Knowledge Application

1. Knowledge Application TWO

2. Marketing is about using knowledge to understand and satisfy customer needs • Early successes were mass marketing brands (e.g. Coca Cola, Wrigleys) • Tedlow proposes: mass marketing demands knowledge of • Exploiting economies of scale • Re-investment of profits into promotion • How to create integrated vertical market systems • Produce high volumes at reasonable/low prices to create barriers of entry to competition TWO

3. Functional Knowledge of Manufacturing Processes Functional Knowledge of Mass Marketing Functional Knowledge About Market Research Knowledge of Markets Functional Knowledge About Market Analysis Determination of Market Need Provision of Appropriate Product Marketing Programmes Market Response Assessment FIGURE 2:1 THE USE OF KNOWLEDGE TO SUPPORT MASS MARKETING TWO

4. View that classic mass of single standard product is no longer always appropriate • Emergence of using knowledge to identify market segments of differing needs • Early attempts (e.g. socio-demographic segmentation) limited by quality of knowledge generated by research • Advent of low cost powerful IT systems has permitted more effective segmentation analysis TWO

5. Cluster analysis software permits rapid analysis of customer buying records • Discriminant function analysis to determine product benefit clusters • Advent of e-commerce has greatly increased volume of real time data concerning customer purchase behaviour • Emergence of data warehousing and data mining technology to generate new knowledge TWO

6. Niche marketing is about using in-depth knowledge of small group of customers to satisfy their special needs • Popular strategy of smaller firms • Sometimes what starts as a niche business evolves into a global operation (e.g. Microsoft) • Data mining permitting large firms to acquire knowledge that permits entry into niches TWO

7. Style • Early marketing theory focused on managing next transaction or sale = transactional marketing • Research in Europe (IMP Group) led to recognition that transactional marketing is “arms length relationship” • Research revealed in some markets that firms sought to build long term relationships with customers TWO

8. Emergence of TQM and JIT stimulated need for use of knowledge to develop collaborative relationships • Reichfeld evolved concept of “zero defection” based on demonstrating value from lifelong customer relationship • Emergence of relationship marketing philosophy • Extremist proposed transactional marketing was obsolete TWO

9. More sensible approach is to accept both styles are appropriate, it depends upon market circumstance TWO

10. 1:1 Marketing • Every customer has specific need to be satisfied • Use knowledge of need to build 1:1 relationship • In use in industrial markets (e.g. construction) for years • Pine proposed that, by becoming orientated towards customisation of products, could begin to move towards philosophy in consumer goods markets TWO

11. Made feasible by advent of JIT permitting flexible and fast response to customer needs • Example of Dell permitting on-line consumer customers to specify computer design required • Concept aided by knowledge being accumulated from data mining • Example of Amazon.com making customised response based on prior book orders TWO

12. Restriction is: company must be able to make profit from offering specific customised product to individual customers TWO