Business In Action: Thriving in the Digital Enterprise Chapter 12

Business in Action: Thriving in the Digital Enterprise Tenth Edition, Global Edition Chapter 12 The Art and Science of Marketing © 202...

Business in Action: Thriving in the Digital Enterprise Tenth Edition, Global Edition Chapter 12 The Art and Science of Marketing © 2024, Pearson Education Ltd. All Rights Reserved Learning Objectives (1 of 2) 12.1 Define marketing, and explain its role in society. 12.2 Identify five trends that help define contemporary marketing. 12.3 Differentiate between consumer buying behavior and organizational buying behavior. 12.4 Define strategic marketing planning, and identify the four basic options for pursuing new marketing opportunities. © 2024, Pearson Education Ltd. All Rights Reserved Learning Objectives (2 of 2) 12.5 Identify the four steps in crafting a marketing strategy. 12.6 Describe the four main components of the marketing mix. 12.7 Define marketing analytics, and characterize its use in contemporary marketing. © 2024, Pearson Education Ltd. All Rights Reserved Marketing in a Changing World Marketing – The process of creating value for customers and building relationships with those customers in order to capture value back from them © 2024, Pearson Education Ltd. All Rights Reserved The Role of Marketing in Society (1 of 3) Needs – Differences between a person’s actual state and their ideal state; they provide the basic motivation to make a purchase Wants – Specific goods, services, experiences, or other entities that are desirable in light of a person’s experiences, culture, and personality © 2024, Pearson Education Ltd. All Rights Reserved The Role of Marketing in Society (2 of 3) Exchange process – The act of obtaining a desired object or service from another party by offering something of value in return Transaction – An exchange of value between parties © 2024, Pearson Education Ltd. All Rights Reserved The Role of Marketing in Society (3 of 3) Utility – The power of a good or service to satisfy a human need – Form, time, place, and possession © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Concept (1 of 2) Marketing concept – An approach to business management that stresses customer needs and wants, seeks long-term profitability, and integrates marketing with other functional units within the organization © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Concept (2 of 2) Relationship marketing – A focus on developing and maintaining long-term relationships with customers, suppliers, and distribution partners for mutual benefit Customer loyalty – The degree to which customers continue to buy from a particular retailer or buy the products of a particular manufacturer or service provider © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.1 The Selling Concept Versus the Marketing Concept © 2024, Pearson Education Ltd. All Rights Reserved Challenges in Contemporary Marketing Involving the customer in the marketing process Making data-driven decisions Conducting marketing activities with greater concern for ethics and etiquette © 2024, Pearson Education Ltd. All Rights Reserved Involving the Customer in the Marketing Process Customer Relationship Management (CRM) – A type of information system that captures, organizes, and capitalizes on all the interactions that a company has with its customers Social commerce – The creation and sharing of product-related information among customers and potential customers Voice of the Customer (VoC) – Everything that current and potential customers are saying and writing about a company and its products; also refers to efforts to capture all this feedback © 2024, Pearson Education Ltd. All Rights Reserved Making Data-Driven Decisions and Measuring Marketing ROI Attribution – The contribution a given marketing activity makes to sales and other marketing goals Marketing research – The collection and analysis of information for making marketing decisions – Observation, surveys, interviews, and focus groups © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.2 AI-Enhanced Marketing Research © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.3 (1 of 2) Marketing Research Techniques Technique Definition and Examples Observation Any in-person, mechanical, or electronic technique that monitors and records behavior, including website usage tracking, television viewing monitoring, and social media monitoring. Surveys Data collection efforts that measure responses from a representative subset of a larger group of people; can be conducted in person (when people with clipboards stop you in a mall, that’s called a mall intercept), over the phone, by mail or email, or online. Designing and conducting a meaningful survey requires thorough knowledge of statistical techniques such as sampling to ensure valid results that truly represent the larger group. For this reason, many of the simple surveys that you see online these days do not produce statistically valid results. Longitudinal studies survey the same group of people over a period of time. Interviews, focus One-on-one or group discussions that try to probe deeper into issues than a survey groups, and research typically does. Focus groups involve a small number of people guided by a facilitator while panels being observed or recorded by researchers. Unlike surveys, interviews and focus groups are not designed to collect statistics that represent a larger group; their real value is in uncovering issues that might require further study. Research