Marketing: Helping

Buyers Buy

Chapter 13

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

1. Define marketing, and apply the marketing concept to both for-profit and nonprofit organizations.

2. Describe the four P’s of marketing.

3. Summarize the marketing research process.

LEARNING GOALSChapter Thirteen

13-2

4. Show how marketers use environmental scanning to learn about the changing marketing environment.

5. Explain how marketers apply the tools of market segmentation, relationship marketing and the study of consumer behavior.

6. Compare the business-to-business market and the consumer market.

LEARNING GOALSChapter Thirteen

13-3

Profile

• In 2010, Jimenez became the first American CEO of Swiss-based Novartis.

• Jimenez sees Novartis as more than just a pharmaceutical company.

• To exemplify marketing at its best, social responsibility needs to be part of the Novartis mission.

JOSEPH JIMENEZNovartis

13-4

Where’s the beef? Many people don’t care about the answer to that question anymore. As the trend toward vegetarianism grows, this well-known company in Canada offers a vegan version of its chicken sandwich in 500 of its 750 stores.

Name that company!

NAME that COMPANYChapter Thirteen

13-5

What is Marketing?

• Marketing -- The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large.

WHAT’S MARKETING?LG1

13-6

• Marketing today involves helping the buyer buy through:

- Websites that help buyers find the best price, identify product features, and question sellers.

- Blogs and social networking sites that cultivate consumer relationships.

FOCUS of CONTEMPORARY MARKETINGLG1

What is Marketing?

13-7

• Many theaters provide food with movies.

LET’S GO to the MOVIES(Spotlight on Small Business)

• It may turn out that such theaters only appeal to a niche market and may not prove profitable.

• Do you have other suggestions for how to improve the movie-going experience?

Photo Courtesy of: A.D. Wheeler

13-8

The Evolution of Marketing

• Production Era

• Selling Era

• Marketing Concept Era

• Customer Relationship Era

FOUR ERAS of U.S. MARKETINGLG1

13-9

• The general philosophy was “Produce what you can because the market is limitless.”

• After mass production, the focus turned from production to persuasion.

The PRODUCTION and SELLING ERASLG1

The Evolution of Marketing

13-10

• After WWII, a consumer spending boom developed.

• Businesses knew they needed to be responsive to consumers if they wanted their business.

The MARKETING CONCEPT ERALG1

The Evolution of Marketing

13-11

• 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.

APPLYING the MARKETING CONCEPT LG1

The Evolution of Marketing

13-12

• Customer Relationship Management (CRM) -- Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations.

• Organizations seek to enhance customer satisfaction building long-term relationships.

• Today firms like Priceline and Travelocity use CRM that allow customers to build a relationship with the suppliers.

The CUSTOMER RELATIONSHIP ERALG1

The Evolution of Marketing

13-13

• The cost of acquiring a new customer is 5x the cost of retaining one. Here’s how to keep them:

SERVICE with a SMILESix Steps for Keeping Your Customers Happy

1. Build trust

2. Emphasize the long term

3. Listen

4. Treat your customers like stars

5. Show appreciation

6. Remember employees are customers too!

LG1

The Evolution of Marketing

Source: Inc. Guidebook, Vol. 2 No. 5 and Entrepreneur, February 2010.

13-14

• Nonprofit marketing tactics include:

NONPROFIT MARKETINGNonprofit Organizations and Marketing

- Fundraising

- Public Relations

- Special Campaigns

- Ecological practices

- Changing public opinions and attitudes

- Increasing organizational membership

LG1

13-15

• Nonprofit marketing strategies include:

- Determine the firm’s goals and objectives

- Focus on long-term marketing

- Find a competent board of directors

- Exercise strategic planning

- Train and develop long-term volunteers

- Carefully segment the target market

MARKETING STRATEGIES for NONPROFITSLG1

Nonprofit Organizations and Marketing

13-16

• The clothing industry is developing software to help measure the environmental impact of their apparel.

• Would you look at a label to determine whether or not you would buy tennis shoes or a garment based on its eco-friendliness?

HOW GREEN is GREEN?(Thinking Green)

13-17

The Marketing Mix The FOUR P’s

LG2

13-18

Designing a Product to Meet Consumer Needs

• Product -- A good, service, or idea that satisfies a consumer’s want or need.

