Designing a customer-driven strategy

Module 3: Designing a customer-driven strategy

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Personas

Whilst segmentation and target marketing serve to identify and validate the profitability of homogeneous customer groups; personas help to enrich those identities to understand better how to acquire, engage, and retain customers belonging to those groups. A persona is a snapshot of your typical or ideal customer—a personification of your target market. Personas are used as a marketing tool to provide insights into the needs, wants, and limitations of users or customers (Salminen et al. 2021; Cooper 2004; Jenkinson 1994).

Nielsen (2013) states that there are four different perspectives that a persona can take:

  1. Goal-directed perspective.
  2. Role-based perspective.
  3. Context/engagement perspective, which describes what the person is doing when they’re engaging with the brand (Sønderstrup-Andersen 2007).
  4. Fiction-based (archetypal) perspective.

The common feature of the first three perspectives is that the persona descriptions are founded on data to create an end-user profile or data-driven persona. The fourth perspective does not include data as a basis for the persona description. Still, it establishes personas from the designers’ intuition and assumptions or a purely fictional one—an ad hoc persona.

Ad hoc personas

Ad hoc personas can also take the form of extreme characters or users that help identify atypical user stories that often get overlooked or the alignment of assumption personas to assumptions made by the business about its customers or offerings, thereby making these assumptions explicit and open for testing and validation using actual data.

Data-driven personas

Data analysis creates these persona perspectives (data used to define your market segment is a good start). Data-driven personas are grounded in actual data points around demographic, geographic, psychographic, and behavioural variables:

  • Demographic data pertains to the tangible and quantifiable characteristics of a persona. These include age, income, gender, occupation, marital status, family status (number of children/dependents), education level, cultural orientation (membership of ethnic/religious groups), asset ownership, and access to capital/finance.
  • Geographic data reveal helpful information about the persona’s physical location and environment, such as language, currency, population density (i.e. urban/suburban/rural/other), the nature of retail, transportation infrastructure, communication channels/infrastructure, etc.
  • Psychographic data encapsulates in the persona the attitudes, aspirations, and beliefs prevalent in the target market. Examples include values, goals, attitudes, risk tolerance, information gathering practices, internal/external influences (what/who influences their decisions), pain points and more.
  • Behavioural data helps to understand how, when and where a persona uses your product or service. What instigates their thinking about it? How, when, and where does the product offering fit into the larger context of their day? Is it an afterthought? Is it planned? Do they avoid it? Do they embrace it?

Together demographic, geographic, psychographic, and behavioural data points are used to reflect the dynamic variables in the personas’ real lives. Collecting the data necessary to build a persona can be difficult if internal stakeholders are not engaged enough to provide or facilitate access to such data (Faily 2015). In this situation, Pruitt and Adlin (2006) suggest designing assumption personas as a starting point from which to validate or invalidate any assumptions held by the business and internal stakeholders

Personas often start as ad hoc or assumption-based, then become data-driven and thus more believable over time. If data sets are small, manual persona development (MPD) techniques are used to analyse data. For example, from primary data collection methods such as customer interviews, focus groups or surveys, and/or secondary data collection sources (e.g. from an existing company and industry data).

However, while MPD works well for small data sets, as online marketing analytics data becomes more prevalent and accessible, we now see the rise of digital data-driven persona development (DDPD) that uses quantitative ‘big data’ sets. In addition to scalability, digital DDPD offers enhanced objectivity, decreased costs and ‘updatability’; and can be used in conjunction with qualitative manual techniques using small data sets to provide deeper insights if necessary (Salminen et al. 2021, p. 1686). The Lexus video is an example of how digital DDPD was used to create a Lexus customer persona (‘Intuitive’) that was then used to inform the development of a television advertisement.

Watch

Often personas start out as assumption-based, then become data-driven over time. Watch the three videos listed below from LinkedIn Learning to learn more about the differences between assumption-based and data-driven personas:

These videos are from the LinkedIn Learning video series:

Nodder, C 2016, UX Design: 3 Creating Personas, LinkedIn Learning video series, viewed 10 January 2022, https://www.linkedin.com/learning/ux-design-3-creating-personas/what-is-a-persona.

