marketing strategy for flt photo. the house of customer
DESCRIPTION
The House of Customer is an application of a Quality Deployment tool (the House of Quality) to the marketing. Here is an example of application to a printing company. All mathematical calculations are not reported. Enjoy it! ;)TRANSCRIPT
“FLT PHOTO”
“If you have a picture on your computer, you'll
have a look at it just few times but if you print it
then you can do it forever!”
Misino Edoardo 818354
Negri Erika 816288
Ravishankar Arvind 814504
Sborgia Marco 820620
Zucchi Paolo 814308
1. Company Description and purpose 2. Market analysis
• Macro-environmental analysis PEST analysis
• Demand analysis – macro view point Qualification: market qualification Definition: 6O model Measurement: Winters model
• Demand analysis – micro view point Customer profile
• Offering analysis PORTER analysis
• SWOT analysis
3. Decisions • Segmentation
Survey research • Targeting • Positioning
Value curve • Marketing strategy
The house of customer Final decisions: operational marketing Marketing mix
Product Price Place Promotion
4. Budgeting and conclusions
INDEX
COMPANY DESCRIPTION AND
PURPOSE COMPANY:
FLT is one of the biggest printing company of north Italy, specialized in high personalized
products.
They do not have any retail store, they deliver their products using intermediate sellers.
2000: They create a direct selling channel opening a web site.
(downloading a software it is possible to create personalized photos and gifts)
Recently, they introduced a more direct web-selling process.
(without downloading any software)
Nowadays, they are experiencing a negative trend, worsened by the economic crisis
and the competition!
PURPOSE:
The changing of environment (increase of web markets) and the globalization bring the market to
become global; making difficult to compete with “the best” international companies.
This project aims to understand the AS-IS situation and to suggest to FLT the best way
to overcome this period, raising its brand image and its sales in the Italian & European market.
PROJECT DESCRIPTION AND PURPOSE
Market Analysis: according to the general
marketing structure we made a deep analysis of
the market in order to understand how the
environment is (PEST analysis, Market
Qualification, “6 O” model and Porter analysis),
how FLT is working on it (macro-analysis:
Winters Model) and who our customers are
(micro-analysis: Customer Profile). The final
output of this analysis is: the SWOT analysis.
Decisions: the aim of this paragraph is: first,
to explain segmentation, targeting and
positioning in the market; second, to provide
a new marketing tool in order to translate
needs into decisions (The House of the
Customer); third, to take a new approach for
the marketing mix: translating decisions into
a cohesive program. With this structure the
Customer begins the central influencer of
company’s decisions and the House of
Customer is the tool that translate its needs.
Budgeting and Conclusions: develop a
real and applicable offer, trying to
help FLT to grow.
The project follows three macro-areas:
PROJECT DESCRIPTION AND PURPOSE A
na
lysis
D
ecis
ion
s
Bu
dg
et
• PEST analysis
• Market Qualification
• 6 0 model
• Porter analysis
• Winter model
• Customer Profile
SWOT
• Segmentation
• Targeting
• Positioning
• The House of Customer
• Marketing Mix
• Budget
Customer
PEST ANALYSIS MARKET ANALYSIS: macro-environment analysis
A market is defined by what it addresses, be it a product, a company, a brand, a business
unit, a proposition, an idea, etc..; so, it is important to be clear about how you define the
market analyzed. The PEST analysis provides a clear definition of the market. We use it to
review FLT strategy and position, through a marketing point of view.
POLITICAL and ECONOMICAL
• GENERAL VIEW
•The highest fiscal pressure in whole Europe (52%)
•Monetary strategy: current monetary inflation 3.3 %.
• Government stability is critical
• The Italian economy used to be driven in large part by the
manufacture of high-quality consumer goods produced by small and
medium-sized enterprises, many of them family-owned.
• In 2012 economic growth and labor market conditions deteriorated, with negative
growth of -2.3%, unemployment rising to nearly 11%, with youth unemployment
around 35% (see the picture comparison between Germany, blue line, and Italy,
green line). The government has undertaken several reform initiatives designed to
increase long-term economic growth.
• Average yearly income per household: 21,104 US$.
• ICT
• During the 2013 electoral campaign new concepts as E-democracy and social
media have entered strongly in the political scenario, with the first on-line primary
elections occurred totally on the web (M5S, 2013).
.
• Italy ranks at 70th position in ADSL average speed (4.56Mbps) and the digital
divide is still a problem tackled through European and National investments (€ 320
Mln)
• Companies more active on web export more: 39% of the export turnover of small
and medium enterprises digitally enhanced derives from the online marketing of
their products. Italy’s data are significantly lower than those that characterize the
international scenario and European e-commerce, but its commitment to digitization
is clearly increasing: in 2012, the Italians web shopper were up 30%, touching the
share of 12 million units, about 40% of Internet users in our country.
MARKET ANALYSIS: macro-environment analysis
SOCIO-CULTURAL
• POPULATION
• Today Italian population: more than 60 million people (60.702.570 people), 7.5% of
them are immigrant.
• Old country Population (20.3% of the population is over 65 years) and its growth rate
is 0.38%.
