Strategic Marketing Management

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STRATEGIC MARKETING MANAGEMENT –

Basic Marketing concepts

Dr. Kalliopi Chatzipanagiotou

Lecturer in Marketing

University of Glasgow

Lecture 1

The overall aims of this module are:

Review the essentials of marketing management

Understand the impact of strategic marketing decisions on the firm

Gain insight into the “real world” frustrations/rewards of making strategic marketing decisions

Learn how to develop a marketing plan

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Understand the key concepts and strategic planning not only as a process for achieving organizational goals but also as a means of building long-term relationships with customers

Understand the importance of the planning process within the context of strategic marketing and developing a marketing plan

Utilize the tools, concepts and models for strategic marketing evaluation, decision and implementation

Design a marketing programme based on conducting effective marketing research, developing marketing capabilities and competitive advantages

Implement and coordinate a strategic marketing programme

By the end of the course you should be able to:

Learning Objectives

Course Schedule

Week Topics

1Course IntroductionMarketing: A Basic Review

2Writing a Marketing Plan

3Collecting and Analyzing Marketing Information

4Developing Competitive Advantage and Strategic FocusDeveloping Goals and Objectives

5Customers, Segmentation, and Target Marketing

6Product Strategy/ Branding and Positioning

7Pricing and Distribution Strategy

8Integrated Marketing Communication I

9Integrated Marketing Communication II

10 Marketing Implementation and Control/ Developing Long-Term Customer Relationships

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Information regarding the course:

10 sessions, 2 hours each

Moodle 2 siteYou automatically gain access to the classes you are registered for. If not, contact the course administrator

The course exam constitutes 100% of the overall mark. The examination (2 hours) will be based on essay questions.

Tutorials

3 tutorialsThese cases are as follows:• USA Today: Innovation and Evolution in a Troubled Industry (is included in textbook)

• IKEA Looks to Further Penetrate the U.S. Market (is included in textbook)

• Apple's Winning Marketing Strategy (download it from MOODLE 2)

Effective tutorials require conscientious preparation before class. Thus, in order to be ready for class discussion of a case, please

Read the case through rather quickly for familiarity. Read the case a second time. Study all the exhibits carefully. Decide what the strategic issues are. Try to answer the case questionsStart your analysis of the issues with some number crunching. Use whichever tools and techniques of strategic analysis are called for. Support your opinions with reasons and evidence. Develop an appropriate action plan and set of recommendations.

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Organize your study:

Core reading:O. C. Ferrell and M. Hartline, (2011), Marketing Management Strategies - 5thedition (ISBN 9780538467445), Cengage Learning.

Supplementary texts and readings: o J. Fahy and D. Jobber (2012) (4th ed.). Foundations of Marketing. Mc Graw Hill o Hollensen, S. (2011) (5th ed.), Global Marketing: A decision-oriented approach, London: Financial

Times Prentice Hall.o D. West, J. Ford, Essam Ibrahim (2010), Strategic Marketing: Creating Competitive Advantage,

Second Edition, Oxford University Press.o Kotler P. & Keller K., 2006, Marketing Management, Pearson Prentice Hall, 12th Edition. o Hollensen, S. (2011) (5th ed.), Global Marketing: A decision-oriented approach, London: Financial

Times Prentice Hall.o Lambin J.J., Chumpitaz R., Schuiling I., 2007, Market- Driven Management, MacMillan, 2nd

edition.

The slides should be the guide for the topics. It is VERY IMPORTANT to study more thoroughly the concepts covered in our sessions based on the books that are given to you as references.

What is Marketing?

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Identifying the Marketing Concept

CUSTOMERBUSINESS

The Management of this Exchange

Business Consumer (B2C)

Business Business (B2B)

Business Government (B2G)

… …

2

2

2

Identifying the Marketing Concept

The process of obtaining something of value by offering something in return;typically obtaining products for money

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Basic Marketing Concepts:What Is Exchange?

Five Conditions of Exchangeo There must be at least two parties to the exchange.

o Each party has something of value to the other party.

o Each party must be capable of communication and delivery.

o Each party must be free to accept or reject the exchange.

o Each party believes it is desirable to exchange with the other party.

Goods/ServicesPrice ValueBrand

WarrantyConvenience

MoneyTime

EnergyCommitment

Experience Knowledge

Expectations

CUSTOMERBUSINESS

‘The Give and Get of Marketing’

The customer gives the business gets

The business gives the customer gets

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• Marketing (2005 AMA definition)– “… an organizational function and a set of business processes

for creating, communicating, and delivering value to customersand for managing customer relationships in ways that benefitthe organization and its stakeholders.”

