11 Building Customer Relationships Through Effective Marketing Copyright

11 Building Customer Relationships Through Effective Marketing Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

What is Marketing? According to the American Marketing Association… Marketing is the activity, set of institutions, and processes for… • • Creating Communicating Delivering Exchanging …offerings that have value for customers, clients, partners, and society at large Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Marketing: A Better Definition Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to facilitate exchanges that satisfy customer needs and organization objectives Product Ideas Pricing Promotion Services Place Goods 2 Important Functions Facilitate Exchanges (Encourage Purchase) Satisfy Customer Needs Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Eight Major Marketing Functions Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Managing Customer Relationships § Relationship marketing • Establishing long-term, mutually satisfying buyerseller relationships § Customer relationship management (CRM) • Using information about customers to create marketing strategies that develop and sustain desirable customer relationships § Customer lifetime value • Measure of a customer’s worth (sales minus costs) to a business over one’s lifetime Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Customer Loyalty What do customers want? Sometimes it’s more profitable to retain customers by offering them big rewards than attracting new customers who may never develop the same loyalty. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Understanding Today’s Customers are: • Sophisticated • Demanding • Price Sensitive Why is Customer Satisfaction Important? • Getting new customers costs more than keeping them. • Long-term customers boost profits. • Satisfied customers tell their friends. • Customers pay more for good service. • Unhappy customers spread the word. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Marketing Concept • The Marketing Concept is a business philosophy that a firm should continually try to offer products that satisfy customers needs while also making a business profit • The Marketing Concept includes three parts: 1. Customer Orientation -- Finding out what customers want and then providing it. 2. Service Orientation -- Making sure everyone in an organization is committed to customer satisfaction. 3. Profit Orientation -- Focusing on the goods and services that will earn the most profit. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Utility: The Value Added by Marketing § The ability of a good or service to satisfy a human need § Kinds of utility: • Form utility: Created by converting production inputs into finished products • Place utility: Created by making a product available at a location where customers wish to purchase it • Time utility: Created by making a product available when customers wish to purchase it • Possession utility: Created by transferring title (ownership) of a product to a buyer Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Types of Utility Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Markets and Their Classification § Market: A group of individuals or organizations, or both, that need products in a given category and that have the ability, willingness, and authority to purchase such products § Consumer markets: • Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy products to make a profit § Business-to-business (industrial) markets: • Producer, reseller, governmental, and institutional customers that purchase specific kinds of products for use in making other products for resale or for day -to-day operations Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Developing Marketing Strategies § Marketing strategy: A plan that will enable an organization to make the best use of its resources and advantages to meet its objectives. § Consists of: 1. The selection and analysis of a target market 2. The creation and maintenance of an appropriate marketing mix (a combination of product, price, distribution, and promotion developed to satisfy a particular target market) Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Target Market Selection and Evaluation § Target market • A group of individuals, organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group § Market segment • A group of individuals or organizations within a market that share one or more common characteristics § Market segmentation • The process of dividing a market into segments and directing a marketing mix at a particular segment or segments rather than at the total market Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

A Well-Chosen Market ÜSize: There must be enough people in your target group to support a business ÜProfitability: The people must be willing and able spend more than the cost of producing and marketing the product ÜAccessibility: Your target must be reachable through channels that your business can afford ÜLimited Competition: Look for markets with limited competition; a crowded market is tough to crack Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Undifferentiated Approach § Directing a single marketing mix at the entire market for a particular product § Useful in only a limited number of situations Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Market Segmentation Approach Group of individuals or organizations within a market that share one or more common characteristics Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Differentiated Market Segmentation Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Common Bases of Market Segmentation Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Segmenting the Market Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Marketing Mix Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Marketing Mix: The 4 P’s Product Price Promotion Place • Product differentiation • Brand • Cover costs • Competitively priced • Inform and persuade customers to buy • Build positive customer relationships • Distribution channel • Distributors and wholesalers Product Decisions about product’s design, purpose, brand name, packaging, and warranties Price Decisions based on price setting (what to charge for product) including rebates, and discounts Promotion Decisions that sellers use to persuade and communicate to people to buy their products / services Place (Distribution) Decisions based on moving products from producers to consumers (marketing channels) Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Marketing Strategy and the Marketing Environment § The Marketing Mix (4 P’s): The marketing mix consists of elements that a firm controls and uses to reach its target market § The Marketing Environment: Forces that make up the external and outside the firm’s control include: • • • Economic forces Sociocultural forces Political forces Competitive forces Legal and regulatory forces Technological forces Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Marketing Information Systems § A system for managing marketing information that is gathered continually from internal and external sources § Internal data sources • Sales figures, product and marketing costs, inventory, sales force activities § External data sources • Suppliers, intermediaries, customers, competitors, economic conditions § Outputs • Sales reports, sales forecasts, buying trends, market share Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Marketing Research § Process of systematically gathering, recording, and analyzing data concerning a particular marketing problem § Six steps of marketing research 1. 2. 3. 4. 5. 6. Define the problem Make a preliminary investigation Plan the research Gather factual information Interpret the information Reach a conclusion Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Using Technology to Gather and Analyze Marketing information § Database: Collection of information arranged for easy access and retrieval, such as: • LEXIS-NEXIS • Reader’s Digest § Single-source data: Information provided by a single firm § Online information services: Offer subscribers access to e-mail, websites, mailing lists § Internet: Useful in accessing Web pages such as Nielsen and Advertising Age Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumer Buying Behavior Consumers’ buying behaviors differ for different types of products Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Consumer Buying Power § Personal income: The income an individual receives from all sources less the Social Security taxes the individual must pay § Disposable income: Personal income less all additional personal taxes § Discretionary income • Disposable income less savings and expenditures on food, clothing, and housing • Of particular interest to marketers due to choice of how to spend it Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.