Connecting the Dots: Principles of
Marketing in a Really Short Time
Purdue University
July 28, 2009
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Slides taken from Principles of Marketing, 10th
Edition, by Philip Kotler and Gary Armstrong
and used with permission.
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Changes in the Service Sector
1.
Shift in the Base of World Economies
2.
Your customer's Expectations Are Shifted by Forces Outside Your Industry
3.
Technology, Technology, Technology!
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Shift in World Economies
•
Agricultural
•
Industrialization
•
Service
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Your Customer’s Expectations Are Shifting!
•
Your customer expects your service to be:
• Immediate
• Perfect
• Free
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Opportunities Spring from Technology
 Creation of new or improved service
 More involvement of customers in operation tasks through self-service
 Creation of centralized customer service departments
 Recording customer information on easily accessible data banks
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What is Marketing?
•
Process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others.
•
More simply: Marketing is the delivery of customer satisfaction at a profit.
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What is Marketing?
"Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders."
American Marketing Association 2004
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What Motivates a Consumer to Take Action?
•
Needs – state of felt deprivation for basic items such as food and clothing
and complex needs such as for belonging. i.e. I need a better job
•
Wants – form that a human need takes as shaped by culture and individual
personality. i.e. I want a college degree
•
Demands – human wants backed by buying power. i.e. I have money to
obtain a college degree from XYZ University
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How Do Consumers Choose Among Products and Services?
•
Customer Value – benefit that the customer gains from owning and using a
product compared to the cost of obtaining the product.
•
Customer Satisfaction – depends on the product’s perceived performance in
delivering value relative to a buyer’s expectations. Linked to Quality and
Total Quality Management (TQM).
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Marketing & Sales Concepts Contrasted
Starting
Point
Factory
Focus
Existing
Products
Means
Ends
Selling
and
Promoting
Profits
through
Volume
The Selling Concept
Market
Customer
Needs
Integrated
Marketing
The Marketing Concept
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Profits
through
Satisfaction
The Marketing Process
Marketing
Intermediaries
DemographicEconomic
Environment
TechnologicalNatural
Environment
Product
Suppliers
Place
Target
Consumers
Price
Publics
Promotion
PoliticalLegal
Environment
Competitors
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SocialCultural
Environment
Seven P’s of Service
Traditional four P’s of Marketing
•
•
Product
• Quality
• Features
• Options
• Style
• Brand
Price
• List Price
• Discounts
• Allowances
•
•
•
•
•
Packaging
Sizes
Services
Warranties
Returns
• Payment Period
• Credit Terms
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Seven P’s of Service
 Place
• Channels
• Coverage
• Location
 Promotion
• Advertising
• Personal Selling
•
•
Inventory
Transport
• Sales Promotion
• Publicity
• Direct Marketing
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3 More P’s



Physical Evidence
– Arrangements of objects
– Materials used
– Shapes/lines
– Lighting/shadows
Process Design
– Policies & Procedures
– Factory/delivery cycle time
Participant
– Service Provider
– Other employees and customers
−
Color
Temperature
Noise
−
Training and rewarding systems
−
Customer being serviced
−
−
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The Marketing Information System
Marketing Managers
Marketing Decisions and Communications
Marketing Information System
Distributing
Information
Assessing Information
Needs
Developing Information
Information
Analysis
Internal
Data
Marketing
Research
Marketing
Intelligence
Marketing Environment
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Characteristics Affecting Consumer Behavior
Culture
Social
Personal
Psychological
Buyer
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The Buyer Decision Process
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
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Steps in Segmentation, Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
Market
Positioning
Market
Targeting
3. Develop Measures
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market
Market Segmentation
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Step 1. Market Segmentation
Bases for Segmenting Consumer Markets
Geographic
Nations, states,
regions or cities
Demographic
Age, gender, family size and
life cycle, or income
Psychographic
Social class, lifestyle, or
personality
Behavioral
Occasions, benefits,
uses, or responses
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Using Multiple Segmentation Bases: Geodemographics
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Step 3. Positioning for Competitive
Advantage: Strategies
Product
Class
Product
Attributes
Away from
Competitors
Benefits
Offered
G
H
C
A
D
Against a
Competitor
E
B
F
Users
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Usage
Occasions
Selecting the Right Competitive Advantages
Important
Criteria
for
Determining
Which
Differences
to
Promote
Profitable
Affordable
Preemptive
Distinctive
Superior
Communicable
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Communicating A Strong Positive Image
•
•
•
•
•
•
Image Formula
(accuracy + clarity + consistency) x continuity
Accuracy
* Honest and reachable – 95% who we are and who we want to be
Clarity
* Is our message understandable and measurable?
Consistency
* Is everyone singing the same tune?
Continuity
* Over time
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What is a Product?
•
•
•
Anything that can be offered to a market for attention, acquisition, use or consumption.
Satisfies a want or a need.
Includes:
• Physical Products
• Services
• Persons
• Places
• Organizations
• Ideas
• Combinations of the above
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Levels of Product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Features
Core
Benefit
or
Service
After-Sale
Service
Design
Warranty
Actual
Product
Core
Product
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Characteristics of Services
Intangibility
Can’t be seen, tasted, felt, heard,
or smelled before purchase.
Inseparability
Can’t be separated from service
providers.
Variability
Perishability
Quality depends on who provides
them and when, where and how.
Can’t be stored for later sale or use.
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Marketing Strategies for Service Firms
•
•
•
Managing Service Differentiation
• Develop offer, delivery and image with competitive advantages.
Managing Service Quality
• Empower employees
• Become “Customer obsessed”
• Develop high service quality standards
• Watch service performance closely
Managing Service Productivity
• Train current or new employees
• Utilize technology
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Value = Benefits – Costs
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Benefits = Solution to a problem
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Costs =







