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Chapter 2 Adapting Marketing to the New Economy. Drivers of the New Economy. Digitalization and Connectivity. Customization and Customerization. Industry convergence. Disintermediation and Reintermediation. Old Economy Product unit organization Profitable transactions
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Chapter 2 Adapting Marketing to the New Economy To accompany A Framework for Marketing Management, 2nd Edition
Drivers of the New Economy Digitalization and Connectivity Customization and Customerization Industry convergence Disintermediation and Reintermediation To accompany A Framework for Marketing Management, 2nd Edition
Old Economy Product unit organization Profitable transactions Financial scorecard Stockholders Marketing does the marketing New Economy Customer segment organization Lifetime value of customer Marketing scorecard Stakeholders Everyone does the marketing Changes in Business Practices To accompany A Framework for Marketing Management, 2nd Edition
Old Economy Build brands via advertising Customer acquisition No customer satisfaction measurement Overpromise, underdeliver New Economy Build brands via performance Customer retention Measure customer satisfaction and retention rates Underdeliver, overpromise Changes in Business Practices To accompany A Framework for Marketing Management, 2nd Edition
Internet Domains B2C B2B C2C C2B B2C = Business-to-Consumer Benefits include: greater ordering convenience, lower cost, easier information and price gathering CDNow is oneexample How Marketing Practices Are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition
Internet Domains B2C B2B C2C C2B B2B = Business-to-Business Volume is 10-15% higher than B2C. Benefits include: lower costs via B2B auctions, buying alliances, greater access to information. How Marketing Practices Are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition
Internet Domains B2C B2B C2C C2B C2C = Consumer-to-Consumer Consumers are creating product information online via newsgroup and chat room dialogues. Transactions occur via online trading sites such as eBay. How Marketing Practices Are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition
Internet Domains B2C B2B C2C C2B C2B = Consumer-to-Business Facilitate communication between customer and businesses. How Marketing Practices Are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition
How Marketing Practices Are Changing: E-business • Brick and click firms have often faced channel conflict issues • Brick and click firms tend to be more successful than pure click e-tailer competitors because . . . • Customer acquisition costs are lower • Resources, knowledge, customer base, supplier relationships are superior To accompany A Framework for Marketing Management, 2nd Edition
How Marketing Practices Are Changing: CRM • Customer Relationship Marketing (CRM) allows companies to: • Deliver real-time customer service • Customize market offerings, products, services, media, and messages To accompany A Framework for Marketing Management, 2nd Edition
How Marketing Practices Are Changing: CRM • Effective Customer Relationship Marketing requires: • Reducing customer defection rates • Extending the life of the customer relationship • Enhancing customer sales / profit potential • Making low-profit customers MORE profitable or terminating them • Focusing on high value customers To accompany A Framework for Marketing Management, 2nd Edition
How Marketing Practices Are Changing: CRM • CRM Leads to One-on-One Marketing • Four Steps for One-to-One Marketing • Don’t go after everyone, carefully identify your prospects and customers. • Group customers by their needs and their value to the company; aggressively pursue the most valuable customers. • Build stronger relationships with customers via individual interaction. • Customize messages, services, and products for each customer. To accompany A Framework for Marketing Management, 2nd Edition
How Marketing Practices Are Changing: CRM • Customer Databases and Database Marketing are the key to Effective CRM • Database uses include: • Best prospect identification • Matching offers to customers • Deepening customer loyalty • Reactivating customer purchasing • Avoiding serious mistakes To accompany A Framework for Marketing Management, 2nd Edition