DEVELOPING a PRODUCTLG2

• Test Marketing -- Testing product concepts among potential product users.

• Brand Name -- A word, letter, or a group of words or letters that differentiates one seller’s goods from a competitor’s.

13-19

Setting an Appropriate Price

• Pricing products depends on many factors:

- Competitors’ prices

- Production costs

- Distribution

- High or low price strategies

• Middlemen are important in place strategies because getting a product to consumers is critical.

PRICING and PLACING a PRODUCTLG2

13-20

Developing an Effective Promotional Strategy

• Promotion -- All the techniques sellers use to inform people about their products and motivate them to purchase those products.

• Promotion includes:

- Advertising

- Personal selling

- Public relations

- Word of mouth

- Sales promotions

PROMOTING the PRODUCTLG2

Photo Courtesy of: Uri Baruchin

13-21

• Get customers emotional about your product:- Make your product “built to love.”

- Use emotion-laden advertising.

PERFECT PROMOTIONHow to Get Customers to Need Your Product

LG1

Sources: Entrepreneur, February 2011 and Entrepreneur, March 2010.

Developing an Effective Promotional Strategy

• Be a likeable salesperson:- Have confidence.

- Be intriguing.

- Show interest in others.

- Be enthusiastic and respectful.

13-22

• Too much clutter

• Too difficult to navigate

• Stale information

• Copycatting

• Ignoring the needs of your customer base

• Not analyzing data

• Refusing to get outside help

TANGLED WEB of PROMOTIONSeven Sins of Web DesignLG1

Source: Entrepreneur, January 2011.

Developing an Effective Promotional Strategy

Photo Courtesy of: Cortes de Cima

13-23

• Consumers have smartphones and digital tablets that can get them online anywhere.

CALLING ALL BUSINESSES!(Social Media in Business)

• Devices lack of uniform design which is a challenge to web designers, making it costly.

• mShopper helps retailers break into the mobile market with the Mobile Commerce Platform, or mStore.

13-24

Progress Assessment

• What does it mean to “help the buyer buy?”

• What are the three parts of the marketing concept?

• What are the Four P’s of the Marketing Mix?

PROGRESS ASSESSMENT

13-25

Providing Marketers with Information

• Marketing Research -- Analyzing markets to determine challenges and opportunities, and finding the information needed to make good decisions.

• Research is used to identify products consumers have used in the past and what they want in the future.

• Research uncovers market trends and attitudes held by company insiders and stakeholders.

SEARCHING for INFORMATIONLG3

13-26

The Marketing Research Process

1. Defining the problem or opportunity and determining the present situation.

2. Collecting research data.

3. Analyzing the data.

4. Choosing the best solution and implementing it.

FOUR STEPS in the MARKETING RESEARCH PROCESSLG3

13-27

• What’s the present situation?

• What are the alternatives?

• What information is needed?

• How should the information be gathered?

DEFINING the PROBLEM or OPPORTUNITYLG3

The Marketing Research Process

13-28

• Secondary Data -- Existing data that has previously been collected by sources like the government.

COLLECTING SECONDARY RESEARCH DATA

• Secondary data incurs no expense and is usually easily accessible.

• Secondary data doesn’t always provide all the needed information for marketers.

LG3

The Marketing Research Process

13-29

• Primary Data -- In-depth information gathered by marketers from their own research.

• Telephone, online and mail surveys, personal interviews, and focus groups are ways to collect primary data.

COLLECTING PRIMARY RESEARCH DATALG3

The Marketing Research Process

13-30

• Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions.

FOCUS GROUPSLG3

The Marketing Research Process

13-31

• Marketers must turn data into useful information.

• Must use their analysis to plan strategies and make recommendations.

• Finally, marketers must evaluate their actions and determine if further research is needed.

ANALYZING the DATA and IMPLEMENTING the DECISIONLG3

The Marketing Research Process

13-32

• Analyze customer needs and satisfaction.

• Analyze current markets and opportunities.

• Analyze the effectiveness of marketing strategies.

• Analyze marketing process and tactics currently used.

• Analyze the reasons for goal achievement or failure.

