Blog 2 (Chapters 5, 6, 7)

Chapter 5

Consumer behavior is influenced by various factors such as cultural, social and personal factors. Among these cultural factors exert the broadest and deepest influence.

Consumer behavior refers to the way individuals, groups and organizations select, buy, use and dispose of goods, services or experiences to satisfy their needs and wants. It is of utmost importance for marketers to understand the theory and the reality of consumer behavior.

In this blog I will talk about cultural factors only. Culture is the way of life or in other words the ideas, customs, and social behavior of a particular people or society. The norms, ideas, customs, behavior are embedded in people’s lifestyle. And as such these determine the person’s wand and behavior.

Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups and geographic regions. When subcultures grow larger and affluent enough, companies often design specialized marketing programs to serve them.

Speaking about social classes they are relatively homogenous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests and behavior. Social class members show distinct product and brand preferences in many areas, including clothing, home furnishings, leisure activities, and automobiles. There are also language differences - advertising copy and dialogue must ring true to the targeted social class.

In my view cultural factors seem not only to influence consumer behavior but also other political and socio-economic issues. It is the foundation of what drives one into their success, freedom, and so on and so forth. Culture is passed on even from one generation to another so it dominates and influences how we behave in each circumstance. When branding, it is important to distinguish the cultural factors inherent to each market or to each situation in order to adapt its product and its marketing strategy since these will play a role in the perception, habits, behavior or expectations of consumers.

I will give an example, in the United States; it is common to invite colleagues or friends at home for a drink or dinner. In Japan, on the contrary, inviting someone at home does not usually fit into the local customs. It is better to eat with friends or colleagues in a restaurant.

Chapter 6

The business buying-decision process includes eight stages called buy-phases. In modified re-buy or straight – rebuy situations some stages are compressed or bypassed. For example, the buyer may have a favorite supplier or a ranked list of suppliers and can skip the search and solicitation stages.

The buying process begins when someone in the company recognizes a problem or need that can be solved by obtaining a good or service. The need is triggered by internal or external stimuli. Internally it could be a decision to develop a new product which requires new equipment and material or a decision to search for new vendors, lower prices or better quality. Externally the buyer may get new idea at a trade show, see an ad, visit a web or a call from a sales representative who offers better products or lower prices.

Next the buyer determines the needed item and the specifications and quantity required. Reliability, durability and price are determined. Here business marketers can help by describing how their products meet or even exceed the buyer’s needs.

The buyer tries to identify the most appropriate suppliers through different channels. For example in my organization we have a vendors database and we always know what each supplier can offer. The searching can also be done through directories, asking other companies, or the internet.

The buyer will then ask suppliers to submit their proposals; in my organization usually we will ask for three proposals (Proforma Invoices) from three suppliers in order to compare prices and specifications, delivery time and quality.

Selecting the supplier is based on what the buyer wants to achieve i.e. depends on the criteria set when soliciting for the proposals.

After selecting the supplier, the buyer negotiates the final order, listing the technical specifications; the quantity needed, the expected time of delivery, return policies and so on.

Performance review of the retained supplier is very vital, if they are not giving the services as stipulated in the contract then it would be ideal to drop them. Feedback can be received from end-users. The buyer may contact the end users through their evaluation.

I do strongly think that understanding the buying decision process will enable companies to align their marketing strategies accordingly.

Chapter 7

Segmentation can be done either by looking at the descriptive characteristic: geographic, demographic and psychographic, or, at behavioral trends such as consumer responses to benefits, usage occasions, or brands. Regardless of the type of segmentation used, the key is adjusting the marketing program to recognize customer differences.

Geographic Segmentation

Geographic segmentation divides the market into geographical units such as nations, cities, neighborhoods. The company can operate in one or a few areas or it can operate in all but pay attention to local variations. It can tailor market programs according to the needs and wants of local customer groups in trading areas, neighborhoods even individual stores.

