Download Chapter One

11
Building Customer
Relationships
Through Effective
Marketing
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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
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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
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Eight Major Marketing Functions
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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
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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.
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distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Understanding Today’s Customers
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.
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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.
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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
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Types of Utility
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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
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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)
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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
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A Well-Chosen Market
Size: There must be enough people in your target group
to support a business
Profitability: The people must be willing and able
spend more than the cost of producing and marketing the
product
Accessibility: Your target must be reachable
through channels that your business can afford
Limited Competition: Look for markets
with limited competition; a crowded market is tough to crack
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Undifferentiated Approach
 Directing a single marketing mix at the entire
market for a particular product
 Useful in only a limited number of situations
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Market Segmentation Approach
Group of individuals or organizations within a
market that share one or more common
characteristics
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distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Differentiated Market Segmentation
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Common Bases of Market Segmentation
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Segmenting the Market
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Marketing Mix
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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)
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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
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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
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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
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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
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Consumer Buying Behavior
Consumers’ buying behaviors differ for different types
of products
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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
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distributed with a certain product or service or otherwise on a password-protected website for classroom use.