MARKETING AND SALES MANAGEMENT

James S. Boles, Ph.D.Georgia State University

Atlanta, GA

ANALYSING THE BUSINESS ENVIRONMENT

Failing to plan is planning to fail!

The only constant in the modern world is change!

The Macro Business Environment

• Demographic Environment

• Economic Environment

• Natural Environment

• Technological Environment

• Political-Legal Environment

• Social-Cultural Environment

The Demographic Environment

• Trends in the demographic environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

The Economic Environment

• My firm’s economic environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

The Natural Environment

• My firm’s natural environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

The Technological Environment

• My firm’s technological environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

The Political-Legal Environment

• My firm’s political-legal environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

The Social-Cultural Environment

• My firm’s social-cultural environment:– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________– ______________________________

Analysing Current Business

• Boston Consulting Group Matrix:– Stars– Cash cows– Dogs– Question marks

MARKETING STRATEGY TOOLS

SWOT Analysis

Five Forces Analysis

SWOT Analysis

• Strengths

• Weaknesses

• Opportunities

• Threats

Strengths & Weaknesses of a SWOT Analysis

• Firm decides what its strengths are in relation to other firms/competitors

• Useful to develop information needed to allow better competitive decisions

• SWOT encourages good thinking about strengths, weaknesses, opportunities and threats. However, it lacks prescriptive power.

• Thus, the need for Five Forces Analysis

Five Forces Analysis

• The Five Forces Model includes:– Barriers to entry– Power of suppliers– Power of buyers– Rivalry among competitors– Availability of substitutes

Industry Analysis with the Five Forces Model

New Entrants– What are the barriers to entry?

– Can we raise them? Can they by lowered?

– Characteristics of Potential new entrants

– Likely competitive strategies of these entrants

– When will they enter our market

Suppliers

• How Large and concentrated are they?• Can firms switch suppliers easily?• How important is their product to us?• How much cost does their product represent?• What is their relative bargaining power over us?

Buyers

• How concentrated are our customers?• Potential for creating a new market or growing

this one?• How high are switching costs?• How price sensitive is each customer segment• Customer’s relative bargaining power?

Substitutes

• What are the substitutes for our product?• How viable are they as replacements?• How quickly will they penetrate our market?• Which players in the industry will see substitutes

as a chance for diversification?

Competitors

• Who are our major competitors today?• What are their relative industry positions?• What is the competitive advantage of each?• How is product differentiation achieved?

Delivering Value and Building Customer Satisfaction Through

Quality

Quality is the totality of product/service characteristics that

bear on its ability to satisfy stated or implied needs.

Satisfaction

• Satisfaction: A person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.– Setting expectations is key to insure buyer satisfaction

– Know your capabilities to set expectations accurately

– In some cases, exceeding expectations results in “delighted” customers -- but not in every case

– Sometimes satisfied customers defect (leave)

Benefits of Market Orientation

• Higher customer satisfaction– In general, satisfied customers are more loyal & buy

more• Spread favorable word-of-mouth

• Are more brand loyal (less price sensitive)

• Give feedback

• Reduce costs

• Higher profits (short-term and long-term)• Greater value for customers

– You know them and their needs

Management Characteristics of a Market Oriented Firm

• Customer focus– Obsessed with understanding needs and delivering

satisfaction

• Competitor orientation – Continuous recognition of competitors’ sources of

advantages, competitive position and strategies

• Team approach– Cross-functional teams dedicated to developing and

delivering customer solutions -- high morale & commitment to excellence

Customer Satisfaction

• Customer satisfaction can lead to retention • Customer retention leads to increased profitability

– Much cheaper to keep customers than to find new ones– Cheaper to serve customers that you know– Current customers know what to expect -- more likely

to be satisfied

• Typically only “delighted” customers are safe from defection!

• Satisfaction metrics are often interpreted incorrectly!!

The Meaning of Customer Satisfaction

• Typically a skewed distribution of satisfaction • Most dissatisfied customers do not complain --

they just LEAVE!– Encourage complaints

– Have clear policies on dealing with complaints

• Provide quick remedies when possible – Complaint recovery is a source of customer satisfaction

– Can actually be an opportunity

Life-Time Value of the Customer

• Total Customer Value is based on:– Image Value; Personnel, service and product value

• Total Customer Cost is based on:– Monetary cost; Time cost; Energy and psychic cost

• A key metric is determining the value of satisfied customers – Cadillac customer = $350,000 over the lifetime of the customer!!– Avoid customers with a record or profile of a “switcher” – Avoid hard to serve customers when possible

Buyer Behaviour

Consumer and Organisational Buying Behaviour

Steps in the Consumer Buying Process

• Need recognition

• Alternative search

• Alternative evaluation

• Purchase decision

• Post-purchase evaluation

Alternative Search

• 5 sources for information about alternatives– Internal -- own stored information– Group -- family, friends, neighbors– Marketing -- ads, salespeople, dealers,

packaging, displays, promotions– Public -- publicity, consumer reports, reviews– Experiential -- trying or viewing the product

while shopping

Alternative Evaluation

• Customer is trying to satisfy a need

• Customer is seeking benefits

• Each product is a bundle of attributes

• Desired attributes vary by purchase situation

• Consumers develop a belief about each brand (brand image) that mentally positions the product

Purchase Decision

• Purchase decision involves several issues– vendor, quantity, timing, payment method

• Situation events can influence purchase– stock-out, long lines, store hours, others

opinions– ??????????

