Understanding Marketing Management

Professor Charles Trappey

September 13, 2007

Defining Marketing for the 21st Century

• Marketing is everywhere

• Good marketing is an increasingly vital ingredient for business success

• How might Samsung use a focus group to design a new mobile phone?

The Importance of Marketing

• Many companies now have CMO’s

• But marketing is tricky and the C-level job holders can bring either great fortune or great disaster to the company. Can you think of an example, of a famous or infamous marketing person?

The Scope of Marketing

• Marketing deals with identifying and meeting human and social needs.

• A shorter definition is “meeting needs profitably.”

Frequently Asked Questions

1. How can we spot and choose the right marketing segments? McDonalds

2. How can we differentiate our offerings? Sogo

3. How should we respond to customers who buy on price? Traditional market

4. How can we compete against lower-price, lower-cost competitors? TSMC

FAQ’s Continued

5. How far can we go in customizing our offering for each customer? Ford

6. How can we grow our business? Start-up

7. How can we build stronger brands? Acer

8. How can we reduce the cost of customer acquisition? Fed-Ex

9. How can we keep our customers loyal for longer? China Air

Exchange and Transactions

• Exchange is the core concept of marketing where a desired product is obtained from someone by offering something in return.

• Self-produce, beg, steal, or eschange• A transaction is a trade of values between

two or more partiers: A gives X to B abd receives Y in return.

• In a transfer, A gives X to B but does not receive anything tangible in return.

What is Marketed?

• Goods• Services• Events• Experiences• Persons• Places• Properties• Organizations• Information• Ideas – every market offering includes a basic idea

Key Customer Markets

• Consumer Markets

• Business Markets

• Global Markets

• Nonprofit and Governmental Markets

Who Markets?

• Marketers and prospects• Marketers seek to influence the level,

timing, and composition of demand to met the organization’s objectives. There are 8 demand states:

• Negative demand, non-existent demand, latent demand, declining demand, irregular demand, full demand, overfull demand, and unwholesome demand.

New Consumer Capabilities

• Substantial increase in buying power

• Greater variety of goods and services

• A great amount of information about practically anything

• A greater ease in interacting and placing and receiving orders

• An ability to compare notes on products and services

How Business and Marketing are Changing

• Changing technology• Globalization• Deregulation• Privatization• Customization• Heightened competition• Industry convergence• Retail transformation• Disintermediation and reintermediation (brick an

d click)

Ten Rules of Radical Marketing1. The CEO must own the marketing function2. The marketing department must be small and flat and stay that

way.3. Get face to face with the people that matter the most – the

customer.4. Use market research cautiously.5. Hire passionate missionaries not marketers.6. Love and respect customers as individuals and not numbers on a

spreadsheet.7. Create a community of consumers.8. Rethink the marketing mix.9. Celebrate common sense and compete with the larger

competitors with fresh and different marketing ideas.10. Be true to the brand.

Company Orientation Toward the Marketplace

• The Production Concept – consumers want inexpensive and widely available products

• The Product Concept – consumers want quality, performance and innovative features.

• The Selling Concept – Customers will ordinarily not buy enough of the organizations products so therefore the company must undertake an aggressive sales and promotion effort.

• The Marketing Concept – customer centered sense and respond. Selling focuses on the needs of the seller, marketing on the needs of the buyer.

• Holistic Marketing is based on the development, design, and implementation of marketing programs, processes, and activities.

The Holistic Marketing Concept

Internal Marketing

Integrated Marketing

Marketing Department, senior management, other departments

Communications, products and services, channels

Socially Responsible Marketing

Ethics, environment, legal, community

Relationship Marketing

Customers, channels, partners

HolisticMarketing

Core Concepts

• Four P’s: – Product, Price, Place, Promotion

• Four C’s: – Customer solution, Customer cost,

Convenience, Communication

• Needs, wants, demands

Shifts in Marketing Management

• From marketing does the marketing to everybody does the marketing

• From organizing by product units to organizing by customer segments

• From making everything to buying more goods and services from outside

• From using many suppliers to working with fewer suppliers in a partnership

Marketing Management Tasks

• Developing marketing strategies and plans• Capturing marketing insights• Connecting with the customers• Building strong brands• Shaping the market offerings• Delivering value• Communicating value• Creating long term growth.

Chapter 2 Marketing Strategy And Plans

Marketing and Customer Value

The Value Delivery Process

• Choose the value (strategic marketing)– Customer segmentation, market selection/foc

us, value positioning

• Provide the value (tactical marketing)– Product development, service development, p

ricing, sourcing, making, distribution and servicing

• Communicate the value (tactical marketing)– Sales force, sales promotion, advertsing

The Value Chain

Firm infrastructure

Human Resource Management

Technology Development

Procurement

Inbound logistics

OperationsOutboundLogistics

Marketing and Sales Service

MARGIN

Support Activities

Core Competencies

• It is a source of competitive advantage and makes a significant contribution to perceived customer benefits

• It has applications in a wide variety of markets• It is difficult or competitors to immitate

• Nike doesn’t make shoes, they have core competencies in shoe design and shoe merchandising

Holistic Marketing and Customer Value

• Value exploration – how can a company identify new value opportunities?

• Value creation – how can a company efficiently create more promising new value offerings?

• Value delivery – How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently?

The Central Role of Strategic Planning

• Planning– Corporate planning, division planning,

business planning, product planning

• Implementing– Organizing, implementing

• Controlling– Measuring results, Diagnosing results, Taking

corrective action

Corporate and Division Strategic Planning

1. Defining the corporate mission

2. Establishing strategic business units

3. Assigning resources to each SBU

4. Accessing growth opportunities

Defining the Corporate Mission

• Mission statements are at their best when they reflect a vision for the next 20 years.

• Focus on a limited number of goals

• Stress the companies major policies and values

• Define the major competitive spheres within which the company will operate

Defining the Business

• Market definitions of a business are superior to product definitions.

• Levitt also says to define your business in terms of needs, not products.

Assessing Growth Opportunities

Organization and Organizational Culture

Business Unit Strategic Planning

The Business Mission

SWOT Analysis

Goal Formulation

Strategic Formulation

Program Formulation and Implementation

Feedback and Control

Contents of the Marketing Plan

• Please carefully study the Sample Marketing Plan