Demographic Segmentation

One common way of segmenting a market is through the use of demographics. Demographics are quantitative characteristics of a group of people. These characteristics might include sex, age, income or geography (where they live). Businesses that segment their market based on demographics are attempting to target specific market segments that are more likely to be interested in what they have to offer. The cosmetics industry, for example, primarily targets women. The hunting industry might be more likely to target men. Luxury car makers target their markets based on income. Marketers are likely to consider multiple demographic characteristics when segmenting their consumer markets.

Psychographic Segmentation

Psychographics are qualitative attributes of a market and refer to the way people think and what they like to do. Psychographics are personal attributes related to personality, values, attitudes, interests, or lifestyles.

Takeaway

The more segments that marketers are able to identify and combine to specifically target groups of individuals most likely to be interested in what they have to offer, the more effective--and cost effective--their marketing efforts can be. Toward this end, businesses attempt to learn as much as they can about their customers--where they live, their age, their income levels, what they purchase, what their hobbies are and what their likes and dislikes are. This information can then be used to target these customers by reaching out to non-customers who share similar traits and characteristics.

Blog 2 (Chapter 3, 4)

Chapter 3

A marketing information system (MkIS) is a management information system (MIS) designed to support marketing decision making. Jobber (2007) defines it as a "system in which marketing data is formally gathered, stored, analyzed and distributed to managers in accordance with their informational needs on a regular basis."

The system draws from data based on internal company records, marketing intelligence and marketing research. Marketing managers rely on internal reports and databases of all sorts in order to spot important opportunities and potential problems.

At the heart of internal records system is the order-to-payment cycle; sale representatives, dealers and customers send orders to the firm then the sales department prepares invoices and transmits copies to various departments and back orders out of stock items. The shipped items generate shipping and billing documents that will be distributed to various departments. Accuracy and rapidity is key because customers will favor firms that quickly deliver their services.

Marketing managers need real time and accurate reports on current  sales, and sales data must be carefully interpreted so as not to draw the wrong conclusions. Such timely and accurate information helps managers make evidence based decisions.

Companies organize information into customer, product and salesperson databases. Data warehouses are then created which contain personal information of customers such as their past transactions, demographics and psychographics (activities, interests, and opinions). The data is mined and it garners fresh insights into neglected customer segments, recent customer trends, customer loyalty and other important and useful information.

I want to conclude that the advances in information technology and innovation in marketing systems are boosting the ability of marketing managers by giving them an opportunity to react much faster to their customer needs and end up with closing the sale successfully and customer satisfaction.  Gone are the days when the marketing manager had to wait for weekly reports from sales manager.

Chapter 4

Companies use information about customers to enact precision marketing designed to build strong, profitable long-term relationships.  Customer relationship management (CRM) is the process of carefully managing detailed information about individual customers and all customer touch points to maximize loyalty.  

A touch point is any occasion on which a customer encounters the brand and product from actual experience to marketing communications to casual observation. For example for hotels the touch points include reservations, check-in, and checkout, frequent –stay programs, room service, business services, exercise facilities and restaurants.

CRM enables companies to provide excellent real time customer service through the effective use of individual account information. Based on what they know about each valued customer, companies can customize market offerings, services, programs, messages, and media. CRM is important because a major driver of company profitability is the aggregate value of company’s customer base. Don Peppers and Martha Rogers outline a framework for one- to- one  marketing that can be adapted to CRM marketing as follows:

Identifying prospects and customers:  building individual relations is key, maintaining, and mining a rich customer database with information from all the channels and customer touch points.

Differentiating customers in terms of: (1) their needs and (2) their value to the company. Spend proportionately more effort on the most valuable customers. Calculate customer lifetime value and estimate net present value of all future profits from purchases, margin levels, and referrals, less customer-specific servicing costs.

Interact with individual customers to improve knowledge about their individual needs and build stronger relations. Facilitate customer interaction through the company contact center and website.

Customer products, services and messages to each customer are customized and personalized.

In my view companies are now moving away from wasteful mass marketing to more precision marketing designed to build strong customer relationships. Today’s economy is supported by information businesses. Information has the advantages of being easy to differentiate, customize, personalize, and dispatch over networks at incredible speed.

