Fundamentals Of Marketing & Customer Service
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Transcript of Fundamentals Of Marketing & Customer Service
Fundamentals of Marketing & Customer Service
By Ashraf Ayoub
31st Mar’09
References: Business Today Book, 10th Edition by M.Mescon . C.Bovee. J.Thill
What is Marketing?
What is Marketing?
• Process of planning & executing the conception, pricing, promotion, & distribution of ideas, goods, & services to create exchanges that satisfy individual & organizational objectives
Core Marketing Concepts
• Needs• Wants• Demands• Products• Services• Values• Satisfaction• Quality• Exchanges• Transactions• Relationships• Markets
Products & Services
Markets
Needs, wants, &demands
Value, Satisfaction , &quality
Exchanges, Transactions,
&relationships
Fundamental Marketing Goal
• To direct customer’s basics needs into the desire to purchase specific brands
What is customer Service?
• Efforts a company makes to satisfy its customers to help them realize the greatest possible value from the products they are purchasing.
Marketing Applications
• Products
• Services
• Non-profit Organizations
• People (People Marketing)
• Places (Place Marketing)
• Causes (Cause Related Marketing)
Role of Marketing in Society
• Helping People satisfy their Needs & Wants by helping organizations determine what to produce.
Customer Needs
• Difference between a person’s actual & idea states; provides the basic motivation to make a purchase
• Basic human needs:– Food– Water– Air– Shelter– Clothing
Customer Wants
• Things that are desirable in light of a person’s experiences, culture, & personality
• Producers shape Wants by exposing customers to alternatives
How to enhance the appeal of products or services
• By adding a utility (power of a good or service to satisfy a human need)
The four utilities
– Form utility (consumer value created by converting raw materials and other inputs into finished goods & services)
– Time utility (consumer value added by making a product available at convenient time)
– Place utility (consumer value added by making a product available in a convenient location)
– Possession utility (consumer value added when someone takes ownership of a product)
Technology & evolution of Marketing
• Production Era
• Sales Era
• Marketing Era
Factory Existing Selling & Profits throughProducts Promoting sale volume
Market Customer integrated profits throughneeds marketing customer satisfaction
The Sales Era
The Marketing Era
Starting Point
Focus Means Ends
Production Era (until 1930s)
• Characteristics:– Demand for Products Exceed Supply– Manufacturers able to sell whatever produced– Seller’s Market (market place characterized
by a shortage of products)– Marketing Role to take orders & ship goods
Sales Era (1930s-1950s)
• Characteristics:– Supply for Products Exceed Demand – Firms spend more on advertising– Firms still focused on selling whatever
produced– Buyer’s market (marketplace characterized by
an abundance of products)
Marketing Era & Relationship Era
• Characteristics:– Marketing Concept adopting:
• Stressing customers needs & wants• Concentrating on specific target markets• Seeking long term profitability• Coordinating with marketing efforts• Maintaining long-term relationships with customers
Relationship Marketing
• Focus on developing & maintaining long-term relationships with customers, suppliers, & distributers for mutual benefit
Internet & Customer relations
• Brings the outside world closer
• Allows businesses to reach out
• Establish relationships with customers
• Market to the world
• Answer customers questions
• Better understand of customers “who & what they want”
The Importance Of Understanding Customers
• “The aim of marketing is to know & to understand the customer so well that the product or service fits him & sells itself”
Today’s customers
• Sophisticated
• Price sensitive
• Demanding
Why to satisfy customers?
• Acquiring new customer cost up to 5 times as much as keeping existing one
• Long-term customers (buy more, take less time, bring new customers, less price sensitive)
• Satisfied customers are best advertisement• With Superior customer service you can charge
customers as much as 10% more than competitor
• Dissatisfied customers tell 20 other people about bad experience
How to measure customers satisfaction?
• Analyze customer base:– Are you getting new customer?– Are you losing good customers?– What is your customer retention rate?– What are you doing to keep customer loyalty?
Why are today customers less loyal today?
• They have more (choices, styles, options, services, products)
• Have more information from (brochures, consumer publications, internet)
• Empowered & raised expectations
• Products start to look the same
• Time is scarce
• Needs & buying habits change constantly
Not every customer is worth keeping…
• “we’ve gotten a lot smarter about separating the customers we do want from the customers we don’t want” says C. Michael Armstrong
Price, Product Quality, Service quality, Innovation, Image
Customer Perceived Value
Loyalty
Market Share & Profitability
Shareholder Value
Beyond Customer Satisfaction
How to learn about customers
• Consumer buying behavior
• Marketing Research
• Virtual reality
• Database Marketing
• Relationship marketing
• One-to-one marketing
Consumer Buying Behavior
• Definition:Behavior exhibited by consumers as they consider
& purchase various products
• Consider:– Difference between organizational &
consumer markets– Buyers decision process– Factors influence buyer decision process
Organizational market
• Customers who buy goods or services for resale or for use in conducting their own operations
• 3 main subgroups:– Industrial/Commercial Market (buy to
produce)– Reseller Market (wholesalers/retailers)– Government Market (federal, states, local
agencies)
Organizational market (cont.)
