An Expanded Model of the Marketing Process

An expanded An expanded model of the model of the marketing marketing

processprocess

Create value for customers Create value for customers and build customer and build customer

relationshipsrelationships1.1. Understand the marketplace Understand the marketplace

and customer needs and wantsand customer needs and wants

Research consumers and the Research consumers and the marketplacemarketplace

Manage marketing information Manage marketing information and customer data.and customer data.

2. Design a customer driven 2. Design a customer driven marketing strategymarketing strategy

Select customers to serve: Select customers to serve: market market segmentation and segmentation and targetingtargeting

Decide on a value proposition: Decide on a value proposition: differentiation and differentiation and positioningpositioning

3. Construct a marketing program 3. Construct a marketing program that delivers superior valuethat delivers superior value

ProductProduct and service design; build strong and service design; build strong brandsbrands

PricingPricing: create real value: create real value Place Place /Distribution: manage demand and /Distribution: manage demand and

supply chainssupply chains Promotion:Promotion: communicate the value communicate the value

propositionproposition ( marketing mix decisions)( marketing mix decisions)

4. Build profitable relationships 4. Build profitable relationships and create customer delightand create customer delight

Customer relationship management: Customer relationship management: build strong relationships with build strong relationships with chosen customerschosen customers

Partner relationship management: Partner relationship management: build strong relationships with build strong relationships with marketing partnersmarketing partners

CAPTURE VALUE FROM CAPTURE VALUE FROM CUSTOMERS IN RETURNCUSTOMERS IN RETURN

5.Capture value from 5.Capture value from customers to create profits customers to create profits and customer equityand customer equity

Create satisfied loyal customersCreate satisfied loyal customers Capture customer lifetime valueCapture customer lifetime value Increase share of market and Increase share of market and

share of customershare of customer

Factors to be Factors to be considered……considered……

Harness marketing Harness marketing technologytechnology

Manage global marketsManage global markets Ensure ethical and social Ensure ethical and social

responsibilityresponsibility

VALUEVALUE

Companies are facing toughest competition Companies are facing toughest competition everever

Winning customers by moving from product Winning customers by moving from product and sales philosophy to marketing philosophyand sales philosophy to marketing philosophy

Satisfying customer needsSatisfying customer needs Using the skill of market engineering Vs Using the skill of market engineering Vs

product engineeringproduct engineering

Even the best marketing departments in the Even the best marketing departments in the world cannot sell products that are poorly world cannot sell products that are poorly made or fail to meet the customers’ made or fail to meet the customers’ expectation and needexpectation and need

McDonalds : QSCVMcDonalds : QSCV

Quality/service/cleanliness/valueQuality/service/cleanliness/value

109 countries, >23,500 restaurants109 countries, >23,500 restaurants

> 40 million people visit/day> 40 million people visit/day

35 years ago, Peter Drucker observed that a 35 years ago, Peter Drucker observed that a company’s first task is to “ create customers”company’s first task is to “ create customers”

Customers are value maximisersCustomers are value maximisers

Whether or not the offer lives up to the value Whether or not the offer lives up to the value expectation affects both satisfaction and expectation affects both satisfaction and repurchase probabilityrepurchase probability

CUSTOMER DELIVERED VALUECUSTOMER DELIVERED VALUE

CDV is the difference between the CDV is the difference between the Total Customer Value and Total Total Customer Value and Total Customer CostCustomer Cost

CDV = TCV – TCCCDV = TCV – TCC

Total Customer ValueTotal Customer Value

It is the bundle of benefits customers expect It is the bundle of benefits customers expect from a given product or servicefrom a given product or service

Product valueProduct value Services valueServices value Personal valuePersonal value Image valueImage value

Total Customer CostTotal Customer Cost

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

Monetary costsMonetary costs Time costsTime costs Energy costsEnergy costs Psychological costsPsychological costs

Customer SatisfactionCustomer Satisfaction

Satisfaction is a person’s feeling of Satisfaction is a person’s feeling of pleasure or disappointment resulting pleasure or disappointment resulting from comparing a product’s from comparing a product’s perceived performance or outcome in perceived performance or outcome in relation to his or her expectationrelation to his or her expectation

It is an after purchase feelingIt is an after purchase feeling CS = f( perceived performance, CS = f( perceived performance,

expectation)expectation)

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

customer (PP>EX)customer (PP>EX)

PP = perceived performancePP = perceived performanceEX= expectationEX= expectation

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

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

Every company has to set an optimum Every company has to set an optimum standard of expectation ( neither too high or standard of expectation ( neither too high or too low)too low)

Total Customer Satisfaction takes place Total Customer Satisfaction takes place when expectations are raised and when expectations are raised and performances are delivered to match those performances are delivered to match those expectationsexpectations

Honda : one reason our customers are Honda : one reason our customers are so satisfied is that we aren’tso satisfied is that we aren’t

Nissan: “ Guest Drive”Nissan: “ Guest Drive”

Visionary companies develop a vision Visionary companies develop a vision for their future and act to implement itfor their future and act to implement it

Visionary companies have creative, Visionary companies have creative, innovative and imaginative ideas..innovative and imaginative ideas..

