L10 Customer Management

1. L10 Customer Management EC10: Innovation & Commercialisation What it takes to build a successful Venture Team Marcus Thompson wmt1@stir.ac.uk

2. Outline • Targeting • Communications • Branding • Performance Management L1: Team Building

3. 1. Targeting EC10 Innovation & Commercialisation

4. Assessing Emerging Opportunities Information Market Characteristics Product Characteristics Buyer Characteristics Processis interactive – each cycle refines the opportunity Analysis Critical relationships Key Success Factors Synthesis Refine Critical relationships New Opportunity Wickham, Strategic Marketing, Pitman, p158, 1998

5. Revenue Marketing is about having different revenue streams. (FBDS is about adding revenue streams!)

6. 1. Advertising Media • Shows – public/buyers • Periodicals – local national & international • Television & Radio – Heartland FM • Leaflets • Posters & Signs • Point of Sale Material – car stickers • Direct Mail – letters & inserts • Electronic media - • PDF & HTM format • E-zines • Web Pages & transaction site

7. Measuring Advertising • The Reach • The number of the target audience who are expected to receive the message. • Frequency • The number of times the audience will be exposed to the message. • Recency • When and how often contact is made. • Impact • Compatibility between the medium and the message. • Continuity • Length of time of the campaign and its timing Source: International Marketing, p 315, Paliwoda, CIM 1993

8. 2. Public Relations • “The deliberate, planned and sustained effort to establish and maintain understanding between an organisation and its publics” • Concerned more with image than the company identity. • Publics include; employees, consumers, suppliers, financial backers, opinion formers, local community and customers. • Activities include press releases, feature articles, photographs broadcast interviews. • Used in sponsorship, audio-visual presentations, exhibitions, conferences, special events, direct marketing, corporate events. • PR success is based on good copy and can only be done by a skilled professional i.e. journalist.

9. 3. Sales Promotions • A range of tactical marketing techniques designed and placed within a strategic framework to add value to a product or service in order to achieve specific sales and marketing objectives. (American Marketing Association,1998) • Sales promotions involves incentives & objectives to encourage consumers or trade customers to purchase a brand sooner, in larger quantities or more frequently. (Spethmann 2001) • Can be viewed as an acceleration tool.(Neslin 1984)

10. 3. Sales Promotions • Point of Sales (POS), Advertising and Displays • Specialty Advertising & Give-aways • Special Offers & Selective Discounting • Competitions • Co-operative advertising • Specials for Trade Shows, Exhibitions & Demos • Directories & Yellow Pages • Internet - Web, Electronic Marketing & Newsgroups • Trade Incentives - Buyer discounts, Source: International Marketing, Paliwoda, p314, CIM 1993

11. Sales Promotions Examples • Premiums – discounting through coupons, free items (BOGOF), Give-aways (pens, calendars etc.) • Incentives – higher priced products through contests, rebates and loyalty bonuses • Product samples – free trial or taster • Promotional Tie-ins – arrangements between producers or between producer and retailer. • Visual Displays – stimulate in-store purchases • Loyalty Reward Schemes

12. Sales Promotions Strategies • Communication • While advertising builds the value proposition eg a product has changed or improved, sales promotions puts the product into the purchasers view so they can judge the advertising claim ie grab attention • Incentive • Giving a buyer the incentive to behave in a certain way, by agreement, which leads to a reward. Often aimed at switching brands or fortifying loyalty against new entrant, • Invitation • Make the consumer consider the product and buy it in a short space of time. Based on urgency

13. Channel of Distribution • The channel determines the amount of control you have over promotions • Channel is the path that a product takes from producer to final user. • Direct when you, the producer, sells to the customer. • Indirect when it involves more than one intermediary e.g. co-operative farm shop. • The producer supplies an intermediary who is responsible for the sales transactions that move the product. (they own the customer) • Classified by whether they have title to goods • Retailers, Agents, Distributors, Producer Organisations

14. Channel Evaluation • Direct Selling • For - highest margin, control over selling proposition to customer, opportunity to cross-sell. • Against – Expensive to capture customers. Difficult to retain. High promotions cost. Securing payment. • Intermediaries • For – Concentrate on core business of producing. No transaction costs. Limited risk of bad debt (sic). No investment in location or infrastructure. • Against – Producer is distant from customer & trends. Producer has no control over seasonal buying patterns. Subject to price sensitive negotiations.

15. Channel Options • Neither is better and every producer should have a mix of channels available to crate a competitive and sustainable business model. This will allow best profit today to be set against the ability to control the growth of the business. • The are two distinct sales channels • Business to Business (b2b) • Business to Consumer (b2c) • There are two value propositions • High value, low volume • High volume, low value

16. 2. Communications

17. Communicating is one of the most important tools in recovering from mistakes. When you tell someone, be it a designer, a customer, or the CEO of the company, "Look, we've got a problem. Here's how we're going to fix it," you diffuse the fear of the unknown and focus on the solution.' • Michael Dell

18. Communications • How to sell more profitably, to the right people by using the best means (channel) to persuade them. • Communications assumes you already know who you want to sell to, how you can do it profitably and why customers should buy from you rather than someone else.

19. The Promotions Challenge for New Technology Businesses “I don’t know who you are. I don’t know where you are. I don’t know what you sell. I don’t know what’s special about what you do. I don’t know how good your reputation is. Remind me - what was it you wanted to sell me?”

