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Customer focus and relevant marketing theories

3155 words (13 pages) Essay in Marketing

25/04/17 Marketing Reference this

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The task requires discussion of customer focus and relevant marketing theories ,with their application on a chosen organisation. Therefore the selected company is Virgin Media and it would be analysed if customer focus has been appropriately applied in the organisation. Moreover, whether the company takes cues from customers ,as well suitability of customer orientation as a concept in organisation would be discussed too.

Virgin Media is a renowned provider of broadband, TV , landline and mobile phone services in UK. Virgin media claims that they are the provider of fasted broadband in the country. Moreover, their other products such as TV have touch of innovation to, as customers can catch up with their programmes free of costs. Virgin media is experiencing growth at the moment with growing ARPU(Average Revenue Per User) by 3.7% and total revenue by 6.4% (Virgin Media,2010). Furthermore,Virgin Media like its sister brands is known for implementation of innovation in providing services.

2.0 The Concept of Customer Focus

Customer focused organisation , basically, focuses on needs of the customer and brings together several marketing activities that impact customers. Moreover, such organisaiton generates profits by building long term relationship that have a basis on customer satisfaction and value (Kotler et.al,2006).

Significance of being customer focused is huge, that Kumar et.al(2010), believe that marketers that give 50% of their time for advancement of customer centric marketing processes and competencies achieved 30% greater return on investment ,as compared to others who don’t emphasise this much.

2.1 Evolution of Customer Focus

The concept of Sales orientation is a frameset that carries out tasks which lead to sales as the end result. The sales force, display and promotional activities have the common goals and that is accomplishing the process by selling. Thus, in these procedures, learning about customers and understanding customers does not have much significance, especially as long as the organisation carries on generating profits.

Sale

Objective Achieved

Sales Orientation

Decision Making Emphasized on sales arrangements and targets

Fig 1. Sales Orientaion

Having said that, sales orientation was effective in an era when there was not much industrialization and saturation , and customers did not have much choice. An example can be a generic Ford Model T, that was sold all around America , without much knowledge about the customer. The product was a success as customers did not have much choice at that time.

After industrialisation , competition became stiffer and consumers were faced with numerous choices. At that time , it became imperative for companies to understand their consumers as well as retain them.

Sale

Understanding Customer and delivering Satisfaction

Retaining Customers

Therefore, Kotler et,al (2006),stress that ,organizations who tend to understand their customers ,their behaviours and their responses to aspects such as features, price and marketing communications have much better advantage over rivals and they are more likely to remain profitable.

2.2 Application of Customer Focus on Virgin Media

Virgin media is a provider of mobile phone connections , broadband, TV and telephony services to consumers. It can be rightly said about it that it is a customer focused company. It does not rely on just selling the product and closing the deal. Since, it is a service and seeing a good growth in UK market as well as abroad (for instance Qatar), it relies on its excellent customers services, flexibility , catering to needs of consumer by letting them what services to choose and what to leave in a package and above all communicating with them on regular basis in form of mails to remind them. According to Virgin media(Dtg,2007) they have pledged to make customer services at the heart of their business so they have hired more staff, that managed to significantly reduce waiting times(71% calls within 3 seconds).

3.0 Taking ‘Cues’ From Customers

When offering a service or product, it is essential to understand what consumers’ preferences are and how can we shape our offerings accordingly to create value. As Prahalad and Ramaswam(2004), rightly put that customers are not just purchased of your brand, but they should be treated as partners, because they co-create the offering. So basically, it starts with the idea of what really customers requires and then matching that requirements. Prahalad and Ramaswam(2004),suggest that first of all it should be understood where customers feels uncomfortable or feels there is a need of something. Secondly, the offering should have a level of “evolvability”, so the product can be evolved later on according to the requirements, lifestyle and usage patterns of the customer.

Similarly, consumer research plays its role in understanding of consumer too (Kotler et.al,2006). It enables companies learn insight of their consumers as well as potential customers, so that they can cater to their requirements.

3.1 Application on Virgin Media

Virgin media has been regarded in the industry as an innovative company, that wants to be the first one to offer packages and services in the marker.

An example is that, they learnt through research ,as well as experience that consumers were having difficulties in remembering their favourite channels and browsing. They understood the need of an innovation there and introduced Tivo, which can be said a convergence of web and Tv. User takes control of the choices, programs and in case of missing their shows they can replay them without additional cost. Moreover, it lists programs in a vivid and clear way.

Furthermore, customers can have their say when it comes to packaged and they are not forced to accept and pay for services they don’t want to use. For instance , customers can turn their Tv service or phone service off while still paying for packages, alterable, no phone etc.

