Customer-Driven Marketing

What Is Marketing?

Every organization—from profit-seeking firms such as Jimmy John's and Kellogg's to not-for-profits such as the Make-a-Wish Foundation and the American Cancer Society—must serve customer needs to succeed. Perhaps the 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 Board of Directors, marketing is “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”² In addition to selling goods and services, marketing techniques help people advocate ideas or viewpoints and educate others. The American Heart Association mails out questionnaires that ask, “Are you at risk for a heart attack?” The documents help educate the general public about this widespread condition by listing its risk factors and common symptoms and describing the work of the association.

To be a marketing professional means to understand a consumer's hopes, dreams, desires, and fears better than they do themselves and to create goods and services that will satisfy those needs. Marketers know that, while consumers are almost always open to a better way to address their needs, they are rarely able to anticipate or articulate their needs.³ Apple founder Steve Jobs famously said, “Some people say, ‘Give customers what they want.’ But that's not my approach. Our job is to figure out what they're going to want before they do.”⁴ Jobs and visionaries like him create amazing new products that revolutionize the marketplace. Even if companies are not changing the world with their products, marketers are always looking to understand a consumers' needs before those needs surface. Anticipating consumer needs allows a firm to get a jump on the competition, creating a link in consumers' minds between the new need and the fulfillment of that need by the marketers' products. Examples of this approach include:

• Principal Financial Group markets employee retirement plans to organizations that then custom-tailor those plans to retain key employees.
• NetJets offers fractional jet ownership to executives who want the luxury and flexibility of private ownership without the cost of owning their own plane.
• Samsung offers its next generation of high-definition TV with its Smart TVs. Owners can connect their television to their home Internet connection, then add widgets to track the weather, use Skype, stream video content, and check for Twitter updates—all in real time. In addition, they can get video-on-demand service and other apps through the company's Web site. “Get the best of the Web right on your TV,” one of Samsung's promotions says.

As these examples also illustrate, marketing is more than just developing exciting new products. It is a systematic process that begins with discovering unmet customer needs, 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 customer relationships.

Consider the simple act of purchasing a cup of coffee. Your purchase decision begins with the thought that a cup of coffee will satisfy a need you have, whether it be something warm to drink, to see your favorite barista, or to fulfill a morning ritual. Meeting this need (or any need, for that matter) requires that you identify a willing partner to the transaction. In the case of a cup of coffee, the other party may be a convenience store clerk, a vending machine, or a Seattle's Best server. When two or more parties benefit from trading things of value, they have entered into an exchange process.

On the surface, 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 Seattle's Best Coffee unless you were aware of the brand. Marketing plays a role in all aspects of this transaction.

HOW MARKETING CREATES UTILITY

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, components, and other inputs from less valuable forms to more valuable finished goods and services. In the case of a cup of coffee, the beans, water, sugar, and cream (which together are worth only a few cents) are transformed into hot coffee (worth many times as much). In addition to form utility, the marketing function also creates time, place, and ownership utility.

• Time utility is created by making a good or service available when customers 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 services from the seller to the buyer.

Evolution of the Marketing Concept

Marketing has always been a part of business, from the earliest village traders to large 21st century organizations producing and selling complex goods and services. Over time, however, marketing activities evolved through the five eras shown in FIGURE 11.1: the production, sales, marketing, and relationship eras, and now the social era. Note that these eras parallel some of the time periods discussed in Chapter 1.

For centuries, organizations operating in the production era stressed efficiency in producing quality products. Their philosophy could be summed up by the remark, “A good product will sell itself.” Although this production orientation continued into the 20th century, it gradually gave way to the sales era, in which businesses assumed that consumers would buy as a result of their energetic sales efforts. Organizations didn't fully recognize the importance of their customers until the marketing era of the 1950s, when they began to adopt a consumer orientation.

The emergence of the marketing era can be explained best by the shift from a seller's market, one with a shortage of goods and services, to a buyer's market, one with an abundance of goods and services. During the 1950s, the United States became a strong buyer's market, forcing companies to satisfy customers rather than just producing and selling goods and services. The marketing era continues today with companies focused on understanding their customers' needs and creating goods and services to meet these needs.