Blog 1 (Chapters 1, 2, 3)

Chapter 1

The holistic marketing concept looks broadly on how to develop, design and implement marketing programs, processes and activities and their interdependence. With Holistic marketing everything matters in marketing and that a broad, integrated perspective is often necessary. Relationship marketing, integrated marketing, internal marketing and performance are the components that characterize holistic marketing.

I will talk about one characteristic which is relationship marketing.  Relationship marketing purposes to build strong, mutual, long-term relationships with key constituents in order to earn and retain the business. The key constituents are: customers, employees, marketing partners (channels, suppliers, distributers, dealers, agencies), and members of the financial community (shareholders, investors, and analysts).

In the end the company will profit highly by gaining a marketing network out of its constituents with whom it has built mutually profitable business relationships.

My take on this is that relationships are so important for any unit to exist and thrive. A holistic approach to marketing is more intriguing.

According to (http://en.wikipedia.org/wiki/Relationship_marketing), relationship marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages.

With the growth of the internet and mobile platforms, relationship marketing has continued to evolve and move forward as technology opens more collaborative and social communication channels. This includes tools for managing relationships with customers that go beyond simple demographic and customer service data. Relationship marketing extends to include inbound marketing efforts, (a combination of search optimization and strategic content), PR, social media and application development.

         

Chapter 2

A marketing plan summarizes what the marketer has learned about the market place and indicates how the company plans to attain its marketing objectives. Each product level whether product line or brand has to design a marketing plan for achieving its goals. Marketing conditions are dynamic and they change rapidly so planning and adapting to the changes is crucial and indispensable. Today marketing plans have their own flaws, such as lack of realism, insufficient competitive analysis and a short-run focus.

Firms make marketing plans on a yearly basis, the plan defines how progress toward objectives will be measured so management can assess the results and evaluate the effectiveness and efficiency of the organization’s marketing.

Returns on marketing investments are not easily measured because outcomes such broader brand awareness, enhanced brand image, greater customer loyalty, and improved new product prospects takes months or even years to manifest themselves.

I do think that although a marketing plan has its own flaws, it is an important tool that a firm cannot forego. A plan keeps your marketing efforts aligned with corporate goals and objectives; A good marketing plan will help determine what should be done and what should be left out. This will keep the team focused on work that matters—work that accomplishes the company’s goals and objectives.

A plan puts the firm on the same perspective, companies suffer from a lack of unity. Everyone has different goals and objectives and has an opinion on what the company should do and how it should be done. A good plan will help get the team in agreement on your problems, challenges, goals, objectives, strategies and tactics, ultimately getting everyone aligned and contributing.

A plan helps capture sight of the big picture, a lot of the tactics we engage in these days tend to be very specialized and focus on the small picture. Twitter, for example, is a micro-exchange between you and your audience, 140 characters at a time. It’s a powerful tool, but one that’s very much about the moment. A good plan will the company keep sight of the big picture so it does not get lost in the weeds and miss out on opportunities.

Chapter 3

Marketing research is a process of systematically designing, collecting and reporting of quantitative and qualitative data and findings that are relevant to a specific marketing situation that faces the firm. Marketing Research in big companies has a dedicated department meaning that it is of utmost importance for a company to channel resources in order to study and understand the industry, competitors, and audiences.

Marketing research starts by defining the problem and the objectives. The problem is well defined and specified because it aims at addressing a marketing challenge. The objective responds to the possible questions that align to the problem definition. Developing a research plan is equally important, it is the way forward for gathering the needed information, data sources, research methodology, tools, sampling plan, and contact methods. The process involves collecting the information, analyzing the information, presenting findings and making decisions.

In my view, for any business whether startup stage or expansion phase; for it to be successful it has to regularly undertake market research in order to stay tuned to changing market trends and to retain competitive edge.

Market research is vital for understanding the critical characteristics of the target market to increase sales revenue, profit, ROI and overall business success.