Designing a Customer-Driven Marketing Strategy

MARKETING MANAGEMENT
Art and science of choosing target markets and building profitable relationships with them. A marketing managers aim is to find, attract, keep, and grow target customers by creating, delivering, and communicating superior customer value.

Procter and Gamble Philippines

To design a winning marketing strategy, the marketing manager must answer two important questions.

1. What customers will we serve? (whats our target market)? 2. How can we serve these customers best (whats our value proposition)?

SELECTING CUSTOMERS TO SERVE

The company must first decide who will it serve. It is necessary to select customers that can be served well and profitably.
STEP 1: STEP 2:

Market Segmentation - Dividing the market into segments of customers.

Target Marketing - evaluating each market segments attractiveness and selecting one or more segments to enter.

Marketing managers must decide which 1 customers they want to target and on the level, timing, and nature of their demand. Managing demand means managing customers who come from two groups: new and repeat customers. Keeping existing customers is important as the cost of retaining them is much less than attracting new ones. Simply, marketing management is customer management and demand management.

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CHOOSING A VALUE PROPOSITION

A value proposition is the set of benefits or values the firm promises to deliver to consumers to satisfy their needs. Customers question: Why I should buy your brand rather than a competitors?

MARKETING MANAGEMENT ORIENTATIONS The firm must decide the design strategies that will build profitable relationships with target customers. There are 5 alternative concepts under which organizations design and carry out their marketing strategies: the production, product, selling, marketing, and social marketing concepts.

PRODUCTION CONCEPT Consumers prefer products that are widely available, and relatively inexpensive to purchase The firms focus would be on improving production and distribution efficiency to reduce product costs and therefore be in a position to sell more cheaply .

PRODUCT CONCEPT Consumers prefer those products that offer the most quality; the best performance; or innovative features. Firms focus would, primarily, be on regular product enhancement.

SELLING CONCEPT Consumers will buy certain products only if they are aggressively promoted and sold. Firms focus would be on advertising and sales activities, especially for those products that consumers do not actively look for.

MARKETING CONCEPT Attempt to identify the needs and wants of the target market, and then offer a solution that delivers more value than the competitors products. Firms focus would be on delivering customer satisfaction, at a profit.

SOCIETAL CONCEPT Organizations should determine the needs, wants and interests of target markets and deliver the desired satisfaction more effectively and efficiently than competitors in a way that maintains or improves the customers and societys well-being. The firm should aim to satisfy: consumers needs/ want, company profits/requirements and consumers and societys long run interests.

CAPTURING VALUE FROM CUSTOMERS

1. Creating Customer Loyalty and Retention

Good customer relationship management creates customer delight. Delighted customers remain loyal and talk favourably about the company. Companies are realizing that losing a customer means losing more than a single sale.

Customer lifetime value the value of the entire stream of purchase that the customer would make over a lifetime of patronage.

A Tour to The Worlds Largest Dairy Store and New York Times Disneyland of the Dairy Stores

ENJOY!

CAPTURING VALUE FROM CUSTOMERS

From its humble beginnings as a small dairy stores in 1969, Stew Leonards has grown at an amazing pace. Its built 29 additions onto the original store, which now serves more than 300,000 customers each week. This legion of loyal shoppers is largely a result of the stores compassionate approach to customer service.

Rule #1: at Stew Leonards The customer is always right. Rule #2: If the customer is ever wrong, reread rule #1!

CAPTURING VALUE FROM CUSTOMERS 2. Growing Share of Customer Share of customer is the portion of the customers purchasing at a company gets in its product categories. To increase share of customer, firms can offer greater variety to current customers. Or they can create programs to cross-sell and up-sell in order to market more products and services to existing customers.

CAPTURING VALUE FROM CUSTOMERS

3. Building Customer Equity

Customer equity is the total combined customers lifetime values of all of the companys customers. The more the loyal the firms profitable customers, the higher the firms customer equity. It may also be a better measure of firms performance than current sales or market shares.

Companies should manage customer equity carefully. They should view customers as assets that need to be managed and maximized. But not all customers, not even all loyal customers, are good investments. Surprisingly, some loyal customers can be unprofitable, and some disloyal customers can be profitable.

The company can classify customers according to their potential profitability and manage its relationship with them accordingly. There are four classifications of customers according to their profitability and projected loyalty. 1. Strangers 2. Butterflies 3. True friends 4. Barnacles

1. Strangers They show low potential profitability and little projected loyalty. The relationship strategy for these customers is simple: Dont invest anything in them. 2. Butterflies They are potentially profitable but not loyal. However, like butterflies, we can enjoy them for only a short while and then theyre gone. The company should use promotional blitzes to attract them, create satisfying and profitable transactions with them.

3. True Friends They are both profitable and loyal. The firm should make continuous relationship to delight these customers and nurture, retain, and grow them. 4. Barnacles They are highly loyal but not profitable. The company might be able to improve their profitability by selling more, raising the fess, or reducing service to them.

CAPTURING VALUE FROM CUSTOMERS

3. Building Customer Equity

Different customers require different relationship management strategies. The goal is to build the right relationships with the right customers.

THE CHANGING MARKETING LANDSCAPE

The Digital Age

Rapid Globalization

Call for Ethics and Social Responsibility

Growth of Not-for-Profit Marketing

THE DIGITAL AGE

Technology provided marketers with exciting new ways to learn about and track customers and to create products and services tailored to individual customer needs. Digital technology has also brought a new wave of communication, advertising, and relationship building tools-ranging from online advertising, video sharing tools, cell phones and video games to Web widgets and online social network.

RAPID GLOBALIZATION
In an increasing smaller world, many marketers are now connected globally with their customers and marketing partners. Today, companies are not only trying to sell more of their locally produced goods in international markets, they also are buying more supplies and components abroad.

CALL FOR MORE ETHICS AND SOCIAL RESPONSIBILITY

GROWTH OF NOT-FOR-PROFIT MARKETING Marketing has also become a major part of the strategies of many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, and even churches.

END