The Philosophy of Customer Orientation by

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Customer value.

customer delivered value is the difference

between total customer value and totalcustomer cost.


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Total customer value.

customer expectation from a given product

or service.


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Total customer cost.

cost which incur in using a product or

service.


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The Indian consumer

Demographic profile.

920 million consumers in 1995.

In 2007 more than one billion consumers..

Geographical distribution.

Diversity in language, religion and

social customs.


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Religious diversity.

Linguistic diversity.

Diversity in dress ,food habits etc. Diversity in literacy level.

Diversity in density of population.


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Social class.

Social class can be used as a base for

market segmentation and is usually

measured by a weighted index of several

demographic variables such as Education ,occupation and income.

The concept of social class implies a

hierarchy in which individuals in the same

class generally have the same degree ofstatus, while members of other classes have

either higher or lower class.


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Social class categories

The most general categorization ofsocial class structure can be put underthree groups.

Upper class. Middle class.

Lower class.

Where as middle class represents thelargest proportion of population and isconsidered as the largest consumption

group.


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The middle class can be further be divided

creating a total of five groups of social class.

such a division can be more useful tomarketers for developing appropriate

products and services targeting specific

social class consumers.

Upper class.

Upper middle class.

Middle, middle class.

Lower middle class. Lower class.


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The upper class.

The upper class of most societies is a varied

group of individuals who include the aristocracy,

the nouveau riches (the new social elite) and the

upper-middle class. Aristocracy consists of traditional old money

families who acquired great wealth and power

E.g. : maharajas and business people.


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The middle class

This class consists of primarily white collarworkers at managerial levels.

E.g. : doctors ,lawyers, medium sizedbusiness. In India middle class is the largest consuming

class.


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The lower class.

They are poor people and generally represent a

sizable population, particularly in the poorer

developing countries.

E.g. : un represent farm workers ,un organizedlabour , unskilled workers.

Studies shown that consumers in different social

class vary in terms of values product preference

and buying habits.


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Societal marketing concept.


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Societal marketing concept

Holds that the organization task is to

determine the needs, wants and interests

of target markets and to deliver the

desired satisfaction more than itscompetitors in a way that preserves or

enhances the consumers and the

society's well being.


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Societal marketing concept is based on

the following premises.

The marketer has to fulfill thecustomer demand and also to

contribute to the enrichment or quality

of life. The marketer shall not offer a

product to consumers if it is not in the

best interests of consumers.The marketer will offer long run

consumer and public welfare.


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Societal marketing concept calls upon

marketers to build upon social and

ethical considerations . Marketers have to balance on

Profitability.

Consumer satisfaction. Public interest .


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E.g. of successful companies using

societal marketing concept.

Ben & jerry

The body shop.


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Societal Marketing Concept

Do what is good for society

Who determines what is good for

society?

Ethics

HonestyTrust

Give back to the community


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cause related marketing

cause related marketing is a form of

corporate philanthropy that links a

companys contributions (usually

monetary) to a predesignated worthycause with the purchasing behavior of

consumers.


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Relationship marketing.


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Aim of building long term relationship

with customers, suppliers.

Marketing network consists of the

company and its supporting

stakeholders (customers, employees,

retailers ) with whom it has builtmutually business relationships.

Rather competition between the

companies but with the networks.

E.g. :Harley Davidson.


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Process involved in the customer

relationship marketing.

Suspects.

prospects.>disqualified prospects.

First time customers.

Repeat customers.

Clients.

Members. Advocates

Partners

In active or

Ex customers


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Win back-strategies.


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Suspects- everyone who mightconceivably buy the product or service.

Prospects- company looks harder at thesuspects to determine who are the mostlikely people who go for the buy.

Disqualified prospects are thosepeople in which the company rejectsbecause of the inability to pay.

Converts many of qualified prospects to

first time customers. And then to convert the first time

customers to repeat customers.


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And the repeat customers when they gofor repeated purchase will turn to

clients. People whom the company treats very

specially.

then the clients to members is the nextstep in membership program offers a

whole set of benefits to join.

Members to advocates

Advocates to partners where thecompany and the customer worktogether actively.


