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13-11-1

McGraw-Hill/IrwinUnderstanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights

Reserved.

Nickels McHugh McHughNickels McHugh McHugh

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13

CH

AP

TE

R*

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Marketing: Marketing: Building Building

Customer Customer RelationshipsRelationships

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MarketingMarketing

• The process of The process of planningplanning and and executingexecuting the the conceptionconception, , pricingpricing, , promotionpromotion, and , and distributiondistribution of goods and services of goods and services to to facilitate exchanges that satisfyfacilitate exchanges that satisfy individual and organization objective.individual and organization objective.

13-2

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13-3

Evolution of Marketing- Evolution of Marketing- p350p350

• Production Era - Up to early 1900sProduction Era - Up to early 1900s

• Selling Era - 1920s-1950sSelling Era - 1920s-1950s

• Marketing Concept Era - 1950s - Marketing Concept Era - 1950s - 1980s1980s• CustomerCustomer

• ServiceService

• ProfitProfit

• Customer Relationship Era - 1990s+Customer Relationship Era - 1990s+

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13-4

Marketing Strategies inMarketing Strategies inNon-Profit OrganizationsNon-Profit Organizations

• Find a productive Find a productive board of trustees board of trustees (Directors)(Directors)

• Make marketing Make marketing the focus; not the focus; not short-term salesshort-term sales

• Know your Know your mission and mission and review mission review mission strategy regularlystrategy regularly

• Practice strategic Practice strategic planningplanning

• Carefully segment Carefully segment target markettarget market

• Train & develop Train & develop volunteers for long-volunteers for long-termterm

• Be frugal- know Be frugal- know how to manage how to manage financesfinances

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13-5

Elements in the Marketing Elements in the Marketing MixMix

ProductProduct

MarketinMarketing g

ProgramProgram

PlacPlacee

PromotioPromotionn

Buy at Buy at Computers Computers

‘R Us‘R Us

PricPricee

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13-6

Marketing ProcessMarketing Process

1.1. Find OpportunityFind Opportunity

2.2. Conduct ResearchConduct Research

3.3. Identify Target Identify Target MarketMarket

4.4. Design ProductDesign Product

5.5. Product TestingProduct Testing

6.6. Brand Name, Design Brand Name, Design & Price& Price

7.7. Develop Distribution Develop Distribution SystemSystem

8.8. Design Promotional Design Promotional ProgramProgram

9.9. Build Relationship Build Relationship With CustomerWith Customer

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13-7

Where They GotWhere They Got Their NamesTheir Names

• Taco BellTaco Bell Glen BellGlen Bell

• Days InnDays Inn Cecil DayCecil Day

• Bose CorpBose Corp Amar BoseAmar Bose

• Ty Inc.Ty Inc. Ty WarnerTy Warner

• Bristol-MyersBristol-Myers William Bristol William Bristol & John & John

MyersMyersSource: World Features SyndicateSource: World Features Syndicate

Founder(s)Founder(s)

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13-8

Some Pricing StrategiesSome Pricing Strategies

• Cost-PlusCost-Plus

• Going-RateGoing-Rate

• Loss-LeaderLoss-Leader

• PsychologicalPsychological

• SkimmingSkimming

• DiscountDiscount

Source: Perdue University, May 2005

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13-9

Other Things To KeepOther Things To Keep In Mind With PriceIn Mind With Price

• Payment PeriodPayment Period• AllowancesAllowances

• RegularRegular• SeasonalSeasonal

• BundlingBundling• Trade DiscountsTrade Discounts• Price FlexibilityPrice Flexibility• Credit TermsCredit Terms

• Price DifferencesPrice Differences• Target CustomersTarget Customers• Geographic AreasGeographic Areas

• Volume Discounts Volume Discounts and Wholesale and Wholesale PricingPricing

• Cash and Early Pmt Cash and Early Pmt DiscountDiscount

Source: Perdue University, May 2005

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13-10

Place DecisionsPlace Decisions

• Direct SalesDirect Sales

• Reseller SalesReseller Sales

• Market CoverageMarket Coverage• Intensive Intensive • SelectiveSelective• ExclusiveExclusive

