Part 5

Marketing:
Developing
Relationships

McGraw-Hill/Irwin Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
CHAPTER 11 Customer Driven Marketing

CHAPTER 12 Dimensions of Marketing Strategy

CHAPTER 13 Digital Marketing and Social Networking

11-2
Learning Objectives
LO 11-1 Define marketing, and describe the exchange process
LO 11-2 Specify the functions of marketing
LO 11-3 Explain the marketing concept and its implications for
developing marketing strategies
LO 11-4 Examine the development of a marketing strategy,
including market segmentation and marketing mix
LO 11-5 Investigate how marketers conduct marketing research
and study buying behavior
LO 11-6 Summarize the environmental forces that influence
marketing decisions
LO 11-7 Assess a companys marketing plans, and propose a
solution for resolving its problem

11-3
What is Marketing?
Marketing is an organizational
function and 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.
-- American Marketing Association ---

1-4
Nature of Marketing

Marketing is not:
Manipulating consumers to get them to buy products
they do not want
Just selling and advertising
Marketing is:
A systematic approach to satisfying consumers

11-5
The Exchange Relationship

Exchange
The act of giving up one thing (money, credit, labor,
goods) in return for something else (goods, services, or
ideas)
Each participant must be willing to give up his or her
respective something of value to receive the
something held by the other

11-6
The Exchange Process:
Giving Up One Thing in Return for Another

11-7
Creating Value with Marketing
Val

Customer
Value =
Customer
Benefits Customer
Costs

Benefits Anything a buyer receives in an exchange

Costs Anything a buyer must give up to obtain the
products benefits
Monetary costs and time and effort expended to procure the
product

11-8
 Value inside Luxurious Brands

12-9
 Value inside
Luxurious
Brands

12-10
The Marketing Concept
Marketing Concept
The idea that an organization should try to satisfy
customers needs through coordinated activities that also
allow it to achieve its own goal
A business must find out what consumers desire and
then develop the good, service, or idea that fulfills their
needs or wants
The business must then get the product to the customer
The business must continually alter, adapt, and develop
products to keep pace with changing consumer needs
and wants

11-11
Good Marketing is No Accident

Starbucks plans to
ensure its marketing
successes in
countries around the
world.

1-12
Successful New Product
Launches Require Careful
Planning

1-13
 To compete in this
aggressively interactive
environment, companies
must shift their focus
from driving transactions
to maximizing
CUSTOMER LIFETIME
VALUE

14
Consumer vs Company-initiated
Community: HACI vs Hondaisme
The Exchange Relationship
The tangible product itself may not be as important
as the image or the benefits associated with the
product
This intangible something of value may be:
Capability gained from using a product
The image evoked by it
The brand name

11-16
The Marketing Concept
Determining customers true needs is increasingly
difficult because no one fully understands what
motivates people to buy things
A business must also achieve its own objectives:
Boosting productivity
Reducing costs
Achieving a percentage of a specific market
A firm must have good information about what
consumers want, adopt a consumer orientation, and
coordinate its efforts throughout the entire organization

11-17
Evolution of the
Marketing Concept

Our society and economic system have changed over

time, and marketing has become more important as
markets have become more competitive
Production orientation
19th century
Manufacturing efficiency
Sales orientation
Early 20th century
Supply exceeds demand; a need to sell products grew

11-19
What is being
Marketed?

1-20
Singapore
Medicine: What
is being
Marketed?

1-21
What is being Marketed?

1-22
1-23
What is being
Marketed?

1-24
What is being
Marketed?

1-25
What is being Marketed?

1-26
Importance of Marketing to
Business and Society

Marketing is a necessary function to reaching consumers,

establishing relationships, and driving sales
Marketing is essential in communicating the value of
products and services
Nonprofits, government institutions, and even people must
market themselves to spread awareness and achieve
desired outcomes
All organizations must reach their target markets,
communicate their offerings, and establish high-quality
services

11-27
Marketing Myopia

1-28
 Marketing is so basic that it
cannot be considered a separate
function (i.e., a separate skill or
work) within the business, on a
par with others such as
manufacturing or personnel.
Marketing requires separate work
and a distinct group of activities.
But it is, first, a central dimension
of the entire business. It is the
whole business seen from the
point of view of its final result,
that is, from the customers point
of view.
At the corporate level, marketing
managers have a critical role to
play as advocates for the
customer and for a set of values
and beliefs that put the customer
first in the firms decision
making, and to communicate the
value proposition as part of that
culture throughout the
organization, both internally and
in its multiple relationships and
alliances.
Evolution of the
Marketing Concept

Today some people still inaccurately equate marketing

with a sales orientation

Market Orientation
An approach requiring organizations to gather
information about customer needs, share that
information throughout the firm, and use that information
to help build long-term relationships with customers

Began in the 1950s and continues today

New technologies are helping firms to improve
communication and learn what customers want

11-31
Marketing Research and
Information Systems

Guides marketing decisions

May include data on age, income, ethnicity,
educational level, etc. of the target market and how
frequently they purchase the product

11-32
 Facts & Trends
(BPS, 2005 and Deka Research, 2006)

Measures of marketing
demand:
- 4 million babies born per
year
( = the market ).
- Family expenditure per baby
per month = Rp. 600.000,-
(= the potential market)

Increased health threats.

Higher expectation on kids
future.
Increased number of working
moms (inadequate ASI)

The available market
4-33
 Demographics, Changing Values, and
Marketing Strategy

The growing segment of

Metrosexual men and the
growth of male segment.
Chinese ethnic culture
expression in Indonesia
 Challenges in the Modern
Environment
Web 2.0
Marketing Research and
Information Systems

Marketing information system A framework for

accessing information about customers from sources both
inside and outside the organization
Inside the organization
Continuous flow of information on prices, sales, and
expenses
Outside the organization
Data are available through public and private reports, census
statistics, digital media sources, etc.

