Www.SimpsonScarborough.com Connecting the Dots: Principles of Marketing in a Really Short Time Purdue University July 28, 2009

www.SimpsonScarborough.com

Connecting the Dots: Principles of Marketing in a Really Short Time

Purdue UniversityJuly 28, 2009


Slides taken from Principles of Marketing, 10th Edition, by Philip Kotler and Gary Armstrong

and used with permission.


Changes in the Service Sector

1. Shift in the Base of World Economies

2. Your customer's Expectations Are Shifted by Forces Outside Your Industry

3. Technology, Technology, Technology!


Shift in World Economies

• Agricultural

• Industrialization

• Service


Your Customer’s Expectations Are Shifting!

• Your customer expects your service to be:

• Immediate

• Perfect

• Free


Opportunities Spring from Technology

Creation of new or improved service

More involvement of customers in operation tasks through self-service

Creation of centralized customer service departments

Recording customer information on easily accessible data banks


What is Marketing?

• Process by which individuals and groups obtain what they needneed and want want through creating and exchanging products exchanging products and value with others.

• More simply: Marketing is the delivery of customer satisfaction at a profit.


What is Marketing?

"Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders." American Marketing Association 2004


What Motivates a Consumer to Take Action?

• Needs – state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I need a better job

• Wants – form that a human need takes as shaped by culture and individual personality. i.e. I want a college degree

• Demands – human wants backed by buying power. i.e. I have money to obtain a college degree from XYZ University


How Do Consumers Choose Among Products and Services?

• Customer Value – benefit that the customer gains from owning and using a product compared to the cost of obtaining the product.

• Customer Satisfaction – depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. Linked to Quality and Total Quality Management (TQM).


Marketing & Sales Concepts Contrasted

Factory ExistingProducts

Sellingand

Promoting

ProfitsthroughVolume

Market CustomerNeeds

IntegratedMarketing

Profitsthrough

Satisfaction

The Selling ConceptThe Selling Concept

The Marketing ConceptThe Marketing Concept

StartingPoint Focus Means Ends


The Marketing Process

TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Im

plem

enta

tion

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analys

is

Competitors

MarketingIntermediaries

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment


Seven P’s of Service

• Product• Quality• Features• Options• Style• Brand

• Packaging• Sizes• Services• Warranties• Returns

Traditional four P’s of Marketing

• Payment Period• Credit Terms

• Price• List Price• Discounts• Allowances


Seven P’s of Service

Place• Channels• Coverage• Location

• Inventory• Transport

Promotion• Advertising• Personal Selling

• Sales Promotion• Publicity• Direct Marketing


3 More P’s

Physical Evidence– Arrangements of objects– Materials used – Shapes/lines – Lighting/shadows

− Color− Temperature− Noise

Process Design– Policies & Procedures – Factory/delivery cycle time

Participant– Service Provider

– Other employees and customers

− Training and rewarding systems

− Customer being serviced


The Marketing Information System

Marketing Information System

InformationAnalysis

InternalData

MarketingResearch

MarketingIntelligence

DistributingInformation

Assessing InformationNeeds

Marketing Managers

Marketing EnvironmentMarketing Environment

Ma

rke

tin

g D

ec

isio

ns

an

d C

om

mu

nic

ati

on

s

Developing Information


Characteristics Affecting Consumer Behavior

BuyerBuyer

Psychological

Personal

Social

Culture


The Buyer Decision Process

Need RecognitionNeed Recognition

Information SearchInformation Search

Evaluation of AlternativesEvaluation of Alternatives

Purchase DecisionPurchase Decision

Postpurchase BehaviorPostpurchase Behavior


Steps in Segmentation, Targeting, and Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation


Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

Demographic

Age, gender, family size and life cycle, or income

Psychographic

Social class, lifestyle, or personality

Behavioral

Occasions, benefits, uses, or responses

Nations, states, regions or cities


Using Multiple Segmentation Bases: Geodemographics


Step 3. Positioning for Competitive Advantage: Strategies

Against aCompetitor

Against aCompetitor

UsageOccasions

UsageOccasions

Away fromCompetitors

Away fromCompetitors

ProductAttributes

ProductAttributes

ProductClass

ProductClass

BenefitsOffered

BenefitsOffered

UsersUsers

B

AA

ED

CH

G

F


Selecting the Right Competitive Advantages

Criteriafor

DeterminingWhich

Differencesto

PromoteAffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

CommunicableCommunicable


Communicating A Strong Positive Image

• Image Formula• (accuracy + clarity + consistency) x continuity

• Accuracy* Honest and reachable – 95% who we are and who we want to be

• Clarity* Is our message understandable and measurable?

• Consistency* Is everyone singing the same tune?

• Continuity* Over time


What is a Product?

