BUSN Ch.11 Marketing: Building Profitable Customer Connections

LEARNING OBJECTIVES After studying this chapter, you will be able to: 11-1Discuss the objectives, the process, and the scope of marketing 11-2Identify the role of the customer in marketing 11-3Explain each element of marketing strategy 11-4Describe the consumer and business decision-making process 11-5Discuss the key elements of marketing research 11-6Explain the roles of social responsibility and technology in marketing

Marketing

Creating, communicating, and delivering value to customers while managing beneficial relationships.

utility

The ability of goods and services to satisfy consumer "wants."

People Marketing

Marketing focusing on sports, politics, art, or individuals such as politicians and celebrities.

Place Marketing

Marketing designed to draw people, businesses, and tourists to a particular city, state, or nation.

Event Marketing

Marketing or sponsoring athletic, cultural, or charitable events such as the Olympics or Super Bowl.

Idea Marketing

Marketing ideas meant to change how people think or act, such as recycling, buckling seatbelts, or conserving water.

Production Era

An early 1900s period where the top priority was producing large quantities of goods as efficiently as possible.

Selling Era

A period beginning in the 1920s when supply exceeded demand, causing the emergence of the hard sell.

Marketing Era

A period beginning in the 1950s characterized by customer choice and the rise of the marketing concept.

marketing concept

A business philosophy that makes customer satisfaction—now and in the future—the central focus of the entire organization.

Relationship Era

The current marketing era that focuses on building long-term customer relationships.

Customer Acquisition Cost

Acquiring a new customer can cost five times more than keeping an existing customer.

Customer Advocates

Satisfied customers who become powerful generators of positive word of mouth.

customer relationship management (CRM)

The ongoing process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value.

Limited Relationships

Customer relationship approach for broad audiences using websites and toll-free lines to gather data.

Full Partnerships

Close relationship approach for high-ticket products and smaller customer bases, like key accounts.

Marketing Value

Achieved when customers believe a product offers a better cost-to-benefit ratio than competitors.

Loyal Customers and Price

Loyal customers are often willing to pay more rather than switch to lower-cost competitors.

value

A customer perception that a product has a better relationship than its competitors between the cost and the benefits.

customer satisfaction

When customers perceive that a good or service delivers value above and beyond their expectations.

Perceived Value

Belief that a product is uniquely qualified to meet customer needs, going beyond simply creating value.

New Business Value Challenge

The difficulty of competing against a market leader with disproportionately strong perceived value.

customer loyalty

When customers buy a product from the same supplier again and again— sometimes paying even more for it than they would for a competitive product.

marketing plan

A formal document that defines marketing objectives and the specific strategies for achieving those objectives.

market segmentation

Dividing potential customers into groups of similar people, or segments.

target market

The group of people who are most likely to buy a particular product.

Target Market Size

There must be enough people in your target group to support a business.

Target Market Profitability

The people must be willing and able to spend more than the cost of producing and marketing your product.

Target Market Accessibility

Your target must be reachable through channels that your business can afford.

Target Market Limited Competition

Look for markets with limited competition; a crowded market is much tougher to crack.

consumer marketers (also known as business-to-consumer or B2C)

Marketers who direct their efforts toward people who are buying products for personal consumption.

business marketers (also known as business-to-business or B2B)

Marketers who direct their efforts toward people who are buying products to use either directly or indirectly to produce other products.

demographic segmentation

Dividing the market into smaller groups based on measurable characteristics about people, such as age, income, ethnicity, and gender.

geographic segmentation

Dividing the market into smaller groups based on where consumers live. This process can incorporate countries, cities, or population density as key factors.

psychographic segmentation

Dividing the market into smaller groups based on consumer attitudes, interests, values, and lifestyles.

behavioral segmentation

Dividing the market based on how people behave toward various products. This category includes both the benefits that consumers seek from products and how consumers use the products.