Recently, this focus has intensified, leading to the emergence of the relationship era in the 1990s and the social era of today. In the relationship era, companies emphasized customer satisfaction and building long-term business relationships. As the second decade of the new century gets under way, the social era of marketing is in full swing, thanks to the Internet and the creation of social media sites such as Twitter and Facebook. Companies now routinely use the Web and social media sites to connect to consumers as a way of marketing their goods and services.

EMERGENCE OF THE MARKETING CONCEPT

The marketing era can also be identified with the term marketing concept, which refers to a companywide customer orientation with the objective of achieving long-run success. The basic idea of the marketing concept is that marketplace success begins with the customer. Successful firms analyze their customers' needs and then work backward to offer products that fulfill them. Exceptional firms are those that do a better job of understanding and meeting their customers' needs than their competitors. Apple, Nike, Budweiser, and GEICO are examples of firms that do an outstanding job marketing their products.

Consumer Behavior

In the marketing era, all businesses, large or small, work diligently to provide the goods and services that satisfy their customers' needs. But who exactly are these customers? What are their needs? Where do they purchase and how do they use these products? The answers to these and many other questions are critical to a firm's understanding of their customers and the larger market for their products.

Both personal and interpersonal factors influence the way buyers behave. Personal influences on consumer behavior include individual needs and motives, perceptions, attitudes, learned experiences, and self-concept. For instance, today people are constantly looking for ways to save time, so firms do everything they can to provide goods and services designed for convenience. However, when it comes to products such as dinner foods, consumers want convenience, but they also want to enjoy the flavor of a home-cooked meal and spend quality time with their families. So companies such as Stouffer's offer frozen lasagna or manicotti in family sizes, and supermarkets have entire sections devoted to freshly prepared take-out meals that range from roast turkey to filet mignon.

Sometimes external events influence consumer behavior. After the recent recession, consumers are less likely to go into debt to make purchases. The Federal Reserve data show that in a previous year, consumers spent about 14 percent of their income to pay off their debts. In a more recent year, that number was down to 10 percent, indicating that consumers are unwilling to take on new debt to make purchases. Since about 70 percent of the U.S. GDP is the result of consumer spending, manufacturers and retailers—and especially small businesses—will need to rethink their consumers' profiles to respond to these challenges.⁵

STEPS IN THE CONSUMER BEHAVIOR PROCESS

In general, consumer decision making follows the sequential process outlined in FIGURE 11.2, with interpersonal and personal influences affecting every step. The process begins when the consumer recognizes a problem or opportunity. If someone needs a new pair of shoes, that need becomes a problem to solve. If you receive a promotion at work and a 20 percent salary increase, that change may also become a purchase opportunity.

To solve the problem or take advantage of the opportunity, consumers seek information about their intended purchase and evaluate alternatives, such as available brands. The goal is to find the best response to the problem or opportunity. Eventually, consumers reach a decision and complete the transaction. Later, they evaluate the experience by making a post-purchase evaluation. Feelings about the experience serve as feedback that will influence future purchase decisions. The various steps in the sequence are affected by both interpersonal and personal factors.

Marketing Research

In addition to studying individual consumers, a firm can also investigate the larger market for their products. Whether it is conducted by the owner of a small business or by the marketing department of a Fortune 500 company, marketing research is more than just collecting data. Marketing research is the process of collecting and evaluating information to help marketers make effective decisions. Researchers must decide how to collect data, interpret the results, convert the data into decision-oriented information, and communicate those results to managers for use in decision making. This research links business decision makers to the marketplace by providing data about potential target markets that help them design—as in the case of GEICO Insurance—effective marketing approaches.

OBTAINING MARKET DATA

To get a complete picture of their markets, researchers need both internal and external data. Firms generate internal data within their organizations. Financial records provide a tremendous amount of useful information, such as changes in unpaid bills; inventory levels; sales generated by different categories of customers or product lines; profitability of particular divisions; or comparisons of sales by territories, salespeople, customers, or product lines.

Researchers gather external data from outside sources, including previously published data. Trade associations publish reports on activities in particular industries. Advertising agencies collect information on the audiences reached by various media. National marketing research firms offer information through subscription services. Some of these professional research firms specialize in specific markets, such as teens or ethnic groups. This information helps companies make decisions about developing or modifying products.

