Marketing Philosophy and Strategy Chapter One Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-2 Key Learning Points The marketing concept Different organizational philosophies about marketing Importance of being customer focused The job of the marketing manager Typical marketing organizational forms How marketing is changing The focus of this book Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-3 What is Marketing? Marketing is the set of activities that attempts to influence choice. Think about marketing and the type of people who help to market a service. Which of the hotel employees listed at left are involved in marketing? Desk clerk Desk clerk Valet Valet Concierge Concierge Waitress Waitress Reservation clerk Reservation clerk Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-4 What is Marketing? Who engages in marketing? Who engages in marketing? Product manufacturers Product manufacturers Government Government Not-for-profit organizations Not-for-profit organizations Churches Churches Universities Universities Politicians Politicians Utility companies... Etc. Utility companies... Etc. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-5 What is Marketing? Successful marketing is difficult: There is no formula for marketing success. There is no formula for marketing success. Requires considerable interaction with customers. Requires considerable interaction with customers. Customers often cannot accurately describe their needs. Customers often cannot accurately describe their needs. Competitive action is difficult to predict. Competitive action is difficult to predict. Customer tastes and societal trends change frequently. Customer tastes and societal trends change frequently. Implementing strategy precisely is difficult. Implementing strategy precisely is difficult. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-6 Table 1.1 Top 10 Brands 1923 and 2005 Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-7 Organizational Philosophies The Marketing Concept The Marketing Concept Emphasizes a customer focus: Emphasizes a customer focus: Organizing resources toward understanding customers needs Organizing resources toward understanding customers needs Offering products or services designed to meet needs Offering products or services designed to meet needs Profits result from serving customers better than the competition. Profits result from serving customers better than the competition. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-8 The purpose of a business is to create and keep a customer. To do that you have to produce and deliver goods and services that people want and value at prices and under conditions that are reasonably attractive relative to those offered by others to a proportion of customers large enough to make those prices and conditions possible. - Theodore Leavitt Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-9 Illustration ING Direct is one of the fastest growing banks in the world. ING Direct is one of the fastest growing banks in the world.ING Direct ING Direct ING meticulously fires customers who cost too much or who desire exceptions to operating policies. ING meticulously fires customers who cost too much or who desire exceptions to operating policies. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-10 Figure 1.1 Strategic Approaches to the Marketplace Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-11 Organizational Philosophies Sales Driven: Focus: What we make, we sell. Little attention paid to the customer Very aggressive selling efforts Seeks to maximize volume, not profit Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-12 Organizational Philosophies Technology (or product) driven: Focus: Research and development; customer needs are secondary Problem: developed technology may not satisfy needs Great technology does not guarantee company success Feature fatigue commonly results Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-13 Organizational Philosophies Marketing driven: Focus: Embraces marketing, but to the point of excess Enormous investments in marketing research Common in consumer goods firms Problem: Very slow to respond to changes in the marketplace Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-14 Customers do not inherently want to buy products. Products cost money and, for corporate buyers, reduce profits. Customers buy products for the benefits that the product features provide. - Russell S. Winer Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-15 Activity Customer driven firms focus on selling benefits rather than products or services. Supply one or more benefits for each of the sentences below: Customer driven firms focus on selling benefits rather than products or services. Supply one or more benefits for each of the sentences below: Dont sell me a house, sell me... Dont sell me toothpaste, sell me... Dont sell me a movie, sell me... Dont sell me dry-cleaning, sell me... Dont sell me life insurance, sell me... Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-16 Organizational Philosophies Customer driven: Focus: Benefits desired by buyers Stresses long-term relationships: Conflicts: marketing versus finance Company reactions to crisis Attitudes toward marketing: expense or investment? Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-17 Organizational Philosophies How do organizations achieve a customer orientation? Information is shared among corporate functions. Strategic and tactical decisions are made cross-functionally and across divisions. Divisions and functions are committed to execution of coordinated decisions. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-18 Table 1.2 Customer Orientation Checklist Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-19 Figure 1.2 Reversing the Value Chain Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-20 Figure 1.3 The Dangers of Being Customer-Led Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-21 Organizational Philosophies Does a customer orientation and the marketing concept inhibit companies from developing revolutionary new products? No. Marketing managers need to translate new technology into benefits that customers desire. