Transcript Chapter0

Part Two
Foundations for Creating Value
Part Two
Foundations for Creating Value
Takes us to the business marketer’s engine room: an overview of
how to identify opportunities, strategic planning and assess
the role of marketing in a learning organization
Chapter 5 - Market Opportunities
Chapter 6 - Marketing Strategy
Chapter 7 - Weaving Marketing into the Fabric of the Firm
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Chapter Five
Market Opportunities:
Current and Potential Customers
Generating B2B Opportunities
DEVELOP MARKETS
AMONG CURRENT
CUSTOMERS
FIND OPPORTUNITIES
WITH EXISTING
CUSTOMERS
NEW
MARKET OPPORTUNITIES
ACQUIRE
NEW
CUSTOMERS
DEVELOP
A RESEARCH
PROGRAM
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Develop Markets among Current Customers
•
80-20 rule: Generally, the “top” 20 percent of customers
generates 80% of sales
•
Existing customers are logical prime candidates for the firm’s new
products because these customers (1) Know the company; (2) Are
familiar with the firm’s service standards; (3) Are familiar with its
dedication to quality; (4) Have experienced its technical capabilities
•
The seller can “penetrate” these accounts and receive more of the dollars
for little cost as compared to the cost of attracting a new, unfamiliar
customer;
•
The cost of recruiting new customers is greater than that of retaining
existing ones should they be lost.
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Four step process
of developing markets among current customers
1.
Rate your best customers (Best Customers) – ideally, firms
should allocate its marketing budget to service its best customers
until marginal revenue equals marginal cost and marginal cost is
rising
2.
Maximize revenues through collaboration (Customer
Maximization) – e.g., newspaper ad manager work with car dealer
to develop special events.
3.
Develop customer specific products (New Products) – Light and
medium accounts should be a prime target for account penetration
4.
Learn from your customer’s customers (Network Payoffs)
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Finding Opportunities with Customers
Four step approach:
1.
Establish a formal feedback program with customer
contact points (sales, support)
2.
Develop databases – databanks, data warehousing and
data mining
3.
Compile decile reports
4.
Develop customer research assistance program
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Customer Feedback
A formal feedback program: Empathic dialogue is active listening
an identification with customer concerns, resulting in
customer-centered communication and problem solving.
•
The ability to listen actively and identify with customer
concerns is at the core of empathic dialogue.
•
Sympathy is feeling for another; empathy is feeling as
another.
•
These discussions require the seller to share his client’s
knowledge, perceptions, hopes, and fears in order to offer
solutions and/or point out opportunities.
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Customer Feedback
Sources for customer feedback and opportunity identification
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Marketing research firms
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Academic research
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The salesforce
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Public opinion surveys
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Databases
•
Databanks created unprecedented volumes of information
•
Data warehousing is the practice of storing all of the firm’s
information on a centralized, centrally managed computer which
may be accessed by authorized users firmwide; it amassed
databases which grew both with the simple passage of time and
the continual hunt for new, “useful” data.
•
Data mining assists in sorting through this maze to identify data
required for a specific project/use; Data mining is a logical
outgrowth of databanks & data warehousing
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Decile Report
•
A decile report orders the firm’s customers from best to worst,
according to purchase volume for the period, summarized by
tenths.
•
Decile reports are used for:
1. Identifying the best accounts
2. Allocating promotional budgets
3. Focusing market research efforts
4. Targeting special promotions/rewards
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Acquire New Customers
Four step process for acquiring new customers:
1.
Calculate your current customer’s lifetime value (LTV)
to serve as yardstick for planning
2.
Find customers in a new segment who “look like” your
existing customers
3.
Get into some new geographic territory
4.
