Fall+2008+Section+07-SS+Week+1

Hi Everyone:

Below is my brief overview of key lessons to remember from the first week.

I. What is Marketing?

Marketing is about creating free and fair exchange of value between buyers and sellers. See below:



In this diagram you see the following: There are two ways to deal with this new marketing reality. The first is to focus heavily on something marketers always have emphasized--**maximizing customer satisfaction**. Customer satisfaction (CS) is achieved when the customer's experience is greater than or equal to his/her expectation. If a firm can maintain CS or create incredible CS, it will provide an opportunity for a relationship with the customer. Such a relationship provides stability through innovation and survival. In biology, the interdependent characteristics of organisms in symbiotic relationships are a result of changes from the continuous exchange of information. Similarly, customer satisfaction provides an opportunity for communication between firm and customer, leading to a symbiotic relationship in which benefits evolve for both parties. Stable customer satisfaction ratings bring impact to long term profitability. By maximizing customer satisfaction we are also strategically planning for keeping bottom line costs lower. We can plan for this because our expected outcome is we will reap lower transaction costs by retaining and satisfying customers and satisfied customers are more profitable than unsatisfied customers. When comparing the costs of keeping a satisfied customer to the higher costs of recruiting a new customer its easy to see that a company finds its lowest costs and highest value by engaging in the extra activity, incentives and efforts that may need to take place to ensure that these new and continuing customers are //satisfied//.
 * 1) Value is exchanged in that goods/services are exchanged for money.
 * 2) The communication from the sellers can be valuable and/or can be persuasive.
 * 3) The information from the buyers can also be of value to the sellers.
 * 4) We discussed in class that information from the buyers is becoming increasingly valuable because:
 * Sellers can provide feedback that can help buyers improve their ability to deliver more value.
 * Because many of the new value propositions introduce an element of interaction into the product/service there are many more mechanisms for gaining information from buyers.
 * Buyers have the ability to maximize word of mouth. This can either greatly enhance perceptions of the seller's value proposition or
 * Greatly harm the seller's value proposition.
 * The key is to have systems in place that tell the Firm of dissatisfied customers PRIOR to the customer bad mouthing the firm
 * It's all about customer satisfaction
 * Being proactive in preventing customers from damaging a firm's reputation is important, but just as important, plans need to be develop to react to dissatified customers. These plans need to be developed during a time when the firm is not under the stress of response and damage control

Consistent delivery of customer satisfaction will result in strong relationships with the customer. These strong relationships will assist the company when negative word of mouth efforts by unsatisfied customers come into the consciousness of satisfied customers. Consistent delivery of customer satisfaction also maximizes the impact of information flow to the seller.

To insure that a firm can deliver on customer service it must message its value proposition in terms of its core competencies. The organization that can remain focused on central values and its core business will have an easier time delivering on customer expectations.

The second way is to more actively manage (not control) the interactions between the firm and customer and among the firm's customers. As Elliot noted, you want systems in place that let you know customers are dissatisfied before they tell everyone else. In the "old days," this meant providing customers with telephone hotlines, where customer service reps were on duty to help; then came the e-mail help and online "chats" with customer helpers. Now, of course, customers don't necessarily look first to the company for help. They go online to locate or form "communities of interest" to find solutions or share comments about companies and their products. It's more critical than ever that companies be aware of these "communities" and even jump into the discussion when necessary to "set the record straight" or offer solutions. That is why we will introduce the 5th P (participation) into our discussion this term and that is why I am asking you to participate in the WIKI to get a better understanding of how these new social networks operate. Companies can even link those online communities with the firm's own web site. This allows the firm to have a modicum amount of control over the firm's resources and allows the firm a portal to monitor a buyer's temperment.

II. This course will talk about Marketing from both a strategic and an operational level (see the Concept.gif file for a full description of topics that will be covered in this course.) The first part of the class will be about strategic marketing planning The second part of the class will focus largely on operational marketing.
 * 1) What is a strategically defensible position in the market place.
 * 2) How to choose the appropriate opportunities. (segmenting the market and identifying target segments)
 * 3) How to value customer segments
 * 4) How to create value propositions consistent with the targeted segmented.
 * 5) How to defend your position against compeititive threats to retain customers.
 * 6) This will be accomplished through interactive lectures and case discussions.
 * 1) How to integrate the 4P's
 * 2) How to change when the original plan isn't working.
 * 3) This will accomplished through participation in the Markstrat simulation.

III. Case Discussion A significant amount of time was devoted to the discussion of a “Position Statement” and "Value Proposition" in relation to the case studies. It is important to discover whether the company in question has a clear understanding of its position in the market place. What market or market segment(s) does it serve? From a customer perspective, what benefits does it provide? From an internal capabilities perspective, what does it do a better job of providing for the market? Why can it do a better job of providing for that market? Does the company even have any business trying to serve that market? If we cannot discern the answers to these questions from the case, we need to read it again more carefully.
 * 1) The Xerox case was used primarily as a vehicle to understand how to conduct case analysis in this class.
 * 2) Some things to remember:
 * Read and reread the case to identify data that might be pertinent to your final discussion.
 * Facts are only "facts" if the qualitative text matches with quantitative data presented in the case. Otherwise they are just opinions which may or may not be worthwhile. If you cite facts (or even data) then please clearly identify where I can find them in the case.
 * Identify the key issue to be addressed in your analysis. This may or may not be the specific operational question identified by the decision maker in the case. The example discussed in class, in the Xerox case, two problems were apparent. The problem presented at the end of the case, making a decision regarding the type of guarantee to offer, and the one which became apparent while examining the data, how does Xerox become a more homogeneous company?
 * Identify alternatives that may be used to address the issue you identify.
 * Once you have done that, evaluate the alternatives based on a subset of the data you identified in step one which are pertinent to decision making process. **Only include data which is pertinent**. If applicable, potential financial outcomes of the alternatives should be an element of the evaluation.
 * Data used should be both qualitative and quantitative.
 * If you are making assumptions make them clear in the analysis.
 * Try to find a way that you can easily compare alternatives based on the data. I uploaded one table as an example.
 * You must provide a basis for measuring whether the alternative selected is the best and/or can be assessed as successful in the future. (I uploaded when excel spreadsheet as an example)
 * What are you proposing, why and how do you know when it works
 * "If you can not measure it, you can not manage it"....what is the measurement of success?
 * And remember... more is not better; better is better