marketing management ch 2
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Dr. Karim KobeissiIslamic University of
Lebanon - 2014
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Chapter 2: Marketing Process Managing !"eMarketing #$ort
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Section I: The Marketing Process
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The Marketing Process
The marketing%rocess is the logical path along which it is
appropriate to make marketing decisions. Consequently,
understanding the !e steps o" the marketing process is
crucial "or anyone looking to market a product.
In the rst "our steps, companies work to understand
consumers, create customer !alue, and #uild strong
customer relationships. In the nal step, companies capture
!alue "rom consumers in the "orm o" sales, prots, and long$
term customer equity.
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% Simplied Model o" The Marketing Process
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Step &: 'nderstand The Marketplace andCustomers (eeds, )ants * +emands
Marketing is all a#out creating !alue "or customers. So, as
the rst step in the marketing process, the company
must "ully understand consumers needs, wants,
demands and the marketplace in which it operates in
order to create and enhance customers !alues.
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Step -: +esign a Customer +ri!en Marketing Strategy
nce it "ully understands consumers and the
marketplace, marketing management can design a
customer$dri!en marketing strategy. To design a
winning marketing strategy, the marketing manager
must answer two important questions:
1) What customers will we serve (whats our target
market)?
2) How can we serve these customers best (whats our
value proposition)?
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&$ Selecting Customers to Ser!eThe company must rst decide whom it will serve. It does this
b dividing the market into segments o" customers $ /a0
market segmentation and selecting which segments it will go
a!ter " /#0 market targeting.#ome people think o! marketing
management as $nding as man customers as possi#le and
increasing demand. 1ut marketing managers know that they
cannot ser!e all customers in e!ery way. 1y trying to ser!e all
customers, they may not ser!e any customers well. Instead,
the company wants to select only customers that it can ser!e
well and prota#ly. 'ltimately, marketing managers must
decide which customers they want to target and on le!el,
timing, and nature o" their demand.
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/a0$ Market Segmentation
Market Segmentation is the su#$
di!iding o" customers into
homogenous su#$set o"
customers where any su#$set
may concei!a#ly selected as
market target to #e reached
with distinct Marketing Mi2.
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/#0$ Market Targeting
Market !argeting $ In!ol!es
e!aluating each segments
attracti!eness and selecting one
or more segments to enter
according to organi5ational
resources * o#6ecti!es. Targeting
reduces time and cost as well as
increases sales.
!arget Market & % set o" #uyers
sharing common needs or
characteristics that the company
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7!aluating Market Segments Segment Si5e and 8rowth
9 %naly5e current sales, growth rates ande2pected prota#ility "or !arious segments.
Segment Structural %ttracti!eness
9 Consider e;ects o": competitors, a!aila#ilityo" su#stitute products and, the power o"#uyers * suppliers.
Company #6ecti!es and
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-$ Choosing a >alue Proposition
The company must also decide how it will ser!e
targeted customers 4 3ow the company will:
a0 +i;erentiate itsel" in the marketplace4
#0 Position itsel" in the marketplace4
%ccordingly, the company must choose its !alue
proposition.
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+ i ; e r e n t i a t i o n
Di$erentiation is
the act o"
designing a set
o" meaning"ul
di;erences to
distinguish the
company?so;ering "rom
competitor?s
o;erings.
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P o s i t i o n i n g
Positioning is the act o"
arranging "or a product to
occupy a clear, distincti!e,
and desira#le place relati!e
to competing products in the
minds o" target consumers.
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P o s i t i o n i n g / c o n 0The end result o" positioning is the creation o" a market$"ocused
val'e %ro%osition - !"e set of bene(ts a com%any
%romises to )eliver to c'stomers to satisfy t"eir nee)s$
to answer the customers question: @)hy should I #uy your
o;er rather than a competitors o;er4A 9 it is a simple clear
statement o" why the target market should #uy the product.
*'c" val'e %ro%ositions )i$erentiate one bran) from
anot"er an) t"e %ro)'ct+s %osition can be vie,e) as t"e
main res'lt of its )i$erentiation.
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% P d t P iti i M
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% Product Positioning Map
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Positioning & *!P !"e #ssence of
*trategic Marketing
* t e % / o n s t r ' c t a M a r k e t i n g P r o g r a m ! " a t D e l i v e r s * ' % e r i o r a l ' e
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* t e % / o n s t r ' c t a M a r k e t i n g P r o g r a m ! " a t D e l i v e r s * ' % e r i o r a l ' e
In this point, the company has to de!elop an integrated marketing
program that will actually deli!er the intended !alue to target
customers. The marketing program #uilds customer relationships
#y trans"orming the marketing strategy into action. It consists o"
the rms marketing mi, the set o" marketing tools the rm uses
to implement its marketing strategy.
