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Knowledge-based Marketing

Marzieh Yaghini

Maede Parvizian

Arezou Ghiassaleh

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Contents

Marketing Concept

Segmentation & MR

Positioning

Promotion

Product development & Innovation

Pricing

Knowledge Plan

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Marketing Concept

Achievement of organizational goals is best fulfilled through understanding the needs of customers and acting to deliver satisfaction superior to that available from the competition.

Relationship marketing building long-term customer loyalty. requiring in-depth knowledge of customers’ behavior in

the purchase process.

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Knowledge-based

Marketing

promotion

CRM & Service

Product Development

PricingSegmentation

Customer Behavior

Market Research

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Segmentation

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Segmentation & MR

Possible benefits:(a) by specialization, companies could stimulate greater consumption and thereby market expansion

(b) if there are few competitors within a given segment, promotional costs might be reduced

today’s market researchers have access to powerful low cost computer data bases and easy-to-use software tools such as Statistical Programming Social Sciences (SPSS).

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the knowledge to implement the

functional managerial processes associated with the procurement,

production and distribution of standard

goods

knowledge of market conditions (customer needs, behavior of

competitors)

two sources of knowledge

Knowledge requirements in mass marketing

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One-to-one marketing

By combining data processing capability with a wealth of new data, large companies were placed in a position to develop a very detailed understanding of the needs and behavior patterns of individual customers.

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positioning

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positioning

Four possible generic competitive advantage options available to organizations:

Cost leadership Differentiation Focused cost leadership Focused differentiation

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positioning

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The Honda company in trying to sustain a global position by: choosing the business strategy of ‘Small Is Smart’ using a manufacturing model which could be adopted

in all major factories defining a global standard layout for all main assembly

lines to maximize the benefits of knowledge sharing encouraging a ‘challenging spirit’ within the workforce

Honda Company

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Redeploying Knowledge: k lo

Daido Metals : positioned to outperform competition in the areas of both cost

and quality. relying heavily on acquiring knowledge from interactions with

one customer that can then be redeployed across projects for other customers.

Keyence: positioned as being the lowest cost provider of customized

products working with multiple customers, analyzing each customer’s

needs and then developing a family of product sensors to solve the customer problem

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market positioning and the nature of the knowledge

Large firms tend to opt for reach because this maximizes the number of customers who will receive information that can influence purchase decisions

specialist firms tend to focus on contacting fewer customers but delivering to each potential purchaser a much more extensive volume of information.

E-commerce and appearance of new on-line knowledge: offering information about competitors.

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large firms can compete more effectively because of using the knowledge in:

Classifying customer into distinct groups based upon their purchase behavior

Modeling relationships between possible variables such as age, income, location to determine which of these influence purchase decisions

Clustering data into finite clusters that define specific customer types

Use this knowledge to tailor products and other aspects of the marketing mix

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Network-Based Positioning

sharing of knowledge and resources to achieve greater scale in the execution of marketing processes is one of the most common reasons for smaller firms to enter into a partnership with other organizations.

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Alternative Strategies for Knowledge-Based Business Networking

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CRM & Services

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Sources of knowledge shaping in services

Explicit service Implicit service the customer’s previous exposure to the service

service providers need to monitor all of these contact sources to understand their impact on existing and potential customers.

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Service Gap Theory & SERVQUAL model

The main objective: minimizing the gap between customers’ desires and actual experience.

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CRM

Effective customer relationship management is critically dependent upon having accurate and up-to-date knowledge about customers.

The first step in gaining a deeper knowledge of customer behavior is the construction of a customer database.

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Customer behavior

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A Buyer Behavior Model

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Data mining

selecting, exploring and modeling large amounts of data to attempt to identify new patterns, correlations or irregularities in the data sets using a range of statistical analysis tools.