Financial
Time
Hassle
Opportunity
Physical
Psychological
Social
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Distribution



Access
Location
Control the pathways
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The Communication Process
Noise Noise Noise Noise Noise Noise
Sender
Noise Noise Noise Noise
Noise Noise
Noise Noise Noise Noise Noise Noise
Encoding
NoiseFeedback
Noise Noise Noise
Noise Noise
Noise Noise Noise Noise Noise Noise
Message
Noise Noise Noise Noise
Noise Noise
Media
Noise Noise Noise Noise
Noise Noise
NoiseResponse
Noise Noise Noise
Noise
Noise
Decoding
Noise Noise Noise Noise Noise Noise
Noise Noise Noise Noise
Noise
Noise
Receiver
Noise Noise Noise Noise Noise Noise
Noise Noise Noise Noise Noise Noise
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Steps in Developing Effective Communication
Step 1. Identifying the Target Audience
Step 2. Determining the Communication Objectives
Buyer Readiness Stages
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
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Setting the Promotion Mix
Nature of Each Promotion Tool
Advertising
Reaches Many Buyers, Expressive
Impersonal
Personal Selling
Personal Interaction, Builds Relationships
Costly
Sales Promotion
Provides Strong Incentives to Buy
Short-Lived
Public Relations
Believable, Effective, Economical
Underused by Many Companies
Direct Marketing
Nonpublic, Immediate, Customized,
Interactive
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Customer Satisfaction
Customer Satisfaction Results When a Company’s Performance
Has Fulfilled a Buyer’s Expectations.
Performance Exceeds Expectations–
Customer is Delighted
Product’s Actual Performance
Buyer’s Expectations Are Based On:
Customer’s Past Buying Experiences
Opinions of Friends & Associates
Marketer/ Competitor Information & Promises
Performance Below Expectations –
Customer is Dissatisfied
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The Basis of Service Quality
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Other’s Definition
Quality = Zero Defects
– Deming
Conformance to specifications
– Crosby
“Attention to detail and exceeding customer expectations”
– Disney
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The Customer’s Definition
– Berry et al
•
Reliability
• Consistency
• Dependability
• Honor your promises
•
Responsiveness
• Willingness/readiness of employees to provide service
• Timeliness of service
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•
Competence
• Possession required skills and knowledge
• Of contact personnel
• Of operational support personnel
• Research capability of firm
•
Access
• Approachability and ease of contact
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•
Courtesy
• Politeness
• Respect
• Consideration
• Friendliness
•
Communication
• Keeping customers informed in language they understand
• Listening to customers
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•
Credibility
• Trustworthiness
• Believability
• Honesty
•
Security
• Freedom from danger, risk or doubt
• Physical safety
• Financial
• Confidentiality
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•
Understanding the Customer
• The marketing concept
• Specific customer requirements
• Individualized attention
• Recognizing the regular customer
•
Tangibles
• Physical evidence of service
• Facilities
• Personnel
• Other customers
• Tools or equipment
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Breakdown in Service Quality
Service Gaps
GAP
1
Customer
Expectations
Key Factors:
Lack of market segmentation
Insufficient marketing research
Inadequate use of marketing research
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Perceptions of
Customer Expectations
Source of For Service Gaps: Zeithaml, Berry & Parasuraman, 1993.
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Breakdown in Service Quality
Service Gaps
Perceptions of
Customer Expectations
GAP
2
Key Factors:
Lack of customer-defined standards and
process management
Absence of formal process for setting service quality goals
Perception of infeasibility — that customer expectations
cannot be met
Inadequate management commitment to service quality
Service Quality
Standards
Source of For Service Gaps: Zeithaml, Berry & Parasuraman, 1993.
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Breakdown in Service Quality
Service Gaps
Service Quality
Standards
GAP
3
Key Factors:
Role ambiguity among employees
Role conflict among employees
Poor employee - technology - job fit
Inappropriate evaluation / compensation system
lack of perceived control (contact personnel!)
Lack of teamwork
Service Delivery
Source of For Service Gaps: Zeithaml, Berry & Parasuraman, 1993.
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Breakdown in Service Quality
Service Gaps
Service Delivery
GAP
4
Key Factors:
Inadequate management of expectations
Overpromising in advertising
Overpromising in personal selling
Inadequate communication among departments/functions
Differences in policies and procedures across branches or units
External
Communications
to Customers
Source of For Service Gaps: Zeithaml, Berry & Parasuraman, 1993.
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Thank you!
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