The ma6or marketing mi2 tools are classied into "our #road groups,
called the !our %s o" marketing: product, price, place, and
promotion. To deli!er on its !alue proposition, the rm must rst
create a need$satis"ying market o;ering /product0. It must decide
how much it will charge "or the o;ering /price0 and how it will
make the o;ering a!aila#le to target consumers /place0. Binally, it
must communicate with target customers a#out the o;ering and
persuade them o" its merits /promotion0.The rm must #lend each
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e at ons % ' ng oc s 'stomer a 'e an
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e at ons % ' ng oc s 'stomer a 'e an*atisfaction
The key to #uilding
lasting customer
relationships is to
create superior
customer !alue and
satis"action. Satised
customers are more
likely to #e loyal
customers and gi!e
*t 5 t l 6
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*te% 5 a%t're al'e 6rom'stomers in et'rn
The nal step in!ol!es capturing !alue in return
in the "orm o" current and "uture sales, market
share, and prots. 1y creating superior
customer !alue, the rm creates highly satised
customers who stay loyal and #uy more. This, in
turn, means greater long$run returns "or the
rm.
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Section II: Managing The Marketing7;ort
Intro)'ction
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Intro)'ctionSo "ar we ha!e "ocused on the marketing in
marketing management.(ow, lets turn to the
management. In "act, in addition to #eing good
at the marketing in marketing management*
companies also need to pay attention to the
management. anaging the marketing process
re+uires the !our marketing management
Managing Marketing: %nalysis Planning
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Managing Marketing: %nalysis, Planning,Implementation, and Control
I- 7nalysis
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I- 7nalysisManaging the marketing "unction #egins with a complete
analysis o" the companys situation. The marketer should
conduct a S)T analysis, #y which he e!aluates the
companys o!erall strengths /S0, weaknesses /)0,
opportunities /0, and threats /T0.
*trengt"s include internal capa#ilities, resources, and
positi!e situational "actors that may help the company
ser!e its customers and achie!e its o#6ecti!es.
8eaknesses include internal limitations and negati!e
situational "actors that may inter"ere with the companys
per"ormance. 9%%ort'nities are "a!ora#le "actors or
trends in the e2ternal en!ironment that the company may
7nalysis :con;
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7nalysis :con; The company should analy5e its markets and marketing
en!ironment to nd attracti!e opportunities and
identi"y en!ironmental threats.
The company should analy5e company strengths and
weaknesses as well as current and possi#le marketing
actions to determine which opportunities it can #est
pursue.
!"e goal of *89! analysis is to matc" t"e
com%any+s strengt"s to attractive o%%ort'nities
in t"e environment ,"ile eliminating or
overcoming t"e ,eaknesses an) minimi
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I I - P l a n n i n g
Planning is a management process that managers use to identi"y
and select appropriate goals and courses o" action "or an
organi5ation. The organi5ational plan that results "rom the
planning process details the goals o" the organi5ation and
species how managers intend to attain those goals. !"'s
%lanning is bot" a goal-making an) a strategy-making
%rocess.
)h + Pl i T k Pl i i ti 4
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)here +oes Planning Take Place in rgani5ations4
In large organi
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7 * t r a t e g i c P l a n s
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7 - * t r a t e g i c P l a n s
=o, )o com%anies com%ete an) s'ccee)
in a global market %lace>
ne part o" the answer is a commitment to
creating and retaining satised customers.
The second part is adapting to a continuously
changing marketplace through market$
oriented strategic planning. This is the "ocus
o" strategic %lanning?!"e contin'o's
%rocess of )evelo%ing an) maintaining a
strategic (t bet,een t"e organi
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Corporate Strategic Planning
%t the corporate le!el, all companies start the strategic
planning process #y undertaking three planning
acti!ities:
&. +ening the corporate di!ision mission.
-. Setting company o#6ecti!es and goals.
D. +esigning the #usiness port"olio.
Strategic Planning at Corporate =e!els
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Strategic Planning at Corporate =e!els
& +ening the Corporate Mission
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&. +ening the Corporate Mission
The corporate mission is a statement o" the
companys purpose 9 what it wants to
accomplish in the larger en!ironnement.
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-. Setting Company #6ecti!es and 8oals
The company needs to
turn its mission into
detailed supporting
o#6ecti!es "or each
le!el o" management.
7ach manager should
ha!e o#6ecti!es and #e
responsi#le "or reaching
them.
