This week we take a look at the point of difference in marketing to business compared to marketing to consumers (end-users).
Additional players involved in the decision-making process include approvers and gatekeepers. Approvers can override the deciders and buyers. Gatekeepers can stop suppliers from getting their foot inside the door. Some people take on several roles at the same time. Purchasing Managers can be gatekeepers, influencers and buyers. Users are often the same as initiators because they raise attention to a recognised need. Suppliers should identify all the participants in the buying center and assess their level of influence and evaluation criteria. Knowing the most appropriate and preferred way to communicate to the buyer is also a key to success. There may be hidden buying influences that need to be discovered.
I like the way that Frederick E. Webster Jnr says that ultimately it is an individual who makes the purchasing decision. So we see that there is another agenda, a personal one, that co-exists besides consideration for the overall business strategy and satisfying the end-user's needs. There may be a window open for corruption and opportunism, especially in some cultures. However, people also like doing business with people they like!
B2B relationships become the meat in the sandwich that, if working collaboratively, can satisfy the consumer's need for their mutal benefit.
It would be interesting to analyse the different model approaches offered up by the Marketing faculty and compare them with views from psychologists and philosphers about human nature and building long-term relationships in general. The word 'trust' comes up a lot... and, just like we see mixed opinions about the meaning of 'loyalty', perhaps there are quite a few interpretations of what this means and how important it is to the Marketing Manager.
Monday 25 June 2012
Saturday 16 June 2012
Session 4: Long-term Relationships
I have adapted the text from Chapter 7 (Kotler Keller, 2012) into my own words for Session 4 as follows:
Companies can increase customer perceived value (CPV) by increasing total customer benefit and decreasing total customer cost. An increase in total customer benefit can be achieved by improving functionality, efficiency or the customer's opinion of the company's promise. A decrease in total customer cost can be done two ways, by reducing the buyer's non-monetary costs like time and energy, or by reducing the products money cost, for example saving on running costs and repairs. The value proposition is a promise that doesn't necessarily affect the company's profits.
Satisfaction is linked to loyalty. Therefore marketing encourages the 80-20 rule of ditching unprofitable customers with low Customer Lifetime Value (CLV) and building long-term profitable customers. Focus should be switched to attract and keep loyal customers. This is enhanced by effective customer profitability analysis using the ABC accounting technique to avoid misallocation of marketing effort - putting money where the best returns are. The marketing funnel identifies blockages in building loyalty within the potential target market and facilitates reduction in defection by using strategies such as up-selling, cross-selling, special treatment and subsidizing direct and indirect network advantages from "free" customers. Behavioural segmentation uses the marketing funnel to develop campaigns to convert buyer-readiness stage to the next level. Companies also try to get customers hooked by locking them into rewards programs and software advantages that would be costly to exit. Marketers can learn from the four loyalty statuses (hard-core loyals, split loyals, shifting loyals and switchers) to study strengths and weaknesses.
Customer Relationship Management (CRM) and data mining provides great information about individual needs, trends and segments. However, privacy issues relating to observing online behaviour are prompting government regulators to question the need for legislation in this area.
To identify which customers to attract and retain, companies look at market segments to recognize customer differences. In addition to the usual variables of geographic, demographic, psychographic and behavioural segmentation, business markets also address operating variables, purchasing approaches, situational factors and personal characteristics of the buyer. Roger Best has devised a 7-step approach to needs-based market segmentation. Segments must be measurable, substantial, accessible, differentiable and actionable. Michael Porter's 5 Forces analyses the long-run attractiveness of a market segment.
I also enjoyed the 'cut loose' style review of our lecture with Dr Cullen Habel last week which debated the relevance of the 80-20 rule in business. Arguing its existence is beside the point; companies should build on their success by redirecting their ongoing marketing efforts to the most attractive market segments where the results speak for themselves, while taking care not to miss new opportunities (Question Marks). Guess it's another way of looking at the BCG matrix - getting rid of the dogs. Progressive organisations learn to identify the 'weak link' and take action. I'm not so sure that 'bad' customers should be given to our competitors though as some people would suggest...
In researching the definition of customer loyalty on-line, a good read was found in the 2009 blog trails by Don Peppers and Esteban Kolsky's experiment.
Companies can increase customer perceived value (CPV) by increasing total customer benefit and decreasing total customer cost. An increase in total customer benefit can be achieved by improving functionality, efficiency or the customer's opinion of the company's promise. A decrease in total customer cost can be done two ways, by reducing the buyer's non-monetary costs like time and energy, or by reducing the products money cost, for example saving on running costs and repairs. The value proposition is a promise that doesn't necessarily affect the company's profits.
