UNIT IIFOCUS ON CUSTOMERS

Marketing Management Process

Organizing Marketing Planning Managing Marketing

Efforts

Assessing Marketing Opportunities

Selection of Target Markets

Developing Marketing Mix

Components of Customer Expectations

• Desired Service Level: Wished-for level of service quality that customer believes can and should be delivered

• Adequate Service Level: Minimum acceptable level of service

• Predicted Service Level: Service level that customer believes firm will actually deliver

• Zone of Tolerance: Range within which customers are willing to accept variations in service delivery

States of Satisfaction and Levels of Consumer Expectations

Ideal -- ExcitedDesired -- PleasedPredicted -- OK -- IrritatedAdequate -- Dissatisfied -- Angry

Model of Consumer Expectations

Ideal Service

Desired Service

Adequate Service

PredictedService

Zoneof

Tolerance

Factors that Influence Customer Expectations of Services

Predicted Service

Explicit & Implicit Service Promises Word-of-Mouth Past ExperienceDesired Service

ZONE OF

TOLERANCE

Adequate Service

Personal Needs

Beliefs about What Is Possible

Perceived Service Alterations

Situational Factors

Enduring service intensifiers•Derived expectations•Personal service philosophies

Personal needs

Transitory service intensifiers•Emergencies•Service problems

Perceived servicealternatives

Self-perceivedservice role

Situational factors•Bad weather•Catastrophe•Random over- demand

Explicit service promises•Advertising•Personal selling•Contracts•Other communications

Implicit service promises•Tangibles•Price

Word-of-mouth•Personal•“Expert” (Consumer Reports, publicity, consultants, surrogates)

Past experience

Predicted service

Expectedservice

Desired service

Zone oftolerance

Adequateservice

Perceived service

Factors Influencing Desired, Adequate& Expected Service

Criteria to Evaluate a Service based on Customers' Service Expectations

Speed Certainty Ease Personal recognition

Where Does the Customer Fit in aService Organization?

People processing (e.g., motel stay): customer is physically involved throughout entire process

Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up

Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it

Information processing (e.g., health insurance): involvement is mental - specify information upfront and later receive documentation of coverage

Consumer Decision Making Process

Need Recognition

• For the decision process to begin, a potential buyer must first recognize a problem or need

• Can be caused by internal or external stimuli

Information Search• Information can be obtained from:

– Personal Sources

• Family, friends, neighbors, and acquaintances

– Commercial Sources

• Advertising, salespeople, dealers, packaging, and displays

– Public Sources

• Restaurant reviews, editorials in the travel section, consumer-rating organizations

Evaluation of Alternatives

• Products are seen as bundles of product attributes

• Customers rank attributes and form purchase intentions

Perceived Risks in Purchasing and Using Services

• Functional – unsatisfactory performance outcomes

• Financial – monetary loss, unexpected extra costs

• Temporal – wasted time, delays lead to problems

• Physical – personal injury, damage to possessions

• Psychological – fears and negative emotions• Social – how others may think and react• Sensory – unwanted impacts to any of five

senses

Purchase Decision

Post Purchase Behavior

• The smaller the gap between customer expectations and perceived performance, the greater the customer’s satisfaction

• Cognitive dissonance is buyer discomfort caused by post purchase conflict

External Factors Influencing Consumer Behavior

• Culture is the most basic determinant of a person’s wants and behavior

• Subcultures are groups of people with shared value systems based on common life experiences and situations

• Social classes are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors

• Reference Groups • Family

Initiator Information Provider Influencer Decision Maker Purchaser User Or Consumer

Service Provision as Drama

“ All the world’s a stage and all the

men and women merely players. They have their exits and their entrances and each man in his time plays many parts”

William Shakespeare As You Like It

The Dramaturgy of Service Delivery

• Service dramas unfold on a “stage”--settings may change as performance unfolds

• Many service dramas are tightly scripted, others improvised

• Front-stage personnel are like members of a cast

• Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways

• Support comes from a backstage production team

• Customers are the audience—depending on type of performance, may be passive or active

Service Roles and Scripts

• Role: A set of behavior patterns learned through experience and communication

• Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes

• Script: A sequence of behavior to be followed by employees and customers during service delivery– Some scripts (e.g. teeth cleaning) are routinized, others

flexible

– Technology change may require a revised script

– Managers should reexamine existing scripts to find ways to improve delivery, increase productivity, enhance experiences

MARKET SEGMENTATION

No Market Segmentation

Segmented by Sex

Segmented by Age

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profilesMarket Targeting

3. Develop measure of segment attractiveness4. Select target segments

Market Positioning

5. Develop positioning for target segments6. Develop a marketing mix for each segment

Step 1. Market SegmentationLevels of Market Segmentation

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached

More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

Mass MarketingSame product to all consumers

(no segmentation, i. e. a commodity)

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Marriott)

Regional/City

National

International

Step 1. Market SegmentationGeographic Segmentation

Step 1. Market SegmentationDemographic Segmentation

• Dividing the market into groups based on variables such as:

– Age

– Gender

– Family size or life cycle

– Income

– Occupation

– Education

– Religion

– Nationality

Step 1. Market SegmentationPsychographic Segmentation

Divides Buyers Into Different Groups Based on:

Step 1. Market SegmentationBehavioral Segmentation

• Dividing the market into groups based on variables such as:– Occasions– Benefits– User status– Usage rate– Loyalty status– Readiness stage– Attitude toward product

Step 1. Market Segmentation Technographic segmentation

Pessimists

Optimists

Career Family Entertainment

Fast forwardsNew age nurturers

Misuse potatoes

Techno strivers

Digital hopefuls Gadget grabbers

Hand shakers Traditionalists Media junkies

Step 1. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

Step 1. Market SegmentationSegments must respond differently to different marketing mix

elements & programs

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve the segments.

Requirements For Effective Segmentation

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Step 2. Market TargetingMarket Coverage Strategies

Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness

• Company objectives and resources

Market Targeting Strategies

Five Patterns of Target Market Selection