20. Effective Communications “The transmission of a chosen message through any form of media to an identifiable target audience.” Source: Paliwood,1993 International Marketing, CIM, p317 Noise Message Receiver Sender Channel Feedback

21. Promotions • Any form of communications that is used to inform, persuade or remind people of a product and its characteristics. • Promotions Mix includes: • Advertising • Public Relations • Personal Selling • Sales Promotions

22. Organisational Responsibility for Marketing • In a manufacturing company - people in the lab and supply partners who make the product may not the same people who sell the product to the customer, or who convince the customer to buy. • But in a service company, the same people who deliver the service, are the same people selling the service • ie. web designers, research technicians,

23. Internal Marketing • “selling” your employees and strategic partners on the purpose of what you are doing • convincing stakeholders to try their best and make them enthusiastic about serving the customer

24. Managing Evidence • the process of using some tangible cues and hints to help the customer understand the benefits of what you are selling • the physical environment in which the service is sold • If you want people to think your technology is a world beater make sure it looks expensive and is presented carefully • Pricing - charging a high price always makes people think they are getting a good deal

25. 3. Branding

26. What is a Brand? A brand is a name, term, sign, symbol, design or combination, which is used to identify the goods or services of one seller and differentiate them from those of the competition. (Dibbs 2001) Its aim is to encourage differentiation from the competition to encourage customer loyalty. This can include: Appealing to different market segments Capturing those consumers who like to switch brands Gaining more exposure in the media Offer internal focus and clarity within a business (embedded shared values.)

27. Brand Loyalty Loyalty “is a strongly motivated and long standing decision to purchase a particular product or service (Dibb et al, 2001, p271). A brand can attract & retain customers by promoting value, image, prestige and lifestyle values. It has six meanings: Attributes Benefits Values Personality Cultural Fit User

28. Three Levels of Awareness Recognition. Aware that a brand exists and views it is an alternative to purchase if the preferred brand is unavailable Preference. Prefers one brand to another. If chosen brand is unavailable then consumer chooses a substitute brand. Insistence. The customer will only ever purchase the one kind of brand and is willing to spend time and effort to acquire that particular brand. (Miller 1998)

29. The Customer is King? Customer Loyalty High Low Satisfied Stayers Happy Wonderers High Seem happy but not always loyal Ideal but danger of complacency Customer Satisfaction Hostages Dealers Low Loyal but tied for location, emotional or psychological reasons Not satisfied and move brands for best deals. To be avoided. Piercy, 2002, p29 Market – Led Strategic Change

30. Satisfaction Verses Loyalty • Satisfaction is an Attitude • How a customer feels about a company, product or service • Loyalty is a behaviour • Do they come back and buy more. • Most firms measure satisfaction (at point of sales e.g., a new car.

31. Loyalty as Value • Committed Loyalist • Place high value and wiling to pay a premium. • Feature Loyalist • Place high value on particular features – may be Satisfied Stayers or Hostages. • Convenience loyalist • Stick with it – Hostages e.g. bank? • Channel Loyalist • Places value on Channel e.g. likes Pepsi but eats at MacDonald's so drinks coke. • Lack of Choice • No choice. e.g., employer buys computer. • Price Loyalist • Wants the best price for the performance (dealers)

32. Why Brands Work • A strong brand commands higher price and higher margins. • A strong brand focuses consumers on specific points of differentiation ranging from unique features to emotional, image-orientated benefits. (Davis 2002) BUT • Brand equity requires continuous development, investment, skillful advertising and excellent customer service. • It must be protected as part of the Intellectual Property of the business. • Independent businesses (can) sell provenance far better than multi-nationals. • Given a choice everyone wants to buy local fresh produce.

33. Benefits of Brand Equity • Reduced marketing costs because of high customer awareness & loyalty. • More leverage when negotiating with suppliers, advertisers and punters. • Charge higher prices than other areas. • Opportunities for brand extensions. • Defense against competition from other areas.

34. Brand Issues • Ability to cope with local nuances • Making it unique • Brand naming • Brand ownership • Brand usage • Faithful reproduction • Consistency Adapted from Mazur & Hogg, The Marketing Challenge,, CIM, p123

35. Brand Audit What is our product – its physical components How do Consumers perceive it? Who are the competitors? Who is the brand, its personality and the message we use to express it? Source: Modified from LANNNON, The Marketing Challenge, CIM p146 Positioning Strategy Attract new customers Reinforce for existing customers Overcome prejudices/ to lapsed customers Execution modified by local & cultural nuances

36. What Next? 1. Where are we now? 5. How we ensure that we arrive? Adapated from Strategeic Marketing Mnagement, Wilson, Gilligan, Pearson, CIM Series p 4 2. Where do we want to be? 4. Which is the best way? 3. How are we going to get there?

37. 4. Performance Management

38. How to Kill Creativity • When leadership becomes dominanceWhen questioning becomes accusationWhen assertiveness becomes aggressionWhen myopia becomes focusWhen opportunities become problemsWhen arrogance becomes confidenceWhen structures become stricturesWhen inclusion becomes exclusionWhen rules become constraints When support becomes ownership When capabilities become impediments When habits become free-thinking When experience becomes intoleranceWhen collaboration becomes fragmentationWhen identity becomes an excuse