Market-Based Management : Strategies for Growing Customer Value and Profitability

by Best, Roger

• ISBN13: 9780131469563
• ISBN10: 0131469568
• Edition: 4th
• Format: Paperback
• Copyright: 2009-01-01
• Publisher: Pearson College Div

Summary

This unique book is built around a performance orientation and the belief that real learning occurs only with the application of knowledge. It emphasizes market-based managementwith a focus on the linkages between marketing strategy and profitability, and provides a systematic method for learners to evaluate the profit impact of a marketing strategy.Coverage that goes beyond marketing fundamentals features a three-fold integration of market-driven strategy, customer satisfaction, and profitable growthgiving readers the tools and techniques for delivering higher levels of customer satisfaction, marketing productivity and profitability. A special effort was made to include more coverage of customer loyalty marketing, performance metrics, customer relationship marketing, and brand and product line strategies.For anyone interested in strategic marketing.

Table of Contents

Preface	xviii
About the Author	xxi
Acknowledgments	xxii
PART I MARKET ORIENTATION AND PERFORMANCE	3	(58)
CHAPTER 1 CUSTOMER FOCUS AND MANAGING CUSTOMER LOYALTY	5	(30)
Customer Focus and Profitability	5	(9)
How to Underwhelm Customers and Shareholders	6	(1)
Customer Focus and Customer Satisfaction	6	(2)
Customer Satisfaction: A Key Marketing Performance Metric	8	(1)
A Wide-Angle View of Customer Satisfaction	8	(2)
De-Averaging Customer Satisfaction and Customer Profitability	10	(2)
Profit Impact of Customer Dissatisfaction	12	(2)
Profit Impact of Customer Retention	14	(5)
Customer Satisfaction and Customer Retention	15	(1)
Customer Retention and Customer Life Expectancy	16	(1)
The Lifetime Value of a Customer	17	(2)
Customer Loyalty and Managing Customer Loyalty	19	(5)
Measuring Customer Loyalty	19	(1)
Customer Loyalty and Customer Relationship Marketing	20	(2)
Top Performers	22	(1)
Underachievers	22	(1)
High Potentials	22	(1)
Nonprofits	22	(1)
New Customer Acquisition	23	(1)
Win-Back Customers	23	(1)
Managing Customer Exit	23	(1)
Building a Marketing Orientation	24	(4)
Marketing Knowledge	25	(2)
Marketing Leadership	27	(1)
Market Orientation and Employee Satisfaction	28	(1)
Summary	28	(1)
Market-Based Logic and Strategic Thinking	29	(1)
Marketing Performance Tools	30	(2)
Notes	32	(2)
Appendix 1.1 Present Value Table	34	(1)
CHAPTER 2 MARKETING PERFORMANCE AND MARKETING PROFITABILITY	35	(26)
Market Versus Financial Performance	36	(2)
Marketing Performance	36	(1)
A Market-Based Strategy	37	(1)
Marketing Performance Metrics	38	(2)
Internal Versus External Performance Metrics	39	(1)
In-Process Versus End-Result Performance Metrics	39	(1)
Marketing Profitability	40	(7)
Measuring Marketing Profitability	41	(2)
Net Marketing Contribution-Product Focus	43	(2)
Net Marketing Contribution and Business Unit Profitability	45	(1)
Marketing Profitability-A Customer Focus	46	(1)
Marketing Strategies and Profitable Growth	47	(4)
Strategies to Grow Market Demand	48	(1)
Strategies to Increase Market Share	49	(1)
Strategies to Increase Revenue per Customer	49	(1)
Strategies to Lower Variable Cost	50	(1)
Strategies to Increase Market Efficiency	50	(1)
Marketing Profitability Metrics	51	(4)
Marketing Return on Sales	51	(1)
Marketing Return on Investment	52	(2)
Profit Impact of Marketing Profitability Metrics	54	(1)
Summary	55	(1)
Market-Based Logic and Strategic Thinking	56	(1)
Marketing Performance Tools	56	(2)