• RELATIONSHIPS & COMMUNICATION
• Italians prefer to do business with people they know and trust. Italians much prefer
face-to-face contact, therefore it is important to spend time in Italy developing the
relationship. Networking can be a full-time occupation in Italy.
•Personal contacts allow people to get ahead.
MARKET ANALYSIS: macro-environment analysis
TECHNOLOGICAL
• MARKET DRIVERS IN ITALY:
• cloud computing
• digitalization of public administration
• Mobile broadband
• Tablets
• e-Commerce
• Social networking
• SOCIAL MEDIA
• People accessing the Internet at least once a month are
28.9 million (+3.8%).
It is a man dominated network, but women are growing.
• ADVERTISING MARKET
• More than a half of the advertising money spent in
the country goes to one media: television, but internet is growing too. We are going to
becoming a market like one the UK, where Internet
left TV behind.
% OF INTERNET USERS
MARKET QUALIFICATION MARKET ANALYSIS: demand analysis macro view point qualification
Population of
Italy
60.702.570
9-16
4.522.990
17-30
9.570.491
31-50
18.701.259
51-60
7.746.256
61-74
9.230.428
9-16
2.171.035
17-30
9.091.966
31-50
16.831.133 51-60
6.197.005
61-74
5.538.257
9-16
151.972
17-30
4.727.823 31-50
7.574.010
51-60
1.239.401
61-74
276.913
POTENTIAL
PENETRATED
AVAILABLE SERVED
QUALIFIED
3.432.250
31.197
49.771.424
39.829.396
13.970.119
Understanding the actual market potentialities helps to know where you are today and forecast where
you will be tomorrow.
MARKET ANALYSIS: demand analysis macro view point qualification
POTENTIAL market that is achieved when the marketing effort is infinite
we consider the whole Italy excluding the ages surely not interested in our products( x<9,x>74)
QUALIFIED market with the requisites to be available for the purchase
we consider people with web access
AVAILABLE the qualified market with the requisite to be able to spend enough
we consider people who can buy on the internet (credit-card, pay-pal,..)
SERVED available market that is reached by marketing efforts
We find it through a geographic research on website users and considering that FLT can reach the whole Italy
PENETRATED market already purchased
Data given by FLT marketing manager
«6O» MODEL
•Bulk purchasing, World of Mouth purchasing, speculating purchasing, blanket purchasing
•High Quality Digital Photo Printing for all types of products, projects and occasions (calendars, canvas, I-phone covers) . Socially connected with the customers to precisely analyze requirements and to provide services at a competitive price through a reliable delivery channel.
OFFERING
•Families, Small Business Units, Advertising channel, Social Activists, Academicians, Entertainment Industry. OCCUPANTS
•Anniversaries, Birthdays, Project Portfolio Publishing, Advertising and Business Development activities, festivity (Christmas, Easter).
OCCASIONS
ORGANISATION
OBJECTIVES
OPERATIONS
• Supermarkets, Photographic Store and Websites.
• Customer Solution, Cost, Convenience and Communication.
MARKET ANALYSIS: demand analysis macro view point definition
1
3
5
2
4
PORTER ANALYSIS
MARKET ANALYSIS: offering analysis
3 POTENTIAL ENTRANTS:
Low entry barriers (affordable
capital requirements, only on the
website, so low fixed costs) but low
profit. This sector has low
attractiveness.
MEDIUM-LOW
2 SUBSTITUTE PRODUCTS:
Nowadays there a lot of indirect
competitors with digital products,
such as storage devices. This is the
reason why people do not feel the need
to print. The broader competition is
moving toward digital photo frames.
HIGH
4 BARGAIN POWER OF
SUPPLIERS:
FLT is a big company in this sector,
therefore it has a high bargaining power
with its suppliers. On contrary,
regarding photo papers, they can only
choose between two suppliers.
MEDIUM
1 INTERNAL COMPETITION:
Companies offer products with similar characteristics. The buyer’s decision-
making variables are the brand name and popularity: technological interfacing
is what differentiate you from your competitors.
MEDIUM-HIGH
5 BARGAIN POWER OF
BUYERS:
There are many competitors who can
offer the same product (high Elasticity)
on the website. Distributors like
Esselunga and Mediaworld have more
bargaining power than FLT. This
means that we must differentiate from
our competitors
HIGH
WINTERS MODEL Due to the structure of the company and markets in which FLT operates (Software in-store,
Software end-users and Web-site end-users), we decided to measure the three different channels
market size, instead of every single products.
• Objective: market size forecast of existing markets in 2014.
• Available data: quantitative data of 2011, 2012 and 2013.
• Markets are affected by trend and seasonal variation .
The above factors suggest the choice of using the Winters forecasting model.
We describe below the most important steps and the results. *
First step: thanks to quantitative data of 2011, 2012 and 2013 demands, it is possible to make
an analysis in order to understand the size of each market.
