BA 100 Chapter 13

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CHAPTER 13
Marketing:
Helping Buyers
Buy

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LEARNING OBJECTIVES 1 of 2
1. Define marketing, and apply the marketing concept to
both for-profit and nonprofit organizations.
2. Describe the four Ps of marketing.
3. Summarize the marketing research process.

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LEARNING OBJECTIVES 2 of 2
4. Show how marketers use environmental scanning to
learn about the changing marketing environment.
5. Explain how marketers apply the tools of market
segmentation, relationship marketing and the study
of consumer behavior.
6. Compare the business-to-business market and the
consumer market.

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DAYMOND JOHN
FUBU
• Started sewing wool hats in his
apartment in 1989 and sold them
on the street.
• He started designing other
products and created the brand
FUBU.
• After many rocky years, John
has earned millions and advises
others on Shark Tank. Photo credit: © Frederick M. Brown/Stringer/Getty Images

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NAME that COMPANY
This company studies population growth and
regional trends as it expands its product line for
specific regions of the country. Its research led to the
creation of Creole flavors targeted primarily in the
South and spicy nacho chees flavors mad especially
for Texas and California.
Name that company!

6. ©McGraw-Hill Education.
WHAT’S MARKETING? LO 13-1
Marketing -- The activity, set of institutions and
processes for creating, communicating, delivering, and
exchanging offerings with value for customers, clients,
partners, and society at large.
Photo credit: (c) Lars A. Niki

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FOCUS of CONTEMPORARY
MARKETING LO 13-1
Marketing today involves helping the buyer buy
through:
- Websites that help buyers find the best price,
identify product features, and question sellers.
- Blogs and social networking sites that cultivate
consumer relationships.

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FOUR ERAS of U.S. MARKETING LO 13-1
Production Era
Selling Era
Marketing Concept Era
Customer Relationship Era Photo credit: Library of Congress Prints and Photographs Division [LC-DIG-nclc-04454]

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The PRODUCTION and
SELLING ERAS LO 13-1
The general philosophy was
“Produce what you can
because the market is
limitless.”
After mass production, the
focus turned from production
to persuasion.
Photo credit: © Bettmann/Corbis

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The MARKETING CONCEPT ERA LO 13-1
After WWII, a consumer spending boom developed.
Businesses knew they needed to be responsive to
consumers if they wanted their business.
Photo credit: © David Schaffer / age fotostock

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APPLYING the
MARKETING CONCEPT LO 13-1
The Marketing Concept includes three parts:
1. Customer Orientation -- Finding out what customers
want and then providing it.
2. Service Orientation -- Making sure everyone in an
organization is committed to customer satisfaction.
3. Profit Orientation -- Focusing on the goods and
services that will earn the most profit.

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The CUSTOMER
RELATIONSHIP ERA LO 13-1
Customer Relationship Management (CRM) --
Learning as much as you can about customers and
doing what you can to satisfy or exceed their
expectations.
Organizations seek to enhance customer satisfaction
building long-term relationships.
Today firms like Priceline and Travelocity use CRM
that allow customers to build a relationship with the
suppliers.

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The EMERGING
MOBILE MARKETING ERA LO 13-1
As digital technology continues to grow, consumer
demands are expected to rise in:
1. Now: Consumers want to interact anywhere, anytime.
2. Can I?: They want to use information in new ways that
create value for them.
3. For me: Consumers expect personalized experiences.
4. Simply: Consumers want all interactions to be easy.

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SERVICE with a SMILE
Six Steps for Keeping Your Customers Happy LO 13-1
The cost of acquiring a new customer is 5x the cost
of retaining one. Here’s how to keep them:
1. Build trust
2. Emphasize the long term
3. Listen
4. Treat your customers like stars
5. Show appreciation
6. Remember employees are
customers too!
Source: Inc. Guidebook, Vol. 2 No. 5.
Photo credit: (c) 2007 Keith Eng

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MAKING SUSTAINABILITY
JUST PEACHY
Campbell Soup is one of the 100 Most Sustainable
Corporations in the World.
The company works with local farmers in New
Jersey to use peaches unfit for purchase.
Campbell’s manufactures peach salsa at no cost and
donates proceeds to the Food Bank of South Jersey.
Photo credit: © Foodcollection/Getty Images RF

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NONPROFIT MARKETING LO 13-1
Nonprofit marketing tactics include:
- Fundraising
- Public Relations
- Special Campaigns
- Ecological practices
- Changing public opinions and
attitudes
- Increasing organizational
membership
Photo credit: Courtesy of the Dental Trade Alliance and the Ad Council

