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Marketing for the 21st Century

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  • Pages: 26
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  • Category: Marketing

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The Five Company Orientation towards the Market Place

As the market has changed, so has the way the company deals with the marketplace. The company orientation towards marketplace deals with the concepts which a company may apply while targeting a market. There are basically five different orientations which a company takes towards the marketplace.

Production Concept

In this concept the company mainly tries to increase production irrespective of demands of the customer. The production concept is almost extinct now with companies paying more and more attention to the customer. The basic proposition is that customers will choose products and services that are widely available and are of low cost. So business is mainly concerned with making as many units as possible. By concentrating on producing maximum volumes, such a business aims to maximize profitability by exploiting economies of scale. Managers try to achieve higher volume with low cost and intensive distribution strategy.

This seems a viable strategy in a developing market where market expansion is the survival strategy for the business. Companies interested to take the benefit of scale economies purse this kind of orientation. In a production-orientated business, the needs of customers are secondary compared with the need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant. It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers

Selling Concept

The selling concept believes that customers will not buy products unless persuaded to do so. As we know, this is true even today in case of certain products such as insurance. Although the customer should use it, they rarely do. The Selling Concept proposes that customers, be individual or organizations will not buy enough of the organization’s products unless they are persuaded to do so through selling effort. So organizations should undertake selling and promotion of their products for marketing success.

The consumers typically are inert and they need to be goaded for buying by converting their inert need in to a buying motive through persuasion and selling action. This approach is applicable in the cases of unsought goods like life insurance, vacuum cleaner, and firefighting equipment including fire extinguishers. These industries are seen having a strong network of sales force.

This concept is applicable for the firms having over capacity in which their goal is to sell what they produce than what the customer really wants. In a modern marketing situation the buyer has a basket to choose from and the customer is also fed with a high decibel of advertising. So often there is a misconception that marketing is all about selling. The problem with this approach is that the customer will certainly buy the product after the persuasion and if dissatisfied will not speak to others. In reality this does not happen and companies pursuing this concept often fail in the business.

Product Concept

The product concept says that customers will always buy products which are better in terms of quality performance and features. The concept is especially applicable in terms of electronics and other techno gadgets nowadays. The product concept proposes that consumers will prefer products that have better quality, performance and features as opposed to a normal product. The concept is truly applicable in some niches such as electronics and mobile handsets. Two companies which stand apart from the crowd when we talk about the product concept are Apple and Google. Both of these companies have strived hard on their products and deliver us feature rich, innovative and diverse application products and people just love these brands.

One problem which has been associated with the product concept is that it might also lead to marketing myopia. Thus companies need to take innovations and features seriously and provide only those which the customer needs. The customer needs should be given priority. In the past several of Microsoft’s products have been brought under the hammer with people feeling more and more disgruntled with the operating systems because of lack of innovation and new features.

Each Microsoft operating system appears almost similar with just few tweaks. On the other hand, innovating too soon becomes a problem. Several innovative products are marked as experimental in the market instead of being adopted as a result of which these products have less shelf life and might have to be taken off the market. Thus companies following the product concept need to concentrate on their technology such that they provide with excellent feature rich and innovative products for optimum customer satisfaction.

Marketing Concept

Just like selling is a necessity, similarly branding and marketing are a necessity in some products. The marketing concept proposes that the success of a firm depends on the marketing efforts of the company in delivering a value proposition. The marketing concept proposes that the success of the firm depends on the marketing efforts of the company and in delivering a better value proposition as compared to its competitors in its own target market. Let’s take an example of 2 eternal rivals – Pepsi and Coke – Both of these companies have similar products. However the value proposition presented by both is different. These companies thrive on the marketing concept. Where Pepsi focuses on youngsters, Coke delivers on a holistic approach.

Also the value proposition by Coke has been better over ages as compared to Pepsi which shows that coke especially thrives on the marketing concept, i.e. it delivers a better value proposition as compared to its competitor. The marketing concept also demands that the strategic decisions made by the company are taken keeping the customer in mind. Especially the needs wants and demands of the customers. A holistic approach is taken with the whole organization striving to make the customer experience better.

Applying the marketing concept also means knowing what the market needs and expects from the company as a result of which companies which apply the marketing concept need to carry out more of market research. The marketing concept is the most followed ideology by top companies.

