Customer Orientation

Session:3 Prof: Yasmin

Customers or Consumers?
Are customers and consumers the same? A customer purchases and pays for a product or service A consumer is the ultimate user of the product or service; the consumer may not have paid for the product or service

Consider the following example:

A food manufacturing business makes own-label, Italian ready meals for the major supermarkets. So far as the business is concerned, the customer is the supermarket to whom it supplies meals The consumer is the individual who eats the meal
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In terms of its marketing effort, who should the business above target?
In reality it needs to understand the needs and wants of both the customer and the consumer. It needs to develop a strong understanding of the needs of the supermarkets in terms of their requirements for ready meals (e.g. packaging, recipes, price & delivery). It also needs to understand (perhaps with the help of the supermarkets) the needs and wants of the consumer. How are tastes changing? Are consumers happy with the standard / taste of the product?

Marketing Management in a Customer-orientated Business

The process of marketing management is about attracting and retaining customers by offering them desirable products that satisfy needs and meet wants. Marketing management in a customerorientated business consists of five key tasks summarized in the table on the next slide:
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Marketing Task

Commentary

Identify target markets Management have to identify those customers with whom they want to trade. The choice of target markets will be influenced by the wealth consumers hold and the business' ability to serve them Market research Management have to collect information on the current and potential needs of customers in the markets they have chosen to supply. Areas to research include how customers buy (which marketing channels are used) and what competitors are offering

Product development Businesses must develop products and services that meet needs and wants sufficiently to attract target customers to wish and buy Marketing mix Having identified the target markets and developed relevant products, management must then determine the price, promotion and distribution for the product. The marketing mix is tailored to offer value to customers, to communicate the offer and to make it accessible and convenient The objective in marketing is to first attract customers - and then (most importantly) retain them by building a relationship. In order to do this effectively, they need feedback on customer satisfaction. They also need to feed this back into product design and marketing mix as customer needs and the competitive environment changes
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Market monitoring

Business Components
A company which aims at achieving its objectives, making profits and outperforming its competitors in the long run must satisfy a few of its components first According to Arthur D little the factors that influence business performance are
Stakeholders Processes Resources Organization
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Arthur D Little SPRO model

Set Strategies to satisfy key stakeholders. ..by improving key business processes

Stakeholders

Processes

.and aligning resources and organization.

Resources

Organization
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Customer Satisfaction
Satisfaction is the fulfillment or gratification of need, desire or appetite It is a feeling derived by a customer when he compares the actual performance with the performance that he expects of it. Customer satisfaction is achieved by understanding customer requirements and delivering superior quality goods and services
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Concept of Value
Different customers look for different benefits from the same product Companies should communicate the value that their product will give to the customers If the customers are convinced about the value they be attracted to buy the product A high customer value plays a vital role in generating customer loyalty
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Value Chain
Every firm performs a set of activities That help in designing, producing, marketing, delivering and supporting its product These activities form a process At every stage of the process the firm adds value The chain of activities from raw materials procurement to after sales service is called 11 the value chain

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Providing Value cost balance

Customer expects certain benefits from a product Marketers need to add as many benefits as they can to their products However marketers need to ensure that when adding benefits to the product the cost of the product does not increase exorbitantly The product should strike a balance between the value and the cost 13

Value- Delivery System

A firm establishes a partnerships with the other members of its delivery network in order to improve the performance of the value delivery system and create a competitive advantage over its rival firms

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Attracting and Retaining Customers

Attracting customers:
Developing advertisement Mailing or making personal phone calls Participating in trade shows, fairs or organizing events Next step company identifies the prospect as either hot, warm or cold

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Attracting and Retaining Customers

Cost of loosing a customer: customers can be retained only if the products meet their expectations
Defection rate Define and measure retention rate Identify causes for attrition Estimate the loss of profit from that customer Figure out the cost of retaining the customer LISTEN to the customer
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Attracting and Retaining Customers

Need for Retention:
Acquiring a new customer cost five times more than satisfying an existing customer On an average the company looses 10% of its customers annually A 5% reduction in customer attrition may increase the profit by 25-85% Benefits of retaining customers:
Increased revenue Decrease in cost of selling Advertising Cross selling possibilities

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Relationship Marketing
Refers to understanding and responding to customer needs and preferences to build more meaningful and long term connections with customers Basic marketing Reactive marketing Accountable marketing Proactive marketing Partnership marketing

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Summary
To outsmart competition a company must manage its SPRO in an effective and efficient manner A company must understand customer requirements and provide goods, which impart higher value for their money Value chain As the competition gets fierce the companies must try to attract and retain customers 19 Relationship marketing