1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control Strategic Marketing

Chapter 5 Capabilities for Learning About Customers and Markets McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

5-3 Capabilities for learning about customers and markets *Market-driven strategy, market sensing and learning processes *Marketing information and knowledge resources *Marketing intelligence and knowledge management *Ethical issues in collecting and using information

5-4 Learning capabilities at P&G *Competitive strength from superior customer knowledge *To deliver a customer experience, less formal research, more one-to-one communication *Consumer Village *Online virtual reality Cave *Watch people clean baths *Understand what it is like to live on $50/month *Social networking sites

5-5 Market Sensing and Learning Processes *Market sensing processes *Learning organization *Learning and competitive advantage *Learning about markets *Barriers to market learning processes

5-6 Market sensing at Tesco International *Retailer entry to U.S. grocery market, not with existing format *Discovering what U.S. consumers want: *Senior managers live with U.S. families *Probe lifestyles of families *Prototype store *Developing a new retail format and targeting the “grocery gap”

5-7 Market sensing processes *Open-minded inquiry processes *Analyzing competitors’ actions *Listening to front-line employees *Searching for latent customer needs *Scanning the peripherary of the market *Encouraging experimentation

5-8 Marketing information and knowledge resources *Scanning processes *Specific marketing research studies *Internal and external marketing information resources *Relationships with external marketing research providers

Client  Would you recommend this supplier? 2. Supplier  Do you have sufficient funds for this project? 3. What parts of the project will be subcontracted, and how do you manage subcontractors? 4. May I see your interviewer’s manual and data entry manual? 5. How do you train and supervise interviewers? Screening A New Research Supplier

What percentage of interviews are validated? 7. May I see a typical questionnaire? 8. Who draws your samples? 9. What percentage of your data entry is verified? 10. Managers - What do you think about this supplier? Source: Seymour Sudman and Edward Blair, Marketing Research, A Problem-Solving Approach, Irwin/McGraw-Hill, 1998, 67. Screening A New Research Supplier

5-11 A Framework for Market Sensing Probability of the Event Occurring Effect of the Event on the Company HighLowMedium *1=Disaster, 2=Very bad, 3=Bad, 4=Neutral, 5=Good, 6=Very good, 7=Ideal Utopia Field of Dreams Things to Watch Danger Future Risks

5-12 Learning About Markets Objective Inquiry Keeping and Gaining Access to Prior Learning Synergistic Information Distribution Mutually Informed Interpretations Source: George S. Day, Journal of Marketing, October 1994.

5-13 Barriers to market learning *Managers reject new insights/information *Rigid organizational structures and inflexible information systems *Politics favour the status quo *Overwhelming pressure of existing business operations *Tendency to “active inertia”

5-14 Best Buy’s customer knowledge strategy *Strategy treats customers as individual, develops solutions for needs and engages employees to serve them *New ideas from listening more closely to customers and employees *Knowledge shared with manufacturers and product developers *Core innovation competency is gathering and synthesizing customer intelligence

5-15 Customers and design at Xerox *“Customer-led innovation” - “dreaming with the customer” *Not just building prototype and getting feedback *Focus groups as first step in commercial printer design *Changing designs in response to customer insights *Investment in understanding what customers think about the “bright ideas”

5-16 Marketing research project *Defining the problem *Understanding the limitations of the research *Quality of the research *Costs *Evaluating and selecting suppliers *Research methods

5-17 Existing marketing information resources * * In-company resources * Open source resources * Research agency resources

5-18 Creating new marketing information *Observation and ethnographic studies *Marriott - rethink hotel experience for “road warriors” *GE - developing plastic fibers position *Intel - use of computers by children in China *Research surveys *Internet-based research

5-19 Problem definition to guide marketing research studies Research Project and Scope Research Objectives Research Questions Planned Outcomes Describe the topic for the study and the background. Set specific goals for the study - why is it being undertaken? Identify the specific pieces of information required and the questions that need to be asked to obtain that information When completed how should the results be presented for management use?

5-20 Impact of the Internet on Marketing Costs and Availability *Online Surveys *Fast *Inexpensive *Limitations in population coverage *Resistance to excessive Web communications *Customer feedback and peer-to-peer Web communications *Monitoring customer Web behavior

5-21 Marketing and management information systems *Marketing information systems *Management information systems *Marketing decision support systems

5-22 Marketing Decision-Support System Components Database Analysis Capabilities Display Models

5-23 Marketing intelligence and knowledge management *Marketing intelligence *Knowledge management *Role of the chief knowledge officer *Leveraging customer knowledge

5-24 Ethical issues in collecting and using information *Invasion of customer privacy *Information and ethics *Information collection *Research subjects *Information sharing

5-25 Neuromarketing *Magnetic resonance imaging (MRI) *Pictures response of brain to stimuli *Probing consumer preferences is controversial *Invasive *Privacy issues *Information sharing *Insurance companies *Employers *Law enforcement