Earlier in this subject, we discussed data sources and the need to identify relevant secondary (desktop) data sources so that you can make evidence-based marketing decisions. These sources are also valuable for creating a manual data-driven customer persona.

Creating a customer persona

If you create a document that profiles a customer segment, complete with a semi-fictional character that describes the roles this character has, the goals of the character, the challenges the character faces using some demographics, and a story that brings him to life, then you have succeeded in developing a customer persona that can move your business forward.

Watch

The following key video from LinkedIn Learning is important for your capstone assessment and presents a series of essential questions that should be addressed in creating a persona:

This video is from:

Ladd, D 2020, Marketing: Customer Segmentation, LinkedIn Learning video series, viewed 16 February 2022, https://www.linkedin.com/learning/marketing-customer-segmentation/common-ways-to-segment-customers.

You may like to revisit the video on Finding Secondary Sources in Module 2 Secondary (desktop data sources) video in relation to researching census data in developing your persona (probably at the end of the watch section).

Here is a summary of the key points from the video to help with the Capstone Assessment:

  • Semi-fictional character description that captures the essence of the target market. This is particularly important. The necessary components should include a name, the character’s title, and an image of the character (acknowledging the source) representing a typical customer in the segment. The title does not just have to be their title in their company if they even work for one. For example, there may be a segment of customers with the title ‘Chief Cleaner-Upper’ in the household goods market.
  • A day in the life that demonstrates an understanding of the character’s daily life. With a solid customer persona, you should be able to construct a one or two-paragraph summary of the key insights you have about this customer. What does success look like for the character, and what motivates the character?
  • Demographics and behaviours. These data points (age, income, education, usage rates, location, etc.) are helpful because they will be used to assist in targeting the character via advertising, media, and outreach.
  • Goals of the character concerning the product category. (This should be reflected not only in a section called ‘Goals’ but also in the story.) What is the character trying to achieve? What motivates the character? What are the character’s aspirations? Consider the elements of value, as discussed in Module 1. Ideally, you want to understand what benefits the character seeks when making a purchase decision in your product category. For example, if the character is responsible for buying clothing detergent for home, are the character’s goals to clean the laundry, or is the character looking for ways to make clothes last longer before they look old?
  • Pain points that the character faces today. This is critical to understand because most consumers make decisions to avoid pain. Are there areas where the character gets frustrated? Feels remorse over past decisions? Agonises over making choices? Feels confused about information? These are excellent sources for identifying product ideas, communication opportunities and service offerings.
  • Information search process for the character. What triggers the character’s search? How does the character evaluate information? What communication sources does the character trust, and how does the character compare his options? This step provides insights into the first three stages of the buyer decision-making process, as discussed in Module 2. These insights will be helpful in the design of your communication plan to reach the target persona.
  • Ideal purchase experience for the character. How does the character buy? How does the character use the product and services in this area? What happens after the purchase? This step provides insights into the fourth and fifth stages of the buyer decision-making process, as discussed in Module 2. Researching this area may uncover unmet needs or gaps in your current offerings that could help differentiate your product.
  • Common objections used by the character. From reading the persona, you want to understand why this character, which represents your target market, may not want to or even be unable to make a purchase decision. Possibly, this character does not have purchasing authority or access to payment terms. Or, it could be that the character is brand loyal to a product he grew up using. Discerning these blockers to a sale would be valuable input for your marketing plan.

Once the build of an excellent customer persona is complete, use it to evaluate the Ps of the marketing mix (product, price, place, promotion, people, process, and physical evidence), which can be done by asking questions such as:

  • Do you have the right products and services?
  • What pricing strategies should be employed to reach the target segment?
  • Are you reaching your target market at the right place? Or should you consider other distribution opportunities?
  • What adjustments need to be made to the promotional plans?
  • Do we have the right people? Are they well trained?
  • What adjustments need to be made to our processes?

