Chapter 12

Customer-Driven Marketing
o al s
ng G
r n i 4 Outline the basic steps in
Lea developing a marketing strategy.
Summarize the ways in which Describe the marketing research
1 5
marketing creates utility. function.
Explain the marketing concept and
2 6 Identify and explain the methods
relate how customer satisfaction available for segmenting
contributes added value. consumer and business markets.
Describe not-for-profit marketing,
7 Outline the determinants
and identify the five major of consumer behavior.
3
categories of nontraditional
marketing. 8 Discuss the benefits and
tools for relationship
marketing.
WHAT IS MARKETING?
Marketing Organizational function and set of processes
for creating, communicating, and delivering value to
customers and for man- aging customer relationships
in ways that benefit the organization and its
stakeholders.

Exchange process Activity in which two or more parties

give something of value to each other to satisfy
perceived needs.

How Marketing Creates Utility

Utility Want-satisfying power of a good or service.

• Time utility Making a good or service available when

EVOLUTION OF THE MARKETING
CONCEPT
Emergence of the Marketing Concept
Marketing concept Company-wide consumer orientation
to promote long-run success.

• Firm starts with analysis of customers’ needs and

works
backward to offer products that fulfill them.

• Explained by shift from sellers’ market in which

goods
and services are relatively scarce to buyers’ market
in
which they are relatively plentiful.
Delivering Added Value Through Customer
Satisfaction and Loyalty
• Firm starts with analysis of customers’ needs and
works backward to offer products that fulfill them.

Customer satisfaction Ability of a good or service to meet

or exceed a buyer’s needs and expectations.

• Increasing customer loyalty just five percent equals

significant increases in lifetime profits per
customer.

Customer Satisfaction and Feedback

• Can get feedback through toll-free telephone
hotlines, customer satisfaction surveys, customer
complaints, and other ways.
EXPANDING MARKETING’S
TRADITIONAL BOUNDARIES
Not-for-Profit Marketing
• 20 million not-for-profits worldwide.
• Account for five percent of GDP worldwide.
• Apply marketing tools to reach audiences, secure
funding, improve their images, and accomplish their
overall missions.
• Sometimes partner with a profit-seeking company to
promote a message.
Nontraditional Marketing
DEVELOPING A MARKETING
STRATEGY
• First, study and analyze potential target markets and
choose among them.
• Second, create a marketing mix to satisfy the chosen
market.
Selecting a Target Market
Target market Group of people toward whom an organization
markets its goods, services, or ideas with a strategy
designed to satisfy their specific needs and
preferences.

Marketing mix Blending the four elements of marketing

strategy—product, distribution, promotion, and
pricing—to satisfy chosen customer segments.

Developing a Marketing Mix for

International Markets
• Standardization Offering the same marketing mix in
every market.

• Adaptation Developing a unique marketing mix to fit

MARKETING RESEARCH
Marketing research Collecting and evaluating information to
support marketing decision making.

Obtaining Marketing Research Data

• Use internal and external data.

• Secondary data: Previously published data from

trade associations, advertising agencies, marketing
research firms, and other sources.

• Primary data: Data collected through observation,

surveys, and
other forms of observational study.
Applying Marketing Research Data
• As accuracy of research information increases, so
does
the effectiveness of the marketing strategies.

• Example: GM’s H3 Hummer research

Data Mining
Data mining Computer searches of customer data to detect
patterns and relationships.

• Uses data warehouses, sophisticated customer

databases that allow managers to combine data from
several different organizational functions.

• Example: Walmart’s use to determine local

preferences and tailor its inventory appropriately.
MARKET SEGMENTATION
Market segmentation Process of dividing a total market into
several relatively homogeneous groups.
How Market Segmentation Works
Segmenting Consumer Markets
Geographic Segmentation

• Divides market into homogeneous groups on the basis

of their locations.
Demographic Segmentation
• Divides market on the basis of various demographic or
socioeconomic characteristics.
Psychographic Segmentation
• Divides consumer market into groups with similar
psychological characteristics, values, and
lifestyles.
Product-Related Segmentation
• Divides market based on buyers’ relationship to the
good or service.
CONSUMER BEHAVIOR:
DETERMINING WHAT CUSTOMERS
WANT
Consumer behavior Actions of ultimate consumers directly
involved in obtaining, consuming, and disposing of
products and the decision processes that precede and
follow these actions.

Determinants of Consumer Behavior

• Personal factors: Needs and motives, perceptions,
attitudes, self-concept.
• Interpersonal factors: Cultural, social, and family
influences.

Determinants of Business Buying Behavior

• Often a variety of influences from multiple decision
Steps in the Consumer Behavior Process
CREATING, MAINTAINING, AND
STRENGTHENING MARKETING
RELATIONSHIPS
Relationship marketing Developing and maintaining long-term,
cost-effective exchange relationships with partners.

Benefits of Relationship Marketing

• Lower costs and higher profits for the business.

• Efficient targeting of best customers that increases

the lifetime value of a customer.

• Stronger relationships with business partners and

opportunities to
combine capabilities and resources to better
Tools for Nurturing Customer
Relationships
• 80/20 principle: Frequent customers have a higher
lifetime value, so businesses allocate resources
accordingly.
Frequency Marketing and Affinity-Marketing Programs
• Frequency marketing Reward purchasers with cash,
rebates, and other premiums.
• Affinity programs Solicit involvement based on common
interest.
Example: Credit card with baseball team logo
• Comarketing Businesses jointly market each others’
products.
• Cobranding Firms link their names in a single