KENT 29 KENT 29 BAD 67051 BAD 67051 Marketing Management Marketing Management Lecture 1 Marketing Management Thinking, Decision Making, & Positioning
Jan 05, 2016
KENT 29KENT 29
BAD 67051BAD 67051Marketing ManagementMarketing Management
Lecture 1Marketing Management Thinking,
Decision Making,& Positioning
Text DefinitionText Definition
Marketing is a social process involving the activities necessary to enable individuals and organizations to obtain what they need and want through exchanges with others and to develop ongoing exchange relationships.
AMA Definition (2004)AMA Definition (2004) Marketing is an organizational
function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
AMA Definition (2007)AMA Definition (2007)
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
……oror
Marketing is the anticipation, management, and satisfaction of demand through the exchange process.
Marketing ManagementMarketing Management
A. Text Definition“…the process of planning and executing
the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives.” (p.14) [ugh]
Marketing ManagementMarketing Management
B. Philip Kotler and Kevin Lane Keller (2006) define marketing management as "the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering, and communicating superior customer value."
Marketing ManagementMarketing Management
C. Peter Drucker (a management guru) wrote: "Because the purpose of business is to create a customer, the business enterprise has two--and only these two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business .”
Marketing ManagementMarketing Management
D. Marketing Management is the management of “innovative and imitative processes” to identify and satisfy consumers more cost effectively than their competitors.
II. Marketing Management II. Marketing Management PhilosophiesPhilosophies
A. Production Concept
A. Production ConceptA. Production Concept
Assumes consumers want products that are available and highly affordable.
Implies management should focus on improving production and distribution efficiency.
Useful when:–demand exceeds supply–product cost is too high
B. Product ConceptB. Product Concept
Assumes consumers want product that offer the most quality, performance, and features.
Implies the firm should make continuous product improvements.
Places the focus on the product, not the customer.
C. Selling ConceptC. Selling Concept
Assumes consumers will not buy enough product unless there is a strong sales and promotional effort.
Useful for:–unsought goods–nonprofit areas
D. The Marketing ConceptD. The Marketing Concept
Assumes that achieving the organization’s goals depends on determining and satisfying consumers more effectively and efficiently than competitors.– Mullins, Walker, and Boyd say:
“Market-oriented firms…[are]…among the most profitable and successful at maintaining strong competitive positions in their industries over time” (p. 34).
D. The Marketing ConceptD. The Marketing Concept
Three parts to the concept:
–The satisfaction of consumers’ needs, wants, and desires,
–at a profit (or to attain organizational goals),
–through an integrated effort within the firm.
Notes:Notes:Firms must identify and satisfy customers’
needs AND continue to do so!Competition FORCES sellers to focus on
the consumer.Consumers must be seen in the context of
all environmental/market factors (managers must have a “market orientation”).
E. The Societal Marketing E. The Societal Marketing ConceptConcept
Assumes that customer satisfaction should be delivered in a way that maintains or improves the consumer’s and society’s well-being.
(a customer’s wants/needs may be at odds with what is good for society
e.g., pollution control)
III. The Marketing Concept III. The Marketing Concept and:and:
A. Synergy–Managers must create
marketing tactics that fit together well.
–They must coordinate implementation.
III. The Marketing Concept III. The Marketing Concept and:and:
B. Hypercompetition–Competitive Advantages do not last.
Customer Satisfaction and competition require innovation, cost advantages, and quality enhancements.
–Changes create new market segments, with new needs.
C. Relationships– Long term alliances with external
entities (customers, channel members, and suppliers)
– Cross Functional Decision Making Teams within the organization
III. The Marketing Concept III. The Marketing Concept and:and:
Market OpportunitiesMarket Opportunities
Customer Orientation
CompetitorOrientation
CompanyOrientation
PROFITS
EnvironmentalContext
IV. Strategic PlanningIV. Strategic Planning
The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing markets.
Developed by senior managers– Future oriented– Intended to create objectives and
strategies for success against competition.
