Marketing for Design Engineers: Key Concepts Mary Caravella, School of Business 1(c) 2012 Mary Caravella

What is marketing? (c) 2012 Mary Caravella2

What is marketing? Creating, communicating and delivering VALUE to customers, and managing relationships with those customers to benefit the organization and its stakeholders (c) 2012 Mary Caravella3

Customer relationships are built on interactions with mutual value…  Three key types of interactions tracked by marketers:  Transactions (purchases)  Visits (“engagement”)  Votes (“social influence”) (c) 2012 Mary Caravella4 Customers (with problems and goals) Customers (with problems and goals) Marketers (with skills and resources) Marketers (with skills and resources) Interactions Influence/enable other transactions

We develop customer value propositions to facilitate transactions 5(c) 2012 Mary Caravella Transaction Costs Price Customer Value Brand Associations Service Experiences Product Attributes Benefit Claims Cost Claims Customer Value Proposition: The specific bundles we propose to help customers solve a problem or achieve a goal, including the benefits we claim they will receive and the costs we ask them to pay Search Learning Negotiation Disposal

Two key questions we will focus on 1. Will what we design create value for customers? 2. How will customers find us? (c) 2012 Mary Caravella6 Eric Ries (2011) The Lean Startup, Crown Business

“People don’t want ¼” drill bits, they want ¼” holes” (c) 2012 Mary Caravella7

Two drills on Amazon… (c) 2012 Mary Caravella8 Black & Decker SSL20SB 20-Volt MAX Smart Select Lithium Ion Drill/Driver with extra battery DEWALT DCD760KL 18-Volt 1/2-Inch Cordless Compact Lithium-Ion Drill/Driver Kit (includes second battery) $118.05$179.99

Two drills on Amazon… (c) 2012 Mary Caravella9  SmartSelect Clutch; Choose your project icon and drill automatically adjusts power and speed for optimal results  Gear indicator; 2-speeds indicates high or low setting  20-volt MAX Lithium batteries deliver extended run-time  High torque motor delivers 175-Inch-pounds  Ergonomic design for improved comfort and control  Lightweight design (4.0 lbs) minimizes user fatigue  Dual speed range 0-500/ rpm delivers optimal performance  LED worklight provides increased visibility in confined spaces  Compact track saw batteries (DC9181) are compatible with the existing system of DEWALT 18v power tools produced since 1996  Compact size (8.2-inch) allows users to fit into tight spaces; $118.05$179.99

Two different brands for two different targeted markets with different problems to be solved or goals to be achieved (c) 2012 Mary Caravella10

Three DIMENSIONS of customer needs (c) 2012 Mary Caravella11  Functional  Social  Psychological

Why does he choose specific products/services? (c) 2012 Mary Caravella12 Because they help me Do something (Functional) Express myself with others (Social) Experience something enjoyable (Psychological)

Why does he choose specific products/services? (c) 2012 Mary Caravella13 I need… A drill I can use for everything Assurance I am buying a reliable product

Why does he choose specific products/services? (c) 2012 Mary Caravella14 Because they help me Improve my business (Functional) Market my business (Social) Avoid risks (Psychological) (and I’m a person too!)

Why does he choose specific products/services? (c) 2012 Mary Caravella15 I need… Tools I can use all day Rugged Compatible power supplies Tools that show I’m a professional (and make me feel like one) Distinctive styling consistent with me

Your product is a tool to help customers create value for themselves. The more you understand customers and what they value the more likely you will create value (c) 2012 Mary Caravella16

 Functional value: helps solve a problem or achieve a goal  Social value: connects with or distinguishes from others; expresses something about self to others  Psychological value: interesting, enjoyable, anxiety-reducing, satisfying (c) 2012 Mary Caravella17

