Page 324 - Introduction to Business

298 PART 3 Marketing

first mover The company that is first into company’s product or service. If a company is the first to invade a niche market, it
a market with a new product or service
can obtain first-mover advantages. These include the possibility of preempting
positioning Endowing a new or existing competitors, aura of leadership, initial cost advantages, and higher profits.
product or service with attributes
deemed important by a market so that Another important aspect of a niche marketing strategy is positioning.
the market perceives the offering as Positioning refers to endowing an existing or new product or service with attributes
superior to competitive products on that are deemed important by the market, with the market perceiving that the offer-
these attributes
ing is superior to compet-
EXHIBIT 8.8 Price itive products on these
Low High attributes. Let’s assume
Positioning a New Soft that a food and beverage
Drink Good
Brand B company is considering
developing a new soft
New brand
drink. In researching con-
Brand A sumers, it discovers that
taste and price are the
Taste two most important qual-
ities affecting their choice
Brand E of soft drink. The com-
pany then conducts addi-
tional research to see how
Brand C
Brand D their offering compares to
five major brands on
Bad
these qualities. Exhibit 8.8
shows that the new brand is positioned well for success, as it is the only brand that
is perceived to have both low price and good taste.
reality Give some examples of how political parties have pursued a niche
CH ECK marketing strategy.

Managing Customers

General Electric, AT&T, Chevron, Federal Express, Hewlett-Packard, Intel, Levi
Strauss, Southwest Airlines, State Farm, and Taco Bell are some of the smart com-
panies that are putting together aggressive programs for managing their customers.
They are doing this because they realize that customers may well be their most
important asset. They have been rewarded handsomely for their customer man-
agement programs.
• AT&T and Intel obtained market-value-to-book-value ratios of 4.5 times or
better. General Electric achieved return-on-equity to cost-of-equity ratios of
better than 2.5 to 1. 49
• State Farm obtained a 20 percent increase in average annual income for its
insurance agents.
• John Deere increased its golf and turf revenues by 35 percent. 50
• British Airways’ profits jumped 61 percent in 1995 over what it earned in 1993.
• Ritz Carlton Hotel has 90 percent of its customers stay with them again. 51

Analyzing Customers
The first step in a customer management program is to analyze your customers. The
chief objective is to determine which are profitable and unprofitable. “Learning

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