Notes	58	(3)
PART II MARKET ANALYSIS	61	(138)
CHAPTER 3 MARKET POTENTIAL, MARKET DEMAND, AND MARKET SHARE	63	(32)
Market Definition	63	(6)
Broad Market Vision	66	(1)
Vertical Versus Lateral Market Demand	67	(1)
Served Market Definition	68	(1)
Market Potential	69	(9)
Untapped Market Opportunities	69	(1)
Awareness	69	(1)
Availability	70	(1)
Ability to Use	70	(1)
Benefit Deficiency	70	(1)
Affordability	71	(1)
Market Development Index	72	(1)
Market Potential and Market Growth	72	(1)
Rate of Market Development	73	(1)
Accelerating Market Growth	74	(1)
Customer Adoption Forces	75	(1)
Product Adoption Forces	75	(2)
Market Demand	77	(1)
Projecting Future Market Demand	77	(1)
Product Life Cycle	78	(5)
Market Demand, Prices, and Marketing Expenses	79	(1)
Product Life Cycle and Marketing Profitability	80	(2)
Generic Product Life Cycle Versus Individual Product Life Cycles	82	(1)
Market Share and Share Potential	83	(6)
Share Development Tree	83	(2)
Product Awareness	85	(1)
Product Attractiveness	85	(1)
Price Acceptable	86	(1)
Product Availability	86	(1)
Service Experience	86	(1)
Market Share Index	86	(1)
Share Potential and Market Share Management	87	(1)
Market Share Potential	88	(1)
Share Development Index	88	(1)
Summary	89	(1)
Market-Based Logic and Strategic Thinking	90	(1)
Marketing Performance Tools	91	(3)
Notes	94	(1)
CHAPTER 4 CUSTOMER ANALYSIS AND VALUE CREATION	95	(40)
Discovering Customer Benefits	96	(9)
A Day in the Life of a Customer	96	(1)
Empathic Design	96	(2)
Lead User Analysis	98	(1)
Staple Yourself to an Order	99	(1)
Kano Method	100	(1)
The Kano Measurement Process	101	(2)
Managing Customer Satisfaction/Dissatisfaction	103	(1)
Customer Benefits and Customer Value	104	(1)
Life Cycle Costs and Value Creation	105	(5)
Low Price	106	(1)
Acquisition Costs	106	(1)
Usage Costs	106	(1)
Ownership Costs	107	(1)
Maintenance Costs	107	(1)
Disposal Costs	108	(2)
Price-Performance and Value Creation	110	(3)
Relative Performance	110	(1)
Relative Price	110	(1)
Customer Value	111	(1)
Value Map	112	(1)
Perceived Benefits and Value Creation	113	(5)
Product Benefits	113	(1)
Service Benefits	114	(1)
Company or Brand Benefits	115	(1)
Overall Customer Benefits	115	(1)
Perceived Cost of Purchase	116	(1)
Perceived Customer Value	117	(1)
Emotional Benefits and Value Creation	118	(1)
Emotional Benefits and Psychological Value	118	(1)
Brand Personality and Value Creation	118	(1)
Transaction Cost and Value Creation	119	(3)
Space Value	120	(1)
Transaction Value	121	(1)
Value Creation Across the Supply Chain	121	(1)
Identifying Value Drivers	122	(3)
Customer Preferences	123	(1)
Customer Value	124	(1)
Customer Analysis Tools	125	(2)
Discovery Methods	126	(1)
Process Methods	126	(1)
Tracking Methods	126	(1)
Testing Methods	127	(1)
Analysis Methods	127	(1)
Summary	127	(2)
Market-Based Logic and Strategic Thinking	129	(1)
Marketing Performance Tools	130	(2)
Notes	132	(2)
Appendix 4.1 Trade-Off Analysis Computations	134	(1)
CHAPTER 5 MARKET SEGMENTATION AND CUSTOMER RELATIONSHIP MARKETING	135	(34)
Customer Needs	136	(4)
Forces That Shape Consumer Market Needs	136	(1)
Demographic Influences	137	(1)
Lifestyle Influences	137	(1)
Usage Behaviors	137	(1)
Forces That Shape Business Market Needs	138	(1)
Firmographics	138	(1)
Business Culture	139	(1)
Usage Behaviors	139	(1)
Needs-Based Market Segmentation	140	(9)
The Demographic Trap	140	(1)
Needs-Based Market Segments	140	(1)
Segment Identification	141	(2)
Segment Attractiveness	143	(2)
Segment Profitability	145	(2)
Segment Positioning	147	(1)
Segment Strategy Acid Test	148	(1)
