Contemporary Business - Chapter 12.pdf - po ang - Januszek66

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Marketing Management

Par 4

Chapter 12

Customer-Driven Marketing

Chapter 13

Product and Distribution Strategies

Chapter 14

Promotion and Pricing Strategies

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Chapter 12

Summarize the ways in which mar-

keting creates utility.

Explain the marketing concept and

relate how customer satisfaction

contributes to added value.

Describe not-for-profit marketing,

and identify the five major cate-

gories of nontraditional marketing.

Outline the basic steps in develop-

ing a marketing strategy.

Describe the marketing research

function.

Identify and explain each of the

methods available for segmenting

consumer and business markets.

Outline the determinants of con-

sumer behavior.

Discuss the benefits of and tools for

relationship marketing.

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T he words natural food used to conjure up images of

bins filled with sprouts, tofu, and cardboard-dry wheat

bread. People who actually knew what to do with dried

beans purchased in bulk shopped at these markets. Not

anymore. Whole Foods Market, which was founded in

Austin, Texas, in 1978 by John Mackey and his girl-

friend, admittedly had its share of sandal-clad cus-

tomers driving VW buses. Today, Whole Foods’s

168 stores welcome well-heeled customers, along

with their Lexuses and Range Rovers, to its park-

ing lots. Whole Foods has figured out what con-

sumers want and how to offer it. “Americans

love to eat. And Americans love to shop,” says

CEO John Mackey. “But we don’t like to shop for

food. . . . Whole Foods thinks shopping should be fun.

Iranian descent can purchase their pilaf staple by the

pound, while Asian customers can pick up gai choy and

Whole Foods Market: A Whole New Kind of Grocery Store

With this store, we’re pioneering a new lifestyle that synthe-

sizes health and pleasure. We don’t see a contradiction.”

The Whole Foods experience is better than any spa

or theme park. Consumers can stroll along aisles of heir-

loom tomatoes, wander past the lobster and crab tanks,

dip a fresh strawberry into a flowing chocolate fountain,

sample any of 350 varieties of cheese, or order a salad

while they sip a glass of Chardonnay. They can pick up

dinner to go—sushi, goat cheese lasagna, or Indian aloo

mattar. They can rest assured that it’s all offered to pro-

mote their good health; Whole Foods specializes in organic

foods, those produced without unwanted extras such as

pesticides and hormones. Chickens raised for Whole

Foods, the firm promises, have never ingested antibiotics

or growth hormones. The pasta comes from an Italian

farmer who grows acres of organic durum wheat to pro-

duce his Montebello brand. Fish is caught fresh every day.

Whole Foods also caters to local and ethnic taste

preferences. When the manager of the Whole Foods

store in Santa Monica, California, learned that some of

his Buddhist customers were unable to eat foods contain-

ing onion or garlic, he began posting “No Onion, No

Garlic” signs above prepared dishes that did not contain

these ingredients. In Glendale, California, customers of

chicken feet. Hispanic customers have a wide choice of

tamale fixings at the same store. Manager Dave Aeber-

sold appreciates the freedom he has to offer selections

specific to his customer base. “I’m empowered to run this

like it’s my own store,” he says.

Not surprisingly, all of these delicacies come at a

price. A pound of brie that sells for $3.99 at a regular

supermarket will cost you $6.23 at Whole Foods, and a

half gallon of orange juice that goes for $1.99 elsewhere

will set you back $2.69. If you really want to splurge, you

can pick up a pound of French aged goat cheese for $25

or a bottle of Villa Manodori balsamic vinegar for $27.

That strawberry you dip in the chocolate fountain will

cost you $1.59—as much as a pint of strawberries at

another store. While some might argue that high prices

could drive consumers away, Mackey claims that the qual-

ity of his goods attracts shoppers. “If Americans want to

eat higher quality, they can pay for it,” he remarks. Whole

Foods customers are loyal, even if it costs them a little

more. “Business is simple,” Mackey explains. “Manage-

ment’s job is to take care of employees. The employees’

job is to take care of the customers. Happy customers

take care of the shareholders. It’s a virtuous circle.” 1

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Business success in the 21st century is directly tied to a

company’s ability to identify and serve its target mar-

kets. In fact, all organizations—profit-oriented and not-

for-profit, manufacturing and retailing— must serve cus-

tomer needs to succeed, just as Whole Foods Market

does by providing a wide array of healthful foods tai-

lored to its customers. Marketing is the link between the

organization and the people who buy and use its goods

and services. It is the way organizations determine buyer

needs and inform potential customers that their firms

can meet those needs by supplying a quality product at

a reasonable price. And it is the path to developing

loyal, long-term customers.

