Evolving views of marketing

1. Evolving views of marketing • Attracting customers Todays customers are smarter, more price conscious,more demanding and approached by more players • The challenge is not to produce satisfied customers but to produce delighted and loyal customers • Companies seeking to expand their profits and sales have to spend time and resources leading to suspects,prospects and sales effort

2. Computing the cost of lost customers-First the company must define and measure its retention rate • Second the company must distingush the causes of customer attrition and identify those can be managed better • Third,the company needs to estimate how much profit it loses while losing customers,the lost profit is equal to the customers life time value • Fourth, the company needs to figure out how much it would cost to reduce the defection rate, and finally nothing beats listening to customers

3. The need for customer retention-A company would be wise to measure customer satisfaction regularly as its the key toretention • A highly satisfied customer stays loyal longer buys more as the company introduces new products,less bothered by competition,pricing • Companies think they are getting a sense of customer satisfaction by tallying complaints

4. Measuring customer life time value- describes the present value of the stream of future profits expected over the customers lifetime • The company must subtract from expected revenues the expected costs of attracting, selling and serving that customer • Of course,a company needs,in addition to an average customer estimate,a way ofestimating CLV for each individual customer

5. Customer relationship management,the key- The aim of CRM is to produce high customer equity • CRM is the process of managing detailed information about individual customers and care fully managing all customer touch points • There are three drivers of customer equity; value equity,brand equity and relationship equity

6. Value equity is the customers objective assesment of the utility of an offering based on the perceptions of its benefits • Brand equity is the customers subjective and intangible assesment of the brand,above its perceived value • Relationship equity is the customers tendency to stick with the brand above and beyond all objective and subjective assesments

7. Customer relationship management- is perhaps the most important concept of modern marketing • It involves managing detailed iformation of individual customers and carefully managing customer touch points to maximise loyalty • More recently CRM is the overall process of building and maintaining profitable customer relationships by superior value and satisfaction

8. Customer value- Attracting and retaining customers can be a difficult task • Customers have a big line of products and services to chose from • A customer buys from the firm that offers highest perceived value • The difference between all the benefits and cost of marketing offer compared to other offers eg: Federal express

9. Customer satisfaction- Depends on the products perceived performance relative to a buyers expectations • If the product performance falls short of expectations the customer is disastisfied • If performance matches expectations,the customer is satisfied and if the performance exceeds expectations there iscustomer delight

10. Oustanding marketing companies go out of their way to keep important customers satisfied • Highly satisfied customers repeat purchases and also constitute to good word of mouth • Smart companies aim to delight customers by promising only what they can deliver and then delivering more than they promise

11. Customer relationship levels and tools • At one extreme,a company with many low-margin customers may seek to develop basic relationships with them • P&G does not call and talk to all tide customer instead they do brand building,get to promotions,toll free no. and website • At the other extreme in markets with few customers and high margins sellers want to create full partnership with key customers • Eg:P&G work closely with walmart&boeing with airline service providers

12. Today most of the leading companies are offering customer loyalty and retention programs beyond consistent quality • Marketers use specific marketing tools like frequency marketing programs to reward regular buyers like flierprograms,hotel upgrad • Club marketing programmes and communities • Harley- davidsons Harley owners group(HOG)

13. Types of buying decision behaviour • Complex buying behaviour-undertake this behaviour ,they are highly involved inpurchase perceive significant difference among brands • Consumers may be highly involved when the product is expensive,risky,purchased infrequently and highly self expressive • Typically the consumer has to learn about the product category,for eg: a PC buyer may not know what attributes to consider

14. Dissonance –reducing buying behaviour -occurs customers are highly involved in infrequent purchase but see little difference among brands • For eg:Customers buying carpeting may face a high involvement decision because carpeting is expensive and self expressive • Yet buyers may consider most carpet brands in the given price range to be the same • After purchase the customer might experience post purchase dissonance as they notice disadvantages in the purchased prod or adv.in the non-purchased

15. Habitual buying behaviour- occurs under conditions of consumers low involvement and a little significant brand difference • For eg:Common salt,the consumers simply go to a store and search for a brand • If they reach out the brand in future its out of habit rather than strong brand loyalty • Because they are not committed to any brands marketers use price and sales promotions to stimulate product trial

16. Variety seeking buying behaviour- is undertaken by consumers in situations of low involvement but significant brand differences • In such cases consumer often do a lot of brand switching • For eg; When buying cookies consumer may hold some beliefs,choose a cookie without much evaluation,evaluate during consumption • But next time the customer may pick another brand just for a variety not due to disatifaction

