DQE-Based Marketing and customer trend analysis

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DQE-Based Marketing and customer trend analysis

• Anthony Okuogume Timo Karjalainen
• Kajaani University Consortium
• Ninetta Chaniotou, Kainuun Etu Oy

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Contents

• Purpose of lecture
• Target group
• What is a market?
• Strategic marketing management
• DQE as Strategic marketing Moderator
• Customer trend analysis
• DQE as a Trend Setter
• DQE-based customer trend analysis
• List of key literatures

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DQE-Based Marketing and customer trend analysis

• Purpose of this lecture
• This course is part of a lecture series focused
  on developing firms products/services and
  activities from the point of view of design,
  quality and environmental friendliness.
• Through the DQE process it is possible for firms
  to crystallize key developmental targets which
  will lead to the enhancement of customers values
  built on products. The final objective however,
  is increased sales and competitiveness!
• Target group
• The lecture is for business students and
  consultants. The objective of the lecture is to
  provide key information and guidance of how
  DQE-products should be marketed, and what to
  expect.

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Marketing and customer trend analysis

• Objectives
• To highlight the importance of strategic
  marketing orientation in the design - quality and
  environmentally friendly products and services
  (DQE approach)
• To help SMEs to realize better competitiveness
  on its DQE products
• To crystalize key developmental targets in SMEs
  marketing strategies

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What do we mean by DQE?

• What is the DQE approach?
• What is the DQE tool?
• How does it relate to the market?
• Market individual preferences societal values
  (significant numbers of the individual
  preferences)

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WHAT IS A MARKET?

• FOR A MARKET TO EXIST
• There must be people with particular needs and
  wants and one or more products that can satisfy
  those needs.
• Likewise, buyers must both be willing and able to
  purchase products that satisfies their needs and
  wants.
• Therefore, a product market consists of a
  specific product (or line of related products)
  that can satisfy a set of needs for the people
  (or org) willing and able to purchase the product

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Why pursue market driven strategies?

• Analysis of successful business strategies
  points to the central importance of market-based
  strategies.
• These strategies start with a clear understanding
  of the market and how it is likely to change
• A market-driven orientation becomes the basis for
  deciding how, when, and where to compete
• (Craven,Lambs and Crittenden, 1990)

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Market Orientation

• The Identification of customers needs, to meet
  those needs more effectively than competitors
• The process begins with the customer and uses
  actual demand as a means to focus resources
  (e.g., Pareto Law)
• There is a strong emphasis in building long-term
  relationships with customers
• We believe the key to the future customer
  orientation is dqe orientation
• It seeks to build customers loyalty by means of
  consistently offering superior value and are well
  informed of the competitors position

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Why customer orientation would lead to mutually
beneficial exchanges
OFFERS Products, service, etc.
Provider goals survival financial social spiritual
Ecological etc.
Customer goals Solution Benefits etc.
Customer satisfaction
Responses Purchases, support, etc
(Hooley et al., 1998)
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Dqe-based definition of Marketing

• In DQE perspective, Market individual
  preferences societal values (significant
  numbers of the individual preferences)
• Kotlers (19844) definition of marketing
• "marketing is a social process, through which
  individuals and groups get what they need and
  want by creating and exchanging products and
  values among themselves
• From a DQE point of view, marketing is a social
  process for the creation and exchange of values
  (values on the other hand, is the sum of
  individual preferences (values) plus societal
  values)

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Dqe-based definition of Marketing

• In defining marketing, the product plan, which
  aims to generate new products or services, is not
  seen as a separate activity, but rather as an
  essential part of the marketing process
• SourceDqe criteria

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Why Strategic Market management?

• The inclusion of the term market between the
  phrase, strategic management stresses
• that strategy development should be market and
  environment driven
• the process should be proactive rather than
  reactive and the focus is on influencing the
  environment as well as responding to it (Aaker)

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Strategic Marketing management

• According to David A. Aaker (1998)
• Strategic Marketing management
• Is proactive and future oriented
• Rather than simply accepting the environment as
  given, it can be influenced and perhaps even
  controlled with creative, active strategies
  (emphasis added)
• Why it is important to be proactive to dqe values
• Dqe moderates advantages needed to sustain and
  extend competitiveness in current and for future
  markets

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Why Strategic orientations?

