Customer-Driven Marketing

Chapter 11

Define marketing.

Discuss the evolution of the marketing concept.

Describe not-for-profit marketing and nontraditional marketing.

Outline the basic steps in developing a marketing strategy.

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Learning Objectives

Describe marketing research.

Discuss market segmentation.

Summarize consumer behavior.

Discuss relationship marketing.

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Marketing- set of processes for creating,

communicating, and delivering value to customers and

for managing customer relationships in ways that benefit

the organization and its stakeholders.

Marketing begins with discovering unmet customer needs and

continues with researching the potential market; producing a good

or service capable of satisfying the targeted customers; and

promoting, pricing, and distributing that good or service.

Throughout the entire marketing process, a successful organization

focuses on building customer relationships.

The best marketers not only give consumers what they want but

even anticipate consumers’ needs before those needs surface.

Exchange process- activity in which two or more parties

give something of value to each other to satisfy perceived needs.

What Is Marketing?

Utility: power of a good or service to satisfy a

want or need

Create time utility by making a good or service

available when customers want to purchase it.

Create place utility by making a product

available in a location convenient for customers.

Create ownership utility through an orderly

transfer of goods and services from the seller to

the buyer.

How Marketing Creates Utility

Evolution of the Marketing Concept

Marketing concept- company-wide consumer orientation to promote long-run success.

Firm starts with analysis of customers’ needs and works backward to offer products that fulfill them.

Explained by shift from sellers’ market in which goods and services are relatively scarce to buyers’ market in which they are relatively plentiful.

Emergence of the Marketing Concept

20 million not-for-profits exist worldwide.

Apply marketing tools to reach audiences, secure funding, improve their images, and accomplish their overall missions.

Not-for-profit organizations operate in both public and private sectors.

Sometimes partner with a profit-seeking company to promote a message.

Not-for-Profit Marketing

Non-Traditional Marketing

1. Study and analyze

potential target

markets and choose

among them.

2. Create a marketing

mix to satisfy the

chosen market.

Developing a Marketing Strategy

Target market- group of people toward whom an

organization markets its goods, services, or ideas

with a strategy designed to satisfy their specific

needs and preferences.

Types of Markets

consumer (B2C) product: good or service that is

purchased by end users

business (B2B) product: good or service purchased to be

used, either directly or indirectly, in the production of

other goods for resale

Selecting a Target Market

Marketing Mix blends the four strategies to fit the

needs and preferences of a specific target market.

→Product strategy involves the nature of the product and its

package design, brand names, trademarks, and product

image.

→Distribution strategy ensures that customers receive their

purchases in the proper quantities at the right times and

locations.

→Promotional strategy blends advertising, personal selling,

sales promotion, and public relations to achieve its goals of

informing, persuading, and influencing purchase decisions.

→Pricing strategy is setting profitable and justifiable prices for

the firm’s product offerings, sometimes subject to government

scrutiny.

Marketing Mix

Standardization- offering the same marketing

mix in every market.

Adaptation- developing a unique marketing

mix to fit each market’s local competitive

conditions, consumer preferences, and

government regulations.

Mass customization- allows a firm to mass

produce goods and services while adding

unique features to individual or small groups of

orders.

Marketing Mix for International Markets

Marketing research– the process of collecting and

evaluating information to support marketing decision

making. AC Nielson– Consumer Research

Secondary data– Previously published data from trade

associations, advertising agencies, marketing research

firms, and other sources.

Primary data– Data collected through observation,

surveys, and other forms of observational study.

Data mining– computer searches of customer data to

detect patterns and relationships.

Business intelligence– activities and technologies for

gathering, storing, and analyzing data to make better

competitive decisions

Marketing Research

Market Segmentation

Market segmentation– the process of dividing a total

market into several relatively homogeneous groups.

How Market Segmentation Works

Geographic Segmentation

Divides market into homogeneous groups on the basis of their

locations.

Demographic Segmentation

Divides market on the basis of various demographic or socioeconomic

characteristics: gender, income, age, occupation, household size,

stage in the family life cycle, education, and ethnic group

Psychographic Segmentation

Divides consumer market into groups with similar psychological

characteristics, values, and lifestyles. (VALS)

AIO statements—people’s verbal descriptions of various attitudes, interests,

and opinions

Product-Related Segmentation

Divides market based on buyer’s relationship to the good or service.

based on benefits sought by buyers, usage rates, and loyalty levels

Segmenting Consumer Markets

Geographic segmentation– targets

geographically concentrated industries.

Demographic, or customer-based,

segmentation– a good or service

intended for a specific organizational

market (i.e. healthcare).

End-use segmentation– focuses on

the precise way a B2B purchaser will

use a product.

Segmenting Business Markets

Consumer behavior- actions of ultimate

consumers directly involved in obtaining,

consuming, and disposing of products and the

decision processes that precede and follow these

actions.

Personal factors: needs and motives, perceptions,

attitudes, self-concept

Interpersonal factors: cultural, social, and family

influences

External factors: economic events

Business buying behavior- often includes a

variety of influences from multiple decision makers.

Determining What Customers Want

Steps in Consumer Behavior

Relationship marketing- developing and

maintaining long-term, cost-effective exchange

relationships with partners.

Consumers enter into relationships only if

there is some benefit to them.

Relationship marketing seeks to achieve

customer satisfaction.

Relationship Marketing

Lower costs and higher profits for the business.

Efficient targeting of best customers increases the

lifetime value of a customer.

revenues and intangible benefits (referrals and

customer feedback) from a customer over the life of

the relationship, minus the amount the company must

spend to acquire and serve that customer.

Stronger relationships with business partners and

opportunities to combine capabilities and

resources to better accomplish goals.

Benefits of Relationship Marketing

80/20 principle: frequent customers have a

higher lifetime value, so businesses allocate

resources accordingly

Frequency marketing: reward purchasers with

cash, rebates, and other premiums (TGI Fridays

reward program)

Affinity programs: solicit involvement based on

common interest

Comarketing: businesses jointly market each

others’ products

Cobranding: firms link their names in a single

product

Tools for Nurturing Customer Relationships

Customizing products and marketing and

rapidly delivering goods.

Customer relationship management

software helps companies gather, sort, and

interpret data about specific customers.

One-to-One Marketing