Transcript KENT 19 BAD 67051 Marketing Management

KENT 29
BAD 67051
Marketing Management
Lecture 1
Marketing Management Thinking,
Decision Making,
& Positioning
Text Definition
Marketing is a social process
involving the activities necessary
to enable individuals and
organizations to obtain what they
need and want through exchanges
with others and to develop ongoing
exchange relationships.
AMA Definition (2004)
Marketing is an organizational
function and a set of processes for
creating, communicating, and
delivering value to customers and
for managing customer
relationships in ways that benefit
the organization and its
stakeholders.
AMA Definition (2007)
Marketing is the activity, set of
institutions, and processes for
creating, communicating,
delivering, and exchanging
offerings that have value for
customers, clients, partners, and
society at large.
…or
Marketing is the anticipation,
management, and satisfaction of
demand through the exchange
process.
Marketing Management
A. Text Definition
“…the process of planning and executing
the conception, pricing, promotion, and
distribution of goods, services, and
ideas to create exchanges with target
groups that satisfy customer and
organizational objectives.” (p.14)
[ugh]
Marketing Management
B. Philip Kotler and Kevin Lane Keller
(2006) define marketing management
as "the art and science of choosing
target markets and getting, keeping and
growing customers through creating,
delivering, and communicating
superior customer value."
Marketing Management
C. Peter Drucker (a management guru)
wrote: "Because the purpose of business is
to create a customer, the business enterprise
has two--and only these two--basic
functions: marketing and innovation.
Marketing and innovation produce results;
all the rest are costs. Marketing is the
distinguishing, unique function of the
business .”
Marketing Management
D. Marketing Management is the
management of “innovative and
imitative processes” to identify and
satisfy consumers more cost
effectively than their competitors.
II. Marketing Management
Philosophies
A. Production Concept
A. Production Concept
Assumes consumers want products that
are available and highly affordable.
Implies management should focus on
improving production and distribution
efficiency.
Useful when:
– demand exceeds supply
– product cost is too high
B. Product Concept
Assumes consumers want product that
offer the most quality, performance,
and features.
Implies the firm should make continuous
product improvements.
Places the focus on the product, not the
customer.
C. Selling Concept
Assumes consumers will not buy
enough product unless there is a
strong sales and promotional effort.
Useful for:
– unsought goods
– nonprofit areas
D. The Marketing Concept
Assumes that achieving the organization’s
goals depends on determining and satisfying
consumers more effectively and efficiently
than competitors.
– Mullins, Walker, and Boyd say:
“Market-oriented firms…[are]…among the most
profitable and successful at maintaining strong
competitive positions in their industries over
time” (p. 34).
D. The Marketing Concept
Three parts to the concept:
–The satisfaction of consumers’
needs, wants, and desires,
–at a profit (or to attain
organizational goals),
–through an integrated effort
within the firm.
Notes:
Firms must identify and satisfy
customers’ needs AND continue to
do so!
Competition FORCES sellers to
focus on the consumer.
Consumers must be seen in the
context of all environmental/market
factors (managers must have a
“market orientation”).
E. The Societal Marketing
Concept
Assumes that customer satisfaction
should be delivered in a way that
maintains or improves the
consumer’s and society’s wellbeing.
(a customer’s wants/needs may be at
odds with what is good for society
e.g., pollution control)
III. The Marketing Concept
and:
A. Synergy
– Managers must create
marketing tactics that fit
together well.
– They must coordinate
implementation.
III. The Marketing Concept
and:
B. Hypercompetition
– Competitive Advantages do not
last. Customer Satisfaction and
competition require innovation,
cost advantages, and quality
enhancements.
– Changes create new market
segments, with new needs.
III. The Marketing Concept
and:
C. Relationships
– Long term alliances with external
entities (customers, channel
members, and suppliers)
– Cross Functional Decision Making
Teams within the organization
Market Opportunities
Environmental
Context
Customer Orientation
PROFITS
Competitor
Orientation
Company
Orientation
IV. Strategic Planning
The process of developing and
maintaining a strategic fit between the
organization’s goals and capabilities
and its changing markets.
