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Introduction To Marketing: University of Chicago Marketing Management
Introduction To Marketing: University of Chicago Marketing Management
University of Chicago
Marketing Management
Company Orientations Towards the Marketplace
A Customer Orientation
Interest
Channel
Decision
Product /
Service
Action
Price
Satisfaction
Profits Through Customer Satisfaction (One Customer)
Referrals
Price Premium
Reduced Selling Effort
Increased Usage
Normal Profits
Acquisition Costs
Profit A Customer Generates Over Time
Dollars($)
60
40
20
0 Credit Card
Customer
-20
-40
-60
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Cost of Losing and Attracting Customers
• Cost of Average Sales Call =
• Cost of Lost Customers $300
• # Accounts = 64000 • Average # Calls to Convert
• Loss = 5% for poor service = Customer = 4
3200 accounts • Cost of New Customer = $1200
• Loss in Revenue / Account = • Annual Revenue from
$40000 Customer = $5000
• Total Revenue Loss = $ 128 • # Loyal Years = 2
MM • Profit Margin = 10%
• Margin = 10% • Lifetime Value = $1000
• Loss in Profits = $ 12. 8 MM • Firm is spending more on
• How to Increase Retention attracting new customers than
Rate? they are worth!
Cost of Losing and Attracting Customers
Opportunity Identification
Build A Marketing Strategy
• Product
• Price
• Place
• Promotion
3C - 4P Framework
• Product
• Customer
• Price
• Company
• Promotion
• Competitor
• Place
3C - 4P Framework
BMW
Colgate
IDS • Product Nestle
PDA / • Customer
Infiniti • Price Rohm&Haas
• Company
Sealed-Air Intel
• Promotion
Barco • Competitor
• Place Dell
Marketing System
Socio / Cultural
Recasting the 3C - 4P Framework in Value Terms
Creating
Value
• Product
• Customer
Capturing
• Price
• Company Value
• Place
• Competitor Communicating
• Promotion Value
Mapping Value Migration
• Limited competition
• High growth
• High profitability In the outflow stage,
talent, resources &
• Competitive stability customers leave at an
• Stable market share accelerating rate
• Stable margins
Market 2
Value ÷
Revenues • Competitive intensity
• Declining sales
1
• Low profits
1998
2001
1.
2.
. New Entrant
3.
.
1.
2. New Entrant
3.
Old New
.
Key elements .
Assumptions
Affordable
1. Quality
Luxury
Coffee Shops & Gourmet
Office Coffee Cafes 1985 2. Freshness
3. Close to office
1. Price
Traditional Whole bean 2. Ease of purchase
Grocery Blend
. Gourmet Coffee
Starbucks
3. Uniform offering Coffee is Coffee
.
.. GCA
Gloria Jean’s
Starbucks
Starbucks
Value Migration
Phases
.. .
Millstone
Folgers
Maxwell House Millstone
Millstone
.
Nestle