11 Marketing Building Profitable Customer Connections Copyright 2019

11 Marketing: Building Profitable Customer Connections Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

LEARNING OUTCOMES 1. Discuss the objectives, the process, and the scope of marketing 2. Identify the role of the customer in marketing 3. Explain each element of marketing strategy 4. Describe the consumer and business decisionmaking process 5. Discuss the key elements of marketing research 6. Explain the roles of social responsibility and technology in marketing Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 2

LO 1 Marketing and Utility • Marketing: Organizational function and a set of processes for: • Creating, communicating, and delivering value to customers • Managing customer relationships in ways that benefit the organization and its stakeholders • Utility: Ability of goods and services to satisfy wants Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 3

LO 1 Utility - Types Form utility • Satisfies wants by converting inputs into a finished form Time utility • Satisfies wants by providing goods and services at a convenient time for customers Place utility • Satisfies wants by providing goods and services at a convenient place for customers Ownership utility • Satisfies wants by smoothly transferring ownership of goods and services from seller to buyer Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 4

LO 1 Scope of Marketing People marketing Place marketing Event marketing Idea marketing Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 5

LO 1 Exhibit 11. 1 The Evolution of Marketing Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 6

LO 2 Customer Relationship Management (CRM) • Ongoing process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value • Companies can either have limited relationships or pursue full partnerships with clients Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 7

LO 2 Customer Satisfaction and Loyalty • Customer satisfaction • Customers’ perception that a good or service delivers value above and beyond their expectations • Customer loyalty • Customers repeatedly buy certain products Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 8

LO 3 Marketing Plan • Formal document that defines marketing objectives and the specific strategies for achieving those objectives • Involves: • Deciding where to target efforts �Market segmentation: Dividing potential customers into groups of similar people, or segments Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 9

LO 3 Marketing Plan (continued) • Determining strategies to reach the target market • Anticipating and responding to changes in the external environment Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 10

LO 3 Exhibit 11. 2 Marketing Strategy Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 11

LO 3 Target Market • Group of people who are most likely to buy a particular product • Characteristics of a well-chosen target market • • Size Profitability Accessibility Limited competition Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 12

LO 3 Consumer and Business Marketers • Consumer marketers (business-toconsumer or B 2 C) • Direct their efforts toward people who are buying products for personal consumption • Business marketers (business-tobusiness or B 2 B) • Direct their efforts toward people who are buying products to use either directly or indirectly to produce other products Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 13

LO 3 Consumer Market Segmentation Demographic • Dividing the market based on characteristics about people such as age, income, ethnicity, and gender Geographic • Dividing the market based on where consumers live Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 14

LO 3 Consumer Market Segmentation (continued) Psychographic • Dividing the market based on consumer attitudes, interests, values, and lifestyles Behavioral • Dividing the market based on how people behave toward various products Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 15

LO 3 Categories of Business Market Segmentation Geographic Customerbased Product-use– based Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 16

LO 3 Marketing Mix • Blend of marketing strategies for: • • Product Price Distribution Promotion • Firms need to reevaluate their marketing mix for each new country they enter Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 17

LO 3 Elements of the External Marketing Environment • • • Competitive Economic Social or cultural Technological Political or legal Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 18

LO 3 Exhibit 11. 5 Elements That Influence the Consumer Decision-Making Process Influence Description Cultural • Culture: The values, attitudes, and customs shared by members of a society • Subculture: A smaller division of the broader culture • Social Class: Societal position driven largely by income and occupation Social • Family: A powerful force in consumption choices • Friends: Another powerful force, especially for high-profile purchases • Reference Groups: Groups that give consumers a point of comparison Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 19

LO 3 Exhibit 11. 5 Elements That Influence the Consume Decision-Making Process (continued) Influence Description Personal • Demographics: Measurable characteristics such as age, gender, or income • Personality: The mix of traits that determines who you are Psychological • • Motivation: Pressing needs that tend to generate action Attitudes: Lasting evaluations of (or feelings about) objects or ideas Perceptions: How people select, organize, and interpret information Learning: Changes in behavior based on experience Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 20