(c) 2012 Mary Caravella18 The sensors found in smart phones and Nintendo Wii controllers have migrated into Black & Decker’s cordless 4v MAX Gyro, billed as the world’s first motion- activated screwdriver. Tilt it right by a mere quarter of an inch and it screws clockwise to tighten; left, and it turns counterclockwise—all thanks to an internal gyroscope that senses wrist motions, which are measured by a small microprocessor that turns those movements into changes in the drill’s speed and direction

Now that we better understand WHY people choose what they do, we turn to HOW they do it (c) 2012 Mary Caravella19

HOW does he choose? (c) 2012 Mary Caravella20 LIFESEARCHSOLVE DMP (decision making process) How a customers moves through a decision

Life gives rise to problems and goals (c) 2012 Mary Caravella21 What’s going on in my life? What triggers this need? LIFESEARCHSOLVE 1.Creating Customer Value

We search for and evaluate solutions (c) 2012 Mary Caravella22 LIFESEARCHSOLVE What’s going on in my life? What triggers this need? What do I already know about how to address this need? Who should I ask? Where else should I look? What is important to consider?

We choose, and evaluate our choice (c) 2012 Mary Caravella23 LIFESEARCHSOLVE What’s going on in my life? What triggers this need? What do I already know about how to address this need? Who should I ask? Where else should I look? What is important to consider? How satisfied am I with the product/service? How satisfied was I with the purchase process? Do I get the support I need?

Need characteristics affect the DMP… (c) 2012 Mary Caravella24 LIFESEARCHSOLVE Need Importance Drives effort to get started AND increases effort spent searching Need Frequency Decreases effort spent searching 1: Target Segment Description Implications

So they affect your marketing challenge (c) 2012 Mary Caravella25 FREQUENCY LOHI IMPORTANCE HI Getting him started (“I know why… how?”) Switching to you (“Why are you better than your competition?”) LO Getting him started (“Why bother?”) Switching to you (“Why should I change my routine?”)

We’re opening a deli, we’d like Sam to find us (c) 2012 Mary Caravella “I need lunch” 26

What is Sam’s “decision journey” (DMP)? Sam likes to get outside of work during his 30 minute lunch break. He usually walks with a few of his coworkers to one of the nearby fast food places, but lately has been packing lunches– he’d like to eat healthier, but doesn’t want to make his friends change their lunch routine. (c) 2012 Mary Caravella27

Identify key decision criteria (c) 2012 Mary Caravella28  When Sam chooses a place to eat for lunch…  What is non-negotiable? (“must haves”)  Can get in and out in 30 minutes  What other things does he consider? (potential “differentiators”)  Healthy food  Friends can get food they like too

Develop competitive decision matrix (c) 2012 Mary Caravella29 CriteriaMcDonaldsSubwayOur Healthy Deli Differentiators Tasty, familiar food my friends like FriesSubsWrapsNone Healthy foodSmall selection2/3 selectionFull selectionLimited selection* Less than 10 min away YesNoYes Must haves Within 30 minutes8 minutes away15 minutes away 8 minutes away0 minutes away Pricing < $8.00 /meal $5.00/meal$5.00 core menu $6.00 core menu $4.00/meal + pre time Very useful for determining and communicating competitive situation and product development priorities

Decision criteria affect your POSITIONING  How you distinguish yourself from competitors in your customer’s mind (c) 2012 Mary Caravella30  Positioning Statement  For (our target segment), our ( product/brand )  is (ONE important and most differentiating decision criterion)  among all (competing ways of solving targeted problem)  because ( single most important “supporting evidence” )

Some direction.. 1. Will what we design create value for customers?  Work to understand all the dimensions of customer value: functional, social and psychological, that customers evaluate against costs  Understand which product attributes are must haves and which are differentiators  Use brands to signal (and deliver) intangible benefits 2. How will customers find us?  Work to understand the customer decision journey (DMP)  Understand what is most likely to trigger a search, where they are most likely to search and what causes them to stop searching  Use brands to create mental shortcuts related to your positioning (c) 2012 Mary Caravella31

Reach out if I can help  (c) 2012 Mary Caravella32