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MARKETING

L&T EXECUTIVE DEVELOPMENT PROGRAM


September 2014
DEEPA SAHASRABUDDHE

MODULE 1:

CUSTOMER VALUE

WHAT DRIVES CUSTOMERS


CHOICE OF VENDOR?
HIS ASSESSMENT OF VALUE

DIFFERENT CUSTOMERS DEFINE `VALUE


DIFFERENTLY
SAME CUSTOMER DEFINES VALUE
DIFFERENTLY DEPENDING ON SITUATION!

WHAT IS `VALUE?
An assessment, an estimate

Of Benefits versus Costs

VALUE = BENEFITS - COSTS

CUSTOMER PERCEIVED VALUE


Customer Benefit

Customer Cost

Functional, economic
& psychological

Finding, evaluating,
purchasing, using,
maintaining, disposing

Product

Money

Service

Time

Personnel

Physical Energy/
effort

Image

Mental Energy

HOW TO INCREASE CUSTOMER VALUE??

Decrease
Costs
Increase
benefits

GROUP EXERCISE ON VALUE


OFFERING

MODULE 1 RECAP: CUSTOMER

VALUE

Value drives customers choice of vendor


Different customers define value differently
Same customer defines value differently depending on
situation
Value is an assessment of benefits less costs
Hence it can be enhanced by increasing benefits or
decreasing costs
Benefits are economic, functional, psychological and can
be delivered through Product, Services, Image, People

Costs are for finding, evaluating, purchasing, using and


disposal money, time, effort (energy physical and
mental)

WHAT HAS MARKETING GOT TO


DO WITH ALL THIS?

Module 2

WHAT IS MARKETING?

What does THIS customer value? And THAT


one? Are they similar?
Can we sell to all of them? Should we?
Some of them? Who?

DISCOVERING /
UNDERSTANDING
VALUE

What benefits should we provide to them?


How do we improve value by reducing cost?
What should they think of us as?
What will the product be?

What should we charge?

CREATING
VALUE

How will the customer know this is what


we offer? These are the benefits? How can
he reach out to us?
How will our product reach the customer?
And the money reach us?
COMMUNICATING &
DELIVERING
VALUE

What does customer think we are good at?


Falling short of?
Should we retain this customer? How?
How much can this account grow? How to
grow it?
TRACKING,
MAINTAINING &
GROWING
CUSTOMERS

MARKETING IS .
DISCOVERING /
UNDERSTANDING VALUE

CREATING
VALUE

TRACKING, MAINTAINING
& GROWING CUSTOMERS

COMMUNICATING &
DELIVERING
VALUE

MODULE 2 RECAP: WHAT IS MARKETING


Marketing is an organisational function and a
set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stake holders

`MEETING NEEDS PROFITABLY

Value
Proposition
Brand
Marketing
Mix

Marketing
Mix

Tracking & Growing


Value

Segmentation
& Targeting

Positioning

Communicating &
Delivering Value

Buyer
Behaviour

Creating Value

Understanding Value

MARKETING IS .
Customer
Relationship
Management

DAY
PLAN:

Module
1
2
TEA BREAK
3
4
5
LUNCH
6
7
TEA BREAK

Topic
Customer Value
What is Marketing
10.30 AM TO 10.45 AM
Segmentation & Targeting
Positioning and Brand
Marketing Mix
1 PM TO 2 PM
Buyer Behaviour
Customer Relationship
Management
3.30 PM TO 3.45 PM
Consolidation Exercise
Summary

Module 3

SEGMENTATION AND TARGETING

Early in the
twentieth century

FORD Model T

Manufacturers produced high volumes of standardised goods for a mass


market

GM Cadillac

IN THE LATE TWENTIES THIS


GAVE WAY TO

GM
Chevrolet

More demanding customers, product differentiation

TODAY ......

TODAY ......

SEGMENTATION IS ABOUT
Identifying groups of customers who define
value in similar ways, who share the same
needs

Group together those that seek similar


benefits from you

Then analyse/identify what variable


captures this difference? What is the
commonality that is driving the need?

SEGMENTING CONSUMER MARKETS


Demographic based on age, gender,
income etc.
Psychographic based on attitude, values,
approach towards life etc.
Behavioural based on the exhibited
behaviours and habits of the segment
Geographic based on locations

SEGMENTING BUSINESS MARKETS


Demographic by industry size, type, location
Operating variables technology, customer
capabilities (Level of service)
Purchasing approaches purchase function
orientation, power structure, criteria for
purchasing
Personal/account characteristics values of
buyers, attitude towards risk/quality, loyalty

MANUFACTURER OF STEEL COILS AND STRIPS


2ND

1ST LEVEL
AUTOMOBILE
CONSTRUCTION
WHITE GOODS
RAILWAY WAGONS
Industry

End-use

LEVEL
Vehicle Bodies
Auto-components

Attitude

3RD LEVEL
Global / Indian brands
Fineblanking

Technology

WHY DO SEGMENTATION??

