UNIT II FOCUS ON CUSTOMERS

Marketing Management Process

Organizing Marketing Planning Managing Marketing Efforts

Assessing Marketing Opportunities

Developing Marketing Mix

Selection of Target Markets

Components of Customer Expectations

Desired Service Level: Wished-for level of service quality that customer believes can and should be delivered Adequate Service Level: Minimum acceptable level of service Predicted Service Level: Service level that customer believes firm will actually deliver Zone of Tolerance: Range within which customers are willing to accept variations in service delivery

States of Satisfaction and Levels of Consumer Expectations

Ideal -- Excited Desired -- Pleased Predicted -- OK -- Irritated Adequate -- Dissatisfied -- Angry

Model of Consumer Expectations

Ideal Service
Desired Service
Zone of Tolerance
Adequate Service

Predicted Service

Factors that Influence Customer Expectations of Services

Personal Needs Desired Service Beliefs about What Is Possible Explicit & Implicit Service Promises Word-of-Mouth Past Experience

ZONE OF TOLERANCE

Perceived Service Alterations Adequate Service Situational Factors Predicted Service

Factors Influencing Desired, Adequate& Expected Service

Enduring service intensifiers Derived expectations Personal service philosophies Personal needs

Explicit service promises Advertising Personal selling Contracts Other communications Implicit service promises Tangibles Price Word-of-mouth Personal Expert (Consumer

Transitory service intensifiers Emergencies Service problems Perceived service alternatives Self-perceived service role

Expected service Desired service Zone of tolerance

Reports, publicity, consultants, surrogates)

Past experience

Adequate service

Predicted service

Situational factors Bad weather Catastrophe Random over- demand

Perceived service

Criteria to Evaluate a Service based on Customers' Service Expectations

Speed Certainty Ease Personal recognition

Where Does the Customer Fit in a Service Organization?

People processing (e.g., motel stay): customer is physically involved throughout entire process Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it Information processing (e.g., health insurance): involvement is mental - specify information upfront and later receive documentation of coverage

Consumer Decision Making Process

Need Recognition
For the decision process to begin, a potential buyer must first recognize a problem or need Can be caused by internal or external stimuli

Information Search
Information can be obtained from: Personal Sources

Family, friends, neighbors, and acquaintances

Commercial Sources

Advertising, salespeople, dealers, packaging, and displays

Public Sources Restaurant reviews, editorials in the travel section, consumer-rating organizations

Evaluation of Alternatives
Products are seen as bundles of product attributes
Customers rank attributes and form purchase intentions

Perceived Risks in Purchasing and Using Services

Functional unsatisfactory performance outcomes Financial monetary loss, unexpected extra costs Temporal wasted time, delays lead to problems Physical personal injury, damage to possessions Psychological fears and negative emotions Social how others may think and react Sensory unwanted impacts to any of five senses

Purchase Decision

Post Purchase Behavior

The smaller the gap between customer expectations and perceived performance, the greater the customers satisfaction Cognitive dissonance is buyer discomfort caused by post purchase conflict

External Factors Influencing Consumer Behavior

Culture is the most basic determinant of a persons wants and behavior Subcultures are groups of people with shared value systems based on common life experiences and situations Social classes are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors

 Reference Groups Family

Initiator Information Provider Influencer Decision Maker Purchaser User Or Consumer

Service Provision as Drama

All the worlds a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts
William Shakespeare As You Like It

The Dramaturgy of Service Delivery

Service dramas unfold on a stage--settings may change as performance unfolds Many service dramas are tightly scripted, others improvised Front-stage personnel are like members of a cast Like actors, employees have roles, may wear special costumes, speak required lines, behave in specific ways Support comes from a backstage production team Customers are the audiencedepending on type of performance, may be passive or active

Service Roles and Scripts

Role: A set of behavior patterns learned through experience and communication Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes Script: A sequence of behavior to be followed by employees and customers during service delivery
Some scripts (e.g. teeth cleaning) are routinized, others flexible Technology change may require a revised script Managers should reexamine existing scripts to find ways to improve delivery, increase productivity, enhance experiences

MARKET SEGMENTATION

No Market Segmentation

Segmented by Sex

Segmented by Age

Steps in Market Segmentation, Targeting, and Positioning

1. Identify bases for segmenting the market 2. Develop segment profiles

Market Segmentation

Market Targeting

3. Develop measure of segment attractiveness 4. Select target segments 5. Develop positioning for target segments 6. Develop a marketing mix for each segment

Market Positioning

Step 1. Market Segmentation Levels of Market Segmentation

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

(no segmentation, i. e. a commodity)

Different products to one or more segments

Same product to all consumers

Mass Marketing

Segment Marketing

(some segmentation, i.e. Marriott)

Step 1. Market Segmentation

Geographic Segmentation
International

National

Regional/City

Step 1. Market Segmentation

Demographic Segmentation
Dividing the market into groups based on variables such as: Age Gender Family size or life cycle Income Occupation Education Religion Nationality

Step 1. Market Segmentation

Psychographic Segmentation
Divides Buyers Into Different Groups Based on:

Step 1. Market Segmentation

Behavioral Segmentation
Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product

Step 1. Market Segmentation

Technographic segmentation

Pessimists Career
Fast forwards Techno strivers

Family New nurturers age

Entertainment Misuse potatoes

Digital hopefuls Gadget grabbers Traditionalists Media junkies

Optimists

Hand shakers

Step 1. Market Segmentation Segments must respond differently to different marketing mix elements & programs Requirements For Effective Segmentation
Size, purchasing power, profiles of segments can be measured.

Measurable

Accessible

Segments can be effectively reached and served.

Segments are large or profitable enough to serve. Effective programs can be designed to attract and serve the segments.

Substantial

Actionable

Step 2. Market Targeting

Market Coverage Strategies
A. Undifferentiated Marketing

Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Company Marketing Mix
B. Differentiated Marketing

Market

Segment 1

Segment 2 Segment 3
C. Concentrated Marketing

Segment 1 Segment 2 Segment 3

Evaluating Market Segments

Segment size and growth Segment structural attractiveness Company objectives and resources

Market Targeting Strategies

Five Patterns of Target Market Selection