MARKETING: BUILDING PROFITABLE CUSTOMER CONNECTIONS BUSN11, CHAPTER 11

Transcription

1 MARKETING: BUILDING PROFITABLE CUSTOMER CONNECTIONS BUSN11, CHAPTER 11

2 Getting Value by Giving Value 11-1 Marketing: the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing can provide long-term profitability for businesses when value to customers is established

3 Getting Value by Giving Value Utility: the ability of goods and services to satisfy consumer wants. Form Utility: Converting raw materials into a finished good Ex. Jamba Juice turns fresh fruits and veggies into smoothies Time Utility: Providing goods and services at a convenient time Ex. McDonald s has a 24-hour drive-through Place Utility: Providing goods and services at a convenient place Ex. Redbox machines inside McDonald s and outside Walgreens Ownership Utility: Smoothly transferring ownership of goods and services from seller to buyer Ex. Car dealerships offering financing options

4 The Scope of Marketing: It s Everywhere! 11-1a People Marketing: Dominated by sports, politics, and art Ex. Paris Hilton built her early career on promotion alone Place Marketing: Drawing people to a particular place Ex. What happens in Vegas stays in Vegas Event Marketing: Sponsoring athletic, cultural, or charitable events Ex. The Super Bowl Idea Marketing: Spreading ideas with the intention of changing how people think or act Ex. Reduce, Reuse, Recycle

5 The Evolution of Marketing: From the Product to the Customer 11-1b

6 The Evolution of Marketing: From the Product to the Customer Production Focus: Top business priority was to produce large quantities of goods as efficiently as possible Selling Focus: Production capacity increased, making supply exceed demand, resulting in the need for the hard sell Marketing Focus: Post WWII, companies made customer satisfaction the central focus of the entire organization Relationship Focus (current): Focuses on building long-term customer relationships

7 The Customer: Front and Center Customer Relationship Management (CRM) 11-2a CRM: Ongoing process of acquiring, maintaining, and growing profitable customer relationships by adding value Ex. Amazon greets customers by name, recommends specific products, and provides streamlined checkout Can t do CRM without C.I.S. Value: Consumers believe a product has a better relationship between cost and benefit than any other competitor

8 Customer Satisfaction 11-2c Customer Satisfaction: When customers perceive that a good or service delivers value above and beyond their expectations 2 traps less savvy marketers fall into: 1) Overpromising Don t give consumers overly high expectations because it will result in disappointment 2) Underpromising If you don t set expectations high enough, too few customers will want to try your product

9 Marketing Strategy: Where Are You Going and How Will You Get There? 11-3 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

10 Target Market 11-3a Target Market: the group of people who are most likely to buy your product There are 4 keys to establishing a target market: Size: Must be enough people to support a business Profitability: People must be willing and able to purchase your product Accessibility: Target must be reachable through channels your business can afford Limited Competition: A crowded market is much tougher to crack

11 Consumer Markets vs Business Markets 11-3b Consumer Marketers (B2C): direct their efforts to people who are buying products for personal consumption Ex. Toothpaste Business Marketers (B2B): direct their efforts to customers who are buying products to use either directly or indirectly to produce other products Ex. Lumber The difference is how the buyer will use the product

12 Consumer Market Segmentation 11-3c There are 4 main categories used for segmenting potential consumers: Demographic Segmentation Geographic Segmentation Psychographic Segmentation Behavioral Segmentation

13 Demographic Segmentation Dividing the market based on measurable characteristics such as: Age Income Ethnicity Gender Ex. GMC has a commercial out that shows a professional biker riding through the country. The advertisement then shows the biker loading his bike into the back of his pickup truck, showcasing the space. The slogan like a pro appears at the end. The target market of this ad is bikers, specifically ones who want to ride like a pro.

14 Geographic Segmentation Dividing the market based on where consumers live, incorporating key factors such as: Counties Cities Population density Ex. A surfboard company would be more likely to focus marketing efforts in Hawaii as opposed to South Dakota. In Hawaii, the waves are close-by thus creating a need for the perfect surfboard.

15 Psychographic Segmentation Dividing the market based on consumer: Attitudes Interests Values Lifestyles Ex. Toyota Prius targets consumers who care about protecting the environment by using slogans like the planet s favorite hybrid.