Results: VALUE market size
2011(€) 2012(€) 2013(€) Tot % var
Sw in-store 550.892 442.470 368.184 -33%
Sw end-us 2.109.591 1.614.702 1.035.651 -51%
Web end-us 299.728 542.199 553.127 +85%
TOT 2.960.211 2.599.370 1.956.963 -34%
This analysis keeps in consideration the trends and seasonality in each market (s=12
months)
MARKET ANALYSIS: demand analysis macro view point measurement
* NOTE: for the calculations just see the excel file “FLTgroup18-Demand&Budget”-paper1
Second step: initialization. Calculation of starting trend, mean and seasonality
Fourth step: calculation of forecast demand from Dec 2013 to Nov 2014 and MAD, SDE and CVE.
m is equal to 2 now for Dec 2013 and
3, 4 and so on for the following months.
The three indicators show how our
model fits the reality. In the following
slide we report the demand forecast
only for “web”. For the others look at
the note * .
MARKET ANALYSIS: demand analysis macro view point measurement
Third step: calculation of mean, trend and seasonality of the t period from Jan 2013 to Nov 2013
in order to forecast its demand.
In order to have a better estimation we started
with initial numbers (α=β=γ=0,3) and then we
calculated the best ones that minimize modular
errors (2013 forecast minus 2013 demand). We use
the “excel resolute” to solve that optimization
problem.
m is equal to one because the demand forecast is
made using the previous period data.
* NOTE: excel file “FLTgroup18-Demand&Budget”-paper2-3-4
0
1000
2000
3000
4000
5000
6000
1 13 25 37
Demand D(t) Forecast F(t) F(2014)
The colored cells are associated to
the formula of the same color
reported in the previous slide.
It is interesting to underline the
huge error in January 2013
(period 25): comparing it with the
errors in the other 2 markets (sw
in-store and sw end-users) it is
possible to conclude that it is an
out of order period, with un-
common sells, but considering the
variation in this type of market it
is plausible to find such strange
data.
Looking also to the other two
markets forecast demands we can
make some considerations:
2014 will be another year of
recession, but the company is
strong and has a lot of
possibilities of improvement.
Therefore it is time to take action!
Website Demand
MARKET ANALYSIS: demand analysis macro view point measurement
MAD 67
SDE 186,77
CVE 0,09
α 0,973348
β 0,090335
γ 0,9
F(2014)
Dec-13 4606,05
Jan-14 2909,33
Feb-14 1441,22
Mar-14 1474,41
Apr-14 1337,95
May-14 1631,63
Jun-14 1552,65
Jul-14 1631,26
Aug-14 1637,39
Sep-14 3001,09
Oct-14 2105,42
Nov-14 2409,03
Receiving the product quickly
Creating the product request quickly
Finding the suitable website quickly
Relationship with the company
Knowing the phase of advancement
Having durable products
MARKET ANALYSIS: demand analysis micro view point
CUSTOMER PROFILE We want to define the needs and the wants of our existing and potential customers. We have three
kind of customers: new entrants, switchers from other companies, loyal clients. In order to do that, we
made some interviews to people who have already bought products from companies similar to FLT and
to others who have never bought these kind of products. The issues are the followings:
3. Once the customer decides to
print something…
Need to find the right website in the first
ranking position in the web search
1. Once a customer makes the request…
Need to receive it at home or in the shop, as
quickly as possible.
2. Once a customer is on the website or in a
shop…
Need of making own product personalization as
quickly as possible
4. Need to be able to communicate with the
company either during the personalization
of a product or during the use of the
software
5. Once made the personalization…
Need to know where the product is and how
much time it needs will be delivered
6. Need to have a product that lasts
through years, reminding the vision “A
print is forever”
MARKET ANALYSIS: demand analysis micro view point
Having a high quality print
Having a high level of print personalization
Having a high level of adds personalization
Having a good post sale assistance
Having a high reachability of the website
Acting good with a simple click
12. A print is not just a print.
Need to feel good knowing for
instance that the company you chose
is somehow green
10. Need to maintain
communication with the
company after the delivery
9. Need to personalize products’
characteristics : adding texts,
draws, images,…
8. Need to have editing tools
available (i.e. effects, shadows,
details,…)
7. Need for having high quality
print: good paper, high quality
colors,…
11. Time that a customer need to
search a web site that satisfies
his requests
PROBLEM RECOGNITION
Understand the need of having a photo printed, in order to see it every day, or the need to do a particular present
GATHERING INFORMATIONS
Publicity, past experiences, word of mouth, internet, social networks, company site EVALUATION OF
ALTERNATIVES
Evaluation of all the value drivers among competitors if possible, otherwise, just a part especially for new entrants or switchers. Depending on available alternatives in the location.
PURCHASE
DECISIONS Directly on the
site, on the bases
of its simplicity,
usability,..
MARKET ANALYSIS: demand analysis micro view point
ROLES: INITIATORS: people between 16-75 years old interested in this
kind of service
INFLUENCERS: loyal clients, switcher and the company itself
DECIDERS: final customer
BUYERS: final customer
USERS: final customer
POST-
PURCHASE Confirm satisfaction in
the service becoming or
keeping on being a
loyal customer.
Customer care
SWOT ANALYSIS
Software: even if it has some problems and its sales are decreasing little by little, it is a good point of differentiation with competitors. Historically value added for customers.