The world's largest consumer-goods manufacturer, Procter & Gamble, has excelled in marketing research for a long time. It created its own marketing research department in 1923 and began conducting its research online in 2001. P&G CEO Bob McDonald has set the goal of reaching 1 billion new customers worldwide over the next few years. This expansion involves reaching customers in developing regions. As part of this strategy, he traveled undercover to 30 countries, posing as a marketing researcher.⁶

Secondary data, or previously published data, are low cost and easy to obtain. Federal, state, and local government publications are excellent data sources, and most are available online. The most frequently used government statistics include census data, which contain the population's age, gender, education level, household size and composition, occupation, employment status, and income. Even private research firms such as TRU (formerly Teenage Research Unlimited), which studies the purchasing habits of teens, provide some free information on their Web sites. This information helps firms evaluate consumers' buying behavior, anticipate possible changes in the marketplace, and identify new markets.

Even though secondary data are a quick and inexpensive resource, marketing researchers sometimes discover that this information isn't specific or current enough for their needs. If so, researchers may conclude that they must collect primary data—data collected firsthand through such methods as observation and surveys.

Simply observing customers cannot provide some types of information. A researcher might observe a customer buying a red sweater but have no idea why the purchase was made—or for whom. When researchers need information about consumers' attitudes, opinions, and motives, they need to ask the consumers themselves. They may conduct surveys by telephone, in person, online, or in focus groups.

One method that companies might use to obtain primary research is a focus group. A focus group gathers 8 to 12 people in a room or over the Internet to discuss a particular topic. A focus group can generate new ideas, address consumers' needs, and even point out flaws in existing products. For example, when Frito-Lay develops a new potato chip flavor, they use the new Lay's Facebook app to suggest new flavors and ask their focus group members to click an “I'd Eat That” button to register their preferences. So far, the results show that a beer-battered onion-ring flavor is popular in California and Ohio, while a churros flavor is a hit in New York. “It's a new way of getting consumer research,” said the chief marketing officer of Frito-Lay North America. “We're going to get a ton of new ideas.”⁷

ADVANCED RESEARCH TECHNIQUES

Once a company has built a database, marketers must be able to analyze the data and use the information it provides. Data mining, part of the broader field of business intelligence, is the task of using computer-based technology to evaluate data in a database and identify useful trends. These trends or patterns may suggest predictive models of real-world business activities. Accurate data mining can help researchers forecast sales levels and pinpoint sales prospects.

Companies such as Rapleaf Inc. collect publicly available personal information from social-networking sites like Facebook, Twitter, and other forums. They then sell this information to entities such as airlines and credit card companies that regard those individuals as potential customers. Such information can include everything from your blogging or posting habits to your credit rating. Among the issues arising from data mining are ownership of Web user data, the targeting capabilities of the Web, government supervision—and, of course, privacy.

Market Segmentation

As a firm begins to develop a picture of its customers' needs, companies will often attempt to form their customers into groups called market segments. This is an important process, as companies can be much more efficient with their product design, production process, and promotional activities if they are targeting similar customers. Simply put, market segmentation is the process of dividing a market into homogeneous groups by isolating the traits that distinguish a certain group of customers from the overall market.

Firms have been segmenting markets since people first began selling products. Tailors made some clothing items for men and others for women. Tea was imported from India for tea drinkers in England and in other European countries. In addition to the segments based on demographic (gender, for example) and geographical (location) segmentation, today's marketers also define customer groups based on psychographic criteria—lifestyle and values—as well as product-related distinctions. FIGURE 11.3 illustrates the segmentation methods for consumer markets.

GEOGRAPHIC SEGMENTATION

The oldest segmentation method is geographic segmentation—dividing a market into homogeneous groups on the basis of their locations. Geographic location does not guarantee that consumers in a certain region will all buy the same kinds of products, but it does provide some indication of needs. For instance, suburbanites buy more lawn care products than do central-city dwellers. Consumers who live in northern states, where winter is more severe, are more likely to buy ice scrapers, snow shovels, and snow blowers than those who live in warmer climates. Marketers also look at the size of the population of an area, as well as who lives there.

