Customers and Customer Value Essay

merchandise involves1.Managing profitable customer relationships2.Aw atomic number 18ness attracting/retaining customers3.Increasing a customers willingness to payBreadth and Depth of merchandisingMarket raft with desire and ability to subvert a specific fruit All organizations commercialize and people market themselvesDating, PEYoIdeas and values be marketedBuyers may be divers(prenominal) than end customer (B2B, B2C)Social Marketing influence behavior of singles, benefit to individuals or society not marketer Anti-smokingConsumer Behaviour (B2C/B2B)Heart of marketing straight ineluctably and penurys of consumers better than competition oValue is only what is perceived by consumerCustomers see solutions for delivering customer value, not in terms of attributes Fundamental Principles of MarketingoWhat are drivers of customer value? Their benefits/costConsumersWho are the competitors that satisfy the similar needsThe competitorsOffer a product/ assist whose attributes del iver the value as good as or better than the competitors The CompanyMethods of Discovering customer behavior take Psychological deprivation (food, shelter)Wants Needs shaped by culture and the individual (burger vs. Tofu) oQualitative researchQuantitative ResearchFeedback agonistic intelligenceSocio-economic trendsConsumer purchase decision processBuyers may skip a stage depending on how involved they are in the purchase o elevated involvement if product isExpensiveSerious personal consequencesReflects social imageHigh involvement results in consideration of more brandsMore product attributesMore information sourcesMore time fatigued searchingHigh involvementProvide education about category and info on productLow involvementBuyers react to monetary value, convenience and familiarityThe Marketing ProcessIdentify Consumer Needs & WantsNeeds Psychological deprivation (food, shelter, etc.)Wants Needs shaped by culture and the individual (burgers vs. tofu) oSegment, Target and Position (STP)Segmentation and Targeting Who to ServeChoose which customers to servePositioning How to ServeIdentify key benefits of offering, points of difference with rivals oDevelop and Execute a Marketing program based on the Marketing Mix (4 Ps) intersection pointFeatures, brand name, packaging, service, warrantyPlaceOutlets, channels, coverage, transportationPriceList price, rebates, discounts, payment achievementPromotionAdvertising, sales onward motion, merchandising, personal conducting, publicity How to Position yourself with customersMarket leaderEncourage habitual purchase, keep quality high, reinforcing ads, avoid stock outs ChallengersEncourage mix seekingEncourage trial (coupons), try something new adsBuild Profitable Customer RelationshipsBasic Relationships ( crushed-margin customers) vs. Full Relationships (key / dominant customers) Frequency marketing programsRewards, encourage customers to pass away moreClub marketing programsOffer members discounts for being mem berCustomer SatisfactionSatisfied customers are loyal (mig order rate of 5%)Refer telephoner to others (tell average of 3 others)Less price sensitiveCustomer DissatisfactionMigrate at 40%Dont complain (96% never report back) circulate average of 11 people about problemsoManage Product PortfolioShould you keep all your products?Should market them all the same way?Can you increase the products in your portfolio?BCG evolution Share MatrixMarket Growth Rate (y-axis) vs. Relative Market Share (x-axis) High High StarsLow High Cash CowsHigh Low Question MarksLow Low DogsMarketsProductsCurrent stark nakedCurrentMarket sixth sense-Selling more products in existing marketsProduct suppuration -Selling new products in existing marketsNewMarket Development-Selling existing products in new markets (geographic or new segments)Diversification -Selling a new product in new marketsHow your product portfolio could be expandedTim HortonsMarketsProductsCurrentNewCurrentMarket Penetration-High d ensity in geographic area-Heavy advertising-High affect to be franchisors-Regularly upgrades facilitiesProduct Development-Bagels and cappuccino-Sandwiches, wraps, soupsNewMarket Development-Expansion to campuses-TimShop (online)-Expansion into U.S.Diversification-Partnered with U.S.