NEXT, CHOOSE WHO TO FOCUS ON:

TARGETING
Segment Attractiveness
Size, Growth rate, Profitability, Risk
PORTERS FIVE FORCES:
Threat of intense segment rivalry
Threat of increasing bargaining power of suppliers
Threat of increasing bargaining power of customers
Threat of new entrants
Threat of substitutes

Own Objectives, Competencies and Resources

GROUP EXERCISE ON
SEGMENTATION AND TARGETING

Exercise Sheets

MODULE 3 RECAP: SEGMENTATION &

TARGETING
Segmentation is the division of the overall market into
groups whose members have a similar need from the
product; groups whose members define value in similar
ways
Segmenting markets helps companies tailor their
offerings to provide better value than if they created
offerings that appealed to the `average / `mass

Target segments are those that the company chooses to


focus on based on their assessment of segment
attractiveness, own objectives, strengths and
competencies

Module 4

POSITIONING

Having identified target segments,


understood what they value next step is

WHAT ARE THE KEY BENEFITS WE WANT TO


PUT TOGETHER FOR THIS SEGMENT

VALUE PROPOSITION
The set of benefits that you offer to the target
market in return for the associated payment

WHY SHOULD I BUY YOU?

reliability
durability
Faster operations/
lower cycle time
lower operator
fatigue
assured uptime
affordable quality

Now we should be all set to create our


product and launch

RIGHT?

Video

notice / register

REMEMBER
RECALL

POSITIONING

POSITIONING IS
The act of Designing and Communicating with the consumer
in such a way that your product occupies a valued and
distinct place / reputation in the minds of the target
consumer is called POSITIONING

AIM: An image or a position that is valuable to customer and


strongly associated with us and not easy for competitor to
match

POSITIONING IS
Figuring out WHAT is it that we want the
customer to remember us for, associate us

with the most


And
Doing everything to drive that message

across and retain it

POSITIONING METHODS
Burj Al Arab worlds
tallest hotel

POSITIONING METHODS
ATTRIBUTES :
Largest portfolio of excavators of all sizes;

Oldest company in the business;


Most technologically advanced
processes/technology;

POSITIONING ON BENEFITS
Faster (cycle time, implementation etc)
Cheaper
More efficient (Single sourcing for all your
excavator needs)

SAVE 30% ON YOUR ELECTRIC BILLS

POSITIONING ON IMAGE

FINDING THE RIGHT VALUE-PROPOSITION


AND POSITION
Valuable to customer

Favourable `point of difference for you You are superior to competitor


Deliverable; supported by your strengths
and competencies
Customer comprehends and appreciates

Transforming environments
through new, dynamic uses of light

CKI

REMEMBER ME AS THE COMPANY THAT

THE SPECIFIC BENEFITS I BRING TO YOU IN


THIS CASE ARE

BRAND
Offering from an identified, known source is a
branded market offering.

Brand helps the customer identify the


product with a specific supplier and delineate
from others. Over time it gathers meaning or
brand attributes

KEY BENEFITS OF A STRONG BRAND


Helps establish credibility and is a short-hand
descriptor for key benefits provided
Repository for various intangible attributes

Reduces purchaser risk and shortens decision


making cycle
Shortens new product establishment time

Reduces price sensitivity

MODULE 4 RECAP: POSITIONING


Value proposition is set of benefits
Positioning is the creating and maintaining a certain
image/reputation about the brand in the customers mind

It is important to be clear about what is the positioning


we want and have. Ideally it should be valuable, unique
and difficult to copy.
One must make sure one focuses on maintaining the
positioning promise
Building a brand delivers significant benefits over time

GROUP EXERCISE ON
POSITIONING

Exercise Sheets

Module 5

MARKETING MIX

THE MARKETING MIX


The tools the marketer has to make the value
proposition come alive for the customer

PRODUCT
Features and attributes
Quality
Design
Brand name
Packaging sizes and
variants
Services
Warranties

BENEFITS TRANSLATED INTO THE PRODUCT


German engineered crane

reliability
durability
Faster operations / lower
cycle time
lower operator fatigue
assured uptime
affordable quality

All components from


Germany
Ergonomically designed cabin
Preventive Maintenance
bundled
Vendor managed inventory of
spares
Operator training
Manuals and documentation
24 x 7 helpline
Emergency repair service

PRICE
The value that is put
on the exchange
process
List price
Discount
Allowances

Payment period
Credit terms
Outcome based pricing , gain and risk share pricing

PROMOTION
Advertising
Personal selling

Sales promotion
Public relations

Direct Marketing
Digital Media

PLACE (DISTRIBUTION )
Channels
Coverage
Locations

Inventory
Transport

WHAT ADDITIONAL TOOLS DOES THE SERVICE


FIRM HAVE TO CREATE/CONVEY VALUE?
Contact employees
Customer
him/herself/Other
customers

