marketing management chapter 1 what is marketing management
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Marketing Management
Dawn Iacobucci
© 2010 South-Western, a part of Cengage Learning
What is Marketing
Chapter 1
Discussion Questions
• What is marketing?• What can marketers market?• What types of decisions do marketers
make?
Marketing and Exchange
• Marketing is an exchange between a firm and customer
Company
CustomerThe customer seeks benefits from the
company,and expects to pay.
The company offers benefits to its
customers,and seeks profits.
Why might an exchange NOT occur?
• The criteria needed for an exchange to occur: – Must have something of value to exchange – Need to be able to communicate – Must be able to exchange (under 21
drinking) – Must want to exchange – At least 2 people needed for an
exchange to occur
What is the long term benefit to having satisfaction in an exchange?
• More profitable relationship• Price insensitivity • Inelastic demand• Loyalty
What Can We Market?
What Can We Market?
Orientations
• Product/Production– Build a better mousetrap
• Selling Orientation– Let’s make a Deal
• Marketing/Customer– Building relationships with the customer
Selecting a Marketing-Oriented Strategy Is Target Marketing
Production-oriented manager sees everyone as basically similar and practices “mass marketing”
Marketing-oriented manager sees everyone as different and practices “target marketing”
Marketing IS the Business
• Marketing should permeate the entire organization
• Chief Marketing Officers (CMO) need to show results– Quantify results when possible (e.g.,
market share, revenue growth, income growth, ROIM)
Marketing Framework
Start with a Situational Analysis using the 5Cs
Marketing Framework
• Customers (for a chimps’ NPO)– Who are they?
• 20 to 40 years old – What are they like?
• Animal lovers – Do you want to draw different customers?
• Yes, other donors to NPO
• Company– What are the strengths and weaknesses?
• Financial strength (Intel)• Producing flexibility (DaimlerChrysler)• Patents (IBM)• Channel relationships (Kraft)• Loyal customer base (Starbucks)• Technical capability (3M)
Examples of Company Strength
• The One ProductHenry Ford made a wonderful car - the Model A- but that's all he made. General Motors decided that many people would like something different and were willing to pay for it. Fortunately, for Ford, he caught on quickly, but Ford almost went out of business with the thinking that one model fit everyone.
Examples of Company Weakness
Marketing Framework
• Context (for a chimps’ NPO)– What is happening in the industry that might
reshape the future business?• Economy—concerned with economy and job
security because donors might not give• Politics—unknown—Democrats and
Republicans• Legal—NA• Technological—move more giving online• Societal—more green animal habitats
Marketing Framework
• Collaborators (for a chimps’ NPO)– Can address the customers’ needs while
strengthening B2B partnerships?• Good relations with supply chain—
partner with pet food stores• Good relations with distribution channel
members (where place ads) —broaden beyond Full Standing Inserts (FSI) in two women’s magazines (e.g., periodicals with broader demographic reach)
Marketing Framework
• Competitors (for a chimps’ NPO)– Who are the competitors that must be
consider?• Any donation behavior; other animals, health
agencies, museums, and the arts• Competitors’ strengths—some have very
good brand names– What are their likely actions and reactions?
• More advertising, lobbying, solicitation.
Marketing Framework
Proceed to Strategic Marketing Planning with STP
Marketing Framework
• Segmentation (Social network to sell travel vacation packages through testimonials and word-of-mouth—800,000 users) – Customers aren’t all the same; they vary
in their preferences, needs, and resources• Current customers—low 20s• Non-customer—40 and older• Ideal customer—mid 20s with good
disposable income
Marketing Framework
• Targeting (sell travel vacation packages)– Attracting some of those customers
makes better sense than going after others• Estimate size and profitability—buyers
$1,350 one trip every other year• Rank desirability of segments—25 to
35 better disposable income
Marketing Framework
• Positioning (sell travel vacation packages)– Communicate benefits clearly to intended
customers• High quality and high price or low quality
and low prices?—high quality, prices are high but they’re good value
• Distribution mass or exclusive—to succeed, need some scale, which suggests wide availability/presence and mass promotion if cheap (e-referral program)
Marketing Framework
Advance to Marketing Tactics with the 4Ps
Marketing Framework
• Product (small attachment for cell phone which allows user to project presentations onto wall in a small boardroom) – Will customers want what the company is
prepared to produce?• Are we high-end or basic—high-end, innovative• What are the primary features—innovative,
convenient, light• What are the brand associations—few because
minimal awareness as yet• Where are we in product life cycle—Brand new
Marketing Framework
• Price (small attachment for cell phone) – Will customers pay what we would like to
charge?• What are the customers’ price sensitivities—
minimal, this is a cool business toy• Offer occasional price discounts—No reason,
benefits outweigh high price• Beneficial to price differently from competitors—
No competition yet, but keep price high to gain margin and spend on R&D.
