Knowledge Application

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Knowledge Application
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• Marketing is about using knowledge to understand
  and satisfy customer needs
• Early successes were mass marketing brands (e.g.
  Coca Cola, Wrigleys)
• Tedlow proposes mass marketing demands knowledge
  of
• Exploiting economies of scale
• Re-investment of profits into promotion
• How to create integrated vertical market systems
• Produce high volumes at reasonable/low prices to
  create barriers of entry to competition

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Functional Knowledge About Market Research
Knowledge of Markets
Determination of Market Need
Functional Knowledge About Market Analysis
Provision of Appropriate Product
Marketing Programmes
Market Response Assessment
FIGURE 21 THE USE OF KNOWLEDGE TO SUPPORT MASS
MARKETING
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• View that classic mass of single standard product
  is no longer always appropriate
• Emergence of using knowledge to identify market
  segments of differing needs
• Early attempts (e.g. socio-demographic
  segmentation) limited by quality of knowledge
  generated by research
• Advent of low cost powerful IT systems has
  permitted more effective segmentation analysis

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• Cluster analysis software permits rapid analysis
  of customer buying records
• Discriminant function analysis to determine
  product benefit clusters
• Advent of e-commerce has greatly increased volume
  of real time data concerning customer purchase
  behaviour
• Emergence of data warehousing and data mining
  technology to generate new knowledge

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• Niche marketing is about using in-depth knowledge
  of small group of customers to satisfy their
  special needs
• Popular strategy of smaller firms
• Sometimes what starts as a niche business evolves
  into a global operation (e.g. Microsoft)
• Data mining permitting large firms to acquire
  knowledge that permits entry into niches

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Style

• Early marketing theory focused on managing next
  transaction or sale transactional marketing
• Research in Europe (IMP Group) led to recognition
  that transactional marketing is arms length
  relationship
• Research revealed in some markets that firms
  sought to build long term relationships with
  customers

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• Emergence of TQM and JIT stimulated need for use
  of knowledge to develop collaborative
  relationships
• Reichfeld evolved concept of zero defection
  based on demonstrating value from lifelong
  customer relationship
• Emergence of relationship marketing philosophy
• Extremist proposed transactional marketing was
  obsolete

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• More sensible approach is to accept both styles
  are appropriate, it depends upon market
  circumstance

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11 Marketing

• Every customer has specific need to be satisfied
• Use knowledge of need to build 11 relationship
• In use in industrial markets (e.g. construction)
  for years
• Pine proposed that, by becoming orientated
  towards customisation of products, could begin to
  move towards philosophy in consumer goods markets

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• Made feasible by advent of JIT permitting
  flexible and fast response to customer needs
• Example of Dell permitting on-line consumer
  customers to specify computer design required
• Concept aided by knowledge being accumulated from
  data mining
• Example of Amazon.com making customised response
  based on prior book orders

12

• Restriction is company must be able to make
  profit from offering specific customised product
  to individual customers