• Inventory SizeInventory Size

• LogisticsLogistics

Source: Perdue University, May 2005

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13-11

Market Research ProcessMarket Research Process

• Define the QuestionDefine the Question

• Collect DataCollect Data

• Analyze the dataAnalyze the data

• Choose the best solution and Choose the best solution and implementimplement

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13-12

Sources for MarketingSources for Marketing Research InformationResearch Information

Secondary DataSecondary Data

• Government Government PublicationsPublications

• Commercial Commercial PublicationsPublications

• MagazinesMagazines• NewspapersNewspapers• Internal/General Internal/General

SourcesSources

Primary DataPrimary Data• SurveysSurveys• Focus groupsFocus groups• InterviewsInterviews• ObservationObservation• Online surveysOnline surveys• QuestionnairesQuestionnaires• Customer commentsCustomer comments

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13-13

The Marketing EnvironmentThe Marketing Environment

EconomicEconomic

SocialSocial

TechnologTechnologyy

GlobalGlobal

CustomeCustomerr

CompetitivCompetitivee

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13-14

Why Should YouWhy Should You Market To Women?Market To Women?

• Women control 80% of all household Women control 80% of all household spending.spending.

• Women purchase 81% of all products and Women purchase 81% of all products and services manufactured.services manufactured.

• 80% of all checks written are signed by 80% of all checks written are signed by women.women.

• 85% of all automobile purchases are 85% of all automobile purchases are influenced by women.influenced by women.

• In 2005, 4.7 Million women were self-In 2005, 4.7 Million women were self-employed.employed.

Source: St. Louis Small Business Monthly, May 2004

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13-15

Different MarketsDifferent Markets

• ConsumerConsumer• NicheNiche• One-to-OneOne-to-One

• Business-to-Business-to-Business (B2B)Business (B2B)

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13-16

Market SegmentationMarket Segmentation

• Target MarketingTarget Marketing

• GeographicGeographic• DemographicDemographic• PsychographicPsychographic• BenefitBenefit• VolumeVolume

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13-17

Influences onInfluences onConsumer BehaviorConsumer Behavior

CultureCulture

SubculturSubculturee

Reference Reference

GroupGroup

Cognitive Cognitive

DissonanceDissonance

CustomeCustomerr

LearningLearning

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13-18

Consumer Decision Making

Marketing mix

•Product

•Price

•Place

•Promotion

Marketing mix

•Product

•Price

•Place

•Promotion

Psychological

•Perception

•Attitudes

•Learning

•Motivation

Psychological

•Perception

•Attitudes

•Learning

•Motivation

Situational

•Type of Purchase

•Social surroundings

•Physical surroundings

•Previous experience

Situational

•Type of Purchase

•Social surroundings

•Physical surroundings

•Previous experience

Sociocultural

•Reference groups

•Family

•Social class

•Culture

•Subculture

Sociocultural

•Reference groups

•Family

•Social class

•Culture

•SubcultureDecision-Making Decision-Making ProcessProcess

•Problem RecognitionProblem Recognition

•Information SearchInformation Search

•Alternative evaluationAlternative evaluation

•Purchase decisionPurchase decision

•Postpurchase evaluationPostpurchase evaluation • (cognitive dissonance)(cognitive dissonance)

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13-19

Planning For Planning For More BusinessMore Business

• What do we do well-and not do well?What do we do well-and not do well?

• What are we really selling?What are we really selling?

• To whom do we sell?To whom do we sell?

• How do we reach our target group?How do we reach our target group?

• How can we break through the clutter?How can we break through the clutter?

Source: Investor’s Business Daily, February 9, 2004

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13-20

Business-to-ConsumerBusiness-to-ConsumerE-Commerce as % of SalesE-Commerce as % of Sales

0.00% 0.50% 1.00% 1.50% 2.00% 2.50%

2005

2004

2003

2002

2001

2000

Source: U.S. Census, May 18, 2006; http://home.earthlink.net/~lindberg_b/GECGrwth.htm, accessed August 5, 2006

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13-21

Business-to-Business (B2B)Business-to-Business (B2B)

1.1. NumberNumber

2.2. SizeSize

3.3. Geographic Geographic ConcentrationConcentration

4.4. RationalRational

5.5. Direct SalesDirect Sales

6.6. Personal SellingPersonal Selling