The Philosophy Of Customer Orientation

• Customer value.

customer delivered value is the difference between total customer value and total customer cost.

• Total customer value.

customer expectation from a given product or service.

• Total customer cost.

cost which incur in using a product or service.

The Indian consumer

Demographic profile.920 million consumers in 1995.In 2007 more than one billion consumers..Geographical distribution.Diversity in language, religion and

social customs.

• Religious diversity.

• Linguistic diversity.

• Diversity in dress ,food habits etc.

• Diversity in literacy level.

• Diversity in density of population.

Social class.

• Social class can be used as a base for market segmentation and is usually “ measured” by a weighted index of several demographic variables such as Education , occupation and income.

• The concept of social class implies a hierarchy in which individuals in the same class generally have the same degree of status, while members of other classes have either higher or lower class.

Social class categories

• The most general categorization of social class structure can be put under three groups.

• Upper class.• Middle class.• Lower class.• Where as middle class represents the

largest proportion of population and is considered as the largest consumption group.

• The middle class can be further be divided creating a total of five groups of social class.

such a division can be more useful to marketers for developing appropriate products and services targeting specific social class consumers.

• Upper class.• Upper middle class.• Middle, middle class.• Lower middle class.• Lower class.

The upper class.

• The upper class of most societies is a varied group of individuals who include the aristocracy, the nouveau riches (the new social elite) and the upper-middle class.

• Aristocracy consists of traditional old money families who acquired great wealth and power

• E.g. : maharajas and business people.

The middle class

• This class consists of primarily white –collar workers at managerial levels.

• E.g. : doctors ,lawyers, medium sized business.

• In India middle class is the largest consuming class.

The lower class.

• They are poor people and generally represent a sizable population, particularly in the poorer developing countries.

• E.g. : un represent farm workers ,un organized labour , unskilled workers.

• Studies shown that consumers in different social class vary in terms of values product preference and buying habits.

Societal marketing concept.

Societal marketing concept

• Holds that the organization task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more than its competitors in a way that preserves or enhances the consumers and the society's well being.

• Societal marketing concept is based on the following premises.

The marketer has to fulfill the customer demand and also to contribute to the enrichment or quality of life.

The marketer shall not offer a product to consumers if it is not in the best interests of consumers.

The marketer will offer long run consumer and public welfare.

• Societal marketing concept calls upon marketers to build upon social and ethical considerations .

• Marketers have to balance on

• Profitability.

• Consumer satisfaction.

• Public interest .

• E.g. of successful companies using societal marketing concept.

• Ben & jerry

• The body shop.

Societal Marketing Concept

• Do what is good for society

• Who determines what is good for society?

• Ethics

• Honesty–Trust

• Give back to the community

cause related marketing

• cause related marketing is a form of corporate philanthropy that links a company’s contributions (usually monetary) to a predesignated worthy cause with the purchasing behavior of consumers.

Relationship marketing.

• Aim of building long term relationship with customers, suppliers.

• Marketing network consists of the company and its supporting stakeholders (customers, employees, retailers ) with whom it has built mutually business relationships.

• Rather competition between the companies but with the networks.

• E.g. :Harley Davidson.

Process involved in the customer relationship marketing.

• Suspects.• prospects.>disqualified prospects.• First time customers.• Repeat customers.• Clients.• Members.• Advocates• Partners

In active or

Ex customers

• Win back-strategies.

• Suspects- everyone who might conceivably buy the product or service.

• Prospects- company looks harder at the suspects to determine who are the most likely people who go for the buy.

• Disqualified prospects – are those people in which the company rejects because of the inability to pay.

• Converts many of qualified prospects to first time customers.

• And then to convert the first time customers to repeat customers.

• And the repeat customers when they go for repeated purchase will turn to clients.

• People whom the company treats very specially.

• then the clients to members is the next step in membership program –offers a whole set of benefits to join.

• Members to advocates• Advocates to partners where the

company and the customer work together actively.

• Some customers will move out because of dissatisfaction , bankruptcy

• Bring back the customers through customer win back strategies.

Different levels of investment incustomer relationship building.

• Basic marketing.

• Re-active marketing.

• Accountable marketing.

• Pro-active marketing.

• partnership marketing.

• Basic marketing: the sales person simply sell the product.