• Gary Hamel C.K. Prahalad
• Managers should have a clear and shared
  understanding of how their industry may be
  different in 10 years and a strategy for
  competing in that world

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Strategic orientations

• Challenges firms to evaluate the extent to
  which
• It has a distinctive farsighted view of the
  future rather than being conventional and
  reactive
• It focus on regenerating core strategies than on
  core processes
• It focus on building key strengths in innovation
  and competitiveness
• Strategic orientation can be optimized through
  the application of DQE method

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Why market driven strategy?

• Gaining competitive advantage in marketing is a
  continuing process.
• An important part of this challenge is analyzing
  and strategically responding to changing
  environmental opportunities and threats.
• Why dqe is market oriented?

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DQE AS TREND SETTER?
What new DQE moderated competences to build to
sustain and extend competitiveness in current
markets
What new DQE moderated competences can be built
to create future markets ?
NEW
DQE moderated core competences
What new products or services could be created by
creatively redeploying current DQE moderated
competences or advantages?
What are the opportunities to improve
competitiveness in current market by better
leveraging of DQE moderated competences
EXISTING
MARKET
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Why Market Analysis?

• It is the process through which the trends in the
  broader market and the needs of specific segments
  are evaluated
• It allows the attractiveness of a given market to
  be accurately determined
• It allows the assessment of factors driving
  change in the market
• It is a tool for analyzing competitors and
  identifying alternative offerings that serve the
  specific market segment

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Dimension of Market Analysis

• ACTUAL AND POTENTIAL MARKET SIZE
• MARKET GROWTH
• MARKET PROFITABILITY
• COST STRUCTURE
• DISTRIBUTION SYSTEMS
• TRENDS AND DEVELOPMENT
• KEY SUCCESS FACTORS
• KEY DQE FACTORS (Company and market based)

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ACTUAL AND POTENTIAL MARKET SIZE.
THE MARKET PIE
market size
potential market size
marketshare
Market Growth
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POTENTIAL MARKET SIZE.

• Analysis of the additional sales that can be
  generated if new users were attracted.
• if new uses were invented.
• if current buyers can be enticed to use the
  product or service more frequently.
• Enticed through the application of the DQE
  approach
• DQE based offerings
• The promotion of responsible consumption which
  not only will lead to healthy environment but
  also, to new business possibilities

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MARKET GROWTH

• growth means more sales and profits even if
  market share remain constant.
• It also means less price pressures.
• Market growth analysis An estimation of the
  future market size.

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MARKET PROFITABILITY

• Questions to answer
• What is the intensity of competition among
  existing rivals
• That is, in what way are they competing?
  (e.g.,Are they competing on dqe factors?)
• Are there any potential competitor/s who may
  enter segment if profits are more attractive
• Are there any substitute products which may
  attract customers if prices could rise in current
  product market?
• What are the bargaining powers of customers?
• What are the bargaining powers of suppliers?

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COST STRUCTRE

• WHAT ARE THE COST STRUCTURE?
• For example, an analysis of the value-chain may
  uncover the value-added stage which may represent
  the most critical costs component.
• For example, the dqe environmental factor such as
  recycling and promoting responsible consumption
  brings key benefits that can have tremendous
  impacts on costs
• Achieving cost advantage at this stage can be
  critical for building competitive advantage and
  profitability.

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Porters 5-factor Model of Market Profitability
Threats of Potential Entrants
Bargaining Power of Customers
Bargaining power of Suppliers
COMPETITION AMONG EXISTING FIRMS
Threats of substitutes Products
(Adopted fromAaker, 1998)
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DISTRIBUTION SYSTEM

• Questions to answer
• what alternative channel of distributions are
  available?
• what are the existing trends?
• what are the dominant channel/s?
• what new channels have or will emerge?
• who controls the channels and how would this
  likely to change in the future?
• what is the implication of the DQE approach on
  the choice of distribution strategy?

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MARKET TRENDS

• What are the major trend/s in respect to D, Q,
  and E issues?
• For example, what are the major consumer trends
  regarding quality? Are consumers willing to pay
  higher price for longer life cycle products?
• What are the consumer trends in relation to new
  products and innovative design?
• Are consumers willing to buy recycled products?
• Are consumers willing to pay more for an
  environmentally friendly product?
• Branch analysis
• For example, an analysis of the customers
  competitors the market allows the trend/s to be
  uncovered
• From the DQE point of view
• Information on users
• Hopes, fears, lifestyle, preferences and attitude
  towards life (values)
• Market gaps
• In product areas
• User's preferences
• Time frame (the when and time suitability factor)
• Importance of product design and market trends
  for orientating business towards new products and
  finally towards innovation.

