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WHAT IS MARKETING?
Marketing Organizational function and set of processes for creating,
communicating, and delivering value to customers and for man- aging
customer relationships in ways that benefit the organization and its
stakeholders.
Exchange process Activity in which two or more parties give something of
value to each other to satisfy perceived needs.
How Marketing Creates Utility
Utility Want-satisfying power of a good or service.
• Time utility Making a good or service available when customers want to
purchase it.
• Place utility Making a product available in a location convenient
for customers.
• Ownership utility Orderly transfer from the seller to the buyer.
Emergence of the Marketing Concept
Marketing concept Company-wide consumer orientation
to promote long-run success.
• Firm starts with analysis of customers’ needs and works
backward to offer products that fulfill them.
• Explained by shift from sellers’ market in which goods
and services are relatively scarce to buyers’ market in
which they are relatively plentiful.
Delivering Added Value Through Customer
Satisfaction and Loyalty
• Firm starts with analysis of customers’ needs and works backward to offer
products that fulfill them.
Customer satisfaction Ability of a good or service to meet or exceed a buyer’s
needs and expectations.
• Increasing customer loyalty just five percent equals significant increases in
lifetime profits per customer.
Customer Satisfaction and Feedback
• Can get feedback through toll-free telephone hotlines, customer satisfaction
surveys, customer complaints, and other ways.
DEVELOPING A MARKETING
STRATEGY
• First, study and analyze potential target markets and choose among them.
• Second, create a marketing mix to satisfy the chosen market.
Applying Marketing Research Data
• As accuracy of research information increases, so does
the effectiveness of the marketing strategies.
• Example: GM’s H3 Hummer research
Data Mining
Data mining Computer searches of customer data to detect
patterns and relationships.
• Uses data warehouses, sophisticated customer databases that allow managers to
combine data from several different organizational functions.
• Example: Walmart’s use to determine local preferences and tailor its
inventory appropriately.
MARKET SEGMENTATION
Market segmentation Process of dividing a total market into several relatively
homogeneous groups.
How Market Segmentation Works
Segmenting Consumer Markets
Geographic Segmentation
• Divides market into homogeneous groups on the basis of their locations.
Demographic Segmentation
• Divides market on the basis of various demographic or socioeconomic
characteristics.
Psychographic Segmentation
• Divides consumer market into groups with similar psychological characteristics,
values, and lifestyles.
Product-Related Segmentation
• Divides market based on buyers’ relationship to the good or service.
Segmenting Business Markets
• Resembles segmentation for consumer markets, but some methods differ.
Steps in the Consumer Behavior Process
CREATING, MAINTAINING, AND
STRENGTHENING MARKETING
RELATIONSHIPS
Relationship marketing Developing and maintaining long-term, cost-effective
exchange relationships with partners.
Benefits of Relationship Marketing
• Lower costs and higher profits for the business.
• Efficient targeting of best customers that increases the lifetime value of a
customer.
• Stronger relationships with business partners and opportunities to
combine capabilities and resources to better accomplish goals.
Tools for Nurturing Customer Relationships
• 80/20 principle: Frequent customers have a higher lifetime value, so businesses
allocate resources accordingly.
Frequency Marketing and Affinity-Marketing Programs
• Frequency marketing Reward purchasers with cash, rebates, and other
premiums.
• Affinity programs Solicit involvement based on common interest.
Example: Credit card with baseball team logo
• Comarketing Businesses jointly market each others’ products.
• Cobranding Firms link their names in a single product.
One-on-One Marketing
• Customizing products and marketing and rapidly delivering goods.