Segment Marketing Mix Strategy	149	(1)
Segmentation Strategies	149	(7)
Mass Market Strategy	149	(1)
Large Segment Strategy	150	(1)
Adjacent Segment Strategies	151	(1)
Multi-Segment Strategies	151	(2)
Small Segment Strategy	153	(1)
Niche Segment Strategies	154	(1)
Sub-Segment Strategies	155	(1)
Customer Relationship Marketing	156	(7)
Customer Value Versus Company Value	157	(2)
Database Marketing	159	(1)
Mass Personalization	159	(1)
Mass Customization	160	(2)
Customer Relationship Management	162	(1)
Summary	163	(1)
Market-Based Logic and Strategic Thinking	164	(1)
Marketing Performance Tools	165	(2)
Notes	167	(2)
CHAPTER 6 COMPETITOR ANALYSIS AND SOURCES OF ADVANTAGE	169	(30)
Knowledge Is a Source of Advantage	169	(3)
Frontal Attack Strategy	170	(1)
Oblique Strategy	171	(1)
Competition and Competitive Position	172	(2)
Industry Analysis	174	(3)
Barriers to Entry	174	(1)
Barriers to Exit	175	(1)
Customer Buying Power	175	(1)
Supplier Selling Power	176	(1)
Product Substitutes	176	(1)
Competitive Rivalry	176	(1)
Prisoner's Dilemma	177	(1)
Competitive Position	177	(7)
Benchmark Competitors	178	(1)
Competitor Analysis	178	(2)
Competitor Intelligence	180	(1)
A Sample Competitor Analysis	181	(2)
Competitive Benchmarking	183	(1)
Sources of Competitive Advantage	184	(1)
Cost Advantage	185	(4)
Variable Cost Advantage	185	(2)
Marketing Cost Advantage	187	(1)
Operating Cost Advantage	188	(1)
Differentiation Advantage	189	(2)
Product Advantage	189	(1)
Service Advantage	189	(1)
Reputation Advantage	190	(1)
Marketing Advantage	191	(1)
Channel Advantage	191	(1)
Sales Force Advantage	191	(1)
Brand Awareness	192	(1)
Summary	192	(1)
Market-Based Logic and Strategic Thinking	193	(1)
Marketing Performance Tools	194	(2)
Notes	196	(3)
PART III MARKETING MIX STRATEGIES	199	(128)
CHAPTER 7 PRODUCT POSITIONING, BRANDING, AND PRODUCT LINE STRATEGIES	201	(36)
Product Positioning	201	(6)
Product Positioning and Market Share	204	(1)
Product Positioning Strategies	205	(2)
Product Positioning and Differentiation	207	(6)
Product Differentiation	207	(3)
Service Differentiation	210	(2)
Brand Differentiation	212	(1)
Low Cost of Purchase	212	(1)
Branding and Brand Management Strategies	213	(7)
Brand Identity	213	(1)
Brand Encoding	214	(1)
Company and Product Name	215	(3)
Brand Name Development	218	(1)
Creating a New Brand Name	218	(2)
Brand Equity	220	(3)
Brand Assets	220	(1)
Brand Liabilities	221	(1)
Brand Equity	222	(1)
Brand and Product-Line Strategies	223	(8)
Product-Line Development	224	(1)
Umbrella and Flanker Brands	224	(2)
Product-Line Extensions	226	(2)
Bundling and Unbundling Strategies	228	(1)
Product-Line Substitution Effects	229	(1)
Product-Line Scale Effects	230	(1)
Summary	231	(1)
Market-Based Logic and Strategic Thinking	232	(1)
Marketing Performance Tools	233	(3)
Notes	236	(1)
CHAPTER 8 MARKET BASED PRICING AND PRICING STRATEGIES	237	(34)
Understanding Life Cycle Costs	238	(3)
Market-Based Pricing	241	(5)
Skim Pricing	242	(1)
Value-In-Use Pricing	242	(1)
Perceived Value Pricing	243	(1)
Segment Pricing	244	(1)
Strategic-Account Pricing	245	(1)
Plus-One Pricing	246	(1)
Cost-Based Pricing Strategies	246	(6)
Floor Pricing	246	(1)
Cost-Plus Pricing	247	(1)
Penetration Pricing	248	(1)
Low-Cost Leader Pricing	249	(1)
Competitive Bid Pricing	250	(1)
Harvest Pricing	251	(1)
Pricing and Profitability	252	(4)
Total Contribution	253	(3)
Price Elasticity and Performance	256	(5)
Inelastic Price Performance	257	(1)
Elastic Price Performance	258	(1)
Ease of Switching	259	(1)
Supply/Demand Conditions	260	(1)
Product-Line Pricing	261	(3)
Pricing Substitute Products	261	(1)
