1. Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER THIRTEEN MARKETING MANAGEMENT Text by Profs. Gene Boone & David Kurtz Multimedia Presentation by Prof. Milton Pressley The University of New Orleans milton.pressley@uno.edu

2. Copyright © 2003 by South-Western. All Rights Reserved. Summarize the ways in which marketing creates utility Summarize the ways in which marketing creates utility Explain the marketing concept and relate how customer satisfaction contributes to added value Explain the marketing concept and relate how customer satisfaction contributes to added value Describe the components of a market and distinguish between B2B and B2C marketing Describe the components of a market and distinguish between B2B and B2C marketing Outline the basic steps in developing a marketing strategy Outline the basic steps in developing a marketing strategy LEARNING GOALS

3. Copyright © 2003 by South-Western. All Rights Reserved. Describe the marketing research function Describe the marketing research function Identify each of the methods available for segmenting consumer and business markets Identify each of the methods available for segmenting consumer and business markets Distinguish between buyer behavior and consumer behavior Distinguish between buyer behavior and consumer behavior Discuss relationship marketing, including its importance in strategic planning Discuss relationship marketing, including its importance in strategic planning LEARNING GOALS

4. Copyright © 2003 by South-Western. All Rights Reserved. © PhotoDisc CHAPTER OVERVIEW Examines the marketing concept and the way businesspeople develop a marketing strategy Examines the marketing concept and the way businesspeople develop a marketing strategy Explains how businesses apply marketing research data to market segmentation and understanding consumer behavior Explains how businesses apply marketing research data to market segmentation and understanding consumer behavior Looks at the important role played by customer relationships in today’s highly competitive business world Looks at the important role played by customer relationships in today’s highly competitive business world

5. Copyright © 2003 by South-Western. All Rights Reserved. WHAT IS MARKETING? Marketing: process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations and events to create and maintain relationships that satisfy individual and organizational objectives Marketing: process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations and events to create and maintain relationships that satisfy individual and organizational objectives © PhotoDisc

6. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.1 Marketing at Goex: Determining and Meeting Wants and Needs Figure 13.1 Marketing at Goex: Determining and Meeting Wants and Needs

7. Copyright © 2003 by South-Western. All Rights Reserved. Exchange process: when two or more parties benefit from trading things of value Exchange process: when two or more parties benefit from trading things of value WHAT IS MARKETING? © PhotoDisc

8. Copyright © 2003 by South-Western. All Rights Reserved. How Marketing Creates Utility Utility: want-satisfying power of a good or service Utility: want-satisfying power of a good or service Production creates form utility Production creates form utility Marketing creates time, place, and ownership utility Marketing creates time, place, and ownership utility © PhotoDisc

9. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.2 The McDonald’s Big ‘n Tasty: Providing Customer Satisfaction by Creating Time, Place, and Ownership Utility

10. Copyright © 2003 by South-Western. All Rights Reserved. EVOLUTION OF THE MARKETING CONCEPT Over time, marketing activities evolved through four eras as shown on the next slide

11. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.3 Four Eras in the History of Marketing

12. Copyright © 2003 by South-Western. All Rights Reserved. Emergence of the Marketing Concept Marketing concept: companywide customer orientation to promote long- run success Marketing concept: companywide customer orientation to promote long- run success The basic idea is that marketplace success begins with the customer The basic idea is that marketplace success begins with the customer © PhotoDisc

13. Copyright © 2003 by South-Western. All Rights Reserved. Delivering Added Value Through Customer Satisfaction and Quality Customer satisfaction: result of a good or service meeting or exceeding the buyer’s needs and expectations Customer satisfaction: result of a good or service meeting or exceeding the buyer’s needs and expectations © PhotoDisc

14. Copyright © 2003 by South-Western. All Rights Reserved. Delivering Added Value Through Customer Satisfaction and Quality Value-added: occurs when a company exceeds value expectations by adding features, lowering its price, enhancing customer service, or making other improvements to increase customer satisfaction Value-added: occurs when a company exceeds value expectations by adding features, lowering its price, enhancing customer service, or making other improvements to increase customer satisfaction © PhotoDisc

15. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.4 American Express: Providing Quality by Meeting the Desire for Privacy

16. Copyright © 2003 by South-Western. All Rights Reserved. Importance of Customer Satisfaction Critical for building long-lasting relationships Critical for building long-lasting relationships E-commerce surveys found that: E-commerce surveys found that: Ninety percent of customers who were satisfied said they would return to the same site Ninety percent of customers who were satisfied said they would return to the same site One of every 12 visitors abandon online shopping carts before making a purchase One of every 12 visitors abandon online shopping carts before making a purchase © PhotoDisc

17. Copyright © 2003 by South-Western. All Rights Reserved. Obtaining Customer Feedback Important to find out how buyers perceive the company or its products by obtaining customer feedback through: Important to find out how buyers perceive the company or its products by obtaining customer feedback through: Toll-free telephone hotlines Toll-free telephone hotlines Customer satisfaction surveys Customer satisfaction surveys Web site message boards Web site message boards Written correspondence Written correspondence © PhotoDisc

18. Copyright © 2003 by South-Western. All Rights Reserved. EXPANDING MARKETING’S TRADITIONAL BOUNDARIES Not-for-profit organizations benefit by applying many of the strategies and concepts used by profit-seeking firms Not-for-profit organizations benefit by applying many of the strategies and concepts used by profit-seeking firms May apply marketing tools to reach their audiences, secure funding, improve their images, and accomplish their overall missions May apply marketing tools to reach their audiences, secure funding, improve their images, and accomplish their overall missions Some form a partnership with profit- seeking companies Some form a partnership with profit- seeking companies © PhotoDisc

19. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Growth in the number of not-for- profit organizations has forced them to adopt businesslike strategies and tactics to successfully compete Growth in the number of not-for- profit organizations has forced them to adopt businesslike strategies and tactics to successfully compete © PhotoDisc

20. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.5 Categories of Nontraditional Marketing

21. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Person marketing: efforts designed to attract attention, interest, and preference of a target market toward a person Person marketing: efforts designed to attract attention, interest, and preference of a target market toward a person Example: political campaigns Example: political campaigns Person Marketing © jax-inter.net

22. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Place marketing: attempts to attract people to a particular area, such as a city, state, or nation Place marketing: attempts to attract people to a particular area, such as a city, state, or nation Example: appealing to consumers as a tourist destination Example: appealing to consumers as a tourist destination Person Marketing Place Marketing © PhotoDisc

23. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.6a Place Marketing

24. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Cause marketing: efforts to promote a cause or social issue, such as the prevention of child abuse, antilittering efforts, and anti-smoking campaigns Cause marketing: efforts to promote a cause or social issue, such as the prevention of child abuse, antilittering efforts, and anti-smoking campaigns Cause Marketing Person Marketing Place Marketing © PhotoDisc

25. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.6b Cause Marketing

26. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Event marketing: marketing or sponsoring short-term events such as athletic competitions and cultural and charitable performances Event marketing: marketing or sponsoring short-term events such as athletic competitions and cultural and charitable performances Event Marketing

27. Copyright © 2003 by South-Western. All Rights Reserved. Nontraditional Marketing Organization marketing: attempting to influence consumers to accept the goals of, receive the services of, or contribute in some way to an organization Organization marketing: attempting to influence consumers to accept the goals of, receive the services of, or contribute in some way to an organization Event Marketing © PhotoDisc Organization Marketing

28. Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING A MARKETING STRATEGY Marketing strategy development is a two-step process Marketing strategy development is a two-step process First, study and analyze potential target markets and choose among them First, study and analyze potential target markets and choose among them Second create a marketing mix to satisfy the chosen market Second create a marketing mix to satisfy the chosen market © PhotoDisc

29. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.7 Target Market and Marketing Mix within the Marketing Environment

