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Marketing Fundamentals CUSTOMER-DRIVEN. Einstein created his theories not from experiments, but from thought problems. We’re not Einstein, but this section has more to do with philosophy than practice…. It purpose is to create a mindset…. Think of two occasions when you felt that you

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Marketing Fundamentals

CUSTOMER-DRIVEN


Einstein created his theories

not from experiments,

but from thought problems.


We’re not Einstein, but this section has more to do with

philosophy than practice….

It purpose is to create a mindset….


Think of two occasions when you felt that you

were a valued customer.

Why did you feel that way?


Think of two occasions when you felt that you

had a negative experience as a customer.

Why did you feel that way?


Fundamentals

http://www.youtube.com/watch?v=KkBvzS_fJ2g&feature=player_embedded#


The marketing conceptis the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition.

Today most firms have adopted the marketing concept, but this has not always been the case.


In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later.


The Production Concept

Can we produce the product?

Can we produce enough of it?

The Sales Concept

Can we sell the product?

Can we charge enough for it?


Examples of Marketing

Concepts

http://www.youtube.com/watch?v=l4seWLW2KhQ&feature=player_embedded


Number 1

What (Who) is a Customer?


A customer?

Who are we talking about?

Not always clear:


Who is a customer?

Take a piece of paper and answer

the following questions:


Who is a customer?

1. Is a student a customer?


Who is a customer?

1. Is a student a customer?

2. In what ways are they

a customer?


  • Who is a customer?

  • Is a student a customer?

  • 2. In what ways are they

  • a customer?

  • 3. In what ways are they

  • not

  • a customer?





Further:

Practically no one tries to sell to everyone……



Because:

Not everyone is a Customer!



Practically no one tries to sell to everyone……

Markets are segmented:

80/20 Rule

Demographics

Psychographics

Needs/Wants

Needs are: Wants backed by resources!


IS the customer always RIGHT?


Is the customer always right?

NO!

“The cliché is wrong. The right customer

is always right. The wrong customer, is

not right for the selling company.”

Jeffrey J. Fox


Okay Customers are:

Profitable

Loyal

Spreads positive WOM

Gives positive referrals


Okay customers can:

also be:

Tough, exacting, impatient, challenging, fickle,

exasperating, needy, insistent,

and a pain in the neck.


  • Not Okay customers are:

  • “Difficult”

  • The service provider doesn’t care about them

  • 2. The service provider isn’t listening to them

  • 3. The service provider isn’t doing anything to resolve

  • the problem

  • 4. They have been victimized, unfairly treated

  • or taken advantage of

  • 5. The service provider gives the customer the

  • run-around

  • 6. Promises are not kept


Not Okay customers are:

About 3% of the population is clinically insane


Not Okay customers are:

About 3% of the population is clinically insane

Another 40% is neurotic…………


And we just don’t all agree on

things.

http://www.expedia.com/pub/agent.dll/qscr=dspv/htid=11379/crti=7/hotel-reviews


Low High

PROFITABLE

Customer Misfits

Spinners

Big Spenders

Underachievers

Low

LOYAL

Win-Back Cust

New Potentials

Advocates

Loyalists

High


Student evaluation of teaching taken at random

from the internet as an example.

Teacher A (picked at random… named Smith)

Student 1

“I am still extremely disappointed I took this class.

I took it as an elective just because I thought it would be interesting...

wrong teacher. The tests were so hard; I'm a straight A student

and ended up with my first B. Don't take him…”


Teacher A

Student 2

“I like her as a person ,however, I wasn't very fond of her teaching style.

The last month all we did was presentations and were left on our own.

If you don't learn well this way, don't taker her. Otherwise she is pretty good.”


Teacher A

Student 3

“HE is a guy. His name is Roland Acosta. He's actually pretty good,

but his classes take FOREVER. Bring a laptop or small

GameBoy and you will be fine.”


Is Teacher A:

a good teacher, or a bad teacher….


Is Teacher A:

For that matter:

a man or a women?


Berry, L.L, and Seiders, K. (2007) “A Cognitive-emotional Theory of Customer

Injustice and Emotional Labor.” Advances in the Psychology of Justice and

Affect. (D. De Cremer, Ed.), 199-226.


Not Okay customers are:

(bottom line)

Unprofitable:

i.e., not worth the price you are paying.