Customer care: FLT always wants to satisfy its customers: if there are some problems the product will be replaced. Furthermore, there is high quality and eco-friendly products.
Website functions: during the last two years the company has invested a lot on it, but it is far from international printing colossus yet (for instance: Vistaprint).
Shops visibility: the shops’ channel is a good and direct contact with customers. The problem is that people who print through this channel do not know FLT’s name.
Web visibility: the website is not easy to find. There is also a problem of clarity : there are three Flt websites and this could generate confusion in customer’s mind.
Actual
Machineries: All competitors use more or less the same kind of machineries, but, with such a technological market, the opportunities could be behind the corner.
Link with social networks: this market is literally taking off. There is the opportunity to invest either on advertising or improving the demand through networks tools.
The economic crisis seems continuing on and the number of customers is decreasing. Moreover, the taxes are increasing this could lead to problems in effort costs.
SWOT THREATS
OPPORTUNITIES
STRENGTHS WEAKNESSES
MARKET ANALYSIS: swot analysis
SURVEY RESEARCH In order to analyze and understand our market segments, we decided to make a survey research. This
survey is based on a questionnaire that goes through customer needs, specifying different weights. It
works in the following way: there is a fixed number of points (60) to divide into the different needs
analyzed previously. The questionnaire was shown to 100 people of different ages and social classes,
but we intend to upload it on our website and offer a discount to whom participates. Every single
column represent one single customer. In this way the customer needs will always taken
consideration by the company. Here is the example of 11 answers and the total results (the answers
include the last type of products bought) *
DECISIONS: segmentation survey research
After a deep analysis of all data, it is possible to find some common distribution of needs: in this
way we found 3 kinds of global answers: that we associated to three different segments:
Professional(P), Average Customer (CM) and Family (F).
* NOTE: for the calculations just see the excel file “FLTgroup18-TheHouseoftheCustomer”-paper1
Professional Average Customer Family
Measurability 18% 40% 42%
Accessibility high high high
Internal
Homogeneity high high high
External
Homogeneity medium medium medium
Importance high high high
Duration high high high
A customer will belong to a segment if his/her
weights for the same colored needs are equal or
higher than 5 (a threshold between a good rate
and a bad rate). There is also the possibility to
belong to more than one segment (for instance
customers in columns number 1, 8 and 10) or to
belong to none(customers in columns number 9
and 11). Following, we will describe the
characteristics of the three segments.
Measurability estimates the market size
(18%, 40% and 42% respectively) and the buying power (looking to the products bought, professional
customers spend in average more, but less often than the other two segments). Accessibility is high for
each segments, but with different marketing actions. Internal homogeneity is high because of the
definition of the segments(similar answers in the questionnaire). Instead, external homogeneity is
medium because, occasionally, customers belongs to two different segments. Importance is high
because even if the professional segment is smaller than others it has a good relevance in terms of
turnover (high value bargain). Finally, duration is high because the three segments will be the same
during next years.
DECISIONS: segmentation characteristics
TARGETING DECISIONS: targeting
Targeting is the process of evaluating each market segment attractiveness and selecting one or more
segments together in view of satisfying the market specific needs and preferences.
We, FLT photo, are not being target specific and we are open to all customers interested in printing
photos online/offline.
In this way we widen our market reach and our market potential is considerably higher!
We must do this because the market does not allow a sensitive differentiation. The only way to succeed
in this sector is doing a “total coverage” strategy.
Sales growth strategy, that ignores market segment differences, and attempts to appeal to all
prospective customers with a single basic product line through mass advertising and distribution is
called “undifferentiated” or “mass marketing”.
A strategy in which several market niches or population segments are targeted with different products
for each niche is called “differentiated marketing”.
A growth strategy in which resources of a firm are focussed on a well defined market niche or
population segment is called “concentrated market”.
A marketing strategy in which advertising efforts are focused on a small group of highly-targeted
consumers is called “micromarketing”.
Undifferentiated Marketing applies to FLT as it has a wide range of products and a good
social reach. In this way FLT can exploit the market potential and grow at the same rate as its
competitors.
DECISIONS: positioning
PERCEPTUAL MAP Positioning is a mental image or picture that the service provider would like to have about itself in the
consumer’s mind. It is a deliberate attempt to build an identity of a certain kind for the service.
In order to explain the FLT positioning, we decided to use two tools: perceptual map and value curve.
Customers
highly value
certain
attributes
Service firms
develop
concepts that
are highly
valued
Service concepts
are then
communicated
to target
customers
The target
customers
accurately perceive
the position of the
service
Service firms
differentiate
themselves from
competitors in
this manner
Perceptual mapping is a diagram technique used by asset
marketers that attempts to visually display the perceptions of
customers or potential customers. Typically the position of a
product, product line, brand, or company is displayed relative
to their competition.
Need :
To develop a marketing strategy, it is always better to understand and plot the consumer’s views
about the product or the brand. Perceptual Map serves as a tool to understand the situation of the
company, relative to its competitors.
