Lecture 14 GEB1011 Chapter 11 Customer-Driven Marketin an!

Market "e mentation

Rev. 02/24/11

#on-se mentation Marketin $ Mass Marketin $ %n!i&&erentiate! Marketin $ 'omo eneous Marketin . (ocuses on )hat is common to the nee!s o& a** customers "uccess&u* )hen !eman! e+cee!s supp*, "uccess&u* )hen nee!s are -asic an! uncomp*icate! Lea!s to economies o& sca*e an! *o)est price Customers not tota**, satis&ie! "e mentation Marketin $ .ar et Marketin $ Di&&erentiate! Marketin $ 'etero eneous Marketin . (ocuses on unmet nee!s o& customers Di&&erences must e+ist -et)een mem-ers o& the *ar er market an! these !i&&erences must -e measura-*e #ecessar, )hen !eman! an! supp*, are near*, in -a*ance in or!er to increase sa*es /ncrease! pro!uct va*ue must e+cee! increase! pro!uct price Lea!s to reater customer satis&action 0nce the market is se mente!$ ,ou must -e a-*e to !esi n a marketin mi+ that a!!resses the nee!s o& the ne) se mente! market Bui*!s customer *o,a*t, Each market se ment respon! !i&&erent*, to promotions$ communications$ a!vertisin $ an! other marketin mi+ varia-*es Each se mentation market must -e *ar e enou h to a**o) 1a*ue 2 3rice an! a**o) &or a reasona-*e pro&it "e mente! market nee!s to -e re*ative*, sta-*e not prone to unpre!icta-*e chan es C*assi&ication varia-*e use! to se ment markets Demo raphic varia-*es 4 a e$ en!er$ income$ ethnicit,$ marita* status$ e!ucation$ occupation$ househo*! si5e$ *en th o& resi!ence$ t,pe o& resi!ence$ etc. Geo raphic varia-*es 4 re ion$ state$ metropo*itan area$ count,$ cit,$ 5ip co!e$ census tract$ nei h-orhoo!$ etc. 3s,cho raphic varia-*es 4 attitu!es$ *i&est,*e$ ho--ies$ risk aversion$ persona*it, traits$ *ea!ership traits$ ma a5ines rea!$ te*evision pro rams )atche!$ etc. Behaviora* varia-*es 4 -ran! *o,a*t,$ usa e *eve*s$ -ene&its sou ht$ !istri-ution channe*s use!$ reaction to marketin &actors$ etc.

'istorica* Deve*opment o& Marketin 6 1. 3re /n!ustria* Revo*ution a7 pro!uction !one manua**, in sma** -atch an!/or to or!er -, an in!ivi!ua* artisan -7 markets )ere *oca* markets centere! aroun! a to)n or sma** cit, 2. Ear*, /n!ustria*i5ation -e&ore the invention o& the steam en ine a7 pro!uction !one -, usin simp*e machiner, manua**, po)ere! -, the artisan$ or -7 po)ere! -, air current$ )ater current$ or anima* po)er c7 pro!uction )as sti** !one in sma** shops o& 8ust a &e) artisans !7 markets )ere sti** *oca* markets usua**, centere! aroun! *ar er cities e7 pro!ucts )ere -ecomin more stan!ar!i5e! an! a*rea!, stocke! on store she*ves &7 *ar er cites are -ecomin re iona* centers o& commerce 7 these *ar er markets a**o)e! &or investment in 9capita*: or too*s to achieve the 9economies o& sca*e: to re!uce unit cost an! unit price ;. .he invention o& the steam en ine ushere! in6 a7 the &actor, s,stem 1. pro!uction machines are no) po)ere! -, a centra* po)er s,stem !istri-ute! throu hout a &actor, -, use o& !rive sha&ts$ pu**e,s$ an! -e*ts to in!ivi!ua* machines. <0$ =0$ even 100 o& machines cou*! -e po)ere! -, a sin *e steam en ine 2. .he 9economies o& sca*e: o& such &actories re!uce! costs so much that more o& the avera e peop*e cou*! a&&or! manu&acture! oo!s an! not !epen!ant on makin their o)n. ;. 3ro!ucts -ecame more an! more stan!ar!i5e! to achieve reater an! reater econom, o& sca*e in pro!uction to *o)er costs an! prices$ e+amp*e 'enr, (or!>s Mo!e* 9.: -7 rai*roa! transportation 1. the mo-i*e steam en ine revo*utioni5e! transportation 2. transportation )as no *on er !epen!ant on )ater )a,s ;. over*an! transportation an! the &*e+i-i*it, it o&&ere! -ecame ?uick$ sa&er$ an! *ess e+pensive 4. this a**o)e! oo! manu&acture! in *ar e &actories to -e !e*ivere! to markets hun!re!s o& mi*es a)a, <. markets no) -ecame nationa* markets$ an! eventua**, )ith steam ships -ecame internationa* 4. Mass 3ro!uction an! Mass Marketin )as sti** the norm -ecause market !eman! &ar outstrippe! market supp*,

