Chapter Thirteen Building Customer Relationships Through Effective Marketing

Marketing • The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives Copyright © Houghton Mifflin Company. All rights reserved. 13 - 2

Major marketing functions • Exchange functions – Buying – Selling • Physical distribution functions – Transportation – Storing • Facilitating functions – – Financing Standardizing and Grading Risk taking Gathering information Copyright © Houghton Mifflin Company. All rights reserved. 13 - 3

Types of Utility Copyright © Houghton Mifflin Company. All rights reserved. 13 - 4

The Marketing Concept • To achieve success, a business must: – Talk to its potential customers to assess their needs – Develop a good or service to satisfy those needs – Continue to seek ways to provide customer satisfaction • Relationship marketing – Developing mutually beneficial long-term partnerships with customers to enhance customer satisfaction and to stimulate long-term customer loyalty Copyright © Houghton Mifflin Company. All rights reserved. 13 - 5

How is a customer’s needs satisfied? Copyright © Houghton Mifflin Company. All rights reserved.

Markets and Their Classification • 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 • Consumer markets – Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy products to make a profit • Business-to-business (industrial) markets – Producer, reseller, governmental, and institutional customers that purchase specific kinds of products for use in making other products for resale or for day-today operations Copyright © Houghton Mifflin Company. All rights reserved. 13 - 7

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 – Consists of • 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 © Houghton Mifflin Company. All rights reserved. 13 - 8

Developing Marketing Strategies (cont’d) • Target market selection and evaluation – Target market • A group of individuals, organizations, or both, for which a 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 share 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 © Houghton Mifflin Company. All rights reserved. 13 - 9

Copyright © Houghton Mifflin Company. All rights reserved. 13 - 10

Types of Buying Behavior • The decisions and actions of people involved in buying and using products • Consumer buying behavior – The purchasing of products for personal or household use, not for business purposes • Business buying behavior – The purchasing of products by producers, resellers, governmental units, and institutions Copyright © Houghton Mifflin Company. All rights reserved. 13 - 11

Consumer Buying Decision Process and Possible Influences on the Process Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 12 th ed. Copyright © 2003 by Houghton Mifflin Company, Adapted with permission. Copyright © Houghton Mifflin Company. All rights reserved. 13 - 12

The American Consumer • Consumer income – Personal income • The income an individual 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 on food, clothing, and housing Copyright © Houghton Mifflin Company. All rights reserved. 13 - 13

Customer purchases • • Why do customers buy? What do customers buy? Where do

Why Do Consumers Buy? • They have a use for the product • They like the convenience a product offers • They believe the purchase will enhance their wealth • They take pride in ownership • They buy for safety Copyright © Houghton Mifflin Company. All rights reserved. 13 - 15

What Do Consumers Buy? • What percentage of disposable income is pent on various categories of products and services? Source: “Consumer Expenditures in 2002, ” Bureau of Labor Statistics, April 2002. Copyright © Houghton Mifflin Company. All rights reserved. 13 - 16

Poverty • People that are living at or below the poverty line have no discretionary income. • The poverty line is the minimum level of income deemed necessary to achieve an adequate standard of living Copyright © Houghton Mifflin Company. All rights reserved. 13 - 17

Where Do Consumers Buy? • Influences on where to buy – Perception of the store – General impressions of an establishment’s products, prices, and sales personnel – Types of retail outlets • Specialty store, department store, discount store – Location – Product assortment – Services such as credit terms, return privileges, free delivery Copyright © Houghton Mifflin Company. All rights reserved. 13 - 18

When Do Consumers Buy? • When buying is most convenient • Hours have stretched to include evenings, holidays, and Sundays • Many online catalog companies now offer twenty-four hours a day, seven days a week access Copyright © Houghton Mifflin Company. All rights reserved. 13 - 19