Marketing Management session 2 - Group 1

Session 2 Marketing Management

GROUP 1ARRIBE-CATUNGAL-GARCIA-MEDINA

Chapter 5 Creating Long-term Loyalty

Relationships#mayForever

CHARMIE DUNGCA ARRIBE, MD

Chapter Questions• What are customer value, satisfaction, and

loyalty, and how can companies deliver them?

• What is the lifetime value of customers, how can marketers maximize it?

• How can companies attract and retain the right customers & cultivate strong customer relationships?

• What are the pros & cons of database marketing?

Building Customer Value, Satisfaction & Loyalty

#CustomerDelight

Figure 5.1 Kotler 14th edition

Figure 5.1 Organizational Charts

What is Customer Perceived Value?

Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.

Figure 5.2 Determinants of CPV Kotler’s 14th edition

Figure 5.2 Determinants of Customer Perceived Value

Image benefit Psychological cost

Personal benefit Energy cost

Services benefit Time cost

Product benefit Monetary cost

Total customer benefit Total customer cost

Steps in a Customer Value Analysis

• Identify major attributes and benefits that customers value

• Assess the qualitative importance of different attributes and benefits

• Assess the company’s and competitor’s performances on the different customer values against rated importance

• Examine ratings of specific segments• Monitor customer values over time

What is Loyalty?#keepthemLoyal

Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.

Table 5.1 Kotler 14th edition

Top Brands in Customer Loyalty for 2010

1. Apple iPhone2.Clairol (hair color)3.Samsung4.Mary Kay5.Grey Goose Vodka6.Clinique7.AVIS8.Walmart9.Google10.amazon.com

http://amazon.com/

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10

The Value Proposition

The whole cluster of benefits the

company promises to deliver

http://www.volvo.com/


Measuring Satisfaction#SatisfactionGuaranteed

Periodic Surveys

Customer Loss Rate

Mystery Shoppers

Monitor Competitive Performance


What is Quality?#TotalQuality

Quality is the totality of features andcharacteristics of a product or

service that bear on its ability to satisfy

stated or implied needs.


Maximizing Customer Lifetime Value

#ToTheMaxxx

Customer Profitability

Customer Equity

LifetimeValue

Figure 5.3 Kotler 14th edition

Figure 5.3 Customer-Product Profitability Analysis

Estimating Lifetime Value#SpendALifetime


What is Customer Relationship Management?

#ReleationshipsBeLike

CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty.


Framework for CRMIdentify prospects and customers

Differentiate customers by needs and value to company

Interact to improve knowledge

Customize for each customer

Attracting & Retaining Customers

Customer Retention Data#akinkanalang

• Acquiring new customers cost 5X more than satisfying & retaining current ones

• average company losses 10% of its customers each year

• 5% reduction in the customer defection rate can increase profits by 25 - 85%

• profit rate tends to increase over the life of the retained customer due to increased purchases, referrals, price premiums, & reduced operating costs to service

Kotler 14th edition

Managing Customer Base

Reduce the rate of defection

Increase longevity

Enhance “share of wallet”

Terminate low-profit customers

Focus more effort on high-profit customers

Building Loyalty#KeepThemLoyal

• Create superior products/services for target market• cross departmental planning is key for customer

satisfaction & retention• Integrate the “Voice of the Customer” in all business

decisions• Organize a database of information on individual

customer needs/preference/conatacts• Make accessible easy to customer to reach company

staff• assess the potential frequency programs• Run award programs recognizing outstanding

employees

Loyalty Programs


Customer Database & DB Marketing

#MarketersMustKnow• Customer database

• Database marketing

• Mailing list


Data mining#DataMiningGoal

To identify prospects

To target offers

To deepen loyalty

To reactivate customers

To avoid mistakes

Kotler 14th edition

Don’t Build a Database When

• The product is a once-in-a-lifetime purchase

• Customers do not show loyalty

• The unit sale is very small

• The cost of gathering information is too high

• There is no direct contact between seller and ultimate buyer


Perils of CRM• Implementing CRM before creating a

customer strategy

• Rolling out CRM before changing the organization to match

• Assuming more CRM technology is better

• Stalking, not wooing, customers

Chapter 6Analyzing Consumer

MarketsMARIZEL CATUNGAL, MD

Will address the ffg questions:• How do consumer characteristics influence buying

behavior?

