1. Rethinking Marketing
Cultivating Relationships
Ahead of Building Brands
Presented By : Bijoy E.V (bijoyev@yahoo.com)
Venue: IBS-B
Date: 2011 (Dec 18 – Dec 21)
Ref: Roland T. Rust, - Christine Moorman, and Gaurav Bhalla
2. Idea in Brief
Most of the companies are still depend on mass media
marketing to drive impersonal transactions
As an alternative
Companies can interact with customers with the help
of Powerful technologies like D/W for understanding
and interacting with customers
Which can help to radically reorganize in
“Cultivating Relationships” ahead of building
brands.
.
3. Basic Changes in Views
Shift from pushing individual products to building long-term
customer relationships.
• Marketing Department to “Customer Department”
• Replaces the CMO to Customer Officer
• Brand Managers to Customer managers
• Shift the firm’s focus
Product Profitability to Customer profitability
5. Idea in Action ( Cont..)
Key distinctions
Traditional and a Designed to serve
customer- customers and customer
cultivating company V/S segments
Communication is two-way and
organized to push individualized, or at least tightly
products and brands targeted at thinly sliced segment
6. Cultivating Customers
• IBM – Energy efficiency or server consolidation, and
coordinates its marketing efforts across products
for a particular customer
• IBM’s insurance practice - IBM’s Insurance Process
Acceleration enables customer and industry specialists to
build fast and flexible processes for Insurance
• Tesco - Investments in analytics that have improved customer
retention, data-collecting thru loyalty card.
• American Exp - Spending ability to a trusted circle. Offering
special Membership Rewards
7. New Roles & Responsibilities
• CCO
• reporting to the CEO
• designing and executing the firm’s customer relationship strategy
• promotes a customer centric culture and removes obstacles to
the flow of customer information
• Increasing the profitability of the firm’s customers, as measured
by metrics such as customer lifetime value (CLV)
• Customer managers
• Ultimate expression of marketing - Identify customers’ product
needs.
• Brand Managers, under the customer managers’ direction, supply
the products
10. In house-Impact
• Market research.
• Touch customers—including finance (the source
• Scope of analysis shifts from an aggregate view to an individual
view of customer
• Shifts its attention to acquiring the customer input that will drive
improvements in customer-focused metrics
• Research and development.
• Customer must be brought into the design process, Eg: Nokia
Beta labs, P&G.
• Customer service
• In-house to ensure long-term relationships. (Eg: Delta Airlines call
centre locations)
11. Building CLV
1. Companies need to focus less on product profitability and
more on customer Profitability
2. Pay less attention to current sales and more to CLV
3. Shift their focus from brand equity (the value of a brand) to
customer equity (the sum of the lifetime values of their
customers).
4. Pay less attention to current market share and more
attention to customer equity share – more relevant to
shareholder value.
12. Key Note
Deriving this Competitive way to serve customers.
Transformation must be driven from the top down. But however
daunting, the shift is inevitable.
Editor's Notes
Clubcard - to track which stores customers visit, what they buy, and how they pay. This information has helped Tesco tailor merchandise to local tastes and customize offerings at the individual level across a variety of store formats. (Shoppers who buy diapers for the first time at a Tesco store, for example, receive coupons by mail not only for baby wipes and toys but also for beer )American Exp - existing customers’ spending ability to a trusted circle of family members or partners while introducingthe brand to potential new customers
CMO: Companies as diverse as Chrysler, Hershey’s, Oracle, Samsung, Sears, United Airlines, Sun Microsystems, and Wachovia now have CCOsUSAA - top managers spend two or three hours a week on the call-center phones with customers.Tesco- managers spend one week a year working in stores and interacting with customers as part of the Tesco Week in Store (TWIST) program.
1. Focus less on product profitability - Products that may be unprofitable but strengthen customer relationships.2. pay less attention to current sales and more to “customer lifetime value” (CLV)3. shift their focus from brand equity (the value of a brand) to customer equity (the sum of the lifetime values of their customers)4. Customer equity share - the value of a company’s customer base divided by the total value of the customers in the market
