CUSTOMERS The marketing process begins by identifying the market opportunities that will best help your company achieve its mission, given the products and services that the company has to offer. To determine these opportunities, the marketer answers two questions: Who are our target customers? Your firm probably has many different potential customers who may be interested in your company's offerings. But, they likely fall into one of two main categories: (1) individual consumers or (2) businesses or organizations. Your company's primary market may shift over time if such a change would have strategic value. For instance, a magazines company sells mainly to individuals might see some advantages in developing and marketing certain kinds of services —such as newsletters or b2b supplements—for business customers. Why should they buy our product and not our competitors'?
CUSTOMER BEHAVIOR We will start by answering to our first question: WHO are our target customers? Understanding consumer behavior helps marketers identify the most appropriate offering to fulfill consumer demands. Clearly, individual consumers and businesses/organizations have a different behavior relative to purchasing process and also to purchasing power. Let’s concentrate on individual consumer behavior. People decide to buy products for many different reasons. The slide above shows just a few examples of the forces—cultural, social, personal, and psychological—that most influence individuals' purchasing decisions.
CONSUMER BUYING PROCESS Consumers use a fairly predictable series of steps when they decide whether to buy something. You've probably followed the steps shown below many times yourself: Recognize a need —for example, your newsletter doesn’t provide financial information, so you need to subscribe to a new one. Search for more information: such as surfing the Internet for extra financial information. Weigh the alternatives: &quot;That newsletter have all the information the old one provided, plus a detailed section on finances.&quot; Decide to buy: including determining that the price is right, concluding that you've done enough &quot;shopping around,&quot; and buying the product. Evaluate and act on the purchase —you may feel satisfied, disappointed, or even delighted with your purchase; you may unsubscribe to the new newsletter or decide to buy it again; you may use and dispose of the product in ways that are important for marketers to know. It is also important to think about what your customers (and target market) value. Think about your own experience as a customer—how do you determine what is most important to you? Did you get the results you expected? Were the results delivered the way you wanted them? Was the price what you were hoping for?
LEARNING ABOUT CUSTOMERS How do your gather and use information about your target market? By researching and evaluating . Here are a few ways to proceed: Review your company's internal sales and order information —which reveal existing customers' buying patterns and characteristics. Gather marketing intelligence —which you collect through reading newspapers, and trade publications; talking with customers, suppliers, and distributors; checking Internet sources; and meeting with company managers. Perform market research —which is conducted either by an internal research department or an outside firm through devices such as market surveys, product-preference tests, focus groups, and so forth. Use secondary data sources —such as government publications, business information, and commercial data. For media industries, the end-consumer behavior can be easily analyzed using special media studies like SNA-Focus (developed by Romanian Audit Bureau of Circulation), that enables the creation of your media (TV, newspaper, magazine, internet, etc) consumer general profile including: socio-demographics (age, sex, ESOMAR, average salary, region, etc), media digest behavior (product, frequency, duration, etc), general interests, free time activities, consuming behaviors (all brands on the market), etc. By studying the forces that influence consumers' decisions—as well as the process that consumers go through in deciding whether to buy—you can figure out how best to reach and serve these customers.
STEPS FOR MARKET RESEARCH Define the marketing opportunity you will focus on. Create a specific question about a marketing opportunity that you want to explore. Establish your research objectives in exploring the opportunity you identified. Decide what kinds of information you'll need to gather to evaluate the market opportunity. Develop your market-research plan. Decide on the following aspects: Data sources. You can gather primary data (gathered for a specific purpose or project) or secondary data (collected for another purpose and already existing somewhere, such as a prospect database). R esearch categories and techniques Research instruments. Select from questionnaires or mechanical devices Sampling plan. Decide whom you'll contact as research respondents, how many, and how you'll choose them. Customer-contact methods. Choices include mail, telephone, personal contact, or online interviews. 4. Implement your market-research plan. Collecting the information can be both rewarding and frustrating. Prepare to run into some of these problems: Respondents who aren't home must be recontacted or replaced, Some respondents won't cooperate as you had hoped, Some interviewers may be biased or dishonest. 5. Analyze the information. Tabulate the data you gathered and then apply various statistical techniques and decision models to analyze the results. 6. Present your findings. Present the major findings that are relevant to making the key marketing decisions facing you or your company.
