copyright © 2003 by south-western. all rights reserved. chapter thirteen marketing management text...

Copyright © 2003 by South-Western. All Rights Reserved.

CHAPTER THIRTEENCHAPTER THIRTEEN

MARKETING MANAGEMENTMARKETING MANAGEMENT

Text by Profs. Gene Boone & David Text by Profs. Gene Boone & David KurtzKurtzMultimedia Presentation byMultimedia Presentation byProf. Milton PressleyProf. Milton PressleyThe University of New OrleansThe University of New Orleans

[email protected]@uno.edu


• Summarize the ways in which marketing Summarize the ways in which marketing creates utilitycreates utility

• Explain the marketing concept and relate Explain the marketing concept and relate how customer satisfaction contributes to how customer satisfaction contributes to added valueadded value

• Describe the components of a market and Describe the components of a market and distinguish between B2B and B2C distinguish between B2B and B2C marketingmarketing

• Outline the basic steps in developing a Outline the basic steps in developing a marketing strategymarketing strategy

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS


• Describe the marketing research functionDescribe the marketing research function• Identify each of the methods available for Identify each of the methods available for

segmenting consumer and business segmenting consumer and business marketsmarkets

• Distinguish between buyer behavior and Distinguish between buyer behavior and consumer behaviorconsumer behavior

• Discuss relationship marketing, including Discuss relationship marketing, including its importance in strategic planningits importance in strategic planning

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS


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CHAPTER OVERVIEWCHAPTER OVERVIEWCHAPTER OVERVIEWCHAPTER OVERVIEW• Examines the marketing concept and Examines the marketing concept and

the way businesspeople develop a the way businesspeople develop a marketing strategymarketing strategy

• Explains how businesses apply Explains how businesses apply marketing research data to market marketing research data to market segmentation and understanding segmentation and understanding consumer behaviorconsumer behavior

• Looks at the important role played Looks at the important role played by customer relationships in today’s by customer relationships in today’s highly competitive business worldhighly competitive business world


WHAT IS MARKETING?WHAT IS MARKETING?WHAT IS MARKETING?WHAT IS MARKETING?

• Marketing:Marketing: process of planning process of planning and executing the conception, and executing the conception, pricing, promotion, and pricing, promotion, and distribution of ideas, goods, distribution of ideas, goods, services, organizations and events services, organizations and events to create and maintain relationships to create and maintain relationships that satisfy individual and that satisfy individual and organizational objectives organizational objectives

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Figure 13.1 Marketing at Goex: Determining and Figure 13.1 Marketing at Goex: Determining and Meeting Wants and NeedsMeeting Wants and Needs


• Exchange process:Exchange process: when two or when two or more parties benefit from trading more parties benefit from trading things of valuethings of value

WHAT IS MARKETING?WHAT IS MARKETING?WHAT IS MARKETING?WHAT IS MARKETING?

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How Marketing Creates UtilityHow Marketing Creates UtilityHow Marketing Creates UtilityHow Marketing Creates Utility

• Utility:Utility: want-satisfying power of a want-satisfying power of a good or servicegood or service

• Production creates Production creates form form utilityutility• Marketing creates Marketing creates time, place,time, place, and and

ownershipownership utility utility

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Figure 13.2Figure 13.2The McDonald’s Big ‘n The McDonald’s Big ‘n Tasty: Providing Tasty: Providing Customer Satisfaction Customer Satisfaction by Creating Time, by Creating Time, Place, and Ownership Place, and Ownership UtilityUtility

Figure 13.2Figure 13.2The McDonald’s Big ‘n The McDonald’s Big ‘n Tasty: Providing Tasty: Providing Customer Satisfaction Customer Satisfaction by Creating Time, by Creating Time, Place, and Ownership Place, and Ownership UtilityUtility


EVOLUTION OF THE MARKETING CONCEPTEVOLUTION OF THE MARKETING CONCEPT

• Over time, marketing activities evolved through four eras as shown on the next slide


Figure 13.3 Four Eras in the History of MarketingFigure 13.3 Four Eras in the History of Marketing