<. .he Ear*, Maturin o& Markets6 1@20 to 1@41 a7 consumer nee!s &or the -asic &unctiona**, o& pro!ucts are -ecomin satis&ie! -7 consumers -u, ne) pro!ucts on*, )hen pro!ucts have ne) &eatures$ the o*! one sti** )orks c7 consumers et -ore! )ith the same o*! thin an! -u, ne) pro!ucts )hen o&&ere! variet,$ cars )ith variet, o& co*or$ -o!, st,*e$ etc. . !7 pro!uction is sti** contro**e! -, 9economies o& sca*e: there&ore this variet, is pre!etermine! -, pro!uction an! then o&&ere! -, sa*es to the customer e7 "a*esmen are sent out to convince the customer that the variet, o&&ere! is )hat the customer )ants &7 "a*esmen *earn )hat se**s an! )hat !oes not =. "econ! "tep in the Maturin o& Markets6 1@4A to 1@=< a7 sa*es -e ins to take over the *ea!ership position in corporate hierarchies -7 sa*es te**s pro!uction )hat to pro!uce -ase! upon their kno)*e! e o& )hat se**s c7 pro!uction is sti** contro**e! -, 9economies o& sca*e: an! unit cost !7 to se** their pre-pro!uce! pro!ucts companies -e in to a!vertise to convince customers to -u, their pro!ucts e7 a!vertisin so&tens up the customer &or the sa*esman>s c*ose o& the sa*e &7 prevai*in attitu!e is that mone, spent on a!vertisin a poor pro!uct to make it se** is more pro&ita-*e than investin hu e amounts into capita* investment to improve the pro!uct 7 Marketin -ecomes the po)er in corporations A. .hir! "tep in Maturin Markets6 1@=< to 1@A< a7 a!vertisin an! sa*es is -ecomin e+pensive -7 corporations -e in to use promotions to attract customer attention$ in a )a, so&ten up the customer &or a!vertisin c7 9economies o& sca*e: sti** contro*s pro!uction cost -ecause pro!uction is sti** -ase! upon &i+e! sin *e purpose machines &or pro!uction !7 more an! more attention is &ocuse! on marketin to se** )hat is pro!uce! B. .he emer ence o& 9Customer Driven Marketin : 1@A< to 3resent a7 customers revo*t an! !o not -u, ne) pro!uct unti* the o*! one -reaks -7 competitors reco ni5e an opportunit, an! -e in to ive customers more choices c7 Capanese companies a!opt Dr. Demin >s concepts an! improve the ?ua*it, o& their pro!ucts !7 Consumers -e in to !eman! pro!uct -e !esi ne! the )a, the, )ish to use them e7 .o,ota !eve*ops &*e+i-*e manu&acturin a)a, &rom sin *e purpose machines to ce** manu&acturin &7 Marketin research shi&ts &rom !eterminin )hat )i** se** to !eterminin )hat the customer )ants 7 3ro!uction no) manu&actures )hat the customer )ants h7 (*e+i-*e manu&acturin rep*aces 9economies o& sca*e: )ith 9economies o& scope: @. Marketin instea! o& -ein the *e s o& pro!uction to se** pro!ucts is no) -ecomin the e,es an! ears o& the compan, to *earn )hat the customer )ants an! to in&orm pro!uction )hat to pro!uce$ ho)ever$ sa*es is sti** nee!e! -ecause most

kno)*e! ea-*e customers sti** )ant a persona* re*ationship )ith a kno)*e! ea-*e sa*esperson.