Customer Base 200,000

1. Retained 95% 133,000 Satisfied 70% (140,000) Not retained 5% -7,000 Retained 90% 5,400 Do Complain 10%(6,000) Not Retained 10% Customer Base 200,000 -600 Dissatisfied 30% (60,000) Retained 22% 11,800 Don’t Complain 90% (54,000) Not Retained 78% -42,120 New Customers Needed 24.86% 49,720

4. How likely are you to buy this product or brand again on your next purchase?

5. Customer Life Expectancy and Customer Retention Customer Life (N) (given rate of customer retention) Customer Life (purchase periods) CR = Customer Retention Rate Retention rate

6. LifetimeValueof a Customer

7. Marketing strategy

8. Outline • Strategic market planning • Offensive and defensive strategies • Building a marketing plan

9. Strategic market planning • Specify strategic direction for each product/market and to allocate resources in a way that will bring about desired short- and long-run performance • Requires an assessment of: • Business performance • Market attractiveness • Competitive position

10. Market attractiveness • Market forces • Market size • Growth rate • Buyer power • Competitive environment • Number of competitors • Price rivalry • Ease of entry • Market access • Customer familiarity • Channel access • Sales requirements

11. Competitive position • Differentiation position • Product quality • Service quality • Brand image • Cost position • Unit cost • Transaction cost • Marketing expenses • Marketing position (presence) • Market share • Brand awareness • Distribution

12. Offensive strategies • Invest to grow • Invest marketing resources to grow the market or market share • Improve position • Invest to improve and/or strengthen competitive position • New market entry • Invest to enter new attractive markets or develop new product markets

13. Defensive strategies • Protect position • Invest to protect market share and competitive advantage • Optimize position • Optimize price-volume and marketing resources to maximize profits • Monetize • Manage market position for maximum cash flow with limited marketing resources • Harvest/Divest • Manage the product for maximum short-run cash flow or minimum losses

14. Strategic market plans Market attractiveness Competitive position

15. Building a marketing plan • Creativity versus structure • Why marketing plan? • Identifying opportunities • Focused market strategy • Resource allocation • Performance roadmap • Building a marketing plan

16. Building a marketing plan cont. • Part I – Situation analysis (where are we now?) • Step 1: Current situation • Step 2: SWOT analysis • Part II – Marketing strategy (where do we want to go?) • Step 3: Strategic market plan • Step 4: Marketing mix strategy • Part III – Performance plan (what is the expected impact?) • Step 5: Develop a revenue plan + marketing budget • Step 6: Develop a profit plan • Step 7: Performance review

17. Currentsituation • Analyzing customers • Needs analysis • Decision making processes • Analyzing context • Demographic environment • Economic environment • Socio-cultural environment • Political/legal environment • Technological environment • Natural environment • Analyzing the company • Analysis of the business model • Competitive advantage • Collaborators and complementers analysis • Analyzing competitors

19. Building a marketing plan cont. • Part I – Situation analysis (where are we now?) • Step 1: Current situation • Step 2: SWOT analysis • Part II – Marketing strategy (where do we want to go?) • Step 3: Strategic market plan • Step 4: Marketing mix strategy • Part III – Performance plan (what is the expected impact?) • Step 5: Develop a revenue plan + marketing budget • Step 6: Develop a profit plan • Step 7: Performance review

20. SWOT analysis • External factors • Opportunities • Threats • Internal factors • Strengths • Weaknesses

21. Building a marketing plan cont. • Part I – Situation analysis (where are we now?) • Step 1: Current situation • Step 2: SWOT analysis • Part II – Marketing strategy (where do we want to go?) • Step 3: Strategic market plan • Step 4: Marketing mix strategy • Part III – Performance plan (what is the expected impact?) • Step 5: Develop a revenue plan + marketing budget • Step 6: Develop a profit plan • Step 7: Performance review

22. Marketing plan • Purpose • A marketing plan lays out a campaign to fulfill a company’s marketing strategy • Content • Executive summary • Table of contents • Summary of current situation • Assessment of market opportunity • Summary of the company’s marketing strategy • A marketing budget • Forecast unit sales and revenues • Plan for monitoring and evaluating action plans

23. Dell Computer • Graphs copied from: • www.value-based-marketing.com/uncategorized/what-would-you-do-with-dell-computer/#more-21 • What would you do with Dell computer?

24. Dell computer • ”Create a better way to buy a computer” • Reduced distribution costs: By cutting out the middleman, distribution costs were reduced giving the company a competitive price position. • Improve the buying experience: Dell’s knowledgeable staff had expertise to help customers who were frequently unknowing. In contrast, IBM, Apple and others were selling through resellers who were not necessarily knowledgeable about the product. Michael Dell surmised that customers would find value in talking to staff who had good product knowledge and could help guide purchase decisions to suit the customers’ needs. • Guide future product development: The direct selling model gave Dell first-hand knowledge of customers’ needs.

28. How has Dell responded? • Improve core business • Shift portfolio to higher-margin offerings • Balance liquidity, profitability, and growth

29. Sources • Pride & Ferrell: Ch. 1, 2 & 3 • Best, Roger J. (2009): Market-Based Management: Strategies for Growing Customer Value and Profitability, 5th ed., Pearson Prentice Hall, New Jersey (ISBN-13: 978-0-13-233653-6)