Perceptual maps can display consumers ideal points that reflect their ideal combinations
of product characteristics.
From the online web interface of FLT
and its competitors, we are able to
develop a perceptual map that, in a
diagram technique, is used to
understand the consumer’s view about
the website and is plotted considering
different parameters.
FLT Startprint, which is actually the website of the company, lies in the band with its ends
tied between complexity of usage and social reach. We understand by the perpetual map that
Startprint, though having a good market potential with a wide range of products, is damaged
by its website. In fact, the website is not as customer friendly as the one of its competitors.
We can observe from the perceptual
map that VistaPrint has a customer
friendly website and is high rated,
based on ease of usage. On the other
hand, Snap Fish lies in the
intermediate point of a customer
friendly website and a good market
reach.
SOCIAL
REACH
EA
SE
OF
US
AG
E
CO
MP
LE
XIT
Y O
F
US
AG
E
INDIVIDUALITY
FLT
software
Direction to
proceed in
the future
PERCEPTUAL MAP OF LINE DIGITAL
PHOTO PRINTING COMPANIES
DECISIONS: positioning
After the positioning analysis through the perceptual map, we decide to develop 2 value curves. The
first curve aims to compare our strengths, opportunities and weakness previously analyzed in the
SWOT analysis. The second curve aims to compare the level of need satisfaction of customer. The
comparison is made with FLT major Italian competitor: Snapfish (SF).
DECISIONS: positioning value curve
First curve: Direction of Improvement FLT SF
Software: the actual software works well and develop functions that the web site
cannot have; Snapfish does not have a so-well developed software. 3 0
Web functions: web functions are improving, but they are less than competitors.
Some disadvantages are: necessity to log-in before the personalization of the
product, some problems with compatibility and smaller product width and depth (a
lot of products are customizable only with the software)
3 5
Shop visibility (Brand image): Improving shops visibility means empowering
the relationship with big retailers (like Esselunga, Bennet and Media world). Even
if FLT collaborate with the major distributors, customers do not know its brand
name, because it does not appear on products
1 4
Web visibility: It means, how much the web site is known and findable for the
customer. Values are chosen looking to Google and other search engines ranking.
Furthermore, FLT has 3 different websites and this create confusion in the
customer mind.
3 4
Customer care: It is very important for FLT. There are a strong customer support
and a huge cooperation with them in personalization process. For instance, if the
product does not fit customer need it would be changed.
4 4
Machineries: FLT uses high quality machineries and papers ; more or less all the
competitors use the same ones. 4 4
Link with social networks: they are trying to improve but the link is not as
efficient as Snapfish one. 1 4
Second Curve: NEEDS FLT SF
Receiving the product quickly: all the companies use the same delivery
services (Bartolini, Ups, Tnt) 4 4
Creating the product request quickly: we compared the two companies
measuring the time for the personalization and sending of a request for a
product: the average time for FLT was 7min 25sec, for Snapfish 6min 45sec.
3 4
Finding the suitable website quickly: we compared the two companies
measuring the time for searching the web sites on search engines without
digiting their name: FLT 9min 30 sec Snapfish 11sec
1 5
Good Relationship with the company: this need is very well satisfied from
FLT, having the best Italian customer support 5 3
Knowing the phase of advancement(tracking transparency):both companies
provide the customer with information about the status of their order. 5 5
Having durable products: it is very important for FLT to give a good and
durable product to customers. One of their slogan is: "a digital photo is just an
image, a print is forever”.
4 3
Having a high quality print: each company has more or less the same
machinery and, then, the same print quality. 4 4
Having a high level of print personalization: both companies could
improve a lot in this field (adding extra effects like: shadows, tech-effects) 1 1
Having a high level of adds personalization: more or less all competitors
offer a high range of additional adds-ons 4 4
Having a good post-sale assistance: for Flt, post-sale assistance is very
important: they make great efforts to provide the best service in this field. 5 3
Having a high reachability of the website: it is difficult to find the
website: there are three different sites that confuse customers. 1 4
Acting good with a simple click: Flt is aware about the importance of being
eco-friendly: in fact, they recycle the majority of their waste. However,
customers are not informed about that.
4 2
DECISIONS: positioning value curve
THE HOUSE OF CUSTOMER After developing awareness about how our company is perceived by the customer, we need to decide our
marketing strategy we must implement is arrived. But how the company decide which improvements
are better to implement first?
We decide to re-model a Quality Function Deployment tool. That tool, called The House of Quality, aims
to discover which product functionalities are the best in order to implement an high quality product.
Our idea is to rethink that model in order to translate the customer needs in Directions of
Improvement for the company. We decided to call that: The House of Customer.
Considering the market segmentation and the positioning of our company, the macro-idea is to take all
the needs, associate to them a weight, and translate them in choices of improvement (taking into
consideration 3 segments): three Houses of Customer will be implemented. How does it work in
practice? For simplicity, we start the explanation with a scheme of the House:
Roof: it explain correlations between
Directions of Improvement
Needs Value Curve: following the
Positioning, it compares our level of
satisfied needs with the competitors
one.
