CHAPTER 4 Hit a Home Run with Customers

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4

Hit a Home Run

with Customers

4.1

The Marketing

Concept

4.2

Discover What People

Want

4.3

Target Markets

4.4

Customer Service

PHOTO AT LEFT ? DIGITAL VISION

C H A P T E R

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Frito-Lay Reaches Teens

The 30 million teenagers in the United States spend $175 billion annually on

everything from fashions to electronics. How do you market to media-savvy

consumers with short attention spans who are skeptical of traditional

advertising? Teens make up a fickle, competitive, ever-changing group of

consumers. Research gathered on teens becomes out of date more quickly

than for any other age group. Companies must be able to speak the

language of teenagers, identify their latest trends, and find the best ways to

appeal to them through everything from music downloads to instant

messaging.

The teen market is potentially very lucrative. Teens have a powerful

influence in the marketplace because they are trendsetters and early

adopters. Teens are an attractive market due to the potential lifetime of

value they offer. Gaining the loyalty of teens can result in continued longterm future sales.

The teen market is increasingly sophisticated and challenging. Today¡¯s

teens have a desire to be treated like adults. These young people feel that

they are under more pressure than the teens of any other generation. They

are expected to earn good grades, participate on a sports team and in other

extra-curricular activities, and be accepted into college.

Frito-Lay believes that companies have to match communication efforts

to the desired audience. Frito-Lay created partnerships with MTV Spring

Break, MTV Video Music Awards, Yahoo Music, and Universal Music to

make a greater impact with the teen market. It also created a partnership

with Wal-Mart to offer teen consumers free music downloads with the

purchase of Doritos. Teens could key in codes found in Doritos¡¯ packages at

Wal-Mart¡¯s web site to access free music. This marketing strategy was based

upon the popularity of music among teenagers. The strategy resulted in a

huge return on investment.

Think Critically

1.

Why are teens receiving so much attention from marketing firms?

2.

List two forms of technology used by Frito-Lay to capture the attention

of teens.

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Lesson 4.1

The Marketing

Concept

Goals

? Explain the central focus of the marketing concept.

? Explain the reasons for increased sports and entertainment options.

Terms

? marketing concept

? productivity

? breakeven point

? opportunity cost

In the United States, $65 billion of snacks are sold each

year. The Hershey Company understands the snack

market. Nearly 38 percent of snacks sold fall into the

category of confection or candy, and Hershey is the

category¡¯s sales leader with 29 percent of the total

business. Hershey has fourteen $100-million brands,

including Reese¡¯s peanut butter cups and Hershey¡¯s

Kisses.

Reese¡¯s is one of Hershey¡¯s star brands. The peanut

butter version is most popular in the United States.

To widen its appeal, white chocolate, fudge,

caramel, and ¡®¡®bites¡¯¡¯ versions are offered to

consumers. In the global market, marshmallow

and hazelnut versions are offered to appeal to

consumers in the Far East and Western

Europe.

Hershey¡¯s Kisses, created by company founder Milton

Hershey over 100 years ago, has grown into a $400million brand. Sixty percent of the Kisses¡¯ business is

seasonal, centering around special holidays. Hershey¡¯s

has the goal of making Kisses the candy of choice year

round and has added caramel-filled, dark chocolate,

mint, and peanut butter versions. Kissables are miniature,

candy-coated Kisses available in a single-serving snack

pack and other sizes.

Work with a group. Determine the popularity of

Hershey¡¯s within your group. How many in your group

enjoy snacks while enjoying entertainment events? Do

snack companies often advertise at or sponsor events

you have attended? Should Hershey¡¯s be concerned

about the obesity trend among youth and its possible

relationship to Hershey¡¯s products?

THE MARKETING

CONCEPT

Marketing is an important business function. You participate in the marketing process as a consumer of goods and services. About half of every

dollar you spend pays for marketing costs. Marketing costs include product

development, packaging, advertising, and sales expenses.

The most important aspect of marketing is satisfying customer needs.

Customers¡¯ needs should be the primary focus during the planning, production, distribution, and promotion of a product or service. A business that

keeps the focus of satisfying customer needs is said to be following the

marketing concept.

