Week 3 Weekly Podcast Transcript

Transcription

1 Week 3 Weekly Podcast Transcript Connecting with Customers Regardless of how wonderful, cost-efficient, or well-designed a product may be, if the customers who would benefit most from the item are unaware of it, it will ultimately fail. One of the main goals of marketing is to understand the consumer decision-making process and use this knowledge to effectively reach the target population. The same information can also be used to analyze business-to-business buying behaviors. Companies that are successful in selling their products and services are those that take the time to develop strategic marketing plans. This week, you will explore the various factors that influence consumer behavior and decision-making. You will also compare the different approaches used to reach consumers versus marketing directly to other businesses. Focus on the process of developing an effective marketing strategy geared toward the target segment of the population. By the end of this week, you will be able to: Evaluate the various factors that affect consumer behavior Compare and contrast the similarities and differences between consumer and business-to-business buying behaviors Explain how firms evaluate segments to develop a targeting strategy

2 During Week 3, you will use a variety of resources including selections from the course text, journal articles, audio versions of key readings, and a video interview. Audio versions of the key readings include those resources used for completing both Discussion Questions and Applications. This week, you begin with Chapters 6, 7, and 8 of your course text, Marketing Management, identified in your Syllabus and in Resources under Week 3. An important aspect of marketing research involves analyzing the specific market a company hopes to reach. Chapter 6 introduces you to the dynamics of consumer buying behavior, while Chapter 7 deals with the dynamics of the business market. In Chapter 8, you will explore the process of identifying market segments, each composed of individuals with similar needs or preferences. Focus on how marketers select the most appropriate segment or segments to target. The journal article for this week, Co-creation Experiences: The Next Practice in Value Creation, discusses the recent trend of allowing consumers to help shape the design of the products they purchase. This has required firms to become more transparent and is causing a shift in the way products are developed and the methods used to create value. Let s outline some of the individual resources that you will use in this week s activities. Video: "Understanding Customer Needs and Market Segments" featuring Dr. Raj Echambadi

3 Narrator: We are excited to continue our conversation with Dr. Echambadi from the University of Central Florida. This week, we will be conversing with him about market segments! Dr. Echambadi, welcome back! Dr. Raj Echambadi: Thank you. It s a pleasure to be here. Narrator: What are needs and wants? Should marketers focus on customer needs or wants? Dr. Raj Echambadi: Psychologists define customer needs as food, shelter, clothing. Now, these are basic needs and, of course, there are symbolic needs as well, like social needs, needs for belonging, needs for love, and there are higher order needs, as well. Wants are needs that are culturally conditioned. For instance, let me give you an example. Somebody s hungry and in the United States, you know, they might go to a McDonalds or a Burger King and have a hamburger, but else if you are talking about some other parts of the world it could be rice and curry. While the need is hunger, the wants are fairly different, etc. The important thing for marketers to understand is you always try to focus on customer needs. Needs do not change; wants are transient. Our grandparents had the need for transportation, but they probably used horse and buggy and we use cars and airplanes today, etc. but tomorrow it might change to, you know, you say Beam me up, Scotty and you re probably going to be in Beijing or something. So one of the things you need to understand is that if you don t focus on customer needs and focus on wants, you can actually become obsolete immediately. Narrator: What is meant by the term, market segments and what role do they play? Dr. Raj Echambadi: That s a great question. The objective of market segmentation is to develop market segments, which can be defined as a subset of people or subset of organizations that share similar characteristics. And the reason why you segment is, you make sure that the segment of people or organizations that you are dividing the market, have homogenous

