Transcript MARKETING: An Organizational Competency INTRODUCTION TO

MARKETING
Theory – Application - Implementation
Introduction to the course
MARKETING 3350
• TESTS 100%
– 5 total – best 4 test scores will determine your
grade for the course.
– No make-up tests!
– No extra credit!
– Knowledge + logic + understanding = No
guesses
COURSE STRUCTURE
• Business casual environment
• Prepare for class everyday
– slides, text, websites, and vocabulary
• Attend all classes
• Bring printout of slide and take good handwritten class notes
• Participate
– Your comments and questions, in-class activities
• Form opinions based on facts and analysis
Analyze, create, learn, understand,
and apply [versus memorize]
Stages of learning
1. Memorize – rote learning
2. Learn – understand in your own terms
3. Understand – be able to explain it to others so
they comprehend
4. Apply – be able to identify, modify, and apply or
creatively adapt for analysis and insight
KEY LEARNING OUTCOMES
Understand
•
the role of marketing as the hub of the
wheel,
•
the importance of aligning corporate
offerings with market wants and needs,
•
the role of the chief marketing officer,
•
the many functional areas of marketing,
and introduce the major marketing
concepts, models, and theories.
KEY LEARNING OUTCOMES
•
Marketing has many components that need
to be coordinated and integrated to
maximize your chance for success.
•
There is a logical sequence to developing
marketing programs and the importance of
research to making good decisions.
•
There are many marketing concepts and
theories that are relatively easy to
understand but are difficult to implement.
•
New product development [NPD] is critical
to the continuing success of the firm and
how marketing manages the NPD cycle.
KEY LEARNING OUTCOMES
•
For career success, students must become
very flexible [recognize an item or situation
even if it has a different name] and
adaptable [take a basic concept, model, or
theory and modify or apply it to a specific
situation] to succeed in the business
world.
•
Also for career success, students must
become comfortable making decisions
based on incomplete and sometimes
uncertain information!
Harvard Business Review
TOP TOOLS
BLUNT
POWER TOOLS
INSTRUMENTS
Strategic planning
CRM * *
Customer segmentation *
Core competencies
Outsourcing
*
Scenario
& contingency planning *
Knowledge
Strategic alliances
management *
Growth strategy*
*
Supply chain management*
Collaborative
Mergers &
Loyalty management innovation
Acquisitions
Six sigma*
RUDIMENTARY
IMPLEMENTS
HBR 2006 [12/07 P. 20]
SPECIALTY TOOLS
RFID*
MARKETING
Imagination is more important than knowledge.
-Albert Einstein
MARKETING
• Excellent marketing executives
are dreamers that are also
doers.
• They convert dreams and ideas
into successful products and
services.
MARKETING AND YOU
• You must continually market
yourself to have the best
career opportunities!
• Why do you think two graduating
seniors with exactly the same GPA
and extracurricular activities get
very different offers?
ORGANIZATIONAL GROWTH AND
NEEDS
• FUTURE MANAGEMENT CHALLENGES
OF YOUR GENERATION
– Depth, breadth, and flexibility
– Leadership
ORGANIZATIONAL GROWTH AND
NEEDS
• DEMOGRAPHIC DYNAMICS
– Managing multiple [older] generations
– The changing landscape
– Future labor force and employment
projections
– An increasingly difficult challenge with
skilled labor
• 2011-2020
• 2021-2040
THE RECESSION and EMPLOYMENT
EFFECTIVE DATE
RATE
RATE WITH 25%
BENEFITS
< July 24, 2007
$5.15
$6.44 [$13.4k]
July 24, 2007
$5.85
$7.31 [$15.2k]
July 24, 2008
$6.55
$8.19 [$17.0k]
July 24, 2009
$7.25
$9.06 [$18.9k]
40.7% increase
June 30, 2010 Illinois [3rd
highest]
$8.25
$10.31 [$21.5k]
60.1% increase
What would you do with your number of
employees if you owned a business?
LABOR FORCE PROJECTIONS
No matter which economic
projections come true … there
will be a sharp slowdown in the
number of people entering the
workforce.
Business Week, May 20, 2002
[Where have all the workers gone? video]
What’s happening to jobs?
