Seller Relationship and why it varies
• A relationship is a bond or connection between the firm and its customers.
• This may be strong, weak or nonexistent.
• It can be based on logic or emotion
• Logical bond – realization that a customer simply cannot get a better product elsewhere.
• Greatest potential for strong buyer-seller relationships exists when the product is an important part of consumers’ lives.
• Buyer-seller relationships are based on exchange, where each party expects, or perhaps even demands value for what is given (i.e. money for products).
• Customers who have a relationship with the firm tend to feel good about remaining loyal, are not as likely to seek out competitive offerings, actively promote the firm to others and are willing to pay higher prices.
• Over time, some customers will cease to be profitable and firms should take steps to dissolve the unprofitable relationships.
Integrated Lever Selection important in a marketing plan
• The 2Is allow firms to choose levers that can move customers through the relationship phases faster and more effectively than ever possible.
• the 2Is demands that firms leverage the 2Is across the matrix design as much as possible in order to advance customers to the commitment stage.
• Product – Individualization of user pages (Yahoo!) sustains commitment and increases switching costs. Individualization also spurs users to move from awareness to exploration.
• Pricing – Targeted price promotions, which can be both individualize and interactive in the form of a permission email, can advance users from exploration/ expansion to commitment by giving them a price incentive to make the purchase.
• Communications – Interactive targeted banner ads are a classic example of the 2Is influence on communications levers. Banner ads can be targeted at particular segments, and the interactivity of a banner ad allows a user to move from awareness to exploration just by clicking on it.
• Community – In the case of eBay, the strong vibrant community sustains buyers’ commitment by ensuring a constant supply of a wide range of goods. In turn, the large number of shoppers benefits sellers by driving up auction prices.
• Distribution – Interactivity allows for tight linkages between suppliers and buyers, which can facilitate a collaborative relationship that results in benefits in logistics, inventory planning and responsiveness, especially just-in-time production.
Ebay’s application of the Marketspace Matrix Change Over time
• Ebay began to utilize more levers, and the additions were focused in two places: the commitment column in the matrix became heavily utilized, as did the community row.
• Ebay did also seek to drive awareness and exploration among new users, but the firm designed the bulk of the new levers added to the matrix to advance users to the commitment stage and keep them there.
Key principles for lever selection within the Marketspace Matrix
Choose Levers to Effect a Change
· Firms must understand the behavioral change they are trying to create.
· After establishing the desired outcome, the optimal levers will be easier to pick.
· E.g. Amazon.com 1-click ordering capability
Determine Which Levers Have the Most Leverage
· Firms must understand which levers are decisive in moving customers from one stage to another.
· While one lever may help generate awareness or exploration, another may prove to be the tipping point from one stage to another.
· E.g.: Offline sale of cosmetics
o Magazine ads generate awareness, but decisive point is at the cosmetic counter. Firms thus need to move customers to the counter since that is the commitment or dissolution point.
Consider Barriers to Advancement
· Need to understand what prevents people from moving from one stage to another.
· The obstacle that stands in the way of advancement should be the target of a lever.
· E.g.Handspring adopted Palm operating system for its devices so that Handspring users could use existing Palm applications (product lever) and was able to compete and build awareness using the price lever.
Consider the Medium’s Effect on Desired Behavior
· To advance from one stage to another, the medium used for the awareness stage may be quite different from the one for the commitment stage.
· E.g.MSN CarPoint – To enable commitment behavior, CarPoint refers customers to local dealers who have the customer’s car of choice, a unique distribution lever.
Level of Involvement Matters
· High-involvement purchases will have different marketing levers than low-involvement purchases.
· To know which lever to use, firms need to understand where the product falls on the involvement spectrum.
· E.g. High-involvement decision is a consumer’s choice of bank.
Understand Consumer Learning Trends
· Firms need to understand how consumers learn about products.
· Often different segments learn in different ways. Elderly customers usually do so through offline channels whereas younger consumers usually do so through the Internet.
· For firms to effectively reach their target customers, they must use marketing levers that are consistent with the preferred learning processes of that particular segment, especially during the awareness and exploration stages.
Credibility of the Channel Matters
· The credibility of the channel matters more than the literal message.
· A message can be ignored when delivered via one medium, but completely absorbed when delivered by another.
· E.g. The Blair Witch Project
o By choosing to initially promote the movie almost exclusively via the Internet, promoters were able to create a hype and anticipation around the movie and its release that would not have been possible through conventional channels.
The Choice of Levers Must be Consistent with Positioning Choice
· The firm’s marketing levers must support the choice of position the firm takes in a certain segment of the market.
· This would mean that certain levers would be ruled out and others will be more attractive.
· E.g. American Express Platinum Card
o Personal invitations are sent to potential members which is consistent with the positioning of prestige, exclusivity and unique services for the frequent spender.
The Medium can be the Message – or the Product
· By choosing the channel, the firm is already making a choice about what it is saying.
· E.g. By advertising in Town and Country, the firm is perceived as targeting an affluent audience with fairly conservative values, even if it sells eggs.
Matrix Design Must be Adaptive
· A firm must be able to adapt its matrix to respond to evaluation of the campaign and changes in the market.
· As levers prove ineffective or extremely effective, resources must be allocated in response to these discoveries.