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MARKETING STRATEGIES for
NONPROFITS LO 13-1
Nonprofit marketing strategies include:
- Determine the firm’s goals and objectives
- Focus on long-term marketing
- Find a competent board of directors
- Exercise strategic planning
- Train and develop long-term volunteers
- Carefully segment the target market

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The FOUR Ps LO 13-2

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DEVELOPING a PRODUCT LO 13-2
Product -- A good, service, or idea that satisfies a
consumer’s want or need.
Test Marketing -- Testing
product concepts among
potential product users.
Brand Name -- A word, letter,
or a group of words or letters
that differentiates one seller’s
goods from a competitor’s. Photo credit: Caia Image/Glow Images

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PRICING and
PLACING a PRODUCT LO 13-2
Pricing products depends on many factors:
- Competitors’ prices
- Production costs
- Distribution
- High or low price strategies
Middlemen are important in place strategies because
getting a product to consumers is critical.
Photo credit: © Burke/Triolo/Brand X Pictures RF

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PROMOTING the PRODUCT LO 13-2
Promotion -- All the techniques sellers use to inform
people about their products and motivate them to
purchase those products.
Promotion includes:
- Advertising
- Personal selling
- Public relations
- Word of mouth
- Sales promotions
Photo Courtesy of: Uri Baruchin

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PERFECT PROMOTION
How to Get Customers to Need Your Product LO 13-2
Get customers emotional about your product:
- Make your product “built to love.”
- Use emotion-laden advertising.
Be a likeable salesperson:
- Have confidence.
- Be intriguing.
- Show interest in others.
- Be enthusiastic and respectful.
Sources: Entrepreneur, www.entrepreneur.com, accessed November 2014.
Photo credit: John Lund/Drew Kelly/Blend Images LLC

23. ©McGraw-Hill Education.
TANGLED WEB of PROMOTION
Seven Sins of Web Design LO 13-2
• Too much clutter
• Too difficult to navigate
• Stale information
• Copycatting
• Ignoring the needs of your
customer base
• Not analyzing data
• Refusing to get outside help
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.
Photo Creditf: Cortes de Cima

24. ©McGraw-Hill Education.
TEST PREP 1 of 3
1. What does it mean to “help the buyer buy?”
2. What are the three parts of the marketing
concept?
3. What are the Four Ps of the marketing mix?

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SEARCHING for INFORMATION LO 13-3
Marketing Research -- Analyzing markets to
determine challenges and opportunities, and finding the
information needed to make good decisions.
Research is used to identify products consumers
have used in the past and what they want in the
future.
Research uncovers market trends and attitudes held
by company insiders and stakeholders.

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FOUR STEPS in the MARKETING
RESEARCH PROCESS LO 13-3
1. Defining the problem or opportunity and
determining the present situation.
2. Collecting research data.
3. Analyzing the data.
4. Choosing the best solution and implementing it.

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DEFINING the PROBLEM
or OPPORTUNITY LO 13-3
• What’s the present
situation?
• What are the alternatives?
• What information is
needed?
• How should the
information be gathered?
Photo credit: ©Mark Edward Atkinson/Blend Images LLC

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COLLECTING SECONDARY
RESEARCH DATA LO 13-3
Secondary Data -- Existing data that has previously
been collected by sources like the government.
Secondary data incurs no
expense and is usually
easily accessible.
Secondary data doesn’t
always provide all the
needed information for
marketers.
Photo credit: ©Jose Luis Pelaez Inc/Blend Images LLC

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COLLECTING PRIMARY
RESEARCH DATA LO 13-3
Primary Data -- In-depth information gathered by
marketers from their own research.
Telephone, online and mail surveys, personal
interviews, and focus groups are ways to collect
primary data.
Photo credit: Photographer's Choice/SuperStock

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FOCUS GROUPS LO 13-3
Focus Group -- A group of people who meet under the
direction of a discussion leader to communicate
opinions.
Photo credit: (c) Marmaduke St. John / Alamy

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ANALYZING the DATA and IMPLEMENTING
the DECISION LO 13-3
Marketers must turn data into useful information.
Must use their analysis to plan strategies and make
recommendations.
Finally, marketers must evaluate their actions and
determine if further research is needed.

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KEY BENEFITS of
MARKETING RESEARCH LO 13-3
• Analyze customer needs and satisfaction.
• Analyze current markets and opportunities.
• Analyze the effectiveness of marketing strategies.
• Analyze marketing process and tactics currently
used.
• Analyze the reasons for goal achievement or
failure.

