Section 3 slides module 1 - The Marketing Concept...2019/05/04 · 3 recognise-the marketing...

www.themarketingconcept.com © Dr. Stephen Fanning

Manarola – Cinque Terre

themarketingconcept.com


themarketingconcept [e-book] has 3 sections

how individual organisationsarticulate &

implement the marketing concept

theories & concepts that shape

marketing thought

application of marketing theories

& concepts[aka principles] [aka practices]


lmarketing philosophy

Section 1


the marketing concept bestsatisfy

bestsatisfy

needs & wants needs & wants

www.themarketingconcept.com © Dr. Stephen Fanning www.themarketingconcept.com © Dr. Stephen Fanning

a market

www.themarketingconcept.com © Dr. Stephen Fanning (Kotler, Fitzroy, & Shaw, 1980, p.14)

marketing

Classic definition

satisfaction


marketing

Contemporary definition

satisfaction


Self actualisation

Ego needs

Social needs

Safety & security needs

Physiological needs

Cognitive needs

Aesthetic needs

Transcendence needs:

The extended hierarchy of needs


Needs can be...

Biogenic: needs for the body

Psychogenic: needs for the mind


Benefits can be...

Utilitarian: benefits that are objective, functional, & measureable

Hedonic: benefits that are subjective, pleasure, experiential, excitement, fantasy.


needs are different to wants

needs are part of being humanMaslow presents the view that needs can be arranged in a hierarchy

A want is the product that a consumer selects to best satisfy a need. Wants are the direction a consumer takes during the buyer decision process.


actual self ideal self

the perception a person currently

has about himself or herself

how a person would like to perceive

himself or herself in the future

Maslow stated that when our needs are 80% satisfied we hunt for new needs


Marketing is about -

Satisfactionwhen a customer’s expectations are exceeded


Episodic <> Cumulative <> Collective <> Aggregate


profitable4 exchange relationships4

customer organisation channel partners society

synergistic symbiotic, strategic, & sustainable

Total profits4 Relationships4

the ‘umbrella’ [overarching] concept


needs are often expressed as objectives

organisations also have needs Organisational needs could also be arranged in a hierarchy

www.themarketingconcept.com © Dr. Stephen Fanning a cultural task-force that looks to the future

needs to be embedded in an organisation’s culture

the world has always been disruptiveThe evolution of marketing: a societal perspective - reveals that

The 4 recurring patterns or quests


2The industrial revolution lead to 2 new business concepts

new business conceptsthe production concept – the selling concept+

3 business concepts and the business philosophies

a production philosophy

a selling philosophy

a marketing philosophy


It is likely that an organisation philosophy is an amalgam of business concepts

A marketing audit should explore this topic

In this example we could conclude that the organisation has adopted

the marketing concept & is practicing a marketing philosophy


An organisation may ‘go to market’ & not be practicing a marketing philosophy.

It is important to remember that

or fully


Organisation adopts the marketing concept

Designs and develops a unique marketing philosophy

Considers the prevailing situational factors [COMP]

Nurtures an organisational culture


The right culture does not happen by chance it happens by choiceA marketing philosophy nurtures a culture.

Being customer centric Understanding the customer A commitment to quality & value Honest communication Delivering on promises A commitment to satisfaction Cultivating a sense of mission espirit de corps


strategic3financial3 communication3

recognise - the marketing concept

craft &communicate - a marketing philosophy

nurture - a marketing culture

situational factors – the COMP considerations

best satisfy2

Summary of section 1


theorymarketing

Section 2


Section 2: Theory - [3 modules]


Consumption CostsValues1

Consumption Qualities

Situationalfactors

Commitment to proceed

Considered set of products

Estimate value of alternatives

cost-benefit-riskanalysis

Recognition of a need

Product selection

Exchange of money may happen in any time-zone

Postpone

Exit

Forming of expectations

Co-produce

iterative

Product performance

[+][-]

Purchase behaviour Post-purchase behaviourProduct delivery321 [searching, estimating, & selecting] [experiencing & assessing] [reflecting & evaluating]