Emergence of the Marketing Emergence of the Marketing ConceptConceptEmergence of the Marketing Emergence of the Marketing ConceptConcept

• Marketing concept: Marketing concept: companywide companywide customer orientation to promote long-customer orientation to promote long-run successrun success• The basic idea is that marketplace success The basic idea is that marketplace success

begins with the customerbegins with the customer

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Delivering Added Value Through Delivering Added Value Through Customer Satisfaction and QualityCustomer Satisfaction and QualityDelivering Added Value Through Delivering Added Value Through Customer Satisfaction and QualityCustomer Satisfaction and Quality• Customer satisfaction:Customer satisfaction: result of a result of a

good or service meeting or good or service meeting or exceeding the buyer’s needs and exceeding the buyer’s needs and expectationsexpectations

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Delivering Added Value Through Delivering Added Value Through Customer Satisfaction and QualityCustomer Satisfaction and QualityDelivering Added Value Through Delivering Added Value Through Customer Satisfaction and QualityCustomer Satisfaction and Quality• Value-added: Value-added: occurs when a occurs when a

company exceeds value expectations company exceeds value expectations by adding features, lowering its by adding features, lowering its price, enhancing customer service, price, enhancing customer service, or making other improvements to or making other improvements to increase customer satisfactionincrease customer satisfaction

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Figure 13.4 American Express: Providing Figure 13.4 American Express: Providing Quality by Meeting the Desire for Privacy Quality by Meeting the Desire for Privacy Figure 13.4 American Express: Providing Figure 13.4 American Express: Providing Quality by Meeting the Desire for Privacy Quality by Meeting the Desire for Privacy


Importance of Customer Importance of Customer SatisfactionSatisfactionImportance of Customer Importance of Customer SatisfactionSatisfaction• Critical for building long-lasting Critical for building long-lasting

relationshipsrelationships• E-commerce surveys found that:E-commerce surveys found that:

• Ninety percent of customers who were Ninety percent of customers who were satisfied said they would return to the satisfied said they would return to the same sitesame site

• One of every 12 visitors abandon online One of every 12 visitors abandon online shopping carts before making a purchaseshopping carts before making a purchase

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Obtaining Customer FeedbackObtaining Customer FeedbackObtaining Customer FeedbackObtaining Customer Feedback

• Important to find out how buyers Important to find out how buyers perceive the company or its perceive the company or its products by obtaining customer products by obtaining customer feedback through:feedback through:• Toll-free telephone hotlinesToll-free telephone hotlines• Customer satisfaction surveysCustomer satisfaction surveys• Web site message boardsWeb site message boards• Written correspondenceWritten correspondence

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EXPANDING MARKETING’S EXPANDING MARKETING’S TRADITIONAL BOUNDARIESTRADITIONAL BOUNDARIESEXPANDING MARKETING’S EXPANDING MARKETING’S TRADITIONAL BOUNDARIESTRADITIONAL BOUNDARIES• Not-for-profit organizations benefit Not-for-profit organizations benefit

by applying many of the strategies by applying many of the strategies and concepts used by profit-seeking and concepts used by profit-seeking firmsfirms

• May apply marketing tools to reach May apply marketing tools to reach their audiences, secure funding, their audiences, secure funding, improve their images, and improve their images, and accomplish their overall missionsaccomplish their overall missions

• Some form a partnership with profit-Some form a partnership with profit-seeking companiesseeking companies

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Nontraditional MarketingNontraditional MarketingNontraditional MarketingNontraditional Marketing

• Growth in the number of not-for-Growth in the number of not-for-profit organizations has forced them profit organizations has forced them to adopt businesslike strategies and to adopt businesslike strategies and tactics to successfully competetactics to successfully compete

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Figure 13.5 Categories of Nontraditional Marketing

Figure 13.5 Categories of Nontraditional Marketing



• Person marketing:Person marketing: efforts designed to efforts designed to attract attention, attract attention, interest, and interest, and preference of a target preference of a target market toward a market toward a personperson

