CHAPTER 11: MARKETING

Building Profitable Connections with Your Customers

MARKETING IS MORE THAN ADVERTISING

Marketing – 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

Form Utility

The ability of goods and services to satisfy wants.

Time Utility Place Utility Ownership Utility

THE SCOPE OF MARKETING: IT’S EVERYWHERE  People Marketing  Place Marketing  Event Marketing  Idea Marketing

THE EVOLUTION OF MARKETING: FROM THE PRODUCT TO THE CUSTOMER

THE CUSTOMER: FRONT AND CENTER

Customer Relationship Management (CRM) Limited Relationships Full Partnerships

 Value  Customer Satisfaction  Customer Loyalty

MARKETING STRATEGY

WHERE ARE YOU GOING AND HOW WILL YOU GET THERE?

THE ENVIRONMENT IS CONSTANTLY CHANGING

When low carbohydrate diets swept through American culture, retail sales of french fries plummeted, dropping 2.9% in 2001, 3.3% in 2002, and 10% in 2003.

TARGET MARKET

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A Well Chosen Target Market:

 Size  Profitability  Accessibility  Limited Competition

CONSUMER MARKETS VS BUSINESS MARKETS

Consumer Markets

Products for personal consumption.

How will the buyer use the product?

Business Markets

Products used directly or indirectly to produce other products.

Different approaches to select target markets.

ANALYZING PROMOTIONAL STRATEGIES

MARKET SEGMENTATION

Selecting a target market begins with dividing your market into segments.

Marketers may select multiple segments to target.

CONSUMER MARKET SEGMENTATION

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Demographic

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Geographic

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Psychographic

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Behavioral

BUSINESS MARKET SEGMENTATION

• Geographic • Customer-based • Product-use based

TURN UP THE VOLUME ON NAGGING: MARKETING TO KIDS  Advertising directly to kids in the United States is a $15 billion business  Kids under 13 influence about $600 billion in family spending each year  Media-savvy kids often don’t notice the pitches  A scary result: 53% of kids say buying certain products makes them feel better about themselves

THE MARKETING MIX

THE GLOBAL MARKETING MIX

 Do you need to change your marketing mix for every country?

 Most consumer products require a new marketing mix for each global market.

GRASS ROOTS MARKETING IS A BUNCH OF BULL...RED BULL

 Red Bull launched in Europe in 1987  They gave away cases of the product to student advocates and encouraged them to throw a PARTY!

 They stayed connected with their young target market, becoming popular in bars  Red Bull launched in the US in 1997  They still employ Word-of-Mouth strategies

CUSTOMER BEHAVIOR: DECISIONS, DECISIONS, DECISIONS

Consumer Behavior

How people act when they are buying products.

CONSUMER DECISION MAKING PROCESS

Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior

INFLUENCE IN DECISION MAKING Cultural: Values, attitudes, customs, social class Social: Family, friends & reference groups Personal: Demographics, personality Psychological: Motivation, attitudes, perceptions, learning

BUSINESS BUYER BEHAVIOR

 Rationale Criteria  Specific Purchase Criteria  Objective Standards  Input from Multiple Internal Sources  Formal Process  Frequently Seek Customized Goods

MARKETING RESEARCH: SO WHAT DO THEY REALLY THINK?

 Monitor and predict customer behavior  Evaluate and improve marketing mix  Better marketing decisions  More value for consumers  More profits for business

Conducting Market Research

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Define the problem Access available information Gather additional information Review internal records; interview employees Collect outside data Organize and interpret data Make a decision and take action Assess the results of the action

Define the Problem

  List the possible causes  Eliminate any that can not be measured Beware of symptoms 

Your company has missed its revenue targets

 Symptom – sales declined  Possible causes:  Have your customers changed?

    Have their tastes changed?

Have their buying habits changed?

Have you changed your product?

Are there new competitors?

Gathering Information

 Assess what you already have available  If you need more…  Stay as close to home as possible  Sales records  Complaints  Receipts  Credit records  Ask your employees

MARKETING RESEARCH DATA

Secondary Data: Existing Data Lower Cost Primary Data: New Data that is Compiled More Expensive May not be Specific Frequently Outdated Available to Competitors Customized Fresh, New Proprietary   Already published material Trade associations      Direct mail Questionnaires Telephone or street surveys Panel studies Test marketing

Organizing and Interpreting Data

 Prioritize the data with the most important on top  What strategies are suggested?

 How can they be accomplished?

 How are they different from what I’m doing?

 What current activities should be increased?

 What current activities should be decreased or dropped?

Making Decisions and Taking Action

  Prioritize each possible strategy from the standpoint of:  Immediate goal to be achieved  Cost to implement  Time to accomplish  Measurements Select those with the greatest impact  Develop tactics to implement

Assess the Results

 Analyze your progress measures  Adjust if necessary  At the conclusion..

 Did you achieve your goal ?

 Should the decision be renewed or expanded ?

COLOR ME HUNGRY?

Surrounding customers with red, yellow, and orange encourages them to eat a lot quickly and leave.

• Marketing researchers found that American consumers associate red with energy, passion, speed, and hunger. • Yellow suggests happiness and warmth; orange suggests playfulness, fun, affordability.

A MAJOR MARKETING SHIFT: SOCIAL RESPONSIBILITY  Marketers have responded to social demands:  Setting higher standards for environmentalism  Abolishment of sweatshops  Involvement in the community  Many companies have begun to employ green marketing 

GO GREEN

 Target consumers who buy based on their convictions

A MAJOR MARKETING SHIFT: TECHNOLOGY  Technology has revolutionized marketing  Power has shifted from producers to consumers  Customers have 24/7 access to information  Marketers have an abundance of promotional opportunities  Companies can mass customize products for customers

Sales Forecast

 Assess how the total market will perform  What is the overall economic climate ?

 Assess your performance and market share  Will customers make decisions on the same basis they have in the past ?

 How will your competitors perform  Will there be new competitors ?

 Will they introduce new products ?

 Will some competitors leave the market ?

Foundation Simulation

Customers

Product Questions:

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What do the customers want?

 What are the characteristics of the product that are important to customers?

 What is the most important product characteristic • In the low tech segment?

• In the high tech segment?

What is “perceived age” of a product?

How is reliability measured?

What will increase material costs?

Pricing Questions:

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What do the customers want?

 What is the price range for low tech products?

 What is the high tech price range?

 If Demand is greater than Supply, what is the impact on sensor prices?  If Supply is greater than Demand, what is the impact on sensor prices?

Promotional mix

  You will invest money in a “promotion” budget and create “awareness”.  It relates to your advertising efforts.

 The awareness you create is specific to a single product.

You will invest money in a “sales” budget and create “access” to your products.

  Accessibility applies to the segment, not the product Sales Budget is spent on distribution, order entry, customer service, etc.