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Contemporary Business 12th ed. Chapter 12 Summary page 1 of 3 CUSTOMER-DRIVEN MARKETING 1201 – What Is Marketing? Every organization must serve its customer’s need to survive. Marketing is “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,” according to the American Marketing Association. Marketing is more than just selling. The marketing process includes identifying unmet customer needs, researching the potential market; producing a good or service that satisfies the need; and promoting, pricing, and distributing that good or service. Successful marketing creates utility, the ability of a good or service to satisfy the wants and needs of customers. Products have form utility based on their function, and they also have utility of time, place, and ownership, meaning they can be found at a convenient time and place and easily transferred from seller to buyer. 1202 – Evolution of the Marketing Concept Modern marketing have evolved through four distinct eras, each with an increasing focus on the consumer. The term marketing concept refers to a company-wide consumer orientation to promote long-run success. Many argue that the most important sale for a company is the second sale because repeat purchases indicate customer satisfaction. Customer satisfaction can be enhanced through value-added goods and services and by a commitment to quality in products and customer service. Firms can evaluate customer satisfaction through surveys, complaints, and other forms of customer feedback. 1203 – Expanding Marketing’s Traditional Boundaries The marketing concept is increasingly being applied in all kinds of organizations, not just for-profit companies. Not-for-profit organizations apply marketing techniques to reach audiences, secure funding, improve their images, and accomplish their overall missions. Not-for-profits often engage in one of five nontraditional forms of marketing: person marketing, which promotes an individual; place marketing, which attracts attention to a particular place such as a tourist destination; event marketing, which markets events aimed at fundraising or awareness; cause marketing, which promotes a cause or social issue; and organization marketing, which influences consumers to accept the goals of, use, or contribute to an organization. 1204 – Developing a Marketing Strategy Marketing strategy can be summed up in the expression “Find a need and fill it.” Its development has two steps: The first step is analysis and selection of potential markets. The second step is the creation of a marketing mix to satisfy the needs of the chosen market. Markets can be classified by product type, either consumer markets or business markets. An organization’s target market is the group of potential consumers toward Contemporary Business 12th ed. Chapter 12 Summary page 2 of 3 whom it directs it marketing efforts. Its marketing mix is the blend of product, distribution, promotion, and pricing strategies it develops to fit the needs and preferences of the target market. Companies that market goods and services can decide to standardize the marketing mix in every location or adapt it for each location. Marketers also try to build adaptability into the design of their products. 1205 – Marketing Research Marketers turn to market research for information that will help them make effective decisions. Market research links business decision makers to the marketplace by providing data about potential target markets that help them design effective marketing mixes. Marketers rely on both internal and external data such as sales and inventory levels. They also use secondary data gathered from published sources and primary data gathered firsthand through surveys, observations, focus groups, and other methods. Companies also use data mining, searches through customer data that reveal patterns, to help them design effective marketing plans. 1206 – Market Segmentation Marketers target their marketing efforts through market segmentation, the division of a market into several relatively homogenous groups. The effectiveness of segmentation depends on how measurable the segment is, whether it is accessible through communication, and whether it is large enough to provide the potential for profit. Markets can be segmented in many ways, including geographically on the basis of location; demographically on the basis of customers’ socioeconomic characteristics; psychographically based on customers’ shared psychological values, characteristics, and lifestyle; and product-related on the basis of a product’s benefits usage rates, or brand loyalty. Business markets are segmented in similar ways. 1207 – Consumer Behavior: Determining What Customers Want A fundamental task of marketing is analyzing consumer behavior, the actions of ultimate consumers directly involved in obtaining, consuming, and disposing of products and the decision processes that precede and follow these actions. A combination of personal and interpersonal factors influences the ways in which customers behave. Personal influences on consumer behavior include individual needs and motives, perceptions, attitudes, learned experiences, and self-concept. The interpersonal determinants of consumer behavior include cultural, social, and family influences. Buyers in business markets face additional organizational pressures. Buyers go through six steps: identifying a need, searching for a product to satisfy the need, evaluating alternatives, making a purchase decision, completing the purchase act, and evaluating the purchase. 1208 – Creating, Maintaining, and Strengthening Marketing Relationships Businesses seeking new ways to gain a competitive advantage through marketing are increasingly turning to relationship marketing, the development and maintenance of long- Contemporary Business 12th ed. Chapter 12 Summary page 3 of 3 term, cost-effective exchange relationships individual customers, suppliers, employees, and other partners. Relationship marketing strengthens connections between firms that can provide mutual protection against competitors, lower costs, and raise profits. It also helps firms retain existing customers, who are cheaper to attract than new customers and who usually by more, require less service, refer other customers, and provide valuable feedback. Sometimes firms customize goods or services for high-value customers while simultaneously trying to boost sales of stock products to less-valuable customers. Firms may use frequency marketing programs to offer rewards to repeat customers, affinity programs to build bonds with customers, or comarketing or cobranding to associate their products with another brand or firm. The Internet has increased opportunities for businesses to engage in one-on-one marketing. Companies can take orders for customized products, gather data about buyers, and predict what goods or services a customer might want in the future. Companies increasingly rely on customer relationship management software technology that helps them gather, sort, and interpret data about customers. Business success in the 21st century is directly tied to a company’s ability to identify and serve its target markets. All organizations must serve customer needs to succeed. Marketing is the link between the organization and the people who buy and use its goods and services. Marketing is the path to developing loyal, long-term customers.