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“Marketing Theory for EngineeringEntrepreneurs - II”
Gamini Nanda GunawardanaB.Sc.Eng.(Hon.); M.B.A.; C.Eng.; M.I.E.(SL); M.C.S.(SL);M.I.D.P.M.(UK); F.I.A.P.(UK); M.B.C.S.(UK)
Director – Ceylinco [email protected] ://groups.yahoo.com/group/gaminigunawardana
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What is Marketing?Marketing is the social process by which
individuals and groups obtain what they needand want through creating and exchanging products and value with others. - Kotler.
Marketing is the management process that
identifies, anticipates and satisfies customerrequirements profitably. - The CharteredInstitute of Marketing.
Marketing is essentially about marshalling the
resources of an organization so that they meetthe changing needs of the customer on whomthe organization depends. - Palmer.
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Stages in Organizational Planning
Corporate
StrategicPlan
Business Unit
Strategic
PlanStrategic
Marketing
PlanShort Term(Tactical )
Marketing Plan
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The Corporate & MarketingStrategy Process
Price PromoBusiness Unit Analysis
Mission &Objectives
Strategy for Each SBU
SBU 1 SBU 2 SBU 3
Marketing Situation Analysis
Target Market Strategy
MarketingPositioning Strategy
Place Product
The Strategic Marketing PlanImplementation
Control and Evaluationof Performance
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• Production Concept – Consumers willfavor products that are available and
affordable and the management shouldtherefore focus on improving productionand distribution efficiency.
• Product Concept – Consumers will favorproducts that offer the highest quality,performance and features and that theorganization should therefore devote itsenergy to making continuous productimprovements.
• Selling Concept– Consumers will not buyenough of the organizations products
unless it takes large scale selling nadpromotion effort.
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Marketing Role
Market analysis– Target markets– Competition– Customers• Business planning – Defines objectives– Defines revenue & growthopportunities– Match core competenciesheld/needed– Defines whole product– Defining role within valuechain
– Implications• Internal and external
Market analysis– Target markets– Competition– CustomersBusiness planning
– Defines objectives– Defines revenue & growthopportunities– Match core competenciesheld/needed– Defines whole product
– Defining role within valuechain– Implications
Internal and external
Positioning– Company– ProductProduct and programmanagement– Value delivery
Evangelism, partnerships– Channel strategy
Direct, OEM, tiered– Launch planning and execution
Cross functional team leadership
Marketing communications– Collateral, packaging– Public awareness– Lead generation– Sales tools and training
Customer-centric & strategic Customer-centric & tactical
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MARKETING STRATEGY PROCESS
SituationAnalysis
MarketingProgram
Development
(Tactics)
Implementingand Managing
MarketingStrategy Designing
MarketingStrategy
SettingObjectives
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Analysis ofEnvironmental Factors
Identify Threats &Opportunities
Analysis of KeyCompetitors
Analysis of Firm’s
Resources andLimitations
Product-MarketAnalysis
Situation Assessment
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Situation Analysis• Laws and regulations• Politics• The current state of technology• Economic conditions• Sociocultural aspects• Demand trends• Media availability• Stakeholder interests• Competitor - Marketing plans and campaigns• Internal factors such as your own experience and
resource availability
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Macro Environment Factors
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Analyzing Competition 1. Define Industry Structure & Characteristics
2. Identify &
Describe KeyCompetitors
5. Identify New
Competitors
3. Evaluate KeyCompetitors
PRODUCT- MARKETSTRUCTURE &
MARKET SEGMENTS
4. AnticipateActions byCompetitors
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Extent ofMarket Coverage
CustomerSatisfaction
CurrentCapabilities
PastPerformance
CompetitorEvaluation
Evaluating Key Competitors
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Forces Driving Competition
PotentialEntrants
Suppliers
Substitutes
Buyers
Bargaining Power of Suppliers Bargaining Power of Buyers
Threat of Substitute Products
Threat of New Entrants
Level ofIndustryRivalry
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Set SMART Objectives• Specific - Be precise about what you are
going to achieve• Measurable - Quantify your objectives• Achievable - Are you attempting too
much?• Realistic - Do you have the resource tomake the objective happen (men, money,machines, materials, minutes)?