IV. Strategic PlanningIV. Strategic Planning
A. Defining the Company’s MissionB. Setting Company Objectives and
GoalsC. Source of Competitive AdvantageD. Development Strategy for GrowthE. Allocation of ResourcesF. Search for Synergy
V. Types of Corporate V. Types of Corporate GROWTH StrategiesGROWTH Strategies
Products Markets
Current Products
New Products
Current Customers
Market Penetration
Product Development
New Customers
Market Development/ Expansion
Diversification
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets
Increase sales of EXISTING products to CURRENT markets =
– 1. Market Penetration
Market PenetrationMarket Penetration
Increase sales of EXISTING products to CURRENT markets.
–Increase Market Share–Increase Usage
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets
Develop NEW PRODUCTS for CURRENT markets =
–2. Product Development
Product DevelopmentProduct DevelopmentDevelop NEW PRODUCTS for CURRENT
markets to:– Meet changing CUSTOMER needs and
wants,– Match new COMPETITIVE offerings,– Take advantage of NEW
TECHNOLOGY, and– Meet the needs of SPECIFIC market
segments.
V. Types of Corporate V. Types of Corporate StrategiesStrategies
B. Growth Strategies for New Markets
Bring CURRENT products to NEW markets =
1. Market Development/Expansion
Market DevelopmentMarket Development
Bring CURRENT products to NEW markets
(e.g., Arm & Hammer)
Market ExpansionMarket Expansion
Taking CURRENT products to NEW DOMESTIC geographic areas
International Expansion–Regional strategy–Multinational strategy–Global strategy
V. Types of Corporate V. Types of Corporate StrategiesStrategies
B. Growth Strategies for New Markets
Taking NEW PRODUCTS to NEW MARKETS =
2. Diversification
DiversificationDiversification
Taking NEW PRODUCTS to NEW MARKETS
(e.g., Arm and Hammer Toothpaste)
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets
– 1. Market Penetration– 2. Product Development
B. Growth Strategies for New Markets– 1. Market Development/Market
Expansion– 2. Diversification
–3. Strategic Alliances
Strategic AlliancesStrategic Alliances
Total collaboration by EXCHANGING key resources to enhance companies’ performance.
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current MarketsB. Growth Strategies for New Markets
C. Consolidation Strategies–1. Retrenchment
RetrenchmentRetrenchment
WITHDRAW from WEAKER current markets
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New MarketsC. Consolidation Strategies
– 1. Retrenchment
–2. Pruning
PRUNINGPRUNING
REDUCE the number of PRODUCTS offered in current markets
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current MarketsB. Growth Strategies for New MarketsC. Consolidation Strategies
– 1. Retrenchment– 2. Pruning
–3. Divestment
DivestmentDivestment
Selling off part of the business -- ELIMINATE a product and a current market.
V. Types of Corporate StrategiesV. Types of Corporate Strategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
D. Other Corporate Strategies
Other StrategiesOther Strategies
1. Based on Competitive AdvantageLow Cost Leader orDifferentiation--Offer a unique value to customers based on:
Design, quality, service, variety, etc.