11-37
Marketing Research and
Information Systems
Primary Data

11-38
Online Marketing Research
New information technologies are changing how
businesses learn about consumers and market their
products
Digital media and online social networks
Opportunity to reach new markets via the Internet
Online surveys are becoming an important part of
marketing research
Virtual testing Interactive multimedia research that
combines sight, sound, and animation to improve
testing of products and their features

11-39
Buying Behavior
Buying Behavior

Marketers analyze buying behavior because a firms

marketing strategy should be guided by an
understanding of buyers

11-40
Psychological Variables of Buying Behavior

11-41
Social Variables of
Buying Behavior

Social R

11-42
Understanding Buying Behavior
Trying to understand consumers is the best way to satisfy
them
Tools and techniques for analyzing consumers are not
exact
To combat declining gum sales, companies have begun to
turn gum into a fashion statement
Kraft is engaging young artists to create designs for its gum
packaging
Rockstar Iced Mint Energy is touting its energy-boosting
caffeine and taurine content
These overhauls are an attempt to reconnect with the teen
market, which is the largest purchaser of gum products

11-43
The Marketing Environment

External forces directly or indirectly influence the

development of marketing strategies:
Political, legal, and regulatory forces
Social forces
Competitive and economic forces
Technological forces
Marketing requires creativity and consumer focus
because environmental forces can change quickly and
dramatically

11-44
The Marketing Mix and the
Marketing Environment

11-45
Developing a Marketing Strategy

Marketing Strategy
A plan of action for developing, pricing distributing, and
promoting products that meet the needs of specific
customers
Has two major components:
Selecting a target market
Developing an appropriate marketing mix to satisfy
that target market

11-46
Selecting a Target Market

Market
A group of people who have a need, purchasing
power, and the desire and authority to spend
money on goods, services, and ideas
Target Market
A specific group of consumers on whose needs
and wants a company focuses its marketing efforts

11-47
Selecting a Target Market

Total-Market Approach
An approach whereby a firm tries to appeal to everyone
and assumes that all buyers have similar needs
Sellers of salt, sugar, and many agricultural products
use a total-market approach because everyone is a
potential consumer of these products

11-48
Selecting a Target Market
Market Segmentation
A strategy whereby a firm divides the total market into
groups of people who have relatively similar product
needs
Market Segment
A collection of individuals, groups, or organizations who
share one or more characteristics and thus have
relatively similar product needs and desires
Women are the largest market segment, with 51% of
the U.S. population
Marketers are focusing on the growing Hispanic
population

11-49
Market Segmentation Approaches
Concentration Approach
A market segmentation approach whereby a company
develops one marketing strategy for a single market
segment
Porsche directs all its marketing efforts toward high-income
individuals who want to own high-performance vehicles
Multisegment Approach
A market segmentation approach whereby the marketer
aims its efforts at two or more segments, developing a
marketing strategy for each
Raleigh bicycles has designed separate marketing strategies
for racers, tourers, commuters, and children

11-50
Target Market Strategies

11-51
Market Segmentation Approaches
Niche Marketing
Is a narrow market segment focus when efforts are on
one small, well-defined group that has a unique, specific
set of needs
Niche segments are usually very small compared to the
total market for the product
Many airlines cater to first-class flyers, who comprise
only 10% of international air travelers
To meet the needs of these elite customers, airlines
include special perks along with spacious seats

11-52
Market Segmentation Approaches
For a firm to successfully use a concentration or
multisegment approach to market segmentation:
1. Consumers needs for the product must be heterogeneous
2. The segments must be identifiable and divisible
3. The total market must be divided in a way that allows
estimated sales potential, cost, and profits of the segments
to be compared
4. At least one segment must have enough profit potential to
justify developing and maintaining a special marketing
strategy
5. The firm must be able to reach the chosen market segment
with a particular market strategy

11-53
Bases for Segmenting Markets

Companies segment markets on the basis of several

variables:

Demographic Geographic Psychographic Behavioristic

11-54
Developing a Marketing Mix

Marketing Mix
The four marketing activitiesproduct, price, promotion,
and distributionthat the firm can control to achieve
specific goals within a dynamic marketing environment
The buyer or the target market is the central focus of
all marketing activities

11-55
The Marketing Mix:
Product, Price, Promotion, and Distribution

11-56
Product
A product whether a
Good A physical entity you can touch (a car,
computer, or adopted kitten)
Service The application of human and mechanical
efforts to people or objects to provide intangible benefits
to customers (Air travel, dry cleaning, or haircuts)
Idea Can be a concept, philosophy, image, or issue
(attorney advise or political parties)
Is a complex mix of tangible and intangible attributes that
provide satisfaction and benefits

11-57
Price

Price
A value placed on an object exchanged between a
buyer and a seller
The buyer usually exchanges purchasing power
income, credit, wealthfor the satisfaction of utility
associated with a product
Key element of the marketing mix because it relates
directly to the generation of revenue and profits
Can be changed quickly to stimulate demand or
respond to competitors actions

11-58
Distribution
Distribution
Making products available to customers in the quantities
desired
Sometimes referred to as place because it helps to
remember the marketing mix as the 4 Ps
Product, price, place, and promotion
Intermediariesusually wholesalers and retailers
perform many of the activities required to move products
efficiently from producers to consumers or industrial
buyers
Involves transporting, warehousing, materials handling,
and inventory control
11-59
Promotion

Promotion
A persuasive form of communication that attempts to
expedite a marketing exchange by influencing individuals,
groups, and organizations to accept goods, services, and
ideas
Includes advertising, personal selling, publicity, and
sales promotion
Digital advertising on websites and social media sites
are growing

11-60