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-22 Organizational Philosophies Marketing as a Value-Added Activity: Marketing adds value to some segments of the population. Capturing value is also important. Sustaining value is a final concern. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-23 Marketing Managers Job The main job of the marketing manager depends upon: The organizational structure. The industry. The level in the organization that is being focused upon. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-24 Figure 1.4 Desserts Division Organizational Chart, General Foods Corporation Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-25 Figure 1.5 Partial Organizational Chart, Grasse Fragrances SA Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-26 Figure 1.6 Regional Bell Operating Company Marketing Organization Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-27 The main job of anyone in marketing is to create or implement a marketing strategy for the product or service that meets the needs of the targeted customers better than the competitors offerings and achieves the objectives set by the organization. - Russell S. Winer Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-28 Figure 1.7 The Marketing Managers Interactions Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-29 A marketing plan is a written document containing the guidelines for the product s marketing programs and allocations over the planning period. - Russell S. Winer Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-30 Figure 1.8 Hierarchy of Planning Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-31 Figure 1.9 Marketing Planning Sequence Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-32 Table 1.3 Marketing Plan Summary Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-33 Mobile technology Customer power Interactive marketing Globalization Customer relationships Communication challenges Emphasis on ROI Sustainable marketing practices The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-34 Figure 1.10 Anywhere, Any Time Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-35 The Changing Nature of Marketing Diffusion of Mobile Technology: Allows increasingly complex applications Serves as mobile marketing platform Widely available; acts as an information access flattener Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-36 The Changing Nature of Marketing Customers are becoming more powerful due to: The Internet. The Internet. Web sites and services which enhance interaction capabilities. Web sites and services which enhance interaction capabilities. Mobile technology revolution. Mobile technology revolution. Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-37 Consumers want a conversation, dialogue, to participate, to be more in control. Consumers expect more personal attention communication, products and services that are tailored to their wants and needs. Consumers will expect customization, so products and services reflect their unique wants and needs. Marketing is being redefined. - A.G. Lafley Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-38 The Internet is an indispensable tool for marketers with respect to: The Internet is an indispensable tool for marketers with respect to: Communications. Communications. Pricing. Pricing. Distribution channels. Distribution channels. The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-39 Globalization is a key concern, as it creates both opportunities and threats. Several factors influence globalization. The Euro Democratization of Russia Latin America emerges as a market Geopolitical events The emergence of China and India The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-40 Chinas global impact: One-fifth (1.3 billion) of the worlds population One-fifth (1.3 billion) of the worlds population Very low-cost supplier Very low-cost supplier Acquisition of global brands Acquisition of global brands Indias global impact: Outsourcing Outsourcing Significant consumer goods market Significant consumer goods market Acquisition of global brands Acquisition of global brands The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-41 Customer relationship management and database marketing: Customer retention is paramount. Lifetime customer value Relationship marketing relies upon: Database marketing Mass customization NikeID.com Mass customization NikeID.comNikeID.com Customer satisfaction Personalization often leads to loyalty. The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-42 Marketers face many marketing communication challenges: Decline in media usage. Decline in media usage. Increase in DVRs. Increase in DVRs. Increase in time spent on online and audience fragmentation. Increase in time spent on online and audience fragmentation. Decline in prime time viewership. Decline in prime time viewership year olds are increasingly difficult to attract to TV year olds are increasingly difficult to attract to TV. The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-43 Figure 1.11 Kimberly Clarks Media Mix Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-44 ROI and marketing investments: Pressure to measure ROI Pressure to measure ROI Pressure to develop better strategies and programs Pressure to develop better strategies and programs Sustainable marketing practices The Changing Nature of Marketing Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-45 Focus of the Book Ch 1: Marketing managers job, marketing function, changes in marketing Ch 2: Components of marketing strategy, differentiation Ch 3, 4, 5, 6: Collecting information useful for marketing decisions Ch 7, 8: Product positioning, branding, packaging, new products Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-46 Focus of the Book Ch 9, 10, 11, 12, 13: Pricing, communication, sales promotion, distribution, sales, and direct marketing decisions Ch 14: Building long-term customer relationships Ch 15: Marketing services Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall 1-47 Executive Summary Marketing is pervasive. Marketing is difficult. Customer retention is critical. Marketing concept is customer and competitor focused. Customer-oriented organizations invest in the customer. Technological innovation is compatible with a customer-orientation. Changes in the marketing environment impact the marketing managers job.