• Piece labor → assembly line → automated assembly line
• Better-faster-cheaper → outsourcing
• Integrated circuit → automation
–
–
–
–
–
–
Office functions
Internet replaces much information servicing
Machinery [precision and speed] + Robots [working, efficiency]
Scanners [bar codes → RFID]
Relational data base software [single data entry, data capture, routine analysis]
Automated warehouses [AGVs, AS/RS systems]
• Foreign displacement
– Shrinking world [lesser developed nations wages for unskilled jobs which are
DISAPPEARING, speed to market and customer]
– Trade area local content – NAFTA and EU!
FORCES AT WORK 1960 to now
•
•
•
•
•
•
Influx of women into the labor force
Reduction in the armed services
Corporate downsizing
Immigration is flat
Technology advances accelerate
Baby boomers start retiring in mass
– What do you think about Social Security for you?
What’s happening to jobs?
• Piece labor → assembly line → automated assembly line
• Better-faster-cheaper → outsourcing
• Integrated circuit → automation
–
–
–
–
–
–
Office functions
Internet replaces much information servicing
Machinery [precision and speed] + Robots [working, efficiency]
Scanners [bar codes → RFID]
Relational data base software [single data entry, data capture, routine analysis]
Automated warehouses [AGVs, AS/RS systems]
• Foreign displacement
– Shrinking world [lesser developed nations wages for unskilled jobs which are
DISAPPEARING, speed to market and customer]
– Trade area local content – NAFTA and EU!
FORCES AT WORK 1960 to now
•
•
•
•
•
•
Influx of women
Reduction in armed services
Corporate downsizing
Immigration is flat
Technology advances accelerate
Baby boomers start retiring in mass
– What do you think about Social Security for you?
Population by Single Year of Age
and Sex: 1970
AGE
Population pyramid
85+ years
80 years
75 years
70 years
65 years
60 years
55 years
50 years Age
Working
45 years
40 years
3520-65
years
30 years
25 years
20 years
15 years
10 years
5 years
Under 1 year
1.8
•
Male
1.3
Female
0.8
0.3
Males
0.3
Percent
Females
Source: U.S. Census Bureau, Decennial Census 1970
0.8
1.3
1.8
AGE
Population by Single Year of Age
and Sex: 2000
85+ years
80 years
75 years
70 years
65 years
60 years
55 years
50 years
Working
Age
45 years
40 years
20-65
35 years
30 years
25 years
20 years
15 years
10 years
5 years
Under 1 year
1.8
•
Male
1.3
Female
0.8
0.3
Males
0.3
Percent
0.8
Females
Source: U.S. Census Bureau, Decennial Census 2000
1.3
1.8
AGE
Population by Single Year of Age
and Sex: 2030
85+ years
80 years
75 years
70 years
65 years
60 years
55 years
50 years Age
Working
45 years
40 years
35 20-65
years
30 years
25 years
20 years
15 years
10 years
5 years
Under 1 year
1.8
•
Male
1.3
Female
0.8
0.3
Males
0.3
Percent
0.8
Females
Source: U.S. Census Bureau, Population Projections 2008
1.3
1.8
SOCIAL SECURITY
[One scenario]
• Underfunded by $26,000,000,000,000 to
2040
– ~2,513,415,404 miles of $1 bills end-to-end
– ~100,899 trips around the earth at the
equator
• But, if our economy grows 0.5% faster
than the assumed growth rate, social
security is not underfunded!
GENERATION Y
• You are different from all previous
generations – and you will shape the world in
unknown ways.
• GEN Y occupies a unique place in the history
of the world.
– Wealth
– Education
– Opportunity
• Never before has a single generation entered
into a change of the labor force of this
magnitude.
LABOR FORCE PROJECTION
ISSUES
• WEALTH EFFECT
– 401k, pensions, and social security
• INHERITANCE EFFECT
– $8-22 TRILLION range
– $197,000 per Baby-Boomer
– What would your parents do differently if they
inherited $400,000 tax-free today?
