Chapter 11 Building Customer Relationships Through Effective Marketing
Chapter 11 Building Customer Relationships Through Effective Marketing
Learning Objectives 1. Understand the meaning of marketing and the importance of management of customer relationships. 2. 3. Explain how marketing adds value by creating several forms of utility. 4. 5. Understand what markets are and how they are classified. 6. 7. 8. 9. 10. Explain how the marketing environment affects strategic market planning. Trace the development of the marketing concept and understand how it is implemented. Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy. Understand the major components of a marketing plan. Describe how market measurement and sales forecasting are used. Distinguish between a marketing information system and marketing research. Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 2
Marketing …an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 3
Table 11. 1: Major Marketing Functions Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 4
Exchange Between Buyer and Seller Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15 th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Adapted with permission. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 5
Relationship Marketing …establishing long-term, mutually satisfying buyerseller relationships. Successful marketers respond to customer needs and strive to continually increase value to buyers over time. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 6
Customer Relationship Marketing …using information about customers to create marketing strategies that develop and sustain desirable customer relationships. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 7
Customer Lifetime Value …a combination of purchase frequency, average value of purchases, and brandswitching patterns over the entire span of a customer’s relationships with a company. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 8
Utility …the ability of a good or service to satisfy a human need. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 9
Types of Utility § Form: converting production inputs into finished products § Place: making a product available at a location where customers wish to purchase it § Time: making a product available when customers wish to purchase it § Possession: transferring title (or ownership) of a product to a buyer Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 10
Figure 11. 1: Types of Utility Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 11
Marketing Concept …a business philosophy that a firm should provide goods and services that satisfy customers’ needs through a coordinated set of activities that allows the firm to achieve its objectives. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 12
Table 11. 2: Evolution of Customer Orientation Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 13
Evolution of the Marketing Concept 1850 1900 1950 2000 Source: Adapted from William M. Pride and O. C. Ferrell, Foundations of Marketing, 3 rd ed. , © 2009 by Houghton Mifflin Company. All rights reserved. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 14
Implementing Marketing Concept § Obtain information § Determine needs § Determine how needs are currently satisfied § Learn how products might be improved § Find out opinions customers have of firm and marketing efforts § Use information to pinpoint specific needs and potential customers Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 15
Mobilize Marketing Resources ü Provide product ü Price product ü Promote product ü Distribute product ü Obtain information Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 16
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. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 17
Market Classifications Ø Business-to-Consumer (B 2 C) Ø Business-to-Business (B 2 B) Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 18
Business-to-Consumer Markets …consist of purchasers and/or household members who intend to consume or benefit from the purchased products and who do not buy products to make profits. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 19
Business-to-Business Markets …are grouped broadly into producer, reseller, governmental, and institutional categories…. They purchase specific kinds of products for use in making other products, for resale, or for day-to-day operations. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 20
B 2 B Markets § Producer : buys certain products to use in manufacture of other products § Reseller: buys finished products and sells them for profit § Governmental: buys goods and services to maintain internal operations and to provide products to citizens § Institutional: buys goods for goals unrelated to profit, market share, or return on investment Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 21
Marketing Strategy …a plan that will enable an organization to make the best use of its resources and advantages to meet its objectives. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 22
Using the Internet • The American Marketing Association’s website is an excellent resource for marketing information. http: //www. marketingpower. com Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 23
Parts of Marketing Strategy § Select/analyze target market § Create/maintain appropriate marketing mix Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 24
Marketing Mix …a combination of product, price, distribution, and promotion developed to satisfy a particular target market. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 25
Target Market …a group of individuals or organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 26
Marketing Managers ü Examine potential markets for possible effect on firm’s sales, costs, and profits ü Determine if organization has the resources to produce a marketing mix that meets the needs of a target market ü Determine if satisfying those needs is consistent with firm’s objectives ü Analyze competitors Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 27
Approaches of Selecting Target Market Ø Undifferentiated Company designs a single marketing mix and directs it at the entire market for a particular product Ø Market segmentation Company divides a market into segments and directs marketing mix at particular segment or segments rather than the total market Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 28
Market Segment …a group of individuals or organizations within a market that shares one or more common characteristics. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 29
Figure 11. 2: Selecting Target Markets The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 30
Table 11. 3: Common Bases of Market Segmentation Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15 th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Adapted with permission. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 31