Marketing Framework
• Place (small attachment for cell phone) – Where and how will customers purchase
the market offering?• Will we be extensive or selective—
Extensive• Use more pull or push—Pull• Any conflicts to resolve—Still forging
relationships
Marketing Framework
• Promotion (small attachment for cell phone) – What can we tell the customers or do for them
to entice them to purchase?• Our marketing communications (advertising)
goals—Search engines, get into Sharper image• How to measure ad effectiveness—Click-
throughs• How to budget across IMC—Aim for Business
Week, Forbes
Framework Considerations
• 5 Cs, STP and 4 Ps are interdependent– Marketers must understand how one
decision impacts other decisions
• The 5 Cs are in flux– Marketers must consistently monitor and
adjust strategy accordingly
Consumer Product Classes
Homogeneous
Heterogeneous
Shopping Products
Specialty Products
Convenience Products Impulse
Emergency
New Unsought
Regularly UnsoughtUnsought Products
Staples
Problem Solving Continuum
Routinized Response Behavior
Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed
Limited Problem Solving
Extensive Problem Solving
High involvementInfrequently purchased
Expensive High risk
Much information desired
Low involvement High involvement
Business Product Classes – How They Are Defined
Installations; important capital items
Accessories; short lived capital items Raw Materials;
unprocessed expense items
Component Parts & Materials; expense items that become a part of the final product
MRO Supplies
Professional Services
Business Product Classes
Little
Little
None
Little
StraightRebuy
Organizational Buying Processes
Characteristics
Time required
Multiple influences
Review of suppliers
Information needed
Type of Process
Much
Much
Much
Much
New-TaskBuying
Much
Much
Much
Much
New-TaskBuying
Medium
Some
Some
Some
ModifiedRebuy
Much
Much
Much
Much
New-TaskBuying
Little
Little
None
Little
StraightRebuy
Types of Shopping
Multiple Influence and Roles in the Buying Center
GatekeepersDeciders
(power to select & approve suppliers)
Influencers (write technical specifications)
Users
Buyers (work with suppliers & arrange
terms of sale)
BuyingCenter
Purchase Decision Making
Two Models for How Buyers Decide
• Lexicographic method– Compare brands by most important attribute;
brands that make the cut go into consideration set; then compare on next important attribute, etc.
• Average method– One attribute can’t make or break a brand– If a brand is strong on one attribute and average
on another, it will still dominate a brand that was average on all of its attributes
This Book…
• Assumes global customers• Assumes omnipresence of the Internet• Gives fresh, fun examples• Trains you to think like a marketer• Defines terms as necessary• Offers lists of factors to consider • Gives “how to” guidance when feasible
This Book…
• Each chapter opens with the Marketing Framework to maintain a focus on the big picture while also highlighting key concepts and tools about to be covered.
This Book…
• Begins each chapter with coverage of “What” is the topic and “Why” it should matter to you
• Every chapter then addresses the question of “How do I do this successfully?”
Book Layout
Study Question 1
• Marketers try to figure out what _____ want and then they try to figure out how to provide it and make money doing so.– a. business owners– b. advertisers– c. customers– d. companies
Study Question 2
• Marketers help/work with all of the following EXCEPT–a. athletes.–b. department stores.–c. hotels.–d. All can be helped by
marketers.
Study Question 3
• Which of the following is NOT part of the 5Cs? –a. context–b. corporation–c. customer–d. competitors
Study Question 4
• What order is correct for a situation analysis?–a. 5Cs, 4Ps, STP–b. 5Cs, STP, 4Ps–c. 4Ps, 5Cs, STP–d. STP, 5Cs, 4Ps
Study Question 5
• B2B marketers have said there are three kinds of purchases - new buy, modified rebuy, and –a. alternate rebuy.–b. convenience rebuy.–c. old buy.–d. straight rebuy.
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