30. Copyright © 2003 by South-Western. All Rights Reserved. Selecting a Target Market Target Market: group of people toward whom an organization markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences Target Market: group of people toward whom an organization markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences

31. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix Marketing mix: blending the four elements of marketing strategy (product, pricing, place, and promotion) to satisfy chosen consumer segments Marketing mix: blending the four elements of marketing strategy (product, pricing, place, and promotion) to satisfy chosen consumer segments

32. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix Involves more than just designing a good or service with needed attributes Involves more than just designing a good or service with needed attributes Includes decisions about package design, brand name, trademarks, warranties, product image, new product development, and customer service Includes decisions about package design, brand name, trademarks, warranties, product image, new product development, and customer service Product strategy © PhotoDisc

33. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix Deals with the methods of setting profitable and justifiable prices Deals with the methods of setting profitable and justifiable prices Subject to government regulation and considerable public scrutiny Subject to government regulation and considerable public scrutiny Product strategy Pricing strategy © PhotoDisc

34. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix Insures that customers receive their purchases in the proper quantities at the right times and locations Insures that customers receive their purchases in the proper quantities at the right times and locations Distribution sometimes referred to as place Distribution sometimes referred to as place Product strategy Pricing strategy Distribution strategy © PhotoDisc

35. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix Involves informing, persuading, and influencing purchase decisions Involves informing, persuading, and influencing purchase decisions Uses tools such as personal selling, advertising, sales promotion, and public relations Uses tools such as personal selling, advertising, sales promotion, and public relations Product strategy Pricing strategy Distribution strategy Promotional strategy © PhotoDisc

36. Copyright © 2003 by South-Western. All Rights Reserved. Developing a Marketing Mix for International Markets Standardization Vs. Adaptation? Standardization Vs. Adaptation? Figure 13.8 Cultural Differences: Sound Reason for an Adaptation Strategy Figure 13.8 Cultural Differences: Sound Reason for an Adaptation Strategy

37. Copyright © 2003 by South-Western. All Rights Reserved. MARKETING RESEARCH FOR IMPROVED MARKETING DECISIONS Marketing research: collection and use of information to support marketing decision making Marketing research: collection and use of information to support marketing decision making © PhotoDisc

38. Copyright © 2003 by South-Western. All Rights Reserved. Obtaining Marketing Research Data Researchers use both internal and external data Researchers use both internal and external data Internal data is generated within the researcher’s organization Internal data is generated within the researcher’s organization External data is gathered from sources outside their firms External data is gathered from sources outside their firms © PhotoDisc

39. Copyright © 2003 by South-Western. All Rights Reserved. Applying Marketing Research Data As the accuracy of information collected by researchers increases, so does the effectiveness of resulting marketing strategies As the accuracy of information collected by researchers increases, so does the effectiveness of resulting marketing strategies Examples: Examples: Products are improved Products are improved Advertisements become more effective Advertisements become more effective Customers are more satisfied Customers are more satisfied © PhotoDisc

40. Copyright © 2003 by South-Western. All Rights Reserved. Computer-Based Marketing Research Systems After scanning the universal product code (UPC), computers identify the product, its manufacturer, and its price After scanning the universal product code (UPC), computers identify the product, its manufacturer, and its price Data can be used to: Data can be used to: Schedule inventory, ordering, and delivery Schedule inventory, ordering, and delivery Track sales Track sales Test the effectiveness of promotions and new product introductions Test the effectiveness of promotions and new product introductions Marketing research firms store consumer data and commercially available databases Marketing research firms store consumer data and commercially available databases © PhotoDisc

41. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.9 AC Nielsen: Marketing Research With Global Reach

42. Copyright © 2003 by South-Western. All Rights Reserved. Data Mining Data mining: using a computer to search through massive amounts of customer data to detect patterns and relationships Data mining: using a computer to search through massive amounts of customer data to detect patterns and relationships Data warehouses: sophisticated customer databases that allow managers to combine data from several different organizational functions Data warehouses: sophisticated customer databases that allow managers to combine data from several different organizational functions © PhotoDisc

43. Copyright © 2003 by South-Western. All Rights Reserved. MARKET SEGMENTATION Market segmentation: process of dividing a total market into several relatively homogeneous groups Market segmentation: process of dividing a total market into several relatively homogeneous groups © PhotoDisc

44. Copyright © 2003 by South-Western. All Rights Reserved. No Market Segmentation © PhotoDisc Copyright © 2003 by South-Western. All Rights Reserved.