• Re –active marketing : the sales person sells the product and encourages the customer to call if he or she has questions ,comments or complaints.

• Accountable marketing : sales person phone the customer after sometime sale occur to check the product is meeting expectations.

• Pro-active marketing:

the company sales person contacts the customer from time to time with inviting suggestions and any specific disappointments.

partnership marketing:

the company works continuously with the customer to perform better.

Marketing environment

• marketing environment comprises of

• Internal marketing environment (micro). (objectives and resources)

• External marketing environment. (macro).

• External marketing environment. (macro). consists of

• Socio-cultural environment.

• Economic environment.

• Legal/political environment.

• Competitive environment & technological environment

Environmental scanning.

• Environmental scanning is the practice of keeping track of environmental changes that can affect an organization and its markets.

• These changes can occur in all dimensions of external environment-

• Economic.

• Political.

• Legal.

• Social.

• Technological & competitive.

economic

income inflation recessionInterest

rateExchange

rate

• Recession is a period of economic activity when income ,production and employment tend to fall.

Technology

Technology for

Nation

TechnologiesFor

Products and services

TechnologyFor

business

SOCIAL-CULTURALFACTORS

VALUESTIME

STRAVED CUSTOMERS

MULTIPLELIFESTYLES

Market oriented strategic planning

• Strategic planning is a stream of decisions and actions which leads to help the firm achieve its objectives.

• Strategic planning is a route map to the firm.

• Strategic planning serves as a hedge against risk and uncertainty.

planning is a formal framework to act and it involves deciding the actions to be perused well in advance.planning occurs at three levels in an organization.top level management- long range corporate strategic planning.middle level management- planning of marketing mix strategies, allocation of resources , co-ordaining the activities of operational units.

• Lower level management- operational planning takes place at the bottom of organizational structure i.e. day to day weekly or monthly activities.

• Business unit strategic planning consists of the following steps.

• Business mission

• Swot analysis.

• Goal formulation.

• Strategy formulation.

• Program formulation & implementation.

• Feed back and control.

SWOT Analysis

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

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• Goal formulation.• After the swot analysis ,firm can proceed to goal

formulation.• Every business is having a goal may be a mix of

goals .• Objectives for profitability , sales growth , market

share improvement ,risk containment ,innovation and reputation.

Strategy formulation

The way to achieve goals is strategy.

Michael porter has condensed them into three types of marketing strategies

Cost leadership.Differentiation. Focus.

• Cost leadership

Business works for the lowest production and distribution costs so that it can price lower than its competitors

program formulation

once the business unit has developed its strategies it must work out.

strengthening r&d development ,training the sales force and develop ads.

• Implementation.implementing the strategies in an effective way is an important factor.every company is having their own strategies based on these they will implement the same (employees hiring , training , assigning them the right jobs.

• Feed back and control

firm needs to track and monitor new developments in the internal and external environment.

Corporate and division strategic planning.

• All corporate headquarters undertake four planning activities.

• Defining the corporate mission.

• Establishing strategic business units.

• Assigning each resources to sbu

• Planning new business , downsizing older business.

• Strategic business units. • An sbu has three characteristics.• It is a single business or collection of

related business that can be planned separately from the rest of the company.

• It has its own set of competitors.• It has a manager who is responsible for

strategic planning and profit performance and who controls most of the factors affecting profit.

Planning new business, downsizing older business.

• When there is a gap between the projected sales and current sales corporate management have to develop or acquire new business to fill it.

• How can it fill the strategic planning gap?

• Three options are available.• Further growth within the current

business (intensive growth strategies)• Identify the business that are related to

the current business (integrative )• Identify opportunities that are unrelated

to the company’s current business (diversification )

• Growth strategies.

Two major growth strategies are intensive growth strategies and integrated growth strategies.

• Intensive growth strategies.

can be explained in terms of Ansoff’s (1957) product /market matrix.

market penetration strategy. market development strategy. product development strategy. diversification strategy.

• ANSOFF’S PRODUCT/ MARKET MATRIX.

MARKETPENETRATION

STRATEGY

PRODUCTDEVELOPMENT

STRATEGY

MARKETDEVELOPMENT

STRATEGY

DIVERSIFICATIONSTRATEGY

EXISTINGMARKET

EXISTINGPRODUCTS

NEWPRODUCTS

NEWMARKET

• Market penetration strategy:a firm seeks increased sales volume from its current products in the current market through more aggressive marketing efforts.market development strategy:a firm enters into new market with the existing products. This is nothing but expanding the market region.e.g. : a firm operating in the domestic market may decide to move in to foreign market.

