Chapter 13 Marketing Helping Buyers Buy Mc Graw-Hill Irwin

Chapter Thirteen LEARNING GOALS 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. 13 -2

Chapter Thirteen LEARNING GOALS 4. Show 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. 13 -3

Profile JOSEPH JIMENEZ Novartis • 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. 13 -4

Chapter Thirteen NAME that COMPANY Where’s the beef? Many people don’t care about the answer to that question anymore. As the trend toward vegetarianism grows, this wellknown company in Canada offers a vegan version of its chicken sandwich in 500 of its 750 stores. Name that company! 13 -5

What is Marketing? WHAT’S MARKETING? LG 1 • 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. 13 -6

What is Marketing? LG 1 FOCUS of CONTEMPORARY MARKETING • 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. 13 -7

LET’S GO to the MOVIES (Spotlight on Small Business) • Many theaters provide food with movies. • 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 moviegoing experience? Photo Courtesy of: A. D. Wheeler 13 -8

The Evolution of Marketing FOUR ERAS of U. S. MARKETING LG 1 • Production Era • Selling Era • Marketing Concept Era • Customer Relationship Era 13 -9

The Evolution of Marketing LG 1 The PRODUCTION and SELLING ERAS • The general philosophy was “Produce what you can because the market is limitless. ” • After mass production, the focus turned from production to persuasion. 13 -10

The Evolution of Marketing The MARKETING CONCEPT ERA LG 1 • After WWII, a consumer spending boom developed. • Businesses knew they needed to be responsive to consumers if they wanted their business. 13 -11

The Evolution of Marketing LG 1 APPLYING the MARKETING CONCEPT • 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. 13 -12

The Evolution of Marketing LG 1 The CUSTOMER RELATIONSHIP ERA • 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. 13 -13

The Evolution of Marketing LG 1 SERVICE with a SMILE Six Steps for Keeping Your Customers Happy • The cost of acquiring a new customer is 5 x the cost of retaining one. Here’s how to keep them: 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! Source: Inc. Guidebook, Vol. 2 No. 5 and Entrepreneur, February 2010. 13 -14

Nonprofit Organizations and Marketing NONPROFIT MARKETING LG 1 • Nonprofit marketing tactics include: - Fundraising - Public Relations - Special Campaigns - Ecological practices - Changing public opinions and attitudes - Increasing organizational membership 13 -15

Nonprofit Organizations and Marketing LG 1 MARKETING STRATEGIES for NONPROFITS • 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 13 -16

HOW GREEN is GREEN? (Thinking Green) • 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? 13 -17

The Marketing Mix The FOUR P’s LG 2 13 -18

Designing a Product to Meet Consumer Needs DEVELOPING a PRODUCT LG 2 • Product -- A good, service, or idea that satisfies a consumer’s want or need. • 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 LG 2 PRICING and PLACING a PRODUCT • 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. 13 -20

Developing an Effective Promotional Strategy PROMOTING the PRODUCT LG 2 • 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 Photo Courtesy of: Uri Baruchin 13 -21

Developing an Effective Promotional Strategy LG 1 PERFECT PROMOTION How to Get Customers to Need Your Product • Get customers emotional about your product: - Make your product “built to love. ” - Use emotion-laden advertising. • Be a likeable salesperson: - Have confidence. - Be intriguing. - Show interest in others. - Be enthusiastic and respectful. Sources: Entrepreneur, February 2011 and Entrepreneur, March 2010. 13 -22

Developing an Effective Promotional Strategy TANGLED WEB of PROMOTION Seven Sins of Web Design LG 1 • Too much clutter • Too difficult to navigate • Stale information • Copycatting • Ignoring the needs of your customer base Photo Courtesy of: Cortes de Cima • Not analyzing data • Refusing to get outside help Source: Entrepreneur, January 2011. 13 -23

CALLING ALL BUSINESSES! (Social Media in Business) • Consumers have smartphones and digital tablets that can get them online anywhere. • Devices lack of uniform design which is a challenge to web designers, making it costly. • m. Shopper helps retailers break into the mobile market with the Mobile Commerce Platform, or m. Store. 13 -24