CUSTOMER VALUE EQUATION WORKSHEET Use this worksheet to think through what your customers value, which you can think of as an equation. The service value as determined by the customer is equal to the results received times how the service is delivered , in relation to the price of the service times any costs for acquiring service . The values in the equation are relative, since different customers often want different things, or the same customer may want different things at different times. For example, you may value convenience and the opportunity to save time more in one situation, and price in another. Think about how you can leverage the factors in the equation to add value to the customer, and enhance the business.
ORGANIZATIONS BUYING BEHAVIOR When organizations, rather than individual consumers, buy from your company, the whole marketing picture changes. Why? Organizations, including for-profit businesses, institutions, governmental organizations, differ from individual consumers in important ways. For one thing, they buy goods and services in order to produce their own offerings—which they then sell, rent, or supply in some other way to other customers. Thus, they're usually looking for the best possible deal for their company as a whole. Organizations also differ from consumers in their buying patterns. The straight re-buy: The organization regularly reorders products/services: newspaper subscription, newsletters, press monitoring services. If the company buys from your firm, you'll probably feel pressure to maintain the quality of your product. The modified re-buy: The organization wants to change purchasing terms, such as product specifications, prices, or delivery requirements. If the company buys from your firm, you may feel some pressure to protect the account to keep rivals from encroaching on your business. The new task: The organization buys a product for the first time—which may require a lengthy and complex decision process between your firm and the company.
PURCHASING DECISION Organizations are influenced by a different mix of forces than individuals are in their buying decisions. The slide above below shows a few examples. Clearly, marketing to businesses requires very different strategies than marketing to individuals does.
CONSUMER BUYING PROCESS On the other hand, businesses use a similar process to that of individual consumers when making purchasing (that is, procurement) decisions: Recognize a need or problem —for example, &quot; Our Bank needs a news flow, offering latest financial news and real time news alerts.&quot; Determine the needed item's general characteristics and required quantity —&quot; Available to all bank’s terminals.&quot; Determine the needed item's technical specifications . Search for potential suppliers. Solicit bids or proposals from suppliers. Choose a supplier. Negotiate the final order —including specifying delivery and installation schedule, final quantity, payment terms, and other details. Assess the chosen supplier's performance —and decide whether to maintain the business relationship. By understanding how the procurement process works, you can design a more effective strategy for reaching and serving business customers.
UNDERSTAND COMPETITION Your organization will not be the only one looking at the marketing opportunities—competitors will be in the picture as well. Consumers and businesses typically have choices when making buying decisions. Your company wants your offering to be chosen over your competitors' offerings—not always an easy task because competition is becoming more intense every year. How can the marketer make sure that customers keep buying from your firm and not your competitors? Your company has to make it clear to customers what the benefits of your products are. That is, you must find, and sustain a competitive advantage that has meaning for your customers .
COMPETITIVE ANALYSIS The first part of any competitive analysis involves determining who your competition is, existing and potential. Once you've identified your potential and existing competitors, analyze their following characteristics: Strategies Objectives Strengths & Weaknesses ways of doing business
COMPETITION Beware: competitive threats can come from many different directions: Other players offering similar products to yours Entirely new players in your industry Companies that make substitutes for your products Customers' power of comparing, set competitors against one another, and easily switch suppliers Your own suppliers' power to raise their prices or reduce the quantity of their offerings Most companies have both existing and potential competitors. But companies are more likely to be hurt by their potential and emerging competitors than by existing rivals. Existing rivals are openly and visibly competing in the same arena. Emerging rivals haven't yet declared themselves as players in your industry. So how do you identify your firm's main potential and existing competitors? Here's an easy rule of thumb: Competitors are companies that satisfy—or that intend to satisfy—the same customer needs that your firm satisfies. For example, a customer buys a daily news flow that your company makes. His real need isn't for the news flow—it's for the information. That need can be satisfied by other methods: newspapers, magazines, TV, radio, free news websites, news flows from other company, etc. Thus your company actually has more competitors than you might think.