-based Cold Stone Creamery rag 75 steps of STPoGroup potential vendees into segmentsGeographic, demographic, psychographic, behavioralHow do organizational buyers differDemand for your product is derived from demand of buyers product Fate tied to buyers fate customary to haveFew dominant customers and long term relationshipsProvide competitive bidsHave multiple people involved in the purchaseTo increase likeliness of B2B successUnderstand the purchasing organizations needsUnderstand the organization buying processoRight bidding list, who is influential and who to pay attention to oGroup products to be sold into categoriesMultiple products with some common trait (often consumer type) Useful where multi consumer type, each with own needs, but not one product to meet all needs Business vs commercial aircraftDevelop Market/product grid and estimate size of marketSelect Target MarketsExpected Financial Performancesizing and growth, purchasing power, profitsCompetitive PositionCompetitive in segment now and over timeAccessibilitySegment can be reached and served at reasonable priceFit with the OrganizationYou can deliver an effective marketing programoTake marketing actions to reach target market4 PsProduct positioningHead-to-head or DifferentiationChallenges in repositioningTo change how consumers view an offering relative to competition oHuge advertising be to change beliefs of peopleConsumers may be confused about what your brand stands for oConsumers may not buy your claimWhy repositionReacting to competitionNew Balance vs. NikeReaching new marketChocolate milk for adultsCatching a rising trendHealth trendsChanging the value addedTrade spate or upLecture 8First P in 4 Ps (Produc t)Hard to do wello90% of new products test down in first yearoCommon among successesUniquely, superior point of differenceHas to incline well, has to be valued in the marketLecture 9 price and carry2 Ps Price and PlacePriceThe money exchanged for ownership of goods/servicesPrices involves perception of value and will varyCheaper price for like quality has higher valueHigher price can signal quality (watches, cars)There is a tradition of getting stuff for free or very cheap over internet that is hard to change (vs. by phone or TV) Pricing matters a lotAffects customers viewDiscussion starts with pricing,Goes more generally to marketing than strategyWhy change your price?Demand, cost, competitionHow will people reactPeople place premium on option, if pure tone getting less, will be dissatisfied and feel violated Market mix over product life cycle for price (in order of 4 stages) oSkimming penetration, gain market share, defend market, stay profitable Factors affecting pricing de cisionsoInternal FactorsMarketing objectivesMarketing mix strategiesCostsOrganizational considerationsExternal FactorsDemandCompetition, resellers parsimoniousnessGovernmentSteps in setting pricesIdentify pricing constraints and objectivesConstraintsDemand, stage in product life cycle, single vs product line, cost of producing, marketing, changing prices, Competitive market and competitors ObjectivesProfit or just survivalSales and or market share ( revenue enhancement, unit of measurement volume)Social responsibilityEstimate demand and revenueAll else being equal, as price falls, demand increaseExcept forLuxury goodsDemands also affected byoPrice and availabilityIncome aimsChanging buyer tastes and preferencesMarketing Managers want to know price elasticity of demand % change in quantity demanded relative to % change in price oSlope of demand curve tractile demandSlight decrease in price, steep increase in demandSubstitutes usually (no alternatives usually non elastic) oEstimate Cost, volume, profit relationshipsTotal cost = total unbending cost + total variable costsBreak-even analysis (sales equal costs)Determines profitability at different levels of salesBEP = Total fixed cost / (unit price unit variable cost)oSelect an approximate price levelPricing based on demandskimming pricing high price when hungry initial buyers are not price sensitive penetration pricing low price to attract buyers (wii)prestige pricing signal quality with the priceprice ocean liner set of prices by a product line (ex. bauer 70, 80, 90, apx) odd-even pricing prices ending in .99 seem lowertarget pricing when a specific price to buyer is a goal bundle pricing price for a package of multiple products yield management pricing match demand and show dynamically to customize prices Pricing based on coststandard mark-up add a fixed percentage to the cost of all similar items undetermined pricing add a mark-up to the cost (consulting) experience curve pricing lower the p rice as your own costs come down the instruction curve Pricing based on profit (little role for demand and competition) target profit pricingtarget return-on-sales pricingtarget return-on-investment pricingPricing based on the competitionCustomary pricing (ie. Swatch, chocolate bars) (all the same) price above, at or below similar productsLoss leader pricing sell something at a discount to get