chap005 market opportunities current and potential customers

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Copyright ©The McGraw-Hill Companies, Inc. Permission required for reproduction or display

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Foundations for

Creating Value

Part Two

McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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Part Two

Foundations for Creating Value

• Chapter 5

• Market Opportunities

• Chapter 6

• Marketing Strategy

• Chapter 7

• Weaving Marketing into the Fabric of the Firm


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Chapter 5

Market Opportunities:

Current and Potential Customers


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Finding Business to Business Opportunities


NEW MARKET OPPORTUNITIES

ACQUIRENEW

CUSTOMERS

DEVELOPA RESEARCH

PROGRAM

FIND OPPORTUNITIES WITH EXISTING

CUSTOMERS

DEVELOP MARKETS AMONG CURRENT

CUSTOMERS

5-5-66McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

DEVELOP MARKETSAMONG CURRENT CUSTOMERS

FOUR STEP PROCESS

1. RANK YOUR BEST CUSTOMERS

2. MAXIMIZE REVENUES THROUGH

COLLABORATION EFFORTS

3. DEVELOP SPECIFIC PRODUCTS FOR EACH

CUSTOMER

4. LEARN OF SPECIAL NEEDS FROM YOUR

CUSTOMER’S CUSTOMERS

5-5-77McGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

FIND OPPORTUNITIES WITHEXISTING CUSTOMERS

1. ESTABLISH A FORMAL FEEDBACK PROGRAM

WITH CUSTOMER CONTACT POINTS (SALES,

SUPPORT)

2. DEVELOP DATABASES

3. COMPILE DECILE REPORTS

4. DEVELOP CUSTOMER RESEARCH ASSISTANCE PROGRAM

FOUR STEP APPROACH

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RESEARCHING CUSTOMERS

FIND OUT YOUR CUSTOMER’S NEEDS THROUGH:

1. FOCUS GROUPS – best for generating ideas and

gaining customer insights

2. SURVEYS – asking questions by personal interview,

mail, telephone, internet

3. JOINT DEVELOPMENT AND TESTING – use to

adjust and adapt products after purchase

4. CUSTOMER VISITS – use on-site meetings for problem

identificationMcGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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ACQUIRE NEW CUSTOMERS

1. Calculate your current customer’s lifetime value (CLV) to serve as yardstick for planning

2. Find customers in a new segment who “look like” your existing customers

3. Expand into new geographic territory

4. Transfer/modify existing products for other industries


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17.3

$4,686$5,119$5,627 LTV/100 customers$ 649$ 769$ 919Acq+4$ 881$1,002$1,144Acq+3$1,222$1.331$1,455Acq+2$1,933$2.017$2,109Acq+1

NPV @ 20%NPV @ 10%NPV @ 10Discounting profits

Profit forecasts

Acq+1 [60 buyers ($90)]×.8 gr. profit–[100 accts×$20 service/acct] =Acq+2 [36 buyers ($90)+16 buyers ($60)] .8 gr. profit- [60 accts×$20+40 accts×$10] =Acq+3 [31.2 buyers($90)+9.6 buyers($60)+4.8 buyers($50)] .8 gr. profit- [52 accts×$20+24×$10+$24×$4] =Acq+4 [27.4 buyers ($90)+8.3 buyers ($60)+2.9 buyers ($50)+1.9 buyers ($50)]-

ScheduTrax Lifetime Value Analysis

8.3 9.616.0Customers 2.9 4.815.0

11.519.2$ 2$500.103

12.514.424.0$ 4$500.202

18.220.824.040.0$10$600.401

40.5

1.945.6

27.431.236.060.0100$20$900.600

4th Yr. after

acquisition

3rd Yr.after

acquisition

2nd Yr.after

acquisition

1st Yr.after

acquisitionAcquisition

PeriodAccount

Service CostsExpected $ Purchases

Purchase Probability

Yrs. since the Last Purchase

[45.6×$20+20.8×$10+14.4×$4+19.2×$2] =

Expected customer migrations following acquisition


Exhibit 5-4

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DEVELOPING OPPORTUNITIES THROUGH MARKETING RESEARCH

PURPOSE OF RESEARCH1

CUTOMER MANAGEMENT

2

ACQUIRE NEW CUTOMERS


ACHIEVED BY

1. CUSTOMER RESEARCH – through focus groups and surveys

2. INTERACTING WITH CUSTOMERS – through joint product development and product testing

3. DEVELOPING ON-SITE VISITATION PROGRAMS

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FINDING SEGMENTS

1. USE NAICS CODES TO ASSESS INDUSTRIES’ SIZE AND NEEDS

2. EVALUATE COMPANY CHARACTERISTICS SUCH AS SALES, NUMBER OF EMPLOYEES

3. DETERMINE A COMPANY’S BUYING PROCESSES AND HOW THEY BUY

4. MATCH PRODUCT OFFERINGS TO COMPANIES SEEKING WHAT PRODUCT DOES BEST


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Helpful / informative

BRAND D

BRAND C

BRAND A

BRAND B

Order processefficiency & accuracy

Reasonable price

After-sale service Rapid delivery

Technicalperformance


Exhibit 5-10

PERCEPTUAL MAP

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SEGMENTATION ANDOPPORTUNITY ANALYSIS

IDENTIFY SEGMENTS THROUGH INDUSTRY CLASSIFICATION (SIC / NAICS)

CHOOSE YOUR INDUSTRY TARGETS

CHOOSE YOUR SPECIFIC COMPANY TARGETS BY:

1. HOW THEY BUY2. THE BENEFITS THEY SEEK3. MEMBERSHIPS IN PROFESSIONAL / TRADE

ORGANIZATIONSMcGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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CRITERIA FOR SUCCESSFUL SEGMENTATION

• SEGMENT MUST BE IDENTIFIABLE-enumerated and evaluated

+• SEGMENT MUST BE ACCESSIBLE-

can be reached by marketing activity

+• SEGMENT MUST BE SUBSTANTIAL-

enough to justify efforts


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ESTIMATING SEGMENT SIZE

ANALYTICAL TOOLSFOR SEGMENT EVALUATION:

1. USE OF SCENARIOS - Articulate events and

futures

2. BUILDUP APPROACH/FACTORING –

Estimate product use in its applications

3. STATISTICAL SERIES – Use correlation

between demand and economic activitiesMcGraw-Hill/Irwin Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.

chap005 market opportunities current and potential customers

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