Techniques which are applied include: cluster analysis (to identify groups of similar behaviors) conjoint analysis (to identify preferences) regression analysis (to explore patterns between

variables)

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knowledge mining: abstraction and validation of data from a diversity of company information sources Technics: clustering, classification, value prediction,

association discovery, sequential pattern discovery and time sequence discovery

data warehousing :storage of knowledge to support knowledge mining activities

Data mining (Cont)

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using knowledge to enhance marketing activities

customer communications access and customize information to fulfill the

knowledge needs of individual customers analyzing customer buying patterns and then send a

personalized promotional message

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Customer Targeting

The advent of data warehousing and data mining is now permitting firms to understand the behaviors of individual customers. This permits the firm to analyze the past and future profitability of individual customers which in turn permits the marketer to implement highly targeted, customized marketing campaigns.

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Relationship Programs

organizations have built systems whereby the employee handling the contact has immediate access to customer information which places them in a position to respond immediately to the customer’s needs.

proactive services: the database is used to identify a potential need which a customer may have. Contact is made to determine whether the customer is interested in the additional service proposition.

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Promotion

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Promotion is the marketing process for providing customers with the knowledge that can influence their purchase behavior.

Internal promotion: distributing information that permits

employees to have a deeper understanding of tasks and job

promotion

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promotional mix strategy

Advertising Collateral promotion Direct marketing Personal selling Public relations and publicity Sales promotions

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Feasible Alternatives for promotional activities

To deliver knowledge to completely new target customer groups.

To find an alternative approach to the delivery of knowledge.

To identify a new method of using knowledge to guide the purchase process.

To find an unconventional way of managing the flow of knowledge provision within the market system.

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The Internet and the communication mix

Customers will be able to use the internet to acquire comparative information.

enhance the volume of knowledge provision by incorporating high-grade graphics with audio and interactive capabilities.

upgrading web site technology

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Online Communities

on-line communities constituted of customers chat rooms Create brand sites

(building stronger brand– consumer relationships)

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Internal Electronic Promotion

internal knowledge sharing offers the following benefits: Improving the quality of technical and non-technical

resolution of customer problems. Ensuring greater consistency in the quality of services

delivered. Increasing the frequency with which frontline staff can

resolve customer problems during the first time that the customer makes contact.

Reducing the costs associated with resolving customer problems.

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Product development and Innovation

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A Knowledge Enhancement Option Matrix

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Product Knowledge Management Matrix

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A Traditional Linear New Product Process Management Mode

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Influence of Knowledge Competence on the New Product Process

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Accelerating the Innovation Management Process

Using modern computer for accelerating time-to-market Using computer aided design (CAD) for acquiring

knowledge for evaluation of prototypes Using computer-aided manufacturing (CAM) systems

to provide knowledge for assessing the feasibility of manufacturing a new product idea

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Critical factors in innovation management

Involving the entire workforce in organizational learning to ensure new ideas, knowledge and skills are spread throughout the operation

seeking new knowledge about technological innovation to incorporate latest scientific thinking into the organization’s core knowledge base

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Knowledge Management and R&D

associated with innovation, the most important area to optimize knowledge management is R&D operations

the key aspect of knowledge management within the R & D process are: creation, capture, retrieval and reuse

The first phase in the research process is to initiate discussion and review of available knowledge

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Pricing

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Pricing

Pricing decisions can dramatically impact sales revenue

marketers need in-depth knowledge about customer perceptions of prevailing prices and the influence of price changes

To avoid on-line price competition firms must use the for distributing additional knowledge to enhance customer perceptions about product performance and quality

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pricing strategies

premium pricing penetration pricing trusted supplier value pricing skimming Average pricing Sale pricing limited loyalty pricing Economy pricing

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Price-Value Option Matrix

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The Influence of Knowledge on Pricing

The degree to which sellers and buyers have acquired knowledge will have a major impact on the nature of the pricing systems which are used in a market.

