Marketing Fundamentals CUSTOMER-DRIVEN

Einstein created his theoriesnot from experiments,but from thought problems.

We’re not Einstein, but this section has more to do withphilosophy than practice….

It purpose is to create a mindset….

Think of two occasions when you felt that youwere a valued customer.

Why did you feel that way?

Think of two occasions when you felt that youhad a negative experience as a customer.

Why did you feel that way?

Fundamentals

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

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

The marketing concept is 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

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 answerthe 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?

1. Is a student a customer?2. In what ways are they a customer?3. In what ways are they not a customer?

Is a student a product?

Is a student more like a patient?

Is the student a partner?

Further:Practically no one tries to sell to everyone……

Because:

Not everyone is a Customer!

Markets are segmented:

Practically no one tries to sell to everyone……

Markets are segmented:80/20 RuleDemographicsPsychographicsNeeds/Wants

Needs are: Wants backed by resources!

IS the customer always RIGHT?

Is the customer always right?

NO!

“The cliché is wrong. The right customeris always right. The wrong customer, is

not right for the selling company.” Jeffrey J. Fox

Okay Customers are:

Profitable LoyalSpreads 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”

1. The service provider doesn’t care about them2. The service provider isn’t listening to them3. The service provider isn’t doing anything to resolve the problem 4. They have been victimized, unfairly treated or taken advantage of5. The service provider gives the customer the run-around6. Promises are not kept


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 onthings.

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

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

PROFITABLE

LOYAL

Low High

Low

HighWin-Back Cust

New Potentials

Customer Misfits

Spinners

Big Spenders

Underachievers

Advocates

Loyalists

“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…”

Student evaluation of teaching taken at randomfrom the internet as an example.

Teacher A (picked at random… named Smith)Student 1

Teacher AStudent 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 AStudent 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?

Types of “difficult” customers

1.Verbal abusers2.Blamers3.Rule Breakers4.Opportunists5.Returnaholics

Berry, L.L, and Seiders, K. (2007) “A Cognitive-emotional Theory of Customer Injustice and Emotional Labor.” Advances in the Psychology of Justice andAffect. (D. De Cremer, Ed.), 199-226.


(bottom line)

Unprofitable:

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

The wrong customer is wrong.

Actually….

All Businesses have Partners:

Partners:

CustomersCompetitorsEmployeesGovernmentsSocietyThe Media

To be successful: All of these must be kept happy!

Number 2The Importance of a Customer

Orientation

Clayson’s Simple Definition:

“Marketing is arranging a buyer for a seller.”

This means:

1. 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…………..

Managers get trapped by an invertedpyramid….

Clayson’s Even Simpler Definition:

“Marketing is arranging free exchanges!”

“Marketing is arranging free exchanges!”

This means…

1. Marketing is the process of creating satisfying exchanges.

2. Wealth is created through free exchanges.

You have a dollar….

I have a newspaper…

You go into a store to buy a shirt.

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 3What are Customers Like?

We like to think thatour customers are likethese people….

We like our customers to be upscaleand aware…..

http://www.uni.edu/resources/prospective-students

http://www.uni.edu/resources/prospective-students

Perception is Reality!!

The right Stimulus!

Getting and holding Attention!

Creating the right Hypothesis!

The Importance of Memory!

Are Customers Rational?

Depends on what is meant by rational…


1.The Theory of Utility (economics)


1.The Theory of Utility (economics)2.The Pressure of the Environment

Pavlov

Is a brain necessary forlearning?

B.F. Skinner

How much of acustomer’s behavior isdetermined by theenvironment?


1.The Theory of Utility (economics)2.The Pressure of the Environment3.The Complication of the Psychic

Sigmund Freud

How much of acustomer’s behavior isdetermined by unconscious factors?


1.The Theory of Utility (economics)2.The Pressure of the Environment3.The Complication of the Psychic


1.The Theory of Utility (economics)2.The Pressure of the Environment3.The Complication of the Psychic4.The Subtlety of Culture

How much of a customer’s behavior isdetermined by cultural factors?


1.The Theory of Utility (economics)2.The Pressure of the Environment3.The Complication of the Psychic4.The Subtlety of Culture5.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.

http://en.wikipedia.org/wiki/Expert

http://en.wikipedia.org/wiki/Yiddish_language

Gatekeepers…

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

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

Information:

Example: Oliver North and Congress 1987

The Iran-Contra Affair

5/06/87

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

Front page story

5/06/87 (Same day)

Nothing

5/08/87 North begins testimony

5/10/87

“North attracts support from sympathetic viewers.”

Front page story

5/10/87 (Same day)

Nothing

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

5/12/87 (Same day)

Nothing

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

5/20/87 (Same day)

Nothing

So….

What is news?

Information control has become a majorproblem/opportunity in a connected society.

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

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 does the productdo for you?

What products do is not alwaysobvious or tangible…..

What a product does for one person,may not be what it does for someone else.

Buyers, Users, Payers are not alwaysthe same Person.

And no….that was not Sarah Palin!

Number 5 How to Find Out What Customers Want/Need

What is Information?

Information is something that changes

What You KNOW.

Information is Something that ChangesWhat You KNOW.

1. It is very valuable… and expensive.2. It has a very pragmatic value.

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.

1. It is very valuable… and expensive.2. It has a certain value.3.The amount of information 1/prob.

Information is Something that Changes What You KNOW.

1. It is very valuable… and expensive.2. It has a certain value.3.The amount of information 1/prob.4. It is property. 5. 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


How to obtain information:1. Do marketing research…

Check out: www:cba.uni.edu/clayson/mbafor a complete outline for research

Conflicts between MR and Management

1. 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:

Do-It-Yourself Marketing 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-face with actual customers.


“Spending time with customers is a hundred times more important than attending staff meetings and reading monthly reports.”

Jeffrey Fox




2. Start liking your customers3. Listen

“It does no good to get close to customers if you aren’t listening.”

Jennings & Haughton




2. Start liking your customers3. Listen

EmpathyCuriosity

Patience


How to obtain information:4. Don’t be an Info-Snob

“Do you do regular in-depth interviews with the sales force?


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.”


“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 7Creating a Customer-Oriented Organization

Product DevelopmentDon’t be product driven!

Products are the objects of a transaction.

It is the transaction, not the product, thatis important.

For example:If it is the transaction, thenalways 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

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:

a.What can be done

b.What developers want done

Product DevelopmentDon’t throw products over the wall!

Destroy the Bureaucracy!!


“Blow it up as fast as you can!”


“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


The best idea always win.

Irrespective of where, or from whom, itcomes.



Reward ideas

Even when they are wrong!



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!!

Marketing Fundamentals CUSTOMER-DRIVEN

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