• Example: political Example: political campaignscampaigns

Person Person MarketingMarketing

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• Place marketing:Place marketing: attempts to attract attempts to attract people to a particular people to a particular area, such as a city, area, such as a city, state, or nationstate, or nation

• Example: appealing to Example: appealing to consumers as a tourist consumers as a tourist destinationdestination

Person MarketingPerson Marketing

Place Place MarketingMarketing

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Figure 13.6aFigure 13.6aPlace MarketingPlace MarketingFigure 13.6aFigure 13.6aPlace MarketingPlace Marketing



• Cause marketing: Cause marketing: efforts to promote a efforts to promote a cause or social issue, cause or social issue, such as the prevention such as the prevention of child abuse, of child abuse, antilittering efforts, antilittering efforts, and anti-smoking and anti-smoking campaignscampaignsCause Cause

MarketingMarketing

Person MarketingPerson Marketing

Place MarketingPlace Marketing

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Figure 13.6bFigure 13.6bCause MarketingCause MarketingFigure 13.6bFigure 13.6bCause MarketingCause Marketing



• Event marketing: Event marketing: marketing or marketing or sponsoring short-term sponsoring short-term events such as athletic events such as athletic competitions and competitions and cultural and charitable cultural and charitable performancesperformances

Event Event MarketingMarketing



• Organization Organization marketing: marketing: attempting to attempting to influence consumers influence consumers to accept the goals of, to accept the goals of, receive the services of, receive the services of, or contribute in some or contribute in some way to an organizationway to an organization

Event MarketingEvent Marketing

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Organization Organization MarketingMarketing


DEVELOPING A MARKETING DEVELOPING A MARKETING STRATEGYSTRATEGYDEVELOPING A MARKETING DEVELOPING A MARKETING STRATEGYSTRATEGY

• Marketing strategy development is a Marketing strategy development is a two-step processtwo-step process• First, study and analyze potential target First, study and analyze potential target

markets and choose among themmarkets and choose among them• Second create a marketing mix to Second create a marketing mix to

satisfy the chosen marketsatisfy the chosen market

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Figure 13.7 Target Market and Marketing Mix within the Marketing EnvironmentFigure 13.7 Target Market and Marketing Mix within the Marketing Environment


Selecting a Target MarketSelecting a Target MarketSelecting a Target MarketSelecting a Target Market• Target Market:Target Market: group of group of

people toward whom an people toward whom an organization markets its organization markets its goods, services, or ideas with goods, services, or ideas with a strategy designed to satisfy a strategy designed to satisfy their specific needs and their specific needs and preferencespreferences


Developing a Marketing MixDeveloping a Marketing MixDeveloping a Marketing MixDeveloping a Marketing Mix

• Marketing mix:Marketing mix: blending the four blending the four elements of marketing strategy elements of marketing strategy (product, pricing, place, and (product, pricing, place, and promotion) to satisfy chosen promotion) to satisfy chosen consumer segmentsconsumer segments


Developing a Marketing MixDeveloping a Marketing MixDeveloping a Marketing MixDeveloping a Marketing Mix• Involves more than just Involves more than just

designing a good or designing a good or service with needed service with needed attributesattributes

• Includes decisions about Includes decisions about package design, brand package design, brand name, trademarks, name, trademarks, warranties, product warranties, product image, new product image, new product development, and development, and customer servicecustomer service

Product strategy

Product strategy

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• Deals with the Deals with the methods of setting methods of setting profitable and profitable and justifiable pricesjustifiable prices

• Subject to Subject to government government regulation and regulation and considerable public considerable public scrutinyscrutiny

Product strategy

Pricing strategy

Pricing strategy

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• Insures that Insures that customers receive customers receive their purchases in the their purchases in the proper quantities at proper quantities at the right times and the right times and locationslocations

• Distribution Distribution sometimes referred to sometimes referred to asas place place

Product strategy

Pricing strategy

Distribution strategy


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• Involves informing, Involves informing, persuading, and persuading, and influencing purchase influencing purchase decisionsdecisions

• Uses tools such as Uses tools such as personal selling, personal selling, advertising, sales advertising, sales promotion, and promotion, and public relationspublic relations

Product strategy

Pricing strategy


Promotional strategy

Promotional strategy

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Developing a Marketing Mix for Developing a Marketing Mix for International MarketsInternational MarketsDeveloping a Marketing Mix for Developing a Marketing Mix for International MarketsInternational Markets

• Standardization Standardization Vs. Vs. Adaptation?Adaptation?