D +esigning the 1usiness Port"olio
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D . +esigning the 1usiness Port"olio8uided #y the companys mission statement and o#6ecti!es,
management now must plan its b'siness %ortfolio ? t"e
collection of b'sinesses an) %ro)'cts t"at make '% t"e
com%any.
The #est #usiness port"olio is the one that #est ts the companys
strengths and weaknesses to opportunities in the en!ironment.
1usiness port"olio planning in!ol!es two steps:
&0 The company must analy5e its current business port!olio and
determine which businesses should recei!e more, less, or no
in!estment.
-0 The company must shape the "uture port"olio #y de!eloping
strategies "or growth and downsi5ing.
na y< ng e 'rren 's ness
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na y< ng e 'rren 's nessPortfolio
The ma6or acti!ity in strategic planning is #usiness %ortfolio
analysis where#y management e!aluates the products and
#usinesses that make up the company. The company will want to
put strong resources into its more prota#le #usinesses /S1's0
and drop its weaker ones.
The purpose o" strategic planning is to nd ways in which the
company can #est use its strengths to take ad!antage o"
attracti!e opportunities in the en!ironment. So most standard
port"olio analysis methods e!aluate S1's on two important
dimensions: the attracti!eness o" the S1's market or industry
and the strength o" the S1's position in that market or industry.
The #est$known port"olio$planning method is the growth Share
Matri2 that was de!eloped #y the 3oston ons'lting @ro'%.
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a% ng e ' 're 's ness
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a% ng e ' 're 's nessPortfolio
nce it has classied its S1's, the company must
determine what role each will play in the "uture. It canpursue one o" "our strategies "or each S1':
&0 $ The company can in!est more in the #usiness unit to
buildits share.
2)"The companycan invest ,ust enough to holdthe #-s
share at the current level.
D0$ The company can harvest the #-* milking its short"
term cash ow regardless o! the long"term e/ect.
E0$ The company can divest the #- b selling it or
phasing it out and using the resources elsewhere.
1usiness 'nits Strategic Planning
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1usiness 'nits Strategic Planning
%t the #usiness unit le!el, each
#usiness unit de!elops its own
strategic plan to carry that #usiness
unit into a prota#le "uture.
The Strategic Planning Process at S1'
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The Strategic Planning Process at S1'=e!el
1 $ M a r k e t i n g P l a n s
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1 M a r k e t i n g P l a n sThe marketing plan is a "unctional le!el plan that
"ormulates a scheme "or marketing a product or a#rand. It is the central instrument "or directing
and coordinating the marketing e;ort.
Marketing planning in!ol!es choosing marketing
strategies that will help the company attain its
o!erall strategic o#6ecti!es.
Fotler and %rmstrong /-G&G0 state that each
#usiness, product and #rand should ha!e its own
marketing plan.
arac er s cs o a ar e ng
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arac er s cs o a ar e ngPlan
- % marketing plan may #e de!eloped "or a long
term period /H years0, medium term period or
short term period /one year0.
- % marketing plan may #e de!eloped as a
standalone document or as part o" a #usiness
plan.
Contents o" a Marketing Plan
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Contents o" a Marketing Plan
The #asic sections o" a typical product or
#rand marketing plan include:
&. 72ecuti!e summary
-. Current marketing situationD. Threats * pportunities analysisE. #6ecti!es * Issues
. Marketing strategyJ. %ctions programsK. 1udgetsL. Controls * Contingency plans
1asic Sections o" a Typical Product or 1randM k ti Pl
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Marketing Plan
1. #ec'tive s'mmary
The e2ecuti!e summary Presents a #rie" summary
o" the main goals and recommendations o" the
plan "or management re!iew, helping top
management nd the plans ma6or points
quickly. % ta#le o" contents should "ollow the
e2ecuti!e summary.
/ 0
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/con02. 'rrent marketing sit'ation+escri#es the target market and a companys position in it,
including in"ormation a#out the market, product per"ormance,competition, and distri#ution. This section includes the"ollowing:
% market description that de$nes the market and ma,orsegments and then reviews customer needs and "actors in themarketing en!ironment that may a;ect customer purchasing.
%product review that shows sales* prices* and gross marginso! the ma,or products in the product line.
% re!iew o" competition that identi$es ma,or competitors andassesses their market positions and strategies "or productquality, pricing, distri#ution, and promotion.
% re!iew o" distribution that evaluates recent sales trends andother developments in ma,or distribution channels.