4.0 Niche marketing Vs Mass Marketing

The concept of mass marketing can be understood by the description of Blythe(2005), where it has been presented that, when a products is developed and it can be used by various age groups, segments and people across different lifestyles, then it is usually mass marketed. Moreover differentiated marketing targets multiple segments too ,where they could focus on 2-3 segments offering a differentiated marketing mix for each segments. On the other hand, Blythe(2005), describes niche marketing as a concentrated effort to target just one segment and even individual consumers, so that preferences of specific customers can be understood and they can be satisfied. According to Kotler et.al(2006), those who specialise in providing to niche markets, target those who their competitors often ignore or overlook.

4.1 Application on Virgin Media

Virgin Media being a provider of telephony, mobile and broadband services, caters for all of the market of the country and is open to all segments. At the same time, the concept of “niche” marketing can be traced to a marketing communications activity ,where Virgin media has started targeted ads. Basically, these ads are played at , on-demand TV , and they are matched to the theme of the Tv programme being aired. It has similarity, with Youtube ads ,where advertisers can link their ads to the specific videos they chose ,that are matched with their product or service. Advertisers that have taken up these new kind of ads are Sony, L’Oreal, Ericsson and Microsoft at the moment and are expanding.

5.0 Relationship Marketing

“Relationship marketing, i.e. a company building and maintaining a long-term relationship to its customers,has established itself as an important economic goal in current research and everyday business” (Siems,2010).

Relationship marketing deals with consumer as an individual and attempts to developed and nurture a lasting relationship (Blythe,2005). This implies that marketers are concerned with the value of acquired customer on lifetime basis. An example can be, a car owner, in their lifetime, there is a possibility that they may buy more than 20 cars. With that usage they have the potential to influence friends and families in their car purchase too. This means, by creating a relationship with consumer, giving them excellent customer services, sending them reminders, customises messages, the car company creates opportunities so that customer could go for next purchase of the same brand and can recommend others too. On the other hand, not doing measures to establish relationships can result in losing business from that customer in future.

The investigation by Reichheld (1990), displayed that a advantages of a long lasting customer relationship can be , as follows:

It lowers the transaction cost for he company. The expense of an organisation in describing their particular basic processes lowers down with each transaction. Moreover, Understanding about the customer, enables more improved and efficient processing for the company, in all future transactions for that customer.

Reichheld and Sasser(1993), argued that, long lasting relationship enable the company to up-sell and cross-sell the products. It can be even better if company understands that their existing customer is happy with them, then , likelihood of selling to the same customer is much higher, as compared to selling to a new customer.

Similarly, customer is more likely to make positive recommendations to others too, resulting in positive effects for the company because of newly acquired customers, as a result of recommendations.

5.1 Application on Virgin Media

In author’s opinion, Virgin media takes relationship with customer seriously. Few months back , they sent cards telling customers that they have done a good job by being on Virgin broad band, since it has been officially ranked as the fastest broadband. This apparently, simple communication activity can have multi-faceted effects on the company-customer relationship. For instance, customers would feel better after learning that they are paying and getting the fastest service in town. Similarly, their second thought about changing the service or getting impressed by a competitor’s marketing communications activity would be diminished and they would tend to be loyal with Virgin media. Therefore, such relationship activities ,such as sending out acknowledgement letters are essential for Virgin in the market ,in order to stay atop in this highly competitive market.

Similarly, Customer retention department offers competitive and very attractive packages to customers when they understand that, customer is about to leave them. This case is particularly strong when it comes to mobile consumers as many of them are seen changing their minds about switching to other services providers ,after knowing about new packages.

6.0 The Services Marketing

Service has been described by Kotler et.al(2006), as a benefit that one side can provide to other , that is intangible in nature, does not end up in ownership of any solid thing and its production is not necessarily linked to a physical product too. Similarly, Service has been defined by Gronroose(1984) as the entity of transaction provided by companies ,that usually offer services to their clients and consider themselves as service based companies.

It has been stressed by Jobber(2004), that the major attributes that differentiate a service from a product , it the presence of dominant aspects of intangibility. Services that are core in nature, do not lead to ownership and require differentiated efforts of marketing too. Jobber(2004), further describes that selling a service requires understanding of the particular characteristics of the service and ask special marketing solutions.

6.1 Characteristics of Services Marketing and Virgin Media

The various characteristics of services are studied below , along with its implication on Virgin media while taking into account the concept of customer focus.

6.1.1 Intangibility

According to Jobber(2004), services cannot be seen ,touched, smelled or tasted before they are bought, therefore, customers are unable to examine it because of intangible properties. It has been recommended that “tangible cues” should be given by the service provided ,so the service can be assessed to an extent by the potential consumer.

Virgin Media, keeping consumers into account often, produces adverts that show excellence of its broadband, mobile,TV and landline services. Their adverts are often seen boasting their fasted broadband services, very competitive mobile tariffs and most innovative TV service.

6.2.2 Inseparability

Palmer(2005), presents that consumer and the producer must interact with each other, for the performance of the service , as production and consumption of service is inseparable. Whether the producer is a person, for example in case of a barber or nurse or the producer it a machine based such as bank machine, the service is only realised after interaction of producer and consumer.