• AGING
LEADERSHIP
• C-LEVEL & BOARD
VISION
• EXECUTIVE GROUP
STRATEGIES
• MANAGERS
PROGRAMS
TACTICS
IMPLEMENTATION
LEADERSHIP AND TIME HORIZONS
EXECUTIVE
MANAGEMENT
BOARD OF DIRECTORS,
CEO, COO, CMO, GROUP VP,…
1-10 years
EXECUTIVE, &
SENIOR VICE PRESIDENTS
1-5 years
VICE PRESIDENTS
VP MARKETING (& SALES)
MIDDLE
MANAGEMENT
DIRECTORS
DIRECTOR – PRODUCT MANAGEMENT
SENIOR MANAGERS
GROUP PRODUCT MANAGER
MIDDLE MANAGERS
LOWER
MANAGEMENT
SUPERVISION
& WORKFORCE
1-3 years
1 year
1 week-1 year
PRODUCT MANAGER
1 week-few months
JUNIOR MANAGERS
Immediate-30 days
ENTRY-LEVEL MANAGERS
Immediate-30 days
SUPERVISORY PERSONNEL
&
WORK FORCE
Immediate
YOUR CAREER SUCCESS DEPENDS ON
•
•
•
•
ON TIME
UNDER BUDGET
ABOVE PLAN
NO EXCUSES
• EVERY TIME!
KEY MARKETING FUNCTIONS
• Assist the CEO with the mission, vision, and overall
strategy of the firm.
• Assess and respond to the wants, needs, and
satisfaction of various markets and market segments.
• Develop, design and manage new product
development to enhance product / service portfolios.
• Develop and implement channel of distribution,
positioning, and pricing policies.
• Communicate with various stakeholders.
• Increase net revenue and pre-tax profit and sometimes
market share.
MARKETING IN ACTUAL PRACTICE
REQUIRES
•
•
•
•
Awareness of the world around you
Planning, strategy, implementation, and refinement
Understanding and analyzing data
Organization and focus of resources … resource
efficiency
• Recognize changes, trends, forces, threats, and
opportunities then act on them.
• Leaders vs. Followers video
TREE DIAGRAM
How does an aging population affect the economy of a
developed nation?
More
Automation
Demands more
workforce and
management
skills
What will they do?
?
Labor Shortage
Developed
Nations: Aging
populations
Increase in
government
payments
Rapid increase
in number of
elderly
Increases social
security, health
care, long-term
care, …
MORE
Travel
Small house
building boom
Elderly want
smaller houses
What will they buy?
Potentially too
many large
homes
Financial services
Smaller sizes/portions
Cosmetic surgery
…
Try one on your own for … How does an aging population affect the economy of an
underdeveloped nation?
RECOGNIZING TRENDS: EXAMPLE
• The average Chinese person ate 44 lb. of
meat in 1985 but more than 110 lb. in 2006.
– This increases the demand for grain as it takes
<18 lb. to produce one lb. of beef. So the average
Chinese person is responsible for the world
needing to produce an additional 1,008 pounds of
grain per year.
– Or it increases the demand for grain for grain as it
takes <7 lb. [39% of what beef takes] to produce
one lb. or pork.
MAJOR CHANGES / LESSONS
1985 – TO DATE
THE GOOD
• Price → Value [Wal-Mart]
• Speed to market is critical [INTEL]
THE BAD
• Multi-nation markets, competitors, &
customers [GM continual reorganizations]
• Must have a clear vision [Sears]
• Products, capacity, and / or technology are
not enough [Polaroid]
REVOLUTIONARY TRENDS
• Constantly accelerating rate of change
• The emergence of the EU & trade areas
• The Internet
– Information and the speed of access
– Globalization
– 1 : 1 marketing
– Change the nature of work
– Social Networking
• How much time do you spend per month on
these?
MARKETING
"Business has only two basic functions –
marketing and innovation."
-Peter Drucker
THEY ARE BOTH MARKETING
FUNCTIONS!
MARKETING
Theory – Application - Implementation
1
THE HUB OF THE WHEEL
AND
CONNECTING WITH CUSTOMERS
MARKETING
• The role of the marketing organization is to
efficiently discover and satisfy the needs and wants
of markets and market segments.
• Markets and market segments are composed of
customers, prospects, and suspects.