• Marketing (2007 AMA definition)– “… the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that havevalue for customers, clients, partners, and society at large.”

Basic Marketing Concepts:Marketing Defined

Classical Conditioning is the process of using

established relationship between a stimulus and

a response to cause a learning

Operant Conditioning

Classical Conditioning

Reinforcement results from rewards : the more rewarding the response , the strongest the likelihood of the purchase being repeated.

Conditioning Learning

Behaviors with satisfying results are repeated.Behaviors with unsatisfying results are avoided.

Marketing Concept dimensions

“Think” in Marketing way

BehaviouralPhilosophical

“Act” in Marketing way

Marketing Concept Dimensions

4PsCustomer OrientationCompetitor OrientationInterfunctional Coordination

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4 P’s

Target Market

Product

Price

Promotion

Place

Product- Decisions regardingPhysical good features

Quality levelAccessoriesPackagingWarrantiesBranding

Price-Decisions regardingPrice levelFlexibilityDiscounts

TermsDifferentiation

Promotion-Decisions regardingSalespeople (selection, training,

Incentives)Advertising (media types, types

of advertising)Sales promotion

PublicityInternet/web strategy

Place-Decisions regardingChannel type

IntermediariesOutlet locationTransportation

StorageManaging channels

Did he do Marketing?

Albert Winstone, selling ice-cream, circa 1930.All photography Copyright Ben Vear at Winstones Ice Cream, www.winstonesicecream.co.uk.

Product: Ice-Cream

Promotion: “Stop me and Buy”

Place: A motorcycle and sidecar-Through the

different neighborhoods

Price:5 Cents

Excellent Customer Relationship MarketingHe knew everything about his customersHe was aware of their needs, about the competition, the market opportunities and so on.

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From these humble beginnings, Winstones has grownconsiderably and is now a substantial supplier to a number ofnational supermarket chains and major retail outlets

He was not only “doing” Marketing BUTHe was “thinking” in a Marketing Way!

Three conditions must be met before the marketing concept can be applied

Marketing Concept

Customer Orientation

Integrated Effort

Goal Achievements

Corporate activities

focus upon providing

customer satisfaction

All staff accept the

responsibility for

creating customer

satisfaction

The belief that

corporate goals can

be achieved through

customer satisfaction

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The evolution of Marketing Thoughts

Production Capabilities

Manufacture

ProductCustomers

(a) Production Orientation

This orientation refers in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily.

Implications of this orientation includes:• Pricing based on the costs of production and distribution• Research limited to technical product research• Packaging design primary to protect product• Minimal promotion and advertising, limited to raising awareness of

the existence of the product

The evolution of Marketing Thoughts

Products and Services

Aggressive Sales Effort

Customers

(b) Sales Orientation

Refers to business ability to make profits on using powerful selling techniques topersuade consumers to buy them, rather than on customer needs

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The evolution of Marketing Thoughts

Customer Needs

Potential Market

Opportunities

Marketing Products and

ServicesCustomers

(c) Customer Orientation

It is a culture rather than an individual process.It’s the norms, mindsets, values and behaviours of employees; alongside the structure, systems and control of the company, that put the customer’s needs in the center of all firm’s activities.

These three orientations are presented as being chronological…

Production Capabilities

Manufacture

ProductCustomers

Products and Services

Aggressive Sales Effort

Customers

Customer Needs

Potential Market

Opportunities

Marketing Products and

ServicesCustomers

(a) Production Orientation

(b) Sales Orientation

(c) Customer Orientation

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Transactional and Relationship Marketing

In other words…

The modern Marketing Concept can be expressed as

“the achievement of the corporate goals through meeting and exceeding customers’ needs better

than the competition”

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The nature of customer value

Customer Value Perceived Benefits Perceived Sacrifice (Costs)

(Functional benefits + Emotional benefits)

(Monetary costs + Time costs + Energy costs +Psychic costs)

=

•The value of a product is the mental estimation a consumer makes of it.•Customers and not organizations define what represents value.•The value in the marketplace varies from place to place as well as from market to market.