Once built, a persona is also shared with other teams across the organisation to help staff better understand the customer, e.g. in customer service and call centre teams, research and development, operations and sales. They are also shared with partners, such as external creative advertising agencies, involved in developing the promotions mix.

Watch

The LinkedIn Learning video below suggests several creative ways of using customer personas in your marketing messaging:

This video is from:

Ladd, D 2020, Marketing: Customer Segmentation, LinkedIn Learning video series, viewed 16 February 2022, https://www.linkedin.com/learning/marketing-customer-segmentation/common-ways-to-segment-customers.

Watch

In this Industry Expert video (2:44 minutes), Lisa shares how she creates personas for end-users and intermediaries (i.e. doctors) to assist her in targeting the medicinal cannabis market segment.

Optional deep dive resources: Customer personas

The selection of resources below provides you with options for delving more deeply into the topic of customer personas. The expectation is not to watch or read all of them. Instead, you should choose the ones that are most relevant to your personal and/or professional interest or relevant to your Capstone Assessment.

Watch

This video from LinkedIn Learning (03:51 minutes) discusses the creation of multiple buyer personas in selling to the C-suite (B2B):

Bloomfield, J 2019, Define the C-suite buying personas, LinkedIn Learning video, viewed 9 February 2022, https://www.linkedin.com/learning/selling-to-the-c-suite/define-the-c-suite-buying-personas.

This next video from LinkedIn Learning (02:53 minutes) discusses the need to distinguish between buyers and users in B2B selling, which has implications for creating B2B personas:

Lotardo, EM & McLeod, LE 2018, Distinguish between buyers and users, LinkedIn Learning video, viewed 9 February 2022, https://www.linkedin.com/learning/selling-into-companies/distinguish-between-buyers-and-users?.

Read

In addition, the readings below cover various aspects and issues related to the creation and use of personas. These will be important for your capstone assessment.

If you would like to learn more about approaches to personas, read:

Neilsen, L 2013, ‘Chapter 1.10 Other approaches to personas‘, in Personas-user focused design, Elsevier, Amsterdam, pp. 12-15.

If you are looking for an example of a data-driven persona, read:

Adlin, T & Pruitt, J 2010, ‘Appendix B: Data-driven persona example‘, in The essential persona lifecycle: Your guide to building and using personas, Elsevier Science & Technology, Amsterdam, available from Proquest  Ebook Central.

The following two websites offer examples of business personas:

MarketSplash 2021, 10 best persona examples and how to create your own, viewed 11 January 2022, https://marketsplash.com/persona-examples/.

Wells, J 2019, ‘4 persona examples you can use in any industry‘, Brafton Fuel Your Brand, viewed 11 January 2022, https://www.brafton.com/blog/strategy/persona-examples-from-around-the-web-and-why-they-work/.

This article may be of interest to social entrepreneurs as it contains examples of not-for-profit personas:

Ortbal, K, Frazzette, N & Mehta, K 2016, ‘Constructed stakeholder personas: an educational tool for social entrepreneurs‘, Procedia Engineering, vol. 159, pp. 230–248.

This blog post gives a summary of how to create a persona using Google Analytics:

Salminen, J 2020, Persona creation using Google Analytics: Summary of methods, viewed 11 January 2022, https://persona.qcri.org/blog/persona-creation-using-google-analytics-summary-of-methods/.

This text poses the question of how relevant personas are in the age of online analytics and would be of interest to those looking to learn more about online analytics:

Salminen, J, Jansen, BJ, An, J, Kwak, H & Jung, S-G 2018, ‘Are personas done? Evaluating the usefulness of personas in the age of online analytics‘, Persona Studies, vol. 4, no. 2, pp. 47–65.