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How is the dqe values communicated or embedded in
your products or services?

• Price policy and DQE products (how is value
  proposition communicated?)
• Image creation how do you build your brand?
• Identity is what we build but,
• mage is what the customer thinks
• you are!
• Brand is the persona behind
• the product
• Marketing schools
• Transactional Vs
• Relationship school
• Price trends
• Product and business
• sustainability

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Table 1 A comparison of the major theoretical
approaches to marketing1
The marketing mix approach The relational marketing approach
World view Managing a companys product portfolio, setting and modifying marketing mix-parameters to achieve optimal 4P configuration Managing a companys customer portfolio, building long-term business relationships
Key concepts 4 Ps, segmentation, branding etc. Interaction, relationships and networks
Foreign market entry The choice of a product/market, defining the goals in the target market, the choice of entry mode, developing the marketing plan for penetration, the creation of control systems for monitoring Focuses on the character and number of business relationships developed with other firms in the foreign network as well as with actors that are active in the development of these relationships
Market interaction One-way communication, formal market studies, the seller is the active counterpart Interactive communication, mutual learning and adaptations, all interaction parties active
Differentiation Product differentiation Relationship differentiation
Negotiations Not seen as important Crucial
Promotion Non-personal advertising, brand and image management Through personal interaction, developing identity as a reliable supplier in a network
Mutuality Not seen as important, own short-term goals and market opportunism are the central focus Seen as very important, own long-term goals are achieved through concessions in short-term goals

1 Source Alajoutsijärvi et al., 1997.
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KEY SUCCESS FACTORS

• In this context, the goal of market analysis is
  to identify key success factors in a market.
• Key questions
• What are the basis for competitive advantage?
• What competences are critical for competing now
  and in the future?
• DQE point of view
• In what ways does the application of the DQE
  criteria lead to the development of critical
  competences for sustaining competitiveness in
  current and future markets?
• For example
• Sometimes cheaper
• Sometimes better
• Sometimes more innovative
• Sometimes more expensive, etc.

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An excellent product is a necessary but not
sufficient condition for successful performance
in todays marketplace!
Source Funky Business
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customer trend analysis

• To serve your customers with excellence, you will
  have to know them better!

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The typical customerHave more choices than ever
before!
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
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Choice
Temptation
Time
Trust
Tribe
Values Beliefs
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The typical customerHave more choices than ever
before But they also have
Time Poverty
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice

Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Choice
Attention Poverty
Choice
Choice
Choice
Choice
That is why we need to be different and to offer
something unique!
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Types of offerings
value, complexity
Transformation, Authencity
emotions, experiences
services
Goods
commodities
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How you serve your customer
Your Biz Inc.
Market intelligence
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A customer-centric solution
Your Biz Inc.
Distribution
Product development
Marketing
Production
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How we get to know our customers

• At a point we learn more of our target customers
  through segmention
• Market segmentation
• We Identify and profile distinct groups of buyers
  who differ in their needs and preferences.
• With this knowledge better targeting decisions
  can be made

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E.g., How Hightech customers are understood
Typical Segmentation based on technology adoption
Categories of techonlogy adopters
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How we uncover Customers Needs

• By
• primary customer research doing surveys,
  interviews, focus groups on needs
• Secondary customer research reading
  industry/market studies by analysts
• Benefit studies cost savings, value-in-use,
  customers purchase/use/disposal process
• Revealed preference what they pay for (partial)
  equivalents
• Internal Databases Analyzing electronic
  collections of information obtained from data
  sources within the company.

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Customer trend analysis

• definitions
• Customers
• The entities (business, consumer, or government)
  who (potentially) use the product more
  accurately, the end-customers!

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Customer trend analysis

• What are customer trends ?
• Trends is about change and about recognising what
  is important to the customer
• Customers and what they want change continuosly
• Being quick to recognise those changes and
  provide products they want will give your
  business the competitive edge
• Learn to identify emerging trends It improves
  values to the customer and also, sales turnovers
  and profitability
• Dqe methodology is a customer trend moderator for
  key reasons
• using dqe methods firms can uncover emerging
  customer trends
• Through the application of Dqe methods firms can
  proactively become trend setters! (Please see)

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DQE AS TREND SETTER?
What new DQE moderated competences to build to
sustain and extend competitiveness in current
markets
What new DQE moderated competences can be built
to create future markets ?
NEW
DQE moderated core competences
What new products or services could be created by
creatively redeploying current DQE moderated
competences or advantages?
What are your opportunities to improve
competitiveness in current market by a better
leveraging of DQE moderated competences
EXISTING
MARKET
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Trends Fashion Appeal

• To follow the trends is making our offerings most
  fashionable.
• Fashionable is what is currently acceptable,
  popular appeal or style
• Also, making an offering fashionable means that a
  company must add value to its products with
  distinctive style and design in accordance with
  current or future trends.