• Anything that can be offered to a market for attention, acquisition, use or consumption.• Satisfies a want or a need.• Includes:

• Physical Products• Services• Persons• Places• Organizations• Ideas• Combinations of the above


Levels of Product

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-SaleService

CoreBenefit

orService

ActualProduct

ActualProduct

CoreProduct

AugmentedProduct


Characteristics of Services

IntangibilityIntangibility

InseparabilityInseparability

VariabilityVariability

PerishabilityPerishability

Can’t be seen, tasted, felt, heard, or smelled before purchase.

Can’t be separated from service providers.

Quality depends on who provides them and when, where and how.

Can’t be stored for later sale or use.


Marketing Strategies for Service Firms

• Managing Service Differentiation• Develop offer, delivery and image with competitive advantages.

• Managing Service Quality• Empower employees• Become “Customer obsessed”• Develop high service quality standards• Watch service performance closely

• Managing Service Productivity• Train current or new employees• Utilize technology


Value = Benefits – Costs


Benefits = Solution to a problem


Costs =

Financial Time Hassle Opportunity Physical Psychological Social


Distribution

Access Location Control the pathways


The Communication Process

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MediaMedia

MessageMessage

ResponseResponse

FeedbackFeedback

SenderSender

EncodingEncoding

DecodingDecoding

ReceiverReceiver


Steps in Developing Effective Communication

Step 1. Identifying the Target AudienceStep 1. Identifying the Target Audience

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages

PurchasePurchase

Conviction

Preference

Liking

Knowledge

Awareness


Setting the Promotion Mix

Nature of Each Promotion Tool

AdvertisingReaches Many Buyers, Expressive

Impersonal

AdvertisingReaches Many Buyers, Expressive

Impersonal

Personal SellingPersonal Interaction, Builds Relationships

Costly

Personal SellingPersonal Interaction, Builds Relationships

Costly

Sales PromotionProvides Strong Incentives to Buy

Short-Lived

Sales PromotionProvides Strong Incentives to Buy

Short-Lived

Public RelationsBelievable, Effective, EconomicalUnderused by Many Companies

Public RelationsBelievable, Effective, EconomicalUnderused by Many Companies

Direct MarketingNonpublic, Immediate, Customized,

Interactive

Direct MarketingNonpublic, Immediate, Customized,

Interactive


Customer Satisfaction

Customer Satisfaction Results When a Company’s Performance Has Fulfilled a Buyer’s Expectations.

Buyer’s Expectations Are Based On:

Customer’s Past Buying Experiences Opinions of Friends & Associates

Marketer/ Competitor Information & Promises

Pro

du

ct’

s A

ctu

al

Pe

rfo

rma

nc

e

Performance Exceeds Expectations– Customer is Delighted

Performance Below Expectations – Customer is Dissatisfied


The Basis of Service Quality


Other’s Definition

Quality = Zero Defects– Deming

Conformance to specifications– Crosby

“Attention to detail and exceeding customer expectations”– Disney


The Customer’s Definition

• Reliability• Consistency• Dependability• Honor your promises

• Responsiveness• Willingness/readiness of employees to provide service• Timeliness of service

– Berry et al


• Competence• Possession required skills and knowledge• Of contact personnel• Of operational support personnel• Research capability of firm

• Access• Approachability and ease of contact


• Courtesy• Politeness• Respect• Consideration• Friendliness

• Communication• Keeping customers informed in language they understand• Listening to customers


• Credibility• Trustworthiness• Believability• Honesty

• Security• Freedom from danger, risk or doubt• Physical safety• Financial• Confidentiality


• Understanding the Customer• The marketing concept• Specific customer requirements• Individualized attention• Recognizing the regular customer

• Tangibles• Physical evidence of service

• Facilities• Personnel• Other customers• Tools or equipment


Breakdown in Service Quality

Key Factors:

Lack of market segmentationInsufficient marketing research

Inadequate use of marketing researchLack of interaction between management and customers

Insufficient communication between contact employees and managers

CustomerExpectations

Perceptions ofCustomer Expectations

Source of For Service Gaps: Zeithaml, Berry & Parasuraman, 1993.

GAP1

Service Gaps



Key Factors:

Lack of customer-defined standards andprocess management

Absence of formal process for setting service quality goalsPerception of infeasibility — that customer expectations

cannot be metInadequate management commitment to service quality

Perceptions ofCustomer Expectations

Service QualityStandards


GAP2

Service Gaps



Key Factors:Role ambiguity among employeesRole conflict among employees

Poor employee - technology - job fitInappropriate evaluation / compensation system

lack of perceived control (contact personnel!)Lack of teamwork

Service QualityStandards

Service Delivery


GAP3

Service Gaps



Service Gaps

Key Factors:Inadequate management of expectations

Overpromising in advertisingOverpromising in personal selling

Inadequate communication among departments/functionsDifferences in policies and procedures across branches or units

Service Delivery

ExternalCommunications

to Customers


GAP4


Thank you!

Documents

Www.SimpsonScarborough.com Connecting the Dots: Principles of Marketing in a Really Short Time Purdue University July 28, 2009