Transcript Principles of Marketing

Principles of
Marketing
“ Company and Marketing Strategy:
Partnering to Build Customer
Relationships”
Company & Marketing
• Marketing contributes to and is guided
by the overall company philosophy.
• Marketing works with the other company
functions to design marketing strategies
that deliver value to the target market.
• Finally marketers put the ‘marketing mix’
into play to carry out the planned
strategies successfully.
Strategic Planning:
This is the process of :
a)
Developing & maintaining a strategic fit between
the organizational GOALS and CAPABILITIES and
its changing MARKETING ENVIRONMENT.
b)
Defining a clear company mission, setting
supporting objectives, designing a sound product
portfolio and coordinating functional strategies.
c)
The purpose of strategic planning is to find ways in
which the company can best use its strengths to
take advantage of attractive opportunities in the
environment.
Strategic Planning:
Business unit, product
and market level
Corporate level
Define the
company
mission
Set
company
objectives
& goals
Design
business
portfolio
Plan marketing
& other
functional
strategies
1) Defining the company mission
Overtime a company’s purpose of existence
may become fuzzy as the organization grows,
henceforth it becomes important to refresh its
search for purpose.
 The purpose is redefined by answering these
simple questions ; what is our business? Who
is the customer? What do the customers
value? What should our business be?
Henceforth;
A mission statement states the organization’s
purpose i.e. what it wants to accomplish in the
larger environment.
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The company mission should be:Market oriented and defined in terms of
customer needs as products and technologies
become outdated but market needs exist
forever
Realistic i.e. it should not be too narrow or too
broad
Specific i.e. it should not lack specific ,
workable guidelines
Fit the market environment i.e. should keep
the perspectives and needs of the current
period in mind
Based on the company’s distinctive
competencies i.e. should focus on the
company’s strong points.
Motivating i.e. it should make the employees
feel that they are making a valuable contribution
to the lives of their customers
2) Setting Company Objectives
and Goals:
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Once the purpose has been defined , the
next step is to define this purpose in terms of
detailed supporting objectives for each level
of management i.e. business and marketing
objectives.
All objectives must follow the ‘mission’
guiding star, they will then not conflict with
each other.
3) Design the Business Portfolio
A business portfolio is the products and
services ( the collection of businesses)
that make up the company.
A portfolio should be in accordance to the
strengths and weaknesses of the
company
A company starts the design by:
1) Analyzing the current Business portfolio
2) Developing Strategies for Growth and
downsizing
Analyzing the Current Business
Portfolio
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Management must first identify the key businesses that make up
the company. These key businesses are called ‘strategic
business units’ or SBUs
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An SBU is a unit of the company that has a separate mission and
objectives which are planned independently of the other company
businesses. It can be a division, a product line or at times just a
product or a brand.
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Portfolio analysis tells the manager what businesses are good to
grow and which are good to go. By virtue of this analysis proper
allocation of resources can be conducted.
Market growth rate
The growth share matrix/BCG
matrix
?
High
QUESTION
MARK
STAR
Low
CASH COW
DOG
High
Low
Relative market share

STARS – High market share and high growth rate, these
products require high investment to finance their rapid
growth, eventually their growth slows down and they turn
into cash cows.
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CASH COWS – These are the products with the high market
share but a relatively low growth rate, these products survive
because of a large loyal customer base and they do not
need large investment to hold their market share. These
products are termed as cash cows because they produce a
lot of cash for the company to conduct its activities.
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QUESTION MARKS – These products have a low market
share but a high growth rate hence the ‘question mark’ .
They require a lot of cash to hold or increase their market
share. It is up to the management to decide which ‘questions
marks’ to turn into stars and which ones to do away with.
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DOGS – these products have a low growth rate and a low
market share, they may generate enough cash to survive but
hold no promise of being large sources of cash.
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Depending on where the SBU falls in the
matrix, a company may decide to:
Invest more in order to build the share of the
business
Invest just enough to hold the market share
Milk the short term cash flows in order to
harvest the market share
Use the resources else where henceforth
divesting the SBU.
To keep products in the star and cash cow
quadrants it is important that the company
diversifies its portfolio and add new products
and units continuously.
Developing Strategies for Growth
& Downsizing
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Where ‘growth’ is pure oxygen for the company ,
‘profitable growth’ should be the organization’s
objective.
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Marketing’s main responsibility is to attain
profitable growth for the company , henceforth it
must identify, evaluate and select market
opportunities and lay down strategies to capture
them.
Strategies
Existing
Market
Penetration
Markets
New
Product
Development
Market
Development
Diversification
Existing
New
Products
Products
Markets
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When an organization sells more of its
current/existing products to its existing target
market, deeper ‘market penetration’ is
achieved.
When its sells new products to its existing
target market, ‘product development’ takes
place as the new product is modified to fit its
market place.
When existing products are introduced to new
markets, ‘market development’ takes place i.e.
the market is identified and developed to fit the
product.
When the organization starts up new products
in new markets , it is termed as ‘diversification’.
‘Downsizing’ takes place in order to eliminate
business units or products that no longer fit the
company strategy.
