Chapter 12 Building Customer Relationships Through Effective Marketing

Chapter 12

Building Customer Relationships Through

Effective Marketing

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 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.”


Utility

“…the ability of a good or service tosatisfy a human need.”


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

©2007 Plush Studios/Bill Reitzel


Figure 12.1: Types of Utility


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.”


ImplementingMarketing Concept

Obtain information Determine needs How needs currently

satisfied How products might be

improved What opinions customers

have of firm and marketing efforts

Use information to pinpoint specific needs and potential customers

©2007 Microsoft PowerPoint


Mobilize Marketing Resources

Provide product Price product Promote product Distribute product Obtain information


CustomerRelationship Marketing

“…using information about customers to create marketing strategies that develop and

sustain desirable customer relationships.”

It’s all about the customer….


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.”


Market Classifications

o Consumero Business-to-Business (B2B)o Based on characteristics

©2007 Microsoft PowerPoint


Consumer Markets

“…consist of purchasers and/or households members who intend to consume or benefit from the purchased products and who do

not buy products to make profits.”


Business-to-Business Markets

“…are grouped broadly into producer, reseller, governmental, and institutional categories….purchase specific kinds of

products for use in making other products for resale or for day-to-day operations”


B2B Markets

Producer- buys certain products to use in manufacture of other products

Reseller- intermediaries that buy finished products and sell them for profit

Governmental- government entities buy goods and services to maintain internal operations and to provide products to citizens

Institutional- organizations whose goals do not relate to profit, market share, or return on investment


Marketing Strategy

“…a plan that will enable an organization to make the best use of its resources and

advantages to meet it objectives.”


Parts of Marketing Strategy

Selection/analysis of target market

Create/maintain appropriate marketing mix

©2007 Getty Images/Stockbyte


Target Market

“…a group of individuals or organizations,or both, for which a firm develops

and maintains a marketing mix suitablefor the specific needs and preferences

of that group.”


Marketing mix

“…combination of product, price, distribution, and promotion developed to

satisfy a particular target market “


Approaches ofSelecting Target Market

Undifferentiated- company designs a single marketing mix and directs it at the entire market for a particular productMarket-segmentation- process of dividing a market into segments and directing marketing mix at particular segment or segments rather than the total market

©2007 Getty Images/Stockbyte


Market Segment

“…a group of individuals or organizations within a market that shares one or more

common characteristics.”World’s Most Expensive Dessert

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 21© 2009 South-Western, a division of Cengage Learning

21

CONSUMER MARKET SEGMENTATION

• Demographic

• Geographic

• Psychographic

• Behavioral


Table 12.3: Bases ofMarket Segmentation

Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies (Boston: Houghton Miffl in, 2006). Copyright © 2006 by Houghton Miffl in Company. Adapted with permission.


How are the markets being segmented?

© 2009 South-Western, a division of Cengage Learning

23


• Giant 3 gallon size beans

• Single serving

© 2009 South-Western, a division of Cengage Learning

24


25


Product Decisions

Design

Brand Name

Packaging

Warranties ©2007 Digital Vision/Flying Colours Ltd


Pricing Decisions

$ Base Price$ Discounts$ Goals

Maximize profit Make room for new models


Distribution Decisions

Transportation Storage Selection of Intermediaries


Promotion Decisions

Advertising

Personal Selling

Sales Promotion

Public Relations©2007 Digital Vision/Flying Colours Ltd


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THE ENVIRONMENT IS CONSTANTLY CHANGING

When low carbohydrate

diets swept through

American culture, retail

sales of french fries

plummeted, dropping

2.9% in 2001, 3.3% in

2002, and 10% in 2003.


Figure 12.3: Marketing Mix andthe Marketing Environment


Although Wal-Mart Supercenters have generated great customer satisfaction, they have also prompted questions about their impact on communities. These issues relate to urban sprawl, the viability of local mom and pop stores, the destruction of historic sites, the ability of local tax dollars to support infrastructure to handle increased traffic, and the impact on local culture.

Some communities have successfully fought to keep their hometowns Wal-Mart free. On the other hand, one new Wal-Mart Supercenter can create 450 jobs and generate millions of dollars in local taxes.

What impact are these supercenters likely to have on competitive forces, economic forces, political forces, legal and regulatory forces, and sociocultural forces?


Forces ofExternal Marketing Mix

Economic Sociocultural Political Competitive Legal and regulatory Technological


Buying Behavior

“…the decisions and actions of people involved in buying and using products.”


Consumer Buying Behavior

“…the purchasing of products forpersonal or household use, not for

business purposes.”


Figure 12.4: Consumer BuyingProcess and Influences


BusinessBuying Behavior

“…the purchasing of products by producers, resellers, governmental units, and

institutions.”


Business Buyers

Consider Quality Price Service provided

Usually Better informed Buy in larger quantities Using a different time

frame©2007 Photodisc/Ryan McVay


Business BuyingOccurs Through

Description

Inspection

Sampling

Negotiation


Marketing Information System

“…a system for managing marketing information that is gathered continually from

internal and external sources.”


Sources of Information

Internal Sales figures Product/marketing

costs Inventory levels Activities of sales

force

External Organization’s

suppliers Intermediaries Customers Competitors’

activities Economic conditions


Marketing Research

“…the process of systematically gathering, recording, and analyzing data concerning a

particular marketing problem.”


Table 12.5: Six Stepsof Market Research

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Chapter 12 Building Customer Relationships Through Effective Marketing