Actually….

All Businesses have Partners:


Partners:

Customers

Competitors

Employees

Governments

Society

The Media

To be successful:

All of these must be kept happy!


Number 2

The Importance of a Customer Orientation


  • Clayson’s Simple Definition:

  • “Marketing is arranging a buyer for a seller.”

  • This means:

  • Marketing is the process of creating

  • satisfying exchanges.

  • 2. Wealth is created through free exchanges.


Marketing Concept:

“All marketing strategies should be based on

known consumer needs and/or wants.”


Extension:

“All firms and companies have the same product…

that is, a customer.”

Implications…………..



Clayson’s Even Simpler Definition:

“Marketing is arranging free exchanges!”


“Marketing is arranging free exchanges!”

This means…

  • Marketing is the process of creating satisfying exchanges.

2. Wealth is created through free exchanges.





You go into a store to buy a shirt.

What is the product?

What is the promotion?

What is the price?

What is the place?


Number 3

What are Customers Like?


We like to think that

our customers are like

these people….









Are Customers Rational?


Depends on what is meant by rational…


  • Depends on what is meant by rational…

  • The Theory of Utility (economics)


  • Depends on what is meant by rational…

  • The Theory of Utility (economics)

  • The Pressure of the Environment


Is a brain necessary for

learning?

Pavlov


How much of a

customer’s behavior is

determined by the

environment?

B.F. Skinner


  • Depends on what is meant by rational…

  • The Theory of Utility (economics)

  • The Pressure of the Environment

  • The Complication of the Psychic


How much of a

customer’s behavior is

determined by

unconscious factors?

Sigmund Freud


  • Depends on what is meant by rational…

  • The Theory of Utility (economics)

  • The Pressure of the Environment

  • The Complication of the Psychic


  • Depends on what is meant by rational…

  • The Theory of Utility (economics)

  • The Pressure of the Environment

  • The Complication of the Psychic

  • The Subtlety of Culture


How much of a customer’s behavior is

determined by cultural factors?



  • Depends on what is meant by rational…

  • The Theory of Utility (economics)

  • The Pressure of the Environment

  • The Complication of the Psychic

  • The Subtlety of Culture

  • The Control of Information


Marketing Maven:

A maven (also mavin) is a trusted expert in a particular field, who seeks to pass knowledge on to others. The word maven comes from the Hebrew, via Yiddish, and means one who understands, based on an accumulation of knowledge.


Gatekeepers…

http://movies.nytimes.com/2009/12/20/movies/20scott.html


Information:

Example: Oliver North and Congress 1987



5/06/87

“Folks in North’s hometown recall his driving ambition”

Front page story




5/10/87

“North attracts support from sympathetic viewers.”

Front page story



5/11/87

“Poll: Americans believe North but not Reagan.”

Front page story


5/11/87 (Same day)

“Poll: Americans believe North but not Reagan.”

Front page story


5/12/87

“North comes out as hero during week of hearings”

Front page story



5/19/87

“Contras sack poor village in Nicaragua: Pregnant woman,

3 kids among killed in attack”

Source: NY Times

Top front page story


5/19/87 (Same day)

“Reagan urges more funding for Contras”

On page A3


5/20/87

“Nicaragua gets more aims” [from the Soviet Union]

First page story



So….

What is news?


Information control has become a major

problem/opportunity in a connected society.

http://www.youtube.com/watch?v=5YGc4zOqozo


Number 4

What are They Actually Buying


Customers do not buy products.

They buy what products DO for them.



What products do is not always

obvious or tangible…..


What a product does for one person,

may not be what it does for someone else.




Number 5

How to Find Out What Customers Want/Need


What is Information?

Information is something that changes

What You KNOW.



Information:

Value

Dependent upon the value of

decisions that can be made with

a change in what you know.



  • Information is Something that Changes

  • What You KNOW.

  • It is very valuable… and expensive.

  • It has a certain value.

  • The amount of information 1/prob.

  • It is property.

  • It always needs to be evaluated.


  • Information:

  • Evaluation

  • Who produced it?

  • When was it produced?

  • How was it produced?

  • How was it analyzed?

  • Why was it produced?

  • Who benefits from this information?

  • Why is this information available to me?


  • Information:

  • Warning signs:

  • Confirms what you have always known.