This is because, with the rise of economy, consumers have become more knowledgeable and choosy as a result of which the organization cannot concentrate on what it sells but rather it has to concentrate on what the customer wants to buy. As we are ultimately satisfying the customer, the marketing concept also demands that the organization integrate all its different departments to give value to the customer. This means that all the departments including Marketing, Finance, HR or Operations should have an idea of the core objectives of the company as well as the goal of the company. The market concept thus relies on three key aspects

1) What is the target market – The first step is to determine exactly which the target market is. This can be by market research and deciding which target market will give the best returns. 2) What are the needs wants and demands of the target market – A further step in marketing research is the consumer preferences study. This study will help the firm determine the needs wants and demands of the target market thereby helping the firm in deciding their strategies.

3) How best can we deliver a value proposition – In this step, the firm decided what strategy it needs to adopt. What combination of ATL and BTL activities should be adopted? What kind of value should the firm create and deliver. How should it integrate its different departments? Ultimately, the firm decides how to apply the marketing concept within itself to deliver a better customer experience. To summarize, the marketing concept relies on market research and determining needs of the customer such that a better marketing strategy can be devised which satisfies the needs of the customer. The marketing concept also demands a holistic approach from the organization.

Societal Marketing Concept

The societal marketing concept leads to a company orientation which believes in giving back to the society what it had received from the society. This concept believes that the company is profiting because of society and hence it should also take measures to make sure the society also benefits from the company. The marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Yet some firms and industries are criticized for satisfying consumer wants at society’s expense. Such situations call for a new term that enlarges the marketing concept.

We propose calling it the societal marketing concept, which holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept. Some companies practice a form of the societal marketing concept called because related marketing.

Pringle and Thompson define this as “activity by which a company with an image, product, or service to market builds a relationship or partnership with a ‘cause,’ or a number of ‘causes,’ for mutual benefit. They see it as affording an opportunity for companies to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe that customers will increasingly look for demonstrations of good corporate citizenship.

Smart companies will respond by adding “higher order” image attributes than simply rational and emotional benefits. Critics, however, complain that cause related marketing might make consumers feel they have fulfilled their philanthropic duties by buying products instead of donating to causes directly. Thus societal marketing concept as related to cause related marketing differs mainly because here, the company makes a proactive effort to give back to the society.

Chapter 2 – Developing Strategies and Market Plan
Ansoff’s Product/ Market Expansion Grid

To portray alternative corporate growth strategies, Ansoff presented a matrix that focused on the firm’s present and potential products and markets (customers). By considering ways to grow via existing products and new products, and in existing markets and new markets, there are four possible product-market combinations as shown below:

Ansoff’s matrix provides four different growth strategies: Market Penetration

The firm seeks to achieve growth with existing products in their current market segments, aiming to increase its market share. The market penetration strategy is the least risky since it leverages many of the firm’s existing resources and capabilities.

In a growing market, simple maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation another strategy must be pursued if the firm is to continue to grow. Example from Starbucks: Add new stores in current market areas, improvements in advertising, prices etc. Market Development

The firm seeks growth by targeting its existing products to new market segments. Market development options include the pursuit of additional market segments or geographical regions. The development of new markets for the product may be a good strategy if the firm’s core competencies are related more to the specific product than to its experience with a specific market segment. Because the firm is expanding into a new market, a market development strategy typically has more risk than a market penetration strategy. Example from Starbucks: Review new demographic (senior consumers) or geographic (Asian, European & Australian) markets.

Product Development

The firms develop new products targeted to its existing market segments. A product development strategy may be appropriate if the firm’s strengths are related to its specific customers rather than to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. Similar to the case of new market development, new product development carries more risk than simply attempting to increase market share. Example from Starbucks: Increasing good offerings, sell coffee in supermarkets, extend to Frappuccino drinks.


The firm grows by diversifying into new businesses by developing new products for new markets. Diversification is the most risky of the four growth strategies since it requires both product and market development and may be outside the core competencies of the firm. In fact, this quadrant of the matrix has been referred to by some as the “suicide cell”. However, diversification may be a reasonable choice if the high risk is compensated by the chance of a high rate return. Other advantages of diversification include the potential to gain a foothold in an attractive industry and the reduction of overall business portfolio risk.