Other StrategiesOther Strategies2. Based on Value Disciplines
Operational Excellence--“Okay” products, best price, least inconvenience
Product Leadership
--Innovation for best product performance
Customer Intimacy
VI. Product Portfolio Models VI. Product Portfolio Models
A. The Boston Consulting Group Growth-Share Matrix
The BCG ModelThe BCG Model
STAR
CASH COW
PROBLEMCHILD
DOG
Market-Growth
Rate
High
10%
Low
0%
Market Dominance/Relative Market Share10X High Low 0.1X
The BCG Model -- Cash CowsThe BCG Model -- Cash CowsDominant in Low Growth Market
– Low Growth Sales– Strong Profits– Generate a Large Cash Flow– Do NOT require Cash Resources to be
Reinvested– PROFITS flow to APPROPRIATE
Problem Children
The BCG Model -- Problem The BCG Model -- Problem ChildrenChildren
Low Market Share in High Growth Market– High Growth Sales– Weak Profits– Typically, require additional Cash to
become a Dominant Star
The BCG Model -- StarThe BCG Model -- Star
Dominant in High Growth Market– High Growth Sales– Profitable, but requires attention– Requires Cash and Resources to stay
Dominant– Will be a Cash Cow in the Future
The BCG Model – DogsThe BCG Model – Dogs
Low Market Share in Low Growth Market– Low Growth Sales– Weak Profits– Typically, generate a Little Cash
Flow (or have a weak future)– Not a good candidate for Cash
Resources to be Reinvested
B. The Directional Policy MatrixB. The Directional Policy MatrixCompetitive Position
MarketAttractiveness
High
Medium
Low
MediumStrong Weak
MaintainLeadership
ChallengeLeader
Cash Generator
ChallengeLeader
Manage forEarnings
Harvest
Harvest
Divest
Overcome,Niche, orQuit
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing Plan
A. The Marketing Plan
With an understanding of the organization’s mission and objectives…
A Marketing Plan is written to document the current situation with respect to customers, competitors, and the external environment and providing guidelines for objectives, marketing actions, and resource allocations(text page 20)
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing Plan
1. Situation and Trend Analysis
Marketing Planning begins with a situation and trend analysis….with an eye toward opportunities and threats:• Current and potential customers• Competition• Environmental trends• Other key assumptions
VII. Marketing Management & the Marketing VII. Marketing Management & the Marketing PlanPlan
CUSTOMER
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing Plan
2. Establish Objectives
• Goals in terms of sales volume, market share, and/or profits
3. Select and describe the overall strategy to be used
4. Detail the “Marketing Mix”• Timing• Responsibility
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing Plan
5. Financials
• Costs and payoffs
6. Controls
7. Contingency Plans
THE MARKETING MIXTHE MARKETING MIX
Product
(Good, Service, Idea)
Price
(Value)
Promotion
(Integrated Marketing Communications)
Place
(Distribution)
Customer
(Target Market)
THE MARKETING MIXTHE MARKETING MIX
All this is easier said than done!!
We cannot “set” the marketing mix without “truly” understanding the environment, the customer, and our firm’s capabilities.
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
CUSTOMER
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
A. Macro Trend Analysis
1. Demographic Environment
2. Socio-cultural Environment
3. Economic Environment
4. Regulatory Environment
5. Technological Environment
6. Natural Environment
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
CUSTOMER
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
B. Assessing Industry Attractiveness –
Porter’s Five Competitive Forces Model
Threat of New Entrants
Bargaining Power of Suppliers
Threat of Substitute Products
Bargaining Power of Buyers
Rivalry Among Existing
Competitors
VIII. Understanding Market OpportunitiesVIII. Understanding Market Opportunities
C. Micro Analysis – Assessing Market Attractiveness
1. Is there is a Customer Need we can fulfill?
2. Is our solution special/unique?
3. Is the market likely to grow?
4. Is this a platform for expansion?
IX. Measuring Market IX. Measuring Market Opportunities: Forecasting Opportunities: Forecasting
and Market Knowledgeand Market Knowledge
Research and Intelligence provide information necessary to clarify the “unknown.”
A. ForecastingA. Forecasting
1. Market and Sales Forecasting is absolutely critical
• Forecasts drive budgets!
2. Forecasting is HARD• “Every Forecast is wrong!”
3. WHY BOTHER?
B. Forecasting TermsB. Forecasting Terms
1. Total Population– e.g., 281.4 million people living in 105.5
million households.