ANALYZE COMPETITION Once you've identified your potential and existing competitors, analyze their following characteristics: Strategies: For example, does a particular competitor offer a narrow line of high-priced products with high-level, customized service? Objectives: What is the competitor seeking in the marketplace? (To maximize profits? Market share? Be a technological leader in the industry?) Strengths and weaknesses Ways of doing business By understanding all these characteristics of your competitors, you can design marketing strategies that will increase your chances of coming out on top.
STRENGTHS AND WEAKNESSES What &quot;share of market&quot; does the competitor possess? That is, how much of your target market does the company sell to? What &quot;share of mind&quot; does it possess; that is, what percentage of customers name that competitor as the first one to come to mind? What &quot;share of heart&quot; does the company possess; that is, what percentage of customers say they'd prefer to buy from that firm before any other?
SWOT ANALYSIS Use a SWOT analysis to identify the Strengths, Weaknesses, Opportunities and Threats relative to a product, a product line, a marketing program or to a whole organization. The SWOT analysis lets you to focus on specific areas and discover actions that can help you build strengths, minimize or eliminate weaknesses, maximize opportunities and deal with or even overcome threats.
WAYS OF DOING BUSINESS Most competitors fall into one of these categories in terms of how they respond to changes in the marketplace: Slow-moving : The rival company doesn't react quickly or strongly to other players' moves, perhaps because they feel confident that their customers are loyal, or they just haven't noticed that the game has changed, or they simply lack the resources to make a move. Selective: The company responds to certain kinds of attacks —such as price cuts or advertising campaigns. A &quot;tiger&quot;: The firm reacts swiftly and strongly to any assault. Unpredictable: The firm shows no predictable reactions to marketplace changes.
COMMENTS The leading brand is almost every time the first brand the targeted customers are exposed to. For example, everyone knows the name of the first man that flew over the Atlantic without attendant (Charles Lindbergh), but not many people know the name of the second man that flew over the Atlantic without attendant. When you are first in the category, do not concentrate on brand promotion, but on category promotion. The idea is to eliminate competition. For example, after IMB brought a real revolution on the computer market, many small IT companies emerged: how they succeed? Creating new Categories. E.g. Stratus launched the first minicomputer with tolerance to hardware internal problems and now is a business of more than $600 million. To conquer a place in a person’s mind you have to be aggressive, because people tend to be loyal to their first impressions and opinions.
Analyze Market Opportunities – Customers CUSTOMER Analysis <ul><li>WHO are our target customers? </li></ul><ul><ul><ul><li>Individual Customers </li></ul></ul></ul><ul><ul><ul><li>Businesses or Organizations </li></ul></ul></ul>WHY should they buy our product and not our competitors'?
Forces Affecting Consumer Buying Cultural Forces National values , such as an emphasis on material comfort, youthfulness, or patriotism Ethnic or religious messages or priorities Social Forces Friends, neighbors, coworkers , and other groups with whom people interact frequently and informally Family members, friends: parents, spouses, partners, children, siblings Personal Forces Age: including stage in the life cycle; for example, adolescence or retirement Occupation, economic circumstances, and lifestyle (or activities, interests, and opinions) Psychological Forces Motives: conscious and subconscious needs that are pressing enough to drive a person to take action; for example, the need for safety or self-esteem Perceptions (interpretations of a situation), beliefs , and attitudes (a person's enduring evaluation of a thing or idea)
Understand Consumer Buying Process Recognize a Need Your newsletter doesn’t provide financial information, so you need to subscribe to a new one Search for more information Surfing the Internet for extra financial information Weigh the alternatives That newsletter have all the information the old one provided, plus a detailed section on finances Decide to buy Determining that the price is right, concluding that you've done enough "shopping around," and subscribing the newsletter Example Evaluate the purchase You may feel satisfied, disappointed, or even delighted with your purchase; you may unsubscribe to the new newsletter or decide to buy it again
Marketing Major Directions Marketing Directions Recruitment of New Customers (acquisition) Retention and expansion of relationships with existing customers (base management)
Learning about Consumers <ul><li>Problem: </li></ul><ul><li>How do your gather and use information about your target market? </li></ul><ul><li>Answer: </li></ul><ul><li>By RESEARCHING and EVALUATING </li></ul>