Modify existing products for new industries
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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 (in Chapter 8, product development)
3. DEVELOPING ON-SITE VISITATION PROGRAMS – Crossfunctional teams may employ customer visits to gather information while
assisting customers in problem solving and/or identifying opportunities
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Focus Group (1)
•
A small group of customers may be probed in depth
about a specific topic or issue
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The moderator should be well-trained in the behavioral
sciences; encourages discussion and interaction; tapes
the session for after-detailed analysis; keep discussion
“on topic”
•
The focus group is best used to
-
generate ideas
gain insights into consumer needs
gain insights into consumer constraints
develop hypotheses about market opportunities
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Focus Group (2)
•
Focus groups may accomplish all of the following:
reveal a spectrum of customer motivations; suggest
differences in usage patterns; provide closer contact with
actual customers; simulate thinking about new
products/services. Except provide quantitative results.
•
It is not proper procedure for measuring market share
potential and should not be used to forecast adoption
rates
•
Focus groups are popular because they are often
supported by sophisticated databases; they can be
conducted quickly and cheaply; they almost always yield
surprising insights and some new ideas.
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Focus Group (3)
•
Criticize focus groups
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-
-
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Focus groups are too small in size and geographically limited to
allow findings to be accurately projected onto the total market.
Attitudes, motives, meanings, emotions, and preferences are
difficult to convey and are interpreted by the moderator who is
not necessarily correct.
Still, focus groups can provide “insights” and ideas that can be
subjected to further, more rigorous analysis as part of the total
research effort.
Indeed, focus groups are often considered exploratory research.
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Sample Survey
•
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Sample surveys may be administered by/through
personal interviews, mail, telephone and the internet
Personal interviews – If marketer needs to explain complex
issues, probe in depth, or employ demonstration
•
Mail questionnaires – must be short, clear, logically laid out,
and easy to complete
•
Telephone interviews – are comparatively easy to monitor;
comparatively fast and inexpensive; more intrusive than mailed
questionnaire; incapable of reaching all customers
•
Online surveys – are remarkably fast and cost effective; capable
of reaching large numbers of consumers; do not reach all
populations; may suffer from privacy and/or virus concerns
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Customer Lifetime Value Analysis
•
By estimating the present value of future customer
streams, the firm can identify those customers to guard
most heavily and cultivate most aggressively.
This is useful in all phases of the marketing program.
Critique the LTV concept
•
•
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LTV is logical – as a concept
It is really a statistical estimate
It accuracy depends on subjectively selected historical data, time
horizons, discount rates, and anticipated account maintenance
charges. These factors can, and will, change over time – and will
not change uniformly across accounts
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Exhibit 5-4 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 acquisition
100
0
0.60
$20
$90
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
1
2
3
0.40
0.20
0.10
$60
$50
$50
$10
$ 4
$ 2
40.0
24.0
24.0
20.8
14.4
19.2
40.5
18.2
12.5
11.5
17.3
Profit forecasts
Acq+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] =
NPV @ 10 NPV @ 10% NPV @ 20%
Discounting profits
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
$4,686
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Market Segmentation
•
To evaluate opportunities to acquire new customers, it is
critical to segment the market in order to match company
strengths with unmet or underserved customer needs.
•
Traditionally, market segmentation has used customer
traits, buying patterns, information needs, benefits
sought, psychographic profiles, etc. into discrete clusters
that may be attractive.
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Segmentation and Opportunity Analysis
IDENTIFY SEGMENTS THROUGH INDUSTRY
CLASSIFICATION (SIC / NAICS)
CHOOSE YOUR INDUSTRY TARGETS
CHOOSE YOUR SPECIFIC COMPANY TARGETS BY:
1.
2.
3.
HOW THEY BUY
THE BENEFITS THEY SEEK
MEMBERSHIPS IN PROFESSIONAL / TRADE
ORGANIZATIONS
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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 efforts
Segments that satisfy all of the basic criteria for a “good” market are
likely to be designed as a target market.
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Perceptual Mapping
•
The customer’s mental picture of various products in the
marketplace with regard to significant features/attributes
may be graphically analyzed by perceptual mapping.
•
An aid to segmentation, also an aid to positioning; may
help identify new product opportunities; is used to group
and discriminate among products.
•
The basics of this technique should be discussed in
marketing research course.
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C
Reasonable price
A
Order process
efficiency & accuracy
After-sale service
Rapid delivery
B
Helpful / informative
D
Technical
performance
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