2-12-1McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Relationship Marketing: Where Personal Selling Fits

Chapter2

Chapter

Chapter

2

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The Purpose of Business is to:

Increase the general well being of humankind through the sales of goods and services

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This Requires

Making a profit in order to operate the business and to provide beneficial products to the marketplace

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Profit is a Means to an End

Profit is needed to serve humankind Profit is needed to operate the business Profit is needed to provide products to

the marketplace

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The Two Basic Functions and Goal

of Business Two Basic Functions of Business

Production of goods or creating of servicesMarketing those goods and services

The Primary Goal of BusinessTransform marketplace and workplace into

an environment where everyone is treated fairly

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What is Marketing? Marketing is the activity, set of

institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

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The Production Concept

Companies are production oriented

We know what people want – they want our product.

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The Selling Concept

Characterized by product demonstrations and unsophisticated sales techniques

Emphasis on the product Product created and then sold Management is sales-volume oriented Stresses needs of the seller

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The Marketing Concept

Emphasis is on customer’s wants Customer’s wants drive production Management is profit-oriented Planning is long-term Stresses wants of buyers

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Marketing’s Importance in the Firm

Marketers have four main objectives:Maximize the sales for existing products in

existing marketsDevelop and sell new productsDevelop new markets for existing or new

productsProvide quality service to ensure repeat

business

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Exhibit 2.2: The Marketing Group is the Link

Between Customers and the Organization

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Product: It’s More Than You Think

A good is a physical object that can be purchased

A service is an action or activity performed for a fee

Value-added refers to benefits received that are not included in the purchase price of a good or service

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Exhibit 2.3: Four Elements of the Marketing

Mix and Four Promotion Activities

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What is Meant by the Term “Product?”

A product is a bundle of tangible and intangible attributes, including package, color, and brand, plus the services and even the reputation of the seller

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The Term “Product” May Refer to a Good or Service

ExamplesGoods - a physical object for sale

AutomobileCell phonePrescription medicine

Services - an action or activity done for others for a fee

Automobile repairWireless phone planHealth insurance

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The Good and the Service:

Automobile - repair services Cell phone - wireless phone plane Prescription medicine - health insurance

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We Will Use the Terms Follow-up and Service. What do They Mean?

Follow-up refers to maintaining contact with a customer in order to evaluate the effectiveness of the product and the satisfaction of the customer (More on this in Chapter 14)

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The Term “Service” May Refer to A:

Product, as insurance and advertise which is sold by someone

Service, as customer service which is an activity offered by a seller in conjunction with the purchase of a product, such as delivery, repair, credit cards accepted, 800 telephone number, web site, salesperson available to help customer (More on this in Chapter 14)

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Customer Service by the Salesperson Include:

Salesperson goes to customer’s business to help:Resell productsCustomer use productHandling complaintsReturn damaged productsProvide samplesSuggest further business opportunities

(Above discussed in Chapter 1)

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People Buy More Than the Product

People buy want-satisfaction as Image of owning as a

Polo shirt vs. Wal-Mart shirtDodge Viper* vs. Volkswagen Vanagon*

What the product will do Its quality

*products and associated images used for illustrative purposes only

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What is a consumer product? A consumer product is produced for, and

purchased by, households or end consumers for their personal use

What is an example of a consumer product?ToothpasteTelevisionClothes

There Are Two General Types of Products - Consumer and Industrial

Products

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There Are Two General Types of Products- Consumer and Industrial

Products Cont… What is industrial product? An industrial product is sold primarily for

use in producing other products. Industrial users are profit/nonprofit organizations that buy good and services for one of three purposes1.To make other goods and services2.To sell to consumer or other industrial users3.To conduct the organization’s operations

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The Key Phrases That Differentiate Between Consumer and Industrial

Products are: Consumer product - personal use Industrial product - producing other

products What is an example of an industrial product?Airlines purchase airplanesBoeing sells their airplanes to airlinesUniversity buys computers

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What Is Another Name for an Industrial Product?

Business product Organizational product

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Price: It’s Important to Success

Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product

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Distribution Moves Products to Customers

Three Customer GroupsA household refers to a decision-making

unit that buys for personal useA firm is an organization that produces

goods and servicesA government is an organization that has

two functions: The provision of goods and services to households

and firmsThe redistribution of income and wealth

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Consumer and Industrial Products are Often Distributed Through

Resellers What are Resellers? Resellers, such as wholesalers or

retailers, purchase products and then sell to organizations and/or individuals

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What Is a Wholesaler? The Wholesaler (May Be Referred to as

a Distributor) Primarily engaged in buying, taking title

to, usually storing and physically handling goods in large quantities, and reselling the goods, usually in smaller quantities toRetailersWholesalersManufacturers

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Exhibit 2.5: Examples of Distribution Channels for Consumer and Industrial

Products

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Promotion Tells People

Promotion increases sales by communicating product information to potential customers

The four basic components of a firm’s promotional effort are: (PAPS)Personal sellingAdvertisingPublicitySales promotion

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Exhibit 2.7: Examples of Each Marketing Mix Element

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Relationship Marketing

Relationship marketing is the creation of customer loyalty

Targets a major customer that it wants to sell to now and in the future

Establishes a long-term collaborative relationship

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implement relationship marketing

Relationship Marketing andthe Sales Force

Salespeople

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Three Levels of Relationship Marketing

Transaction selling: customers are sold to and not contacted again

Relationship selling: the seller contacts customers after the purchase to determine if they are satisfied and have future needs

Partnering: the seller works continually to improve its customers’ operations, sales, and profits

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Partnering with Customers

Encourages both the buyer and seller to share information

Two companies work toward the same objective

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Consultative Selling

The process of helping the customer achieve strategic short and long-term goals through the use of the seller’s goods and/or servicesA highly interactive dialogue between a

salesperson and a customerA balanced exchange of information

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Three Consultative Selling Roles for the 21st Century

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Exhibit 2.11: Marketing and Personal Selling Provide Service to Customers