Product components

Core productExpected product

Augmented product

Potential product

Goods

People

Place

Services

Ideas

Experiences

Product considerations

Brand considerations

The total product – an exploded view


brand considerations are the foundation

Building the value of the business [brand equity]

The 3rd financial objective


Exploded view of the circle of satisfaction

CollectivesatisfactionCollective

trust

Collectiveloyalty

Collective impact on the organisation

Brand equity

Collective satisfaction


Customer satisfaction4

We will discuss 4 types: Episodic satisfaction 1 episode or 1 transaction

Cumulative satisfaction Multiple episodes for 1 customer

Collective satisfaction Multiple episodes for all customers

Aggregate satisfaction Combination of multiple total

products

How brand equity is formed

✔✔3 marketingfinancial

objectives

3 marketingfinancial

objectives

✖ ✔


Internal quality

Employee satisfaction

Employee retention

External quality

Customer satisfaction

Customer retention

Outcome: a compelling place to work, to do business, to invest

adapted from Schlesinger and Heskett (1991)

start The service profit chain

Customer loyalty


Repeat purchasing [-c%: +sr: +bv]

Positive WOM [-c%: +sr: +bv]

Communication mix costs [-c%]

Tolerant customers [-c%: +bv]

Lower recovery costs [-c%]

Insulated customers [-c%: +sr]

Reduced considered set [-c%: +sr]

The circle of satisfaction & the financial objectives

-c% = reduce costs +sr = increase sales revenue +bv = build the business value]


A

Marketshare

Marketshare

Collective satisfaction

Marketshare

A

✔3 marketingfinancial

objectives

✔

✔3 marketingfinancial

objectives

✖


Let’s sum up sections 1 & 2


strategic3financial3 communication3

recognise - the marketing concept

craft &communicate - a marketing philosophy

nurture - a marketing culture

situational factors – the COMP considerations

best satisfy2

Summary of section 1


[-] [+]expectations

delivered

Purchase behaviour Product delivery Post purchase

Searching, estimating & selecting Reflecting & evaluating

financial3 strategic3 communication3

Marketing objectives3

costs3

risks/qualities8

Values1

situational factors4

[COMP]

The marketing concept – best satisfy2

qualities

value2

costs

expectations

satisfaction

cumulative sat.

trust

loyalty

collective satisfaction

trust & loyalty

exit

1 2 3

need

product selectioncore

expected

augmented

Brand equity

P. considerations

iterative

goods services

experiences

ideas people

place

Experiencing & assessing

potential

B. considerationsCLV


applicationmarketing

Section 3


positioning – managing the COMP factors


MarketingplanMarketing

action plans

Corrective actions

Organisation’sphilosophy

IMPLEMENT

ANALYSE

DESIGN

1

Evaluateperformance

Analysedata

Implementaction plans

COLLECT

DEVELOP

Businessplans

Organisation’sobjectives priorities &

budget

Marketing Audit[COMP]

Articulate position

EVALUATE


Marketing AuditWhere is the organisation at the present?What are the current situational factors? How well does our total product meet the needs of our customers?

Marketing PlanArticulation of desired position and basis of competitionIdentification of market strategiesIdentification of market/revenue goals

Marketing Action PlansIdentification of tacticsIdentification of responsibilities and timeline

Marketing ControlMeasure performance against specificationsTake corrective action where necessary

Clarifying key terms

if it is not measured - it can’t be managedAn old adage

if it is not measured - it can’t be valued


Just as an architect would have written specificationsEach component of the business plan would have specific outcomes. Each function agrees that this is the business that they are building.


This is the most important slide you

will ever see


Marketing research

the customer, organisation, the market, & the productCollect and analyse



The business plan, discipline plans, & the discipline action plans for the previous year are the starting point


How market research can assist?

Market research can assist in: Uncovering consumer dreams, desires, & demands Designing, developing, delivering new products Conducting a product review Assessing core, expected, & augmented product layers

Positioning & re-positioning a product Assessing competition & market characteristics Assisting with continuous improvement process Measuring operational efficiency & effectiveness



Market research reduces risk

Zaltman and Coulter (1995) suggests that up to 80% of all product failures are as a consequence of poor research.

