Understanding the Customer
and Creating Goods and Services
that Satisfy
Chapter 11
Chapter 11 Learning Goals
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What are the marketing concept and
relationship building?
How do managers create a marketing
strategy?
What is the marketing mix?
How do consumers and organizations make
buying decisions?
Chapter 11 Learning Goals (cont’d.)
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•
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What are the five basic forms of market
segmentation?
How is marketing research used in
marketing decision making?
What are the trends in understanding the
consumer?
Learning Goal 1
• What are the marketing concept and relationship
building?
– Marketing concept involves
• Identifying consumer needs and wants
• Producing goods or services that will satisfy consumers while
making a profit
– Relationship marketing entails
• Forging long-term relationships with customers
• Can lead to repeat sales, reduced costs, and stable relationships
Marketing Concept:
Identifying consumer needs and
then producing the goods or
services that will satisfy them
while making a profit for the
organization
Elements of the Marketing Concept
• Customer value
• Customer satisfaction
• Building relationships
Deere’s Customer Orientation
• Understand needs of the agricultural farmer
customer
• Provide good products that rarely fail
• Quickly repair any problem equipment
• Develop products based on what farmers want
• Extend credit to farmers if needed; build trust
and loyalty
• Provide information that increases customer
value
Source: Neff & Citrin, Lessons from the Top, 1999, p. 47-53.
Learning Goal 2
• How do managers create a marketing strategy?
– Marketing strategies are created by
• Understanding the external environment
– Using environmental scanning
• Defining the target market
– Specific group of consumers toward which a firm directs its
marketing efforts
• Determining a competitive advantage
– Set of unique features of a company and its products
– Perceived by target market as significant and superior to those of the
competition
• Developing a marketing mix
Creating a Marketing Strategy
• Understanding the external
environment
• Defining the target market
• Creating a competitive advantage
– cost competitive advantage
– differential competitive advantage
– niche competitive advantage
Learning Goal 3
• What is the marketing mix?
– Marketing mix is a blend of
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Products
Distribution systems
Prices
Promotion
– Marketing mix is used by marketing managers to satisfy
target consumers
– Mix can be applied to non-business or business situations
Marketing Mix:
The blend of ‘4 Ps’: product
offering, pricing, promotional
methods, and place (distribution
system) that brings a specific group
of consumers superior value
Developing a Marketing Mix
• Product strategy
• Pricing strategy
• Distribution strategy
• Promotion strategy
360° Branding
360° branding: making a strong brand impact on
the customer every time contact is made
Opportunities for 360° branding:
– showrooms, advertisements, web pages, retail
locations, packaging, customer service
Ogilvy & Mather advertising agency applies 360°
branding to its clients
Source: Neff & Citrin, Lessons from the Top, 1999, p. 221-227.
Learning Goal 4
• How do consumers and organizations make buying
decisions?
– Consumer decision making process consists of:
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Responding to a stimulus
Recognizing a problem or opportunity
Seeking information and evaluating alternatives
Purchasing the product and judging the purchase outcome
Engaging in post-purchase behavior
– Factors that influence the process
• Individual factors – unique to each person
• Social factors – family, social classes, and culture
Learning Goal 4
(cont’d.)
• How do consumers and organizations make buying
decisions?
– Differences between consumer and business markets:
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Purchase volume
Number of customers
Location of buyers
Direct distribution
Rational purchase decisions
Buyer Behavior:
Consumer Decision-Making
1. Sense stimulus
2. Recognize problem
3. Search for information
Individual &
Social factors
4. Evaluate alternatives
5. Purchase product
6. Evaluate outcome
7. Post-purchase behavior
Memory
When the Buyer is a Business
(Not a Customer)
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Higher purchase volume
Fewer buyers
More concentrated location of buyers
Direct distribution
Rational purchase decisions
Top 10
Business-to-Business Advertisers
1. AT&T Corp.
2. IBM Corp.
3. Microsoft Corp.
4. Compaq Computer Corp.
5. MCI Communications Corp.
6. Hewlett-Packard Co.
7. Sprint Corp.
8. American Express Co.
9. Canon
10. 3Com Corp.
Source: Business Marketing,
www.businessmarketing.com
Learning Goal 5
• What are the five basic forms of market
segmentation?
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Demographic (population statistics)
Geographic (location)
Psychographic (personality or lifestyle)
Benefit (product features)
Volume (amount purchased)
Market Segmentation:
The process of separating,
identifying, and evaluating the
layers of a market in order to
design a marketing mix
Types of Market Segmentation
Type
General characteristics
Demographic
age, education, gender, income, race,
family, size
regional location (I.e., midwest),
population density, city/county size,
climate
lifestyle, personality, interests, values,
attitudes
benefits provided by the good or
service
amount of use (light to heavy)
Geographic
Psychographic
Benefit
Volume
Learning Goal 6
• How is marketing research used in marketing
decision making?
– Much can be learned about consumers through marketing
research by
• Collecting, recording, and analyzing data important in marketing
goods and services
• Communicating results to management
– Primary data is
• Collected in these ways:
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Door-to-door
Mall-intercept
Telephone
Internet
Mail interviews
Learning Goal 6
(cont’d.)
• How is marketing research used in marketing decision
making?
– Secondary data
• Available from these associations:
– Government
– Trade
– Commercial
• Saves time and money but may not meet researchers’ needs
– Both primary and secondary data give researchers a better
idea of how market will respond to a product
– Reduces the risk of producing something the market doesn’t
want
Marketing Research Process
1. Define the marketing problem
2. Choose a method of research
survey, observation, experiment
3. Collect the data
primary data, secondary data
4. Analyze the data
5. Make recommendations to management
Learning Goal 7
• What are the trends in understanding the consumer?
– New technology has:
• Increased the sophistication of observation research techniques
• Improved the accuracy of data
• Researchers are analyzing the brain to better understand how
people think
– Growing use of decision support systems
• Enable managers to make decisions quickly and accurately
– Growing use of databases for micromarketing
Trends in Marketing
 Advanced observation research methods
 Decision support systems (DSS)
 Use of databases for micromarketing
 allows customized marketing to individuals
 Amazon.com records what every customer buys; this gives
them a sense of every customer’s taste & preferences, which
can be used to target specific customers with customized
purchase suggestions & special offers (Source: Fortune, Sept. 28,
1998, p. 124)