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Maintain Relationships

? DIGITAL VISION

The marketing concept requires maintenance of important

relationships with

customers. Managing customer relationships involves listening to customers and carefully monitoring the

latest consumer trends. Maintaining a

successful marketing relationship

requires effort. Successful salespersons

learn about customers and their needs

by being good listeners. Each customer

is unique with a different personality,

requiring a unique marketing strategy.

While some customers demand intensive attention, others prefer to be left

alone until they make the purchase.

Customer satisfaction is the bottom line for maintaining successful

marketing relationships. Price, quality, service, and the amount of pleasure

gained from a sports and entertainment event are factors that influence

customer satisfaction. Sports and entertainment event planners are challenged to organize satisfying events that customers want and can afford.

When individuals purchase goods and services, they expect appropriate

value for the money spent. Because there is so much competition in the

sports and entertainment industry, marketing strategies must include a

customer service component that stands apart from the competitors.

Customers who receive special attention are less likely to consider doing

business with competitors.

What is the most important aspect of marketing?

INCREASED SPORTS AND

ENTERTAINMENT OPTIONS

The increased standard of living in the United States has resulted in more

discretionary income for consumers. The average consumer has more

money to spend on sports and entertainment events and related merchandise. Increased consumer demand for sports and entertainment events has

resulted in higher prices and more competition. Competition in the marketplace results in more options for consumers and improved events and

merchandise. Marketing strategies must include monitoring the competition

and consumer trends and making improvements that meet the latest customer demands.

THE MARKETING CONCEPT Lesson 4.1

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Customer Focus

Time Out

Small towns in the

United States often

associate their

identity with

sports at the local

school. Small

schools are facing

pressure to consolidate

to use tax dollars more

efficiently. But leaders

in small communities

fear that their communities will lose identity as well as business

connected to local

sports teams. Many

small communities are

now taking steps to

increase their populations in order to save

their schools and the

community¡¯s identity.

Productivity is the rate at which companies produce goods

or services in relation to the amount of materials and

number of employees utilized. Productivity has made

impressive strides in the United States as well as in many

other developing nations. Whether it¡¯s the production of

5,000 concert t-shirts or 10,000 plastic promotional footballs for a professional football team, the product demands for sports and entertainment

events can be filled quickly. But, increased competition has forced business¡¯s

focus beyond productivity to establishing satisfying relationships with

customers. Imagine being highly productive in creating products that consumers do not need or want! Remember, the primary focus of the marketing

concept is the satisfaction of customer needs.

Successful marketing strategies identify customer needs and then develop

and market products viewed as superior by customers. While it is important

to maintain satisfying customer relationships, companies must also earn a

profit. When marketing strategies do not pay attention to customer wants

and needs, sports and entertainment events have disappointing attendance

figures, and stores have surplus merchandise, resulting in price cuts. The

ultimate result of not having a customer focus is a failed business.

Successful marketing strategies identify prospective customers and their

location. Prospective customers must be offered the appropriate marketing

mix¡ªproduct, price, promotion, and location¡ªto maintain satisfying relationships. Marketing success depends upon offering the best product at an

acceptable price where the demand exists. Customers learn about the products and services through promotion. Customers are the driving force

behind the marketing concept.

Weekend Entertainment Choices

Every weekend, there are numerous entertainment choices ranging from

community celebrations and concerts to a wide array of sporting events. The

organizers of all of these events realize the intense competition for consumer

dollars and develop promotional strategies to catch the attention and increase

attendance of consumers. The bottom line is that these events must earn a

profit. The event¡¯s planners and organizers need to know the breakeven

point, or the minimum attendance and sales required to cover all of the

Surviving members of the Beatles have finally decided to

¡®¡®let it be¡¯¡¯ online. Apple Corps. is remastering the original

Beatles recording of the Let It Be album for eventual

reissue. At the same time as the

remastered songs will be available on

CD, they will also be available

for download from the Internet.

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Chapter 4 HIT A HOME RUN WITH CUSTOMERS

Up to this point, Beatles¡¯ music has not been available

online. Legitimate online music sellers hope that the

Beatles¡¯ decision will send a message to other music artist

holdouts that this is the way to go.

Think Critically

Why do you think the Beatles have resisted offering their

music online? How will this announcement affect digital

music sales?

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