DEMOGRAPHIC SEGMENTATION

By far the most common method of market segmentation, demographic segmentation, distinguishes markets on the basis of various demographic or socioeconomic characteristics. Common demographic measures include gender, income, age, occupation, household size, stage in the family life cycle, education, and racial or ethnic group. The U.S. Census Bureau is one of the best sources of demographic information for the domestic market. FIGURE 11.4 lists some of the measures used in demographic segmentation.

Gender is one of the simplest demographic segments and follows the basic premise that shopping and buying patterns are different between men and women. A traditional view is that some types of products are more appealing to women, such as jewelry and skin care, and therefore should be more heavily marketed toward women than men. The same could be said about traditional male products, such as sporting equipment and tools. What may have been true for the old “brick and mortar” retailers still seems to be true today, with 29 percent of women shopping online for shoes, clothing, and accessories, compared with 17 percent for men. Gender differences also are seen in the total volume of Internet purchases. While men and women are online about the same amount of time, 58 percent of e-commerce sales revenue comes from women. Shopping habits also differ, as men generally complete more transactions online while women have a higher average order value.⁸

With a rapidly aging population, age is perhaps the most volatile factor in demographic segmentation in the United States. Of the 325-plus million people projected to live in the United States by 2015, almost 87 million will be age 55 or older.⁹ Working from these statistics, marketers in the travel and leisure, retirement, and investments industries work hard to attract the attention of these Baby Boomers—people born between 1946 and 1964. Active-adult housing communities are one result of these efforts.

Young adults are another rapidly growing market. The entire scope of Generation Y—those born between 1976 and 1997—encompasses about 113 million Americans, a little more than one-third of the total U.S. population. Often called Millennials, these consumers are tech-savvy shoppers who are more likely than their Baby Boomer parents to use digital and mobile technologies to guide their purchase decisions.¹⁰

PSYCHOGRAPHIC SEGMENTATION

Although demographic classifications such as age, gender, and income are relatively easy to identify and measure, researchers also need to define psychographic segmentation categories. Often marketing research firms conduct extensive studies of consumers and then share their psychographic data with clients. In addition, businesses look to studies done by sociologists and psychologists to help them understand their customers.

For instance, while children may fall into one age group and their parents in another, they also live certain lifestyles together. Recent marketing research reveals that today's parents are willing and able to spend more on goods and services for their children than parents were a generation or two ago. Current estimates are that middle income parents who had a baby last year will spend nearly $300,000 over the next 17 years, while higher income families will spend about $500,000 per child.¹¹ Psychographic information of this sort may give a company's management confidence that their proposed exclusive preschool or high-priced children's shoes might now be successful.

PRODUCT-RELATED SEGMENTATION

Using product-related segmentation, sellers can divide a consumer market into groups based on buyers' relationships to the good or service. The three most popular approaches to product-related segmentation are based on benefits sought, usage rates, and brand loyalty levels.

Segmenting by benefits sought focuses on the attributes that people seek in a good or service and the benefits they expect to receive from it. As more firms respond to consumer demand for eco-friendly products, marketers find ways to emphasize the benefits of these products. Home-goods retailer IKEA follows strict guidelines for sourcing its solid-wood furniture products. For example, the worldwide company does not accept any illegally felled wood. IKEA's own forest specialists trace batches of timber to their origins to ensure that the lumber is properly documented and certified by the Forest Stewardship Council. In addition, these specialists work with suppliers to promote more sustainably managed forests worldwide. IKEA uses its Web site and signage in its stores to educate consumers about its wood-source policies.¹²

Consumer markets can also be segmented according to the amounts of a product that people buy and use. Segmentation by product usage rate usually defines such categories as light, medium, and heavy users. According to what is commonly referred to as the “80/20 principle,” roughly 80 percent of a product's revenues come from only 20 percent of its buyers. Companies can now pinpoint which of their customers are the heaviest users—and even the most profitable customers—and direct their greatest marketing efforts toward those customers.