Progress Assessment PROGRESS ASSESSMENT • What does it mean to “help the buyer buy? ” • What are three parts of the marketing concept? • What are the Four P’s of the Marketing Mix? 13 -25

Providing Marketers with Information SEARCHING for INFORMATION LG 3 • 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. 13 -26

The Marketing Research Process LG 3 FOUR STEPS in 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. 13 -27

The Marketing Research Process LG 3 DEFINING the PROBLEM or OPPORTUNITY • What’s the present situation? • What are the alternatives? • What information is needed? • How should the information be gathered? 13 -28

The Marketing Research Process LG 3 COLLECTING SECONDARY RESEARCH DATA • Secondary Data -- Existing data that has previously been collected by sources like the government. • Secondary data incurs no expense and is usually easily accessible. • Secondary data doesn’t always provide all the needed information for marketers. 13 -29

The Marketing Research Process LG 3 COLLECTING PRIMARY RESEARCH DATA • 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. 13 -30

The Marketing Research Process FOCUS GROUPS LG 3 • Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions. 13 -31

The Marketing Research Process LG 3 ANALYZING the DATA and IMPLEMENTING the DECISION • 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. 13 -32

The Marketing Research Process LG 3 KEY BENEFITS of MARKETING RESEARCH • 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. 13 -33

The Marketing Research Process LG 3 WAYS to FIND OUT WHAT CONSUMERS THINK • Conduct informal consumer surveys • Host a customer focus group • Listen to competitor’s customers • Survey your sales force • Become a “phantom” customer 13 -34

The Marketing Environment LG 4 SCANNING the MARKETING ENVIRONMENT • Environmental Scanning -- The process of identifying factors that affect marketing success. • Factors involved in the environmental scan include: - Global factors - Technological factors - Sociocultural factors - Competitive factors - Economic factors 13 -35

The Marketing Environment The MARKETING ENVIRONMENT LG 4 13 -36

The Marketing Environment The ABC’s of MARKETING LG 4 • 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. 13 -37

Two Different Markets: Consumer and B 2 B LG 4 The CONSUMER and B 2 B MARKET • Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them. • Business-to-Business (B 2 B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others. 13 -38

Progress Assessment PROGRESS ASSESSMENT • What are the four steps in the marketing research process? • What’s environmental scanning? • What factors are included in environmental scanning? 13 -39

The Consumer Market MARKETING to CONSUMERS LG 5 • 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. 13 -40

Segmenting the Consumer Market LG 5 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) 13 -41

Segmenting the Consumer Market LG 5 SEGMENTING the CONSUMER MARKET (continued) • Benefit Segmentation -- Dividing the market according to product benefits the customer prefers. • Volume (Usage) Segmentation -- Dividing the market by the volume of product use. 13 -42

Reaching Smaller Market Segments LG 5 MARKETING to SMALL SEGMENTS • Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them. • One-to-One Marketing -- Developing a unique mix of goods and services for each individual consumer. 13 -43

Moving Toward Relationship Marketing LG 5 MASS MARKETING vs. 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. 13 -44

Moving Toward Relationship Marketing KEYS to SUCCESSFUL RELATIONSHIP MARKETING LG 5 • 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 13 -45

The Consumer Decision-Making Process LG 5 STEPS in the CONSUMER DECISION-MAKING PROCESS 1. Problem recognition 2. Search for information 3. Evaluating alternatives 4. Purchase decision 5. Postpurchase evaluation 13 -46

The Consumer Decision-Making Process LG 5 The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES 13 -47

The Consumer Decision-Making Process LG 5 KEY FACTORS in CONSUMER DECISION-MAKING • Learning • Reference Groups • Culture • Subcultures • Cognitive Dissonance Photo Courtesy of: Peter Hilton 13 -48

The Businessto-Business Market LG 6 BUSINESS-to-BUSINESS MARKET (B 2 B) • B 2 B marketers include: - Manufacturers - Wholesalers and retailers - Hospitals, schools and charities - Government • Products are often sold and resold several times before reaching final consumers. 13 -49

The Businessto-Business Market B 2 B MARKET DIFFERENCES LG 6 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. 13 -50

Progress Assessment PROGRESS ASSESSMENT • Define the terms consumer market and businessto-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 B 2 B markets different from consumer markets? 13 -51