• What major psychological processes influence consumer responses to the marketing program?

• How do consumers make purchasing decisions?

• In what ways do consumers stray from a deliberative, rational decision process?

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Figure 6.1 Model of Consumer Behavior


behavior?





What Influences Consumer Behavior?

Cultural Factors

Social Factors

Personal Factors

#EverythingAboutYou


1. What is Culture?Culture is the fundamental determinant of a person’s wants

and behaviors acquired through socialization processes with family and other key institutions.

Cultural values such as achievement and success, efficiency and practicality, progress, material comfort, individualism, freedom, external comfort, humanitarianism, and youthfulness.

Different countries, different views, different values.Marketers should understand cultural values in every

country to understand how to best market products and find opportunities for new products.


SubculturesNationalities

Religions

Racial groups

Geographic regions


Social Classes

Upper uppersLower uppersUpper middlesMiddle class

Working classUpper lowersLower lowers

Social class members show distinct product and brand preferences in many areas, and differ in media preferences

Upper-class prefers magazines and books; news and drama

Lower-class prefers TV; reality shows and sports

Language difference

http://factfinder.census.gov/

Social Classes

http://www.financialplanningph.com/mayaman-ka-na-ba/

#HiClassWaClassBuyMaxx

http://factfinder.census.gov/


2. Social Factors

Referencegroups

Social roles Statuses

Family


Reference GroupsMembership groups

Primary groups

Secondary groups

Aspirational groups

Dissociative groups

Reference Groups

OPINION LEADERS: highly confident, socially active, frequent users, sought for guidance in buying decision- celebrities, politicians, athletes

#I’llBuyWhatHeBuys


Family Distinctions Affecting Buying Decisions

• Family of Orientation• Parents and siblings

• Family of Procreation• Person’s spouse and

children• Wife- main purchasing agent

• Dutch Boy’s “twist and pour paint” for women

#OrderNiMisis


Roles and Status

People choose products that reflect and communicate their role and their actual or desired status in society. Marketers must be aware of the status-symbol potential of products and brands.


3. Personal Factors

Age

Values

Life cyclestage

Occupation

Personality

Self-concept

Wealth

Lifestyle

#It’sAllAboutYou


The Family Life Cycle


Brand Personality

Sincerity-down to earth, honest, wholesome, cheerful

Excitement-daring, spirited ,imaginative, up-to-date

Competence-reliable, intelligent, successful

Sophistication-upper-class and charming

Ruggedness-outdoorsy and tough

https://austudentkevin.wordpress.com/2015/04/26/nikes-brand-personality/

#CreateBrandPersona


Lifestyle Influences

Multi-tasking

Time-starved

Money-constrained

#ThisIsMyLifeMyTimeMyMoney

LOHAS (lifestyles for health and sustainability) Market Segments


Figure 6.1 Model of Consumer Behavior


behavior?





Key Psychological Processes

Motivation

MemoryLearning

Perception


1. Motivation

Freud’sTheory

Behavioris guided by subconsciousmotivations

Maslow’sHierarchyof Needs

Behavioris driven by the lowest, unmet need

Herzberg’sTwo-Factor

Theory

Behavior isguided by motivating

and hygienefactors


2. Perception

Selective Attention

Subliminal Perception

Selective Retention

Selective Distortion

#WagKulangSaPansin

3. LEARNING- teaches marketers that they can build demand for a

product by associating it with strong drives, using motivating cues and providing positive reinforcement

4. MEMORY- brand knowledge as a node in memory- Brand associations- all brand-related thoughts,

feelings, perceptions, images, experiences, beliefs, attitudes etc

#MaalaalaMokaya


behavior?