This text takes you through the evolution of DDPD and would be of interest to those wanting more background context to personas and their use today:

Salminen, J, Guan, K, Jung, S-G & Jansen, BJ 2021, ‘A survey of 15 years of data-driven persona development‘, International Journal of Human–Computer Interaction, vol. 37, no. 18, pp. 1685-1708, DOI:https://doi.org/10.1080/10447318.2021.1908670.

Tools

You can find more articles or ebooks on the personas. Test out these searches in the AIB Library.

 

 

Week 4 Products, Services and Brands

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Welcome to Week 4

This week commences our exploration of the 7Ps that comprise the extended marketing mix. We will explore them over the subsequent few modules, but we will start with ‘product’ this week. Marketers use this umbrella term to refer to any offering—which could be a physical good and/or an intangible service—that you take to market. It is a vital component of the marketing mix because it is the product offering that brings value to a target market. If you have it wrong, you have no basis for building customer relationships (Armstrong et al. 2021).

In this module, we start by defining the umbrella term ‘product’ and its two main classifications: consumer products and industrial products. We discuss the decisions companies make regarding their products and services, product lines and product mixes. We then turn our attention to services, the four characteristics that affect service marketing, and the additional marketing considerations that services require. We then look at the following three Ps of the extended marketing mix in detail—’process’, ‘people’ and ‘physical evidence’—which address these additional considerations of services.

Next, we discuss the brand strategies companies use to build and manage their brands, which are critical to our discussion of products because the brand image, value, and reputation precede and represent the product in the market. Towards the end of this module, we explore how companies find and develop new-product ideas. This includes a discussion of the stages of the product life cycle and how the management of marketing strategies changes during the product life cycle. We conclude by looking at socially responsible product decisions and touching on international product and service marketing.

What you will learn

  • Distinguish between the characteristics of goods, services and experiences.
  • Describe the levels of a product.
  • Identify the characteristics that affect the marketing of a service.
  • Describe how process, people and physical evidence contribute to creating value.
  • Recognise the role of the brand and identify brand strategies to build and manage brands.
  • Plot the product life cycle stages and identify how marketing strategies change over the product life cycle.

What you need to do

      • Work through Module 4: Products, Services and Brands.
      • Complete your First Assessment: Market analysis submission.
      • Complete the activities:
  • Activity 4.1 Product analysis
  • Activity 4.2 Analyse your 3Ps
  • Activity 4.3 Analyse the PLC of your brand.
      • View this week’s Assessment Preparation Guide to start building towards the Capstone Assessment
      • Attend this week’s webinar and bring your questions about anything you did not understand.

Week 5 Price and Place

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Welcome to Week 5

This week continues our exploration of the 7Ps of the marketing mix with two more critical components—’price’ and ‘place’. Our first P for the week is ‘price’. Price is a crucial part of the value proposition. We begin by learning about three main pricing strategies (customer value-based pricing, cost-based pricing and competition-based pricing) and the importance of understanding customer value perceptions, company costs and competitor strategies when setting prices. We also look at the other important external and internal factors affecting a company’s pricing decisions. Then, we turn our attention to four essential pricing considerations: how companies price new products; how companies determine a set of prices that maximises the profits from the total product mix; how companies adjust their prices to take into account different types of customers and situations; and the critical public policy issues related to initiating and responding to price changes. Our next P for the week is ‘place’, which marketers use to refer to how and where a product offer is fulfilled. Exploring place, we learn about supply chain management and how marketing channels add value. Finally, we look at marketing channels and how to organise them to create value.

What you will learn

  • Demonstrate understanding of customer value perception, company costs and competitor strategies when setting prices.
  • Identify appropriate pricing strategies taking into account external and internal factors.
  • Demonstrate an understanding of supply chain management and how marketing channels add value.
  • Describe and evaluate approaches to working with intermediaries or channel members to create customer value.

What you need to do

      • Work through Module 5: Price and Place.
      • Complete the activities:
  • Activity 5.1 Analyse your pricing strategy
  • Activity 5.2 Analyse place (Distribution).
      • View this week’s Assessment Preparation Guide to build towards the Capstone Assessment.
      • Attend this week’s webinar and bring your questions about anything you did not understand.