Example from Starbucks: Currently testing two new restaurant concepts – Café Starbucks and Circadia, or branded casual clothing.

Chapter 3 – Marketing Environment and Marketing research
The Company’s Macro-environment

The company and all of the other actors operate in a large macro environment of forces that shape opportunities and pose threats to the company is known as macro environment. Six largely uncountable external forces influence an organization’s marketing activities and shape opportunities is known as macro environment. Major external and uncontrollable factors that influence an organization’s decision making, and affect its performance and strategies. These factors include the economic, demographics, legal, political, and social conditions, technological changes, and natural forces are known as macro environment.

A factor that influence a company’s or product’s development but that is outside of the company’s control is known as macro environment. For example, the macro environment could include competitors, changes in interest rates, changes in cultural tastes, or government regulations. In a whole we can say that the factors that are major part of the company & uncountable factors which influence an organizations’ marketing are known as macro environment. Elements of Macro-environment

Demographic Environment

Demography is the study of human populations in terms of size, destiny, location, age, gender, race, occupation and other statistics. The demographic environment is of major interest to marketers because it involves people.

Age Structure of the Total Population and Its Changes

The number of different ages of people such as the number of children, teenage, youth, old person should be kept in mind at the time of doing marketing strategy. Because a product cannot be certified for every ages of customer. Moreover, at the time of increasing of population the growth of demand of product rises should be noticed otherwise marketing process won’t be effective at all. On the contrary at the time of the decrease of population the demand falls. This is the reason at the time of doing marketing strategy the matter of population must be analyzed.

Changed Family Life

Now a day’s one can easily identify the changes of family life style such as- the growth of working class women, income capability of women, adult marriage of women and the right of divorce of women etc. also important for doing marketing strategy. For doing more services or jobs outside home the household task of women has gone to the slave. And now we can observe a crisis of slave.

Actually the development of garment industry has created this problem. For this reason people are eager to do a less physical labored task. And prepared food, half cooked food, bread, washing machines etc. are used more. So, now we use pressure cooker, rice cooker, washing machine, go to restaurants for food for save our time but those things created market for the product and the marketers getting benefit from their work and growing rapidly.

Education and Profession

Education rate and job distribution also be remembered at the time of doing marketing strategy. Because the taste, choice, habit, communicating process cannot be same of an educated and a non-educated person. The some thought is applicable for the people of different working people. Our education rate is increasing on a regular basis. Now people are eager to do industrial job or service more than farming. These changes are very important for marketing strategy.

Geographical Shift in Population

Geographically living of population and the shift of geographical living of population create impact on marketing. For a lot of reason people tend to go to big cities. For this reason peoples’ life style and their demand style are changing. Moreover, producing product for tourist, job seeking people, businessmen is also profitable business. Besides, people are going abroad and coming back to the country and making a change in their demand style which has to be kept in mind to keep pace with the global growing market. In Bangladesh people want to shift in Dhaka rather than other cities. So, market of this mega city is bigger than others Economic Environment

Marketers require buying power as well as people. The economic environment consists of factors that affect consumers’ purchasing power and spending power/ patterns. Marketers must pay close attention to major trends and consumers’ spending patterns. In market not only people but also their buying ability is needed. Because buying ability less market is for nothing.

And buying ability relies on peoples’ earning condition, price of a product, savings and debt facilities. At the time of doing marketing strategy one must remember the shift of earning as well as the spending. And by analyzing these one should make their marketing policy. How economic environment effect marketing decisions are given below:

Changing Income

Though our per capita income grows but customers’ real purchasing power falls for 3decades. Increase rate of inflation, increase rate of unemployment, taxes, economic uncertainty also responsible for the downward shift of economic condition of customer. For trade and foreign support some peoples’ purchasing powers are increasing but limited earned peoples’ condition getting worse day by day. In terms of Bangladesh, the farming product’s price is not increasing keeping pace with the industrial product so the farmers’ condition are getting worse day by day. In future price may increase so people tend to buy product and storage. For this reason multinational companies are applying effective techniques for rural class people.