Geographic B2B Segmentation

Dividing the market based on the concentration of customers, such as regional clustering or international differences.

Customer-Based B2B Segmentation

Dividing the market based on customer characteristics such as size, type, institutions, or government.

Product-Use-Based B2B Segmentation

Dividing the market based on how customers will use the product.

marketing mix

The blend of marketing strategies for product, price, distribution, and promotion.

Product Strategy Scope

Encompasses decisions ranging from brand name and product image to package design, customer service, guarantees, and new product development.

Designing the Best Product

Begins clearly with understanding the needs of your target market.

Pricing Strategy

Setting prices relative to product benefits, competition, regulation, and public opinion to deliver customer value.

Distribution Strategy

Delivering products to the right people, quantities, time, and place through shipping, warehousing, and selling outlets.

Promotion Strategy

All ways marketers communicate about products, including advertising, personal selling, sales promotion, public relations, word of mouth, and product placement.

environmental scanning

The process of continually collecting information from the external marketing environment.

market share

The percentage of a market controlled by a given marketer.

Competitive Environment

The dynamic environment that probably affects marketers on a day-to-day basis more than any other element.

Indirect Competitors

Competitors who meet the same consumer needs as you, but with a completely different product (e.g., Altoids vs. Scope).

Economic Environment (Marketing)

Change is certain; marketers must identify and respond to economic expansions and contractions as soon as possible.

Opportunities in Recessions

Affordable luxuries and do-it-yourself enterprises can thrive during economic downturns.

Social/Cultural Environment

Covers lifestyle, customs, language, attitudes, interests, and population shifts that can rapidly impact marketing decisions.

Technological Environment

Changes in technology that can be visible to consumers or affect marketers less directly, such as mass customization and just-in-time inventory.

Political/Legal Environment

Encompasses laws, regulations, and political climate, heavily affecting regulated sectors like telecommunications and pharmaceuticals.

consumer behaviour

Description of how people act when they are buying, using, and discarding goods and services for their own personal consumption. Consumer behavior also explores the reasons behind people's actions.

cognitive dissonance

Consumer discomfort with a purchase decision, typically for a higher-priced item.

business buyer behaviour

Describes how people act when they are buying products to use either directly or indirectly to produce other products.

marketing research

The process of gathering, interpreting, and applying information to uncover marketing opportunities and challenges, and to make better marketing decisions.

External Opportunities and Threats

Identifying external factors ranging from social trends to competition to guide marketing strategy.

Monitoring Customer Behavior

The ongoing process of tracking and predicting customer behavior to anticipate market needs.

Marketing Mix Evaluation

The continuous assessment and improvement of each area of the marketing mix.

Research vs. Creativity

While research helps develop effective programs, it cannot replace the creative potential of gifted individuals.

secondary data

Existing data that marketers gather or purchase for a research project.

primary data

New data that marketers compile for a specific research project.

observation research

Marketing research that does not require the researcher to interact with the research subject.

Scanner Data

Retail sales data used as a form of observation research.

Traffic Counters

Observation research tools used to determine where to place billboards.

Garbage Analysis

An observation research method used to measure recycling compliance.

Observation Research Example (Car Dealership)

Surveying preset radio stations on cars coming in for service to help choose advertising stations.

Downside of Observation Research

It does not yield any information on consumer motivation—the reasons behind consumer decisions.

survey research

Marketing research that requires the researcher to interact with the research subject.

Advantage of Survey Research

Securing information about what people are thinking and feeling, beyond what you can observe.

Disadvantage of Survey Research

People aren't honest or accurate about their experiences, opinions, and motivations, which can make research misleading.

Survey Research Examples

Telephone and online questionnaires, door-to-door interviews, mall-intercept interviews, focus groups, and mail-in questionnaires.

green marketing

Developing and promoting environmentally sound products and practices to gain a competitive edge.

mass customization

The creation of products tailored for individual consumers on a mass basis.