Post-Purchase Evaluation

• Perhaps the most important step for long-term business development

• Often overlooked by retailers/service providers

• Poor evaluations lead to:– bad word-of-mouth; complaints; returns; etc.

Social Influences on Consumer Buying

• Social influences– cultural and subcultural

• affects everyday behaviour, a basic influence• transmitted by family, church and schools

– Social class• affects attitudes and values

– Reference groups and family• family, close friends, professional associations• most people have multiple reference groups

Marketing Influences Consumer Buying

– Product• appearance, packaging, performance

– Price• quality, value, prestige, very important!

– Promotion• advertising, sales promo, salespeople, publicity

• must be consistent and have repeated exposure

– Distribution (place)• must be located where the buyer wants it

• stock-outs are killers

Situation Influences Consumer Buying

• Physical surroundings– geographic and institutional location, décor, sounds,

aromas, lighting, weather and merchandising

• Social– who is present? Others roles in consumption?

• Temporal– time of day or season, holiday, time since last purchase,

time constraints on consumer

Situation Influences Consumer Buying

• Task definition– shopping intent, selection, obtain information,

and/or buyer role versus user role

• Antecedent states– moods, momentary conditions, variety seeking,

habitual behaviors. These are immediately antecedent to the purchase decision

Organisational Buying

• Steps in the Process:– Problem recognition (need recognition)– Determination of characteristics and quantity– Search for qualified potential sources– Acquisition and analysis of proposals– Evaluation of proposals and supplier selection– Selection of an order routine– Feedback and post-purchase evaluation

Major Influences in Organisational Buying

• People– Users, influencers, deciders, approvers,

gatekeepers, buyers

• Environmental– Purchasing department evolution– Cross-functional roles, Centralized purchasing– Internet purchasing, Long-term contracts– Lean production (JIT)

Key Requirements in Organisational Buying

• Value– lowest total cost of ownership

• Understanding customer requirements– transaction– relationship– partnership

Key Influences on Organisational Buying

• Company reputation– quality, price, delivery, previous experience

• Salesperson– understands buyer requirements– investigates needs thoroughly

• Technological interface

• Capability

MARKET SEGMENTATION

The process by which a market is divided into distinct customer subsets of people with similar needs and characteristics

leading them to respond in similar ways to a product/service offering

Growing Importance of Segmentation

– As markets mature, competition becomes more intense

– Customers have more varied needs and desires

– Technology -- micro-segmentation and relationship marketing

– Identifies opportunities for new product development

– Helps design of effective marketing programs

– Improves strategic allocation of marketing resources

SEGMENTATION PROCESS

• 4 Major segmentation descriptors for consumer and business markets: physical, behavioral, product-related and benefits sought

• Objective is to divide the market into relatively homogeneous groups– Selection of Meaningful Descriptors

– Determine if there are differences in the dependent variables

– Evaluation of the results

Segmenting the Market: Physical Descriptors

• Physical Descriptors– Age

– Sex

– Life Cycle

– Income

– Geography

– Education

General Behavioral Descriptors

• Life cycle

• Social class

• Interests (psychographics)

• Firm purchasing structure

• Buying situation

Product-Related Behavior Descriptors

• Product usage (place and frequency/scope)

• Loyalty

• Purchase predisposition

• Purchase influence

• Innovativeness

Customer Needs

• Benefits sought– Different emphasis on various benefits of the product

or service

– What is the “bundle of benefits”

• Choice criteria– Evaluated on the existence of desired characteristics

and the value of each characteristic

Service Segmentation

• Customers must be compatible with the service since they are part of the service process

• Services lend themselves to customization far better than products

• Some services may be able to use technology to reduce variability and costs

Selected Macro-level Bases of Business Segmentation

• Size• Geographic Location• Usage Rate• Structure of Procurement• Product/Service Application• SIC code• Characteristics of Purchase Situation• Value in Use

Selected Micro-level Bases of Segmentation

• Key criteria– Quality, Delivery, Supplier Reputation

• Decision-specific conflict – High or Low

• Purchasing strategy– Optimizer, Satisficer, etc.

• Structure of decision-making unit – Who are the major participants in the decision?

Selected Micro-level Bases of Segmentation

• Importance of purchase – High……….Low

• Attitude toward vendors – Favorable…………Unfavorable

• Organisational innovativeness – Innovator…………..Follower

• Personal characteristics – Demographics, Risk Averse?, Confidence, Job

Responsibility; Decision Style; etc.

Effective Segmentation Requires

• To be effective, identified segments must be:

– Measurable

– Substantial

– Accessible

– Differentiable

– Actionable

Marketing Research

Gathering information and measuring market demand

Steps in the Research Process

• Define the problem & research objectives

• Develop the research plan

• Collect information

• Analyse the information

• Use findings to make a decision

Defining the Problem and Setting Research Objectives

• Types of research– Descriptive, exploratory, causal

• What do we want to know?– Clearly specify needed results– Are we examining a symptom or the problem?– Can we study this issue or problem?

Developing the Research Plan

• Data sources

• Research approaches

• Research instruments– survey, interview, computer scored, etc.

• Sampling plan

• Contact methods

Decision Making with the Results

• First, don’t shoot the messenger!

• What do the results tell us?– Are these issues actionable– Was this the correct research approach (helps

guide future research)– Can we trust these results– Is there some form of unacceptable bias in the

study design (post-hoc analysis)

Methods of Conducting Marketing Research Inexpensively (cheaply)

• Talk to your customers– Conduct research by walking around

• Use customer comment cards – Act on any consistent findings

• Do focus groups of customers– Talk about how they want to do business

• Conduct business reviews with major customers