Chapter 11 – Building customer relations through effective marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
Relationship marketing
The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
Exchange functions
All manufacturers, wholesalers, and retailers—buy and sell to market their merchandise.
Physical distribution functions
These functions involve the flow of goods from producers to customers.
Facilitating functions
These functions help the other functions to take place.
8 major marketing functions:
1) Buying includes obtaining raw materials to make products, knowing how much merchandise to keep on hand, and selecting suppliers
2) Selling creates possession utility by transferring the title of a product from seller to custom
3) Transporting involves selecting a mode of transport that provides an acceptable delivery schedule at an acceptable price
4) Storing goods is often necessary to sell them at the best selling time
5) Financing helps at all stages of marketing. To buy raw materials, manufacturers often borrow from banks or receive credit from suppliers. Wholesalers may be financed by manufacturers, and retailers may receive financing from the wholesaler or manufacturer. Finally, retailers often provide financing to customers
6) Standardization sets uniform specifications for products or services. Grading classifies products by size and quality, usually through a sorting process. Together, standardization and grading facilitate production, transportation, storage, and selling
7) Risk taking—even though competent management and insurance can minimize risks—is a constant reality of marketing because of such losses as bad-debt expense, obsolescence of products, theft by employees, and product-liability lawsuits
8) Gathering market information is necessary for making all marketing decisions.
Customer relationship management (CRM)
Focuses on using information about customers to create marketing strategies that develop and sustain desirable customer relationships.
Customer lifetime value (CLV)
Is a measure of a customer’s worth (sales minus costs) to a business during one’s lifetime.4 CLV also includes the intangible benefits of retaining lifetime-value customers, such as their ability to provide feedback to a company and refer new customers of similar value, but these are important considerations as well.
The ability of a good or service to satisfy a human need.
4 types of utilities
1) Form
2) Place
3) Time
4) Possession
Form utility
Created by converting production inputs into finished products.
Place utility
Created by making a product available at a location where customers wish to purchase it
Time utility
Created by making a product available when customers wish to purchase it.
Possession utility
Created by transferring title (or ownership) of a product to a buyer. For a product as simple as a pair of shoes, ownership usually is transferred by means of a sales slip or receipt.
Marketing concept
A business philosophy that a firm should provide goods and services that satisfy customers’ needs through a coordinated set of activities that allow the firm to achieve its objectives.
Production orientation
Which places a strong emphasis on increased output and production efficiency.
Sales orientation
Characterized by increased advertising, enlarged sales forces, and, occasionally, high-pressure selling techniques.
Customer orientation
When marketers realized that the best approach was to adopt this type of orientation—in other words, the organization had to first determine what customers need and then develop goods and services to fill those particular needs
The firm must mobilize its marketing resources to:
(1) provide a product that will satisfy its customers, (2) price the product at a level that is acceptable to buyers and will yield a profit
(3) promote the product so that potential customers will be aware of its existence and its ability to satisfy their needs
(4) ensure that the product is distributed so that it is available to customers where and when it is needed
A group of individuals or organizations, or both, that need products in a given category and that have the ability, willingness, and authority to purchase them.
Consumer markets
Consist of purchasers and/or household members who intend to consume or benefit from the purchased products and who do not buy products to make profits.
Business-to-business markets
Also called industrial markets, are grouped broadly into producer, reseller, governmental, and institutional categories. These markets purchase specific kinds of products for use in making other products for resale or for day-to-day operations.
Producer markets
Consist of individuals and business organizations that buy certain products to use in the manufacture of other products.
Reseller markets
Consist of intermediaries, such as wholesalers and retailers, who buy finished products and sell them for a profit.
Governmental markets
Consist of federal, state, county, and local governments. They buy goods and services to maintain internal operations and to provide citizens with such products as high- ways, education, water, energy, and national defense.
International markets
Include churches, not-for-profit private schools and hospitals, civic clubs, fraternities and sororities, charitable organizations, and foundations. Their goals are different from the typical business goals of profit, market share, or return on investment.
Marketing strategy
A plan that will enable an organization to make the best use of its resources and advantages to meet its objectives. A marketing strategy consists of
(1) the selection and analysis of a target market and (2) the creation and maintenance of an appropriate marketing mix
Marketing mix
A combination of product, price, distribution, and promotion developed to satisfy a particular target market
Target market
A group of individuals or organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group.
Undifferentiated approach
Directing a single marketing mix at the entire market for a particular product
Market segment
A group of individuals or organizations within a market that shares one or more common characteristics.
Market segmentation
The process of dividing a market into segments and directing a marketing mix at a particular segment or segments rather than at the total market
1) Concentrated
2) Differentiated
Two market segmentation approaches:
Concentrated marketing segmentation
A single marketing mix is directed at a single market segment.
Differentiated market segmentation
Multiple marketing mixes are focused on multiple market segments.
1) Product itself
2) Price of the product
3) Means chosen for its distribution
4) Promotion of the product.
A business firm controls four important elements of marketing that it combines in a way that reaches the firm’s target market.

When combined, these four elements form a marketing mix

The following forces make up the external marketing environment:
1) Economic forces
2) Sociocultural forces
3) Political forces
4) Competitive forces
5) Legal & Regulatory forces
6) Technological forces
Marketing plan
A written document that specifies an organization’s resources, objectives, marketing strategy, and implementation and control efforts to be used in marketing a specific product or product group.
Sales forecast
An estimate of the amount of a product that an organization expects to sell during a certain period of time based on a specified level of marketing effort
1) Executive judgments
2) Surveys of buyers or sales personnel
3 Time-series analyses
4) Correlation analyses
5) Market tests
Forecasting methods include (5)
Marketing information system
A system for managing marketing information that is gathered continually from internal and external sources. Most of these systems are computer based because of the large quantities of data the system must accept, store, sort, and retrieve.
Marketing research
The process of systematically gathering, recording, and analyzing data concerning a particular marketing problem.
A collection of information arranged for easy access and retrieval.
1. Define the problem
2. Make a preliminary investigation
3. Plan the research
4. Gather factual information
5. Interpret the information
6. Reach a conclusion
The Six Steps of Marketing Research:
Single-source data
Information provided by a single firm on household demographics, purchases, television viewing behavior, and responses to promotions such as coupons and free samples.
Online information services
Offer subscribers access to e-mail, websites, down- loadable files, news, databases, and research materials.
Buying behavior
The decisions and actions of people involved in buying and using products
Consumer buying behavior
The decisions and actions of people involved in buying and using products
Business buying behavior
The purchasing of products by producers, resellers, governmental units, and institution
Personal income
The income an individual receives from all sources less the Social Security taxes the individual must pay
Disposable income
Personal income less all additional personal taxes
Discretionary income
Disposable income less savings and expenditures on food, clothing, and housing

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