Figure 13.8 Cultural Figure 13.8 Cultural Differences: Sound Differences: Sound Reason for an Reason for an Adaptation StrategyAdaptation Strategy

Figure 13.8 Cultural Figure 13.8 Cultural Differences: Sound Differences: Sound Reason for an Reason for an Adaptation StrategyAdaptation Strategy


MARKETING RESEARCH FOR MARKETING RESEARCH FOR IMPROVED MARKETING IMPROVED MARKETING DECISIONSDECISIONS

MARKETING RESEARCH FOR MARKETING RESEARCH FOR IMPROVED MARKETING IMPROVED MARKETING DECISIONSDECISIONS• Marketing research: Marketing research:

collection and use of collection and use of information to support information to support marketing decision makingmarketing decision making

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Obtaining Marketing Research DataObtaining Marketing Research DataObtaining Marketing Research DataObtaining Marketing Research Data

• Researchers use both Researchers use both internal internal and and externalexternal datadata• Internal data is generated within Internal data is generated within

the researcher’s organizationthe researcher’s organization• External data is gathered from External data is gathered from

sources outside their firmssources outside their firms

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Applying Marketing Research DataApplying Marketing Research DataApplying Marketing Research DataApplying Marketing Research Data• As the accuracy of As the accuracy of

information collected by information collected by researchers increases, so researchers increases, so does the effectiveness of does the effectiveness of resulting marketing resulting marketing strategiesstrategies• Examples: Examples:

• Products are improvedProducts are improved• Advertisements become more Advertisements become more

effectiveeffective• Customers are more satisfiedCustomers are more satisfied

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Computer-Based Marketing Computer-Based Marketing Research SystemsResearch SystemsComputer-Based Marketing Computer-Based Marketing Research SystemsResearch Systems

• After scanning the After scanning the universal product code universal product code (UPC), (UPC), computers identify the product, its computers identify the product, its manufacturer, and its pricemanufacturer, and its price• Data can be used to:Data can be used to:

• Schedule inventory, ordering, and deliverySchedule inventory, ordering, and delivery• Track salesTrack sales• Test the effectiveness of promotions and new Test the effectiveness of promotions and new

product introductionsproduct introductions

• Marketing research firms store consumer Marketing research firms store consumer data and commercially available databasesdata and commercially available databases

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Figure 13.9 Figure 13.9 AC Nielsen: AC Nielsen: Marketing Marketing Research With Research With Global ReachGlobal Reach

Figure 13.9 Figure 13.9 AC Nielsen: AC Nielsen: Marketing Marketing Research With Research With Global ReachGlobal Reach


Data MiningData MiningData MiningData Mining

• Data mining:Data mining: using a computer to using a computer to search through massive amounts of search through massive amounts of customer data to detect patterns and customer data to detect patterns and relationshipsrelationships

• Data warehouses: Data warehouses: sophisticated sophisticated customer databases that allow customer databases that allow managers to combine data from managers to combine data from several different organizational several different organizational functionsfunctions

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MARKET SEGMENTATION MARKET SEGMENTATION MARKET SEGMENTATION MARKET SEGMENTATION

• Market segmentation: Market segmentation: process of process of dividing a total market into several dividing a total market into several relatively homogeneous groups relatively homogeneous groups

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No Market SegmentationNo Market SegmentationNo Market SegmentationNo Market Segmentation

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Segmented by SexSegmented by SexSegmented by SexSegmented by Sex

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Segmented by AgeSegmented by AgeSegmented by AgeSegmented by Age

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Figure 13.10 Methods of Segmenting Consumer and Business MarketsFigure 13.10 Methods of Segmenting Consumer and Business Markets