panels are groups of people who agree to participate (in person or online) in an ongoing series of research activities, including surveys, interviews, and focus groups). © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.3 (2 of 2) Marketing Research Techniques Technique Definition and Examples Process data Any method of collecting data during the course of other business activities, collection including warranty registrations, sales transactions, gift and loyalty program usage, and customer service interactions. Experiments Controlled scenarios in which researchers adjust one or more variables to measure the effect these changes have on customer behavior.. Test marketing, the launch of a product under real-world conditions but on a limited scale (such as in a single city), is a form of experimental research. Ethnographic A branch of anthropology that studies people in their daily lives to learn about research their needs, wants, and behaviors in real-life settings. Neuromarketing Research that measures brain activity and other biological responses while studies customers are viewing or interacting with products, websites, or other elements; can help explain the subconscious decisions that people have difficulty describing in surveys, interviews, and focus groups. © 2024, Pearson Education Ltd. All Rights Reserved Marketing With Greater Concern for Ethics and Etiquette Permission-based marketing – A marketing approach in which firms first ask permission to deliver messages to an audience and then promise to restrict their communication efforts to those subject areas in which audience members have expressed interest © 2024, Pearson Education Ltd. All Rights Reserved Creating Satisfying Customer Experiences Customer experience – The cumulative effect of the customer journey from presales exploration through purchase through product use and ownership Touchpoint – Any point of interaction online, on the phone, or in person between a company and its current and potential customers © 2024, Pearson Education Ltd. All Rights Reserved Understanding Today’s Customers Consumer market – Individuals or households that buy goods and services for personal use Organizational market – Companies, government agencies, and other organizations that buy goods and services either to resell or to use in the creation of their own goods and services © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.4 Buyer Decision-Making © 2024, Pearson Education Ltd. All Rights Reserved The Consumer Decision Process Cognitive dissonance – Tension that exists when a person’s beliefs don’t match his or her behaviors – Common example is buyer’s remorse, when someone regrets a purchase immediately after making it © 2024, Pearson Education Ltd. All Rights Reserved Identifying Market Opportunities Strategic marketing planning – The process of examining an organization’s current marketing situation, assessing opportunities and setting objectives, and then developing a marketing strategy to reach those objectives © 2024, Pearson Education Ltd. All Rights Reserved Purchase Influences Culture Socioeconomic level Reference groups Situational factors Self-image © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.5 The Strategic Marketing Planning Process © 2024, Pearson Education Ltd. All Rights Reserved Assessing Opportunities and Setting Objectives (1 of 2) Market penetration – Selling more of a firm’s existing products in the markets it already serves Product development – Creating new products for a firm’s current markets Market development – Selling existing products to new markets © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.6 Pursuing Market Opportunities © 2024, Pearson Education Ltd. All Rights Reserved Assessing Opportunities and Setting Objectives (2 of 2) Diversification – Creating new products for new markets Market share – A firm’s portion of the total sales in a market © 2024, Pearson Education Ltd. All Rights Reserved Dividing Markets into Segments (1 of 3) Marketing Strategy – An overall plan for marketing a product; includes the identification of target market segments, a positioning strategy, and a marketing mix Market – A group of customers who need or want a particular product and have the money to buy it Market segmentation – The division of a diverse market into smaller, relatively homogeneous groups with similar needs, wants, and purchase behaviors © 2024, Pearson Education Ltd. All Rights Reserved The Organizational Customer Decision Process An emphasis on economic payback and other rational factors A formal buying process Greater complexity in product usage The participation and influence of multiple people Close relationships between buyers and sellers © 2024, Pearson Education Ltd. All Rights Reserved Dividing Markets into Segments (2 of 3) Demographics – The study of statistical characteristics of a population Psychographics – Classification of customers on the basis of their psychological makeup, interests, and lifestyles © 2024, Pearson Education Ltd. All Rights Reserved Dividing Markets into Segments (3 of 3) Geographic segmentation – Categorization of customers according to their geographical location Behavioral segmentation – Categorization of customers according to their relationship with products or response to product characteristics © 2024, Pearson Education Ltd. All Rights Reserved Choosing Your Target Markets Target markets – Specific customer groups or segments to whom a company wants to sell a particular product – Undifferentiated, differentiated, concentrated, and individualized © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.7 Market-Coverage Strategies © 2024, Pearson Education Ltd. All Rights Reserved Staking Out a Position in Your Target Markets Positioning – Managing a business in a way designed to occupy a particular place in the minds of target customers © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Mix (1 of 4) Marketing mix – The four key elements of marketing strategy: product, price, distribution, and customer communication © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.8 The Marketing Mix © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Mix (2 of 4) Product – A bundle of value that satisfies a customer need or want Price – The amount of money charged for a product or service © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Mix (3 of 4) Distribution channels – Systems for moving goods and services from producers to customers – Also known as marketing channels © 2024, Pearson Education Ltd. All Rights Reserved The Marketing Mix (4 of 4) Promotion – A wide variety of persuasive techniques used by companies to communicate with their target markets and the general public © 2024, Pearson Education Ltd. All Rights Reserved Thriving in the Digital Enterprise: Marketing Analytics Marketing analytics – A range of analytical tools and techniques that help marketers plan and evaluate marketing activities © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.9 (1 of 2) Marketing Metrics Metric and Meaning How It Is Calculated Customer acquisition cost Average cost to acquire a new Total marketing costs during a given period total marketing costs during a given period over number of new customers customer Number of new customers Customer lifetime value Total Can be calculated in a variety of ways with varying degrees of expected revenue or profit from a mathematical sophistication; here is one simple way to do it: customer over the expected lifespan of the business relationship Average order value times average orders per year times expected lifespan of relationship Average order value  average orders per year  expected lifespan of relationship Marketing ROI The return on the total marketing investment over a Customer lifetime value customer lifetime value over customer acquisition cost particular time frame Cost per order Average cost of Customer acquisition cost getting individual orders; usually takes a narrower view than relevant marketing costs during a given period over number of new orders customer acquisition costs Relevant marketing costs during a given period Conversion rate General term Number of new orders signifying percentage of audience members who take a targeted number of times desired customer action is performed over number of opportunities for it to be performed action, such as viewing a video or placing an order Number of times desired customer action is performed Number of opportunities for it to be performed © 2024, Pearson Education Ltd. All Rights Reserved Exhibit 12.9 (2 of 2) Marketing Metrics Metric and Meaning How It Is Calculated Churn rate Percentage of customers lost during a given time period; most commonly used for recurring Customers at start of period  customers at end of period start fraction customers at start of period minus customers at end of period over customers at start of period end fraction contracts and subscriptions, such as Customers at start of period mobile phone service Click-through rate The percentage of website visitors or email recipients who click on an ad or link Number of clickthroughs number of clickthroughs over number of impressions (instances of an ad or link presented to readers) Number of impressions (instances of an ad or link presented to readers) Margin on sales Difference between In dollars: Revenue minus cost of product minus marketing costs the price a product is sold at its cost Revenue  cost of the product  marketing costs to the seller; can be expressed as a As percentage: dollar amount or a percentage Revenue start fraction revenue over costs of the product + marketing costs end fraction Redemption rate Rate at which costs of the product  marketing costs customers redeem coupons or points in a loyalty program Coupons (or points) redeemed during time period over coupons (or points) issued during time period Coupons (or points) redeemed during time period Net Promoter Score A customer’s Coupons Can be measured (or points) on various issued scales, suchduring as 0 totime period to +100. 10 or negative 100 willingness to recommend a company to a friend, relative, or colleague  100 © 2024, Pearson Education Ltd. All Rights Reserved Applying What You’ve Learned (1 of 2) 1. Define marketing, and explain its role in society. 2. Identify three trends that help define contemporary marketing. 3. Differentiate between consumer buying behavior and organizational buying behavior. 4. Define strategic marketing planning, and identify the four basic options for pursuing new marketing opportunities. © 2024, Pearson Education Ltd. All Rights Reserved Applying What You’ve Learned (2 of 2) 5. Identify the four steps in crafting a marketing strategy. 6. Describe the four main components of the marketing mix. 7. Define marketing analytics and characterize its use in contemporary marketing. © 2024, Pearson Education Ltd. All Rights Reserved Copyright This work is protected by United Kingdom copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. © 2024, Pearson Education Ltd. All Rights Reserved