Buyer–seller matrix

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Advent of the Internet

access knowledge rapidly on prices and features of thousands of products

(www.pricescan.com and www.bottomdollar.com) read about the purchasing experience of others can

acquire knowledge that was once accessible only to travel agents

(www.travelocity.com and www.epinions.com )

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the internet is so supportive of enhancing customer knowledge because of: permitting rapid access to a diverse range of

information sources and thus reducing purchase risk enhancing the efficiency of the purchaser’s knowledge

search

Advent of the Internet (Cont)

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Constructing

Knowledge Plans

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marketing planning

the most important goal in the marketing planning process is not the generation of a formal document

planning is an opportunity to use organizational learning as the basis for reviewing recent events and determining a future direction

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marketing planning (Cont)

the firm should seek to learn more about the knowledge issues currently confronting the

organization the direction in which the organization wishes to go in

relation to the future exploitation of knowledge the selection of the most appropriate actions

associated with how to achieve specified future knowledge management performance goals

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The Knowledge Planning Process (Cont)

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The Resource-Based View of Knowledge

“Competition for the future is competition to create and dominate emerging opportunities to stake out new competitive space”

exploiting new and existing knowledge to understand the probable nature of future market conditions and to ensure the organization has acquired competencies appropriate for achieving ongoing success

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Building a Knowledge Management Resource Planning Matrix

Standard factors influence the degree to which customers value knowledge: Level of actual knowledge associated with the product

or service being delivered to the customer. Range of benefits offered by knowledge content

contained within the product or service Price

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Role of knowledge content in fulfilling service quality expectations

Effectiveness with which knowledge is made available to the customer

Relative knowledge provision capabilities of competitors

Building a Knowledge Management Resource Planning Matrix (Cont)

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Building a Knowledge Management Resource Planning Matrix

Standard factors influencing knowledge management capabilities: Cost of knowledge provision Cost of knowledge acquisition and storage. Impact of knowledge on employee productivity. Cost of internal and external distribution of knowledge. Cost of fixed assets required to support a knowledge

management system.

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Knowledge Management Resource Planning Matrix

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Selecting Core Knowledge Competencies

opportunity for adding value comes from exploiting knowledge across : five core processes of inbound logistics, process

operations, outbound logistics, marketing and customer service

four support processes of management capability, HRM practices, exploitation of technology and procurement.

concentrate even more attention on optimizing those core knowledge management competencies associated with maximizing added value activities.

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A Knowledge Chain Model For Supporting AddedValue Generation

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Issue Coverage in a Knowledge Management Marketing Plan

1.Situation review

2.Strengths/weaknesses/opportunities/threats (SWOT) analysis

3. Summary of key issues

4 Future objectives

5. Strategy to achieve objectives

6. Marketing mix for delivering strategy

7. Action plan

8. Financial forecasts

9. Control systems

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KM Implementation Process

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KM Process Implementation

Recognition of knowledge that can contribute towards improving current

marketing operations

Using knowledge to expand the

marketing operation by entering new

markets or acquiring new

customers

recognizing that knowledge

management can represent an

entirely new value proposition for

customers

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The SABRE Story

Initially developed as an in-house product for the company’s own use

the developers rapidly realized that the system could be made more powerful by embedding data on competitors into the system.

SABRE was spun off as an independent company to offer the technology to the rest of the airline industry.

This new company which created as an electronic platform is now valued at twice the value of the originator, American Airlines.

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Progressing the organization from using knowledge to upgrade current operations to the point where knowledge is the source of new value propositions is not a simple process:

1. Instilling across the entire organization the importance of knowledge exploitation for achieving goals and strategies

2. Seeking out mechanisms that enhance access to tacit knowledge

3. Developing search and retrieval tools to acquire internal and external information

KM Process Implementation

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4. Promoting the importance of bringing creative thinking into the problem resolution process.

5. Ensuring that new tacit and explicit learning is captured in order that it can be reused.

6. Creating a culture which is supportive of the idea of maximizing the degree to which employees seek and share knowledge.

KM Process Implementation

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