session 1- 09.13.04 marketing: introduction, strategy and competition
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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
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
“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
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