17. The buyer decision process • Need recognition- the first stage of buyer decision process in which the consumer recognises a problem or need eg:ad of a car • Information search- The stage of buyer decision process in which the consumer is keen to search for more information • Evaluation of alternatives-At this stage the consumer uses the information available to evaluate the alternate brands

18. Purchase decision- Generally the consumers purchase decision will go in favour of the most preferred brand • Influence of others and unexpected situational factors can come in between the decision • Post puchase behaviour – After purchasing the product,the consumer will be satisfied or dissatisfied and will engage in post purchase behaviour

19. Business markets • Business markets fetch more business and money than consumer markets • Take an eg:of a tyre co (good year),various suppliers sell goodyearrubber,steel,equipment and other goods to produce tyres • Good year sells this to retailers who inturn sells it to the conumers,they sell it to the OEMs,and sell to fleet owners for repalcement

20. Charecteristics of business markets • Market structure and demand-the business marketer deals with fewer buyers than consumer marketer • For eg:the good year sells replacement tyres to final customers,its potential customers are lot of vehicle owners • But the companys fate lies in an order from an auto maker&placing in key retailers

21. Business markets are geographically concentrated and business demand is derived demand • B-to-B marketers sometimes promote the products to the final customer to increase business demand • Many business have inelastic demand not directly related to price changes&business markets have fluctuating demand

22. Participants in the buying process • The decision making unit of an organisation is called the buying centre • This group includes the actual users of the product or service,those who make the buying decision,who do the actual buying etc. • The buying centre includes all members of the organisation who play 5 roles in the purchase decision process

23. Users- are members of the organisation who will use the product or service • In many cases users initiate the buying proposal and help define product specifications • Influencers- provide information for evaluating alternatives,technical personnel are particularly important influencers

24. Buyers- have formal authority to select the supplier and arrange terms of purchase • Buyers may help shape product specifications,but major role is selecting vendors and negotiating • In more complex puchases buyers may include high level officers participating in negotiations

25. Deciders- have formal or informal power to select or approve final suppliers • In routine buying the buyers are often deciders or at least approvers • Gate keepers- control the flow of information to others • Examples are technical personnel or even personnel secretaries

26. Market segmentation • Market consists of buyers and buyers differ in one or more ways • They may differ in their wants,resources, attitudes and buying practices • Through market segmentation, the companies divide large heterogeneous markets in to smaller segments t reach more efficiently • A marketer has to try different segmentation variables in consumer markets

27. Geographic segmentation- calls for dividing the market in to different geographical units like nation,state,district etc • A company may operate in one area or few areas or operate in all possible areas but pay attention to geographical differences in needs • Companies are going for untapped territories and mini stores in high density urban areas

28. Demographic segmentation- divides the market in to groups based on variables such as age,gender,family size,income,occupation,relig • These are the most popular basis for segmenting customer groups • A major reason is that the customer needs,wants,and usage rates vary with demographic variables

29. Psychographic segmentation- divides buyers in to different groups based on social class, lifesyle or personality charecteristics • People in the same demographic group can have very different psychographic makeups • Eg:the marketing for Honda appears to target the 20 plus guys but its actually aimed at a much broader personality group

30. Behavioral segmentation- divides buyers in to groups based on their knowledge,attitudes, users or responses to a product • Marketers believe that behaviour variables are the best starting point for building market segments • Ocassions- buyers can be grouped according to ocassions when they get the idea to buy actually make the purchase or use a purchased item

31. Benefits sought- a powerful form of segmentation is to group buyers according to the different benefits they seek from it • User status- markets can be segmented in to groups of non-users,ex-users,potential users,first –time users &regular users • Usage rate- light,medium and heavy users • User status- non-users,ex-users,potential users,first time users&regular users • Loyalty status- A market can also be segmented by consumer loyalty

32. Target marketing • Once the segmentation is done,the firm has to evaluate the various segments and decide which segments it can serve best • Evaluating the market segments- a firm must look at three facts; segment size and growth, segmentstructural attractiveness&coresources • Selecting target market segments- a target market consists of a set of buyers who share common needs that the co needs to serve

33. Undifferentiated marketing- using a mass marketing strategy a firm ignores the segment differences and targets the whole market • Differentiated marketing- here a firm decides to target several market segments and designs separate offers for each • Concentrated marketing-isespecially appealing when company resources are limited,instead of going for a small share in a large market

34. Micromarketing- is the practice of tailoring products and marketing programs to meet the needs of various market segments and niches • Choosing a target market strategy- best depends on the companys resources • Socially responsible target marketing- biggest issues usually involve the targetting of vulnerable or disadvantaged consumers