Advertisers’ Classification of Audiences Name Millennials Gen X-ers Boomers Matures Age Needs Influencer Tech Savvy Grew up in prosperous times Media Savvy Grew up in economic downturn Avid Consumers Deny aging process (2003) <25 25– 38 39– 58 57+ Practical, pragmatic Money conscious Media. Know. All, “Audience Research”, http: //www. mediaknowall. com/Advertising/research. html Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 32
Figure 11. 3: The Marketing Mix and the Marketing Environment Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 33
Product Decisions § Design § Brand Name § Packaging § Warranties Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 34
Pricing Decisions § Base Price Spotlight § Discounts § Goals • Maximize profit • Make room for new models Source: Bayer Consulting for Deloitte LLP survey of 1, 006 people ages 17 to 28. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 35
Distribution Decisions § Transportation § Storage § Selection of Intermediaries • Number of levels • Width of distribution Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 36
Promotion Decisions § Advertising § Personal Selling § Sales Promotion § Public Relations Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 37
Controllable Elements of Mix Can Also Be Varied for. . . § Organizational goals § Marketing goals § Target markets Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 38
Forces of External Marketing Mix § Economic § Sociocultural § Political § Competitive § Legal & regulatory § Technological Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 39
Marketing Plan …a written document that specifies an organization’s resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 40
Marketing Plan ü Describes firm’s current position ü Establishes marketing objectives for product ü Specifies how the organization will attempt to achieve these objectives ü Time frame • Short-range = 1 year or less • Medium-range = 1 to 5 years • Long-range = 5+ years Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 41
Marketing Plan Is Used for. . . § Communication among employees § Assignment of responsibilities/tasks § Schedules for implementation § How resources allocated § Monitor/evaluate performance Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 42
Table 11. 4: Components of Marketing Plan Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15 th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Reprinted with permission. . Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 43
Sales Forecast …an estimate of the amount of a product that an organization expects to sell during a certain period of time based on a specified level of marketing effort. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 44
Forecasting Methods § Executive judgments § Surveys of buyers/sales personnel § Time-series analyses § Correlation analyses § Market tests Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 45
Marketing Information System …a system for managing marketing information that is gathered continually from internal and external sources. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 46
Sources of Information Internal § Sales figures External § Organization’s suppliers § Product/marketing costs § Inventory levels § Activities of sales force § § Copyright © Cengage Learning. All rights reserved. Intermediaries Customers Competitors’ activities Economic conditions Chapter 11 | Slide 47
Information Can Include Ø Daily sales reports Ø Forecasts of sales/buying trends Ø Reports on changes in market share Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 48
Marketing Research …the process of systematically gathering, recording, and analyzing data concerning a particular marketing problem. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 49
Table 11. 5: The Six Steps of Market Research Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 50
Technology and Marketing Information § § Database Single-Source Data Online Information Services Internet • Nielsen • Advertising Age § Intranet Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 51
Table 11. 6: Internet Sources of Marketing Information Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15 th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Reprinted with permission. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 52
Buying Behavior …the decisions and actions of people involved in buying and using products. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 53
Consumer Buying Behavior …the purchasing of products for personal or household use, not for business purposes. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 54
Figure 11. 4: Consumer Decision Process and Influences Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 55
Business Buying Decision Process and Possible Influences on the Process Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 13 th ed. Copyright © 2006 by Houghton Mifflin Company. Adapted with permission. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 56
Personal Income …the income an individual receives from all sources less the Social Security taxes the individual must pay. . Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 57
Disposable Income …personal income less all additional personal taxes. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 58
Discretionary Income …disposable income less savings and expenditures on food, clothing, and housing. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 59
Business Buying Behavior …the purchasing of products by producers, resellers, governmental units, and institutions. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 60
Business Buyers § Consider • Quality • Price • Service provided § Usually • Better informed • Buy in larger quantities Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 61
Business Buying Occurs Through. . . § Description § Inspection § Sampling § Negotiation Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 62
Chapter Quiz 1. The utility created by transferring title of a product to the buyer is called _____ utility. a) b) c) d) e) form time production place possession Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 63
Chapter Quiz 2. J. C. Penney is considered to be a member of which type of market? a) b) c) d) e) Business-to-business Reseller Consumer Producer Institutional Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 64
Chapter Quiz 3. The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is a) b) c) d) e) pricing. quality. product. distribution. promotion. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 65
Chapter Quiz 4. All of the following are true of marketing plans except that they should a) b) c) d) e) not be modified. include details of task scheduling. specify task objectives. describe the firm’s current situation. focus on a particular product or product group. Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 66
Chapter Quiz 5. In this chapter, MIS refers to _____ system. a) b) c) d) e) merged information major information marketing information market influential minor information Copyright © Cengage Learning. All rights reserved. Chapter 11 | Slide 67
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