Perceived benefits: can be derived from the product, the associated service and the image of the company/product

Perceived Sacrifice: is the total cost associated with buying the product

-

Perceived Benefits can be derived from…

Functional features

Performance

TechnologyBrand

Quality

Design

Packaging

Country of origin

Staff behaviour

Size

Image Delivery GuaranteesAfter-sales service

Spare parts

Company Reputation

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Four Forms of Customer Value

Price ValuePerformance

Value

Emotional Value

Relational Value

Customer Value

One of the most powerful customer motivations to purchase

A product is perceived as being cheaper than those offered by competitors

The performance of the product is perceived as high quality

Quality of service received by the customers

The emotional ‘bond’ consumers built with the product

(a) Price Value

(c) Performance Value (e.g Dyson)

(d) Relational Value

EXAMPLES

(b) Emotional Value

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Goods vs. Services

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Health Care (medical practice, hospital, eye care, dentistry)

Financial Services (banking, investment services, insurance)

Professional Services (accounting, legal, architectural)

Hospitality (restaurant, hotel/motel, bed & breakfast, ski resort, rafting)

Travel (travel agency, airline, theme park)

Others (hair styling, plumbing, lawn maintenance, health club, interior design)

Characteristics of Services

Intangibility

Heterogeneity

Inseparability

Services are intangible cannot be seen,

tasted, felt, heard or smelled before

purchase.

Services are produced and consumed

simultaneously.

Services are highly variable

Services cannot be stored.Perishability

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-Services cannot be inventoried-Services cannot be easily patented-Services cannot be readily displayed or communicated-Pricing is difficult

Tangible

Goods Services

Standardized

Production separate from consumption

Nonperishable

Intangible

Heterogeneous

Simultaneous production and

consumption

Perishable

-Service delivery and customer satisfaction depend on employee and customers action-Service quality depends on many uncontrollable factors-There is no sure knowledge that the service delivered in matches what was planned and promoted

vs.

-Customers participate in and affect the transaction-Customers affect each other-Employees affect the service outcome-Mass production is difficult

-It is difficult to synchronize supply and demand with services -Services cannot be returned or resold

Resulting Implications

Source:Parasuraman et al. (1985)

“Servuction” Model

Processes and systems

Personnel

Backstage Frontline

Service1

Direct Relationships

Indirect Relationships

Customer

Customer

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Servuction in a real world

Invisible Visible

ProceduresEmployeesIngredientsEquipment Logistics

Employees Customers Environment (Tangibles +Intangibles)

Servuction in a real world

Invisible Visible

ProceduresEmployeesEquipment LogisticsPlanning

Major Service Producer Audience /Customers Environment (Tangibles +Intangibles)

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PeopleAll human actors who play a part in service delivery and thus influence the

buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.

Physical EvidenceThe environment in which the service is delivered and where the firm and

customer interact, and any tangible components that facilitate performance or communication of the service.

ProcessThe actual procedures, mechanisms, and flow of activities by which the

service is delivered—the service delivery and operating systems.

“Servuction” Model

7 P’s

Target Market

Product

Price

Promotion

Physical evidence

Processes

People

PlacePEOPLEEmployees(Recruiting, Training, Motivation, Rewards, Teamwork)Customers (Training)

PROCESSESFlow of activities(Standardized, customized)Number of stepsCustomer involvement

PHYSICAL EVIDENCE-Facility designEquipmentSignageEmployees dressOther tangibles(e.g Business cards; lecture notes)

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Source: Czinkota and Ronkainen (1995, p. 526)

Scale of elemental dominance

Good

good

B2B vs. B2C Marketing

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BUSINESSBUSINESS

The Management of this Exchange

Identifying the B2B Marketing Concept

•The management process responsible for the facilitation of exchange between

producers of goods and services and their organisational customers.

•B2B marketing and purchasing is a complex and risky business involving a number of

different parties.

Definition of B2B Marketing

A material, item or service that company sells to another company (customer) in order to use them for one of the following reasons:

– To produce its own products/services

– To facilitate company operations

– To incorporate them as components on its own products (OEMs)

– To sell them (as intermediary) to other companies or end-customers

In B2B the products and the services are sold for any other reason than the personalconsumptionIt is NOT the nature of the product; it is the reason for the TRANSACTION

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B2B customers

Commercial Enterprises (Banks; Hotels; etc.)

Retailers or Wholesalers that purchase products for resale to others.

Public and Private institutions (hospitals, colleges and universities, churches, museums etc.)

Government (federal, state, local)

B2B vs. B2C market

Fewer and larger buyersGeographical concentration Many buyersMarket

Relatively technical in natureCustomizationDelivery, services very important

StandardizationService important but less than for business products

Product

Competitive bidding for unique items, list prices standardized items

List prices

Price

Emphasis on personal selling Emphasis on advertisingPromotion

Direct channel to market A number of intermediariesPlace

Buying Center. Diverse group of organization members makes decisions

Individual or household unit makes the decisions

Decision buying process

B2B B2C

Relatively Enduring and complexComparatively, infrequent contact, short duration

Customer relationship

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