• Timed - State when you will achieve theobjective
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Product-Market Life Cycle The “classic” product -market life cycle curve
is a good reflection of what happens toproduct markets
The key to this model is knowing where youare and adopting the appropriate strategy
Define the product-market at a meaningfullevel (at least: product in application, better:offering to fulfill needs of a segment)Use data to gain an objective view of current
position Develop appropriate strategy for thesituationA common fallacy is to believe that you can
change the course of the curve
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Product - Market Life Cycle MARKET
INTRODUCTION
MARKET
GROWTH
MARKET
MATURITY
MARKET
SATURATION
MARKET
DECLINE
Total Industry Sales
Total Industry Profit
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Market Life Cycle : How I know where I am MARKET
INTRODUCTION
MARKET
GROWTH
MARKET
MATURITY
MARKET
SATURATION
MARKET
DECLINE
Total Industry Sales
Total Industry Profit
CompetitorsNone to Few Few but
IncreasingSeveralto Many
Several Severalto Few
Product Differentiation
Very High High Diminishing Little Littleto None
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Market Life Cycle -Strategic Options MARKET
INTRODUCTION
MARKET
GROWTH
MARKET
MATURITY
MARKET
SATURATION
MARKET
DECLINE
Total Industry Sales
Total Industry Profit
GROW GROW
Maintain
MAINTAIN MAINTAIN
Harvest
HARVEST
Exit
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The BCG Matrix
?
Low
High
GROWT
H
RATE
MARKET SHARE
High Low
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GE Planning Grid
Protect Position Invest to Build Build Selectively
Selectivity/Manage for
Earnings
LimitedExpansion or
Harvest
Protect andRefocus
Manage forEarnings DivestLow
High
Medium
MediumStrong Weak
Business Position
Strategies
Market Attractiveness
Build Selectively
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Strategies
• Which segment ? How will we targ et thesegment? How should we position withinthe segment?
• Why this segment and not a differentone? (This will focus the mind).• Define the segment in terms of
demographics and lifestyle. Show how you intend to 'position' your product orservice within that segment.
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Development (Growth) Strategies
3. ProductDevelopment
Diversification(Related or Unrelatedto Core Business)
ExistingMarkets
New Markets
NewProducts
ExistingProducts
1 . MarketPenetration
2. MarketDevelopment
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1. Cost LeadershipThe low cost leader in any
market gains competitiveadvantage from being ableto many to produce at thelowest cost. However, lowcost does not always leadto low price.
2. Differentiation
Differentiated goods andservices satisfy the needsof customers through asustainable competitiveadvantage.
3. Focus or Niche strategyWhere an organization can
afford neither a widescope cost leadership nor awide scope differentiationstrategy, a niche strategy
could be more suitable.
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Marketing Tactics
• Convert the strat egy into the marketing mix (alsoknown as the 4Ps) . These are your marketing tactics.
• Price Will you cost plus, s kim, match the competitionor penetrate the market?
• Place Will you mar ket direct, use agents ordistributors, etc?• Product Sold individually, as part of a bundle, in bulk,
etc?• Promotion Which media will you use? e.g sponsorship,
radio advertising, sales force, point-of-sale, etc?Think of the mix elements as the ingredients of a'cake mix'.
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Elements of the Marketing Mix Marketing manager
ProductFeatures
Brand namePackagingServiceWarranty
PriceList price
DiscountsAllowancesCredit itemsPayment period
PlaceOutlets
ChannelsCoverageTransportationStock level
PromotionAdvertising
Personal sellingSalespromotionPublicity
Target CustomersIntended Positioning
Cohesive marketing mix
Promotion
Product Place
Price
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Market Mix & Life Cycle MARKETINTRODUCTION
MARKET
GROWTH
MARKET
MATURITY
MARKET
SATURATION
MARKET
DECLINEProduct
One or Few
Various - lookfor best
productBuild brandfamiliarity
LittledifferentiationBattle of theBrands
No productdifferentiationOther ways todifferentiate?
Some dropout
Place
Build Value ChainsMaybe selective distribution
Consolidatechannels
Eliminate costs, find betterlow cost channels
Promotion Pioneering, InformingAwareness, Build brand
Informing & PersuadingBuild selective demandDifferentiate brand
Persuade &Remind
Price Skimming orPenetration
Value orPenetration
Add value orMeet competition
Price dealingand price cutting
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Promotions• Personal Selling • Sales Promotion • Public Relations
• Direct Mail • Trade Fairs and
Exhibitions • Advertising • Sponsorship
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Marketing research • Primary Research.
• 1. Interviews• 2. Mystery shopping• 3. Focus groups• 4. Projective
techniques• 5. Product tests• 6. Diaries
• Secondary Research :• Trade associations• National and local press• Industry magazines• Web sites• Informal contacts• Trade directories• Published company accounts• Business libraries• Professional institutes• Previously gathered marketing
research• Census data• Public records
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Control
• Start-up costs• Monthly budgets
• Sales figure• Market share data• Consider the cycle of control
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Corporate Image As A
Strategic Weapon• 5th “P” of Marketing:
• Perception Competitors can mimic a product, price,distribution strategy.
The one thing that competitors cannot copyis a well-defined corporate personality .