35. Positioning • A products position is the way the product is defined by consumers on important attributes place the product occupies in consumers mind • Positioning involves implanting the brands unique benefits and differentiation in customers minds • Positioning maps- show consumer perception of brands vs competitors in important buying dimensions(price,orientation,performance)

36. Choosing a positioning strategy • identifying possible competitive advantages- to understand customer needs better than competitors and deliver more value • Choosing right competitive advantages- if a company has multiple competitive advantages the best which will build its positioning strategy • Selecting the overall positioning strategy- to position the brands on the key benefits that they offer relative to competing brands

37. The product development process Involves eight stages,they are 1.Idea generation- starts with the search for ideas,the management should decide the products and markets to emphasise • The new product objective also should be stated whether cash flow or market domination • 2.Idea screening-this stage is idea pruning or reducing by screening,the company must avoid drop-error,ie permitting a poor idea further or dropping a good one • Idea rating is done by describing the product,the target market and the competition

38. 3.Concept development and testing- surviving ideas must be now developed into product concepts • A product idea is an idea of a possible product the company can see offering to the market 4.Marketing strategy development-consists of 3stages first describing the size,strucuture and behaviour • The second part outlines the products planned pricing and distribution strategy and the third part says about the long-run and profit goals

39. 5.Business analysis- the management must review the sales,cost and profit projections to determine whether they satisfy the objectives • If they do, the product concept can move to the product development stage 6.Product development- if the product concept passes the business test,it moves to the R&D and the engineering department for developing • This stage will answer whether the product idea can be translated in to a technically and commercially feasible product

40. 7.Test marketing- once the management is satisfied with the products functional performance,the product is ready with a brand name • The purpose of test marketing is to learn how consumers and dealers react to handling,using and repurchasing the actual product 8.Commercialisation- test marketing gives management enough information to make a final decision regarding the decision regarding launch • In launching a product,the company should decide when,were to whom and how

41. The product life cycle • The PLC is the course of a products sales history and profits over its life- time • It involves 5 distinct stages- product development,introduction,growth,maturity and decline 1. Product development- product development begins when the company finds and develops a new product idea

42. 2.introduction stage- starts when the product is launched commercially and made available for purchase • High level of promotion is needed to 1,inform the potential customers2, induce trial and 3, secure distribution in retail outlets • Marketing strategies- considering the price and promotion the marketing dept can pursue multiple strategies

43. Rapid skimming strategy-launching new product at a high price and high promotion level • Slow skimming strategy- launching the new product at a high price and low promotion • Rapid penetration strategy- launching the new product at a low price and spending heavily on promotion • Slow penetration strategy- consists of launching the new products at a low price and low level of promotion

44. 3,Growth stage- the growth stage is marked by a rapid climb in sales • New competitors enter the market,attracted by the opportunities for large scale production and profit • They introduce new product features and this further expands the market • The increased number of competitors leads to an increase in the number of outlets and production

45. Marketing strategies- the strategies will try to sustain the market as long as possible • a, the firm improves product quality and adds new product features and models • b,it enters new market segments • c,it enters new distribution channels • d,it shifts some advertising from building product awareness to bringing about product conviction • e,it lowers prices at the right time to attract the price-sensitive buyers

46. 4,Maturity stage- a products rate of growth will slow down and the product will enter a stage of relative maturity • The stage lasts longer than previous stages and pose formidable challenges to the marketing department • Most products are in the maturity stage of the life cycle and most marketers deal with mature markets

47. The maturity stage is divided in to 3 phases • The first phase of growth maturity the sales growth rate starts to decline because of distribution saturation • The second phase,stable maturity,sales become level on a percapita basis because of market saturation • In the third phase ,decaying maturity the absolute level of sales starts to decline and customers move towards other products and substitutes

48. Marketing strategies- • a,market modification- the company should seek to expand the market for its brand by working with the twofactors-no. of users& usage rate per user • b,product modification- in a way that will attract the new users and more usage from current users • c,Market mix modification- stimulate sales through modifying one or more marketing mix elements like price,distribution,advertising,sales promotion etc

49. 5.Decline stage- the sales of most firms and brands eventually decline,the decline may be slow or rapid • Sales may plunge to zero or they may be at a lower level and continue for so many years • Sales decline for a number of reasons like technological advances,consumer shift in tastes and increased domestic and foregin cmpetition • As sales and profits decline some products are withdrawn from the market and remaining reduce the no.of offerings and even promotion and prices

50. Marketing strategies- A company faces number of tasks and decisions to handle its ageing products • They must decide whether to maintain product without change,harvest the product or drop the products • If the product is to continue special marketing strategies have to be evolved