Similarly, the services of Virgin media, not matter they are broadband, phone or TV cannot be produced without the presence of the consumer and need a certain level of interaction. This interaction is required to be created as smooth ,quicker and easier for the consumer and this happens to be working good in the case of broadband which is claimed as the fastest one , and the TV that promises easy to navigate channels and improved user control.

6.2.3 Variability

In services, the performance of usually occurred at various places, by multiple people and can vary. Moreover, services are simultaneously produced and consumed too and needs human interaction therefore, variability is bound to happen.

The challenge for Virgin media is to provide standardized service to all consumers , despite their geographic location, as per promised without much variability. If this challenge can be achieved then Virgin media can be regarded as a provider of a quality service having minimum variance.

6.2.4 Perish-ability

A service, perishes and this implies that amount paid for a broadband service for a month finished at the end of the month ,leaving customer to pay similar amount for the next month. This means that customer cannot store that service to be used later and have to use ,when it has been paid for, otherwise whether utilise or not, it will be perished.

Virgin media shows remarkable, level of putting customers at front by showing their understanding of a situation. According to a customer, he has been given a refund by Virgin media when he moved his house. The reason was that, engineers from Virgin media could not come soon to his new place to install the broadband service. This resulted in wait of 2 -weeks that he could not use internet. The refund by Virgin media strengthened loyalty of customer and gave him a feeling that the service providers does extra effort to understand issues of consumers.

7.0 Integrated Marketing communications

Integrated marketing communications, performs a number of tasks, which can be represented by DRIP framework. This tasks are , to differentiate , to remind, to inform and to persuade. The intense competition in the industry makes it imperative for organisaitons such as Virgin media, to differentiate their products from others.

The point of differentiation for Virgin media is its cutting edge technology and speed and it has been effectively presented in their advertisements. When Virgin media tells their target audience about their unmatched speed, then they ‘differentiate’ and it has been communicated with the help of various tools of IMC. Furtherore, according to Fill(2005), DRIP framework presents “reminding” consumer about past purchases and letting them know about alterations and improvements is another task. Subsequently, “Informing” customers about the features, attributes, availability and bundles of the service is also performed through IMC. Lastly, “persuading” consumers to purchase the service remains the ultimate task of Integrated Marketing Communications too.

Virgin media relies on various means to reach their consumers and that include TV, print media, internet as well as direct communication. A marketing drive saw increase in 31% of the marketing budget for Virgin media, and that resulted in revenue up by 7%(Marketingweek,2010). This shows that how seriously virgin media is taking the competition with BT and SKY and how much efforts they are putting in communicating with their potential customers. This intense competition and the marketing drive with such huge increase in budget , also explains that why Virgin media , strives so much to keep their customers satisfied , keeps relationship with them as well as strive to retain them.

8.0 Customer orientation appropriateness

It has been identified in this task ,using various theories and their application on Virgin media , that the company emphasises its activities and services on consumer requirements. It is a customer driven company that takes input from customers, understand them and cater to their requirements. Similarly, Virgin -media is a dynamic company that keeps altering its offerings according to the changes in market, that can either occur as a result of change in consumer preferences or by change in the technology. Examples presented in various sections of the task especially customer focus section, relationship marketing and Marketing communication clearly depict that, Virgin media is a customer oriented company and the concept of customer orientation is appropriately applied on the selected company.

9.0 Conclusion

The tasks applies, various marketing theories on Virgin Media. Firstly, the concept of customer focus and its evolution has been presented. It has been identified that Virgin media is a customer focused organisation that keeps it customers and their service at the heart of company. The task then moves on to understanding niche and mass marketing. Although, targeting of virgin media is can be fairly regarded as mass marketing effort, yet instances of niche marketing can still be found in TV-on demand ads that are vastly becoming popular in the industry and working well for company as major organisations such as Sony and others are signing for them. Additionally, the relationship marketing theory applied on virgin media depicted that, virgin media goes extra mile to build relationship with their customers by sending them acknowledgement letters and information leaflets, moreover, they claim to provide excellent customer services on phone too, as they have hired considerable number of additional employees to resolve customer queries. Despite such relationship efforts, Virgin Media, has been reported as losing their thousands of customers last year. They claim poor shape of economy as responsible for this. In 2010, the trend reversed and the company saw a substantial growth in their customers which is still ongoing.

Various characteristics of services marketing have been applied on Virgin media and it has been learnt that the company, provides a reliable service that ensure adequate understanding of the customer situation and preferences, as well as provides a smooth “production to consumption” service experience ,with the help of innovative technology. The marketing communication theory of DRIP framework(Fill,2005), has been expanded and applied ton Virgin media to present that Virgin media has been effectively differentiating, reminding, informing and ultimately persuading customers , with the help of Integrated marketing communications, while still keeping customers at the focus of the business.

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