Therefore, market research is a vital management tool We are operating in a dynamic market - increased customer

expectations, greater accountability and shorter product cycles The objective of MR is to provide reliable and accurate data, to

enable managers to make informed decisions. Research quality improves the quality of decisions Although, does not guarantee success

Like all investments must be cost effective outcome focussed



2 types of marketing research

1 As needed - [sometimes referred to as Ad hoc research] a) Specific to a particular need at a particular timeb) Measuring changes to situational factors – internal/external

2 Everyday - [some times referred to as routine or systematised] a) Part of an ongoing & regular business monitoring and control

programme [Sales performance metrics]b) Established longitudinal benchmarking data



The 5 stages of market research

Ad hoc market research generally follows a 5 stage process:1. Clearly define the research ‘problem’ and objectives.2. Develop an appropriate methodology3. Collection of data4. Interpret data 5. Report findings

as needed



Data can be new or existing

Primary data data that is not available from secondary sources and

must be collected for a specific situation Secondary data* data that has been previously collected. Secondary

data falls into two categories: internal external



Qualitative V quantitative tools

Qualitative Discover the elements/qualities that are present

Quantitative Measure the frequency that the elements occur

Don’t get hung up on the tools focus on the outcome



Software for marketing practitioners [SfMP]

covers a broad spectrum of software

solutions/services


Marketing practitioners provide a service to the

organisation & liaise with other strategic

planning group members


Chief FinanceOfficer

The strategic planning group

ChiefInformation

Officer

ChiefMarketing

Officer

Chief Operations

Officer

Articulation of desired market position & basis of competition

Outlines the strategic intent of the organisation

Chief Executive

Officer

Financeplan

Operationalplan

Informationplan

Marketingplan

The business plan

HR


The strategic planning group comprises the chief executive officer and the senior discipline officers.They will generally meet at the beginning of the planning process and set out the parameters

“the meeting of the minds” Peter Balsarini




The strategic planning group will often begin the business planning process with a review of the organisation’s philosophy the organisation’s values the statements of purpose.This may result in some degree of realignment




The marketing audit will be part of a longitudinal study [conducted on a regular basis]: • Quarterly, half yearly, yearlyTherefore, a process will be in place & information will be internal or external secondary data. May require as needed research

The business-marketing planning process


The 3 stages of the business-marketing planning process: 1. Collect & Analyse relevant

information2. Design & Develop the marketing

plan and action plans3. Implement & Evaluate the

specifications in the action plansWe will refer to this process as CADDIE

The 3 stages of CADDIE



Everyday research - making informed decisions

Former MBA student statesAll I do is research. I spend my day doing research. When I review the sales figures or the production forecast figures, I am researching. I am comparing this year with previous years. When I am in a meeting, I am listening to my managers, I am researching. When I am with a customer, I am trying to determine how we can serve them better, improve our products, I am researching.

Before I did this XXXX I thought that market research was something that market researchers did. Then it dawned on me I am a market researcher I gather information, I make conclusions but the difference is I have to make decisions based on my research and the quality of my decisions is dependent on the quality of my research. I am a lot more focussed on quality of information now.

Note: qualitative and quantitative approaches


Two types of everyday marketing research:1. Strategic research is conducted

as part of the business planning process. This is referred to as conducting a marketing audit

2. Tactical research is conducted to evaluate the performance of the organisation against the objectives specified in the marketing plan & marketing action plans. When necessary take corrective action

Everyday marketing research

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Strategic marketing research is conducted as part of the business planning process.

This is referred to as conducting a marketing audit & explores the situational factors facing the organisation [COMP]: Customer Organisation Market Products

Everyday marketing research - strategic




the characteristics of the customersCollects and analyse


The situational factors [COMP] influence the consumer and the organisationa consumer perspective Influences the consumer’s

buyer decision processan organisational perspective Influences the business-

marketing planning process

The marketing audit – COMP factors



A customer audit begins with an identification of the customer segments. This information is important as it will help determine: Identify the customer segments and the

characteristics of the segments. Determine the methodology for undertaking the

market segmentation process Which segments does the organisation intend to

target [approach] Which segments does the organisation not

intend to target [avoid]

