1. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Creating Marketing Strategies for Customer- Centric Organizations

2. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumer Analysis The process of understanding consumer trends, global consumer markets, models to predict purchase and consumption patterns, and communication methods to reach target markets most effectively

3. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Strategy A decisive allocation of resources (capital, technology, and people) in a particular direction

4. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer-Centric Organizations A strategic commitment to focus every resource of the firm on serving and delighting profitable customers. It involves producing new or improved products with evolving marketing methods focused on core, but sometimes changing, market targets.

5. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Characteristics of Customer- Centric Organizations Shared Vision and Values Cross-Functional Integration System-Wide Simultaneous Training Customer Based Metrics

6. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Characteristics of Customer- Centric Organizations Shared Vision and Values Cross-Functional Integration System-Wide Simultaneous Training Customer Based Metrics The goal of a customer-centric organization is to provide a consumer with more value than its competitors

7. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Value The difference between what consumers give up (pay with time, money, or other resources) for a product and the benefits they receive

8. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Marketing Strategy Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive products or services

9. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Marketing Strategy Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive products or services The process includes market analysis, market segmentation, brand strategy, and implementation with the consumer at the core

10. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Implementation in Marketplace Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs Market Analysis Consumer Company Environmental Political/Legal Segmentation Demographic Situational Psychographic

11. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis The process of analyzing changing consumer trends, current and potential competitors, company strengths and resources, and the technological, legal, and economic environments

12. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis The process of analyzing changing consumer trends, current and potential competitors, company strengths and resources, and the technological, legal, and economic environments One goal is to minimize the number of failed products introduced to the market by better understanding the wants and needs of the market

13. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Consumer Insight and Product Development Consumer Insight: an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life, brand, and product choices. Combines fact (from research) and intuition to yield an insight that can lead to a new product, existing product innovation, brand extension, or revised communication plan

14. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Consumer Environment Includes demographic trends, personal and group influences, knowledge, attitudes, motivation, purchase and consumption patterns, changing consumer needs, wants, and lifestyles

15. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Consumer Environment Includes demographic trends, personal and group influences, knowledge, attitudes, motivation, purchase and consumption patterns, changing consumer needs, wants, and lifestyles Changes in the consumer environment can lead to new product ideas, product adaptations, new packaging or new services to help consumers meet their changing needs -iPod Accessories

16. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Corporate Strengths and Resources Resources: - Financial - Technological - Personnel / managerial - Production - Development and design - Research - Marketing / advertising

17. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Corporate Strengths and Resources Resources: - Financial - Technological - Personnel / managerial - Production - Development and design - Research - Marketing / advertising -Proctor and Gamble once developed everything internally. Currently 35% of its innovations are based on licensing and strategic acquisitions

18. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Current and Potential Competitors - Who are current competitors and which firms are likely to become competitors? - What are advantages/disadvantages of competitors and competitive products? -What do alternative scenarios show of how competitors react to new products or innovations?

19. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Analysis: Market Environment Physical Conditions Government Stability and Regulations Market Environment Technology State of Economy

20. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Implementation in Marketplace Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs Market Analysis Consumer Company Environmental Political/Legal Segmentation Demographic Situational Psychographic

21. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Process of identifying groups of people who behave in similar ways to each other, but somewhat differently than other groups

22. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Inferring Other Behaviors From Product Usage

23. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Inferring Other Behaviors From Product Usage

24. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Process of identifying groups of people who behave in similar ways to each other, but somewhat differently than other groups Results in market segment: a group of consumers with similar behaviors and needs that differ from those of the entire mass market Goal: minimize variance within groups and maximize variance between groups Opposite of market aggregation

25. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Market aggregation: when organizations choose to market and sell the same product or service to all customers (also known as mass marketing)

26. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Identifying Segments

27. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs

28. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs Key is understanding which customized features customers value the most

29. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Increasing diversity in consumer needs and wants leads to mass customization: customizing goods for individual customers in high volumes and at relatively low costs Key is understanding which customized features customers value the most Ability to reach “segment of one”

30. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Segmentation Segmentation can increase customer satisfaction and profitability - decreases marketing expenses - increases value (and therefore price) to consumers

31. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Criteria for Choosing Segments Measurability: ability to obtain information about the size, nature, and behavior of a market segment Accessibility: degree to which segments can be reached, either through targeted advertising and communication programs or multiple retail channels

32. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Criteria for Choosing Segments Substantiality: size of the market—is it large enough to be profitable? Congruity: how similar members within the segment exhibit behaviors or characteristics that correlate with consumption behavior

33. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Bayesian Analysis Statistical technique based on a theorem that expresses uncertainty in probability terms Allows consumer analysts to make “educated guesses” on how the human mind affects behavior or “why people buy” Analyzes data collected from point-of- sale (POS) scanners to identify patterns of behavior that define market segments

34. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Implementation in Marketplace Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs Market Analysis Consumer Company Environmental Political/Legal Segmentation Demographic Situational Psychographic

35. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Product Product: the total bundle of utilities (or benefits) obtained by consumers in the exchange process

36. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Product Product: the total bundle of utilities (or benefits) obtained by consumers in the exchange process Internal considerations External considerations

37. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Product Internal considerations include: - What are the costs of developing, producing, distributing, and selling the product? External considerations include: - What form of product best serves consumption patterns for the target segment - What packaging will most likely attract consumers and fulfill transportation, usage, and disposal of the product? - How will consumers compare this product to competitive or substitute products?

38. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Place Place: physical distribution and location of sale - Where will consumers expect and want to buy this product? - What are the most effective outlets through which to sell the product and how best to get it there?

39. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Price Price: total bundle of disutilities (costs) given up by consumers in exchange for the product

40. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Price Pricing considerations include: - What is the best pricing policy for the product or for the store? - How will consumers react to Everyday Low Prices or promotional prices? - Is it more important to have the “lowest price” or prices in the range consumers expect to pay? - What effect does price reduction or price ending have on perceived quality of product? - What does pricing policy need to be to maintain a healthy profit margin?

41. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Promotion Promotion: activities involved in selling a product, including advertising, public relations, sales promotions, and personal sales - What message should be sent to consumers? - Which forms of communication will best reach specific segments? - What type of communication should occur at various stages of purchase and consumption - How should different product attributes be positioned through different forms of media?

42. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Brand Brand: A product or product line, store, or service with an identifiable set of benefits, wrapped in a recognizable personality Functional elements Emotional elements Brand Promise

43. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Brand Functional elements - Performance, quality, price, reliability, logistics Does the brand solve a problem as expected and do what it is supposed to do? Emotional elements - I mage, personality, style, evoked feelings Does the brand create an emotional connections between the customer and the product or firm? Brand Promise What can consumer expect in exchange for their money?

44. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Brand Brand: A product or product line, store or service with an identifiable set of benefits, wrapped in a recognizable personality Brand Equity Brand Personality Brand Protection

45. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Market Mix Strategies: Brand Brand Equity Difference in value created by the brand minus the cost of creating the brand Brand Personality Reflection consumers see of themselves or think will develop by using a brand Brand Protection By promising a certain outcome, brands reduce the risk to consumers that the product may not deliver as expected

46. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Transforming Customers into Friends and Fans

47. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Implementation in Marketplace Marketing Mix Product, Brand, Price, Place Promotion, and 7Rs Market Analysis Consumer Company Environmental Political/Legal Segmentation Demographic Situational Psychographic

48. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Strategy Implementation Even the best strategies are worthless if not implemented well in the marketplace

49. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Strategy Implementation Even the best strategies are worthless if not implemented well in the marketplace 7Rs for formulation and implementation

50. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer Loyalty and Customer Relationship Management

51. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. It is less costly and easier to keep a customer than it is to create a new one Customer Loyalty

52. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers Customer Loyalty

53. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal Customer Loyalty

54. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal Consumer feel entitled to try new brands and switching behavior increases Customer Loyalty

55. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. It is less costly and easier to keep a customer than it is to create a new one Loyal customers generate superior margins and recruit additional customers With increased choices, consumers are becoming more fickle and less loyal Consumer feel entitled to try new brands and switching behavior increases To retain current customers, firms must focus on customer expectations of future benefits Customer Loyalty

56. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer Relationship Management Process of managing all the elements of the relationship a firm has with its customers and potential customers with CRM solutions and enterprise systems

57. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer Relationship Management Implementing CRM

58. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer Relationship Management Implementing CRM - Identify all customers and the nature of contacts with them - Identify which types of customers are most profitable - Identify and understand behaviors of the most profitable customers - Manage contact with most profitable customers - Manage firm activities including strategies and tactics to please the most profitable customers

59. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Customer Relationship Management Provides the ability to calculate the Customer Lifetime Value - The value to the company of a customer over the whole time the customer relates to the company

60. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy

61. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Thinking Globally: involves ability to understand markets beyond one’s own country of origin with respect to: Sources of demand Sources of supply Management & marketing methods

62. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Organizations must understand markets on a global basis in terms of people Consumers have a myriad array of foreign-made and globally branded products Cultural, ethnic, and motivation variables also affect consumer decisions

63. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Can marketing be standardized?

64. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Can marketing be standardized? - Can a firm use the same marketing program in all target countries, or must it create a different program for each? - Which are greater—the similarities among or differences between consumers in different countries? - How do advantages of economies of scale and unified brand image compare to advantages of culture-specific messages?

65. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures

66. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures Cultural empathy: the ability to understand the inner logic and coherence of other ways of life and refrain from judging other value systems

67. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Cross-Cultural analysis: the comparison of similarities and differences in behavioral and physical aspects of cultures Cultural empathy: the ability to understand the inner logic and coherence of other ways of life and refrain from judging other value systems Ethnography: describing and understanding consumer behavior by interviewing and observing consumers in real- world situations

68. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Marketing Strategy Intermarket segmentation: the identification of groups of customers who transcend traditional market or geographic boundaries (similar segments around the world) Intermarket segmentation plays a key role in understanding the similarities and differences between consumers and countries that become the foundation of market standardization

69. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures

70. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures When is global advertising most effective? - Message is based on similar lifestyle - Ad appeals to basic human needs and emotions - Product satisfies universal needs and desires

71. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Advertising Effectiveness Global advertising sends the same message to consumers around the world Localized campaigns adapt messages to the norms of the different cultures When is global advertising most effective? Language problems may occur, but back- translation, visual language, and local experts (advice) helps overcome them

72. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Advertising Effectiveness Before choosing a brand name, marketers should consider the following:

73. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Global Advertising Effectiveness Before choosing a brand name, marketers should consider the following: - Does the name of the product have another meaning in one or more of the countries where it might be marketed? - Can the name be pronounced everywhere? - Is the name close to that of a foreign brand, or does it duplicate another product sold in other markets? - If the product is distinctly American, will national pride and prejudice work against the acceptance of the product?