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MARKETING Q&A

1. Define in full detail the 4 Ps of marketing, and give an example of a company (corporation) that has fully mastered the 4 Ps ensuring their customer is a repeat customer. The 4Ps of marketing are product, price, promotion, and place (distribution). Product variables include quality, models and specifications, packaging and brands and service. Price variable includes allowances and deals, distribution and retail mark-ups and discount structures. Promotion variables include advertisement, sales promotion, personal selling and publicity. Place variables include distribution channels, outlet locations, sales territories and warehousing system. These 4 variables play a vital role in marketing of a product and enable in hitting the target market/consumers and are like the basic building blocks for marketers to understand and deploy accordingly. In my opinion, Starbucks Corporation, offering great products to all its customers since 1978, is a good example of an organization that has mastered the 4Ps ensuring loyal customers. With the coffee beans especially hand-picked, all products aptly priced, and well placed geographically, facilitating easy accessibility to customers, Starbucks has always had the silent promotion strategy. Starbucks has never been big in advertising, but believe in word-of-mouth promotion and in their quality of service.

2. Define Value Chain, and give an example of a company that utilizes a Value Chain Delivery Network, further cite the success rate of their value chain network. Value chain is defined as a tool for strategic planning to create more customer value (Kotler, 2009). The value chain is divided into five primary activities (Inbound logistics, operations, outbound logistics, marketing and sales and service) and four support activities (procurement, human resources management, technological development and infrastructure). Additionally, the value chain helps in analyzing performance, cost, and benchmark standards to improve the organizations value in the market. Wal-Mart, as a tough buyer, purchases goods from the manufacturers directly bypassing all intermediaries on the belief that they negotiate for their customers. WalMart has a fast and responsive transport system with a reported policy of hiring committed drivers having a record of having driven more than 300,000 accident-free miles without any major traffic violation. Having invested heavily in Information and Communication Technology, Wal-Mart is able to cater to the individual needs of the stores. Thus, Wal-Mart Inc. is the best example that utilizes a value chain delivery network. The organization has been very successful over the last decade in terms of value products, customer satisfaction, and delivery network. The success rate of Wal-Marts value chain network is considered very high.

3. What is MIS (from a marketing point of view) and how does it affect the marketing research process? The textbook definition is MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed timely and accurate information to marketing decision makers. This system relies on internal company records, marketing intelligence, and marketing research (Kotler, 2009). Information Systems within the Marketing function implement technologies that allow the personnel to access relevant, timely and current information on customer preferences and market demands to offer prompt services. MIS, through detailed analysis, helps marketers keep a track of and understand the changes in the needs and styles of customers on their products in the market. MIS helps marketing research gain deeper insights into the business processes to determine and implement potential sales strategies. Sales pipelining is the process of recognizing the initiation and closure of each sale in which a prospective customer is converted into a customer and then into a repeat customer. MIS also facilitates marketing research in identifying the most effective market strategy that is relevant to each of the heterogeneous market segments based on specified criteria. MIS is instrumental in formulating successful market strategies by defining product and service standards, understanding the intricacies of sales life cycle, and interpreting sales results to determine sales strategies. Thus the marketing research process cannot even be conceived without the vital component of MIS.

4 4. Why is marketing research so important before launching a new product? Cite companies that failed because lack of market research, additionally, cite companies that great success with a product because of extensive product research. Every organization that launches a product, wants it to be a success in the market and among its customers. For this success, the company has to put in a lot of effort in research to hit the correct target audience. It is responsibility of the Research and Development (R&D) department in a company to analyze the current trends of the market. McDonalds, while franchising their chain to different continents of the world failed miserably in Africa. The launching campaign of McDonalds Africa was chosen at a completely wrong time when famine hit all over Africa. Unfortunately, enough research was not done before launching products (Xanthius, 2009). Southwest airlines, one of the best airline companies in the industry, are well known for its best services at very affordable prices. A few years ago, the organization signed a deal for fuel for which they were criticized. Southwest airlines had done extensive research before signing the deal which proved to be very beneficial for the company thanks to the well founded research on oil price trends unlike other airline companies who had to shell out millions of dollars on fuel (Isidore, 2005).

5 5. What constitutes a profitable customer? Further, how does a progressive company measure a customers lifetime value? A profitable customer is any client for whom the resources utilized to acquire and maintain his or her business is exceeded by the profits earned from having that business. Many different factors must be taken into account, including the cost of sales efforts, commissions paid on the revenue generated by the customer, and the wages, time, and equipment expended in maintaining customer service and support. It is possible for a profitable customer to become unprofitable over time, especially in situations where the volume of business is reduced and the client demands more attention (Tatum & Harris, n.d.). Customer lifetime value describes the net present value of the stream of future profits expected over the customers lifetime purchases. (Kotler, 2009). The customer lifetime value is calculated by subtracting the expected costs spent on customer development/satisfaction, servicing, marketing, and selling the product with the total expected revenue. This metric is more for the long term rather than the short term. Customers lifetime value helps in measuring customer satisfaction. Progressive companies, apart from the traditional approach also consider two factors, namely, life stage events and the so called moments of truth, a term coined by McKinsey. Life stage events track the ups and downs in customers purchase moves sometimes spending more, sometimes spending less in many product/service categories, depending on the reasons for the move. Moments of truth measures the impact of customer interactions whether they are positive or negative.

References

Isidore, C. (2005). Sweet fuel deals ending for Southwest. Retrieved from http://money.cnn.com/2005/04/14/news/fortune500/southwest_oil/

Kotler, P. (2009). A Framework for Marketing Management. Upper Saddle RIver, NJ: Prentice Hall. Tatum & Harris. (n.d.). What is a Profitable Customer? Retrieved from http://www.wisegeek.com/what-is-a-profitable-customer.htm

Xanthius. (2009). Top 10 failed McDonald Products. Retrieved from http://listverse.com/2009/05/30/top-10-failed-mcdonalds-products/