People

Operational flow
of activities

Steps in process
Flexibility vs.
standard
Technology vs.
human

Process

Physical
Evidence

Tangible
communication
Servicescape
Tend to become
quality proxy
variables

MARKETING MIX ` INTEGRATED


GOODS

SERVICES

PRODUCT

PRODUCT

PRICE

PRICE

PLACE

PLACE

PROMOTION

PROMOTION
PEOPLE
PROCESSES

PHYSICAL EVIDENCE

MODULE 5 RECAP: MARKETING MIX


Value proposition has many benefits
These are made available, communicated and delivered
to the customer using the marketing mix.
Physical Goods Marketing Mix is: Product, Price,
Promotion, Place (Known as 4 Ps of Marketing)

Services Marketing Mix is: Product, Price, Promotion,


Place, People, Processes and Physical Evidence (7 Ps of
the Service Marketing Mix)
Marketing Mix can be used creatively to tailor value as
per the customer requirements and preferences
Each element of the Mix has to work in consonance with
the others in an integrated fashion

GROUP EXERCISE ON MARKETING


MIX

Exercise Sheets:

Module 6

BUYER BEHAVIOUR

HOW DOES MARKETER UNDERSTAND


What customer needs, values
Which is the best way to approach him
What communication will be most
appropriate
How he decides what brand to buy

BUYER BEHAVIOUR

MARKETER UNDERSTANDS AND TRACKS


Macro economic factors :
Political, Economic, Socio-Cultural,
Technology and Environmental &
Legal (PESTEL)
Micro economic factors
Competitors, Channel, Customers,
Other stakeholders
Cultural, Social, Personal Factors
Nationalities, religion, reference
groups, age, lifestyle

Sources of
information
Internal Records
(Market Information
Systems)
Market Intelligence
Systems (Secondary
and primary)

MARKETER UNDERSTANDS BUYING PROCESS & HIS


ROLE AT EACH STAGE
Problem Recognition
Information Search
Evaluation of alternatives

What triggers the need /creates motive & use it

Identify info sources; their role & importance.


Mktg communication should address these.

Understand evaluation criteria, method,


performance of self and competitors

Purchase Decision

Vendor, Qty, Payment mode preferred

Post Purchase Behaviour

Track satisfaction, address complaints,


stimulate use frequency / replacement

BUSINESS BUYING IS DIFFERENT


Fewer, larger buyers. Wider range of order sizes.
Professional purchasing

Several buying influences buying centre


Multiple sales calls, longer sales cycle
Derived demand (demand is derived from ultimate demand of
consumers)
Inelastic demand - organizations do not buy more if prices fall
Geographically concentrated buyers possible auto hubs (Pune,
Chennai, Gujarat)
Close supplier-customer relationships
Importance of personal relationships

BUSINESS BUYING
STEPS IN BUYING:
Problem Recognition
General Need Description
Product Specification
Qualified Suppliers
Proposal solicitation and
Selection
Specify Order Routine
Purchase & Use
Performance Review

BUY CLASSES (buying


situations):
New task
Modified Rebuy
Straight Rebuy
BUYING CENTRE: Roles involved,
people and the benefits they seek
Ensuring benefits are
communicated effectively,
efficiently, to the right
persons/roles

COMMUNICATING EFFECTIVELY : BENEFIT STACK


APPROACH
TYPICAL CUSTOMER BENEFITS
OFFERED
Highly competitive prices and
quality

Manufacturing plants in four


continents
Net based order and tracking
system & billing

24x7 help line facility


JIT delivery and customisation

Ability to handle specs. changes


with 12 hr notice
Emergency deliveries on
holidays and weekends

TYPICAL BUYING CENTRE


MEMBERS
Purchase Manager
Plant Manager
Logistics Manager
Marketing Manager
Supply Chain Manager
CFO
COO
CEO

MODULE 6 RECAP: BUYER BEHAVIOUR


To track changing needs marketer needs to understand buyer
behaviour & changing market:
Consumer/buyer behaviour is influenced by Marketing Mix as well as
Political, Economic, Socio-Cultural, Technology and Environmental &
Legal trends (PESTEL). So marketer tracks these Macro-economic
factors.
Buyer behaviour is also influenced by factors like competitors,
channel, customer, other stakeholders. Consumers Social / cultural/
personal traits affect consumer behaviour. Marketer tracks these
Micro-economic factors
Market Sensing data comes from multiple sources including Market
Information Systems and Market Intelligence Systems
B2B differs from B2C in many ways including purchasing process,
complexity & cycle times and people involved
Important to: Identify the buying centre members, roles, what benefits
they seek AND communicate relevant benefits to them.

