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5-1 Copyright ©The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

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1 5-1 Copyright ©The McGraw-Hill Companies, Inc. Permission required for reproduction or display

2 5-2 Foundations for Creating Value Part Two McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

3 5-3 Part Two Foundations for Creating Value Chapter 5 Market Opportunities Chapter 6 Marketing Strategy Chapter 7 Weaving Marketing into the Fabric of the Firm McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

4 5-4 Chapter 5 Market Opportunities: Current and Potential Customers McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

5 5-5 Finding Business to Business Opportunities McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. NEW MARKET OPPORTUNITIES ACQUIRE NEW CUSTOMERS DEVELOP A RESEARCH PROGRAM FIND OPPORTUNITIES WITH EXISTING CUSTOMERS DEVELOP MARKETS AMONG CURRENT CUSTOMERS

6 5-6 McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. DEVELOP MARKETS AMONG CURRENT CUSTOMERS FOUR STEP PROCESS 1.RANK YOUR BEST CUSTOMERS 2.MAXIMIZE REVENUES THROUGH COLLABORATION EFFORTS 3.DEVELOP SPECIFIC PRODUCTS FOR EACH CUSTOMER 4.LEARN OF SPECIAL NEEDS FROM YOUR CUSTOMER’S CUSTOMERS

7 5-7 McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. FIND OPPORTUNITIES WITH EXISTING CUSTOMERS 1.ESTABLISH A FORMAL FEEDBACK PROGRAM WITH CUSTOMER CONTACT POINTS (SALES, SUPPORT) 2.DEVELOP DATABASES 3.COMPILE DECILE REPORTS 4.DEVELOP CUSTOMER RESEARCH ASSISTANCE PROGRAM FOUR STEP APPROACH

8 5-8 RESEARCHING CUSTOMERS FIND OUT YOUR CUSTOMER’S NEEDS THROUGH: 1.FOCUS GROUPS – best for generating ideas and gaining customer insights 2.SURVEYS – asking questions by personal interview, mail, telephone, internet 3.JOINT DEVELOPMENT AND TESTING – use to adjust and adapt products after purchase 4.CUSTOMER VISITS – use on-site meetings for problem identification McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

9 5-9 ACQUIRE NEW CUSTOMERS 1.Calculate your current customer’s lifetime value (CLV) to serve as yardstick for planning 2.Find customers in a new segment who “look like” your existing customers 3.Expand into new geographic territory 4.Transfer/modify existing products for other industries McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

10 5-10 17.3 $4,686$5,119$5,627 LTV/100 customers $ 649$ 769$ 919Acq+4 $ 881$1,002$1,144Acq+3 $1,222$1.331$1,455Acq+2 $1,933$2.017$2,109Acq+1 NPV @ 20%NPV @ 10%NPV @ 10 Discounting profits Profit forecasts Acq+1 [60 buyers ($90)]×.8 gr. profit–[100 accts×$20 service/acct] = Acq+2 [36 buyers ($90)+16 buyers ($60)].8 gr. profit- [60 accts×$20+40 accts×$10] = Acq+3 [31.2 buyers($90)+9.6 buyers($60)+4.8 buyers($50)].8 gr. profit- [52 accts×$20+24×$10+$24×$4] = Acq+4 [27.4 buyers ($90)+8.3 buyers ($60)+2.9 buyers ($50)+1.9 buyers ($50)]- ScheduTrax Lifetime Value Analysis 8.3 9.616.0Customers 2.9 4.815.0 11.519.2$ 2$500.103 12.514.424.0$ 4$500.202 18.220.824.040.0$10$600.401 40.5 1.945.6 27.431.236.060.0 100 $20$900.600 4 th Yr. after acquisition 3 rd Yr. after acquisition 2 nd Yr. after acquisition 1 st Yr. after acquisition Acquisition Period Account Service Costs Expected $ Purchases Purchase Probability Yrs. since the Last Purchase [45.6×$20+20.8×$10+14.4×$4+19.2×$2] = Expected customer migrations following acquisition McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. Exhibit 5-4

11 5-11 DEVELOPING OPPORTUNITIES THROUGH MARKETING RESEARCH PURPOSE OF RESEARCH 1 CUTOMER MANAGEMENT 2 ACQUIRE NEW CUTOMERS McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. ACHIEVED BY 1.CUSTOMER RESEARCH – through focus groups and surveys 2.INTERACTING WITH CUSTOMERS – through joint product development and product testing 3.DEVELOPING ON-SITE VISITATION PROGRAMS

12 5-12 FINDING SEGMENTS 1.USE NAICS CODES TO ASSESS INDUSTRIES’ SIZE AND NEEDS 2.EVALUATE COMPANY CHARACTERISTICS SUCH AS SALES, NUMBER OF EMPLOYEES 3.DETERMINE A COMPANY’S BUYING PROCESSES AND HOW THEY BUY 4.MATCH PRODUCT OFFERINGS TO COMPANIES SEEKING WHAT PRODUCT DOES BEST McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

13 5-13 Helpful / informative BRAND D BRAND C BRAND A BRAND B Order process efficiency & accuracy Reasonable price After-sale service Rapid delivery Technical performance McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. Exhibit 5-10 PERCEPTUAL MAP

14 5-14 SEGMENTATION AND OPPORTUNITY ANALYSIS IDENTIFY SEGMENTS THROUGH INDUSTRY CLASSIFICATION (SIC / NAICS) CHOOSE YOUR INDUSTRY TARGETS CHOOSE YOUR SPECIFIC COMPANY TARGETS BY: 1.HOW THEY BUY 2.THE BENEFITS THEY SEEK 3.MEMBERSHIPS IN PROFESSIONAL / TRADE ORGANIZATIONS McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

15 5-15 CRITERIA FOR SUCCESSFUL SEGMENTATION SEGMENT MUST BE IDENTIFIABLE- enumerated and evaluated + SEGMENT MUST BE ACCESSIBLE- can be reached by marketing activity + SEGMENT MUST BE SUBSTANTIAL- enough to justify efforts McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

16 5-16 ESTIMATING SEGMENT SIZE ANALYTICAL TOOLS FOR SEGMENT EVALUATION : 1.USE OF SCENARIOS - Articulate events and futures 2.BUILDUP APPROACH/FACTORING – Estimate product use in its applications 3.STATISTICAL SERIES – Use correlation between demand and economic activities McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.


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