KEY BENEFITS of MARKETING RESEARCHLG3

The Marketing Research Process

13-33

• Conduct informal consumer surveys

WAYS to FIND OUT WHAT CONSUMERS THINK

• Host a customer focus group

• Listen to competitor’s customers

• Survey your sales force

• Become a “phantom” customer

LG3

The Marketing Research Process

13-34

The Marketing Environment

• Environmental Scanning -- The process of identifying factors that affect marketing success.

SCANNING the MARKETING ENVIRONMENTLG4

• Factors involved in the environmental scan include:

- Global factors

- Technological factors

- Sociocultural factors

- Competitive factors

- Economic factors

13-35

The MARKETING ENVIRONMENTLG4

The Marketing Environment

13-36

• Always be customer-focused.

• Benchmark against the best firms.

• Continuously improve performance.

• Develop the best value package.

• Empower your employees.

• Focus on relationship building.

• Goal achievement is the reward.

The ABC’s of MARKETINGLG4

The Marketing Environment

13-37

Two Different Markets: Consumer and B2B

• Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them.

The CONSUMER and B2B MARKET

• Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others.

LG4

13-38

Progress Assessment

• What are the four steps in the marketing research process?

• What’s environmental scanning?

• What factors are included in environmental scanning?

PROGRESS ASSESSMENT

13-39

The Consumer Market

• The size and diversity of the consumer market forces marketers to decide which groups they want to serve.

• Market Segmentation -- Divides the total market into groups with similar characteristics.

• Target Marketing -- Selecting which segments an organization can serve profitably.

MARKETING to CONSUMERSLG5

13-40

Segmenting the Consumer Market

• Geographic Segmentation -- Dividing the market by cities, counties, states, or regions.

• Demographic Segmentation -- Dividing the market by age, income, education, and other demographic variables.

• Psychographic Segmentation -- Dividing the market by group values, attitudes, and interests.

(continued)

SEGMENTING the CONSUMER MARKETLG5

13-41

• Benefit Segmentation -- Dividing the market according to product benefits the customer prefers.

• Volume (Usage) Segmentation -- Dividing the market by the volume of product use.

SEGMENTING the CONSUMER MARKET

(continued)LG5

Segmenting the Consumer Market

13-42

Reaching Smaller Market Segments

• Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them.

MARKETING to SMALL SEGMENTS

• One-to-One Marketing-- Developing a unique mix of goods and services for each individual consumer.

LG5

13-43

Moving Toward Relationship Marketing

• Mass Marketing -- Developing products and promotions to please large groups of people.

• Relationship Marketing-- Rejects the idea of mass production and focuses toward custom-made goods and services for customers.

MASS MARKETING vs. RELATIONSHIP MARKETINGLG5

13-44

• Effective relationship marketing is built on:

- Open communication

- Consistently reliable service

- Staying in contact with customers

- Trust, honesty, and ethical behavior

- Showing that you truly care

KEYS to SUCCESSFUL RELATIONSHIP MARKETINGLG5

Moving Toward Relationship Marketing

13-45

The Consumer Decision-Making Process

1. Problem recognition

2. Search for information

3. Evaluating alternatives

4. Purchase decision

5. Postpurchase evaluation

STEPS in the CONSUMER DECISION-MAKING PROCESSLG5

13-46

The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES

LG5

The Consumer Decision-Making Process

13-47

• Learning

• Reference Groups

• Culture

• Subcultures

• Cognitive Dissonance

KEY FACTORS in CONSUMER DECISION-MAKINGLG5

The Consumer Decision-Making Process

Photo Courtesy of: Peter Hilton

13-48

The Business-to-Business Market

• B2B marketers include:

- Manufacturers

- Wholesalers and retailers

- Hospitals, schools and charities

- Government

• Products are often sold and resold several times before reaching final consumers.

BUSINESS-to-BUSINESS MARKET (B2B)LG6

13-49

1) There are relatively few customers.

2) Customers tend to be large buyers.

3) Markets are geographically concentrated.

4) Buyers are more rational than emotional.

5) Sales are direct.

6) Promotions focus heavily on personal selling.

B2B MARKET DIFFERENCESLG6

The Business-to-Business Market

13-50

Progress Assessment

• Define the terms consumer market and business-to-business market.

• Name and describe five ways to segment the consumer market.

• What’s niche marketing and how does it differ from one-to-one marketing?

• What are four key factors that make B2B markets different from consumer markets?

PROGRESS ASSESSMENT

13-51