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WAYS to FIND OUT WHAT CONSUMERS
THINK LO 13-3
• Conduct informal consumer
surveys
• Host a customer focus
group
• Listen to competitor’s
customers
• Survey your sales force
• Become a “phantom”
customer
Photo credit: © Hero/Corbis/Glow Images

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SCANNING the MARKETING
ENVIRONMENT LO 13-4
Environmental Scanning -- The process of
identifying factors that affect marketing success.
Factors involved in the environmental scan include:
- Global factors
- Technological factors
- Sociocultural factors
- Competitive factors
- Economic factors

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TWO is BETTER THAN ONE
• China is setting aside its strict one-
child policy and allowing two
children if one of the spouses is an
only child.
• Legos are far more expensive in
China and part of that is due to
distribution costs.
• By building a factory near
Shanghai, Lego hopes to take
advantage of the potential market
growth and lessen the price for
families.
Photo credit: © NI QIN/E+/Getty Images RF

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The MARKETING ENVIRONMENT LO 13-4
Jump to Appendix 1 for long image description

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The ABCs of MARKETING LO 13-4
• Always be customer-focused.
• Benchmark against the best firms.
• Continuously improve performance.
• Develop the best value package.
• Empower your employees.
• Focus on relationship building.
• Goal achievement is the reward.
Photo credit: © Image Source, all rights reserved

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The CONSUMER and
B2B MARKET LO 13-4
Consumer Market -- All the individuals or households that
want goods and services for personal use and have the
resources to buy them.
Business-to-Business (B2B) -- Individuals and
organizations that buy goods and services to use in
production or to sell, rent, or supply to others.
Photo credit: © Torsten Silz/AFP/Getty Images

39. ©McGraw-Hill Education.
TEST PREP 2 of 3
1. What are the four steps in the marketing research
process?
2. What’s environmental scanning?
3. What factors are included in environmental
scanning?

40. ©McGraw-Hill Education.
MARKETING to CONSUMERS LO 13-5
The size and diversity of the consumer market forces
marketers to decide which groups they want to
serve.
Market Segmentation -- Divides the total market into
groups with similar characteristics.
Target Marketing -- Selecting which segments an
organization can serve profitably.

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SEGMENTING the
CONSUMER MARKET 1 of 4 LO 13-5
Geographic Segmentation -- Dividing the market by
cities, counties, states, or regions.
Demographic Segmentation -- Dividing the market
by age, income, education, and other demographic
variables.
Psychographic Segmentation -- Dividing the market
by group values, attitudes, and interests.

42. ©McGraw-Hill Education.
SEGMENTING the
CONSUMER MARKET 2 of 4 LO 13-5
Benefit Segmentation -- Dividing the market
according to product benefits the customer prefers.
Volume (Usage) Segmentation -- Dividing the
market by the volume of product use.

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SEGMENTING the
CONSUMER MARKET 3 of 4 LO 13-5
Jump to Appendix 2 for long image description

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SEGMENTING the
CONSUMER MARKET 4 of 4 LO 13-5
Jump to Appendix 3 for long image description

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MARKETING to
SMALL SEGMENTS LO 13-5
One-to-One Marketing-- Developing a unique mix of
goods and services for each individual consumer.
Niche Marketing -- Identifies small but profitable
market segments and designs or finds products for them.

46. ©McGraw-Hill Education.
MASS MARKETING vs.
RELATIONSHIP MARKETING LO 13-5
Mass Marketing -- Developing products and
promotions to please large groups of people.
Relationship Marketing-- Rejects the idea of mass
production and focuses toward custom-made goods and
services for customers.
Photo credit: © RJ Sangosti/The Denver Post/Getty Images

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KEYS to SUCCESSFUL RELATIONSHIP
MARKETING LO 13-5
Effective relationship marketing is built on:
- Open communication
- Consistently reliable service
- Staying in contact with customers
- Trust, honesty, and ethical behavior
- Showing that you truly care

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STEPS in the CONSUMER
DECISION-MAKING PROCESS LO 13-5
1. Problem recognition
2. Search for information
3. Evaluating alternatives
4. Purchase decision
5. Postpurchase evaluation
Photo credit: © Dmitri Maruta / Alamy

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TURNING NEGATIVES to POSITIVE
• Online product reviews have changed the
consumer decision-making process.
• But the reviews are not always valid because they
could be written about the experience instead of
the product.
• Amazon hopes to correct this issue and has
started a program in which the site’s most trusted
reviewers are sent products to write about.