Radio advertisement, mini pack of product, buy at installment etc. are the major example of this initiative. For example, people of Bangladesh are buying color TV rather than black and white TV, they buying refrigerator, air conditioner, and cars like Lexus etc. which denotes their level of income increasing and the preferring higher standard of living. Now big companies are in market they offering higher remuneration to the people who are searching for job. These people are joining there and increasing income which results in a market with high rate of cash flow.

Changing Consumer Spending Patterns

The spending patterns are different basis on earning patterns so their buying patterns also different. Food, housing and transportation use up the most house hold income. As family income rises, the percentage expense on food declines, spent on housing remains constant, and both the percentage spent on most other categories and that devoted to saving categories. At the time of increasing of income the eating habit gets changed. Again the storage of product or the shortage of product may cause the change of demand.

Changes in major economic variables such as income, cost of living, interest rates, and savings and borrowing patterns have a large impact on the market place. Companies watch these variables by using economic forecasting. Business does not have to be wiped out by an economic down turn or caught short in a boom. With adequate warning they can take advantage of change in economic environment.

Natural Environment

The natural environment involves the natural resources that are needed as inputs by marketers or they are affected by marketing activities. Environmental concerns have grown steadily during the past three decades. Marketers should be aware of several trends in the natural environment. For different types of business task and industrial activities our natural environment is getting ruined.

As a result of these situations before doing marketing strategy one has to be conscious about the danger of natural environment. From 1960’s people are started think about the world natural loss. Since 2 decade this pressure is getting larger. In 1992 at reo de Jeniro the capital of Brazil arranged the World conference. The air, water and sound pollution gets out of control in a lot of cities. The decreasing rate of ozone level is a global threat to us. So a marketing manager must concentrate on some natural issue.

Such as: Shortage of Raw Material

Assets can be divided as limitless but not increasable and limited but increasable. As example- air and water is unlimited but for some industrial reason these resources gets polluted. For this reason mass consciousness is raised or some countries enforced law. Fore stand food is limited but it is possible to increase its’ production. To make run the forest or wood related businesses we should start taking tree plantation measures. On the other hand oil, gas, coal etc. natural resources are also problematic. Though these resources are enough in some cases available but the expense to use these resources are increased a lot. So the alternative resources are looked for or experimenting is going on to lessen the expenses.

Increase Cost of Energy

As an asset oil is very problematic for future development. Because the rich and developed countries are depend greatly on oil. The problem will exist till the alternative source is not introduced. As a result a lot of countries are trying to use solar energy or uranium energy.

Increase of Pollution

Some industrial activities are undoubtedly harming the nature. The filth of factories consisting of poison is polluting both soil and water. As a result taking food seems threatening. As example- the effect of uranium blast of Chernobyl is still active. Now people are unwilling to take some type of food. In Bangladesh the growth rate is too high to describe.

Technological Environment

The technological environment is perhaps the most dramatic forces now shopping own destiny. Technological environment involves forces that create new technologist creating new product and marketing opportunities. Technological environment consists of some elements by which new product are being developed. For this reason, marketing has to face new threats, problems & sources of creation.

Faster Pace of Technological Change

Technology is changing day by day. A company must have to fix their step accordance with the technological changes. Otherwise, it is impossible to survive in the market competition. At the present day all types of communication are done by modern technology. To marketing goods in BD one has to stay connect with modern technology. Now think about the communication process of the organizations. In past, they used the classical telephone for communication which sometimes makes disturbance & non-transferable. But at a present day they use mobile which is easier than telephone. One should take the advantages about the modern technology

Political Environment

Marketing decisions are strongly affected by developments in the political environment. Political environment consists of laws, government agencies, government itself and pressure groups that influence or limits various organizations and individuals in a given society. Policies like Displaying the Expiry date, MRP, and Green Circle on a Vegetarian Food product also influence the marketing decision.

Also there exist a Special Interest Groups like NGOs who oppose any unethical acts by the business. In recent history we saw opposition by large customer group against Cadbury as worms were found in one of its products. Also Coca-Cola suffered lots of opposition as pesticides were found in its Cold-Drink. The Growth of Consumerism movement has made the business Pro-Consumer and made the market Consumer Driven Market.

Cultural Environment

The cultural environment is made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors. There are few cultural values which affect marketing decision making. These are, persistence of cultural value, shifts in secondary cultural value, people views of organization/ others, etc. Culture is set of beliefs and customs pertinent in a society. A marketing campaign must be in tandem with the beliefs. The market should adjust the decisions with respect to the cultural and social beliefs.