Marketers also segment users by brand loyalty—the degree to which consumers recognize, prefer, and insist on a particular brand. They then attempt to tie loyal customers to a good or service by giving away premiums, which can be anything from a logo-emblazoned T-shirt to a pair of free tickets to a concert or sports event.

Steps in Building a Marketing Strategy

Once a firm has a good understanding about likely customer behavior, the market in which it will operate, and how customers might group together, it transforms this information into a marketing strategy. Decision makers in any successful organization, for-profit or not-for-profit, follow a two-step process to develop their strategy. First, they study and analyze potential target markets, choosing those likely to yield the greatest profit, give them long-term growth potential, and provide defensible positions relative to their competitors. Second, they create a series of goods or services that will satisfy the chosen market.

A marketing plan is a key component of a firm's overall business plan. The marketing plan outlines its marketing strategy and includes information about the target market, sales and revenue goals, the marketing budget, and the timing for implementing the elements of the marketing mix.

SELECTING TARGET MARKETS

Markets can be classified by type of product. Consumer products (B2C)—often known as business-to-consumer products—are goods and services, such as an SUV, tomato sauce, or a haircut, that are purchased by end users. Business products (B2B)—or business-to-business products—are goods and services purchased to be used, either directly or indirectly, in the production of other goods for resale. Some products can fit either classification, depending on who buys them and why. For example, your neighbors may buy a global positioning system (GPS) for their next road trip, or General Motors buys GPS systems by the thousands for installation on its assembly lines.

An organization's target market is the group of potential customers toward whom it directs its marketing efforts. Customer needs and wants vary considerably, and no single organization has the resources to satisfy everyone. Popular Science is geared toward readers who are interested in science and technology, whereas Bon Appétit is aimed at readers who are interested in fine food and cooking.

Decisions about marketing involve strategies for four areas of marketing activity: product, distribution, promotion, and pricing. A firm's marketing mix blends the four strategies to fit the needs and preferences of a specific target market. Marketing success depends not on the four individual strategies but on their unique combination.

• Product strategy involves more than just designing a good or service with needed attributes. It also includes decisions about package design, brand names, trademarks, warranties, product image, new product development, and customer service. Think about your favorite pair of jeans. Do you like them because they fit the best, or do other attributes—such as styling and overall image—also contribute to your brand preference?
• Distribution strategy ensures that customers receive their purchases in the proper quantities at the right times and locations.
• Promotional strategy effectively blends advertising, personal selling, sales promotion, and public relations to achieve its goals of informing, persuading, and influencing purchase decisions.
• Pricing strategy involves one of the most difficult areas of marketing decision making: setting prices for a good or service. Pricing is sometimes subject to government regulation and considerable public scrutiny. It also represents a powerful competitive weapon and frequently produces responses by industry competitors who match price changes to avoid losing customers. Think about your jeans again. Would you continue to purchase them if they were priced either much higher or much lower?

FIGURE 11.5 shows the relationships among the target market, the marketing mix variables, and the marketing environment.

To see how the marketing mix affects a particular product offering, consider a walk-in medical clinic like the ones found in supermarkets, chain drugstores, or big-box stores. Patients typically see nurse practitioners or physician assistants who can diagnose and treat minor medical conditions and prescribe some medications. The product strategy is, of course, medical services, but these clinics represent more than just medical care. They are open evenings and on weekends, and they are located where the consumers are. No need for a separate trip to a doctor's office: the physical location of a walk-in clinic is an important part of the distribution strategy. Letting consumers know that these clinics are available to provide seasonal flu shots and summer camp physicals helps establish the value of these centers to the public.

As part of its promotional strategy, drugstore chain Walgreens markets its Take Care Clinics with some nationwide health care organizations. Pricing strategy, the last element of the marketing mix, is addressed by setting pricing that represents a relatively low cost to the consumer: usually about $80 per visit. Marketers use product, distribution, promotion, and pricing strategies to create clinics that meet consumer needs.¹³

Relationship Marketing

The past decade has brought rapid change to most industries, as consumers have become better informed and more demanding purchasers by comparing competing goods and services. They expect, even demand, new benefits from product offerings, making it harder for firms to gain a competitive advantage based on product features alone.