Pricing Complementary Products	262	(2)
Summary	264	(1)
Market-Based Logic and Strategic Thinking	265	(1)
Marketing Performance Tools	266	(4)
Notes	270	(1)
CHAPTER 9 MARKETING CHANNELS AND E-MARKETING	271	(28)
Marketing Channels and Channel Strategy	272	(2)
Marketing Channel Performance	274	(3)
Customer Reach	275	(1)
Operating Efficiency	276	(1)
Service Quality	277	(1)
Alternative Channel Systems	277	(6)
Direct Channel Systems	277	(1)
Indirect Channel Systems	278	(2)
Mixed Channel Systems	280	(1)
B2C Channels	280	(1)
B2B Channels	280	(3)
Channel Systems That Build Customer Value	283	(5)
Delivering Product Benefits	283	(1)
Delivering Service Benefits	284	(1)
Building Brand Image	285	(1)
Building Company Benefits	285	(1)
Improving Cost Efficiency	286	(2)
Channel Systems and Competitive Advantage	288	(2)
Sales Force Advantage	288	(1)
Sales Productivity	288	(1)
Distribution Advantage	289	(1)
Profit Impact of Alternative Marketing Channels	290	(3)
Summary	293	(1)
Market-Based Logic and Strategic Thinking	294	(1)
Marketing Performance Tools	295	(2)
Notes	297	(2)
CHAPTER 10 MARKETING COMMUNICATIONS AND CUSTOMER RESPONSE	299	(28)
Marketing Communications	300	(2)
Strategies to Increase Customer Response	302	(2)
Building Customer Awareness and Comprehension	304	(6)
Media Selection and Customer Awareness	304	(2)
Message Frequency and Customer Awareness	306	(2)
Ad Copy and Customer Response	308	(2)
Message Reinforcement	310	(2)
Message Reinforcement and Pulsing	310	(1)
Heavy-Up Message Frequency	311	(1)
Stimulating Customer Action	312	(1)
Push Versus Pull Communications Strategies	312	(1)
Pull Communications and Customer Response	313	(5)
Advertising Elasticity	314	(1)
Advertising Carryover Effects	315	(1)
Direct Marketing Promotions	316	(1)
Promotional Price Elasticity	317	(1)
Push Communications and Customer Response	318	(4)
Trade Promotions and Customer Response	319	(1)
Forward Buying and Customer Response	319	(3)
Summary	322	(1)
Market-Based Logic and Strategic Thinking	323	(1)
Marketing Performance Tools	323	(2)
Notes	325	(2)
PART IV STRATEGIC MARKETING	327	(76)
CHAPTER 11 STRATEGIC MARKET PLANNING	329	(24)
Product-Market Diversification	329	(2)
Two Levels of Diversification	331	(1)
Strategic Market Planning Process	332	(1)
Business Performance	333	(1)
Market Attractiveness	334	(2)
Competitive Advantage	336	(1)
Portfolio Analysis and Strategic Market Plans	336	(7)
Offensive Strategic Market Plans and Performance Impact	340	(1)
Defensive Strategic Market Plans and Performance Impact	341	(2)
Marketing Mix Strategy and Performance Plan	343	(3)
Marketing Mix Strategy	343	(1)
Performance Plan	343	(3)
Summary	346	(1)
Market-Based Logic and Strategic Thinking	347	(1)
Marketing Performance Tools	348	(4)
Notes	352	(1)
CHAPTER 12 OFFENSIVE STRATEGIES	353	(24)
Strategic Market Plans	354	(1)
Offensive Strategic Market Plans	355	(2)
Offensive Core Strategy I: Invest to Grow Sales	357	(5)
Offensive Strategy IA: Grow Market Share	357	(1)
Offensive Strategy IB: Grow Revenue per Customer	358	(1)
Offensive Strategy IC: Enter New-Market Segments	359	(1)
Offensive Strategy ID: Expand Market Demand	360	(2)
Offensive Core Strategy II: Improve Competitive Position	362	(3)
Offensive Strategy IIA: Improve Customer Loyalty and Retention	363	(1)
Offensive Strategy IIB: Improve Differentiation Advantage	363	(1)
Offensive Strategy IIC: Lower Costs/Improve Marketing Productivity	364	(1)
Offensive Strategy IID: Build Marketing Advantage	364	(1)
Offensive Core Strategy III: Enter New Markets	365	(4)
Offensive Strategy IIIA: Enter Related New Markets	365	(1)