Relationships: compare
needs with functionalities
Results: final
functionalities weights
Directions of Improvement
Value Curve: following the
Positioning, it compares our level
of satisfied needs with the
competitors one
Needs weights: how
much a need is important
for the segment under
investigation
Directions of Improvement:
following the SWOT analysis
Customer Needs:
following the Customer
Profile
Bonus: to mix a mathematical tool
with the experience of market expert
DECISIONS: marketing strategy
Now we can enter in details of the House of the
Customer. Let’s start with the description of
Relationships between Customer Requirements
(needs) and Functional Requirements.
We decide to assign three different relationships
(strong, moderate and weak), with three different
weights (1, 3 and 9 respectively). Now the link
between needs and directions of improvement are
clear: for instance a need like “having a high level of
print personalization” impacts in a strong way on
“software” and “web functions” improvement; it also
has a moderate relationship with “machineries” and
finally a weak impact on the “customer care”. *
Now we can start the analysis of the Roof: it aims to explain
correlations between different Directions of Improvements in
order to help the reader of the House to take decisions more
precise. In our case of analysis there are not negative correlations
and for instance a possible improvement in “web functions” will
have also influence on “customer care”, “machineries” and “link
with social networks”.
DECISIONS: marketing strategy
* NOTE: for the calculations just see the excel file “FLTgroup18-TheHouseofCustomer”-paper4-5-6
A look to the Value Curves
These are the 2 curves explained in
the Positioning part and their aim to
better explain what is the allocation
of the company compared to
competitors. What is the value added
of these curves? First, they help to
understand which is the perceived
value of our customers and second, as
like the roof, to translate in a
mathematical tool the subjectivity
and the experiences of market
experts:
Thanks to the Roof and Value Curves it is possible to decide
Bonus (expressed in percentage of +10%, -10% and no bonus) to
give a weight to the different “Directions of Improvement”
(maximize, target and minimize respectively).
For example let’s analyze the Direction of Improvement “link with
social networks”:
• Roof: 3 pluses high impact on other improvements
• Value Curves: first very low value in the direct comparison
with competitor (1 against 4); second looking together to
Relationships and Needs Value Curve it is possible to analyze
the 4 relationships: “creating the product request quickly” (3
against 4); “finding the suitable website quickly”(1 against 5);
“having a good post sale assistance” (5 against 3); “having a
high reachability of the website” (1 against 4).
The company is clearly in
defective in this direction
and so we assign a
maximize (bonus=+10%)
DECISIONS: marketing strategy
Let’s start with the calculation: first we must consider the three segments separately in
order to consider the different weights about needs that we calculated in the
Segmentation; second we must consider every single direction of improvement and
calculate the sum of the value of the need and multiply by the value of relationship. To
simplify we report the calculations of just one “Direction of Improvement”(machineries)
of the first House of the Customer. To see all calculations just have a look to the excel file
“FLTgroup18-TheHouseoftheCustomer”-paper4-5-6.
Finally you can appreciate the global view of the three Houses:
DECISIONS: marketing strategy
Weight of improving machineries =
72*9 + 132*9 + 90*3 + 84*1 + 66*3 =2388
OPERATIONAL MARKETING How can we translate the marketing strategy results coming from the three houses of customer into
decisions? We decided to use an evaluation method based on points. The Direction of Improvement
with the higher rate will be the first one that will be implemented.
DECISIONS: marketing strategy final decisions
• First three columns: mathematical results of
the three Houses (calculated as we explained
before)
• “RATE”: sum of the previous ones;
• “BONUS”: sum of the bonuses coming from
the three houses;
• “Final Rate”: the rate value
increased/decreased of the bonus, divided by
1000. Let’s have an example *
Rate = P + CM + F = 3234 + 6791 + 7182 = 17135
Final rate = rate * (1 + bonus)/1000 = 17135 +
(1 + 30%)/1000 = 22.28
CONCLUSIONS: thanks to this tool the
company can finally make investments with
effectiveness: the objective of a good marketing
process is to increase the value perceived by
customers in a profitable way for the company.
After them, we can have a look at practical
decisions.
* NOTE: for the calculations just see the excel file “FLTgroup18-TheHouseofCustomer”-paper7
DECISIONS: marketing strategy final decisions
Using the House of Customer, FLT can better organize its efforts.
The first step will be to develop web functions, through the following actions:
• Re-design of the website with the support of an informatics company, specialized
in web applications: the develop of just one website (overcoming also the problem
of having three different website); more effectiveness (an easy and complete website keeps the
customer from switching to another website and complete his order quickly).
• Internationalization of website: new languages will be added: generating new possibilities and
opportunities to spread the business.
The second step will be increasing the link with social networks.
In order to do that we decided to follow two parallel streets:
• Increasing the possibility of using social networks photos in the personalization of products
both on the website and on the software.
• Increasing the advertisement on Facebook creating a page in which customers can be always
updated about promotions and the launch of new products. It will be important to have a
direct link with the website (Startprint).
Third, the company must maintain a very high customer care service and a useful and efficient
software.
Finally, Flt must improve its web visibility:
• Investing in internet actions to improve its google ranking (this could be possible with the
same informatics company mentioned previously).
