Transcript Slide 1

BUAD 307—MARKETING FUNDAMENTALS
MARKETING OVERVIEW
AND STRATEGY
BUAD 307
OVERVIEW AND STRATEGY
Perner
2
Learning Objectives
• Understanding
– The scope and basic objectives of
the marketing function
– Customer value
– The contrasting perspectives of
the “Marketing Concept” and the
“Selling Concept.”
• Appreciating the need of
firms for unique and specific
strategies based on
tradeoffs and, unique
strengths, and market
conditions
BUAD 307
OVERVIEW AND STRATEGY
Perner
3
2007 American Marketing Association
(AMA) Definition
Marketing: “The (1) activity, (2)
set of institutions, and (3)
processes for (4) creating, (5)
capturing, (6) communicating, (7)
delivering, (8) and exchanging (9)
offerings that have (10) value for
(11) customers, (12) clients, (13)
partners, and (14) society at
large.” (Numbering added.)
BUAD 307
OVERVIEW AND STRATEGY
Perner
4
ACTIVITY
INSTITUTIONS
PROCESSES
MARKETING
CREATION
COMMUNICATION
DELIVERY
EXCHANGE
CUSTOMERS
OFFERINGS
VALUE
CLIENTS
PARTNERS
BUAD 307
OVERVIEW AND STRATEGY
SOCIETY
Perner
5
Value
BENEFITS RECEIVED
VALUE 
COST
• Benefits—examples
– Money
– Time
– Risk
– Convenience
• In delivery
• In usage
–
–
–
–
–
–
• Costs—examples
Reliability
Durability
Performance
Style/aesthetics
Prestige
Service component
BUAD 307
OVERVIEW AND STRATEGY
Perner
6
Customer Value, Part I
• Value is the ratio of the
benefits received (usually
goods or services) to what is
given up (usually money)
• For a transaction to take
place, the benefits received
must usually be greater than
the sacrifice
• Note that a high price product
may be a good value to the
customer even if a high price
is paid if the perceived
benefits received are higher
BUAD 307
OVERVIEW AND STRATEGY
Perner
7
Customer Value, Part II
• A low priced product may not
represent value to a customer if
the benefits received are
perceived to be low, too.
• Different customer segments will
have different value perceptions
• A product which is adapted to
the needs of a particular
segment can be very valuable to
that segment even if the overall
“quality” is not seen as superior
by most other consumers
• Cost may be in terms of money
or other sacrifice
BUAD 307
OVERVIEW AND STRATEGY
Perner
8
Value: Implications
• A low quality, low price
product represents poor
value for many customers
• A very high benefit
product at a high price
can represent value for
some segments
• Customer segments differ
in what they find valuable
BUAD 307
OVERVIEW AND STRATEGY
Perner
9
Steps Toward Value Orientation
• Information sharing within the firm
• Balance of cost and benefits (for the
target segment—different balances for
different types of customers)
• Relationships with customers (as
opposed to “one shot” transactions)
BUAD 307
OVERVIEW AND STRATEGY
Perner
10
STRATEGY
• Strategy
• Target markets
• Related marketing mix: Product, distribution,
promotion, and price
• Counterintuitive realities
• Marketing, strategy, and the organization
• Strengths, Weaknesses, Opportunities, and
Threats (SWOT) Analysis
BUAD 307
OVERVIEW AND STRATEGY
Perner
11
Learning Objectives
• Appreciate
– The scope of
strategic decisions
– Tradeoffs that firms
must make in their
decisions
– Cumulative and “spillover” effects of
strategic decisions
and the need for
consistency
– The need for industry
balance and firm unit
cash flow balance
BUAD 307
OVERVIEW AND STRATEGY
Perner
12
Strategy
• Plan
– To achieve desired
objectives (e.g., profit,
market share)
– Based on available
resources (e.g.,
financial, patents,
trademarks, people,
brand name/image ,
distribution channels)
– Subject to choices made
(e.g., willingness to take
risk, short run vs. long
run goals)
BUAD 307
OVERVIEW AND STRATEGY
Perner
13
MARKETING STRATEGY
COMMON
SENSE
ENVIRONMENT
COUNTERINTUITIVE
REALITIES
PRIORITIES/
OPPORTUNITY
COSTS
STRATEGY
EXPERIMENTATION/
EXPRIENCE
BUAD 307
RESOURCES
OVERVIEW AND STRATEGY
Perner
14
Counterintuitive Realities
• A firm’s product should not necessarily
appeal to the majority of customers—it is
usually better to serve one segment well.
• Large segments may not be attractive to
serve—those attract a great deal of
competition
• It is usually not a good idea to closely
imitate successful competitors
• If a competitor lowers its price and takes
market share away from you, the best
response may be to raise your price
BUAD 307
OVERVIEW AND STRATEGY
Perner
15
Marketing Strategy: Sequence
BUSINESS
MISSION
STATEMENT
OBJECTIVES
PRODUCT
SITUATION/
SWOT
ANALYSIS
Adapted from
text, p. 16.
MARKETING
STRATEGY
IMPLEMENTATION
EVALUATION
CONTROL
BUAD 307
OVERVIEW AND STRATEGY
DISTRIBUTION
PROMOTION
PRICE
Perner
16
REMINDER
• It is tempting to try to
enlarge market share
by reaching out to new
targets but
– Compromises in
product design,
distribution, and
positioning will tend to
make the brand less
attractive to the core
segment
– This will likely lead to
increased competitive
intensity
BUAD 307
OVERVIEW AND STRATEGY
Perner
17
Market Balance
• Different firms
should attempt
to offer different
forms of value,
appealing to
different
customer
segments—
otherwise,
competition is
likely to
degenerate into
price
competition
BUAD 307
A WELL BALANCED
GADGET INDUSTRY
EASYTECH, LTD.
EASE OF
USE
TROJAN CREATIONS,
INC.
PERFORMANCE
MICROGEEKS, LTD.
SMALL
SIZE
OVERVIEW AND STRATEGY
BRUIN PRIDE, INC.
LOW
PRICE
PATIENCE-IS-STUPID,
INC.
SPEED
Perner
18
Examples of Objectives
• Profit level
• Profit growth
• Total unit
sales
• Growth in unit
sales
• Growth in
dollar sales
• Total dollar
sales
• Brand
perception by
customers
– Value
– Quality
– Innovativene
ss
– Reliability
BUAD 307
•
•
•
•
•
•
•
OVERVIEW AND STRATEGY
Brand name
recognition
Brand name
recognition by product
category
Product availability
– Availability across
retailers and other
distributors
– Store placement
Percentage of products
sold at full price
Percentage of revenue
from new products
Affordability of product
Elimination of unsafe
product ingredients
Perner
19
Strengths, Weaknesses, Opportunities, and
Threats (SWOT) Analysis
STRENGTHS
WEAKNESSES
STRATEGY
OPPORTUNITIES
THREATS
BUAD 307
OVERVIEW AND STRATEGY
Perner
20
SWOT--Microsoft
• Strengths
• Weaknesses
– New Products
• Windows 7—
powerful; opportunity
to sell upgrades
• Office 2010
applications
– Technology
– Market share
– Barriers to entry
– Brand name
– Cash
BUAD 307
– Zune
– Bing (search engine)
• Opportunities
– Bing (search engine)
– Windows 7 64 bits
– Gaming
• Threats
– Economic fluctuations
– Apple
• Image
• Design
OVERVIEW AND STRATEGY
Perner
21