Chapter Eleven Key Terms Business

Marketing

An organizational function and a 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

Utility

The ability of goods and services to satisfy consumer “wants”

Types of Utility?

1. Form utility

2. Time utility

3. Place utility

4. Ownership utility

Form utility

Satisfies wants by converting inputs into a finished form

Time utility

Satisfies wants by providing goods and services at a convenient time for customers

Place utility

Satisfies wants by providing goods and services at a convenient place for customers

Ownership utility

Satisfies wants by smoothly transferring ownership of goods and services from seller to buyer

Different forms of marketing

• People marketing

• Place marketing

• Event marketing

• Idea marketing

Customer relationship management (CRM)

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

Value

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

Companies can either have?

Limited relationships or pursue full partnerships with clients

Perceived Value versus Actual Value

Helping customers believe that your product is uniquely qualified to meet their needs

Customer satisfaction

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

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

• Determining strategies to reach the target market

• Anticipating and responding to changes in the external environment

Target market

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

Characteristics of a well-chosen target market?

• Size

• Profitability

• Accessibility

• Limited competition

Consumer marketers

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

Consumer marketers are also known as?

Business-to-consumer or B2C

Business marketers

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

Business marketers are also known as?

Business-to-business or B2B

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

Business Market Segmentation

• B2B Geographic segmentation

• B2B Customer-based segmentation

• B2B Product-use‒based segmentation

B2B Geographic segmentation

Dividing the market based on concentration of customers

B2B Customer-based segmentation

Dividing the market based on customers’ characteristics

B2B Product-use‒based segmentation

Dividing the market based on how customers will use the product

Marketing mix

The blend of marketing strategies for product, price, distribution (place), and promotion

The Global Marketing Mix

Firms need to reevaluate their marketing mix for each new country they enter

Environmental scanning

The process of continually collecting information from the external marketing environment

The Marketing Environment

• Competitive

• Economic

• Social/Cultural

• Technological

• Political/Legal

Competitive (Market share)

The percentage of a market controlled by a given marketer

Economic

Identify and respond to change as soon as possible

Social/Cultural

Covers a vast array of factors, including lifestyle, customs, language, attitudes, interests, and population shifts

Technological

Often affects marketers in ways that are less directly visible

Political/Legal

Laws, regulations, and political climate

The Global Marketing Environment

• The Internet has made the world market virtually accessible to everyone

• Understand each element of the marketing

• mix for each of your markets

Cultural influence

Culture: The values, attitudes, and customs shared by members of a society

Subculture: A smaller division of the broader culture

Social Class: Societal position driven largely by income and occupation

Social Influence

Family: A powerful force in consumption choices

Friends: Another powerful force, especially for high profile purchases

Reference Groups: Groups that give consumers a point of comparison

Personal Influence

Demographics: Measurable characteristics such as age, gender, or income

Personality: The mix of traits that determines who you are

Psychological Influence

Motivation: Pressing needs that tend to generate action

Attitudes: Lasting evaluations of (or feelings about) objects or ideas

Perceptions: How people select, organize, and interpret information

Learning: Changes in behavior based on experience

Consumer behavior

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

Steps in the Consumer Decision Process

• Need recognition

• Information search

• Evaluation of alternatives

• Purchase decision

• Post-purchase decision

Business buyer behavior

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

Decision-making process is based on?

Purchasing training and application of rational criteria

Input is integrated from?

A number of internal sources based on a formal process

Customers seek?

Highly customized goods, services, and prices

Marketing research

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

Marketing research is used to?

• Identify external opportunities and threats

• Monitor and predict customer behaviors

• Evaluate and improve each area of the marketing mix

Types of Data

• Secondary data

• Primary data

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

Secondary data info

• Existing data that marketers gather or purchase

• Tends to be lower cost

• May not meet your specific needs

• Frequently outdated

• Available to your competitors

• Examples: U.S. Census, The Wall Street Journal, Time magazine, your product sales history

Primary data info

• New data that marketers compile for the first time

• Tends to be more expensive

• Customized to meet your needs

• Fresh, new data

• Proprietary—no one else has it

• Examples: Your own surveys, focus groups, customer comments, mall interviews

Observation research

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

Survey research

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

Primary Research Tools

• Observation research

• Survey research

An International Perspective

Research firms with a strong local presence (often based in-country) are better able to carry out international marketing research projects

Green marketing

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

Technology and Marketing

Technology has created opportunities for marketers

Mass customization

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