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Part Two

Foundations for Creating Value

McGraw-Hill/Irwin Business Marketing, 4/e

Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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Part Two
Foundations for Creating Value

Chapter 5

Chapter 6
Chapter 7

Market Opportunities Marketing Strategy

Weaving Marketing into the Fabric of the Firm

Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Business Marketing, 4/e

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Chapter 5

Market Opportunities: Current and Potential Customers

McGraw-Hill/Irwin Business Marketing, 4/e

Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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Finding Business to Business Opportunities

DEVELOP MARKETS AMONG CURRENT CUSTOMERS FIND OPPORTUNITIES WITH EXISTING CUSTOMERS

NEW MARKET OPPORTUNITIES ACQUIRE NEW CUSTOMERS

McGraw-Hill/Irwin Business Marketing, 4/e

DEVELOP A RESEARCH PROGRAM

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Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

DEVELOP MARKETS AMONG CURRENT CUSTOMERS

FOUR STEP PROCESS
1. RANK YOUR BEST CUSTOMERS

2.
3. 4.

MAXIMIZE REVENUES THROUGH COLLABORATION EFFORTS

DEVELOP SPECIFIC PRODUCTS FOR EACH CUSTOMER LEARN OF SPECIAL NEEDS FROM YOUR CUSTOMERS CUSTOMERS
Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Business Marketing, 4/e

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FIND OPPORTUNITIES WITH EXISTING CUSTOMERS

FOUR STEP APPROACH
1. ESTABLISH A FORMAL FEEDBACK PROGRAM WITH CUSTOMER CONTACT POINTS (SALES,

SUPPORT)
2. 3. DEVELOP DATABASES COMPILE DECILE REPORTS

4.

DEVELOP CUSTOMER RESEARCH ASSISTANCE PROGRAM

Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Business Marketing, 4/e

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RESEARCHING CUSTOMERS
FIND OUT YOUR CUSTOMERS NEEDS THROUGH: 1. 2. FOCUS GROUPS best for generating ideas and

gaining customer insights

SURVEYS asking questions by personal interview, mail, telephone, internet

3.
4.

JOINT DEVELOPMENT AND TESTING use to adjust and adapt products after purchase
CUSTOMER VISITS use on-site meetings for problem

identification
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ACQUIRE NEW CUSTOMERS

1. Calculate your current customers lifetime value (CLV) to serve as yardstick for planning
2. Find customers in a new segment who look like your existing customers 3. Expand into new geographic territory 4. Transfer/modify existing products for other industries
McGraw-Hill/Irwin Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

5-9

ScheduTrax Lifetime Value Analysis

Expected customer migrations following acquisition Yrs. since 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. the Last Purchase Expected $ Account Acquisition after after after after Purchase Probability Purchases Service Costs Period acquisition acquisition acquisition acquisition 100 0 0.60 $90 $20 60.0 36.0 31.2 27.4 Customers 16.0 9.6 8.3 15.0 4.8 2.9 45.6 1.9 1 2 3 0.40 0.20 0.10 $60 $50 $50 $10 $ 4 $ 2 40.0 24.0 24.0 20.8 14.4 19.2 40.5 18.2 12.5 11.5 17.3

Profit forecasts Acq+1 [60 buyers ($90)].8 gr. profit[100 accts$20 service/acct] = Acq+2 [36 buyers ($90)+16 buyers ($60)] .8 gr. profit- [60 accts$20+40 accts$10] = Acq+3 [31.2 buyers($90)+9.6 buyers($60)+4.8 buyers($50)] .8 gr. profit- [52 accts$20+24$10+$24$4] = Acq+4 [27.4 buyers ($90)+8.3 buyers ($60)+2.9 buyers ($50)+1.9 buyers ($50)][45.6$20+20.8$10+14.4$4+19.2$2] = NPV @ 10 NPV @ 10% NPV @ 20% Discounting profits Acq+1 $2,109 $2.017 $1,933 Acq+2 $1,455 $1.331 $1,222 Acq+3 $1,144 $1,002 $ 881 Acq+4 $ 919 $ 769 $ 649 LTV/100 customers $5,627 $5,119 $4,686
McGraw-Hill/Irwin Business Marketing, 4/e

Exhibit 5-4
Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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DEVELOPING OPPORTUNITIES THROUGH MARKETING RESEARCH

PURPOSE OF RESEARCH
1 CUTOMER MANAGEMENT 2 ACQUIRE NEW CUTOMERS

ACHIEVED BY
1. CUSTOMER RESEARCH through focus groups and surveys 2. INTERACTING WITH CUSTOMERS through joint product development and product testing 3. DEVELOPING ON-SITE VISITATION PROGRAMS
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FINDING SEGMENTS
1. USE NAICS CODES TO ASSESS INDUSTRIES SIZE AND NEEDS

2. EVALUATE COMPANY CHARACTERISTICS SUCH AS SALES, NUMBER OF EMPLOYEES

3. DETERMINE A COMPANYS BUYING PROCESSES AND HOW THEY BUY 4. MATCH PRODUCT OFFERINGS TO COMPANIES SEEKING WHAT PRODUCT DOES BEST
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PERCEPTUAL MAP
BRAND C

Reasonable price
BRAND A

Order process efficiency & accuracy

BRAND B

After-sale service Rapid delivery

Helpful / informative
BRAND D

Technical performance
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Exhibit 5-10
McGraw-Hill/Irwin Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved.

SEGMENTATION AND OPPORTUNITY ANALYSIS

IDENTIFY SEGMENTS THROUGH INDUSTRY CLASSIFICATION (SIC / NAICS)
CHOOSE YOUR INDUSTRY TARGETS CHOOSE YOUR SPECIFIC COMPANY TARGETS BY: 1. HOW THEY BUY 2. THE BENEFITS THEY SEEK 3. MEMBERSHIPS IN PROFESSIONAL / TRADE ORGANIZATIONS
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CRITERIA FOR SUCCESSFUL SEGMENTATION

SEGMENT MUST BE IDENTIFIABLEenumerated and evaluated

SEGMENT MUST BE ACCESSIBLEcan be reached by marketing activity

+ +

SEGMENT MUST BE SUBSTANTIALenough to justify efforts

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ESTIMATING SEGMENT SIZE

ANALYTICAL TOOLS FOR SEGMENT EVALUATION: 1. USE OF SCENARIOS - Articulate events and futures 2. BUILDUP APPROACH/FACTORING Estimate product use in its applications

3. STATISTICAL SERIES Use correlation between demand and economic activities

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