Figure 6.4 Consumer Buying Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

PostpurchaseBehavior


Consumer Buying Process

Marketer’s job is to understand the behavior at each stage.

The attitudes of others, unanticipated situational factors, and perceived risk may all affect the decision to buy, as will consumer’s levels of post purchase product satisfaction, use and disposal, and the company's actions.


Figure 6.5 Successive Sets Involved in Consumer Decision Making


Table 6.4 A Consumer’s Evaluation of Brand Beliefs About Laptops


behavior?





Figure 6.6 Steps between Evaluation of Alternatives and Purchase Decision


Non-Compensatory Models of Choice

• Conjunctive• Lexicographic• Elimination-by-aspects


Consumer’s decision to modify, postpone or avoid a purchase decision is influenced PERCEIVED RISKS:

Functional

Physical

Financial

Social

Psychological

Time


Figure 6.7 How Customers Use and Dispose of Products


Other Theories of Consumer Decision Making

Involvement• Elaboration Likelihood Model

• Low-involvement marketing strategies

• Variety-seeking buying behavior

Decision Heuristics• Availability• Representativeness• Anchoring and adjustment


Mental Accounting

• Consumers tend to…• Segregate gains• Integrate losses• Integrate smaller losses with larger gains• Segregate small gains from large losses

Chapter 7Analyzing Business

MarketsALEJANDRO GARCIA, MD

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 7-

Chapter Questions

• What is the business market, and how does it differ from the consumer market?

• What buying situations do organizational buyers face?

• Who participates in the business-to-business buying process?


Chapter Questions

• How do business buyers make their decisions?

• How can companies build strong relationships with business customers?

• How do institutional buyers and government agencies do their buying?


What is Organizational Buying?

Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.

What is the business market and how does it differ from the consumer

market? #changeme #ibahinmoko• Fewer, larger buyers

• Close supplier-customer relationship

• Professional purchasing

• Multiple buying influences

• Multiple sales calls

• Derived demand

• Inelastic demand

• Fluctuating demand

• Geographically concentrated buyers

• Direct purchasing


What Buying Situation do organisational buyers face? #buyingbigtime

Straight rebuy

Modified rebuy

New task


Chapter Questions

• What is the business market, and how does it differ from the consumer market?

• What buying situations do organizational buyers face?

• Who participates in the business-to-business buying process?


#thebuyingcenterInitiators

Users

Influencers

Deciders

Approvers

Buyers

Gatekeepers


Chapter Questions

• How do business buyers make their decisions?• How can companies build strong relationships

with business customers?• How do institutional buyers and government

agencies do their buying?


Stages in the Buying Process: Buyphases

#buywiselynotfrivorously

• Problem recognition• General need description• Product specification• Supplier search• Proposal solicitation• Supplier selection• Order-routine specification• Performance review


Table 7.2 Buygrid Framework

How can companies build strong relationships with business

customers? #relationshipgoals• Create more value for both parties

• Building trust

• availability of alternatives

• importance of supply

• complexity of supply

• supply market dynamism


Stockless purchase plans

Vendor-managedinventory

Continuous replenishment


Establishing Corporate Trust and Credibility

Expertise

LikeabilityTrustworthiness


Factors Affecting Buyer-Supplier Relationships

Availability of alternatives

Supply marketdynamism

Complexity ofsupply

Importance ofsupply

How do institutional buyers and government agencies do their buying?

#palakasan

• Institutional markets (schools, hospitals, prisons, etc.) provide goods and services to people in their care.

• Require a great deal of paperwork from vendors

• Tend to favor open bidding and domestic companies

CHAPTER 8 IDENTIFYING MARKET SEGMENTS

AND TARGETSElizabeth Anne Yturralde-Medina

Chapter Questions• What are the different levels of market

segmentation?• How can a company divide a market into

segments?• How should a company choose the most

attractive target markets?• What are the requirements for effective

segmentation?

