Session 1- 09.13.04 Marketing: Introduction, Strategy and Competition.

Session 1- 09.13.04Session 1- 09.13.04

Marketing:Marketing:Introduction, Strategy and Introduction, Strategy and

CompetitionCompetition

1/4th to 1/3rd of the civilian workforce in the U.S. performs

marketing activities

Fast route up the corporate ladder

• Professional Selling

• Marketing Research

• Advertising

• Retail Buying

• Distribution Management

• Product Management

• Product Development

• Wholesaling

• Professional Selling

• Marketing Research

• Advertising

• Retail Buying

• Distribution Management

• Product Management

• Product Development

• Wholesaling

Why Study Marketing?

Half of every dollar spent pays for marketing costs

Better-informed consumers

Demand for customer satisfaction

Why Study Marketing?

What is Marketing?

All of the above, plus much more!

Personal Selling?

Advertising?

Making products available in stores?

Maintaining inventories?

What is Marketing?

A Philosophy

An Attitude

A Perspective

A Management Orientation

A Set of Activities, including:

Products

Pricing

Promotion

Distribution (Place)

Marketing Definitions

“A social and managerial process by which individuals and groups obtain what they need and want through

creating and exchanging products and value with others.”

“The delivery of Customer Satisfaction at a profit.”

American Marketing Association Definition

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and

organizational goals.

Marketing Definitions

Key Concepts in Marketing

Needs, Wants and Demands.From deprivation to buying power.

Products and ServicesAnything that might satisfy a need or a want.

Marketing Myopia ?

Value and SatisfactionGain minus cost.Product’s perceived performance matches

expectations.

Meeting Consumers’ Needs, Wants, and Demands

This interview with Jeff Manning, Executive Director of the California Milk Processor Board, describes how the needs of consumers led to a popular slogan.

You have just purchased a tennis racquet factory that has been shut down for the last few years.

The automated equipment and computer system are in excellent shape, and the personnel needed to run the factory are readily available.

But before jumping into production, what questions need to be asked and answered? What plans need to be made? Which of these plans concern marketing?

Marketing Importance in a Practical Situation…

1. What are the needs of tennis players? 2. Do they need more or different styles of tennis racquets?3. How many different categories of tennis players are there? What kind of racquet does each

category need? (Handles, sizes, shapes, weights, and prices are factors.) Which category of player does this firm want to sell to?

4. Estimate how many people are in this chosen category. How many of them will be playing over the next five years? How often will they buy a new racquet?

5. When will these customers buy? (Are there seasons or trends?)6. Where are these customers located? Where do they shop for tennis racquets?7. What price are these customers willing to pay? Does this price leave a profit for the

company?8. How will the company communicate with potential customers? What type of promotion will

reach them?9. How will the racquets be packaged? What type of warranty will they carry? How will the

firm provide customer service?10. How many other companies are making racquets? What kinds and what prices of racquets

do competitors offer? 11. What is the industry as a whole projected to do in the next five to ten years?

… A Significant Role and Many Questions to Answer.

Marketing Management

Production concept

Product concept

Selling concept Marketing

concept

Societal marketing concept

Management OrientationsManagement Orientations

Selling Vs. Marketing

* Selling: Focus on the

needs of the seller

* Marketing: Focus on the

needs of the buyer

Selling Vs. Marketing

* Selling: Preoccupied

converting product into cash

* Marketing: Preoccupied with

satisfying the needs of the customer

Selling Vs. Marketing

* Selling: Increase profits

through sales volume

* Marketing: Use an

integrated marketing strategy to profitably satisfy customer needs

back

Example of a Company Policy Statement Stressing Social Responsibility

Defining the Business Mission

Answers the question, “What business are we in and where are we going?”

Focuses on the market(s) rather than the good or service

Strategic Business Units may also have a mission statement

Market OrientedMarket Oriented

RealisticRealistic

Fit Market EnvironmentFit Market Environment

Distinctive CompetenciesDistinctive Competencies

MotivatingMotivating

Specific

Characteristics of a Good Mission

Statement:

A Mission Statement is a Statement of the Organization’s Purpose.

Defining the Company’s Business and Mission

Coke’s Mission Statement

The Coca-Cola Company exists to benefit and refresh everyone it touches.

The basic proposition of our business is simple, solid and timeless. When we bring refreshment, value, joy and fun to our stakeholders, then we

successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling

our ultimate obligation to provide consistently attractive returns to the owners of our business.

PepsiCo’s Mission Statement

“PepsiCo’s overall mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.”

http:\\www.pepsico.com

CRM

CRM – Customer relationship management . . .“is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”

Relationship Marketing

RequirementsRequirementsfor for

Building Building RelationshipsRelationships

RequirementsRequirementsfor for

Building Building RelationshipsRelationships

Who are your customersWho are your customers

What do customers valueWhat do customers value

How do they prefer to interactHow do they prefer to interact

What do they want to buyWhat do they want to buy

CRM

It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.

Marketers must be concerned with the lifetime value of the customer.

CRM

Customer equity The total combined

customer lifetime values of all customers.