Offensive Strategy IIIB: Enter Unrelated New Markets	366	(2)
Offensive Strategy IIIC: Enter New Emerging Markets	368	(1)
Offensive Strategy IIID: Develop New Markets	368	(1)
Choosing Offensive Strategic Market Plans	369	(2)
Summary	371	(1)
Market-Based Logic and Strategic Thinking	372	(1)
Marketing Performance Tools	373	(2)
Notes	375	(2)
CHAPTER 13 DEFENSIVE STRATEGIES	377	(26)
Defensive Strategic Market Plans	378	(2)
Defensive Core Strategy I: Protect Position	380	(7)
Defensive Strategy IA: Protect Market Share	381	(5)
Defensive Strategy IB: Build Customer Retention	386	(1)
Defensive Core Strategy II: Optimize Position	387	(4)
Defensive Strategy IIA: Maximize Net Marketing Contribution	388	(2)
Defensive Strategy IIB: Reduce Market Focus	390	(1)
Defensive Core Strategy III: Monetize, Harvest, or Divest	391	(4)
Defensive Strategy IIIA: Manage for Cash Flow	391	(1)
Defensive Strategy IIIB: Harvest-Divest for Cash Flow	392	(3)
Selecting a Defensive Strategy	395	(1)
Summary	396	(2)
Market-Based Logic and Strategic Thinking	398	(1)
Marketing Performance Tools	398	(3)
Notes	401	(2)
PART V MARKETING PLANS AND PERFORMANCE	403	(85)
CHAPTER 14 BUILDING A MARKETING PLAN	405	(42)
Creativity Versus Structure	406	(1)
Benefits of Building a Marketing Plan	407	(1)
Identifying Opportunities	407	(1)
Leveraging Core Capabilities	407	(1)
Focused Marketing Strategy	407	(1)
Resource Allocation	408	(1)
Performance Roadmap	408	(1)
Building a Marketing Plan: Process and Logic	408	(11)
Step I: Situation Analysis	410	(1)
Step II: SWOT Analysis	411	(1)
Step III: Strategic Market Plan	412	(2)
Step IV: Marketing Mix Strategy	414	(1)
Step V: Marketing Budget	415	(2)
Step VI: Performance Timeline	417	(1)
Step VII: Performance Evaluation	417	(2)
Sample Marketing Plan	419	(4)
Step I: Situation Analysis	419	(1)
Step II: SWOT Analysis	420	(1)
Step III: Strategic Market Plan	421	(1)
Step IV: Marketing Mix Strategy	421	(1)
Step V: Marketing Budget	422	(1)
Step VI: Marketing Performance Plan	422	(1)
Step VII: Performance Evaluation	422	(1)
Summary	423	(1)
Market-Based Logic and Strategic Thinking	423	(1)
Marketing Performance Tools	424	(2)
Notes	426	(1)
Appendix 14.1 Sample Marketing Plan	427	(20)
CHAPTER 15 PERFORMANCE METRICS AND STRATEGY IMPLEMENTATION	447	(20)
Marketing Performance Metrics	448	(2)
Process Versus End-Result Market Metrics	450	(3)
Process Market Metrics	451	(1)
End-Result Market Metrics	452	(1)
Successful Strategy Implementation	453	(7)
Owning the Marketing Plan	453	(2)
Supporting the Marketing Plan	455	(2)
Adapting the Marketing Plan	457	(2)
Assessing Marketing Plan Implementation	459	(1)
Variance Analysis: Planned Versus Actual Performance	460	(3)
Summary	463	(1)
Market-Based Logic and Strategic Thinking	464	(1)
Marketing Performance Tools	465	(1)
Notes	466	(1)
CHAPTER 16 MARKET BASED MANAGEMENT AND FINANCIAL PERFORMANCE	467	(21)
Customer Satisfaction and Profitability	468	(2)
How Marketing Strategies Affect Profitability	470	(4)
Customer Volume	471	(1)
Margin per Customer	472	(1)
Total Contribution	472	(1)
Net Marketing Contribution	473	(1)
Net Profit (Before Taxes)	473	(1)
How Marketing Strategies Affect Assets	474	(4)
Investment in Accounts Receivable	474	(1)
Investment in Inventory	475	(1)
Investment in Fixed Assets	476	(2)
Return Measures of Profitability	478	(1)
Measures of Shareholder Value	478	(3)
Market-Based Management	481	(3)
Summary	484	(1)
Market-Based Logic and Strategic Thinking	484	(1)
Marketing Performance Tools	485	(2)
Notes	487	(1)
Glossary	488	(8)
Credits	496	(1)
Index	497