Marketing in the business system customer acquisition and retention in VS .NET

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Marketing in the business system customer acquisition and retention
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Traditionally, competition for customers is de ned as arising from other rms in the industry, which make products or provide services similar to those of the company This industry perspective is irrelevant when the company s focus is on solving customer problems Customers are interested in what they buy, not whether the buyer belongs to a particular industry Competitors should be identi ed, therefore, from the customer s viewpoint In this view of the business system, banks and software companies, though from separate traditional industries, could be competitors in supplying customers with added-value products and services like e-money and smart cards Similarly, banks and insurance companies provide competing nancial services From an industrial economics viewpoint, neither would consider the other as competitors Increasing industry convergence and the breakdown of traditional industry boundaries mean that the traditional view of competition is becoming less relevant (Hamel and Prahalad 1994, p 45) A similar situation arises on the supply side; rms compete with the company in attracting the resources of suppliers Competition for suppliers frequently crosses traditional industry and international boundaries Listening to and working with suppliers are just as important as listening to customers (Brandenburger and Nalebuff 1996) Many companies now recognize the importance of working with suppliers, acknowledging that they are equal partners in the creation of value within the business system In this view of the business system, supplier relations are just as important as customer relations Both share the common goal of increasing wealth Both create value and provide access to markets, technology and information In the traditional view of the business system the company serves customers and depends on suppliers for essential raw materials and other inputs As we move further into the knowledge-based economy, such complementary relationships on the supply side are likely to become standard practice This is especially true where there is a large initial investment and where the variable costs are relatively modest Practically all costs in designing computer software, for example, are xed, so the larger the market, the greater the leverage and the more development costs can be spread
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Positioning in the business system
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The objective of the organization is to manage the business system to achieve an increase in the level of perceived value added or a reduction in the price charged In that way the total perceived value to the customer exceeds the collective cost to the organization of performing the value activities embodied in the nal product Positioning for competitive advantage in this sense is based on the organization s ability to manage the business system to provide
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[94] Strategic Marketing
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the nal customer with the desired perceived value at the lowest delivered cost which requires superior performance in at least one of the business system activities (Bradley and O Reag in 2002; Gilbert and Strebel 1988) Only by a adding more value in this way can the organization develop a competitive advantage and thereby survive in a particular business system Obtaining competitive advantage by positioning the organization in the business system means identifying ways of sourcing manufactured components and launching products included in the organization s portfolio The core of the business system positioning concept is the recognition that the organization competes within a business system, not an industry (Brandenburger and Nalebuff 1996; Lanning and Michaels 1988) A productive activity is viewed as a chain of many parts ranging from design to use by the nal customer The various parts of this chain can be ordered, therefore, in terms of stages of perceived value added Competition among organizations takes place at the product level but increasingly at the capability level Successful marketing strategies take advantage of the organization s capabilities but recognize that no capability gives a permanent advantage For example, Honda is known for its capability in engines which it applies in cars, lawn mowers and motorcycles Canon has a known capability in optical imaging and scanning which it applies with great success in copiers, fax machines and cameras Casio applies its capabilities in component miniaturization in calculators, watches, small TVs and hand-held personal computers A traditional view of the value chain stems from the idea of value being added progressively to a product as it passes through stages: inbound logistics, operations, outbound logistics, marketing, sales and service (Porter 1985) The Porter framework of value creation is, however, essentially production driven with an emphasis on the margin accruing to the organization It does not adequately consider marketing activities in the process of adding value in the business system This limitation is removed by viewing the marketing value system as consisting of all the activities and organizations that create and deliver value to customers (Figure 61) This gure is a modi cation and extension of Figure 16 Here concern rests with the four columns under the business system sub-heading The business functions column is a traditional Porter value system that is linked to the three major dynamic activities of marketing product development, customer acquisition and customer retention, represented by the column to the left while the following column describes information ows required in the ful lment of marketing and business tasks research and development, market and customer research The left-most column represents integrated marketing communications activities Also apparent in Figure 61, indicated by arrows, is the large number of interfaces critical to marketing, always considered a boundary spanning process function in the organization (Carson et al 1999, p 116)
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Competition in the business system [95]
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