Although consumers who purchase goods for their own

use and enjoyment or business purchasers seeking prod-

ucts to use in their firm’s operation may seem to be huge,

undifferentiated masses, marketers see distinct wants and

needs for each group. To understand buyers, from huge

manufacturers to Web surfers to shoppers in the grocery

aisles, companies gather mountains of data on every

aspect of consumer lifestyles and buying behaviors. Mar-

keters use the data to understand the needs and wants of

both final customers and business buyers so that they can

better satisfy them. Satisfying customers goes a long way

toward building relationships with them. It’s not always

easy. To establish links with the buying public, Whole

Foods CEO John Mackey invites e-mails from consumers

who may—or may not—be customers. After several

weeks of electronic debate with an animal welfare activist

over Whole Foods’s practice of selling duck meat from a

particular source, Mackey asked the activist to help

rewrite his firm’s policies on farm animal treatment. “It

made me fall out of my chair,” recalls activist Lauren

Ornelas. “Now we’re working together.” 2 This relation-

ship, which developed through direct communication

between the CEO and a consumer, has helped Whole

Foods cement its relationship with customers who are

vegetarian or have other food-source concerns.

This chapter begins with an examination of the mar-

keting concept and the way businesspeople develop a

marketing strategy. We then turn to marketing research

techniques, leading to an explanation of how businesses

apply data to market segmentation and understanding

customer behavior. The chapter closes with a detailed

look at the important role played by customer relation-

ships in today’s highly competitive business world.

WHAT IS MARKETING?

Every organization—from profit-seeking firms such as Costco and Johnson & Johnson to such

not-for-profits as the United Way and the M. D. Anderson Cancer Center—must serve cus-

tomer needs to succeed. Perhaps retail pioneer J. C. Penney best expressed this priority when

he told his store managers, “Either you or your replacement will greet the customer within the

first 60 seconds.”

According to the American Marketing Association, marketing is “an organizational func-

tion 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 stakehold-

ers.” 3 In addition to selling goods and services, marketing techniques help people advocate

ideas or viewpoints and educate others. The American Diabetes Association mails out ques-

tionnaires that ask, “Are you at risk for diabetes?” The documents help educate the general

public about this widespread disease by listing its risk factors and common symptoms and

describing the work of the association.

Department store founder Marshall Field explained marketing quite clearly when he advised

one employee to “give the lady what she wants.” The phrase became the company motto, and it

remains a business truism today. The best marketers not only give consumers what they want

but even anticipate consumers’ needs before those needs surface. Ideally, they can get a jump

marketing organiza-

tional function and set

of processes for creat-

ing, communicating,

and delivering value to

customers and for man-

aging customer relation-

ships in ways that bene-

fit the organization and

its stakeholders.

380

Part 4 Marketing Management

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on the competition by creating a link in consumers’ minds

between the new need and the fulfillment of that need by the

marketers’ products. Principal Financial Group markets em-

ployee retirement plans to other firms as a strategy for retain-

ing the best employees. NetJets offers fractional jet ownership

to executives who want the luxury and flexibility of private

ownership at a reduced cost. Samsung offers its next genera-

tion of high-definition TV with its trademarked Cinema

Smooth Light Engine. “Stop watching TV,” says its latest pro-

motion. “Start living it.”

As these examples illustrate, marketing is more than just

selling. It is a process that begins with discovering unmet cus-

tomer needs and continues with researching the potential

market; producing a good or service capable of satisfying the

targeted customers; and promoting, pricing, and distributing

that good or service. Throughout the entire marketing

process, a successful organization focuses on building cus-

tomer relationships.

When two or more parties benefit from trading things of

value, they have entered into an exchange process. When you

purchase a cup of coffee, the other party may be a convenience

store clerk, a vending machine, or a Starbucks barista. The

exchange seems simple—some money changes hands, and you

receive your cup of coffee. But the exchange process is more

complex than that. It could not occur if you didn’t feel the

need for a cup of coffee or if the convenience store or vending

machine were not available. You wouldn’t choose Starbucks

unless you were aware of the brand. Because of marketing, your desire for a latte, cappuccino,

or plain black coffee is identified, and the coffee manufacturer’s business is successful.

Wrigley’s facilitates the exchange process by offering its Winter-

fresh gum at many outlets, including convenience stores and gro-

cery stores. The bubble packaging keeps each piece fresh until

you’re ready to share with your friends.

exchange process activ-

ity in which two or more

parties give something

of value to each other to

satisfy perceived needs.

How Marketing Creates Utility

Marketing affects many aspects of an organization and its dealings with customers. The ability

of a good or service to satisfy the wants and needs of customers is called utility. A company’s

production function creates form utility by converting raw materials, component parts, and

other inputs into finished goods and services. But the marketing function creates time, place,

and ownership utility. Time utility is created by making a good or service available when cus-

tomers want to purchase it. Place utility is created by making a product available in a location

convenient for customers. Ownership utility refers to an orderly transfer of goods and ser-

vices from the seller to the buyer. Firms may be able to create all three forms of utility. Putting

a new spin on the traditional drive-through restaurant, firms such as Applebee’s, Outback

Steakhouse, and Ruby Tuesday have begun offering curbside service. Customers

phone in their orders and then drive to designated spots in the restaurants’ parking

lots, where employees deliver the food. The service creates time utility by

making the food available when customers want to purchase it, place utility by

offering a convenient location, and ownership utility by providing the food that

customers desire. Industry experts report that this is the fastest-growing trend in

casual dining. “It may have started out as a convenience, but it’s becoming a

complete necessity,” says a president of a restaurant consulting firm. 4

utility want-satisfying

power of a good or

service.

a ssessment c heck

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Chapter 12 Customer-Driven Marketing

Contemporary Business - Chapter 12.pdf

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