HASHTAG AWAY• #whoarepeopleinyourneighborhood• #GenerationXYZ• #wearethemasteroftheuniverse• #collectandcollectthenselect • #whosesideareyouon• #eyesontheprize• #ikawakokayotayonglahat• #babyImworthit• #YourWISHismycommand• #feelingclose

Effective Targeting Requires Marketers:

• Identify and profile distinct groups of buyers who differ in their needs and preferences

• Select one or more market segments to enter• Establish and communicate the distinctive

benefits of the market offering

What is a Market Segment?

• A market segment consists of a group of customers who share a similar set of needs ad wants.

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

BASES FOR SEGMENTING CONSUMER MARKETS

• GEOGRAPHICAL SEGMENTATION #whoarepeopleinyourneighborhoodMarket is divided into different geographical units– Nations, states, regions, countries, cities or

neighborhoods– Company operates in one , two or all with variations– PRIZM Clusters– Geoclustering

GEOGRAPHICAL SEGMENTATION EXAMPLES

• Foreign– Hilton Hotels,Starbucks

• Local– Banana catsup, papaya soap

Demographic Segmentation

Life Stage

Gender

Income

Generation

Social Class

DEMOGRAPHIC SEGMENTATION examples

• Foreign: Crest

• Local: Ponds products

DEMOGRAPHIC SEGMENTATION examples (gender)

DEMOGRAPHIC SEGMENTATION examples (INCOME)

DEMOGRAPHIC SEGMENTATION (Generation) #GenerationXYZ

DEMOGRAPHIC SEGMENTATION(Race & Culture) #wearethemasteroftheuniverse

PSYCHOGRAPHIC SEGMENTATION

• Psychology and demographics to understand consumers

• Consumers are grouped by psychological/personality traits, lifestyle or values

The VALS Segmentation System

Behavioral SegmentationDECISION ROLES Behavioral Variables

Initiator Occasions

Influencer Benefits

Decider User Status

Buyer Buyer-Readiness

User Loyalty Status

Usage Rate

Attitude

BEHAVIORAL SEGMENTATION EXAMPLES

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage

• Aware• Ever tried• Recent trial• Occasional user• Regular user• Most often used

Loyalty Status#whosesideareyouon

Switchers

Shifting loyals

Split loyals

Hard-core

Behavioral Segmentation Breakdown

Bases for Segmenting Business Markets

MARKETING TARGETING

#collectandcollectthenselect

Steps in Segmentation ProcessNeeds-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-MixStrategy

Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

Preference Segments

• Homogeneous preferences exist when consumers want the same things

• Diffused preferences exist when consumers want very different things

• Clustered preferences reveal natural segments from groups with shared preferences

PORTER’S FIVE FORCES

Four levels of Micromarketing

Segments

Local areas Individuals

Niches

EVALUATING AND SELECTING THE MARKET SEGMENTS

#eyesontheprize

Patterns of Target Market Selection

FULL MARKET COVERAGE#ikawakokayotayonglahat

Undifferentiated vs differentiated

Patterns of Target Market Selection

NICHE/ SINGLE SEGMENT CONCENTRATION#babyImworthit

MULTIPLE SEGMENT SPECIALIZATION

• SELECTIVE SPECIALIZATION

INDIVIDUAL MARKETING Customerization

#YourWISHismycommand

• combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice

INDIVIDUAL MARKETING EXAMPLES

• Foreign–Signature custom bike shops,Nike ID, adidas customize it

• Local– PCX Express, personalized items

LOCAL MARKETING/ MICROMARKETING#feelingclose

• Tailor to fit to local customer groups• “GRASSROOTS MARKETING”

– Getting as close and personally relevant

The Long Tail Equation• Chris Anderson explains :

– The lower the cost of distribution, the more you can economically offer without having to predict demand;

– The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes; and

– Aggregate enough minority taste, and you may find a new market.

THANK YOU