people into your store o couch up the list (quoted) priceOne price for all flexible pricing crucial be consistent with all products in product line must be legalMust be consistent with client perceptions of productNeeds to avoid price-cutting by competitorsPrice cut only when you can win (rare)Have cost or tech advantage over rivalsoMake adjustments to the priceDiscountsQuantity, BOGOseasonal workerFunctional/TradeCashAllowancesTrade in allowance for buyersPromotional allowanceEDLP (no need to wait for sales)Geographical AdjustmentsTransportation/shipping costs and whether buy or seller pay sMarket mix over product life cycle (Place/channels)Limited, build, selective, more intensive distribution, fewer selectiveChannelIndividuals or firms that answer get the product/service to the end userB2C directly, or use intermediary, such as future shop (less contacts) oRetailers are channels (but so are distributors and resellers)Benefits of direct channels ( producer to seller)Greater entertainLower variable costDirect contactQuicker response to changesNo need to look for middlemanInternet makes direct distribution easyBenefits of indirect channelsFewer contacts to manageCan match product assortment with customersLess need for producer to have a sales presenceAllows multiple channels for same productApple through site, apple store, BestBuyLeverage a channel teammate with existing customer relations oLower fixed cost (no sales team)Conflicts between channel helpersVertical conflictIssues in chain (producer to retailer)Horizontal ConflictIssues at same level (retailer to reta iler)Challenges of moving from indirect to directMay lose distribution (disintermediation)Buyer loyalty to retailer not productExtra costs involved (e-tail, shipping, sales, customer services) Factors in choosing a channelBusiness environmentCharacteristics of your customersWho, what, whereCharacteristics of your product (complex or evangelize)Ice-cream vs. jetsCharacteristics of your company (B2B, global, languages)What channels and intermediaries are most profitableLecture 104th P, PromotionsThe communication processoSee chart in lecture notes by ChrisThe promotional mixWhat communication tools are availableAdvertising modify Expensive (variable_, deliver the goodss reasons to buy products Control over channel of messageLarge numbers see messageHard to determine responsePersonal merchandisingFace-to-faceVery expensive (fixed cost)Control over message (sales people can differ(Targeted receiversImmediate responsesPublic relationsUnpaid, non-personal communication, from third partyL ittle control over messageHighly credible, not seen as self-servingHard to know responsesSales promotionSamples, coupons, rebates76% of marketing expenditures for packaged goodsShort run (decline in advertising efficiency)Control over message (not building loyalty)Immediate ResponseDirect marketingOver phone, or internetMass or micro, becomes annoying (telemarketers)Control over messageTargeted receivedImmediate responsesDeveloping the promotional mixIn product life cycle to inform, to persuade, to remindProduct characteristicsLevel of complexityMore complex, more personal sellingPotential Risk (financial, social, physical)Greater risk, more personal sellingAncillary services (service/ frequent required post sale) Advertising establishes reputationDirect marketing can describe customizationPersonal selling builds buyer confidence and provides evidence of customer service oKnow your target marketWho is buyer and what is buying behaviourPlace of purchase, reason, how big is market (m ass or custom, first time or repeat oDecision stage of buyerSee chart in Chris lecture notesoChannel strategyPush (want channel to sell it, target channel not end consumer) Push product through channel with goal of getting channel members to push it to customers Direct promotional mix to channel members to gain cooperation Personal selling and sales promotions play study rolesPull (channel users want to get it from you, targeted at end consumer more) Product is pulled through channelsDirect promotional mix at ultimate consumers to encourage them to demand product Mainly advertising and direct marketing to reach end consumers Developing, executing and evaluating the integrated marketingcommunications program oCoordinates all promotional activities to provide a consistent message across all touch points oKnow target audience and how to market to themoIMC Program 3 stagesPlanning StageAwareness, interest, evaluation, trialSet budget based offo% of salesCompetitive parityAll you can af fordDesign promotion, schedule itImplementationExecute the promotion planCarry out