• Buy raw materials
• Buy highly technical products
• Complex products
• Buy consumer products
• Larger Quantities
• Complex buying process
Consumer Market
• Individuals of households that buy goods or services for personal use
• Purchase smaller quantities than organizations
• Simple buying process (identify problem, look for solution, gather information, select alternatives, buy, reassure purchase)
Consumer Decision Process
Need Recognition
Information search
Evaluation of alternatives
Purchase Post purchase
evaluation
Cognitive Dissonance
• Anxiety following a purchase that prompts buyers to seek reassurance about the purchase, commonly known as buyer’s remorse
• Used to enforce sales by:
Guarantees, phone calls, hotlines, follow-up letters
Factors influence buyer’s decision process
• Culture (values, attitudes, beliefs)• Social Class (upper, middle, lower) different in
(activities, goals, shopping places)• Reference groups (Family, friends, co-workers,
sport enthusiasts, music lovers, computer buffs) • Self-Image “you are what you buy”• Situational factors (having coupon, being in
hurry, celebrating holiday, be in bad mod)
Marketing research
• Definition: The collection & analysis of information for making marketing decisions
When to conduct Marketing Research
– Set product goals– Develop new products– Plan future marketing programs– Monitor a program effectiveness– Keep eye on competition– Track industry trends– Measure customer satisfaction
Marketing Research Tools
• Used for probing customers wants & needs• Tools:
– Personal observations– Customer surveys– Questionnaires– Experiments– Telephone or personal interviews– Studies of small groups of population– Focused interviews of 6 to 10 people (focus groups)– Virtual reality
Limitations of marketing researchToolDesignLimitations
Surveys
Administered in artificial settings
Not accurately represent marketplace
Measures the level of service currently provided
Doesn’t identify ways beyond current states
If not carefully worded & administered
misleading
-Poor indicator of future buying
behavior
Suggest what people might prefer or dislike
Not good predictor of what will excite consumers in the future
-Not a substitute for good
judgment
-Source of expensive mistakes
Virtual reality
• It’s a three dimensional modeling• Advantages:
– Realistic settings– Quick setup– Easy reconfiguration of (brand, pricing, & shelf space)– Fast & error-free data collection– Low costs & flexibility– Ability to test new concepts before manufacturing or
advertising costs– Simulations identify competitors threat to business
Virtual reality Design
• Marketers: recreate atmosphere of actual retail store on a screen
• Consumers: – View shelves stocked with any kind of product– Pick up the package for examination– Move the product to virtual shopping cart
• Computer:– Record time spent on shopping– Examining package– Quantity of product purchased– Order of purchase
Database marketing
• Process of building, maintaining & using customer databases for the purpose of contacting customers & transacting business
• How?– Recording & analyzing (customer interactions,
preferences, & buying behavior)– Gathering data about customers transactions,
requests, & preferences– Determine target customers– Customize marketing offers for the best response
Customer relationship management software
Used to:• Interact with customers• Remember customer preferences & priorities• Capture insights about customers in great detail• Calculate customers profitability & future
potential• Build sophisticated but easily accessible
customer profiles• Share data throughout the organization
Relationship marketing
• Focus on conducting two-way communication between company & customer
• Used for building long-term relationships
One-to-one marketing
• Individualizing firm’s marketing efforts for a single customer to accommodate specific customer’s need
• Key Steps:– Identifying your customers– Differentiating among them– Interacting with them– Customize your product or service to fit each
individual customer needs
How To Plan Your Marketing Strategies
Competitive advantage
• Something set you apart from your rivals & makes your product more appealing to customers
Strategic marketing planning
• Involves:– Examining current market situation– Assessing opportunities & setting objectives– Developing marketing strategy to reach
objectives
• Purpose:– Help to identify & create competitive
advantage
• Results: “Marketing Plan”
Strategic marketing planning process
Examine Current Marketing Situation
Review past/current Performance
Evaluate competition
Examine internal strengths & weaknesses
Analyze external environment
Develop Marketing Strategy
Segment Market
Choose Target Market
Position Product
Develop Marketing Mix (4P’s)
Assess Opportunities & Set Objectives
Assess product & market opportunities
Set specific & measurable objectives
Step1: Examining Your Current Marketing Situation
• Reviewing Performance (how well each product is doing in each market where it sold)
• Evaluating Competition• Examining internal strengths & weaknesses• Analyzing external environment & tomorrow
changes
Reviewing Performance
• Use history of marketing performance to explore:– Slowed sales– Prices cut & profit rate– Improved sales– Cash investment in new marketing activities
• Review where you are• Review how you got there• Repeat successes & learn from mistakes
Evaluating Competition
• Keep an eye on competition• Pay attention to another ways customers
satisfied with• Watch horizon for not-existed competitors
Examining internal strengths & weaknesses
• Look at: management, financial resources, production capabilities, distribution networks, managerial expertise, promotional capabilities, ability to adjust your operation to different (cultures, customs, legal requirement & product specifications), technological expertise, & business commitment