  • Confirms what you WANT to believe.

  • Contradicts what you have always known.

  • Is it GOOD THINK?


Number 5

Getting to Know the Customer


Getting to Know the Customer

How to obtain information:

1. Do marketing research…

Check out: www:cba.uni.edu/clayson/mba

for a complete outline for research


  • Conflicts between MR and Management

  • Personality: The bottom line is that the manager who is using research is

  • probably unlike the person that is producing it.

  • 2.Research may be critical:

  • 3.Money (expense): At times it is an expense without an explicit bottom line.

  • 4.Time - “need it now”: Managers want information “now;” researchers want

  • to supply it “later.”

  • 5.Intuition (art): Successful managers typically have successful track records.

  • Many have assumed that decision making is an “art,” and “art” and research may

  • be seen as incompatible.

  • 6.Past - Future Orientation: Research is ultimately done on past events,

  • while a manager is asking for research to reduce the uncertainty about the future.

  • 7.Pseudo Research: Researchers do not like to produce pseudo research.

  • Managers many times want information that will never be used for decision making

  • for a variety of reasons.


Managers’ Response to Research and Evolution

1. Stage of Ignorance:

2. Stage of Blind Faith:

3. Stage of Disillusionment:

4. Stage of Sophistication:



Getting to Know the Customer

How to obtain information:

1. Do marketing research…

Check out: www:cba.uni.edu/clayson/mba

for a complete outline for research

2. Start liking your customers

“My job would be great if it weren’t for the customers.”

Some consultants recommend that top managers

spend 50 percent of their time face-to-facewith

actual customers.


Getting to Know the Customer

“Spending time with customers is a hundred times

more important than attending staff meetings and

reading monthly reports.”

Jeffrey Fox


Getting to Know the Customer

How to obtain information:

1. Do marketing research…

Check out: www:cba.uni.edu/clayson/mba

for a complete outline for research

2. Start liking your customers

3. Listen

“It does no good to get close to customers if you

aren’t listening.”

Jennings & Haughton


Getting to Know the Customer

How to obtain information:

1. Do marketing research…

Check out: www:cba.uni.edu/clayson/mba

for a complete outline for research

2. Start liking your customers

3. Listen

Empathy

Curiosity

Patience


Getting to Know the Customer

How to obtain information:

4. Don’t be an Info-Snob

“Do you do regular in-depth interviews with the

sales force?


Getting to Know the Customer

How to obtain information:

4. Don’t be an Info-Snob.

“Do you do regular in-depth interviews with the

people who interact with customers

(clerks, etc.)?


Coast to Coast

Everyone else is a “flyover.”


Getting to Know the Customer

“Do you do regular in-depth interviews with the

sales force?

“Do you do regular in-depth interviews with the

people who interact with customers

(clerks, etc.)?

Why Not!!


Number 7

Creating a Customer-Oriented Organization


Product Development

Don’t be product driven!

Products are the objects of a transaction.

It is the transaction, not the product, that

is important.


For example:

If it is the transaction, then

always make it very easy to do the transaction.

Always make it easy for the customer to pay you.

https://online.kitco.com/sellprice/Ordr_Faq.htm

http://www.youtube.com/watch?v=2pkzfjnGoKo


  • Product Development

  • The products come from customer

  • needs and/or wants.

  • Products should not come from:

  • What can be done

  • What developers want done


Product Development

Don’t throw products over the wall!



Destroy the Bureaucracy!!

“Blow it up as fast as you can!”


Destroy the Bureaucracy!!

“Anyone found guilty of building or

perpetuating bureaucracies should

be tried on charges of management,

malpractice, found guilty, and spend

serious time in the slammer. “

Jennings & Haughton


Destroy the Bureaucracy!!

The best idea always win.

Irrespective of where, or from whom, it

comes.


Destroy the Bureaucracy!!

The best idea always win.

Reward ideas

Even when they are wrong!


Destroy the Bureaucracy!!

The best idea always win.

Reward ideas

Acknowledge people’s contributions.

Positive reinforcement works almost

every time it is tried.


All Business is Service!

“People become rich when they

make other people happy.

They become very wealthy

when they make a lot of

people happy.”

Benjamin Stein


The Importance of Management

Management

Management

Management


The Importance of Management

Management

Management

Management

Service is no better than management!!


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