The marketing audit – customer audit




Segmentation variables Geographical: location, city V urban, suburb, city, country,

proximity to business Demographic: age, gender, occupation, income,

disposable income, family life cycle Psychographic: lifestyle and values, aspirational goals Behavioural: usage, loyalty, outcomes sought Price/benefit: perceptions of product quality and value

hence products at different price intervals Cultural: culture influences values and in-turn

consumption activities. Importance varies from product to product

VALS: on the basis of values, attitudes, and lifestyles



Segment characteristics Present & likely sales, growth, profitability, lifetime value customer expectations – [quality, value] collective satisfaction product requirements [dreams, desires, demands]



Segment characteristics Identify income characteristics of segments [ability

& willingness to purchase] Identify preferred payment methods, Communication mediums, Location [in-store & on-line] Buying patterns [frequency] Motivators to enter the buyer decision process




Segment characteristics Satisfaction [episodic, cumulative, collective] Retention [NPS] Social media habits Word of mouth and referrals Competition within segment Consumer behaviour Involvement [e.g., family members, friends,

groups, society] Bargaining power of customers

[see Porter’s 5 competitive forces in this chapter



socialprinttelevisionbillboardssponsorshipemailmobiledirect mailwebsitePOPbrochuresSEO

Audit of communication media to best reach segments


Segment conclusionsAfter considering the organisation’s capabilities & constraints Organise the customer segments into a hierarchy

of attractiveness





the characteristics of the organisationCollect and analyse


Identifying the organisation’s objectives Past performance & current objectives: 3 financial objectives 3 strategic objectives 3 communication objectives

The marketing audit – organisation audit

Identify performance gaps


Current capabilities and constraints Key success factors, organisational

competencies, culture, patents, technological skills, processes, employee performance, relative costs, marketing channel effectiveness, barriers to exit a market




Revenue analysis: Size, growth, pricing, strategies, total sales and

margins by product, life cycle, market position, market-share by segment, cost of sales, shareholder value analysis





Brand analysis Customer relationship analysis, brand strength

[uniqueness, relevance], brand stature [esteem, knowledge], brand equity [value as an asset], brand awareness, brand associations





the characteristics of the marketCollect and analyse


Characteristics of the market Financial [size, profitability, growth, market

patterns, potential, profitability, life cycle issues] Competencies [Strategic imperatives, Key

Success Factors] B2B & B2C communication channels Structure of market channels [distribution] Emerging trends and developments

The marketing audit – market audit


Characteristics of the market Past and present objectives: Current capabilities and constraints Revenue analysis: Brand analysis Potential competitors [new entrants] Competitor market power The types of market competition Models of market competition Macro external factors [PESTELE]




Competitor market power Competitive nature and rivalry of the industry Threat of potential entrants [entry-exit barriers] Threat of substitute products Bargaining power of buyers [influence of

consumers] Bargaining power of suppliers



The types of market competition Brand competition Product competition Generic competition Total budget competition



Macro external factors PESTELE Political Economic Sociocultural Technology Environmental Legal Ethical





the characteristics of the productCollect and analyse


Product information would include: Product considerations

The marketing audit – product audit



Product information would include: Product sales Total sales X product Total sales X territory Sales by [hour/day/week/month/year/ or other

suitable unit of measure e.g., weather] Number of transactions Average sell price Margins X product




Product information would include: Product inventory [e.g., value of inventory on hand – usage

rates]

Product adoption & life cycle considerations Strategy, product line – mix, positioning, uniqueness,

value proposition, augmentation, involvement, contact, product components, decision type, recipient[s], category, classification, awareness

Threat of substitute products




The information from the marketing audit is then analysed to determine: The market attractiveness, & The ability of the organisation to

compete [in the market] This information would be included

in the Marketing Audit Report



Marketing* Audit Report

+ the market attractiveness & ability to competeReport on the organizational performance & the situational factors

ReportMarketing Audit

* The other disciplines would also report


The strategic planning group Although the report will be in detail,

the Chief XXXX Officers will often present the information in a SWOT framework Strengths Weaknesses Opportunities Threats