How Market Segmentation WorksHow Market Segmentation Works


• Geographic segmentation: dividing an overall market into homogeneous groups on the basis of population locations

• Useful when consumer preferences and purchase patterns for a good or service differ between regions

GeographicGeographic

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Segmenting Consumer MarketsSegmenting Consumer MarketsSegmenting Consumer MarketsSegmenting Consumer Markets

Criteria Criteria includeinclude


• Demographic segmentation: distinguishes markets on the basis of various demographic or socioeconomic characteristics

• Common demographic measures include income, age, occupation, household size, stage in family life cycle, education, ethnic group, and gender

GeographicGeographic DemographicDemographicDemographicDemographic

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• Psychographic segmentation: divides consumer markets into groups with similar psychological characteristics, values, and lifestyles• Lifestyle: the summation of a person’s

needs, preferences, motives, attitudes, social habits, and cultural background

GeographicGeographic DemographicDemographic PsychographicPsychographicPsychographicPsychographic

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• Product-related segmentation: dividing consumer market into groups based on buyers’ relationships to the good or service

• The most popular approaches are based on benefit sought, usage rates, and brand loyalty levels

GeographicGeographic DemographicDemographic PsychographicPsychographic

Product-Product-RelatedRelated

Product-Product-RelatedRelated

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Segmenting Business MarketsSegmenting Business MarketsSegmenting Business MarketsSegmenting Business Markets

• In many ways, business In many ways, business market segmentation market segmentation resembles that for consumer resembles that for consumer marketsmarkets

• In addition to geographic In addition to geographic segmentation, business segmentation, business markets use:markets use:• Demographic, or customer-Demographic, or customer-

based, segmentationbased, segmentation• End-use segmentationEnd-use segmentation

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Figure 13.11Figure 13.11Using Demographics Using Demographics and Geography to and Geography to Segment Business Segment Business Markets Markets

Figure 13.11Figure 13.11Using Demographics Using Demographics and Geography to and Geography to Segment Business Segment Business Markets Markets


BUYER BEHAVIOR: DETERMINING BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANTWHAT CUSTOMERS WANTBUYER BEHAVIOR: DETERMINING BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANTWHAT CUSTOMERS WANT• Buyer behavior:Buyer behavior: series of decision series of decision

processes by individual consumers processes by individual consumers who buy products for their own use who buy products for their own use and organizational buyers who and organizational buyers who purchase business products to be purchase business products to be used directly or indirectly in the used directly or indirectly in the sale of other itemssale of other items

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BUYER BEHAVIOR: DETERMINING BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANTWHAT CUSTOMERS WANTBUYER BEHAVIOR: DETERMINING BUYER BEHAVIOR: DETERMINING WHAT CUSTOMERS WANTWHAT CUSTOMERS WANT• Consumer behavior: Consumer behavior: refers more refers more

specifically to the actions of specifically to the actions of ultimate consumers directly ultimate consumers directly involved in obtaining, consuming, involved in obtaining, consuming, and disposing of products, and the and disposing of products, and the decision processes that preceded decision processes that preceded and followed these actionsand followed these actions

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Determinants of Consumer Determinants of Consumer BehaviorBehaviorDeterminants of Consumer Determinants of Consumer BehaviorBehavior• Both personal and interpersonal Both personal and interpersonal

factors influence the behavior of an factors influence the behavior of an ultimate consumerultimate consumer• Personal influences on consumer Personal influences on consumer

behavior include individual needs and behavior include individual needs and motives, perceptions, attitudes, learned motives, perceptions, attitudes, learned experiences, and their self-conceptsexperiences, and their self-concepts

• The interpersonal determinants of The interpersonal determinants of consumer behavior include cultural, consumer behavior include cultural, social, and family influencessocial, and family influences

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Determinants of Business Determinants of Business Buying BehaviorBuying BehaviorDeterminants of Business Determinants of Business Buying BehaviorBuying Behavior• Relationship marketing:Relationship marketing:

goes beyond an effort for goes beyond an effort for making the sale to a drive for making the sale to a drive for making the sale again and making the sale again and againagain