In these competitive times, businesses need to find new ways of relating to customers if they hope to maintain long-term success. Businesses are developing strategies and tactics that draw them into tighter connections with their customers, suppliers, and even employees. As a result, many firms are turning their attention to the issues of relationship marketing. Relationship marketing goes beyond making the sale. It develops and maintains long-term, cost-effective exchange relationships with such partners as individual customers, suppliers, and employees. Its ultimate goal: customer satisfaction.

Managing relationships instead of simply completing transactions often leads to creative partnerships. However, customers enter into relationships with firms only if they are assured that the relationship will somehow benefit them. As the intensity of commitment increases, so does the likelihood of a business continuing a long-term relationship with its customers.

Businesses are building relationships by partnering with customers, suppliers, and other businesses. Timberland, maker of footwear and clothing, creates many partnerships that foster long-term relationships. The firm partners with not-for-profit organizations such as City Year and the Planet Water Foundation to complete service projects for communities and the environment. Through its Serv-a-Palooza, hundreds of Timberland employees engage in volunteer tasks in their communities. Those opportunities even extend to customers who have expressed an interest in participating in programs in their own regions. To volunteer for a food drive or help restore a marsh, log on to the Timberland Web site to see what's available. Marketers find these activities help build relationships with customers, communities, and other organizations.¹⁴

BENEFITS OF RELATIONSHIP MARKETING

Relationship marketing helps all parties involved. In addition to providing mutual protection against competitors, businesses that forge solid links with vendors and customers are often rewarded with lower costs and higher profits than they would generate on their own. Long-term agreements with a few high-quality suppliers frequently reduce a firm's production costs. Unlike one-time sales, these ongoing relationships encourage suppliers to offer customers preferential treatment, quickly adjusting shipments to accommodate changes in orders and correcting any quality problems that might arise.

Good relationships with customers can be vital strategic weapons for a firm. By identifying current purchasers and maintaining positive relationships with them, organizations can efficiently target their best customers. Studying current customers' buying habits and preferences can help marketers identify potential new customers and establish ongoing contact with them. Attracting a new customer can cost five times as much as keeping an existing one. Not only are marketing costs lower with existing customers, they usually buy more, require less service, refer other customers, and provide valuable feedback. Together, these elements contribute to a higher lifetime value of a customer—the revenues and intangible benefits (referrals and customer feedback) from the customer over the life of the relationship, minus the amount the company must spend to acquire and serve that customer. Keeping that customer may occasionally require some extra effort, especially if the customer has become upset or dissatisfied with a good or service.

Businesses also benefit from strong relationships with other companies. Purchasers who repeatedly buy from one business may find they save time and gain service quality as the business learns their specific needs. Some relationship-oriented companies also customize items based on customer preferences. Because many businesses reward loyal customers with discounts or bonuses, some buyers may even find they save money by developing long-term relationships.

Alliances with other firms to serve the same customers also can be rewarding. The partners combine their capabilities and resources to accomplish goals that they could not reach on their own. In addition, alliances with other firms may help businesses develop the skills and experiences they need to successfully enter new markets or improve service to current customers.

TOOLS FOR NURTURING CUSTOMER RELATIONSHIPS

Although relationship marketing has important benefits for both customers and businesses, most relationship-oriented businesses quickly discover that some customers generate more profitable business than others. Assume 20 percent of a firm's customers account for roughly 80 percent of its sales and profits—the 80/20 principle mentioned earlier in the chapter—a customer in that category undoubtedly has a higher lifetime value than one who buys only once or twice or who makes small purchases.

While businesses shouldn't ignore any customer, they need to allocate their marketing resources wisely. A firm may choose to customize goods or services for high-value customers while working to increase repeat sales of stock products to less valuable customers. Differentiating between these two groups also helps marketers focus on each in an effort to increase their commitment.