Discipline reports + SWOT summary presentation



Information from the reports & the SWOT summary presentations will be

discussed by the strategic planning group



business-marketing planning processinformation > strategy > tactics


Michelangelo is a lesson in strategy

Best satisfy the customer – Best satisfy the organisation

Do everything required to achieve the goal


The next step would be an iterative process where the strategic planning group & the discipline groups craft the business plan and the various discipline plans




The strategic planning group need to consider the Historical COMP factor Recent COMP factors Then set the organisation’sstrategic directions to manage Future COMP factors

Strategic decision-making

Given that marketing is revenue generator of the organisation

Historical COMP

Recent COMP

Future COMP


Articulation of desired market position & basis of competition

Strategic decision-making

Given that marketing is revenue generator of the organisation

Customer decisions

Organisation decisions

Market decisions

Product decisions


unique product value proposition

Selecting customers means identifying which markets to enter

& how to best satisfy


unique product value proposition

* also referred to as differentiation

Organisations need to design, develop, & deliver a product that is distinct, discernable* & desirable & deliver the dreams, desires, & demands of their selected customers


Organisations have 2 strategic options

when crafting a UPVP

a higher price with appropriate

product augmentation

a low price with minimal

product augmentation

Adapted from Porter

1 2


Segments-of-market strategy

Product-market strategy

Whole-of-market strategy

Segment-of-market strategy

Type of consumer demand

Homogeneous demand Heterogeneous demand

Minimal product augmentation

Situational factors [COMP]

Appropriate product augmentation

One product, one message, one price Many products, many messages, many prices

Product-market strategy


The strategic planning group Synthesise the information from the

various discipline reports Finance Operations Information Marketing




Think [1] strategy [2] tactics [3] congruency


The business plan - structure Executive summary The statement of purpose The situational analysis The organisational objectives The discipline plans



Design & develop marketing planThe marketing plan The executive summary The mission or vision statement The organisational objectives quantitative qualitative

Situational analysis Executive summaries of the

various action plans Who what where when which how




Articulation of desired market position & basis of competition Which customers to serve What products to compete with How to compete Where to compete Who to compete against

The allocation of resources



Articulation of desired market position & basis of competition The product

uniqueness/augmentation/superior value The compelling reason to purchase The most attractive [target] market[s] The anticipated market size The anticipated revenue and return The likely competitors Allocation of resources to achieve marketing

objectives Product protection from copying Best methods of communicating with internal

and external customers


Design & develop marketing plan The strategic marketing objectives of

the organisation The strategies and the tactics

needed to achieve the marketing objectives of the organisation.

The marketing planning process


Selection of appropriate strategiesOrganisations distribute the products through one of three strategies Whole-of-market approach Segments-of-the market approach Segment-of-market approach



Whole-of-market approach • If one product is offered to the entire

market. Market segments are ignored and the emphasis is on minimising costs. Many organisations that adopt a production philosophy practice a whole-of-market approach – this approach can also be a sound for organisations that practice a marketing philosophy. A whole-of-market approach can be practiced if most customers have similar requirements and therefore high volume and high market share can be achieved



Segment-of-market approach Where an organisation offers one product

for a niche market segment and has no desire to develop a product outside their specific and selected market. Unlike whole-of-market approach, which requires considerable resources, a segment-of-market approach can be practiced by organisations of varying size and resources.



Segments-of-the market approach Some organisations serve more than one

segment; with a segments-of-market approach organisations produce multiple products to appeal to the requirements of multiple customer segments [e.g., Toyota, adopt this approach, offering a wide range of products under both the Toyota and Lexus brands].

Mass customisation: is when organisations provide the customer with the opportunity to customise the product to a limited degree [luxury car manufacturers choosing the leather]. Another option is micromarketing [e.g., an architect].



Segmentation variables Geographical: location, city V urban, suburb,

city, country, proximity to business Demographic: age, gender, occupation,

income, disposable income, family life cycle Psychographic: lifestyle and values,

aspirational goals Behavioural: usage, loyalty, outcomes sought Price/benefit: perceptions of product quality

and value hence products at different price intervals

Cultural: culture influences values and in-turn consumption activities. Importance varies from product to product

VALS: on the basis of values, attitudes, and lifestyles



Product decisions The product decisions will vary due

to the nature of the business; however, a comprehensive marketing plan is likely to detail the total product, including the

Product considerations Product layers Product components.