• The marketing organization should strive to exceed
expectations on every purchase so that consumers
want only that brand! That results in the lifetime
value of a customer.
LIFETIME VALUE EXAMPLE
•
•
•
•
•
•
How often do you purchase a box of Kleenex? 2/mo
Which translates to n boxes per year.
At what average unit selling price [AUP]? $1.50
Which produces $ annual revenue [Ryr].
Build the equation for annual revenue.
Times your remaining average lifespan [80-20] of x
years that amounts to $ lifetime revenue [Rl]!
• At 50% gross margin percent [GM]. Note GM=[P-C]/P
• Which results in $ gross profit [Plp] over your
lifetime!
• Build the equation for life time value.
– Answers: Net Revenue = $2,340 - Gross Margin = $1,170
AMA DEFINITION OF MARKETING
“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.”
-American Marketing Association, 2007
Putting it simply, it is …
“Customer satisfaction at a profit”.
Philip Kotler, Northwestern University
WHAT IS MARKETING?
• Marketing is the connector between the
markets and the rest of the company.
• That is why we refer to it as the hub of
the wheel.
• The marketing environment is
composed of alliances, forces,
relationships, and trends that can be
controlled or influenced or used for the
benefit of the firm.
THE MARKETING ENVIRONMENT
Understanding Control and Influence
Technology
Social / Cultural
Advancements, Trends
Attitudes, Values, Lifestyle
Human Resources
Marketing
Mix
Talent pool
Senior
Management
&
Organization
Structure
Environmental /
Natural Forces
Stakeholders
INTERNAL
FORCES
[controllable]
Planning and
Systems
Capital / Economic
Availability, Flows, Trends
Supply
Chain
Management
Competition
Nature, Trends
Government
/ Political / Legal /
Regulatory
External [environmental] forces are generally uncontrollable by the firm.
MARKETING REQUIRES
1. Parties with unmet or unsatisfied needs and/or
wants … whether or not the consumer can specify
them.
2. The consumer has a desire [either a need or want]
plus the ability to pay and be satisfied.
3. Effective 1 or 2-way communication
4. Something of real and/or perceived value
DISCOVERING NEEDS AND WANTS
• B2C consumers may not know or cannot exactly
describe what they need or want.
– The first iPhone.
• Most new products fail in their first two years based
on initial net revenue and gross profit estimates.
• Marketing challenges
– Be close to the market.
– Focus on meaningful benefits.
– Learn from the past, understand forces and trends of today
and tomorrow, then create the future.
NEEDS AND WANTS
• B2C: shaped by culture and personality
• B2B: [organizational buyers] shaped by
requirements
Examples
• B2C Personal vehicle – I need a car for transportation but I
want a new BMW.
• B2B Chocolate – I need some chocolate to make candy
but I want a specific chocolate to make a Hershey Bar.
DISCOVERING AND
UNDERSTANDING MARKETS
• MARKETS [for products and/or services]
– [Preferably] uniquely defined groups of people or entities
with both the desire and the ability to benefit from a specific
item.
• MARKET SEGMENTS
– [Preferably] uniquely defined groups within markets.
• TARGET MARKET SEGMENTS
– Those market segments the entity is and / or will actively
pursue.
• MARKET SHARE
– The entity’s per cent of the total market in units or revenue.
MARKET SHARE
Global Microprocessor Revenue Q1,2009 Source: iSuppli
Product
hierarchy
◦ Brand
◦ Product Family
◦ Product line
◦ Product item
INTEL
Microprocessors
Celeron®
INTEL 80.6%
AMD 11.5%
Freescale 2.9%
Others 1.8%
IBM 3.2%
MARKETS AND STAKEHOLDERS
• MARKETS [for
products / services]
–
–
–
–
–
Business [B2B]*
Consumer [B2C]*
Government
Reseller*
International*
– Institutions [education and
health care]
– Non-profit
– Captive
• STAKEHOLDERS
[some vested interest in what
you do]
– Customers [B2B &
B2C]
– Prospects
– Resellers
– Employees
– Internal departments /
individuals
– Investors
– and more!
