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Chap005 market opportunities current and potential customers

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  • 1. Copyright ©The McGraw-Hill Companies, Inc. Permission required for reproduction or display 5-1
  • 2. Part Two Foundations for Creating ValueMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-2
  • 3. Part TwoFoundations for Creating Value• Chapter 5 • Market Opportunities• Chapter 6 • Marketing Strategy• Chapter 7 • Weaving Marketing into the Fabric of the Firm McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-3
  • 4. Chapter 5 Market Opportunities: Current and Potential CustomersMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-4
  • 5. Finding Business to Business Opportunities DEVELOP MARKETS FIND OPPORTUNITIES AMONG CURRENT WITH EXISTING CUSTOMERS CUSTOMERS NEW MARKET OPPORTUNITIES ACQUIRE DEVELOP NEW A RESEARCH CUSTOMERS PROGRAMMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-5
  • 6. DEVELOP MARKETS AMONG CURRENT CUSTOMERS FOUR STEP PROCESS1. RANK YOUR BEST CUSTOMERS2. MAXIMIZE REVENUES THROUGH COLLABORATION EFFORTS3. DEVELOP SPECIFIC PRODUCTS FOR EACH CUSTOMER4. LEARN OF SPECIAL NEEDS FROM YOUR CUSTOMER’S CUSTOMERS McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-6
  • 7. FIND OPPORTUNITIES WITH EXISTING CUSTOMERS FOUR STEP APPROACH1. ESTABLISH A FORMAL FEEDBACK PROGRAM WITH CUSTOMER CONTACT POINTS (SALES, SUPPORT)2. DEVELOP DATABASES3. COMPILE DECILE REPORTS4. DEVELOP CUSTOMER RESEARCH ASSISTANCE PROGRAMMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-7
  • 8. RESEARCHING CUSTOMERSFIND OUT YOUR CUSTOMER’S NEEDS THROUGH:1. FOCUS GROUPS – best for generating ideas and gaining customer insights2. SURVEYS – asking questions by personal interview, mail, telephone, internet3. JOINT DEVELOPMENT AND TESTING – use to adjust and adapt products after purchase4. CUSTOMER VISITS – use on-site meetings for problem identification McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-8
  • 9. ACQUIRE NEW CUSTOMERS1. Calculate your current customer’s lifetime value (CLV) to serve as yardstick for planning2. Find customers in a new segment who “look like” your existing customers3. Expand into new geographic territory4. Transfer/modify existing products for other industries McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-9
  • 10. ScheduTrax Lifetime Value Analysis Expected customer migrations following acquisition Yrs. since 1st Yr. 2nd Yr. 3rd Yr. 4th Yr. the Last Purchase Expected $ Account Acquisition after after after after Purchase Probability Purchases Service Costs Period acquisition acquisition acquisition acquisition0 0.60 $90 $20 100 60.0 36.0 31.2 27.4 Customers 16.0 9.6 8.3 15.0 4.8 2.9 45.6 1.9 40.51 0.40 $60 $10 40.0 24.0 20.8 18.22 0.20 $50 $ 4 24.0 14.4 12.53 0.10 $50 $ 2 19.2 11.5 17.3Profit forecastsAcq+1 [60 buyers ($90)]×.8 gr. profit–[100 accts×$20 service/acct] =Acq+2 [36 buyers ($90)+16 buyers ($60)] .8 gr. profit- [60 accts×$20+40 accts×$10] =Acq+3 [31.2 buyers($90)+9.6 buyers($60)+4.8 buyers($50)] .8 gr. profit- [52 accts×$20+24×$10+$24×$4] =Acq+4 [27.4 buyers ($90)+8.3 buyers ($60)+2.9 buyers ($50)+1.9 buyers ($50)]- [45.6×$20+20.8×$10+14.4×$4+19.2×$2] = Discounting profits NPV @ 10 NPV @ 10% NPV @ 20% Acq+1 $2,109 $2.017 $1,933 Acq+2 $1,455 $1.331 $1,222 Acq+3 $1,144 $1,002 $ 881 Acq+4 $ 919 $ 769 $ 649 LTV/100 customers $5,627 $5,119 $4,686McGraw-Hill/Irwin Exhibit 5-4Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-10
  • 11. DEVELOPING OPPORTUNITIES THROUGH MARKETING RESEARCH PURPOSE OF RESEARCH 1 2 CUTOMER MANAGEMENT ACQUIRE NEW CUTOMERS ACHIEVED BY 1. CUSTOMER RESEARCH – through focus groups and surveys 2. INTERACTING WITH CUSTOMERS – through joint product development and product testing 3. DEVELOPING ON-SITE VISITATION PROGRAMSMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-11
  • 12. FINDING SEGMENTS1. USE NAICS CODES TO ASSESS INDUSTRIES’ SIZE AND NEEDS2. EVALUATE COMPANY CHARACTERISTICS SUCH AS SALES, NUMBER OF EMPLOYEES3. DETERMINE A COMPANY’S BUYING PROCESSES AND HOW THEY BUY4. MATCH PRODUCT OFFERINGS TO COMPANIES SEEKING WHAT PRODUCT DOES BEST McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-12
  • 13. PERCEPTUAL MAP BRAND C Reasonable price Order process BRAND A efficiency & accuracy After-sale service Rapid delivery BRAND BHelpful / informative BRAND D Technical performance Exhibit 5-10McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-13
  • 14. SEGMENTATION AND OPPORTUNITY ANALYSISIDENTIFY SEGMENTS THROUGH INDUSTRY CLASSIFICATION (SIC / NAICS)CHOOSE YOUR INDUSTRY TARGETSCHOOSE YOUR SPECIFIC COMPANY TARGETS BY: 1. HOW THEY BUY 2. THE BENEFITS THEY SEEK 3. MEMBERSHIPS IN PROFESSIONAL / TRADE ORGANIZATIONSMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-14
  • 15. CRITERIA FOR SUCCESSFUL SEGMENTATION • SEGMENT MUST BE IDENTIFIABLE- enumerated and evaluated + • SEGMENT MUST BE ACCESSIBLE- can be reached by marketing activity + • SEGMENT MUST BE SUBSTANTIAL- enough to justify effortsMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-15
  • 16. ESTIMATING SEGMENT SIZE ANALYTICAL TOOLS FOR SEGMENT EVALUATION:1. USE OF SCENARIOS - Articulate events and futures2. BUILDUP APPROACH/FACTORING – Estimate product use in its applications3. STATISTICAL SERIES – Use correlation between demand and economic activitiesMcGraw-Hill/IrwinBusiness Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-16