• Managing relationships Managing relationships instead of simply completing instead of simply completing transactions often leads to transactions often leads to creative partnershipscreative partnerships

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Figure 13.12Steps in the Buyer Behavior Process

Figure 13.12Steps in the Buyer Behavior Process


CREATING, MAINTAINING, AND CREATING, MAINTAINING, AND STRENGTHENING MARKETING STRENGTHENING MARKETING RELATIONSHIPSRELATIONSHIPS

CREATING, MAINTAINING, AND CREATING, MAINTAINING, AND STRENGTHENING MARKETING STRENGTHENING MARKETING RELATIONSHIPSRELATIONSHIPS• Transaction marketing: Transaction marketing:

characterized by buyer and characterized by buyer and seller exchanges with little seller exchanges with little or no ongoing relationships or no ongoing relationships between partiesbetween parties

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CREATING, MAINTAINING, AND CREATING, MAINTAINING, AND STREGTHENING MARKETING STREGTHENING MARKETING RELATIONSHIPSRELATIONSHIPS

CREATING, MAINTAINING, AND CREATING, MAINTAINING, AND STREGTHENING MARKETING STREGTHENING MARKETING RELATIONSHIPSRELATIONSHIPS• Relationship marketing: Relationship marketing:

developing and maintaining developing and maintaining long-term, cost effective long-term, cost effective exchange relationships with exchange relationships with individual customers, individual customers, suppliers, employees and suppliers, employees and other partners for mutual other partners for mutual benefitbenefit

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Figure 13.13 GE Plastics: Transforming Buyer-Figure 13.13 GE Plastics: Transforming Buyer-Seller Transactions into a PartnershipSeller Transactions into a PartnershipFigure 13.13 GE Plastics: Transforming Buyer-Figure 13.13 GE Plastics: Transforming Buyer-Seller Transactions into a PartnershipSeller Transactions into a Partnership


Benefits of Relationship MarketingBenefits of Relationship MarketingBenefits of Relationship MarketingBenefits of Relationship Marketing

• Can help all parties involved by:Can help all parties involved by:• Mutual protection against competitorsMutual protection against competitors• Lower costsLower costs• Higher profitsHigher profits• Preferential treatmentPreferential treatment

• Lifetime value of a customer: Lifetime value of a customer: the the revenues and intangible benefits from the revenues and intangible benefits from the customer over the life of the relationship, customer over the life of the relationship, minus the amount the company must spend minus the amount the company must spend to acquire and serve that customerto acquire and serve that customer

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• Frequency marketing: program that rewards purchases with cash, rebates, merchandise, or other premiums

• Examples include airline frequent-flier and hotel frequent guest programs

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Frequency Marketing

Frequency Marketing

Tools for Nurturing Customer Tools for Nurturing Customer RelationshipsRelationshipsTools for Nurturing Customer Tools for Nurturing Customer RelationshipsRelationships


• Affinity program: marketing effort sponsored by an organization solicits involvement by individuals who share common interest and activities

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Frequency Marketing

Affinity ProgramAffinity Program



• Common in the credit card industry

• Person obtains a credit card with a logo of a favorite charity, college, or other organization• Credit card company donates

a percentage of the person’s charges to the organization

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Frequency Marketing

Affinity ProgramAffinity Program



• Co-marketing: two businesses jointly market each other’s products

• Example: many personal-computer manufacturers use co-marketing to promote the Intel Pentium processors in their machines

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Frequency Marketing

Affinity Program

Co-marketingCo-marketing



• Co-branding: occurs when two or more businesses team up to closely link their names for a single product

• Example: Kolcraft and baby strollers bearing the jeep brand

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Frequency Marketing

Affinity Program

Co-marketing

Co-brandingCo-branding



WHAT’S AHEADWHAT’S AHEADWHAT’S AHEADWHAT’S AHEAD

• Examination of the Examination of the elements of the elements of the marketing mixmarketing mix• ProductProduct• PricePrice• DistributionDistribution• PromotionPromotion

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copyright © 2003 by south-western. all rights reserved. chapter thirteen marketing management text...

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