Principles of marketing. Creating and capturing value Marketing is managing profitable customer...

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Creating & Capturing Value Lays Coke KFC Levis Fair & Lovely Cellular Phone Technology Mobile Phone Nestle Pure Line water

Transcript of Principles of marketing. Creating and capturing value Marketing is managing profitable customer...

Principles of marketing Creating and capturing value Marketing is managing profitable customer relationships The aim of marketing is to create value for customers and to capture value from Customers in return. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering Satisfaction. Procter & Gamble, one of the worlds largest and most respected marketing Companies, really does create value for consumers by solving their problems. In return, customers reward P&G with their brand loyalty and buying dollars. Telling & selling $ 8.2 Billion, tell and sell "We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper." Creating & Capturing Value Lays Coke KFC Levis Fair & Lovely Cellular Phone Technology Mobile Phone Nestle Pure Line water Marketing defined What is marketing telling & selling Satisfying customer needs Broadly defined, marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. In a narrow business context, marketing involves building profitable, value-laden exchange relationships with customers. Hence, we define marketing as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Design a customer- driven marketing strategy Construct an integrated marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from customers to create profits and customer equity Understand the marketplace and customer needs and wants Market place & customer needs Five core customer and market place concepts 1.Needs (basics), wants (cultural) & demands (backed with buying power) At south west airlines, all senior executives handle bags, check in passengers, and serve as flight attendants once every quarter. we all go out and really spend time with consumers, just to look the differences in how they [think] about brands [and whats] important in their lives. 2.Market offerings (product, services, & experiences) Marketing myopia: the mistake of paying more attention to the specific products a company offers than to the benefits & experiences produced by these products. 3.Value and satisfaction (setting expectations) 4.Exchanges and relationships 5.Markets A market is the set of actual and potential buyers of a product. These buyers share a particular need or want that can be satisfied through exchange relationships. Defining marketing and market place Arrows represent relationships that must be developed and managed to create customer value and profitable customer relationship How should our customers reach us How can our customers reach each other Walmart low price promise Ford cannot deliver high quality to car buyers unless its dealers provide outstanding sales and services What are the local examples of suppliers being major contributor in meeting company philosophy/promise (M) What are the local examples of Marketing intermediaries contributing to companys success/sales (D) Suppliers Company Competitors Marketing Intermediaries Consumers Major Environment Forces Designing a Customer Driven- Marketing Strategy Selecting customers to serve (high and low) Choosing a value proposition (how will it differentiate) Marketing management orientations Production concepts (available & affordable, Chinese PCs) The product concept (quality, performance and innovative features) The selling concept (undertake large selling and promotion effort) The marketing concept (unlike product centered make n sell. Examples of both) The social marketing concept The social marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumers and societys well being. Social Marketing concept Society (Human Welfare) Consumers (want satisfaction) Company (Profits) Home Assignment Name at least two industries for each concept in Marketing Management Orientation. Land Rover Go beyond Designing a Customer Driven- Marketing Strategy Factory Existing products Selling & promotion Profit thru sales Starting FocusMeans Ends point Market Customer needs Integrated marketing Profit thru CS The selling concept takes an inside- out view that focuses on existing products and heavy selling. The aim is to sell what the company makes rather than making what customer wants. The marketing concept takes an outside-in-view that focuses on satisfying customer needs as a path to profits. We have a customer department CEO southwest The selling concept The Marketing concept Creating Customer Value Brand PunctualityWrong billing Complaint resolution Courteous staff Consistency of service Promise to Customers Pakistan Railways: To provide a safe, reliable, modern, efficient and cost effective infrastructure to its customers: to contribute in building the economy of Pakistan and to look after the welfare of its employees. "McDonald's: vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile. Nokia: Connecting People Integrated Marketing Plan Marketers develop integrated marketing program that will actually deliver the intended value to target customers. The marketing program builds customer relationship by transforming the marketing strategy into action. It consists of firms marketing mix, the set of marketing tools the uses to implement its marketing strategy. Marketing mix 4 Ps, product, price, place & promotion (assignment on Air conditions market) Building Customer Relationships Customer Relationship Management (narrower: customer data management activity. Broader-acquiring, keeping & growing customers) Relationship Blocks: Customer value: A customer buys from the firm that offers the highest customer perceived value. Customer satisfaction: It depends on the products perceived performance relative to a buyers expectations Changing nature of customer relationships (bulk and low volume customers in retail) Growing customer share (share of wallet, share of stomach, share of travel & share of garage) Customer