marketing
300
discussion section
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announcements?
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agenda
– administrative stuff
– marketing recap
– market share
– customer lifetime value
– group exercise
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exams and makeup
• Exams on Monday, March 1 and Monday,
April 12
• 5:40 – 6:30pm
• If you need a makeup, please respond to my
email no later than Friday, 5:00pm.
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first discussion question
• due next week… if you choose to do it.
• 2-3 pages is expected length
• Use charts, tables, and bullet points as
much as possible.
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Recap
What is marketing?
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what is marketing?
• The process of planning and
executing the development, pricing,
promotion, and distribution of
goods, and services to create
exchanges that satisfy consumer and
organizational goals.
• Short answer: Marketing is a
process of value creation.
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COMPANY
CONSUMER
MARKETING
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last week
• What were we talking about?
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Recap
Last week, we were thinking about
developing a gum…
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Strategy
• What is strategy? What is the goal?
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market share
Definition:
• the percentage of the overall dollar sales of a
product category that a company has control of.
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market share
Wrigley (70%)
SuperMega Candy (30%)
total gum market ($5.2 billion / year)
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• current gum buyers
• potential gum buyers
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growing market share (current)
Wrigley
(70%)
SuperMega Candy (30%)
Wrigley (50%)
total gum market
($5.2 billion / year)
SuperMega Candy (50%)
total gum market
($5.2 billion / year)
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growing the pie (potential)
$900 million
$450 million
total gum market
($5.2 billion / year)
total gum market
($10.4 billion / year)
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SWOT Analysis
• Strengths
• What are we good at?
• Weaknesses
• What are we bad at?
• Opportunities
•What can we do that we’re not doing?
• Threats
• What are some of the dangers we face?
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External Market Environment
4 External market forces
- Economic
- Technological
- Political and legal
- Cultural and social
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Economic Environment
• Economic
- Is the market for our product category growing?
- Do people have money to spend on our product?
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Technological Environment
• Technological
- how have changes in
technology changed demand
and consumer expectations?
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Political and Legal Environment
• Political and Legal
- Are there restrictions on how people can buy or use the
product?
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Cultural and Social Environment
• Cultural and social
- What is the public perception and common beliefs about
our product category?
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Cultural and Social Environment
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Question
• Why would a
company take back
shoes bought 4 years
ago?
• The value of a
customer is often more
than the cost of a pair
of shoes. Why?
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Consider the shopping experience
• If you feel like a store is helping you and not trying to cheat
you, you’re more likely to develop a positive attitude about
the business.
• If you have a positive attitude about a business, you’re
likely to want to keep doing business with them.
• Think of this as a relationship.
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Question
• Why would a company take back shoes
bought 4 years ago?
• How much is it worth to keep a customer?
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Customer Lifetime Value
• Keeping a customer could be worth
thousands of dollars, maybe even
millions!
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Customer Lifetime Value
• In 1977, Debbi
Fields opened
the first Mrs.
Fields Cookies…
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Customer Lifetime Value
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Customer Lifetime Value
• The first company she went to
said…
• So she went with the second
company.
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Customer Lifetime Value
• Moral: companies should do
everything they can to keep every
single customer
•…ummm, no.
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Meet Joe
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Customer Lifetime Value
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Customer Lifetime Value
Dear Joe,
Thanks but no thanks.
Best,
Bank of America
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Naturally Joe was upset.
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Customer Lifetime Value
WHY
WOULD
THEY DO
THIS TO
ME???!
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Customer Lifetime Value
What’s happening on the other
side of the transaction?
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Customer Lifetime Value
corporate jerk
Hmmm. On average,
Joe keeps $2.41 in his
account...
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Customer Lifetime Value
It costs me more than that
just to mail him statements
and to field his phone calls!
corporate jerk
sensible
businessman
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Translation
• Joe has a negative lifetime value for
Bank of America.
• Joe’s going to cost more money to
keep than he’ll ever contribute.
• In addition, he’s probably going to be
better served by some other company.
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Question
• How does all this relate to the 4 P’s?
(Hint: What is the purpose of the 4 P’s?)
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Customer Lifetime Value
• Deciding who is worth trying to reach and
who is worth keeping is tricky but important.
• We’ll learn more about this next week when
we talk about SEGMENTATION
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Group Project
• Hopefully you read over the group project
description. If not, read it ASAP!
• Take a few minutes to form teams of 4-6
people
• Share email addresses, phone numbers, etc.
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For next week
• Write a group policy with your group using the
template on Learn@UW.
• Make sure to address all the major points:
- rules of conduct
- norms of interaction
- what happens if…
- Please take this seriously; it will save you from
group problems
- Bring a hard copy AND email it to me by next
week!
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See You Next Week
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