45. Segmented by Sex © PhotoDisc Copyright © 2003 by South-Western. All Rights Reserved.

46. Segmented by Age © PhotoDisc Copyright © 2003 by South-Western. All Rights Reserved.

47. © PhotoDisc

48. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.10 Methods of Segmenting Consumer and Business Markets How Market Segmentation Works

49. Copyright © 2003 by South-Western. All Rights Reserved. Geographic segmentation: dividing an overall market into homogeneous groups on the basis of population locations Useful when consumer preferences and purchase patterns for a good or service differ between regions Geographic © PhotoDisc Segmenting Consumer Markets Criteria include 

50. Copyright © 2003 by South-Western. All Rights Reserved. Demographic segmentation: distinguishes markets on the basis of various demographic or socioeconomic characteristics Common demographic measures include income, age, occupation, household size, stage in family life cycle, education, ethnic group, and gender Geographic DemographicDemographic © PhotoDisc Criteria include  Segmenting Consumer Markets

51. Copyright © 2003 by South-Western. All Rights Reserved. Psychographic segmentation: divides consumer markets into groups with similar psychological characteristics, values, and lifestyles Lifestyle: the summation of a person’s needs, preferences, motives, attitudes, social habits, and cultural background GeographicDemographic PsychographicPsychographic © PhotoDisc Criteria include  Segmenting Consumer Markets

52. Copyright © 2003 by South-Western. All Rights Reserved. Product-related segmentation: dividing consumer market into groups based on buyers’ relationships to the good or service The most popular approaches are based on benefit sought, usage rates, and brand loyalty levels GeographicDemographicPsychographic Product- Related © PhotoDisc Criteria include  Segmenting Consumer Markets

53. Copyright © 2003 by South-Western. All Rights Reserved. Segmenting Business Markets In many ways, business market segmentation resembles that for consumer markets In many ways, business market segmentation resembles that for consumer markets In addition to geographic segmentation, business markets use: In addition to geographic segmentation, business markets use: Demographic, or customer- based, segmentation Demographic, or customer- based, segmentation End-use segmentation End-use segmentation © PhotoDisc

54. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.11 Using Demographics and Geography to Segment Business Markets

55. Copyright © 2003 by South-Western. All Rights Reserved. BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANT Buyer behavior: series of decision processes by individual consumers who buy products for their own use and organizational buyers who purchase business products to be used directly or indirectly in the sale of other items Buyer behavior: series of decision processes by individual consumers who buy products for their own use and organizational buyers who purchase business products to be used directly or indirectly in the sale of other items © PhotoDisc

56. Copyright © 2003 by South-Western. All Rights Reserved. BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANT Consumer behavior: refers more specifically to the actions of ultimate consumers directly involved in obtaining, consuming, and disposing of products, and the decision processes that preceded and followed these actions Consumer behavior: refers more specifically to the actions of ultimate consumers directly involved in obtaining, consuming, and disposing of products, and the decision processes that preceded and followed these actions © PhotoDisc

57. Copyright © 2003 by South-Western. All Rights Reserved. Determinants of Consumer Behavior Both personal and interpersonal factors influence the behavior of an ultimate consumer Both personal and interpersonal factors influence the behavior of an ultimate consumer Personal influences on consumer behavior include individual needs and motives, perceptions, attitudes, learned experiences, and their self-concepts Personal influences on consumer behavior include individual needs and motives, perceptions, attitudes, learned experiences, and their self-concepts The interpersonal determinants of consumer behavior include cultural, social, and family influences The interpersonal determinants of consumer behavior include cultural, social, and family influences © PhotoDisc