Week 6 Promotion

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Welcome to Week 6

This week, we conclude our exploration of the 7Ps of the extended marketing mix with our final ‘P’—promotion. We have left the discussion of this P to last for a good reason. Recall in Module 1; we discussed how most people closely associate marketing with selling and advertising. This week, we will (finally!) discuss selling and advertising as important promotion components. While these are the most visible components of marketing, we hope you are now far along in your marketing management learning journey to appreciate that marketing is much more than selling and advertising. In this module, we explore all five promotion mix tools for communicating customer value: advertising, public relations, personal selling, sales promotions and direct and digital marketing. We also look at the changing communications landscape and the need for integrated marketing communications. It is a lot to cover, so, throughout this module, you will have the option of diving deeply into those aspect/s of the promotion mix that are most relevant and interesting to you.

What you will learn
  • Demonstrate understanding of the elements of the promotion mix.
  • Identify the use of a push or pull communications strategy.
  • Demonstrate understanding of marketing communication models to plan communication objectives.
  • Identify the most appropriate promotion mix elements for your marketing needs.
What you need to do
  • Work through Module 6: Promotion.
  • Complete the activities:
    • Activity 6.1 Identify promotion mix strategies
    • Activity 6.2 Analyse your promotion mix.
  • View this week’s Assessment Preparation Guideto continue building towards the Capstone Assessment.
  • Attend this week’s webinar and bring your questions about anything you did not understand.

 

 

Module 7: Sustainable marketing

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Next: Consumerism, environmentalism and sustainable marketing principles ►

Sustainable marketing

In today’s world, the concept of sustainable marketing is of growing importance to the marketing process. As the call for greater environmental and social responsibility gets louder, marketing organisations proactively pursue sustainable marketing to create value for customers and society.

Source: adapted from Armstrong et al., 2021, p. 5

Sustainable marketing is defined as “socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs” (Armstrong et al. 2021, p. 456).

Sustainable marketing organisations act responsibly, together with consumers, public policymakers and others, to create value for customers to capture value from customers in return, now and in the future.

Watch

The video Sustainable marketing: what is it and how to use it (Solve It Like a Marketer 2021) (06:16 minutes) explores sustainable marketing by looking at the principles of ‘having a greater purpose’, ‘the buyer’s journey’, ‘customer needs’, and ‘live the message’. It also gives some suggestions on how you can apply these principles.

Read

Textbook section Sustainable marketing in Chapter 14 gives a detailed definition of sustainable marketing and illustrates its importance with the example of the Australian fashion brand Spell.

In particular, Figure 14.1 Sustainable Marketing illustrates the interplay of concepts making up sustainable marketing. Recall we learned in Module 1 the marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors. The sustainable marketing concept differs from this in that it considers both the societal marketing concept, that is, the future welfare of consumers, and the strategic planning concept (i.e. the company’s future needs) are equally important.

The Australian fashion brand, Spell, is an example of a profit-for-purpose business, also known as a social enterprise. Profit-for-purpose businesses aim to make a social impact while also maximising profits, which they then use to fund social programs.

Profit-for-purpose businesses, such as Spell, measure performance not only on financial outcomes but also on measures of environmental, economic, social and/or cultural impacts that are related to their missions, which must be published annually. A challenge for these businesses is measuring non-financial impacts, especially qualitative ones.

While numbers are easy to measure, e.g. decreased crime rates from the sale of a security product (good or service), it is much more challenging to measure the benefits of reduced fear and social tension resulting from a decrease in crime. Furthermore, while costs might be incurring today, the realisation of its benefits might not be immediate. It might also be challenging to link the benefits to the product or initiative as other variables may contribute (Worth 2020). Fortunately, international organisations, such as the World Bank, the European Union, United Nations, and the OECD, are developing metrics to measure the value of social enterprises.