50. ©McGraw-Hill Education.
KEY FACTORS in CONSUMER
DECISION-MAKING LO 13-5
• Learning
• Reference Groups
• Culture
• Subcultures
• Cognitive Dissonance
Photo Credit: Peter Hilton

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TOP MARKETING CHALLENGES LO 13-5
Marketing can be challenging in both the B2C and
B2B markets.
Common issues are:
- Brand awareness
- Social media
- Converting leads into customers
- Budgeting
- Increasing profit
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.

52. ©McGraw-Hill Education.
BUSINESS-to-BUSINESS
MARKET (B2B) LO 13-6
B2B marketers include:
- Manufacturers
- Wholesalers and retailers
- Hospitals, schools and charities
- Government
Products are often sold and resold several times
before reaching final consumers.
Photo credit: ©Space Images/Blend Images LLC

53. ©McGraw-Hill Education.
B2B MARKET DIFFERENCES LO 13-6
Jump to Appendix 4 for long image description

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TEST PREP 3 of 3
1. Define the terms consumer market and business-
to-business market.
2. Name and describe five ways to segment the
consumer market.
3. What is niche marketing and how does it differ
from one-to-one marketing?
4. What are four key factors that make B2B markets
different from consumer markets?

55. ©McGraw-Hill Education.
Appendix 1: The MARKETING ENVIRONMENT
The consumer is the center of a circular graphic, surrounded by
another circle divided into four, equal sections—product, price, place,
and promotion. The five factors of the marketing environment and their
meanings comprise the outermost circle:
Global: trade agreements, competition, trends, opportunities, and
Internet
Technological: computers, telecommunications, bar codes, data
interchange, and Internet changes
Sociocultural: population shifts, values, attitudes, and trends
Competitive: speed, service, price, and selection
Economic: GDP, disposable income, competition, and unemployment
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56. ©McGraw-Hill Education.
Appendix 2: SEGMENTING the
CONSUMER MARKET 3 of 4
Geographic segmentation sample variables:
• Region (Northeast, Midwest, South, West)
• City or county size (Under 5,000; 5,000-10,999; 11,000-19,999; 20,000-49,000;
50,000 and up)
• Density (Urban, suburban, rural)
Demographic segmentation sample variables:
• Gender (male, female)
• Age (Under 5; 5-10; 11–18; 19–34; 35–49; 50–64; 65 and over)
• Education (Some high school or less, high school graduate, some college, college
graduate, postgraduate)
• Race (Caucasian, African American, Indian, Asian, Hispanic)
• Nationality (American, Asian, Eastern European, Japanese)
• Life stage (Infant, preschool, child, teenager, collegiate, adult, senior)
• Income (Under $15,000; $15,000–$24,999; $25,000–$44,999; $45,000–$74,999;
$75,000 and over)
• Household size (1; 2; 3-4; 5 or more)
• Occupation (Professional, technical, clerical, sales supervisors, farmers, students,
home-based business owners, retired, unemployed)
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57. ©McGraw-Hill Education.
Appendix 3: SEGMENTING the
CONSUMER MARKET 4 of 4
Psychographic segmentation sample variables:
• Personality (Gregarious, compulsive, extroverted, aggressive, ambitious)
• Values (Actualizers, fulfillers, achievers, experiencers, believers, strivers, makers,
strugglers)
• Lifestyle (Upscale, moderate)
Benefit segmentation sample variables:
• Comfort, convenience, durability, economy, health, luxury, safety, status
• Benefit segmentation divides an already established market into smaller, more
homogeneous segments. Those people who desire economy in a car would be an
example. The benefit desired varies by product.
Volume segmentation sample variables:
• Usage (Heavy users, light users, nonusers)
• Loyalty status (None, medium, strong)
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58. ©McGraw-Hill Education.
Appendix 4: B2B MARKET DIFFERENCES
Market structure characteristics of the business-to-business market: relatively few
potential customers; larger purchases; geographically concentrated
Market structure characteristics of the consumer market: many potential customers;
smaller purchases; geographically dispersed
Product characteristics of the business-to-business market: require technical, complex
products; frequently require customization; frequently require technical advice, delivery, and
after-sale service; buyers are trained
Product characteristics of the consumer market: require less technical products; sometimes
require customization; sometimes require technical advice, delivery, and after-sale service; no
special training
Buying procedure characteristics of the business-to-business market: negotiate details of
most purchases; follow objective standards; formal process involving specific employees;
closer relationships between marketers and buyers; often buy from multiple sources
Buying characteristics of the consumer market: accept standard terms for most purchases;
use personal judgement; informal process involving household members; impersonal
relationships between marketers and consumers; rarely buy from multiple sources
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