Chapter Twelve Customer-Driven Marketing

Chapter TwelveCustomer-DrivenMarketingThe nature of marketing is to create value by allowing people and organizations to obtain what they need and want.Marketing is an Exchange RelationshipExchange:The act of giving up something (money, credit, labor, goods) in return for something else (goods, services, or ideas).The Exchange Process: Giving Up One Thing in Return for AnotherSomething of Value(money,credit,labor, goods)Something of Value(goods,services,ideas)SellerBuyerMarketing Creates UtilityUtility: A product’s ability to satisfy human needs and wants.Place UtilityTime UtilityOwnership UtilityForm UtilityFunctions of MarketingBuyingSelling TransportingStoringGradingFinancingMarketing ResearchRisk TakingThe Marketing ConceptThe idea that an organization should try to satisfy customer’s needs through coordinated activities that allow it to achieve its own goals (profit).FAST FACT:Trying to determine a customer’s true needs is difficult because no one fully understands what motivates people to buy.Developing Marketing StrategyMarketing Strategy: A plan of action for developing pricing, distributing and promoting products that meet the needs of specific customers.The Two Major Components:Selecting a Target MarketDeveloping the Appropriate Marketing MixMarket / Target MarketA market is a group of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas. A target market is a more specific group of consumers on whose needs and wants a company focuses its marketing efforts.Customer Relationship Management (CRM)Using information about customers to create marketing strategies that develop and sustain desirable customer relationships.Total-Market ApproachThe marketer tries to appeal to everyone and assumes that all buyers have the same needs.Market SegmentationMarket Segmentation:A strategy to divide the total market into groups of people who have relatively similar product needs.Market SegmentA Market Segment:A collection of individuals, groups, or organizations who share one or more characteristics and have similar product needs and desires.Niche MarketNarrow market segment focus when efforts are on one small, well-defined segment that has a unique, specific set of needs.Bases for Segmenting MarketsDemographicGeographic PsychographicBehavioristic Target Market StrategiesSingle Marketing StrategyCompanyTotal-Market ApproachTotal Target MarketMultiple Target Markets Marketing Strategy 1CompanyMultisegment ApproachMarketing Strategy 2Single Marketing StrategyCompanyConcentration ApproachSingle Target MarketHow America SpendsMINORITY BUYING POWERBy Race, 1990 vs. 2001 Buying Power* % Market ShareCategory: 1990 2001 1990 2001Total minority $439.9 $860.0 10.6% 12.2%Black 307.8 572.1 7.4% 8.1%Hispanic 207.5 452.4 5.0% 6.4%Asian 112.9 253.8 2.7 % 3.6%Native American 19.2 34.8 0.5% 0.5%*in billions Source: Jeffery M. Humphreys, Selig Center for Economic Growth, University of Georgia in “Ethnic,” Marketing News, July 2, 2001, p. 17. The Keys to Successful Market SegmentationConsumers’ product needs must be heterogeneous.Segments must be identifiable and divisible.The market must be divided so segment sales, cost, and profit can be compared.One segment must have enough profit potential to justify a special marketing strategy.The chosen segment must be reached by the firm with a particular marketing strategy.Developing the Marketing Mix: Product, Price, Promotion, and DistributionCustomerPromotionPriceDistributionProductProductA good, service, or idea that has tangible and intangible attributes that provide satisfaction and benefit to consumers.Products should be sold at a profit.PriceA value placed on a product or service that is exchanged between a buyer and seller.DistributionMaking products available to consumers in the quantities and locations desired.PromotionA persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals and organizations to accept goods, services, and ideas.Marketing Research & Information SystemsMarketing Research:A systematic, objective process of getting customer information to guide marketing decisions.Marketing Information System:A framework for assessing information about customers from internal and external sources.Research Collects DataPrimary DataSecondary DataBuying BehaviorThe decision processes and actions of people who purchase and use products.Psychological Variables of Buying BehaviorPerceptionMotivationLearningAttitudePersonalitySocial Variables of Buying BehaviorSocial RolesReference GroupsSocial ClassesCultureHow America SpendsFood and Beverage Sales in the US are Increasing199819992000$309billion$326billion$345billionSource: “Food and drink sales up,” USA Today, October 1, 2001, p. 1B.How America SpendsIf Americans were to reduce household spending, where would they cut back?48%47%41%40%37%36%28%24%Eat out lessForgo vacationsFewer movies at theatersElectronics purchasesFewer concertsBuy less clothingFewer cell & phone calls Buy fewer booksSource: “Staking out a comfort zone,” USA Today, October 1, 2001, p. 2D.The Marketing EnvironmentThe external forces that directly influence the development of marketing strategies.The Marketing Mix and the Marketing EnvironmentCustomerPromotionPriceDistributionProductSocialForcesCompetitiveand EconomicForcesTechnologicalForcesPolitical, Legal, andRegulatoryForcesMarketing EnvironmentHow America SpendsSource: “On the Internet: Buyer beware,” USA Today, April 24, 2001.Fraud On the Internet: Buyer Beware36%4%25%23%11%Yes, Internet fraud occursOccasionally, but not that oftenSignificant problem, but not severeFraud is a severe problemInternet fraud is not a problemSolve the Dilemma1. What do you think were the main concerns with the Olympus 2-door sports coupe? Is there a market for a 2-seat, $32,000 sports car when the Miata sells for significantly less?2. Evaluate the role of the marketing mix in the Olympus introduction.3. What are some of the marketing strategies auto manufacturers use to stimulate sale of certain makes of automobiles?Explore Your Career OptionsHow will a career in marketing be enhanced by knowledge about customer buying behavior and customer service?Additional Discussion Questions and Exercises1. Utility is the ability of a product to satisfy human needs and wants. What are the four kinds of utility?2. Why are intermediaries helpful in distribution?3. What are some different forms of promotion?What is the difference between primary data and secondary data?5. What are some sources for obtaining secondary data?Chapter 12 Quiz1. When a business segments markets on the basis of personality characteristics, motives, and lifestyles, that segmentation is based on a. demographics. b. geographic factors. c. psychographics. d. behavioristic characteristics.2. The act of giving up one thing in return for something else is a. marketing. b. utility. c. an exchange. d. promotion.Chapter 12 Quiz3. The psychological factor described as “changes in a person’s behavior based on information and experience” is termed: a. perception. b. motivation. c. personality. d. learning.4. In developing a marketing mix, what should be the central focus of all marketing activities? a. price b. buyer or target market c. product d. promotionMultiple Choice Questions about the Video1. A(n) _______ is a network for internal communications and includes firewalls to protect information from outside viewers. a. extranet b. intranet c. World Wide Web d. virtual marketing system2. Which of the following is included in the infrastructure for virtual marketing? a. intranet b. extranet c. Internet d. all of the above