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Pride I Hughes I Kapoor Chapter 13 Building Customer Relationships Through Effective Marketing Power. Pride I Hughes I Kapoor Chapter 13 Building Customer Relationships Through Effective Marketing Power. Point Presentation by Charlie Cook Copyright © by Houghton Mifflin Company. All rights reserved. Seventh Edition

The American Consumer • Consumer income – Personal income—the income that a person receives The American Consumer • Consumer income – Personal income—the income that a person 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. • Why do consumers buy? 1. They have a use for the product. 2. They like the convenience a product offers. 3. They believe the purchase will enhance their wealth. 4. They take pride in ownership. 5. They buy for safety. Copyright © by Houghton Mifflin Company. All rights reserved. 2

Consumer Buying Behavior • Consumer Buying Decision Process and Possible Influences POSSIBLE INFLUENCES ON Consumer Buying Behavior • Consumer Buying Decision Process and Possible Influences POSSIBLE INFLUENCES ON THE DECISION PROCESS Situational influences Psychological influences • Perception • Motives • Learning • Attitudes • Personality • Lifestyles • Physical surroundings • Social surroundings • Time • Purchase reason • Buyer’s mood and condition Social influences • • • Family Roles Peer groups Social class Culture and subcultures CONSUMER BUYING DECISION PROCESS Recognize problem Search for information Evaluate alternatives Purchase Evaluate after purchase A buyer goes through some or all of these steps when making a purchase. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Copyright © by Houghton Mifflin Company. All rights reserved. Figure 13. 4 3

What Do Consumers Buy? • Consumer spending Housing (includes furnishings and utilities) 33. 0% What Do Consumers Buy? • Consumer spending Housing (includes furnishings and utilities) 33. 0% Transportation 18. 6% Miscellaneous 10. 4% Personal insurance and pensions 9. 5% Food at home 7. 8% Food away from home 5. 7% Health care 5. 4% Entertainment Apparel and services What percentage of disposable income is spent on various categories of products and services? 4. 9% 4. 7% Source: Bureau of Labor Statistics, Office of Pricing and Living Conditions, ftp: //ftp. bls. gov/pub/specialrequests, March 2000. Figure 13. 5 Copyright © by Houghton Mifflin Company. All rights reserved. 4

The Marketing Concept • Evolution of customer orientation Table 13. 2 Copyright © by The Marketing Concept • Evolution of customer orientation Table 13. 2 Copyright © by Houghton Mifflin Company. All rights reserved. 5

The Marketing Concept • Evolution of the marketing concept – Marketing concept—a business philosophy The Marketing Concept • Evolution of the marketing concept – Marketing concept—a business philosophy that involves the entire organization in the process of satisfying customers’ needs while achieving the organization’s goals. – Relationship marketing—developing mutually beneficial long-term partnerships with customers to enhance customer satisfaction and to stimulate longterm customer loyalty. Copyright © by Houghton Mifflin Company. All rights reserved. 6

Implementing the Marketing Concept • Implementation steps – Obtain information about present and potential Implementing the Marketing Concept • Implementation steps – Obtain information about present and potential customers, their needs, and how well those needs are being satisfied. – Pinpoint specific needs and potential customers toward which to direct marketing activities and resources. – Mobilize marketing resources to: 1. 2. 3. 4. Provide a product that will satisfy customers. Price the product at acceptable and profitable levels. Promote the product to potential customers. Ensure distribution for product availability when and where wanted. – Obtain information on the effectiveness of the marketing effort and modify efforts as necessary. Copyright © by Houghton Mifflin Company. All rights reserved. 7

Markets and Their Classification • Market – A group of individuals or organizations, or Markets and Their Classification • Market – A group of individuals or organizations, or both, that need products in a given category and have the ability, willingness, and authority to purchase such products. • Classification of markets – Consumer markets • Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy the products to make a profit. – Business-to-business (industrial markets) • Producer, reseller, governmental, and institutional markets that purchase specific kinds of products for use in the making of other products, for resale, or for day-to-day operations. Copyright © by Houghton Mifflin Company. All rights reserved. 8

Developing Marketing Strategies • Marketing strategy – A plan that will enable an organization 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 through: • The selection and analysis of a target market. • The creation and maintenance of an appropriate marketing mix, a combination of product, price, distribution, and promotion developed to satisfy a particular target market. Copyright © by Houghton Mifflin Company. All rights reserved. 9

Developing Marketing Strategies (cont’d) • Target market selection and evaluation – Target market—a group Developing Marketing Strategies (cont’d) • Target market selection and evaluation – Target market—a group of individuals, organizations, or both for which the 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 shares 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. Copyright © by Houghton Mifflin Company. All rights reserved. 10

Market Measurement and Sales Forecasting • Sales forecast – An estimate of the amount Market Measurement and Sales Forecasting • Sales forecast – An estimate of the amount of a product that an organization expects to sell during a certain period of time, based on a specified level of marketing effort. • Evaluating the feasibility of a new market – Identify the relevant time frame covered by the forecast. – Define the geographic boundaries of the forecast. – Indicate for which products the forecasts are relevant. Copyright © by Houghton Mifflin Company. All rights reserved. 11

Approaches for Selecting Target Markets • Undifferentiated Approach – Directing a single marketing mix Approaches for Selecting Target Markets • Undifferentiated Approach – Directing a single marketing mix at the entire market for a particular product. Product Price Distribution Promotion Organization Single marketing mix AAAAAAAA AAAAAAAA AAAA Target market NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Copyright © by Houghton Mifflin Company. All rights reserved. Figure 13. 2 a 12

Approaches for Selecting Target Markets (cont’d) • Concentrated Market Segmentation Approach – A single Approaches for Selecting Target Markets (cont’d) • Concentrated Market Segmentation Approach – A single marketing mix is directed at a single market segment. Product Price Distribution Promotion Organization Single marketing mix AAAAAAAA BBBBBBBB CCCCCCCC Target market NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Copyright © by Houghton Mifflin Company. All rights reserved. Figure 13. 2 b 13

Approaches for Selecting Target Markets (cont’d) Product Price Distribution Promotion Marketing mix I BBBBBBBB Approaches for Selecting Target Markets (cont’d) Product Price Distribution Promotion Marketing mix I BBBBBBBB Product Organization AAAAAAAA CCCCCCCC Price Distribution Target markets Promotion Marketing mix II • Differentiated Market Segmentation Approach – Multiple marketing mixes focused on multiple market segments. NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Copyright © by Houghton Mifflin Company. All rights reserved. Figure 13. 2 c 14

Creating a Marketing Mix The Marketing Mix and the Marketing Environment – The marketing Creating a Marketing Mix The Marketing Mix and the Marketing Environment – The marketing mix consists of elements that the firm controls—product, price, distribution, and promotion. The firm generally has no control over forces in the marketing environment. Economic forces Competitive forces Political forces Product Price Sociocultural forces Marketing mix Marketing environment Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Copyright © by Houghton Mifflin Company. All rights reserved. Customer Distribution Promotion Legal and regulatory forces Technological forces Figure 13. 3 15