The final idea is to implement this «Tool» on the website, considering the questionnaire on-line and
controlling continuously the customer needs. There will be constantly updated results in Segmentation
and in the three (or maybe in a future more!!!) Houses of the Customer.
In order to motivate the customer filling the questionnaire, the final marketing decision will be:
• Offer a discount policy on the bargain to whom fill the questionnaire
• Give priority for customer voice by analyzing its point of view trough public forums and blogs
DECISIONS: marketing mix
USER WORLD R
EL
AT
ED
SE
RV
ICE
S
DIS
TIN
CT
IVE
CH
AR
AC
TE
RIS
TIC
S
PRODUCT
CONCEPT
PRODUCTION
WORLD
The next step in a standard marketing process is the translation of operational marketing decisions into
a cohesive marketing program. As we develop our project, we must focus on the analysis of the
experience offered by our website: that will be our “product”. The customer is directly/indirectly involved
in certain decision making phases of the company. This is the reason why it is important to have a tool
to understand continuously customers’ opinion. Blogs and forums are instruments to trace our clients in
view of our continuous improvement. An aerial view of all these variants give us a “PRODUCT MODEL”
PRODUCT
THE PRODUCT MODEL
PRODUCT CONCEPT: Experience through the website,
comparable to other players the international level. It should offer
a lot of functionalities about personalization, in order to satisfy
every kind of customer, from the professional ones to the average
consumers.
USER WORLD:
Distinctive characteristics are what define a website use an
experience:
• Possibility to create funny pictures and models, choosing
whatever photo you want, modifying them in the easiest way.
• Possibility to share your works on social networks, discuss
them on some forum and read about this sector innovations on
blogs.
Related services for costumer, basing the decision on customer
personal profile, characteristics and needs:
• Delivery terms
• Guarantee terms
• Technical assistance
PRODUCTION WORLD:
Watch the product in terms of “how” it is made. FLT has already
IT Section but our suggestion is to outsource website creation and
maintain the phone application, better if both with the same
supplier in order to have the website, the software and the mobile
app aligned.
THE PRODUCT MODEL
EXPERIENCE: empowerment of the experience in order to improve satisfaction.
The way in which you can create an experience is the web-site. Features like speed, intuitiveness and
usefulness become the battlefield with competitors.
Improve forum and blog to create a community (for example a FB page could be a good start point)
Global service (translate the website English, Spanish, German, French)
Improve link with social network albums.
BRAND: with an affirmed brand you can go easily through problems. Startprint is famous for people who
work in the photography field but it is not known to casual photographers.
People do not know Statprint because they have a lot of problems in finding it on web, and in recognizing
it as a preferred site. These are the reasons why FLT needs to create a stronger image:
create a recognizable image to overpower competitors.
create a clear and consistent value proposition.
Give voice to costumers is the starting point in order to involve the customer in developing our new
image. Brand does not belong to company anymore, but to costumer’s perception.
Target
positioning
Brand
identity
Brand
design
Other mktg
levers
Signals
(integrated
communication)
Brand
image
FEATURES AND BRAND DECISIONS: marketing mix product
PRICE STRATEGY
LOW
PRICE
MEDIUM
PRICE
HIGH
PRICE
LOW
QUALITY Cheap goods Shoddy goods
Hit and run
pricing
MEDIUM
QUALITY
Bargain
Average
price, average
quality
Overpricing
HIGH
QUALITY
Super-
bargain
Penetration
pricing
Premium
price
Price is important, because it gives an extrinsic-cue to client. We analysed competitors’ prices and we
fixed the price. Otherwise, it is important to consider the effect the low price would have on product
perception: low prices are not normally associated with high quality products. Therefore, it is important
to stress the benefits of the product, and the possibility of providing those, even with a lower price.
DECISIONS: marketing mix price
The strategy we are applying is a penetration pricing.
We adopt it because an high number of companies give
customers a lot of substitute products. Although our
quality is very high, we must maintain a medium
price to compete. Moreover the general economic
condition does not allow a premium price.
Finally, production costs does not allow a super-
bargain strategy.
In a long term view, continuing our
internationalization process, we should
decrease a little bit our prices to compete
with the European competitors.
Anyway, as the graph shows, we decided to
maintain a premium price compared to the
European market; in order to balance our
new multi-channel market.
Expanding our business in the new markets
could guarantee us, of course, more profits.
SUPERMARKET: FLT has a partnership with the largest
Italian supermarkets. Esselunga and MediaWorld sell their
products using their own brand. This decrease number of
different shops but also decrease the bargain power of FLT.
otherwise, represents also a possible touchpoint with clients.
Going through the forum and blog FLT can integrate his study
on client.
SHOPS: they use more than 2000 shops all over Italy to
pick their products. This channel is a non productive
channel because it does not allow FLT to enter in contact
with client.
WEBSITE: it is clear the demand through this channel is
increasing. Furthermore, this is the most important
channel, because it is the only direct way to study client. It
isn’t more profitable, but we think will become the reason
of surviving in long period.
The improvement of multichannel relationship represents our project result.
