chapter 11: marketing building profitable connections with your customers

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

The ability of

goods and

services to

satisfy wants.

FormUtility

TimeUtility

PlaceUtility

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

Limited Relationships

FullPartnerships

Customer Relationship Customer Relationship Management (CRM)Management (CRM)

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

A Well Chosen Target Market: Size

Profitability

Accessibility

Limited Competition

CONSUMER MARKETS VS BUSINESS MARKETS

How will the buyer use the

product?

Consumer Markets

Business Markets

Products for personal

consumption.

Products used directly or

indirectly to produce other

products.

Different approaches to select target markets.

ANALYZING PROMOTIONAL STRATEGIES

MARKET SEGMENTATION

Marketers may select multiple segments to target.

Marketers may select multiple segments to target.

Selecting a target

market begins with

dividing your

market into

segments.

CONSUMER MARKET SEGMENTATION

Demographic

Geographic

Psychographic

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

Postpurchase Behavior

Evaluation of Alternatives

Purchase Decision

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 Research1. Define the problem2. Access available information3. Gather additional information4. Review internal records; interview

employees5. Collect outside data6. Organize and interpret data7. Make a decision and take action8. 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

Primary Data: New Data that is Compiled

Lower Cost More Expensive

May not be Specific Customized

Frequently Outdated Fresh, New

Available to Competitors

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?

•Marketing researchers found that American consumers associate red with energy, passion, speed, and hunger.

•Yellow suggests happiness and warmth; orange suggests playfulness, fun, affordability.

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

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:

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:

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.