FREQUENCY MARKETING AND AFFINITY MARKETING PROGRAMS

Marketers try to build and protect customer relationships with frequency marketing programs. Such programs reward frequent customers with cash, rebates, merchandise, or other premiums. Frequency programs have grown more sophisticated over the years, offering more personalization and customization than in the past. Airlines, hotel groups, restaurants, and many retailers, including supermarkets, offer frequency programs. For example, vacationers who book a certain number of nights at the Atlantis resort in the Bahamas may earn airfare credit for their trip.¹⁵

Affinity programs build emotional links with customers. In an affinity program, an organization solicits involvement by individuals who share common interests and activities. Affinity programs are common in the credit card industry. For instance, a person can sign up for a credit card emblazoned with the logo of his or her college, favorite charity, or a sports team. Bank of America offers credit cards featuring the logos of all 30 Major League Baseball clubs.

ONE-ON-ONE MARKETING

The ability to customize products and rapidly deliver goods and services has become increasingly dependent on technology such as computer-aided design and manufacturing (CAD/CAM). The Internet offers a way for businesses to connect with customers in a direct and intimate manner. Companies can take orders for customized products, gather data about buyers, and predict what items a customer might want in the future. Computer databases provide strong support for effective relationship marketing. Marketers can maintain databases on customer tastes, price range preferences, and lifestyles, and they can quickly obtain names and other information about promising prospects.

Amazon.com greets each online customer with a list of suggested books he or she might like to purchase. Many online retailers send their customers e-mails about upcoming sales, new products, and special events.

Small and large companies often rely on customer relationship management software technology that helps them gather, sort, and interpret data about customers. Software firms develop this software to help businesses build and manage their relationships with customers. QueueBuster is one such product. The software offers a caller the choice of receiving an automated return call at a convenient time instead of waiting on hold for the next available representative. After implementing the software to support its central reservations team, the Apex Hotel chain minimized the number of dropped customer calls and increased customer-service levels. This simple solution to customers' frustration not only helped build customer loyalty and improve employee morale but also helped save Apex Hotels from losing business.¹⁶

NOTES

1. Company Web site, “Here's What's Great for You,” http://instoresnow.walmart.com, accessed May 13, 2013; Stephanie Strom, “Walmart to Label Healthy Foods,” New York Times, February 7, 2012, http://www.nytimes.com; Jessica Wohl, “Walmart to Label Healthier Food as ‘Great for You,’” Reuters, February 7, 2012, http://www.reuters.com.

2. Association Web site, “Definition of Marketing,” http://www.marketingpower.com, accessed May 2, 2013.

3. Steve Carlotti and Jason Green, “Give the People What They Don't Know They Want,” The Washington Post, May 14, 2012, http://articles.washingtonpost.com.

4. Reineke Reitsma, “Market Research That Goes beyond ‘a Faster Horse,’” RW Connect, Septermber 27, 2012, http://rwconnect.esomar.org.

5. Kevin G. Hall, “Consumers Coming Back, but They May Not Run Up Credit Cards,” McClatchy Newspapers, February 14, 2013, http://www.mcclatchydc.com.

6. Company Web site, http://www.pg.com, accessed May 13, 2013.

7. Stephanie Clifford, “Social Media Are Giving a Voice to Taste Buds,” New York Times, July 30, 2012, http://www.nytimes.com.

8. Matthew Brown, “Understanding Gender and eCommerce,” PFSweb blog, August 10, 2012, http://www.pfsweb.com.

9. U.S. Census Bureau, 2012 Statistical Abstract, “Resident Population Projections by Sex and Age: 2010 to 2050,” http://www.census.gov, accessed May 2, 2013.

10. Patricia Orsini, “Millennials in Aisle 2.0: Keeping Young Supermarket Shoppers Engaged with Brands,” eMarketer, November 20, 2012, http://bx.businessweek.com.

11. Amy Morin, “How Much Money Do Parents Spend on Their Kids?,” Mom.me, May 2013, http://mom.me.

12. Company Web site, “Forestry and Wood,” http://www.ikea.com, accessed May 2, 2013.

13. Company Web site, http://www.takecarehealth.com, accessed May 2, 2013; “Take Care Clinics at Select Walgreens Offer Families Convenient and Affordable Option for Camp and Sports Physicals,” press release, March 7, 2012, http://www.businesswire.com.

14. Company Web site, http://www.timberland.com, accessed May 2, 2013.

15. Company Web site, http://www.atlantis.com, accessed May 2, 2013.

16. Company Web site, http://www.netcall.com, accessed May 2, 2013.