A multichannel relationship already exist, so, our goal is to promote customer’s study through the
touching point of the WEBSITE. This allows us to collect data coming from different segments (also in
the same channel) giving customers exactly whatever they want: establishing a one-to-one relationship.
CHANNELS DECISIONS: marketing mix place
Focus on Web:
Social networks (FB page, twitter account, FB advertising)
Improve our ranking on search engines (google)
Pop-ups
E-mail to our customers (or to Esselunga and MW customers using our cooperation)
Became sponsor of the Main photograph bloggers
Create a forum where all customers can make question
Innovative Channels:
Flash mobs
Events partners (gadgets)
Esselunga and Media promotion initiatives like the choices of the photo of the month.
One of the most important issue that our House of Customer identifies, is a problem of visibility.
Reaching more customer is the main point a company must take in consideration.
How could we improve?
VISIBILITY ADVERTISING BRAND
IMAGE CUSTOMERS
ADVERTISING DECISIONS: marketing mix promotion
BUDGET
AS-IS 2014 2015
shops 26.464 23.153
software 36.426 34.385
web 25.469 21.778
TO-BE 2014 2015
shops 26.464 23.153
software 37.700 43.080
web 27.321 43.669
ΔREVENUES: we decide to take into
account only differential values because we do not
want to modify the actual production. We made
the same calculation for each channel
DECISIONS: budgeting
DEMAND FORECAST (DF): Using the Winters model, we are able to forecast the demand for
2014 and 2015. Regarding the TO-BE situation, we considered a percentage increases due to our
company improvements *. These increases, of course, follows our strategy based on a great effort in
promoting and empowering the web market.
SINGLE PRODUCT VALUE (vu): average of the unitary values of years 2011, 2012
and 2013
* NOTE: excel file “FLTgroup18-Demand&Budget”-paper-5
2014 0
200000
400000
600000
800000
1000000
1200000
1400000
Revenues
actual rev new rev
2015
DECISIONS: budgeting
2014 2015
Δ REVENUES 93.270 811.628
∆ MARKETING
EXPENSES 208.487 213.237
Promotions 101.487 141.237
Web Re-design 25.000 -
Web maintenance - 15.000
Web advertising 20.000 25.000
Web visibility 20.000 20.000
Software empowerment 30.000 -
HoC develop 12.000 12.000
CONTRIBUTION
MARGIN - 115.217 + 598.391
“ΔREVENUES”: increasing in percentages of
sales due to marketing actions. The launches
of the new website and the software
empowerment required 6 and 4 months
respectively. So the increasing in revenues
will be low during the first year (€ 93.270)
but higher during the 2015 (€ 811.628).
“∆MARKETING EXPENSES”. Promotions
regard the discount of 10% to the people
(website and software users) who decided to
make the questionnaire at the end of their
purchases (the increasing of € 40.000 is due
to the sales increase). It is calculated as
follows:
Web Re-design and Software empowerment are initial investments. These two prices come from a
real budget of an informatics company. This company could develop both the more effective website
and the new software. To ensure an always up to date service for the customer the company offers an
annual Web maintenance of € 15.000 for both.
Now the brand FLT must be known and, in order to do that, we want to spread the knowledge of our
website: the actual name “Startprint” can be renamed in “Startprint by FLT” and this required two
additional investments: first Web visibility in order to constantly improve the web ranking;
second the Web advertising on the “mass website”, most of all on principles social networks
(the increase of € 5.000 in the 2015 is due to possible reactions of competitors).
Finally the investment in HoC develop is referred to the necessity of constantly updating the
customer needs and the consequently changes on the House of Customer. This because the web
environment required to be flexible and always prepared to change to follows the new tendencies.
CONCLUSIONS
The results of implemented changes is the significant improvement of multichannel relations with the
costumers, especially WEB RELATIONSHIP.
Now, the company can understand and monitor customer needs through touch points and, through this
new approach towards customers’ needs, it can abroad its perspectives to the European markets.
Even if medium-high investments are necessary to do that, this is the way to create value for the
customer and the company.
The final goal is to create an experience: customers do not have anymore the necessity to print, they
must do it specially for themselves and for their pleasure.
With our budget, we underline the critical situation of FLT, if it will remain in its AS-IS situation.
Our Project is a real and applicable offer, to help FLT growing (for the budget part we consult a real
ICT company, in order to understand the efforts and provide the costs for our proposal). The following
conclusions summarize what we have already underlined and clarified through the project:
• The possibility to print high personalize-volume of photo does not represent anymore a point of
differentiation. The machineries are the same and everyone is becoming international.
FLT must create a personalized experience. They can do it analysing deeply customers’ needs
and provide them the service they want at the moment in which they ask it.
• FLT has the need to create a stronger brand image on the B2C Market. It could be made from
personal website or distributors’ website too. Therefore, for FLT, the relationship with distributors
is fundamental.
These objectives cannot be reached quickly: we provided a step-by-step solution. First from the “House
of Costumer” as a direct applicable tools, then from an improvement in advertising on blogs and finally
creating a web “community” that can help the company to improve itself.
CONCLUSIONS