Satisfaction is linked to loyalty. Therefore marketing encourages the 80-20 rule of ditching unprofitable customers with low Customer Lifetime Value (CLV) and building long-term profitable customers. Focus should be switched to attract and keep loyal customers. This is enhanced by effective customer profitability analysis using the ABC accounting technique to avoid misallocation of marketing effort - putting money where the best returns are. The marketing funnel identifies blockages in building loyalty within the potential target market and facilitates reduction in defection by using strategies such as up-selling, cross-selling, special treatment and subsidizing direct and indirect network advantages from "free" customers. Behavioural segmentation uses the marketing funnel to develop campaigns to convert buyer-readiness stage to the next level. Companies also try to get customers hooked by locking them into rewards programs and software advantages that would be costly to exit. Marketers can learn from the four loyalty statuses (hard-core loyals, split loyals, shifting loyals and switchers) to study strengths and weaknesses.
Customer Relationship Management (CRM) and data mining provides great information about individual needs, trends and segments. However, privacy issues relating to observing online behaviour are prompting government regulators to question the need for legislation in this area.
To identify which customers to attract and retain, companies look at market segments to recognize customer differences. In addition to the usual variables of geographic, demographic, psychographic and behavioural segmentation, business markets also address operating variables, purchasing approaches, situational factors and personal characteristics of the buyer. Roger Best has devised a 7-step approach to needs-based market segmentation. Segments must be measurable, substantial, accessible, differentiable and actionable. Michael Porter's 5 Forces analyses the long-run attractiveness of a market segment.
I also enjoyed the 'cut loose' style review of our lecture with Dr Cullen Habel last week which debated the relevance of the 80-20 rule in business. Arguing its existence is beside the point; companies should build on their success by redirecting their ongoing marketing efforts to the most attractive market segments where the results speak for themselves, while taking care not to miss new opportunities (Question Marks). Guess it's another way of looking at the BCG matrix - getting rid of the dogs. Progressive organisations learn to identify the 'weak link' and take action. I'm not so sure that 'bad' customers should be given to our competitors though as some people would suggest...
In researching the definition of customer loyalty on-line, a good read was found in the 2009 blog trails by Don Peppers and Esteban Kolsky's experiment.
Friday 8 June 2012
Session 3: Market Research targets the young online
My 10 year-old son is an avid follower of online product reviews so he could relate quite a lot to my latest readings about P&G online Market Research. It was a bedtime story with a difference and I was amazed at what he had to say. Maybe my son is developing the mind of a good Marketing Manager?
He thinks that people could make a lot of money by selling products that 'have special parts in it'. In saying that, he explained to me that viewers votes can help improve products to make them more saleable and appealing to customers. He admitted to me that he has voted on many, many toy unboxing reviews. "When new toys come out and you are the first one to put it on the internet, you will get lots of hits. People comment about how good and bad it is and also ask you questions like: 'Is it breakable?' 'How good does it work?'" or the best question in my son's opinion is: "What's it's best feature?" He also said, "Sometimes viewers say something is 'really cool' and 'awesome' because that will encourage customers to buy it. Maybe if you are a YOUTUBE partner then you will get paid for it?" Now where did he get that idea from?
Websites frequently visited by boys include: atamaii.com, Ebay, toywiz.com, amazon.com, youtube.com, hasbro.com, beybladebattles.com and toysrus.com. Sometimes there are links to see new games and toys. Viewers find it interesting to look at what other customers are saying and the reponses can be interactive. My son doesn't always agree with what people say about it. If a new product gets a bad review when it is launched in one country, say USA, then it can damage it's product launch in the next country even before it gets there. Similarly, customers can be so eager to get their hands on it that they are willing to pay extra money on international shipping to be one of the first to have it here. Young children are often visiting websites such as YOUTUBE to watch videos of new releases for toys and movies. For example, my son had seen nearly all the episodes of Ben10 Ultimate Alien, Beyblade Metal Fusion and Bakugan Battle Brawlers well before it came to Australia. We see here that the distance between idea and implementation is shrinking so much so that customers are becoming upset. Waiting too long can be risky as discussed by Elie Ofek and Luc Mathiew in the HBR article called, "Are you ignoring trends that could shake up your business?" Sometimes new products are sold out and superseded with a better model before the original product launch in another country. Technology can be a double edged sword if we can't work with it fast enough in the developed world.
So it is evident that the new generation of customers are using the internet to do their own market research before buying a new product or service. They are scrutinizing feedback from various sources to form calculated opinions and make decisions. With a sample of young online repondents that, according to Robosurveys, "tend to be more truthful when answering computers", the ability for organizations to collect accurate market research for their business is high. In fact, some time ago P&G's Chairman & CEO said, "Today we do the majority of our concept tests in 48 to 72 hours online at the fraction of the cost and with equal or higher reliability. That's the kind of power the Internet can bring." It may be a lot easier to capture the minds of the young but this raises serious moral concerns, especially for me as a mother.