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Some customers will move out because of

dissatisfaction , bankruptcy

Bring back the customers through

customer win back strategies.


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Different levels of investment incustomer relationship building.


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Basic marketing.

Re-active marketing.

Accountable marketing. Pro-active marketing.

partnership marketing.


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Basic marketing: the sales personsimply sell the product.

Re active marketing : the salesperson sells the product andencourages the customer to call if he or

she has questions ,comments orcomplaints.

Accountable marketing : sales personphone the customer after sometime

sale occur to check the product ismeeting expectations.


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Pro-active marketing:

the company sales person contacts thecustomer from time to time with inviting

suggestions and any specific

disappointments.

partnership marketing:

the company works continuously with

the customer to perform better.


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Marketing environment


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marketing environment comprises of

Internal marketing environment (micro).

(objectives and resources)

External marketing environment.

(macro).


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External marketing environment. (macro).

consists of

Socio-cultural environment.

Economic environment.

Legal/political environment.

Competitive environment & technologicalenvironment


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Environmental scanning.


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Environmental scanning is the practice

of keeping track of environmentalchanges that can affect an organization

and its markets.


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These changes can occur in all

dimensions of external environment-

Economic.

Political.

Legal.

Social. Technological & competitive.


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economic

income inflation recessionInterest

rateExchange

rate


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Recession is a period of economic activity

when income ,production and employment

tend to fall.


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Technology

Technology

forNation

Technologies

ForProducts and

services

Technology

Forbusiness


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SOCIAL-CULTURALFACTORS

VALUES TIMESTRAVEDCUSTOMERS

MULTIPLELIFESTYLES


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Market oriented strategicplanning


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Lower level management- operational

planning takes place at the bottom of

organizational structure i.e. day to day

weekly or monthly activities.


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Business unit strategic planning

consists of the following steps.

Business mission

Swot analysis.

Goal formulation.

Strategy formulation.

Program formulation & implementation.

Feed back and control.


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SWOT Analysis

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

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Goal formulation.

After the swot analysis ,firm can proceed to goalformulation.

Every business is having a goal may be a mix ofgoals .

Objectives for profitability , sales growth , marketshare improvement ,risk containment ,innovation

and reputation.


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Strategy formulation

The way to achieve goals is strategy.

Michael porter has condensed them intothree types of marketing strategies

Cost leadership.

Differentiation.

Focus.


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Cost leadership

Business works for the lowest production

and distribution costs so that it can price

lower than its competitors


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program formulation

once the business unit has developed its

strategies it must work out.

strengthening r&d development

,training the sales force and develop ads.


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Implementation.

implementing the strategies in an effectiveway is an important factor.

every company is having their ownstrategies based on these they willimplement the same (employees hiring ,

training , assigning them the right jobs.


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Feed back and control

firm needs to track and monitor new

developments in the internal and external

environment.


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Corporate and divisionstrategic planning.


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All corporate headquarters undertake

four planning activities.

Defining the corporate mission.

Establishing strategic business units.

Assigning each resources to sbu

Planning new business , downsizing

older business.


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Strategic business units.

An sbu has three characteristics.

It is a single business or collection ofrelated business that can be plannedseparately from the rest of thecompany.

It has its own set of competitors.

It has a manager who is responsible forstrategic planning and profit

performance and who controls most ofthe factors affecting profit.


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Planning new business,downsizing older business.


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When there is a gap between the

projected sales and current sales

corporate management have to developor acquire new business to fill it.

How can it fill the strategic planning

gap?


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Three options are available.

Further growth within the current

business (intensive growth strategies) Identify the business that are related tothe current business (integrative )

Identify opportunities that are unrelatedto the companys current business(diversification )


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Growth strategies.

Two major growth strategies are intensive

growth strategies and integrated growth

strategies.


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Intensive growth strategies.

can be explained in terms of Ansoffs

(1957) product /market matrix.

market penetration strategy.

market development strategy.

product development strategy. diversification strategy.

ANSOFFS PRODUCT/ MARKET MATRIX


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ANSOFF S PRODUCT/ MARKET MATRIX.