For Instance McDonalds had to stop its products containing Beef as cow is regarded as goddess in India. But in many cases firms are able to dilute the cultural beliefs by exposing them to anew culture. This can be validated by the fact that Archie’s has made its market in India by promoting different occasions like Valentine’s Day, Father’s Day and friendship day. Also the companies who are in tandem with the cultural beliefs and who promote the culture is able to attract the loyal customers more easily and can retain them more effectively.

Chapter 4 – Consumer Behavior and Business Market
Buyer Decision Process

Research suggests that customers go through a five-stage decision-making process in any purchase. This is summarized in the diagram below:

This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages. For example, a student buying a favorite hamburger would recognize the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation. The buying process starts with need recognition.

At this stage, the buyer recognizes a problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins). An “aroused” customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins. A customer can obtain information from several sources:

• Personal sources: family, friends, neighbours etc. • Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays • Public sources: newspapers, radio, television, consumer organizations; specialist magazines • Experiential sources: handling, examining, using the product The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customer’s value and respect personal sources more than commercial sources (the influence of “word of mouth”). The challenge for the marketing team is to identify which information sources are most influential in their target markets. In the evaluation stage, the customer must choose between the alternative brands, products and services.

How does the customer use the information obtained?

An important determinant of the extent of evaluation is whether the customer feels “involved” in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice. Where a purchase is “highly involving”, the customer is likely to carry out extensive evaluation. High-involvement purchases include those involving high expenditure or personal risk – for example buying a house, a car or making investments. Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes.

Why should a marketer need to understand the customer evaluation process? The answer lies in the kind of information that the marketing team needs to provide customers in different buying situations. In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force may need to stress the important attributes of the product, the advantages compared with the competition; and maybe even encourage “trial” or “sampling” of the product in the hope of securing the sale. Post-purchase evaluation – Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as “cognitive dissonance”. The customer, having bought a product, may feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time. To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision.

Chapter 5 – Segmentation, Targeting and Positioning
Identifying the possible competitive advantage

Competitive Advantage is the extent that a company can position itself as providing superior value to selected target markets. Our competitive advantage should link directly to how we add value to our clients. The specific benefits our clients are pursuing should be found in your competitive advantage. This will help customers differentiate us from competitors and give them a reason to do business with us. It also builds trust as they realize we understand their needs.

For example, we may be selling pizza delivery to customers in our area. The combination of price, service and product quality will establish our competitive advantage. If we cannot do any of these three things better than our competition, then our business of selling pizza will suffer. Imagine we found that there is a high demand for pineapple pizza not being met by our competitors. Offering pineapple pizza would become our competitive advantage, at least in the short-term. Seek out ways to improve our service or product and better meet our customers’ needs.

Product Differentiation

1. Form – A product can be differentiated based on the form of the product. The physical structure, size and shape of the product can be used to differentiate it from others. Take an example of any medicine. A medicine can be differentiated from that of its competition by the means of its potency, its usability, the way it can be taken (intravenous or oral) so on and so forth. Thus the way the product is made can be a type of product differentiation. 2. Features – Any additional features being offered on top of the product becomes a plus point for the customer. The best example for differentiation based on features is Mobile phones, handsets or any technology product. They are differentiated mainly by the number of customizations or the additional features that they offer. Thus features can be a form of Product differentiation.

3. Performance quality – Why is a BMW costlier than other cars? Because it has superior performance. Why is a formula 1 racing car costlier than a BMW? Because an F1 car has an even higher performance as compared to a BMW. Thus performance increases price. Similarly, your competition can present a product which does not perform as well but is available at half the price. Naturally, some of your customers might shift to the competition. This is not true for all customers. Some customers will be looking out for the superior quality products only. Thus you can do product differentiation on the basis of the performance of your product.

4. Durability – In the tough and competitive laptop market, there are some laptops which stand out. These are the ones made for mountaineers and harsh environment researcher. Their cost is very high as compared to normal laptops. But by producing such a product, they have completely differentiated themselves from the market. Kitchen equipment’s, vehicles, sometimes even the shoes you wear, people want things which are durable and can be used for a long term.