Product brand strategy


Product considerations this section of the marketing plan

will identify the key product considerations that need to be communicated.




Product layers will communicate the core needs

that the product must address, what consumer expectations, how the product is augmented, and mayaddress long-term intentions for this product [potential product].




Product components How the product is constructed the qualities that are embedded in each component The goods component

The material and functional properties The services component

Facilitating and supporting activities The ideas component

Branding, pricing, communication The experience components

The feelings and emotional connections The people component

Retaining, recovering, education, The place component

Ambient conditions, artefacts, signage, symbols, space, function, and location




Brand considerations This section will outline how the

product[s] is/are aligned with the overall branding objectives of the organisation.

And include an overview of the brands and how the brands are positioned in relationship to competitor brands.




Blue Ocean Thinking is part of the new product planning process.The idea is for the strategic marketing group to explore if a new approach could provide a Blue Ocean advantageOne that make all segments obselete



Design Thinking is a template for designing & developing a new product + complements Blue Ocean Thinking



Design & Develop the action plans Who does what - when - how A detailed action plan for each: product strategic business unit major function

Allocation of resources to implement each plan

The marketing planning processAction plans


Two types of marketing action plansAs needed marketing action plans relate to specific projects, sometimes

referred to ad hoc projects as the action plan are only undertaken when a particular situation requires attention.

Everyday marketing action plans relate to actions and outcomes that happen

on an ongoing basis, sometimes referred to as ‘marketing metrics’ – sales, market share, communication, advertising, promotions, public relations, social media, service quality, retention, etc.



Marketing action plan may include: Sales Market share Communication Advertising Promotions Public relations Social media Service quality Retention, etc.



The structure of the action plans Title: The title should identify the activity and

parameters of the action plan Organisation philosophy: This should be

included to provide guidance to employees at all levels

Objectives: In broad terms provide a statement of purpose; an overview of what the action plans hopes to accomplish. Describe the specific strategic marketing objectives that the action plan addresses

Financial objectives: This would detail the increase in sales revenue, how it reduces costs as a percentage of sales, build the value of the business



The structure of the action plans [cont] Processes: the processes should be detailed

and include a flow chart[s] of how the actions will be implemented and the sequence of events. The process for reporting of deviations should also be outlined.

Roles and responsibilities: identifies who is responsible for implementing the action plan [this could be a person, an organisation, a team, and may involve channel parties] and who is ultimately accountable for reviewing performance and advising the CMO of any deviations from design.



The structure of the action plans [cont] Timeline: identifies the various milestones that

need to be achieved and in what time period. It is common that a marketing action plan has a shorter life than the marketing plan or business plan therefore timeframes – who does what and by when.

Budget: itemises how much has been budgeted for the implementation of the action plan. This should include a breakdown of costs.



The structure of the action plans [cont] Collection and analysis: what information is

needed post implementation. The how, when, and with what frequency of collection and analysis. Who will analyse the information and who is responsible for distribution of information. Often a weekly report will be presented to the CMO for synthesis and communicating with the strategic planning group.

Evaluation of sales performance metrics Volume, $ value, month, YTD, previous year,

margins Associated costs, Av. sell price, prices exceptions, Market share, territory, department, Salesperson performance, conversion rates, Lead times, Customer satisfaction by product/salesperson



Business planning can be strategic or tactical


bestsatisfy

bestsatisfy to best satisfy2

The focus of the marketing concept is


MarketingplanMarketing

action plans

Corrective actions

Organisation’sphilosophy

IMPLEMENT

ANALYSE

DESIGN

1

Evaluateperformance

Analysedata

Implementaction plans

COLLECT

DEVELOP

Businessplans

Organisation’sobjectives priorities &

budget

Marketing Audit[COMP]

Articulate position

EVALUATE


Where are we now?

How will we get there?

org. objectives

Did we get there?Where do we

want to be?

Back on track

Section 3 slides module 1 - The Marketing Concept...2019/05/04 · 3 recognise-the marketing...

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