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Understanding customer trend

• There are three kinds of companies
• Those who make things happen
• Those who watch things happen
• And those who wonder whats happen
• Where do you want to stand?

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Customer Trends

• How can customer trends be better understood ?
• Firstly, the choice of approach is determined by
  what is being offered and
• by the way value is created in the firm
• As we can create value through the value chain
  process or a more customer-centric value
  creation process!

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The position of offerings based on the DQE
approach
value, complexity
Transformation, Authencity
emotions, experiences
services
Goods
commodities
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Customer Trend DQE approach

• Products made based on the DQE designs should
  offer more than the tangible benefits.
• In this case the tangible products are platforms
  in which emotional benefits (e.g., the DQE
  philosophy!) are built on.
• That means customers who buy a DQE product must
  share in the beliefs represented in the
  offerings.
• The customers are unique and this calls for
  nitch marketing strategies.
• This would allows the firm to build better
  knowledge of its customers and how to serve them
  better than its competitors.

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WELCOME TO THE KARAOKE MARKETPLACE/PACE!

• Where the creation of value happens at the
  exchange point
• Value is co-created with customers
• Companies can only enable customer with offerings
  that allow them to fulfil experiences
• Value is embedded in experiences
• Products and services are platforms in which
  customers can build personified experiences

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Knowing your customer better

• Grönroos, (1997) see marketing as the
  establishment, maintenance, and enhancement of
  relationships with customers and other partners,
  at a profit, so that the objectives of the
  parties involved are met
• That means that through the relationships with
  customers we meet and exceed their needs!

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Knowing your customer better

• How do you know your customer in a relationship?
• To answer this question lets look at a classical
  relationship, love relationship
• How do you know if your partner still loves you?
• How do you know whats going on in your love
  relationship?

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Knowing your customer better

• Do you employ spouse satisfaction research?
• Spouse research Do you analyze generally
  available data on spouse behaviors and trends?
• Do you keep internal database on spouse revealed
  preference?
• No! I dont think you do any of these!
• Why?
• Because You will know!

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Knowing your customer better

• You will know because the nature of the
  relationship is different!
• The foundamental value in a love relationship is
  love.
• Love is mutual and it is co-created!
• Everything arround that relationship are
  platforms built to fulfil that altimate emotional
  value, love!
• Therefore, information on what happens in love
  life is real-time!

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Model of Consumer Behavior
Marketing and Other Stimuli
Economic Technological Political Cultural
Buyers Black Box
Product Price Place Promotion
DQE Moderated
Characteristics Affecting Consumer Behavior
Buyers Decision Process
Buyers Response
Purchase Timing Purchase Amount
Product Choice Brand Choice Dealer Choice
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Knowing your customer better is knowledge-based
marketing

• Knowledge-based marketing
• You have to Integrate the customer in your
  business
• Use knowledge to become market driven
• Develop the right structure that will support
  market driven approach
• Marketing shifts from monologue to dialogue
• Typical one-way communication would decline
• And advertisements would come to serve no purpose
• In co-creation, our knowledge of the customer
  becomes real-time!

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Thank You!
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Refrences

• David Aaker (1998) strategic market management.
  John Wiley Sons, NY
• DQE Criteria
• Gilmore James Pine Joseph (1999) The experience
  economy.
• Gilmore James Pine Joseph (2002) The experience
  is the marketing. Strategic horizons.
• Grönroos, (1997)
• Grönroos Christian From marketing mix to
  relationship marketing - towards a paradigm shift
  in marketing. Management Decision 35/4, 1997
  322-339.
• Hamel Gary and Prahalad C.K. Competing for the
  future. HBS Press, 1996.
• Hooley Graham, Saunders A. John Piercy F.
  Nigel Marketing strategy and Competitive
  Positioning. Prentice Hall, London, 1998.
• John Grant (1999) The New Marketing
  Manifesto.TEXERE, London.
• Kotler Philip Armstrong Gary (2004) Principle
  of marketing
• Lauri Kuukasjärvi-Dqe project
• Normann Richard and Ramirez Rafael From value
  chain to value constellation. HBR, July-August,
  1993 65-77.