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Marketing channels, total product, customer value, gaps model, customer pyramids, zones of tolerance, service, symbol, customer retention, price elasticity of demand.
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Week 7 Test Notes Marketing Performance of activities that seek to accomplish organisations’ objectives’ by anticipating customer needs and creating satisfying goods or services. Not just selling and advertising. There needs to be research into what a market wants or needs, where they want it, how much they are willing to pay for it and analysing how competitors are attempting to meet such needs. Customers are at the core; not the product. Marketing is not just about a business and customer; marketing is internal as well as external. Therefore a firm must market its total product to its staff before staff can market interactively with customers. Marketing Domains Where marketing takes place Industry communicates total product through marketing. The market provides the industry information via the industries market research. The market obtains goods/services in exchange for money. Consumer markets, B2B markets, non-for profit markets or government markets. The ‘Total Product’ The substance – the ‘core’ product The Service – interactive marketing, delivery, instillation, post purchase issues The symbol – branding, external marketing The price Customer value – how much the total product benefits consumers over competition in relation to cost. If a customer places more weight on the total product than the price, they will buy it. Different values: o Price value – products cheaper than competitors thus influencing buying decision. e.g. Ryanair, Aldi o Performance value – products better quality e.g. Dyson o Emotional value – differentiation, reputation, branding, nostalgia e.g. designer brands, fairy liquid, coca cola
o Relational value – customers choose total product based on the service and relationship with company e.g. The AA Different customers or segments value different things. It is the role of the marketing department to determine what certain customer’s value. The gaps model Misconception Company’s perceptions of expectations -------------------- Customer expected total product Misunderstanding of what the customer expects Inadequate Resources Company’s perceptions of expectations ----------------------Total product designs and standards Production line misunderstanding company’s expectation Inadequate delivery Company’s perception of expectations ------------------------ Total product delivered Managers may understand customer’s expectations and supply adequate resources but fail to carry out internal marketing to staff that perform interactive marketing to customers. Exaggerated promise Total product delivered --------- Promises to customers/ consumers ---------- Expected total product Setting expectations too high, resulting in dissatisfaction. Customer gap Gap between perceived total product and expected total product Customer Retention The more satisfied a customer is, the more likely the customer will be retained. Zone of deflection – customer dissatisfied or neither satisfied or dissatisfied Zone of indifference – Customer satisfied Zone of affection – Customer highly satisfied The ‘expected total product’ – word of mouth or past experience The ‘perceived total product’ – adverts or the symbol Making promises – keeping promises – enabling promises Transactional Marketing – focused on ‘winning’ customers Relationship marketing – focused on ‘keeping’ customers It is cheaper to retain customer than find new ones; why: Reduced operating costs Profit from increased usage Profit from different usage (cross selling) Profit from price premium
Because service is intangible, a challenge for the service provider is to use tangible clues as to the quality of the service via thing like the symbol, staff uniform, place and promotion adverts. Staff plays a key role in service industries therefore internal marketing is important. Persihability – if service is not gained today, it will not be available tomorrow Variability – It is difficult to reproduce same standard and consistency through services Intangible – cannot be patented, cannot be inventoried Heterogeneous – varied levels of quality based on a whole range of factors e.g. if it is busy service is likely to be weaker than at quiet times. However, most market offerings are a mixture of substance and service The ‘Substance’ The individual product