Session 2 Dr. Vasilis Theoharakis Introduction Three C’s Four P’s Ανάλυση Αγοράς από μια σκοπιά marketing
What is Marketing? • Marketing is the process of planning and executing the conception, pricing promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives (AMA) • Marketing is the art and science of creating and satisfying customers at a profit
Marketing Sodium Hypochlorite • Pepsi World • http://www.pepsiworld.com/index2.html • Clorox • http://www.clorox.com/science/rmp/how.html
Competing Orientations Toward the Marketplace • Production Concept - Consumers favor products that are widely available and low in cost. • Product Concept - Consumers favor products that offer the most quality, performance and features. • Selling Concept -Consumers, if left alone, will not buy enough of the organization’s products. • Marketing Concept - The key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors
THE IMPORTANCE OF CUSTOMER SATISFACTION • The average business does not hear from 96% of its unhappy customers • For every complaint received, 26 customers actually have the same problem • The average person with a problem tells 9 or 10 people • 13% tell more than 20
THE IMPORTANCE OF CUSTOMER SATISFACTION • Customers who have their complaints resolved tell an average of 5 people • Complainers are more likely to do business with you again than noncomplainers • 54-70% if the complaint is resolved at all • 95% if the complaint is resolved quickly
THE BENEFITS OF CUSTOMER SATISFACTION • Positive word-of-mouth • Purchase more frequently • Less likely to be lost to competitors • Insulated from price competition • Positive work environments
Cost of Losing and Attracting Customers • Cost of attracting a new customer can be up to 5 times the cost of keeping a current one happy • Cost of Offensive Marketing > Cost of Defensive Marketing • Some companies have increased profits from 25% to 85% by reducing defections by 5%
Marketing Analysis Framework 3 C’s Customers Competitors Company Market research S T P (Segment) (Target) (Position) Product Price 4 P’s Place Promotion
Customer Analysis • Who buys and why? • How many customers are there; will there be? • How is the buying done? • Where do they obtain information and where do they buy? • How are decisions made (decision making process)? • What are and will be their under-served needs and wants? • Are there relevant segments?
Competitor Analysis • Who are the competitors? • Who do customers buy from now? • Who might become interested in the future? • What are their … • Goals • Strategy • Assumptions • Capabilities
Company Analysis • Objectives • Corporate • Business unit • Strengths Weaknesses Opportunities and Threats • Reputation • Costs • Expertise • Culture and orientation
Combining the 3 C’s: The Situation Assessment • What customer needs and wants can we meet? • What is profit potential? • What do we need to do to meet them? • Can we do it better than anyone else? • What advantages/disadvantages do we have? • What will likely responses mean for profits? • How sustainable are our advantages?
Final Demand Derived Demand Joint Demand Common Demand Demand Categories within a Supply Chain
Illustrative Demand Drivers Macroeconomic Drivers: Interest Rates Regulation Social Trends Final Demand Industry Drivers Substitutes Complements Price Derived Demand
Direct vs. Indirect Substitution in Market Modeling • Direct substitution - • Displacement of an existing substitute • Example: Intel 80186 vs. 14 existing chips • Entirely new products - • Measure the market for the current approach to the need you are addressing • Example: Intergraph’s 1st CAE system vs. manual drafting tools
Market Attractiveness • Market size • Market growth • Sales cyclicality • Sales seasonality • Profit level • Profit variability
So, what market should be attractive? A market should be attractive to a firm if it can exploit the opportunities presented to gain competitive advantage
How is Marketing Changing? • Increased quality expectations • The war for brands and shelf space • Oversaturation of retailing • How do companies respond?
Be safe Quality of life Right to choose CONSUMERISM Be informed Be heard ENVIRONMENTALISM Long-term planning Eco-systems Pollution Growth
Aggregating Consumers to Segments • Customers may differ in any step in the consumer decision process (heterogeneity) • Preferences of different customer types may conflict • Making one group happy antagonizes another • Compromise offerings are dangerous as no group is really satisfied; competitors can come • Too expensive to design a different product for all • Segmentation is the answer
Market Segmentation • Process of identifying a group of people similar in one or more ways, based on a variety of characteristics and behaviors • Results in market segment: a group of consumers with similar needs and behaviors that differ from those of the entire mass market
Criteria for Choosing Segments Measurability: ability to obtain information about the size, nature and behavior of a market segment Accessibility: degree to which segments can be reached, either through various advertising or communication programs or methods of retailing Substantiality: size of the market--is it large enough to be profitable? Congruity: how similar segment members are in characteristics or behaviors
Segmentation Process (STP) 1. Identify bases for segmenting the market 2. Develop profiles of resulting segments 3. Assess the attractiveness of each segment Size and growth Fit with company capabilities and objectives Assess costs and revenues 4. Select the target segment(s) 5. Develop a positioning strategy for each segment
Criterion Examples of Considerations I. Size and Growth 1. Size • Market potential, current market penetration 2. Growth • Past growth forecasts of technology change II. Structural Characteristics 3. Competition • Barriers to entry, barriers to exit, position of competitors, ability to retaliate 4. Segment saturation • Gaps in the market 5. Protectability • Patentability of products, barriers to entry 6. Environmental risk • Economic, political, and technological change III. Product-Market Fit 7. Fit • Coherence with company’s strengths and image 8. Relationships with • Synergy, cost interactions, image transfers, segments cannibalization 9. Profitability • Entry costs, margin levels, return on investment Selecting Target Segments
Positioning - Perceptual Maps Sportiness Porsche BMW Miata 4 Acura NSX 1 Jaguar Supra Prelude Celica 2 6 VW Golf Economy 5 3 Twingo Punto Corolla Civic Volvo V70 1~6: Clusters of Ideal Points Radius proportional to # of consumers
Positioning • Translate your product into consumer benefits • people should see that it is satisfying their pressing needs • Then, position your product in people’s mind, in a way that differentiates it from all your competitors
Conclusions • Marketing is complex • There are many issues and no single equation that can deal with all of them; you must think • Marketing is quantitative • Must be comfortable applying finance and accounting principles, among others • Marketing is indispensable • No business can succeed if it doesn’t get the marketing right (unless you are a cable monopoly)!