promotionControlPost-test the promotionMake needed changesEvaluating IMCImportant to measure ROIHow many views, traffic to site, coupon redemption rateCan occur during both implementation and controlLecture 11Three options/Modes for exploiting your new product or technology oLicensingWhen to considerWhen you feignt have the resources to bring it to market and dont want to develop them When you want to get the technology to market fast (win standards race) When you want to stop other firms from R&D and patenting RisksBeneficial only while you have technological advantageCreate a standardStay at leading abutRequires strong IP testimonialDependent on others for market successMay lock you into something when market is still emerging oPartnering (selling a component)When to considerWhen you dont have the resources to bring it to market When you want to get the technology to market fastWhen credible part ners can be identified and their endorsement sends a signal When you are strategically important to partnerRisksLarger, more established firms can take advantage (price/terms) Partner can deskill youDependent on partnerMarket success and access to info and managementPartner can become disinterestedoDIY (Do it yourself)When to considerCan bring it to market yourself or want to develop capabilities When you have resources to do itUnderstand requirements and behaviour of end consumerWant to brand it with your nameYou have clout with your ecosystem of playersRisksBleeding edge- rivals learn from your mistakesEffort spent on marketing and distribution makes you lag in R&D Lose nimbleness and speedUnderstand market (buyers, competition and overall market (size and growth) Want to devise an entry strategy to leverage advantagesoEmphasize speed for lead timeProduct, technology, people, partners, locationsSet up intangible entry barriers rather than relying only on proprietary advantage like patents oEmphasize selective focusClearly defined target marketClearly defined partners, channels, suppliersPlus allow for experimentation pliant and liquid resources & capabilities (rent, borrow or share)Decision depends onWhere you see future of companyStability of industryValue to other playersPotential for IP protectionBecoming a platform leaderIndustry platform is foundation technology or service that is essential for a broader, interdependent ecosystem of business Requires innovations to be usefulNo longer under full control of originator, may contain propriety elements oNeed to decide if you are going to purse a product or platform strategy oAchieving platform status requires specific decisions that governTechnology evolutionProduct and systems designBusiness relationships within ecosystemoMany companies dont succeed as they fail to tackle both TechnologyDesigning right interfaces, architecture, disclosing IPBusinessMaking key complements, introducing incentives, defeat comp eting platforms oPlatform potentialMust satisfy two prerequisite conditionsPerform at least one essential function within system of use or solve an essential tech problem in an industry Should be easy to connect to or build upon to expand system of use as well as allow new or even unintended end usersGoogle is coring in internet search. Linus in web server operating systems for tipping. Intellectual Property auspicesLegal right granted by a government that allows inventor to preclude others from using the same invention for a maximum of 20 eld oNeed to demonstrate that invention isNovelNot ObviousUsefulSecret when the patent application is filedBenefitsBlocks others from using inventionRaises the cost of imitation by rivalsHelps to enrol capital by signaling a competitive advantage Helps in negotiating rightsoLimitationsRequires disclosure of the invention in all countriesMonopoly is temporaryRivals can often work aroundLong, complex, costly to defendCan be irrelevant if technolo gy moves quicklyLecture 12 Business Start UpEntrepreneurship ApproachesCausal logical system (start with goals expect return)Evaluate opportunities on measurable market demand & competition Select option with highest expected returnSpecify resources needed to get the military issue you wantMost often used in developed, familiar products/marketsMeans-Based (start with means avoid loss)Evaluate alternatives based on given set of means + low cost experiments Select option based on affordable loss rather than expected return Obtain pre-commitments with customers, suppliersMost often used in uncertain products / marketsDealing with UncertaintyEntrepreneurs pick a comfortable level of risk and push to increase return oBankers pick a desired level of return and push to reduce risk