Reflect

Spell is an Australian fashion brand. Some examples of social enterprises in other industries are:

  • Who Gives a Crap (toilet paper): allocates half of its profits to building toilets.
  • TOMs (shoes): allocates one-third of its profits to gifts of shoes that are manufactured in local communities.
  • OXFAM (stores): provides gifts of seeds, chickens, goats, etc., to foster self-reliance and tackle poverty.

What would be equivalent profit-for-purpose businesses in your local and/or national context?

Optional deep dive: Measuring social impact

If you are interested in learning more about measuring social impact in the context of a profit-for-purpose business, read:

The OECD Policy Brief, Noya, A 2015, Social Entrepreneurship – Social Impact Measurement for Social Enterprises, viewed 11 January 2022, https://www.oecd-ilibrary.org/content/paper/5jrtpbx7tw37-en.

Social Ventures Australia 2021, Insights and action to alleviate disadvantage, viewed 11 January 2022, https://www.socialventures.com.au/.

Social criticisms of marketing practices

There are many ways in which social critics, including consumer advocates and government agencies, have claimed that certain marketing practices hurt individual consumers, society, and other businesses. For example, according to Armstrong et al. (2021):

  • Individual consumers are hurt by: high prices related to high costs of distribution, advertising and excessive markups; deceptive practices related to pricing, promotion and packaging; high-pressure selling; shoddy, harmful or unsafe products; planned obsolescence; and poor service.
  • Society as a whole is hurt through: creating false wants and too much materialism, having too few social goods, and producing cultural pollution.
  • Other businesses are hurt through: acquisitions of competitors; marketing practices that create barriers to entry; unfair competitive marketing practices; and predatory pricing.

Marketers have responded to these criticisms. For example, according to Armstrong et al. (2021), in response to criticisms of individual consumers being hurt by high prices related to costs of distributionadvertising and excessive markups, marketers contend that marketing channel intermediaries add value by offering convenience (e.g. from retail outlets) that would otherwise have to be paid for by the producer. Also, advertising adds value by informing potential buyers of the product and its features and benefits. Marketers also contend that marketing organisations need to treat customers fairly if they are looking to build relationships and repeat business but that, at the same time, costs need to be covered. Profits need to be invested in research and development (or surpluses in an NFP need to be used to fulfil missions) to continue to operate in the future. Similarly, marketers contend that most marketing organisations will want to avoid deceptive practices, high-pressure-selling, shoddy, harmful or unsafe products and poor service because these will likely result in poor customer relationships that will not be good for business in the long term.

In addition, according to Armstrong et al. (2021), in response to criticisms of society as a whole being hurt through creating false wants and too much materialism, marketers contend that people have strong defences against marketing tactics such as advertising—consumers not relying on single sources of information, repeating purchases only if a value is delivered, and high new-product failure rates all indicate consumers are in control of demand, not organisations. Furthermore, in response to society hurting as a whole through cultural pollution resulting from the capacity of marketing and advertising messages to assault our senses (e.g. interrupting us, filling up our email boxes and social media feeds or marring beautiful scenery), marketers respond by contending that the advertising’s design is to primarily reach an intended target audience with an interest in the product (good or service). Further counterarguments to such criticisms over cultural pollution are that the costs of most media (television, radio, newspapers, and magazines) have significant subsidisation by advertising; that product placements often offset the costs of producing a film or television program; that viewers do now have options to ‘zap-past’ advertising; and that many countries have strict quotas in place to regulate the amount of imported advertising that is permissible.

Finally, according to Armstrong et al. (2021), in response to criticisms of other businesses being hurt through acquisitions of competitors, marketing practices that create barriers to entry, unfair competitive marketing practices and predatory pricing, marketers contend that most countries have regulators, such as the Australian Competition and Consumer Commission (ACCC). The ACCC’s role is to enforce the Competition and Consumer Act 2010 and a range of additional legislation aimed at promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.

Read

Textbook section social criticisms of marketing in Chapter 14 identifies the main social criticisms of marketing and how marketers respond to these concerns.