5. Reliability – Do you know why a Volvo sells in the market? The name of Volvo is almost synonymous with safety. Volvo manufactures the most safe and reliable vehicles in the world. That is why their buses are so famous. Therefore it is not surprising that Volvo also sells at a premium. This is because, here the product differentiation is on the basis of Reliability, one of the most valued assets a brand can have. 6. Style – Harley Davidson. Gucci. Tommy Hilfiger. Lamborghini. Ferrari. Longines. Omega. when we take these names, you know what quality we are talking of. Each brand has a style of its own and that is why each brand has a differentiation of its own.

You will never find a Harley Davidson guy wearing a tommy Hilfiger. It’s not that they aren’t rich. It’s just that the two brands don’t go together in style. This is where these brands are able to achieve product differentiation. Thus overall there are several ways you can differentiate a product. Based on this differentiation, a suitable strategy can be followed. Market penetration, Market skimming and other such marketing strategies are derived only after product differentiation is achieved.

Service Differentiation

The main factors which can be used for service differentiation are: 1. Ordering ease: Refers to how easy it is for you to place an order with the company. Baxter Healthcare has eased the ordering process by supplying hospitals with computer through which they send orders directly to Baxter; consumers can now order and receive groceries without going to the supermarket through web-based service such as peapod and net grocer. Thus these services have differentiated themselves through ease of ordering. 2. Delivery: It is related to how well the product or service is delivered to the customer, covering speed, accuracy and customer care. Deluxe check printer, inc., has built an impressive reputation for shipping out its checks one day after receiving an order- without being late once in 18 years.

3. Installation: refers to the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service. Differentiation by installation is particularly important for companies that offer complex products such as computers. 4. Customer training: refers to how the customer’s employees are trained to use the vendor’s equipment properly and efficiently. General Electric not only sells installs expensive X-rays equipment in hospitals, but also gives extensive training to users of this equipment.

5. Customer consulting refers to data, information system and advising services that the seller offers to buyers. For example, the Rite aid drugstore chain’s communications program, called the Vitamin Institute, provide customers with research so they can make more educated judgments and fell comfortable asking for help. On the Web, Rite Aid has teamed with drugstore.com to offer even more health-related information. 6. Maintenance and repair: describes the service program for helping customers keep purchasing products in good working order, an important consideration for many products. These are 6 steps to achieve service differentiation. Each of these steps can be seen implemented in leading service chains / companies.

Channel Differentiation

Channel differentiation gain competitive advantage through the way they design their channel’s coverage, expertise, and performance.

People Differentiation

Companies can gain a strong competitive advantage through having better-trained people. Singapore Airlines enjoys an excellent reputation in large part because of its flight attendants. The McDonald’s people are courteous, the IBM people are professional and the Disney people are upbeat. The sales forces of such companies as General Electric, Cisco, Frito-Lay, and Northwestern Mutual life enjoy an excellent reputation. Well- trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness and communication.

Image Differentiation

A person responds differently to company and brand images. Identity comprises the ways that a company aims to identify or position itself or its product, whereas image is the way the public perceives the company or its products. Image is affected by many factors beyond the company’s control. For example, Nike mainstream popularity turns off 12-to-24-years-olds, who prefers Air walk and other alternative brands that convey more extreme sports image. Hence Image differentiation is important for a company or product.

An effective image establishes the product’s character and value proposition, it conveys this character in a distinctive way and it delivers emotional power beyond a mental image. For image differentiation to work, it must be conveyed through every available communication vehicle and brand contact, including logos, media and special events.

Some Important Points to Image differentiation are:

1. Great companies are significantly better, not just a little better 2. ”Differentiate products, not devices” 3. The most dangerous and quickest evaporating differentiation is lower price unsupported by lower costs 4. High tech buying decisions are based on cold hard logic and rational analysis – except where information overloaded buyers are concerned 5. Real product differentials plus good promotion is a powerful influence

6. Complexities make it easier for products to be different, but harder for customers to know the differences 7. Complexity plus standardization tends to make high tech products seem similar to most buyers 8. It takes time to learn the subtle distinctions between complex products, sometime on minor technical details And, if the differences don’t exist in the customer’s mind, they do not exist 9. The “differences must make a difference”

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