LO 4 Consumer Behavior • People's actions when they are buying, using, and discarding goods and services for their personal consumption • Explores the reasons behind people’s actions Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 21

LO 4 Steps in Consumer Decision Process • • • Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior • Cognitive dissonance: Consumer discomfort with a purchase decision, typically for a higher-priced item Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 22

LO 4 Business Buyer Behavior • Describes people’s behavior when they are buying products to use directly or indirectly to produce other products • Decision-making process is based on purchasing training and application of rational criteria • Input is integrated from a number of internal sources based on a formal process • Customers seek highly customized goods, services, and prices Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 23

LO 5 Marketing Research • Process of gathering, interpreting, and applying information to: • Uncover opportunities and challenges • Make better decisions • Used to: • Identify external opportunities and threats • Monitor and predict customer behavior • Evaluate and improve each area of the marketing mix Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 24

LO 5 Marketing Research - Types of Data • Secondary data: Existing data that marketers gather or purchase for a research project • Primary data: New data that marketers compile for a specific research project Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 25

LO 5 Categories of Primary Research Observation • Does not require the researcher to interact with the research subject Survey • Requires that the researcher interact with the research subject Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 26

LO 5 Exhibit 11. 7 Research Data Comparison Secondary data Primary data Existing data that marketers gather or purchase New data that marketers compile for the first time Tends to be lower cost Tends to be more expensive May not meet your specific needs Customized to meet your needs Frequently outdated Fresh, new data Available to your competitors Proprietary—no one else has it Examples: U. S. Census, the Wall Street Journal, Time magazine, your product sales history Examples: Your own surveys, focus groups, customer comments, mall interviews Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 27

LO 6 Social Responsibility and Technology • Marketers setting standards to protect the environment, abolish sweatshops, and give back to the local community • Companies are employing green marketing when they promote ecological benefits of a product • Technology has revolutionized marketing elements and has enabled mass customization Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or BUSN 11 | CH 11 posted to a publicly accessible website, in whole or in part. 28

KEY TERMS Marketing Utility Marketing concept Customer relationship management (CRM) • Value • Customer satisfaction • Customer loyalty • • Marketing plan Market segmentation Target market Consumer marketers (business-toconsumer or B 2 C) • Business marketers (business-to-business or B 2 B) • Demographic segmentation • • Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. BUSN 11 | CH 11 29

KEY TERMS (continued) • Geographic segmentation • Psychographic segmentation • Behavioral segmentation • Marketing mix • Environmental scanning • Market share • Consumer behavior • Cognitive dissonance • Business buyer behavior • Marketing research • Secondary data • Primary data • Observation research • Survey research • Green marketing • Mass customization Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or Copyright © 2016 Cengage Learning. posted All Rightsto. Reserved. May not be scanned, website, copied or duplicated, posted to a publicly accessible website, a publicly accessible in wholeoror in part. BUSN 11 HIST 4| |CH 11 CH 6 in whole or in part. 30

SUMMARY • Marketing involves creating, communicating, and delivering value to customers • Information is an integral part of CRM • Elements of marketing strategy include product, price, distribution, and promotion • Understanding customer needs includes studying consumer and business buyer behavior Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or Copyright © 2016 Cengage Learning. posted All Rightsto. Reserved. May not be scanned, website, copied or duplicated, posted to a publicly accessible website, a publicly accessible in wholeoror in part. BUSN 11 HIST 4| |CH 11 CH 6 in whole or in part. 31

SUMMARY (continued) • Categories of marketing research data include secondary and primary data • Social responsibility movement and technology have impacted marketing in the last two decades Copyright © 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or Copyright © 2016 Cengage Learning. posted All Rightsto. Reserved. May not be scanned, website, copied or duplicated, posted to a publicly accessible website, a publicly accessible in wholeoror in part. BUSN 11 HIST 4| |CH 11 CH 6 in whole or in part. 32