• Diversification strategy.

diversification is a strategic tool for companies when further growth is restricted or limited in a market.

diversification can be formulated in two ways .

they are related diversification and unrelated diversification.

Diversification

Related diversification

Unrelateddiversification

Through Taking over

Another business

Through Merger with

AnotherBusiness

Through Forming

Joint ventures

Through FormingStrategicAlliances.

• Product development strategy.

A firm develops new products to launch in to the existing markets.

EG : MARUTI ZEN ESTILO

Integrative growth strategy.

• When there is a possibility of having a strong growth future. A firm may adopt integrative growth strategy.

• Generally there are three types of integration exists.

• Backward integration .

• Forward integration.

• Horizontal integration.

backward integration enable the firm to have control over the supply system.

(suppliers, components ). forward integration helps to have

control over the distribution system (networks).

horizontal integration either to seek control over competitors or ownership of the competitive firms.

Boston consulting group’s (BCG) market growth /share matrix.

• The basic process for creating a portfolio plan is to evaluate strategic business units in the organizations portfolio.

• Two techniques for evaluating the sbu’s in a business portfolio management are Boston's consulting group’s growth /share matrix and general electric’s industry attractiveness /business strength matrix.

• The Boston consulting group was founded in the middle of 1960 to provide consultancy service to strategic marketing planners in USA.

• BCG developed a simple but very useful method which came to known as BCG’s

business portfolio matrix on two measures :market growth rate (low or high) and relative market share (low or high)

Boston Consulting Group Matrix

Relative Market Share

High Low

High

Low

Mar

ket G

row

th R

ate

ProductB

ProductA

ProductE

ProductD

ProductC

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• Stars.

• Cash cows.

• Dogs.

• Question marks.

• Stars – are leaders in their markets but they have to focused on building sales or market share. More cash is required to finance their rapid growth. If the market share falls , a star can be changed in to a problem child.

.

• Question marks- they are also called problem children products. The market is growing at a high rate but the market share is low.

• choice is to increase investment and build market share to turn it to a star, or to withdraw support by either harvesting (raising prices while lowering marketing expenditure) or divesting (dropping or selling )

• cash cows – The market is growing at a slow rate and business is high in the form of market leader.

• The company’s objective is to hold sales and market share. If the business fails to hold on its market share , it will be converted to dog.

• Dogs – the market is growing at a slow rate and the market share of the business is low.

• Company have to check by making investments it can boost the business.

• If the business is weak company have to take decision whether to harvest or divest.

• The company’s next task is to determine what objective , strategy and budget to assign to each sbu. Four strategies can be perused.

• Build – here the objective is to increase market share . It is appropriate for question marks whose market shares must grow if they are to become stars.

• Hold –preserve the market share.

strategies are designed to retain customers.

• Harvest – for weak question marks and dogs managers may decide to harvest.

• Involves a decision to withdraw from a business by implementing a program of continuous cost retrenchment.

• Eliminating r&d expenditures ,reducing advt expenses.

• Divest –

• The objective is to sell or liquidate the business and used elsewhere.

• Appropriate for dogs and question marks that are acting as a drag on company’s profits.

Peter Drucker’s (1973) Seven Types of Business

Portfolios

Tomorrows

Bread winners

Developments

Sleepers

Ego trips

Todays bread winners

Failure

Yesterdays bread

winners

high

Market attractivy

low

Business strength

low high

• Today’s bread winners:

• Tomorrow’s bread winners:

• Yesterday’s breadwinners:

• Developments :

• Sleepers :

• Ego trips :

• Failures :

General electric’s ( G E)approach

business strength matrix.

strong average weak

Business strength

high

medium

low

MarketAttrac-tivity

Sbu1

sbu2

sbu3

sbu4

• Green zone consists of three cells at the upper left indicating favorable industry/market attractiveness.

• So it suggests the company to invest and grow.• Yellow zone consists of markets and business

are medium in over all attractiveness.• So the company decide to maintain the shares.• Red zone indicates markets/business are low

in attractiveness so decide to harvest or divest.