Marketing is an Art and a Science

JWI 518 Marketing in a Global Environment, Week2 Summary, 10/21/12
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A tough week with numerous marketing concepts to grasp.

(I) Marketing is both an art and a science
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To be effective in reaching and influencing the right customers - and influencing their perceptions and preferences, with the right promotions at the right time, leaders will need to carefully balance data and instinct as appropriate for the business situation. To do this, marketing leaders need to conduct research through focus groups (to collect qualitative data) and surveys (to collect quantitative data) and proceed with a marketing plan with 8 attributes including goals, company SWOT, PESTEL evaluation of external environment, buyer analysis, strategy, tactical options, timetable and evaluation.

Jack Welch says marketing is both and art as well as science, depending on the skills of those who make the decision.
He confesses to being guilty of practicing it more as an art but is quick to appreciate those who practice it as a science.
He adds that there are companies now that do a fantastic scientific job of reaching Right customers, Right Promotions, at Right Time.
Finally, Jack Welch states that for mature products it is much more an art to catch the eye of the consumer around features that reach right into the soul and touch them.

Kotler (2012) in the textbook makes a similar argument:
"Marketing management is the art and science of choosing target markets and getting,keeping, growing customers through delivering and communicating superior customer value. Marketing is about identifying and meeting human and social needs profitably. The aim of marketing is to make selling superflous - to know and understand the customer so well that the product or service fits him and sells itself. The role of effective Marketing is to identify needs, wants, interests of target customers, satisfy more effectively and  efficiently than competitors while preserving or enhancing consumers' and society's long-term well-being".

(II) Marketing begins with understanding the customer(JWI 518, week1, lecture1)
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Need to understand why the customer makes a purchase and then influence the perception and preferences before he makes the next purchase. To do this, marketer needs to:
(a) Convey a persuasive message to target audience
(b) Design marketing pieces to stop customers, attract eyeballs and present a message
(c) Reinforce brand's image and communicate it is still around
(d) Create subconscious images to influence customer behavior
(e) People like to do business with people they like - so use right spokespersons to influence buying decisions at a later date

(III) To understand the customer, Need a marketing plan & solid research
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Clearly, understanding the customer's perceptions and preferences is a critical first step. To do this,  a marketing plan - like a road map - is needed. It shows a company the best route to get where it wants to go. Without a map to guide its marketing journey,
a company may end up a long way from where it intended (JWI 518, week2, lecture1)

One of the worst approaches a company can take is to conduct marketing on an ad hoc basis. eg. A company says something like, “That sounds like a good idea. Let’s try it.”

(IV) Marketing plan must have eight attributes (week 2, lecture1):
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(1) Goals and Objectives
A company must have a clear idea of what it wants to accomplish with its marketing plan.  Does it want to grow sales, increase market share, enhance brand image, introduce a new brand, or reposition an aging brand?  Did we achieve our goals or not?
(2) Company Evaluation
A marketing plan must take into account the strengths and resources of the company and its weaknesses–profitability, product lines, acquisitions, management skills, technological capabilities, image with the public, and the list goes on.
(3) Environmental Evaluation
It means analyzing all the outside factors that can influence the target market or the company eg. PESTEL, STEEP
(4) Buyer Analysis
An analysis of buyer motivation forms the foundation upon which the marketing plan can be built. Buying first takes place in the mind of the buyer.
(5) Strategy - the overall approach marketing message will take
(6) Tactics - how will the firm implement the marketing strategy
(7) Timetable - outline what needs to happen when for marketing
(8) Evaluation - did the marketing effort succeed or fail ?

(V) To understand the customer, conduct research
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Research much have a purpose and be designed to answer specific questions.
Primary research has qualitative and quantitative approaches
  Qualitative - focus groups to uncover depth of attitudes, ideas and feelings
  Quantitative - Surveys to learn about buyer's attitudes and behaviors
Secondary research consists of company research, govt publications, trade and marketing journals, internet

(VI) TCV, TCC, CLTV
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Total Customer Value (TCV) is the perceived monetary value of the bundle of economic, functional and psychological benefits customers expect from a given market offering
because of the product, service, people and image (Kotler, 2012, p55).

Total Customer Cost (TCC) is the perceived bundle of cost the customers expect to incur in evaluating, obtaining, using and disposing of the given offering including
monetary, time, energy and psychological costs.

TCV and TCC are related - in the customer's mind
Before making a purchase decision, and when considering market offerings from competitors, customers assess TCV against TCC for each offering.
To compete effectively and win, a firm needs to (a) lower the monetary cost (b) reduce the non-monetary costs in terms of time, energy and psychological cost and/or
(c) increase the economic, function and psychological benefits.

Customer Life Time Value (CLTV)- dollar value associated with long term relationship with any customer
Reveals how much a customer is worth over a period of time.
Useful in customer acquisition, selecting optimal service levels to provide different customer groups, identify different valuations for customers with different characteristics,
influencing the behavior of different customers and changing their LTV; helps modify assumptions and input variables to assess impact on CLTV
Helps firm focus on profitable customer relationships, maintaining the core customer base, retaining right customers who have strong impact on customer profitability.
Helps firm avoid overspending on less profitable or unprofitable customers and focus more on keeping profitable ones.
Best customers provide profit from base, increased purchases, price premium, reduced operating cost, referrals

(VII) Other marketing terms
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Acquisition cost - mney for advertising and promotion in securing potential customers
Discount rate - interest rate used in determining the present value of future cash flows
Net Present Value - NPV of all future cash flows with a discounted rate of return; if NPV is positive, an investment is acceptable
Retention rate - rate at which a firm retains its customers from purchase to purchase
Profit per customer - Net profit divided by total number of customers

exhausted but better educated
Dr DP