Developed by senior managers
– Future oriented
– Intended to create objectives and
strategies for success against competition.
IV. Strategic Planning
A. Defining the Company’s Mission
B. Setting Company Objectives and
Goals
C. Source of Competitive Advantage
D. Development Strategy for Growth
E. Allocation of Resources
F. Search for Synergy
V. Types of Corporate
GROWTH Strategies
Products
Markets
Current
Products
New
Products
Current
Customers
Market
Penetration
Product
Development
New
Customers
Market
Development/ Diversification
Expansion
V. Types of Corporate
Strategies
A. Growth Strategies for Current
Markets
Increase sales of EXISTING products to
CURRENT markets =
– 1. Market Penetration
Market Penetration
Increase sales of EXISTING
products to CURRENT markets.
–Increase Market Share
–Increase Usage
V. Types of Corporate
Strategies
A. Growth Strategies for Current
Markets
Develop NEW PRODUCTS for CURRENT
markets =
– 2. Product Development
Product Development
Develop NEW PRODUCTS for
CURRENT markets to:
– Meet changing CUSTOMER
needs and wants,
– Match new COMPETITIVE
offerings,
– Take advantage of NEW
TECHNOLOGY, and
– Meet the needs of SPECIFIC
market segments.
V. Types of Corporate
Strategies
B. Growth Strategies for New Markets
Bring CURRENT products to NEW markets =
1. Market Development/Expansion
Market Development
 Bring
CURRENT products to
NEW markets
 (e.g., Arm & Hammer)
Market Expansion
 Taking
CURRENT products to NEW
DOMESTIC geographic areas
 International
Expansion
– Regional strategy
– Multinational strategy
– Global strategy
V. Types of Corporate
Strategies
B. Growth Strategies for New
Markets
Taking NEW PRODUCTS to NEW
MARKETS =
2. Diversification
Diversification
 Taking
NEW PRODUCTS to NEW
MARKETS
 (e.g., Arm
and Hammer Toothpaste)
V. Types of Corporate
Strategies
A. Growth Strategies for Current Markets
– 1. Market Penetration
– 2. Product Development
B. Growth Strategies for New Markets
– 1. Market Development/Market
Expansion
– 2. Diversification
– 3. Strategic Alliances
Strategic Alliances
 Total
collaboration by
EXCHANGING key resources to
enhance companies’ performance.
V. Types of Corporate
Strategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
– 1. Retrenchment
Retrenchment
 WITHDRAW
from WEAKER
current markets
V. Types of Corporate
Strategies
A. Growth Strategies for Current
Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
– 1. Retrenchment
– 2. Pruning
PRUNING
 REDUCE
the number of
PRODUCTS offered in current
markets
V. Types of Corporate
Strategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
– 1. Retrenchment
– 2. Pruning
– 3. Divestment
Divestment
 Selling
off part of the business -ELIMINATE a product and a
current market.
V. Types of Corporate Strategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
D. Other Corporate Strategies
Other Strategies
1. Based on Competitive
Advantage
Low Cost Leader or
 Differentiation
--Offer a unique value to
customers based on:

Design, quality, service, variety, etc.