2. Market Potential– Those who have an interest in the
product/service and ability to buy– Not all have the money or the legal
status to buy
B. Forecasting TermsB. Forecasting Terms
3. Target Market– Those the firm wants to serve– e.g., 77.4 million households in the Nestles
example
4. Penetrated Market– Those who have actually purchased the
product
US Households by Type: 2000
Household type Number Percent
Total households 105,480,101 100.0 Family households 71,787,347 68.1 Married-couple households
54,493,232 51.7
Female householder, no husband present
12,900,103 12.2
Male householder, no wife present
4,394,012 4.2
Nonfamily households
33,692,754 31.9
One person 27,230,075 25.8 Two or more people 6,462,679 6.1
Source: U.S. Census Bureau, Census 2000 Summary File 1.
C. Types of ForecastsC. Types of Forecasts
1. Top-downa. “Central” management determines the
forecast
2. Bottom-Up
a. “Decentralized” approach; individual forecasts are “summed” to the total.
D. Sources of ForecastsD. Sources of Forecasts
1. Statistical Methods2. Observation
3. Survey or Focus Groups
4. Analogy
5. Judgment
6. Market Tests
E. Sources of Market KnowledgeE. Sources of Market Knowledge
A. Secondary Data
Data previously collected by someone else for a purpose other than the one at hand
Sources of Market KnowledgeSources of Market Knowledge
1. Advantages of Secondary Data:– Almost always less expensive than
primary data– Can be obtained rapidly– Can provide understanding of the
existing knowledge base and gaps
2. Disadvantages of Secondary Data:– Since it is previously collected data,
may be out-dated– May be collected only periodically– May not have been collected in the
form preferred– May not be able to assess its accuracy
3. Examples of Secondary Data:– Census Bureau data and other
Government reports– Sales & Marketing Management
Survey of Buying Power and other Industry newsletters
– Computer Databases– The Internet
3. Examples of Secondary Data:
- Competitor Reports
- Scanner Data
Sources of Market KnowledgeSources of Market Knowledge
B. Primary Data
Data gathered and analyzed specifically for the purpose at hand
Sources of Market KnowledgeSources of Market KnowledgeC. Types of Primary Data1. Surveys:Information is gathered from a sample of
people by means of a questionnaire
–Customer Surveys: Values, Benefits, Beliefs, and Satisfaction
–Focus Groups
Sources of Market Knowledge
C. Types of Primary Data
2. Observation:Systematic recording of behavior or
events as they are witnessed
– Customer Visits
– Vendor Visits
– Competitive Product Usage
C. Types of Primary Data
3. Experiments:Cause and effect relationships by
changing variables to observe response of another variable
– Test markets for changes in price, product, distribution, and promotion
Sources of Market Knowledge
Sources of Market KnowledgeSources of Market KnowledgeC. Types of Primary Data4. Other
–Trade Shows–Reverse Engineering
5. Research Firms:Marketing Research Companies athttp://www.harcourtcollege.com/marketing/
students/research_comp.htm
IX. Decision Support SystemsIX. Decision Support Systems
A. Decision Support System Defined:…a coordinated collection of data, system
tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and the environment and turns it into a basis for making management decisions.
MarketingIntelligence
Internal recordsand reports
MarketingResearch
Database
Data Collection System Decision Support System
Analytic Models
InteractionSystem
IX. Decision Support Systems
IX. Decision Support SystemsIX. Decision Support SystemsB. Database: a collection of information that is
arranged in a logical manner and organized in a form that can be stored and processed by a computer
C. Analytical models system: the database management software that is
used to analyze or provide access to the data within the system
IX. Decision Support Systems
D. User interaction system:• the software that manages the interface
between the user and the system
X. Hypercompetitive Market X. Hypercompetitive Market ResearchResearch
Cross functional teams continuously stay in close touch with lead consumers and suppliers
XI. Global Market ResearchXI. Global Market ResearchA. Global Information System = an organized
collection of:– telecommunications equipment, – computer hardware and software, – data, and– personnel
designed to:– capture, store, update, manipulate, analyze, and
immediately display information about worldwide business activities
XI. Global Market ResearchXI. Global Market Research
B. Global Market Research– 1. Who Does the Research?– Local Group?– Company Team Nearby?– Secondary vs. Primary– 2. The Visit by Executives– Trade Mission– Trade Fair