16 Behavioral Segmentation Dividing the market based on how people behave toward various products, including both: Benefits consumers seek from products How consumers use products Ex. Miller Lite targets the low-carbohydrate beer consumer.

17 Business Market Segmentation 11-3d Business to business marketers typically use 3 categories: Geographic Segmentation Customer-Based Segmentation Product-Use-Based Segmentation

18 Geographic Segmentation Dividing the market based on the concentration of customers Many industries tend to be highly clustered in certain areas Ex. Technology in Northern California a.k.a. silicon valley Especially common on an international basis where language, culture, income, and regulatory differences play crucial roles

19 Customer-Based Segmentation Dividing the market based on the characteristics of customers This approach includes a range of possibilities: Customer Size Customer Type Ex. Johnson & Johnson has a group of salespeople dedicated just to retail accounts like Target and another group of salespeople dedicated to motivating doctors to recommend their products Institutions/Government Ex. Schools and hospitals are key segments for Heinz Ketchup

20 Product-Use-Based Segmentation Dividing the market based on how customers will use the product, possibilities include: The ability to support certain software packages or production systems The desire to serve certain customer groups Ex. Long-distance truckers

21 The Marketing Mix 11-3e

22 Product Strategy Product strategy decisions include: Brand name Product image Package design Customer service Guarantees New product development

23 Pricing Strategy To deliver customer value, your prices must be fair and relative to the benefits of your product Other factors include: Competition Regulation Public opinion Ex. A low-cost desk would be fine, but would you want a discountpriced knee surgery?

24 Place/Distribution Strategy! Goal is to deliver the product to the right people, in the right quantities, at the right time, in the right place! Key decisions include: Shipping Warehousing Selling outlets Ex. Web vs Network Marketing vs Brick-and-Mortar stores

25 Promotion Strategy Includes all the ways marketers communicate about their products Key elements: Advertising Personal selling Sales promotion Public relations Word-of-mouth Product placement

26 The Marketing Environment 11-3g There are 5 factors of the external environment that marketers must be aware of and plan for: Competitive: Affects the day-to-day life of marketers the most. Marketers need to be aware of how emerging and dominant competitors handle each aspect of the marketing mix. Economic: Your goal as a marketer is to identify and respond to changes in the economy as quickly as possible. A sharp eye can see opportunity even in economic downturn. Social/Cultural: Covers changes in lifestyle, customs, language, attitudes, interests, and population shifts. Technological: Booms in technology can indirectly affect marketers in terms of production and inventory management, especially now that everything can be ordered with a single click Political/Legal: Includes changes in laws, regulations, and political climate

27 Customer Behavior: Decisions, Decisions, Decisions! 11-4 Elements that influence the consumer decision-making process

28 Marketing Research: So What Do They Really Think? 11-5 Marketing Research: gathering, interpreting, and applying information to uncover opportunities and challenges. It is used by companies to: Identify external opportunities and threats Monitor and predict customer behavior Evaluate and improve each area of the marketing mix

29 Types of Data 2 main types: Primary & Secondary 11-5a

30 Primary Research Tools 2 Basic categories: Observation research: researcher does not directly interact with the research subject Scanner data from retail sales Traffic counters to determine where to place billboards Garbage analysis to measure recycling compliance Survey research: researcher does interact with research subjects Telephone and online questionnaires Door-to-door interviews Mall-intercept interviews Focus groups

31 Social Responsibility and Technology: A Major Marketing Shift 11-6 Two key factors have had a dramatic impact on marketing in the past couple decades: A surge in the social responsibility movement The dramatic emergence of the internet and digital technology

32 Marketing and Society: It s Not Just About You! 11-6a Green Marketing: Developing and promoting environmentally sound products and practices to gain a competitive edge Ex. H&M released a Conscious Collection consisting of more sustainable clothing to appeal to the green movement

33 Technology and Marketing: Power to the People! 11-6b The power has shifted from the producers to consumers with the rise of the internet Technology has also opened the door for Mass Customization Mass Customization: creating products tailored for individual consumers on a mass basis

34 THE BIG PICTURE The ultimate goal of marketing is long-term profitability The customer must come first for every department, including finance, accounting, manufacturing, engineering, and human resources Competition will only intensify as time goes on as globalization and technology march forward