Customer Orientation

Goals of Customer Orientation

A principle which marketing holds is that a company should view and organize its marketing activities from the consumers point of view.
CUSTOMERS

Maximize Consumption Maximize Consumer satisfaction Maximize Choice Maximize Quality of Life

Front-line people Middle Mgt Top Mgt

Modern Customer Oriented Organization

Customer Expectations
Expectations are formed from past buying experience, friends and associates advice, and marketers and competitors information and promises. Expectations and performance should match. Company raising too high expectations will disappoint the buyer. Company if sets too low expectations, will not attract customers. Successful companies try to match the expectations and delivering performances.

Customer Value
Customer Perceived Value Is the difference between the prospective customers evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Customers estimate which offer will deliver the most perceived value, and act on it. Whether or not the offer lives up to the expectation affects the satisfaction and probability of purchasing the product. Total Customer value is the perceived monetary value of the bundle of economic, functional, and psychological benefits, customers expect from a given market offering.

Value Proposition Consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.
Value Delivery System It includes all the experiences the customer will have on the way to obtaining and using the offering. Total Customer Cost is the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering , including monetary, time, energy, and psychic.

Seller must access the Total customer value and Total customer cost associated with competitors offerings to understand how his offer rates in the buyers mind. A seller who is at a customer perceived value disadvantage has Increase customer perceived value Decrease total customer cost

Philosophy of High customer satisfaction subject to delivering acceptable levels of satisfaction to other stakeholders and total resources.

Customer Loyalty
Commitment to re-buy a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behaviour. A highly satisfied customer becomes a loyal customer. Buys more of companies new products , and upgraded products. Talks favorably about the company and pay less attention to competing brands and less sensitive to price.

Investment in Building Loyalty

Cost should not exceed gains

Levels of investment in building loyalty 1. Basic Marketing. 2. Reactive Marketing 3. Accountable Marketing 4. Proactive Marketing 5. Partnership Marketing Markets with few customers and high profile margins, most sellers will move towards partnership marketing.

Link Between Customer Satisfaction and Loyalty not Proportional Customer satisfaction rated on 1 to 5 scale. 1- low level satisfactionabandon the company and even badmouth. 2-4 fairly satisfied chances to switch to better offer if there 5 High satisfaction/delight- repurchase and even good word about the company, creates an emotional bond Highly satisfied for different reasons. Delivery, product performance, after sales service etc. One may be easily satisfied most of the time and the other might be hard to satisfy but on this occasion satisfied.

Satisfaction on product and quality Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Delivered a quality product when customers expectations are just met or exceeded.
Customer Profitability Revenue generated from a customer over time - (Cost incurred in attracting, selling and servicing the customer) Customer Life time Value Describes the net present value of the stream of future profits expected over the customers lifetime purchase.

Customer Equity
Is the total of the discounted life time values of all the firms customers. More loyal the customers ,higher the customer equity. Value Equity -Sub driver are quality, price and convenience. Brand Equity -Customer brand awareness, customer awareness, customer attitude towards the brand, and customer perception of brand ethics. Relationship Equity Loyalty programs, special recognition and treatment programs, community building programs and knowledge building programs.

Mass customization Is the ability of a company to meet each customers requirements-to prepare on a mass basis individually designed products ,services, programs, and communications. Eg: Nike shoes, Reflect.com P & Gs website. Markets divided on the basis of customer defection 1. Permanent Capture Market 2. Simple Retention Market 3. Customer Migration Market.

Methods of Measuring Customer Satisfaction Periodic surveys Can track customer satisfaction directly. Additional questions to measure repurchase intention and the willingness to recommend the company and brand to others. Monitoring customer loss rate Contacting customers who have stopped buying or switched to other suppliers. Mystery Shoppers Exercise Pose as a potential buyer and report on the strong and weak points experienced in buying the companys and competitors product. You can pair up. Do it in TV shops, Cloth shops etc. Be ready for discussion in the class.

Customer Satisfaction Satisfaction depends upon the offers performance in relation to the buyers expectation. Satisfaction is a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance ( or out come) in relation to his expectations. Performance < Expectations = Dissatisfaction. Performance = Expectations = Satisfaction Performance > Expectations = Highly Satisfied or Delighted

Databases and Database Marketing

Databases and Database Marketing

Customer database: Is an organized collection of information about individual customers or prospects . Accumulated through customer transactions, registration information, telephonic queries etc. Contains customers past purchases, demographics, psychographics, mediagraphics and other useful information. Business Database: Contains business customers past purchases, past volumes, prices and profits , buyer teams member names ( ages, birthdays, hobbies etc.) current contacts, competitive suppliers etc.