THE MARKETING MIX – The 4 P’s
Controllable Marketing Mix Factors
PRODUCT
PLACE
-PRODUCTS
-SERVICES
-Product / Service Combos
-WHERE
-EASE OF ACCESS
PROMOTION
PRICE
Integrated Marketing
-BENEFITS
-VALUE
Communications
4Ps originally suggested by E. Jerome McCarthy, Basic Marketing: A Managerial
approach, Irwin, 1960. The chart of only the 4Ps is in almost every textbook.
THE MARKETING MIX - 4 P’s
Controllable Marketing Mix Factors:
Asking the right questions
PRODUCT
PLACE
Creates the Value
In rank order,
what are the
three most
important
product
benefits?
In rank order,
where do
consumers
prefer to
purchase the
product?
PROMOTION
PRICE
Communicates
the value
Proves the value
with benefits
What are the
most effective
ways for each
market segment
to recognize the
benefits?
What are the
most effective
ways for
consumers to
recognize the
value of the
benefits?
CUSTOMER VALUE AND
RELATIONSHIPS
• VALUE – THE CORNERSTONE OF MARKETING
• The difference between expectation and usage value
and the cost of procurement and use. What is value
to you?
– Benefit[s]
– Perception[s]
– Customer satisfaction [positive customer
experience]
• No substitute for customer satisfaction
– meet, exceed, or greatly exceed
– Managing customer expectations – especially
with services
CUSTOMER VALUE AND
RELATIONSHIPS
• Customer Value & Its Perception
– How do you assess value?
Clothing
• Value Strategies
– are all about real and/or perceived
meaningful differentiation!
CUSTOMER VALUE AND
RELATIONSHIPS
• Remember – there is only one best!
• Best? Price
• Best? Product
• Best? Service
Best perceived / proven value …
Best perceived solution …
for my situation.
CUSTOMER VALUE AND
RELATIONSHIPS
• Relationship marketing
– The friendship analogy
– Easy to understand – hard to do.
– Customer Relationship Management
systems [CRM]
MARKETING MANAGEMENT
PHILOSOPHIES [and primary time periods]
• PRODUCTION ERA [< Great Depression]
– Focused on the firm
– Products that are available and highly
affordable
• PRODUCT ERA [~1900 to early 1960s]
– Products with the most performance and
features
They will buy it if we build it.
• SALES ERA [~1920 to early 1960s]
– Sales are driven by advertising & promotion
You will sell what we make.
Source: Much earlier than Principles of Marketing 14E – probably Kotler text without Armstrong
CONTRASTING CONCEPTS
Starting
point
Factory
Focus
Means
Existing
products
Selling and
promotion
Ends
Profits through
sales volume
THE SALES CONCEPT
Inside-out
Market
Customer
needs
Integrated
marketing
Profits through
customer
satisfaction
THE MARKETING CONCEPT
Outside-in
Source: Principles of Marketing 14E, Kotler and Armstrong, Pearson, p.10 ISBN 13: 978-0-13-216712-3
THE MARKETING CONCEPT AT
WORK
EVERYTHING BEGINS AND ENDS WITH THE CONSUMER !
EMPHASIZES MARKET [SEGMENT] AND CONSUMER NEEDS
MARKETS
AND
SEGMENTS
CONSUMER NEEDS
INTEGRATED
MARKETING
COMMUNICATIONS
PROFITS
THROUGH
SATISFACTION
LEVERAGE BRAND EQUITY
VERSUS THE SELLING CONCEPT WHICH EMPHASIZES THE COMPANY
The “Everything …” phrase dates to the 1970s. No idea where the boxes came from.
MARKETING MANAGEMENT
PHILOSOPHIES
• MARKETING CONCEPT ERA [~mid 1950s to
1990s]
– Market [customer]-driven approach
We will make it if we believe we can sell it in sufficient
quantity AND GET AN ACCEPTABLE RETURN!
Therefore, marketing’s role is to determine if there is
a sufficient probability of success to proceed.
• CUSTOMER RELATIONSHIP ERA [1980s to
?]
– Mutually-satisfying long-term relationships
[relationship marketing]
If we understand each other’s needs and wants we will
both benefit.
Much earlier than Principles of Marketing 14E – probably Kotler text without Armstrong
ETHICS & CORE VALUES
• MORALS
The distinctions between right and wrong.