Learning about Consumers <ul><li>Reading newspapers, and trade publications </li></ul><ul><li>Talking with customers, suppliers, and distributors </li></ul><ul><li>Checking Internet sources </li></ul><ul><li>Meeting with company managers </li></ul>Review your company's internal sales and order information Gather marketing intelligence Perform market research Use secondary data sources <ul><li>Internal research </li></ul><ul><li>Market surveys </li></ul><ul><li>Product-preference tests </li></ul><ul><li>Focus groups </li></ul><ul><li>Government publication </li></ul><ul><li>Commercial data </li></ul><ul><li>SNA-Focus study </li></ul><ul><li>Business Information </li></ul>
Steps for Market Research <ul><li>Define the marketing opportunity you will focus on </li></ul><ul><li>Establish your research objectives in exploring the opportunity you identified </li></ul><ul><li>Develop your market-research plan </li></ul><ul><li>Implement your market-research plan </li></ul><ul><li>Analyze the information </li></ul><ul><li>Present your findings </li></ul>
Evaluating Consumers Customer Value Equation Worksheet
Lifetime Value of a Consumers Worksheet for calculating the Lifetime Value of a Customer
Organizations Buying Behavior The straight re-buy The new task The modified re-buy Pressure to maintain the quality of your product Pressure to protect the account to keep rivals from encroaching on your business Lengthy and complex decision process between your firm and the company
Influences on Purchasing Decision Environmental Forces Interest rates, materials shortages, technological and political developments Organizational Forces Purchasing policies and procedures, company structures and systems (for example, long-term contracts) Interpersonal Forces Purchasing staff members' differing interests, authority levels, ways of interacting with one another Individual Forces An individual buyer's age, income, education, job position, attitudes toward risk Cultural Forces Attitudes and practices influencing the way people like to do business; for example, some people tend to emphasize the collective, not individual, benefits of doing business
Understand Organizations Buying Process Recognize a Need Determine characteristics and quantity of needed items Ex: Our Bank needs a news flow, offering latest financial news and real time news alerts Required technology Search potential suppliers Negotiate the final order Solicit bids or proposals from suppliers Choose a supplier Assess the chosen supplier's performance Ex: Available to all bank’s terminals
Understand Competition <ul><li>Why should customers buy from you and not from competition? </li></ul><ul><li>You have to make it clear to customers what the benefits of your products are. That is, you must find, and sustain a competitive advantage that has meaning for your customers. </li></ul>
Perform a Competitive Analysis <ul><li>Determine your competition </li></ul><ul><ul><li>Existing competition </li></ul></ul><ul><ul><li>Potential competition </li></ul></ul><ul><li>Analyze each competitor </li></ul><ul><ul><li>Strategies </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Strengths & Weaknesses </li></ul></ul><ul><ul><li>ways of doing business </li></ul></ul>
Determine your Competition <ul><li>… Competitors are companies that satisfy—or that intend to satisfy—the same customer needs that your firm satisfies. </li></ul><ul><li>Other players offering similar products to yours </li></ul><ul><li>Entirely new players in your industry </li></ul><ul><li>Companies that make substitutes for your products </li></ul><ul><li>Customers' power of comparing, set competitors against one another, and easily switch suppliers </li></ul><ul><li>Your own suppliers' power to raise their prices or reduce the quantity of their offerings </li></ul><ul><li>… Most companies have both existing and potential competitors. But companies are more likely to be hurt by their potential and emerging competitors than by existing rivals. </li></ul>
Analyze Competition Strengths & Weaknesses Ways of doing Business Objectives Strategies Competition Analysis
Analyze Competition – Strengths & Weaknesses Share of market Share of mind Share of heart How much of your target market does the company sell to? What percentage of customers say they'd prefer to buy from that firm before any other? What percentage of customers name that competitor as the first one to come to mind?
Analyze Competition – Ways of doing business Reacts swiftly and strongly to any assault Doesn't react quickly or strongly to other players' moves Responds to certain kinds of attacks —such as price cuts or advertising campaigns Slow-moving Selective A "tiger" Unpredictable No predictable reactions to marketplace changes
4 Capital Rule of Marketing <ul><li>It is better to be the first than to be the best </li></ul><ul><li>If you can’t be first in a category, create a new category you can be first in </li></ul><ul><li>It is better to be first in the consumer’s mind than to be first on the market </li></ul><ul><li>Marketing is not the battle of the products, but the battle of the consumer’s perceptions relative to the products </li></ul>