Other Strategies
2. Based on Value Disciplines
Operational Excellence
--“Okay” products, best price,
least inconvenience
 Product Leadership

--Innovation for best product
performance

Customer Intimacy
VI. Product Portfolio Models
A. The Boston Consulting Group
Growth-Share Matrix
The BCG Model
STAR
PROBLEM
CHILD
CASH COW
DOG
High
MarketGrowth 10%
Rate
Low
0%
Low
High
0.1X
10X
Market Dominance/Relative Market Share
The BCG Model -- Cash Cows

Dominant in Low Growth Market
– Low Growth Sales
– Strong Profits
– Generate a Large Cash Flow
– Do NOT require Cash Resources to be
Reinvested
– PROFITS flow to APPROPRIATE
Problem Children
The BCG Model -- Problem
Children
 Low
Market Share in High Growth
Market
– High Growth Sales
– Weak Profits
– Typically, require additional Cash to
become a Dominant Star
The BCG Model -- Star
 Dominant
in High Growth Market
– High Growth Sales
– Profitable, but requires attention
– Requires Cash and Resources to stay
Dominant
– Will be a Cash Cow in the Future
The BCG Model – Dogs
 Low
Market Share in Low Growth
Market
– Low Growth Sales
– Weak Profits
– Typically, generate a Little Cash
Flow (or have a weak future)
– Not a good candidate for Cash
Resources to be Reinvested
B. The Directional Policy Matrix
Competitive Position
Strong
High
Market
Attractiveness
Maintain
Leadership
Medium
Weak
Overcome,
Challenge Niche, or
Leader Quit
Challenge Manage for
Harvest
Medium Leader
Earnings
Low
Cash
Generator
Harvest
Divest
VII. Marketing Management & the
Marketing Plan
A. The Marketing Plan
With an understanding of the organization’s
mission and objectives…
A Marketing Plan is written to document the
current situation with respect to customers,
competitors, and the external environment
and providing guidelines for objectives,
marketing actions, and resource allocations
(text page 20)
VII. Marketing Management & the
Marketing Plan
1. Situation and Trend Analysis
Marketing Planning begins with a situation
and trend analysis….with an eye toward
opportunities and threats:
• Current and potential customers
• Competition
• Environmental trends
• Other key assumptions
VII. Marketing Management & the Marketing
Plan
CUSTOMER
VII. Marketing Management & the
Marketing Plan
2. Establish Objectives
• Goals in terms of sales volume, market
share, and/or profits
3. Select and describe the overall strategy to
be used
4. Detail the “Marketing Mix”
• Timing
• Responsibility
VII. Marketing Management & the
Marketing Plan
5. Financials
• Costs and payoffs
6. Controls
7. Contingency Plans
THE MARKETING MIX
Product
(Good, Service, Idea)
Price
Customer
Place
(Value)
(Target Market)
(Distribution)
Promotion
(Integrated Marketing
Communications)
THE MARKETING MIX
All this is easier said than done!!
We cannot “set” the marketing
mix without “truly”
understanding the environment,
the customer, and our firm’s
capabilities.
VIII. Understanding Market Opportunities
CUSTOMER
VIII. Understanding Market Opportunities
VIII. Understanding Market Opportunities
A. Macro Trend Analysis
1. Demographic Environment
2. Socio-cultural Environment
3. Economic Environment
4. Regulatory Environment
5. Technological Environment
6. Natural Environment
VIII. Understanding Market Opportunities
CUSTOMER
VIII. Understanding Market Opportunities
B. Assessing Industry Attractiveness –
Porter’s Five Competitive Forces Model
Threat of New Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Existing
Competitors
Threat of Substitute
Products
Bargaining Power
of Buyers
VIII. Understanding Market Opportunities
C. Micro Analysis – Assessing Market
Attractiveness
1. Is there is a Customer Need we can fulfill?
2. Is our solution special/unique?
3. Is the market likely to grow?
4. Is this a platform for expansion?
IX. Measuring Market
Opportunities: Forecasting
and Market Knowledge
Research and Intelligence provide information
necessary to clarify the “unknown.”
A. Forecasting
1. Market and Sales Forecasting is
absolutely critical
• Forecasts drive budgets!
2. Forecasting is HARD
• “Every Forecast is wrong!”
3. WHY BOTHER?
B. Forecasting Terms
1. Total Population
–
e.g., 281.4 million people living in 105.5
million households.