VALUE CHAINVALUE CHAIN

Designed by Michael Porter of Designed by Michael Porter of Harvard Business SchoolHarvard Business School

It identifies 9 relevant activities It identifies 9 relevant activities that create value in a specific that create value in a specific businessbusiness

5 primary activities5 primary activities 4 support activities4 support activities

VALUE CHAINVALUE CHAINFirm infrastructure Firm infrastructure HRM HRM SUPPORT SUPPORT Technology development Technology development ACTIVITIESACTIVITIESProcurementProcurement____________________________________________________________________Inbound logistics , operations, Inbound logistics , operations, outbound logisticsoutbound logisticsMarketing and Sales , Services Marketing and Sales , Services PRIMARY ACTIVITIESPRIMARY ACTIVITIES

MARGIN

Understanding and using the Value ChainUnderstanding and using the Value Chain

Identify and examine the costs and Identify and examine the costs and performance in each value- performance in each value- creating activity and look for ways creating activity and look for ways to improve itto improve it

Set benchmarks by assessing the Set benchmarks by assessing the competitor’s costs and performance competitor’s costs and performance to get a to get a competitive advantagecompetitive advantage

Proper coordination between Proper coordination between different departmentsdifferent departments

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

Some terms……Some terms……

Value delivery Network:Value delivery Network: A company’s supply chain and how it partners with A company’s supply chain and how it partners with

specific suppliers and distributors to make products specific suppliers and distributors to make products and bring them to marketsand bring them to markets

It also involves looking into the value chain of It also involves looking into the value chain of suppliers, distributors and customerssuppliers, distributors and customers

Goods are pulled by demand and pushed by supplyGoods are pulled by demand and pushed by supply Develop a quick response systemDevelop a quick response system

VALUE NETWORKVALUE NETWORK

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

VALUE PROPOSITIONVALUE PROPOSITION

It is the whole cluster of benefits It is the whole cluster of benefits the company promises to deliver.the company promises to deliver.

VALUE PROPOSITION & VALUE VALUE PROPOSITION & VALUE DELIVERY SYSTEM WILL DELIVERY SYSTEM WILL DETERMINE CUSTOMER DETERMINE CUSTOMER LOYALTY TO A LARGE EXTENTLOYALTY TO A LARGE EXTENT

HIGH PERFORMANCE HIGH PERFORMANCE BUSINESSESBUSINESSES

Some companies navigate through problems Some companies navigate through problems to reach their value proposition and deliver to reach their value proposition and deliver predetermined goals.predetermined goals.

Key success factors:Key success factors:

a.a. StakeholdersStakeholders

b.b. ProcessesProcesses

c.c. ResourcesResources

d.d. OrganisationOrganisation

Stakeholders:Stakeholders: EmployeesEmployees CustomersCustomers ShareholdersShareholders SuppliersSuppliers PartnersPartners DistributorsDistributors

PROCESSESPROCESSES DepartmentalizationDepartmentalization DelegationDelegation Reengineering the work flowsReengineering the work flows New product developmentNew product development Building cross functional teamsBuilding cross functional teams

RESOURCESRESOURCES LabourLabour MaterialsMaterials MachinesMachines InformationInformation InfrastructureInfrastructure Money , capitalMoney , capital

Outsourcing for efficiency and profit Outsourcing for efficiency and profit maximisationmaximisation

CORE COMPETENCECORE COMPETENCE Term coined by Term coined by C.K.PrahladC.K.Prahlad It is an attribute that is a source of It is an attribute that is a source of

competitive advantage as it makes a competitive advantage as it makes a significant contribution to perceived significant contribution to perceived customer benefitscustomer benefits

Has applications to a wide variety of Has applications to a wide variety of marketsmarkets

It is difficult for competitors to imitateIt is difficult for competitors to imitate It accrues to companies that possesses It accrues to companies that possesses

distinctive capabilities.distinctive capabilities.e.g. Wal-Mart : product replenishment, e.g. Wal-Mart : product replenishment,

information system design and logisticsinformation system design and logistics

ORGANISATION AND ORGANISATION AND ORGANISATIONAL CULTUREORGANISATIONAL CULTURE

STRUCTURESTRUCTURE

POLICIESPOLICIES

CULTURECULTURE