equity: is the total combined lifetime values of all of the companys current and potential customers Building the right relationship with right customers ButterfliesTrue friends Potential profitability High profitability Good fit between company's Offering and customer's needs: high profit potential Good fit between company's Offerings and customer's Needs:Highest profit potential StrangersBarnacles Low profitability Little fit between company's Offerings and customer's needs: lowest profit Potential Limited fit between company's offerings and customer's Needs:Low profit potential Short term customersLong term customers Projected Loyalty Changing marketing landscape The digital age Internet Video sharing tools Cell phones Online social networks Online marketing Online Marketing Not for Profit Marketing Social marketing campaign Shaukat Khanim Fatimeed Foundation Zakat Campain Celebrities Charity boxes Company & Marketing Strategy Steps in strategic planning Defining a Market oriented Mission: A statement of the organizations purpose what it wants to accomplish in the larger environment. Setting company objectives & goals Designing the business portfolio Planning marketing & other functional strategies Business unit, product & market level Defining the company mission Corporate level Market oriented business definitions CompanyProduct-Oriented Definition Market-Oriented Definition GoogleWe provides the worlds best online search engine. Help to organize the Worlds information and make it universally accessible and useful. NikeWe Sell athletic shoes and apparel. Bring Inspiration and innovation to every athlete * in the world (*If you have a body, you are an athlete) Wal-MartRun Discount storesDeliver low price every day and give ordinary folks the chance to buy the same things as rich people.Save Money. Live Better. Designing the business portfolio Business portfolio : the collection of business and products that make up the company Portfolio analysis: the process by which management evaluates the products and businesses that make up the company Growth-share matrix: A portfolio-planning method that evaluates a companys strategic business unit in terms of its market growth rate and classified as stars, cash cows, question marks or dogs BCG growth share matrix Market growth rate High Star Question mark low Cash cow Dog highlow Relative market share Boston consulting group Developing strategies for growth & downsizing Product/market expansion grid: a portfolio- planning tool for identifying company growth opportunities through market penetration, market development, product development or diversification Market penetration: a strategy for company growth by increasing sales of current products to current market segments without changing the product Market development: a strategy for company growth by identifying and developing new markets segments for current company products Product development: a strategy for company growth by offering modified or new products to current market segments Developing strategies for growth & downsizing Diversification: a strategy for company growth through starting up or acquiring businesses outside the companys current products and markets Downsizing: Reducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the companys overall strategy The Product/Market Expansion Grid Market Penetration Market Development Product Development Diversification Existing Products New Products Existing Markets New Markets Market Segmentation Dividing a market into distinct groups of buyer s who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs. Market Segment A group of customers who respond in similar way to a given set of marketing effort Market Targeting The process of evaluating each market segments attractiveness and selecting one or more segments to enter Positioning Arranging for a product to occupy a clear, distinctive,and desirable place relative to competing products in the mind of target customers. Differentiation Actually differentiating the market offering to create superior customer value. Marketing Mix The set of controllable Tactical Marketing tools, product, price, place and promotion that the firm blends to produce the response it wants in the target market Cont.. The Marketing Mix Product Variety Quality Design Features Brand name Packaging Services Price List price Discounts Allowances Payment period Credit terms Promotion Advertising Personal selling Sales promotion Public relations Place Channels Coverage Assortments Locations Inventory Transportation Logistics Target customers Intended Positioning 4 PCs4 Cs ProductCustomer solution PriceCustomer cost PlaceConvenience PromotionCommunication The Marketing Mix SWOT Strengths Internal Capabilities that may help a company reach its objectives Opportunities External factors that the company may be able to exploit to its advantage Weaknesses Internal limitations that may interfere with a companys ability to achieve its objectives Threats Current and emerging external factors that may challenge the companys performance Positive Negative Internal External Measuring & Managing Return on Marketing Investment The net return from a marketing investment divided by the cost of the marketing investment (intangible outcomes, not readily measurable on productivity or returns) Beyond measuring return marketing investment in terms of standard performance measures such as sales or market share, many companies are using customer-relationship, retention, & equity. These are more difficult to measure, but capture both current & future performance. Marketing by numbers Net Marketing Contribution NMC = net sales cost of goods sold marketing expenses Marketing return on sales net marketing contribution marketing expenses Marketing ROI net marketing contribution marketing expenses Marketing by Numbers Exercise 1 Thank You Marketing by Numbers Exercise 1 Name: ___________ BCG growth share matrix Name: ___________ Which one is Star, Question mark, cash cow and dog Principles of marketing Exercise 3 Fill the product/market expansion grid Name: ___________