2. Market Potential
– Those who have an interest in the
product/service and ability to buy
– Not all have the money or the legal
status to buy
B. Forecasting Terms
3. Target Market
–
–
Those the firm wants to serve
e.g., 77.4 million households in the Nestles
example
4. Penetrated Market
–
Those who have actually purchased the
product
US Households by Type: 2000
Household type
Total households
Number
105,480,101
Percent
100.0
Family households
71,787,347
54,493,232
68.1
51.7
Female householder,
no husband present
12,900,103
12.2
Male householder, no
wife present
4,394,012
4.2
Nonfamily households
33,692,754
31.9
One person
27,230,075
25.8
6,462,679
6.1
Married-couple
households
Two or more people
Source: U.S. Census Bureau, Census 2000 Summary File 1.
C. Types of Forecasts
1. Top-down
a. “Central” management determines the
forecast
2. Bottom-Up
a. “Decentralized” approach; individual
forecasts are “summed” to the total.
D. Sources of Forecasts
1. Statistical Methods
2.
3.
4.
5.
6.
Observation
Survey or Focus Groups
Analogy
Judgment
Market Tests
E. Sources of Market Knowledge
A. Secondary Data
Data previously collected by
someone else for a purpose other
than the one at hand
Sources of Market Knowledge
1. Advantages of Secondary Data:
– Almost always less expensive than
primary data
– Can be obtained rapidly
– Can provide understanding of the
existing knowledge base and gaps
2. Disadvantages of Secondary Data:
– Since it is previously collected data,
may be out-dated
– May be collected only periodically
– May not have been collected in the
form preferred
– May not be able to assess its accuracy
3. Examples of Secondary Data:
– Census Bureau data and other
Government reports
– Sales & Marketing Management
Survey of Buying Power and other
Industry newsletters
– Computer Databases
– The Internet
3. Examples of Secondary Data:
- Competitor Reports
- Scanner Data
Sources of Market Knowledge
B. Primary Data
Data gathered and analyzed
specifically for the purpose at
hand
Sources of Market Knowledge
C. Types of Primary Data
1. Surveys:
 Information is gathered from a sample
of people by means of a questionnaire
– Customer Surveys: Values,
Benefits, Beliefs, and
Satisfaction
– Focus Groups
Sources of Market Knowledge
C. Types of Primary Data
2. Observation:
 Systematic recording of behavior or
events as they are witnessed
– Customer Visits
– Vendor Visits
– Competitive Product Usage
Sources of Market Knowledge
C. Types of Primary Data
3. Experiments:
 Cause and effect relationships by
changing variables to observe response of
another variable
– Test markets for changes in price,
product, distribution, and promotion
Sources of Market Knowledge
C. Types of Primary Data
4. Other
– Trade Shows
– Reverse Engineering
5. Research Firms:
Marketing Research Companies at
http://www.harcourtcollege.com/mark
eting/students/research_comp.htm
IX. Decision Support Systems
A. Decision Support System Defined:
…a coordinated collection of data,
system tools, and techniques with
supporting software and hardware
by which an organization gathers
and interprets relevant information
from business and the environment
and turns it into a basis for making
management decisions.
IX. Decision Support Systems
Internal records
and reports
Database
Marketing
Research
Analytic Models
Marketing
Intelligence
Interaction
System
Data Collection System
Decision Support System
IX. Decision Support Systems
B. Database:
 a collection of information that is
arranged in a logical manner and
organized in a form that can be
stored and processed by a computer
C. Analytical models system:
 the database management software
that is used to analyze or provide
access to the data within the system
IX. Decision Support Systems
D. User interaction system:
• the software that manages the interface
between the user and the system
X. Hypercompetitive Market
Research
Cross functional teams
continuously stay in close touch
with lead consumers and
suppliers
XI. Global Market Research
A. Global Information System = an
organized collection of:
– telecommunications equipment,
– computer hardware and software,
– data, and
– personnel
designed to:
– capture, store, update, manipulate,
analyze, and immediately display
information about worldwide business
activities
XI. Global Market Research
B. Global Market Research
– 1. Who Does the Research?
– Local Group?
– Company Team Nearby?
– Secondary vs. Primary
– 2. The Visit by Executives
– Trade Mission
– Trade Fair