Measures a firm’s performance, but in a manner that looks to the future.

Key ConceptsKey Concepts

Attracting, retaining and growing customers

Building customer relationships and customer equity

CRM

Customer relationship levels and tools Target market typically

dictates type of relationship Basic relationships Full relationships

Customer loyalty and retention programs

Adding financial benefits Adding social benefits Adding structural ties

Attracting, retaining and growing customers

Building customer relationships and customer equity

Key ConceptsKey Concepts

Building Long-Term Relationships

Customer-oriented personnel

Effective training programs

Empowered employees

Teamwork

Strategic Planning

Strategic planning is defined as: “The process of developing and

maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.”

Strategic Planning

RESOURCES &

OBJECTIVES

EVOLVING MARKET

OPPORTUNITIES

LONG RUN LONG RUN PROFITABILITY PROFITABILITY AND GROWTHAND GROWTH

The Marketing Plan

A written document that acts as a guidebook of marketing activities for the marketing manager.

Why Write a Marketing Plan? Provides a basis for comparison of actual

and expected performance

Provides clearly stated activities to work toward common goals

Serves as a reference for the success of future activities

Allows entry into the marketplace with awareness

Marketing

Plan

Marketing Objective

A statement of what is to be accomplished through

marketing activities.

“Our objective is to increase market share by 40% and to obtain customer satisfaction ratings of at least 90%

in 2003.”

Marketing ObjectivesMarketing Objectives Must Be:Marketing Objectives Must Be:

Realistic

Measurable

Time specific

Consistent with Organization’s Priorities

Examples of Marketing Objectives

SWOT Analysis

Identifying internal strengths (S) and weaknesses (W) and also examining

external opportunities (O) and threats (T)

SWOT Analysis

©South-Western College Publishing

SS

WW

OO

TT

Things the company does well.Things the company does well.

Things the company does not do well.Things the company does not do well.

Conditions in the external environment that favor strengths.Conditions in the external environment that favor strengths.

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Internal

External

Looking at the Business Portfolio

The business portfolio is the collection of businesses and products that make up the company.

The company must: analyze its current business portfolio or

Strategic Business Units (SBU’s) decide which SBU’s should receive more, less,

or no investment develop growth strategies for adding new

products or businesses to the portfolio

MARKET SHARE DOMINANCE

HIGH LOW

MA

RK

ET

GR

OW

TH

RA

TE

LO

W

H

IGH

High growthMarket leaders Require cash

Large profits

Low growth

High market shareHigh cash flow

Low growthLow market shareMinimal cash flow

High growth

Low market shareNeed cash

Poor profit margins

$$$$

BCG Portfolio Matrix

BCG Portfolio Matrix Example

Sub-Notebooks

and Hand-Held Computer

Integrated phone/Palm

devices

Laptop and Personal

Computers

MainframeComputer

MA

RK

ET

GR

OW

TH

RA

TE

LO

W

H

IGH

MARKET SHARE DOMINANCE

HIGH LOW

STAR PROBLEM

CHILD

CASH COW DOG

Strategies for Resource Allocation

BuildBuild

HoldHold

HarvestHarvest

DivestDivest

Provide financial resources if SBU (Problem Child) has potential to be a Star.

Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs.

Increase short-term cash return. Appropriate for all SBUs except Stars.

Get rid of SBUs with low shares in low-growth markets.

1. Market Penetration

2. Market Development

3. Product Development

4. Diversification

ExistingMarkets

NewMarkets

ExistingProducts

NewProducts

Product/ Market Expansion Grid

Developing Growth Strategies

Can be Difficult, Time-Consuming, & Costly to ImplementCan be Difficult, Time-Consuming, & Costly to Implement

Difficult to Define SBU’s & Measure Market Share/ GrowthDifficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses, But Not future PlanningFocus on Current Businesses, But Not future Planning

Can Lead to Unwise Expansion or DiversificationCan Lead to Unwise Expansion or Diversification

Problems With Matrix Approaches

Steps in Analyzing Competitors

Identifying the company’scompetitors

Assessing competitor’s objectives, strategies,strengths and weaknesses,and reaction patterns

Selecting whichcompetitors toattack or avoid

Marketing Strategies for Competitive Advantage

Strategy a Company Adopts

Depends on Its Industry Position

The Marketing Process

The segmentation process divides the total market into market segments.

Target marketing determines which segment(s) are pursued.

The strategic market strategic market positioningpositioning for the product is then determined.

Analyzing marketing opportunities

Selecting target markets Developing the

marketing mix Managing the marketing

effort

Key ElementsKey Elements

A unique blend of product, distribution, promotion, and pricing strategies designed

to produce mutually satisfying exchanges with a

target market.

The Marketing Mix

TargetCustomers

IntendedPositioning

Product“Goods-and-service”combination that a company offers a

target market

PriceAmount of moneythat consumers have to pay to

Obtain the product

Activities that persuade target customers to buy

the product

Promotion

Company activitiesthat make the

product available

Place

Developing the Marketing Mix