58. Copyright © 2003 by South-Western. All Rights Reserved. Determinants of Business Buying Behavior Relationship marketing: goes beyond an effort for making the sale to a drive for making the sale again and again Relationship marketing: goes beyond an effort for making the sale to a drive for making the sale again and again Managing relationships instead of simply completing transactions often leads to creative partnerships Managing relationships instead of simply completing transactions often leads to creative partnerships © PhotoDisc

59. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.12 Steps in the Buyer Behavior Process

60. Copyright © 2003 by South-Western. All Rights Reserved. CREATING, MAINTAINING, AND STRENGTHENING MARKETING RELATIONSHIPS Transaction marketing: characterized by buyer and seller exchanges with little or no ongoing relationships between parties Transaction marketing: characterized by buyer and seller exchanges with little or no ongoing relationships between parties © PhotoDisc

61. Copyright © 2003 by South-Western. All Rights Reserved. CREATING, MAINTAINING, AND STREGTHENING MARKETING RELATIONSHIPS Relationship marketing: developing and maintaining long-term, cost effective exchange relationships with individual customers, suppliers, employees and other partners for mutual benefit Relationship marketing: developing and maintaining long-term, cost effective exchange relationships with individual customers, suppliers, employees and other partners for mutual benefit © PhotoDisc

62. Copyright © 2003 by South-Western. All Rights Reserved. Figure 13.13 GE Plastics: Transforming Buyer- Seller Transactions into a Partnership

63. Copyright © 2003 by South-Western. All Rights Reserved. Benefits of Relationship Marketing Can help all parties involved by: Can help all parties involved by: Mutual protection against competitors Mutual protection against competitors Lower costs Lower costs Higher profits Higher profits Preferential treatment Preferential treatment Lifetime value of a customer: the revenues and intangible benefits from the customer over the life of the relationship, minus the amount the company must spend to acquire and serve that customer Lifetime value of a customer: the revenues and intangible benefits from the customer over the life of the relationship, minus the amount the company must spend to acquire and serve that customer © Micrografx

64. Copyright © 2003 by South-Western. All Rights Reserved. Frequency marketing: program that rewards purchases with cash, rebates, merchandise, or other premiums Examples include airline frequent-flier and hotel frequent guest programs © PhotoDisc Frequency Marketing Tools for Nurturing Customer Relationships

65. Copyright © 2003 by South-Western. All Rights Reserved. Affinity program: marketing effort sponsored by an organization solicits involvement by individuals who share common interest and activities © PhotoDisc Frequency Marketing Affinity Program Tools for Nurturing Customer Relationships

66. Copyright © 2003 by South-Western. All Rights Reserved. Common in the credit card industry Person obtains a credit card with a logo of a favorite charity, college, or other organization Credit card company donates a percentage of the person’s charges to the organization © PhotoDisc Frequency Marketing Affinity Program Tools for Nurturing Customer Relationships

67. Copyright © 2003 by South-Western. All Rights Reserved. Co-marketing: two businesses jointly market each other’s products Example: many personal- computer manufacturers use co-marketing to promote the Intel Pentium processors in their machines © PhotoDisc Frequency Marketing Affinity Program Co-marketing Tools for Nurturing Customer Relationships

68. Copyright © 2003 by South-Western. All Rights Reserved. Co-branding: occurs when two or more businesses team up to closely link their names for a single product Example: Kolcraft and baby strollers bearing the jeep brand © PhotoDisc Frequency Marketing Affinity Program Co-marketing Co-branding Tools for Nurturing Customer Relationships

69. Copyright © 2003 by South-Western. All Rights Reserved. WHAT’S AHEAD Examination of the elements of the marketing mix Examination of the elements of the marketing mix Product Product Price Price Distribution Distribution Promotion Promotion © PhotoDisc