Session+4+student - THE BIG PICTURE Marketing Objective Now...

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Unformatted text preview: THE BIG PICTURE: Marketing Objective Now With Math! THE BIG PICTURE marketing objective source of volume evaluate business objective place price promotion execute product service position segment target STP entity goal competence retention acquisition Customer Definition • What constitutes a customer? – purchase behavior • purchase frequency • purchase quantity – brand relationship • commitment to brand • knowledge/understanding of brand positioning--- easier to count--- more predictive of behavior Examples of Customer Definitions • Restaurant – Someone who purchases a meal from us at least once a month • Online retailer – Someone who has purchased from us at least once • Automotive – Someone who currently drives our brand • Financial services (banks, credit cards) – Someone who has an account and uses for most of their purchases • Luxury goods – Someone who says they would like to own our brand Brand Loyalty • High Involvement – heart : emotional involvement with product • ego-involvement • badge products – head : rational involvement with product • high commitment • resistance to competing arguments • Low Involvement – hand : habitual relationship with product • low commitment • low interest in product information Acquisition • Crucial to obtain…. – start-ups – normal customer attrition – new market development • Expensive to achieve – awareness - trial - repurchase – existing brand loyalties – brand inertia – uncertain future value Acquisition Activities • Awareness advertising – Ads that just make customers aware of the product • Trial advertising – Ads that convince consumers to trying a new product • Trial promotions – Discount for first-time customers • Viral marketing – Word of mouth between customers • New product introductions – Products designed to appeal to new users Customer Retention • Indicator of long-term viability of a firm – product/service performance – strong customer loyalty • Less expensive to maintain – estimated to be 4-10 times more expensive to acquire than to retain a customer – awareness already achieved – brand loyalty/inertia Why retain customers? Customer Lifetime Value 1 2 3 4 5 6 7 Time Company Profit Acquisition Cost Increased sales Reduced cost Word-of-mouth Price premium Retention Activities • Advertising • Promotion (continuity objective) • Loyalty programs (clubs) • Customer relations • Product improvements/line extensions A Customer-Based Model existing customers new customers prospects acquisition retention costs revenue Relationship of investment to revenues startup exploring new markets potential market leader established competitor primary investment primary revenues retention acquisition acquisition retention Acquisition vs. RetentionAcquisition vs....
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This note was uploaded on 01/18/2011 for the course MARKETING 300 taught by Professor Fiet during the Winter '08 term at University of Michigan.

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Session+4+student - THE BIG PICTURE Marketing Objective Now...

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