• Identify sources of competitive advantage (strengths)• Identify areas need improvement (limitations)• Analyze & decide whether:
– Limit your business to opportunities which possess the required strengths
– Challenge your business to reach higher goals by acquiring & developing new strengths
Analyzing external environment & tomorrow changes
Factorsspecificsimpact
Economic conditionsinterest rates, inflation, unemployment, personal
income, saving rates
put off buying expensive items, pent-up demand
Natural environmentinterruptions in the supply of raw materials, floods, droughts, &
cold weather
Affect product availability, affect behavior of target
customers
Social & cultural trends
Trends against product, change in tastes
Needs more advertising to build awareness about
product benefit, products modifications to respond
Laws & regulationsOn product design, pricing, advertising, activities
Control the marketing
TechnologyChange in technologyChange in marketing approaches
Step2: Assessing your Opportunities & Setting your objectives
• New marketing opportunities:– market penetration (Selling more of your existing products in
current markets)– Product development (creating new products for your current
markets)– Geographic expansion (selling your existing products in new
markets)– Diversification (creating new products for new markets)
• Set SMART objectives (eg.certain level of market share,…etc) understood & known by employees
Market Share
• A firm’s portion of the total sales in a market
Step3: Developing Your marketing Strategy
• Divide your market into segments & niches• Choosing your target customers• Position to be established in these markets• Developing a marketing mix to help you get
there
Definitions
• Marketing Strategy: overall plan for marketing a product
• Market: people or businesses who need or want a product & have the money to buy it
• Market segmentation: division of total market into smaller relatively homogeneous groups
Dividing Markets Into Segments
• Objective: to group customers with similar characteristics, behavior, & needs then target them by offering products Priced, distributed & promoted differently.
Factors to Identify Market SegmentsFactorsspecificsEffects
DemographicsStudy of statistical characteristics of a population (age, gender, income, race, occupation, ethnic group)
Poor indicator of behavior
GeographicsCategorization of customers according to geographical location (such as regions, cities, counties or
neighborhoods) to customize & sell products meet needs of specific markets (assuming buying behavior influenced by
people location)
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PsychographicsClassification of customers on the bases of their psychological makeup, by focusing on:
* psychological makeup (including activities, attitudes, interests, opinions, & lifestyles)
** why people behave the way they do (by examining brand preferences, media preferences, reading habits, values,
self-concept)
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GeodemographicsMethod of combining geographical data with demographics data to develop profiles of neighborhood segments
Ease the customiztion
Behavior Categorization of customers according to their relationship with products (knowledge, attitude) or response to product
characteristics
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Choosing Your Target Markets
• Deciding which segment to target & when• Target markets: specific customer groups or segments to
whom a company wants to sell a particular product• Criteria to narrow the focus into suitable market
segments:– Size of segment– Competition in the segment– Sales & profit potential– Compatibility with company resources– Strengths– Costs– Growth potential– Risks
Strategies To Reach Target Markets
• Undifferentiated marketing (mass marketing)• Differentiated marketing• Concentrated marketing
Undifferentiated marketing
• Ignore differences among buyers & offer only one product or product line to satisfy the entire market
• Concludes:– All buyers have similar needs– All buyers can be served with same standardized
product
Differentiated marketing
• Sell a variety of products to several target customer groups
• Requires Substantial resources, why?
Marketing have to tailor products, prices, promotional efforts & distribution arrangements for each group
Concentrated marketing
• Acknowledge that different market segments exist & choose to target just one
• Useful when company resources are limited• Allows to focus time & resources on single type
of customer• Risky strategy (stake company fortune on one
segment)
Positioning Your Product
• Using promotion, product, distribution & price to differentiate a good or service from those of competitors in the mind of prospective buyer
• Factors:– Features– Performance– Quality– Durability– Reliability– Style– Design– Customer service (ordering ease, delivery, installation methods,
& customer support)
Developing The Marketing Mix
• The four key elements of marketing strategy: product, price, distribution (place), & promotion
• Product covers Product itself + brand name, design, packaging, services, quality, & warranty.
• Price: amount of money paid for product (include discounts)
• Distribution: organized network of firms move goods & services from producer to consumer
• Promotion: includes communication & promoting activities of product to target markets (e.g. advertising, personal selling, public relations, sales promotion)
TargetMarket
Ethics
Social responsibility
Society
Tec
hnol
ogy
Politics
Regulation
Nat
ure
Econom
ics
Competition
Distribution
Price
Promotion
Product
Positioning & the Marketing Environment