Database Marketing: Is the process of building, maintaining and using customer databases and other databases (product, suppliers, resellers) for the purpose of contacting, transacting and building customer relationships. Uses of databases To identify prospects To decide which customer should receive a particular offer. To deepen customer loyalty To reactivate customer purchases To avoid serious customer mistakes.

Marketing Management Process

Marketing Management Process

The process of analyzing marketing opportunities, selecting target markets, developing the marketing mix, and managing the marketing effort.

Strategic plan defines the companys overall mission and objectives.

Marketing Management Process

Marketing Channel

Suppliers

Target Consumers

Publics

Factors Influencing Company Marketing Strategy

Competitors

1.Target Consumers
Market Segmentation: The process of classifying customers into groups with different needs, characteristics, or behaviour. Consumers can be grouped based on geographic factors, psychographic factors (social classes, lifestyle), and behavioural factors (purchase occasions, usage rates). Market segment: A group of consumers who respond in a similar way to a given set of marketing stimuli.

Market Targeting: The process of evaluating each market segments attractiveness and selecting one or more segments to enter. A large company may offer a complete range of products to serve all market segments. Eg: General Motors. Market Positioning: Arranging for a product to occupy a clear , distinctive, and desirable place relative to competing products in the minds of the target consumers. A products position is the place the product occupies relative to competitors in the consumers mind. Eg: Quality is job one Ford, Engineered like no other car in the world Mercedes Benz.

2.Marketing Mix
After decided on the positioning strategy, company has to get ready for planning the Marketing Mix. Four Ps Product , Price, Place ,Promotion.

The set of controllable marketing variables that the firm blends to produce the response it wants in the target market. Mix consists of everything the firm can do to influence the demand for its product.

The four Ps of the Marketing Mix

Product
Target Market

Place

Price

Promotion

Target Market A set of buyers sharing common needs or characteristics that the company decides to serve.

Product
Quality Features Options Style Brand Name Packaging Sizes Services Warranties Returns

Price
List Price Discounts Allowances Payment Period Credit terms

Place
Channels Coverage Locations Inventory Transport

Promotion
Advertising Personal Selling Sales Promotion Publicity

3.Managing the Marketing Effort

The company want to design and put into action the marketing mix that will best achieve its objectives in its target markets. Involves four Marketing Management functions: Market Analysis, Market Planning, Market Implementation and Market Control.

3a. Marketing Analysis Company must analyze its markets and marketing environment to find out opportunities and to avoid environmental threats. Analyze company strengths and weaknesses. Feeds information and inputs to the other marketing management functions. 3b.Marketing Planning Deciding on the marketing strategies that will help the company to attain the strategic objectives. Different and detailed marketing plan is needed for each business, product, or brand.

Marketing Management Process

Marketing Channel

Suppliers

Target Consumers

Publics

Factors Influencing Company Marketing Strategy

Competitors

Marketing Plan A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. Contents of a marketing plan Executive summary and table of contents Brief summary of the main goals and recommendations. Outlines the entire plan and the operational detail.

Situation analysis Relevant background data on sales, costs, the market, competitors and other forces in the macro environment.

How the market defined?, how big it is?, how fast it is growing? The trends? All info is used to carry out a SWOT analysis. Marketing Strategy Is the logic by which the business unit hopes to achieve its marketing objectives. The game plan for attaining the objectives. The product manager defines the mission and marketing and financial objectives. Defines the targeted group and their needs. Specific strategies for target markets, marketing mix, and marketing expenditure level.

Financial Projections Sales forecast, an expense forecast, and break-even analysis. Forecasted sales with volume by month and product category. Implementation Controls Monitoring and adjusting implementation of the plan. Goals and budget set for each month, corrective action.

3c.Marketing Implementation The process that turns marketing strategies and plans into marketing action in order to accomplish strategic marketing objectives. Effectively put the marketing plan to work on day to day or month to month activities. Addresses when, who, where, and how.
3d Marketing Control Measuring and evaluating the results of marketing strategies and plans, making corrective actions. Ensure that marketing objectives are attained.

4.The Marketing Environment

Analyze the environment to avoid the threats and take advantage of opportunities. Includes forces that affects the companies ability to serve its consumers like company departments , channel members ,suppliers competitors, and publics. Company should consider the entire marketing environment when developing and positioning its offer to the target market.

Marketing Management Process

Marketing Channel

Suppliers

Target Consumers

Publics

Factors Influencing Company Marketing Strategy

Competitors