Children are not 'qualified' customers because they don't usually have the ability to pay for the goods and services themselves. Yet children can greatly influence the decision maker who has the buying power. Are children simply being brainwashed? Are the core beliefs and values of the family unit under attack? Governments now recognise the link and are now trying to regulate the messages portrayed by smoking, drinking and fast food advertisements for example. This is probably not so much because it affects families, but because the health system is paying a high price for the unhealthy lifestyle that has been promoted.
In our course textbook, "A framework for marketing management" by Kotler Keller, we read about the sociocultural environment where marketers deliberately attract teens because they believe it will likely keep them as customers for life. Teenagers are highly impressionable. So how can I be sure that only secondary beliefs are going to being affected?
On the other hand, if the target market is middle-aged, they are unlikely to do on-line surveys, answer honestly and may be reactant people. So a good strategy to use for this type of customer is a sort of reverse psychology - double negative - using subliminal messages and implied meanings in communication as suggested by Emily Moyer-Guse and Robin L. Nabi. in HBR's Idea Watch, October 2010.
Different approaches are required for doing market research in various target markets. Not just the usual criteria of demographics, economic, sociocultural, natural, technological and politcal/legal environments are necessary but also understanding how consumers think and respond is a key factor in collecting reliable data.
He thinks that people could make a lot of money by selling products that 'have special parts in it'. In saying that, he explained to me that viewers votes can help improve products to make them more saleable and appealing to customers. He admitted to me that he has voted on many, many toy unboxing reviews. "When new toys come out and you are the first one to put it on the internet, you will get lots of hits. People comment about how good and bad it is and also ask you questions like: 'Is it breakable?' 'How good does it work?'" or the best question in my son's opinion is: "What's it's best feature?" He also said, "Sometimes viewers say something is 'really cool' and 'awesome' because that will encourage customers to buy it. Maybe if you are a YOUTUBE partner then you will get paid for it?" Now where did he get that idea from?
Websites frequently visited by boys include: atamaii.com, Ebay, toywiz.com, amazon.com, youtube.com, hasbro.com, beybladebattles.com and toysrus.com. Sometimes there are links to see new games and toys. Viewers find it interesting to look at what other customers are saying and the reponses can be interactive. My son doesn't always agree with what people say about it. If a new product gets a bad review when it is launched in one country, say USA, then it can damage it's product launch in the next country even before it gets there. Similarly, customers can be so eager to get their hands on it that they are willing to pay extra money on international shipping to be one of the first to have it here. Young children are often visiting websites such as YOUTUBE to watch videos of new releases for toys and movies. For example, my son had seen nearly all the episodes of Ben10 Ultimate Alien, Beyblade Metal Fusion and Bakugan Battle Brawlers well before it came to Australia. We see here that the distance between idea and implementation is shrinking so much so that customers are becoming upset. Waiting too long can be risky as discussed by Elie Ofek and Luc Mathiew in the HBR article called, "Are you ignoring trends that could shake up your business?" Sometimes new products are sold out and superseded with a better model before the original product launch in another country. Technology can be a double edged sword if we can't work with it fast enough in the developed world.
So it is evident that the new generation of customers are using the internet to do their own market research before buying a new product or service. They are scrutinizing feedback from various sources to form calculated opinions and make decisions. With a sample of young online repondents that, according to Robosurveys, "tend to be more truthful when answering computers", the ability for organizations to collect accurate market research for their business is high. In fact, some time ago P&G's Chairman & CEO said, "Today we do the majority of our concept tests in 48 to 72 hours online at the fraction of the cost and with equal or higher reliability. That's the kind of power the Internet can bring." It may be a lot easier to capture the minds of the young but this raises serious moral concerns, especially for me as a mother.
Children are not 'qualified' customers because they don't usually have the ability to pay for the goods and services themselves. Yet children can greatly influence the decision maker who has the buying power. Are children simply being brainwashed? Are the core beliefs and values of the family unit under attack? Governments now recognise the link and are now trying to regulate the messages portrayed by smoking, drinking and fast food advertisements for example. This is probably not so much because it affects families, but because the health system is paying a high price for the unhealthy lifestyle that has been promoted.
In our course textbook, "A framework for marketing management" by Kotler Keller, we read about the sociocultural environment where marketers deliberately attract teens because they believe it will likely keep them as customers for life. Teenagers are highly impressionable. So how can I be sure that only secondary beliefs are going to being affected?
On the other hand, if the target market is middle-aged, they are unlikely to do on-line surveys, answer honestly and may be reactant people. So a good strategy to use for this type of customer is a sort of reverse psychology - double negative - using subliminal messages and implied meanings in communication as suggested by Emily Moyer-Guse and Robin L. Nabi. in HBR's Idea Watch, October 2010.
Different approaches are required for doing market research in various target markets. Not just the usual criteria of demographics, economic, sociocultural, natural, technological and politcal/legal environments are necessary but also understanding how consumers think and respond is a key factor in collecting reliable data.
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