Module 7

CUSTOMER RELATIONSHIP
MANAGEMENT

WAYS TO GROW BUSINESS


ACQUIRE NEW ACCOUNTS
GROW EXISTING ACCOUNTS
HOW??

WHAT IS SATISFACTION?
Feeling of pleasure or disappointment
resulting from comparing a products
perceived performance with own
expectation

WHO FRAMES EXPECTATIONS?


Past experience
Promotional claims made by the company
Media reports
Word of mouth influences (including social
media chatter)

HOW DO WE TRACK SATISFACTION?


VoC programs (surveys, helpline data, scan
social media, active customer interactions).
Key questions to ask: Satisfaction level for
various parameters, Likelihood of repatronising, Likelihood of recommending.
Challenges?
NPS net promoter score
Analyse for insights and implement changes

WHY SATISFY CUSTOMERS?


They buy more frequently

Spend more on each occasion


They tend to be easier to serve hence `costing less
They are less price sensitive, hence higher margin
possibilities
Cost of marketing to them goes down over time
They give you positive word of mouth

They are positively disposed towards new


products/extensions you introduce
They are open to up-sell and cross-sell

What is the objective of


`satisfying the customer?

Who is a LOYAL
customer?
Is satisfying the
customer enough
to bring loyalty?

CUSTOMER ENGAGEMENT DRIVES


LOYALTY

LONG TERM, RELATIONSHIP

CUSTOMER RELATIONSHIP MANAGEMENT


(CRM)
Process of moving toward long-term, costeffective, mutually beneficial trust with select
customers is relationship marketing and
implementing this is CRM
Involves collecting, analysing and using
detailed information about customers to
improve their experience with us across their
entire engagement with us from prepurchase to post.

WHO ARE THE `SELECT CUSTOMERS?


High Customer Lifetime Value
`Cost Magnets - Volume Customers
Marquee Value (Benchmark customers)
`Inspiration; `Learning; `Pioneer Value
provider customers
STRATEGICALLY VALUABLE CUSTOMERS

WHO IS AN ENGAGED CUSTOMER?>

Experiences drive

Engagement

WHAT IS EXPERIENCE?
LETS GO FOR SOME COFFEE ..

EXPERIENCE IS
Sum total
Of Actions, Thoughts, Feelings
Through the entire customer journey Need
recognition to disposal
Journey is made up of multiple contact/touchpoints
Not each contributes equally to overall perception

But each has the potential to be a moment-of-truth

EXPERIENCE IMPRESSIONS INFLUENCED BY

PLEASURE

Functional
Goals

EASE

INDIVIDUAL EXERCISE ON BRAND


CONTACT

Caselet

TO GROW CUSTOMER ENGAGEMENT


Understand the customer journey and the brand
contact opportunities
Look beyond functional goals
Reduce customer effort; improve Ease of Doing
Business; processes, interactions, information,
documentation
Identify / build `pleasure opportunities and
capitalise
Provide positive, seamless, memorable experiences
time after time
Be customer-focused not product-focused: The four
Cs customer solution, customer cost, customer
convenience, customer communication

MODULE 7 RECAP: CUSTOMER RELATIONSHIP

MANAGEMENT
Important to retain and grow accounts since it is far less
expensive, more sustainable to do so
CRM focuses on retaining and building customer accounts
through deep understanding of the customer

Satisfaction is necessary but not sufficient


Customer engagement is a vital link to loyalty
To build engagement look at providing experiences that
are Positive, Seamless, Memorable, Time after time
Do this by focusing on more than functional goals
looking at reducing any undesirable effort customer has
to put, improving ease of doing business at each stage of
the journey, meeting individual goals to build emotional
engagement

IN SUMMARY
Marketing is not only about Advertising and Promotion.
It is about knowing who is your key customer(s)
Know what is their definition of value (discover)
Decide what is the value you will deliver, what is the
positioning you take and the brand promise you are
making
Have this as a shared understanding across organisation
so each one knows what is the customer-promise
Construct market offering, price and delivery channel to
reflect this understanding

IN SUMMARY
Communicate effectively showing customer you
understand his concerns and are addressing them
(marketing collateral, proposals, interactions)
Plan the customer experience along entire journey to
fulfil functional needs with ease and pleasure
Improve the journey from Ease of Doing Business
perspective processes, interactions, documentation
Have effective VoC programs to capture, analyse for
insights & Dis-seminate the information to those who
need it / can use it
Do account/customer centred business planning
Key is to be customer-focused and build customer
engagement

Marketing and customer engagement are not


done only by those in the Marketing and
Sales department.
YOU play an important role in it too in
understanding value, building & delivering it
in the products and services and living up to
the brand image of the company in
everything you do!

BEST OF LUCK!