An expanded model of the marketing process

Create value for customers and build customer relationships

1.

Understand the marketplace and customer needs and wants Research consumers and the marketplace Manage marketing information and customer data.

 

2. Design a customer driven marketing strategy  Select customers to serve: market segmentation and targeting  Decide on a value proposition: differentiation and positioning

3. Construct a marketing program that delivers superior value

   

Product and service design; build strong brands Pricing: Pricing: create real value Place /Distribution: manage demand and supply chains Promotion: communicate the value proposition ( marketing mix decisions)

4. Build profitable relationships and create customer delight

Customer relationship management: build strong relationships with chosen customers  Partner relationship management: build strong relationships with marketing partners


CAPTURE VALUE FROM CUSTOMERS IN RETURN 5.Capture value from customers to create profits and customer equity
Create satisfied loyal customers  Capture customer lifetime value  Increase share of market and share of customer


Factors to be considered
marketing technology  Manage global markets  Ensure ethical and social responsibility
 Harness

VALUE


 

Companies are facing toughest competition ever Winning customers by moving from product and sales philosophy to marketing philosophy Satisfying customer needs Using the skill of market engineering Vs product engineering

Even the best marketing departments in the world cannot sell products that are poorly made or fail to meet the customers expectation and need McDonalds : QSCV Quality/service/cleanliness/value 109 countries, >23,500 restaurants > 40 million people visit/day


35 years ago, Peter Drucker observed that a companys first task is to create customers Customers are value maximisers Whether or not the offer lives up to the value expectation affects both satisfaction and repurchase probability

CUSTOMER DELIVERED VALUE CDV is the difference between the Total Customer Value and Total Customer Cost CDV = TCV TCC

Total Customer Value

It is the bundle of benefits customers expect from a given product or service  Product value  Services value  Personal value  Image value

Total Customer Cost

It is the bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of the product or service  Monetary costs  Time costs  Energy costs  Psychological costs


Customer Satisfaction
Satisfaction is a persons feeling of pleasure or disappointment resulting from comparing a products perceived performance or outcome in relation to his or her expectation It is an after purchase feeling  CS = f( perceived performance, expectation)


  

Dissatisfied customer ( PP < EX) Satisfied customer (PP= EX) Highly satisfied or delighted customer (PP>EX)

PP = perceived performance EX= expectation

Customer loyalty is directly proportional to the emotional attachment to the brand

How do buyers form their expectation?  Past buying experience  Friends/ word of mouth  Marketers and competitors information  Promises made by the company


Every company has to set an optimum standard of expectation ( neither too high or too low) Total Customer Satisfaction takes place when expectations are raised and performances are delivered to match those expectations

 

Honda : one reason our customers are so satisfied is that we arent Nissan: Guest Drive Visionary companies develop a vision for their future and act to implement it Visionary companies have creative, innovative and imaginative ideas..

VALUE CHAIN


Designed by Michael Porter of Harvard Business School It identifies 9 relevant activities that create value in a specific business 5 primary activities 4 support activities

 

VALUE CHAIN
Firm infrastructure SUPPORT HRM Technology development ACTIVITIES Procurement __________________________________ Inbound logistics , operations, outbound logistics Marketing and Sales , Services PRIMARY ACTIVITIES MARGIN

Understanding and using the Value Chain



Identify and examine the costs and performance in each valuevalue- creating activity and look for ways to improve it Set benchmarks by assessing the competitors costs and performance to get a competitive advantage Proper coordination between different departments

Each department in an organisation creates walls that slow down the delivery of quality

Some terms
Value delivery Network:  A companys supply chain and how it partners with specific suppliers and distributors to make products and bring them to markets  It also involves looking into the value chain of suppliers, distributors and customers  Goods are pulled by demand and pushed by supply  Develop a quick response system

VALUE NETWORK A system of partnerships and alliances that a firm creates to source, augment and deliver its offering

VALUE PROPOSITION It is the whole cluster of benefits the company promises to deliver. VALUE PROPOSITION & VALUE DELIVERY SYSTEM WILL DETERMINE CUSTOMER LOYALTY TO A LARGE EXTENT

HIGH PERFORMANCE BUSINESSES

Some companies navigate through problems to reach their value proposition and deliver predetermined goals. Key success factors: a. Stakeholders b. Processes c. Resources d. Organisation

Stakeholders:  Employees  Customers  Shareholders  Suppliers  Partners  Distributors



PROCESSES  Departmentalization  Delegation  Reengineering the work flows  New product development  Building cross functional teams


RESOURCES  Labour  Materials  Machines  Information  Infrastructure  Money , capital Outsourcing for efficiency and profit maximisation


CORE COMPETENCE
Term coined by C.K.Prahlad  It is an attribute that is a source of competitive advantage as it makes a significant contribution to perceived customer benefits  Has applications to a wide variety of markets  It is difficult for competitors to imitate  It accrues to companies that possesses distinctive capabilities. e.g. Wal-Mart : product replenishment, information system design Waland logistics


ORGANISATION AND ORGANISATIONAL CULTURE



STRUCTURE POLICIES CULTURE