4 needs, if you will. And when they have homogenous needs, it is fairly easy for marketers to develop a product offering that can cater to this entire segment, if you will. Narrator: Is it a wise strategy for a marketer to strive to reach every segment in the market? Dr. Raj Echambadi: It is not a wise strategy for a marketer to cater to every segment in the marketplace. It is very important for marketers to identify the segments and to identify the specific target markets they are going to go after and only focus on only those target markets. Because focus is extraordinarily critical and if you don t stand for something, you will fall for everything, as the old adage goes. You have to be extraordinarily careful in terms of identifying the target market. Put all your resources allocate all your resources into catering to those target markets. Otherwise, (A) there is a problem in terms of diffusing your resources across wider segments that are suboptimal, but more importantly there is going to be customer confusion, people are not going to realize what you stand for. And therefore, this is probably the strategy I would say, focus and target a segment where you think your resources can be optimally used. Narrator: What are the main differences between marketing to consumers and marketing to business? Dr. Raj Echambadi: Marketing to consumers, also known as B to C marketing, is much more non-rational in the sense that there are emotional elements that marketers have to use in terms of developing marketing strategies. Marketing to businesses, also known as B to B marketing, is much more rational because you re dealing with other organizations and most of the time the buyers in these firms, etc. are very experienced and are experts in the buying processes and so on and so forth. So fundamentally, it s

5 a question of rational versus non-rationality and the buying behaviors, if you will. The second and the larger thing is that when you deal with B to B marketing, personal selling and relationship building is probably far more important as far as the marketing elements are concerned. But as with B to C marketing, or marketing to consumers, mass media advertising or integrated marketing communications is a fairly important marketing experience. Narrator: Are there some types of business that don t require much, if any, marketing? Dr. Raj Echambadi: There used to be a prevalent notion, at least about 15 or 20 years ago, that there are some businesses that don t require much marketing: Encyclopedia Britannicas, or burial plots, or flu vaccines, or marketers call them unsought goods. But of late the thinking has changed and people realize that for any type of business, especially in the western world where you re dealing with a lot of competitive scenarios, and so on, it is actually important for you to have a well-developed marketing strategy. I can t see any product for that matter, not requiring any marketing at all. Narrator: Thanks again for the wonderful information you have given us about market segments. We look forward to hearing from you again! Dr. Raj Echambadi: Thank you very much for having me. You will now hear a summary of the following reading that will help in completing your assignments for the week. Chapter 6, Analyzing Consumer Markets, in Marketing Management. In chapter 6 you are introduced to the type of information marketers evaluate in order to understand the needs and wants of the consumer. First, there is a discussion of the cultural, social, and personal factors that influence consumers. For example, what is their ethnic background? Which organizations do they belong to? What are their ages and their occupations?

6 Psychological processes such as motivation, perception, learning, and memory are also analyzed. The chapter then goes on to describe how consumers actually make the decision to buy a specific product or service. In order to effectively market to a specific target audience, it is important to understand the steps involved in the decision-making process. Be sure and focus on the sequence of events in the buying process and how the consumer s behavior can be influenced at each step. You will now hear a summary of the following reading that will help in completing your assignments for the week. Chapter 7, Analyzing Business Markets, in Marketing Management. The process of marketing to businesses is very different than that of marketing to consumers. Chapter 7 compares key similarities and differences between the two approaches. One of the major differences is that the decision-makers in businesses tend to be much more formal and rational. In addition, there are fewer actual buyers and they are more geographically concentrated. The purchasing of businesses is closely tied to their consumers needs, so careful deliberation occurs before purchases are made. The buying process of businesses is also much more formalized than that of consumers. Focus on the eight stages, or buyphases, in the business buying process. Also focus on the different types of business markets, including institutional and government markets, and note how the buying process differs to include open bidding and increased paperwork. You will now hear a summary of the following reading that will help in completing your assignments for the week. Article Co-creation Experiences: The Next Practice in Value Creation, from Journal of Interactive Marketing.

7 The Internet provides increased levels of communication between users, leading to a greater trade of product information between consumers than every before. In this article, the authors discuss how this increased level of information has resulted in pressure on firms to give greater credence to the opinions of those who will eventually purchase their products or services. The authors explain that the market has shifted from a target to a forum. As businesses seek to create perceived value in their goods, it has become critical that they allow more transparency, allowing the consumer to feel part of the product s development with their views considered. The authors discuss how companies such as Amazon, ebay, and Expedia have effectively adopted this new model and allow for a high degree of interaction in terms of understanding and providing for consumer needs.