/ 0
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/con0
/. !"reats 9%%ort'nities analysis
%ssesses ma6or threats and opportunities that the
product might "ace, helping management to
anticipate important positi!e or negati!e
de!elopments that might ha!e an impact on the
rm and its strategies.
/ 0
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/con0
4. 9bAectives Iss'es
States the marketing o#6ecti!es that the
company would like to attain during the plans
term and discusses key issues that will a;ect
their attainment. Bor e2ample, i" the goal is to
achie!e a & percent market share, this section
looks at how this goal might #e achie!ed.
1asic Sections o" a Marketing Plan /con0
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g
5. Marketing *trategy
7 strategy is an ID#7 aconce%t'ali
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!"e Pro)'ctBmarket e%ansion gri)is a
tool "or identi"ying company growth
opportunities through:
&0 Market Penetration
-0 Market +e!elopment
D0 Product +e!elopment
E0 +i!ersication
Developing Strategies for Growth and Downsizing
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Market %enetrationis a growth strategyincreasing sales to current marketsegments without changing the product
Market )evelo%mentis a growth strategythat identies and de!elops new marketsegments "or current products
Developing Strategies for Growth and Downsizing
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Pro)'ct )evelo%mentis a growth strategythat o;ers new or modied products toe2isting market segments
Diversi(cation is a growth strategythrough starting up or acquiring#usinesses outside the companys currentproducts and markets
The Bour 8rowth Strategies o" the Product$Market 8rowthMatri2
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Matri2
Developing Strategies for Growth and Downsizing
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Do,nsi
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-$JL
gS1'
!erall Cost =eadership
+i;erentiation
Cost Bocus
+i;erentiation Bocus
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1asic Sections o" a Marketing Plan /con0
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1asic Sections o" a Marketing Plan /con0C. 7ction Programs B !actics
- 7 tactic is an action t"at ,e take to eec'te t"e strategy.
-@'i)e) by t"e marketing strategy t"e com%any s%ecify
an) )esigns t"e marketing tactics t"at it ,ill 'se to
im%lement t"e marketing strategy.
Bor e2ample: one strategy to gain market share would #e #rand
#uilding. %s part o" a company?s #rand #uilding strategy, they
may adopt di;erent tactics like /a0 online ad!ertising and /#0
cele#rity supports.
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/con0
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/con0
. 3')get
+etails a supporting marketing #udget that is
essentially a pro6ected prot$and$loss statement. It
shows e2pected re!enues /"orecasted num#er o"
units sold and the a!erage net price0 and e2pected
costs o" production, distri#ution, and marketing. The
di;erence is the pro6ected prot. nce appro!ed #yhigher management, the #udget #ecomes the #asis
"or materials #uying, production scheduling,
personnel planning, and marketing operations.
/con0
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/con0E. ontrols ontingency Plans
This section presents the means that insure the
achie!ement o" o#6ecti!es. ur marketing plan must
#e pro!ided with control mechanisms to estimate the
rele!ance o" the strategies at regular inter!als, and
#ring the changes which are required, when it is
necessary /contingency Plans0. It is the role o"
marketing management to insure this "ollow$up.
eFeion
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eFeionThe plans de!eloped at the
"unctional le!el /e.g.,
marketing plan nancial
planN0 must #e
consistent with and help
an organi5ation achie!e
its o#6ecti!es at #oth the
#usiness and corporate
I I I - Im% lementat ion
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I I I - Im% lementat ionPlanning good strategies is only a start toward success"ul marketing. %
#rilliant marketing strategy counts "or little i" the company "ails to
implement it properly. Marketing im%lementation is the process that
turns marketing plans into marketing actions to accomplish strategic
marketing o#6ecti!es. )hereas marketing planning addresses the what
and why o" marketing acti!ities, implementation addresses the ,"o,"ere ,"en an) "o,.
Many managers think that @doing things rightA /implementation0 is as
important as, or e!en more important than, @doing the right thingsA
/strategy0. The "act is that #oth are critical to success, and companies
can gain competiti!e ad!antages through e;ecti!e implementation.
I- ont r o l
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1ecause many surprises occur during the implementation o" marketing plans,
marketers must practice constant marketing control ? eval'ating t"e
res'lts of marketing strategies an) %lans an) taking correctiveaction to ens're t"at t"e obAectives are attaine).
Marketing control in!ol!es "our steps:
&0Management sets specic marketing goals
-0Management then measures its per"ormance in the marketplace
D0Management e!aluates the causes o" any di;erences #etween e2pected
and actual per"ormance
E0Management takes correcti!e action to close the gaps #etween goals and
per"ormance. This may require changing the action programs or e!en
changing the goals.
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