Fundamentals Of Marketing & Customer Service

Fundamentals of Marketing & Customer Service By Ashraf Ayoub 31 st Mar’09 References: Business Today Book, 10 th Edition by M.Mescon . C.Bovee. J.Thill

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 through Products Promoting sale volume Market Customer integrated profits through needs 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

Beyond Customer Satisfaction Price, Product Quality, Service quality, Innovation, Image Customer Perceived Value Loyalty Market Share & Profitability Shareholder Value

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 research Source of expensive mistakes - Not a substitute for good judgment - misleading If not carefully worded & administered Poor indicator of future buying behavior - Not good predictor of what will excite consumers in the future Suggest what people might prefer or dislike Doesn’t identify ways beyond current states Measures the level of service currently provided Not accurately represent marketplace Administered in artificial settings Surveys Limitations Design Tool

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 Change in marketing approaches Change in technology Technology Control the marketing On product design, pricing, advertising, activities Laws & regulations Needs more advertising to build awareness about product benefit, products modifications to respond Trends against product, change in tastes Social & cultural trends Affect product availability, affect behavior of target customers interruptions in the supply of raw materials, floods, droughts, & cold weather Natural environment put off buying expensive items, pent-up demand interest rates, inflation, unemployment, personal income, saving rates Economic conditions impact specifics Factors

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 Segments - Categorization of customers according to their relationship with products (knowledge, attitude) or response to product characteristics Behavior Ease the customiztion Method of combining geographical data with demographics data to develop profiles of neighborhood segments Geodemographics - Classification 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) Psychographics - Categorization 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) Geographics Poor indicator of behavior Study of statistical characteristics of a population (age, gender, income, race, occupation, ethnic group) Demographics Effects specifics Factors

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)

Positioning & the Marketing Environment Target Market Ethics Social responsibility Society Technology Politics Regulation Nature Economics Competition Distribution Price Promotion Product

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