MARKETPENETRATION

STRATEGY

PRODUCTDEVELOPMENT

STRATEGY

MARKETDEVELOPMENT

STRATEGY

DIVERSIFICATIONSTRATEGY

EXISTING

MARKET

EXISTING

PRODUCTS

NEW

PRODUCTS

NEW

MARKET


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Diversification strategy.

diversification is a strategic tool for

companies when further growth is

restricted or limited in a market.

diversification can be formulated in two

ways .

they are related diversification and

unrelated diversification.


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Diversification

Related

diversification

Unrelated

diversification

ThroughTaking over

Anotherbusiness

ThroughMerger with

AnotherBusiness

ThroughForming

Joint ventures

ThroughFormingStrategicAlliances.


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Product development strategy.

A firm develops new products to launch in

to the existing markets.

EG : MARUTI ZEN ESTILO


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Integrative growth strategy.


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When there is a possibility of having a

strong growth future. A firm may adoptintegrative growth strategy.

Generally there are three types of

integration exists. Backward integration .

Forward integration.

Horizontal integration.


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backward integration enable the

firm to have control over the supply

system.

(suppliers, components ).

forward integration helps to have

control over the distribution system(networks).

horizontal integration either to

seek control over competitors orownership of the competitive firms.


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Boston consulting groups (BCG)market growth /share matrix.

The basic process for creating a


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The basic process for creating a

portfolio plan is to evaluate strategic

business units in the organizations

portfolio.

Two techniques for evaluating the sbus

in a business portfolio management are

Boston's consulting groups growth/share matrix and general electrics

industry attractiveness /business

strength matrix.

Th B t lti


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The Boston consulting group was

founded in the middle of 1960 to

provide consultancy service to strategicmarketing planners in USA.

BCG developed a simple but very

useful method which came to known asBCGs

business portfolio matrix on two

measures :market growth rate (low orhigh) and relative market share (low or

high)


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Stars.

Cash cows.

Dogs.

Question marks.


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Stars are leaders in their markets but

they have to focused on building sales

or market share. More cash is required

to finance their rapid growth. If the

market share falls , a star can be

changed in to a problem child.

.


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Question marks- they are also called

problem children products. The marketis growing at a high rate but the market

share is low.

choice is to increase investment andbuild market share to turn it to a star, or

to withdraw support by either harvesting

(raising prices while lowering marketingexpenditure) or divesting (dropping or

selling )


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cash cows The market is growing at

a slow rate and business is high in the

form of market leader. The companys objective is to hold

sales and market share. If the business

fails to hold on its market share , it willbe converted to dog.


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Dogs the market is growing at a slowrate and the market share of the businessis low.

Company have to check by makinginvestments it can boost the business.

If the business is weak company have totake decision whether to harvest or divest.


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Build here the objective is to


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Build here the objective is to

increase market share . It is appropriate

for question marks whose marketshares must grow if they are to become

stars.

Holdpreserve the market share.

strategies are designed to retain

customers.


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Divest

The objective is to sell or liquidate the

business and used elsewhere.

Appropriate for dogs and question marks

that are acting as a drag on companys

profits.


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Peter Druckers (1973)

Seven Types of BusinessPortfolios


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Failure

Yesterdays bread

winners

Todays bread

winners

Developments

Sleepers

Ego trips

Tomorrows

Bread winners high

Market

ttractivy

low

Business strength

low

high


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Todays bread winners:

Tomorrows bread winners:

Yesterdays breadwinners:

Developments :

Sleepers :

Ego trips : Failures :


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General electrics ( G E)approach

business strength matrix.


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strong average weak

Business strength

high

medium

low

arket

ttrac-tivity

Sbu1

sbu2

sbu3

sbu4

Green zone consists of three cells at the


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Green zone consists of three cells at the

upper left indicating favorable industry/market

attractiveness. So it suggests the company to invest and

grow.

Yellow zone consists of markets and

business are medium in over allattractiveness.

So the company decide to maintain the

shares. Red zone indicates markets/business are low

in attractiveness so decide to harvest or

divest.


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The Philosophy of Customer Orientation by