4) Planning Marketing: Partnering
to Build Customer Relationships
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Marketing’s role in planning the strategy is :
a)
To work out the guiding philosophy i.e. the
marketing concept.
b)
a)
To provide ‘inputs’ to the planners by helping them
identify attractive opportunities in the market.
Help each business unit outline its objectives.
a) Partnering with other
Company departments
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Building the ‘VALUE CHAIN’ i.e. each
department contributes through value
creating activities to design, produce, market,
deliver and support a firms products.
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For a value chain to exist all departments
must think CUSTOMER!!!
b) Partnering with Others in
the marketing system
Company
( marketer)
suppliers
Marketing
Intermediaries
End Users
Competitors
Companies today are partnering with other members of the
marketing system in order create a ‘Value Delivery Network’ i.e.
the network made up of suppliers, distributors, and ultimately the
consumers who partner with each other to improve the overall
performance of the system.
MARKETING STRATEGY
This is the logic by which the marketing
department steers itself in order to achieve the
marketing objectives.
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The strategy :
Outlines which customers the company will serve
and how,
Identifies the total market,
Divides the market into segments and selects the
most lucrative segment,
Focuses on satisfying customer needs and
delivering maximum value to them.
To Design a Customer
Centered Strategy
1) Market Segmentation – The marketer starts
off by dividing the market into distinctive
groups termed as ‘market segments’ which
are composed of consumers who respond in
a similar way to a given set of marketing
efforts. These consumers have distinct
needs, characteristics or behavior.
Henceforth it becomes easier for a company
to focus its efforts.
To Design a Customer
Centered Strategy
2) Target Marketing – Once the marketer has
divided the market into ‘market segments’ ,
the next step is to determine which segments
are most profitable to enter. The marketer
can either choose one segment i.e. a ‘niche’
or choose several related segments i.e.
different type of customers with the same
kind of needs.
To Design a Customer
Centered Strategy
3) Market Positioning– Once the target market
has been decided the marketer must decide
what position the product must occupy in the
market. The product must stand out against
its competitor. It must have a ‘clear’,
‘distinctive’ and ‘desirable’ place in the mind
of its target consumers. The company must
differentiate its marketing offer and then it
must take strong steps to deliver and
communicate the position to target
consumers.
THE MARKETING MIX (4 Ps)
•
Product ( need satisfying marketing offer)
•
Price ( charge for the offer)
•
Place ( how offer will be made available)
•
Promotion ( how the offer will be
communicated to the target audience and
how they will be persuaded to buy)
The 4 Ps Vs The 4 Cs
Marketer’s Perspective
Customer’s Perspective
Product
Customer
Solution
(need satisfying
marketing offer)
Price
(charge for the offer)
Customer
Cost
Place
(how offer will be
made available)
Convenience
Promotion
(how the offer will be
communicated to the TM)
Communication
Marketing Management
This is “ the art and science of choosing target markets and building
profitable relationships with them”. With Management comes the art of
ANALYSIS, PLANNING, IMPLEMENTATION and CONTROL
Analysis
Planning
Develop strategic
Plans
Implementation
Carry out the
Plans
Control
Measure results
Evaluate results
Develop marketing
Plans
Take corrective
action
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Marketing Analysis – A detailed market and SWOT
analysis is conducted to target lucrative
opportunities. This input is then provided by the
Marketing Department to other functions.
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Marketing Planning – Once the market has been
analyzed, the next step is to PLAN/DECIDE
marketing strategies that will help the company
attain its objectives.
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Marketing Implementation – This process turns
the planned strategies into actions. This is where ‘
doing things right’ becomes important. For
Successful implementation to take place the
following things are important:
The company must blend its people, structure,
resources into a cohesive action program that
supports its strategies.
The marketing strategies must fit the company
culture.
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Who will implement the
strategy??
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Planning and Strategy implementation is dependent on
the structure of the organization.
Functional ( Marketing activities are headed by a sales,
advertising, marketing research, customer service or new
product manager)
Geographic ( Sales and marketing people are assigned to
specific countries)
Product Management (A product manager develops and
manages strategies for several diff brands)
Market/Customer Management ( When selling one
product line to many diff types of markets, this is focused
more on the needs of the customer than on the product
itself)
Marketing Control
1.
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4.
Set specific marketing goals
Measure performance in the market place
Evaluate causes of differences b/w expected and actual
performance
Take corrective actions to close gaps b/w goals and
performance.
Marketing Audit is usually conducted to point out problem
areas and devise a plan of action to improve the
company’s marketing performance.
Measuring & Managing ROM
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ROM – Return on Marketing is the net return
from a marketing investment divided by cost
of the marketing investment.
Since its mostly subjective, ROM can be
measured in terms of increased customer
awareness, retention, satisfaction, increased
sales and market share.
A good ROM would be increased Customer
life time value and the eventual increase in
Customer Equity.
THE BOTTOM LINE!
“Projections are made, marketing is delivered,
results are measured, and the knowledge is
applied to guide future marketing…the return
on marketing investments is integral to
strategic decisions at ( all levels) of the
business”