Study Questions

A long time ago my marketing professor told us that 'Marketing' was simple. He maintained that all marketing was about was to "create a need - and then to fill it". When we talk about things like product development - in a very simplified approach - that is what we are talking about.

Our text defines marketing as 'human activity directed at satisfying needs and wants through exchange processes'. But I believe it is much more than that - and even more basic.

Take something like the debit card. Do we really NEED - a debit card. Of course not. We need food, water Esc - but could we do banking - buy things - arrange to have enough cash - without having a debit card. Of course we could. Do we really need ATM's? Before ATM's we used to go to the bank to get cash. With all the branches that all of our banks have opened and continue to open - do we really need ATM's?

So I ask you to consider again - what is Marketing - if it is not - creating a need - and then filling it.

Why is it that we choose to buy the products we buy - or use the services that we use? When you go to the grocery store to buy 'peas' (assuming you buy peas) - do you always buy generic - or do you buy DelMonte or do you insist on Le Seur peas? I have an old friend that doesn't believe that it is a pea - unless it is a Le Seur pea. (OK, how many of you have never heard of Le Seur peas?)

The price for can of Le Seur peas - is about twice that of a can of generic peas. And since most of us don't believe there is a difference anyway - so why are some of us willing to pay more for 'Le Seur' peas.

What - you don't buy peas - so it doesn't matter. How about - beer - sodas - gas - shampoo - pain reliever - this list goes on and on and on.

Why - are we often willing to pay more for something than we might need to? There are a couple of reasons - which follow.

Product Differentiation - big words that mean that - for whatever reason - we WANT to use that product - even though it might cost us more. Because - we BELIEVE - that a particular product is more valuable than an alternative.

Is there a difference in beer? How can Bud Light - be produced in 12 different parts of the country - and all taste the same - they are, after all, using different water. And we know that water is different - 'better' in the Rockies according to Coors - so how can Bud be the same all across the country? And if its not the same - how can it always be better? Yet the beer companies spends millions of dollars - telling you that their beer is better - less filling - or whatever.

Banks, too, believe in Product Differentiation. Watch the advertisements. Is there not a bank - that has "Texas roots". Or how about the bank advertises "It's San Antonio banking as it should be." (Now - I know who I am picking on - and I'm not picking this is marketing)

Most all banks offer checking accounts. All checks are paid as soon as they arrive for clearing - so we can't say - 'use our bank - we won't debit your account until payday, even if your checks arrive before then'. I mean - that would be a real service - holding the checks until I HAVE the money to pay them.

The idea here then - is that our Marketing efforts have to be directed at making our bank different (BETTER) in the minds of those that use our products and services.

Just an aside here - but - one of the reasons that many of you are taking this course - is also - Product Differentiation. Only - YOU are the Product - and you want to make yourselves more valuable to the company you work for - more valuable - so they are willing to pay more (salary) for you.

Convenience - we are willing to pay more for convenience. Isn't that why we call the little store down on the corner of every semi-major intersection - the Convenience Store? It is close - and it has the things that we need in a hurry. We don't 'shop' there - we just run in and pick up what we want (need).

And for that 'convenience' what prices do we pay for what we buy there? Is it cheaper - than going to the grocery store? (Ok, I know that sometimes they have things on sale) - but isn't it true - that the regular price is more at the 'convenience' store?

Again - a LONG time ago - the institution I grew up at - had branches ALL over town. 19 'Convenient' locations. And can you imagine our surprise - when we found out that some of our customers - went to other institutions (banks with only ONE location) because it was MORE CONVENIENT? How could they be MORE CONVENIENT - if they had only one location. Because they were closer - to where the customer lived OR worked - closer to where the customer normally did their banking business. What we learned - was something that HEB - and Diamond Shamrock - have also found out. You can't just be close' - you have to be closer than ANY of the competition - to be thought of as 'convenient'.

And we won't even talk about hours of operation here - 'convenient' is WHENEVER I think of using your services. Not 9 am to 3 pm, not 7 am to 7 pm, but 24 x 7.

In the old days - we designed products and services - based on what we could easily offer. Too often, since most things required computer support - we could only offer what the data processing people wanted to create. We really didn't know what our customers wanted - and we didn't try to hard to find out - because if we knew what they wanted - but couldn't create it in Data Processing - it was just frustrating.

Now - we spend millions of dollars on market research. And sometimes - we still come up with the wrong answers. In the 1970's a couple of innovative bank computer hardware companies - came up with the idea of an ATM or Automated Teller Machine. These hardware companies believed this was the wave of the future - and yet - most research told us that consumers - our customers - would NEVER use a piece of machinery to do what our tellers did so well. They wouldn't carry a 'card' just to use the machine. Well - you'd never guess what happened. For the first 5 or so years they were available - no one did want to use them. In some markets - prior to Cirrus, Pulse Esc - all ATM's were totally proprietary - and you could use ONLY the one provided by your bank (normally - AT your bank). The were really only of any value - after banking hours - but you still had to go to YOUR bank. We didn't want to put them anyplace else - because IT COST MONEY to have it off premise (remember convenience now).

But we did learn - that if we put enough ATM's out there - and made people aware of the values - - - -

Well you now know what has happened - we have ATM's everywhere - including McDonalds. And from the ATM card - came the - you guessed it - the Debit Card. WOW - if we can use the ATM card to take money from our accounts - why not just use it to give the money directly to the merchant!

Do you market for your bank? You bet! Are you very good at it? If not - they should get someone else to do your job!

See it doesn't matter if you do a good job or bad for the customer. If you are doing a good job - they will like the service they get and come back - and maybe even tell their friends. If you are doing a bad job - they will tell that friends that too - and they will do that MORE OFTEN - and IN A LOUDER VOICE!!!!

Marketing is MUCH more than just advertising. Marketing is a total approach to management (banks or any other type of company). It takes a number of things into consideration - including PROFIT (the reason that stockholders think we exist), customer satisfaction and social responsibility. This is an area that has under gone major philosophical changes in the past 20 or so years. Marketing was about selling - only selling. The marketing department might dream up this catchy new account package - price it to give it away - and then spend ton's of money advertising. It didn't matter that the operations of the bank couldn't support the package - or that it was, at best, unprofitable.

Today - Marketing is everyone's responsibility.

Central Information File vs. Marketing Customer Information File. The first has necessary data (name, address, phone number Esc) - while the second has 'interesting' data about the consumer (not just the customer). Consumers - buy things - use services - and the more information we can obtain about out customers that are consumer based - the better job that we can do to market our products and services to them. We know - for example - that most renters would rather own - their home, so if we know they are renting - we can market our home mortgages to them. We also know that most home owners - are never satisfied with their homes - so we can make them aware of home improvement loans.

We know - that most home owners - who have been in their homes for a number of years - probably have considerable equity that might be better used - and that if they have children - and if those children are between the ages of 17 - 24, that we might suggest to them home equity loans to finance their children's education.

But we only know these things - if we have a good Marketing Customer Information file.

ASSIGNMENT:

There is NO specific assignment for this session.