Meeting 3 SFE

ENT 4210 – meeting no. 3: 

ENT 4210 – meeting no. 3 Agenda Introduction: customer and sales analysis (chs. 5-6) Case presentations: adressing key issues, and with reference to themes from chs. 5-6) (app. 15 minutes per group)

What We Need to Know about Current and Potential Customers: 

What We Need to Know about Current and Potential Customers Who buys and uses the product What customers buy and how they use it Where customers buy When customers buy How customers choose Why they prefer a product How they respond to marketing programs Will they buy it (again)?

Who Buys and Uses the Products: 

Who Buys and Uses the Products Initiator -who identifies the need for product Influencer -who has informational or preference input to the decision Decider –who makes the final decision through budget authorization Purchaser –who makes the actual purchase User

Buying Roles and Needs/Benefits Sought: 

Buying Roles and Needs/Benefits Sought

Categories for Describing Consumers: 

Categories for Describing Consumers Demographic Socioeconomic Personality Psychographics and values

Major Segmentation Variables for Business Markets: 

Major Segmentation Variables for Business Markets Demographic Operating variables Purchasing approaches Situational factors Personal characteristics

Major Segmentation Variables for Business Markets: Demographic: 

Major Segmentation Variables for Business Markets: Demographic Industry: Which industries should we focus on? Company size: What size companies should we focus on? Location: What geographic areas should we focus on?

Major Segmentation Variables for Business Markets: Operating Variables: 

Major Segmentation Variables for Business Markets: Operating Variables Technology: What customer technologies should we focus on? User/Nonuser status: Should we focus on heavy, medium, light users or nonusers? Customer capabilities: Should we focus on customers needing many or few services?

Major Segmentation Variables for Business Markets: Purchasing Approaches: 

Major Segmentation Variables for Business Markets: Purchasing Approaches Purchasing-function organizations: Should we focus on companies with highly centralized or decentralized purchasing organizations? Power structure: Should we focus on companies that are engineering dominated, financially dominated, etc.? Nature of existing relationships: Should we focus on companies with which we have strong relationships or simply go after the most desirable companies? General purchase policies: Should we focus on companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding? Purchasing criteria: Should we focus on companies that are seeking quality? Service? Price?

Major Segmentation Variables for Business Markets: Situational Factors: 

Major Segmentation Variables for Business Markets: Situational Factors Urgency: Should we focus on companies that need quick and sudden delivery or service? Specific application: Should we focus on certain applications of our product rather than all applications? Size of order: Should we focus on large or small orders?

Major Segmentation Variables for Business Markets: Personal Characteristics: 

Major Segmentation Variables for Business Markets: Personal Characteristics Buyer-Seller similarity: Should we focus on companies whose people and values are similar to ours? Attitudes toward risk: Should we focus on risk-taking or risk avoiding customers? Loyalty: Should we focus on companies that show high loyalty to their suppliers?

Sources of Customer Value: 

Sources of Customer Value Economic: The economic benefit a customer derives from using a product Functional: Those aspects of a product that provide functional or utilitarian benefits to customers Psychological: The image of the product, including how the product “feels” and whether that feeling matches the image the customer wants to project

Measuring Brand Equity: 

Measuring Brand Equity Awareness: Being aware of a brand is usually a requirement for its purchase and tends to lead to more favorable opinions by reducing the risk associated with a familiar option. Associations: Images related to overall quality as well as specific product attributes and user characteristics affect the reaction to a brand. Attitude: Overall favorability toward a brand is a critical part of brand equity. Attachment: Loyalty to a brand is the strongest type of equity, and most beneficial for sellers. Activity: The strongest fans of a brand become advocates.

Manifestations of Customer Value: 

Manifestations of Customer Value Price. Price is the company’s assessment of the product’s value. Price sensitivity. A product with constant sales when prices increase generally is of greater value than one for which demand slumps. Satisfaction. Survey-based satisfaction measures are standard practice in my business. Complaints and compliments. The number of complaints or compliments the company receives indicates the product’s value. Word-of-mouth. Although often difficult to track, spoken and written comments provide a useful subjective assessment of a product’s value.

Manifestations of Customer Value cont.: 

Manifestations of Customer Value cont. Margin/profit contribution. Generally, higher margins indicates partially monopolistic positions due to greater communicated value. Dollar sales. Total dollar sales provide an aggregate measure of the value of a product as assessed by the market. Competitive activity. Competitive activity such as new-product introductions indicates that the total gap between customer value and company costs is sufficiently large to allow for profits even when more companies divide the market. Repeat purchase rate. High loyalty indicates high brand value.

Assessing the Value of the Product Category: 

Assessing the Value of the Product Category Determine the uses of the product Estimate the importance of the uses List competing products for the uses Determine the relative effectiveness of the product category in each usage situation

Desirable Criteria for Segments: 

Desirable Criteria for Segments Sizeable Identifiable Reachable Respond differently Coherent Stable

Customer Analysis Illustration: PDAs: 

Customer Analysis Illustration: PDAs Who the Customers Are: Primarily upscale mobile professionals Predominately male Analytical and quantitative in nature Well educated Over 21 years of age

PDA Market Segments: 

PDA Market Segments

PDA Market Segments: 

PDA Market Segments

Customer Analysis Illustration: PDAs (cont): 

Customer Analysis Illustration: PDAs (cont) What They Buy: Small size/light weight PC connectivity E-mail communications capability Phone/address book Appointment book/calendar/alarm One-way paging

Important PDA Functions: 

Important PDA Functions

Customer Analysis Illustration: PDAs (cont): 

Customer Analysis Illustration: PDAs (cont) Where They Buy: Buy lower-priced, low feature devices from consumer electronics stores and office supply superstores Higher-end PDAs are purchased from computer stores, through mail order, or via the Internet

Major Uses of Potential Estimates: 

Major Uses of Potential Estimates To make entry / exit decisions To make resource level decisions To make location and other resource allocation decisions To set objectives and evaluate performance As an input to forecasts

Useful Sources for Potential Estimates: 

Useful Sources for Potential Estimates Government Sources Trade Associations Private Companies Financial and Industry Analysts Popular Press The Internet

New or Growing Product Potential: 

New or Growing Product Potential Relative Advantage Is the new product superior in key benefits? To what degree? Compatibility What level of change is required to understand and use a new product? For customers? Intermediaries? The company? Risk How great is the risk involved? What is the probability someone will buy a new product?

Methods of Estimating Market and Sales Potential: 

Methods of Estimating Market and Sales Potential Analysis-Based Estimates Determine the potential buyers or users of the product Determine how many are in each potential group of buyers defined by step 1 Estimate the purchasing or usage rate

How Are Sales Forecasts Used?: 

How Are Sales Forecasts Used? To answer “what if” questions To help set budgets To provide a basis for a monitoring system To aid in production planning By financial analysts to value a company