• ETHICS
The values of human conduct—the right and
wrong of actions, and the good or bad of
motives and ends.
ETHICS
• ETHICS
– Personal ethics should exceed legal
requirements
– If you have to ask about its legality, you
are likely in ethical trouble
– Intent …
– Corporate ethics … [Dilbert ethics video]
CORE VALUES
BENEFITS OF MARKETING
• Who benefits from marketing?
– Everyone
• Who are the buyers and users?
– B2B and B2C buyers and end-users
• How to consumers benefit?
– Economic utility of form, place,
possession, and time
PLANNING
• STRATEGIC
– Generally 3-10 years
• MARKETING
– Generally one year or less
• TACTICAL
– Generally days, weeks, or months
PLANNING AND THE FIRM
Corporate
Philosophy
Strategy
Tactics
Vision - Mission
Core values - Culture
Business definitions and missions
Strategic direction [leadership]
Infrastructure [core competencies]
SBUs
Marketing plan
Objectives & Situation analysis
Segmentation and target marketing
Positioning
Sales plan
Marketing mix
Product – Place – Promotion – Price [value]
No idea where the basic idea with the boxes originated but the text is highly modified.
STRATEGIC PLANNING
• The long-term process of aligning the firm’s
capabilities to continually take advantage of
market opportunities.
• The goal is usually
– maximization of the entity’s revenues, profits, and
/ or
– the accomplishment of major objectives.
• There are several excellent models. The
challenge is to apply and adjust the most
appropriate model for your situation.
STRATEGIC PLANNING
• What are we now?
• What capabilities do we want to
develop?
• What businesses should we be in?
• How do we get there?
– Conventional thinking [your education to date]
– Scenario Planning [Learning From the Future]
• What are the rewards of success?
MARKETING
Theory – Application - Implementation
2
STRATEGIC PLANNING,
CORPORATE GOALS, AND
CORE COMPETENCIES
ORGANIZATIONS
• Business entities
• For-profit organizations
•
•
•
•
Associations
Cooperatives
Governments
Non-profit organizations
BUSINESS STRATEGY
• The conglomerate lessons: You cannot
be all things and conceptual synergies
do not always occur.
• Marketing’s role in strategy
– Work with CEO to understand long-term
objectives, then
• Develop market and product development
programs, tactics, and then implement
successfully.
HOW DOES MARKETING MEET
CORPORATE GOALS?
• Increase net revenue and gross profit
while controlling expenses.
• Improve and increase brand awareness
and loyalty.
• Successfully develop and implement
new products while extending market
reach and increasing market share.
THE MARKETING ORGANIZATION
WORKING RELATIONSHIPS
STRATEGIC DIRECTION OF THE FIRM
BOARD / CEO / COO / CMO / GROUP VP
Board of Directors
and C-level
executives
President or General Manager or Managing Director [International]
BUSINESS UNIT MARKETING OFFICER
THE MARKETING PLAN
PRODUCT
MARKET
CUSTOMER
MANAGEMENT
RESEARCH
SERVICES
PRODUCTS & SERVICES
CUSTOMER SURVEYS
PRICING
NEEDS RESEARCH
CUSTOMER CARE
INTEGRATED
MARKETING
SALES
SALES
ORGANIZATIONS
FORCES
COMMUNICATIONS
ADVERTISING
PROMOTION
CHANNEL MANAGEMENT
PUBLIC RELATIONS
SALES FORCE DIRECTION
SALES MATERIALS
SALES MANAGEMENT
DAILY SALES
ACCOUNT MANAGEMENT
CUSTOMER RELATIONSHIPS
TYPES OF SALES ORGS.
BRAND MANAGEMENT
INTERNAL
EXTERNAL
COMMUNICATIONS CONTINUUM FOCUS
DESIGNING THE BUSINESS
PORTFOLIO
• THE DREAM
• MISSION STATEMENT [purpose – guides decision-making]
– See the U.S. State Department mission statement online
• VISION STATEMENT [values – beliefs and behavior → culture]
– Core values are the fundamental, passionate, and enduring
principles that guide conduct over time.
– Values and beliefs: you can not live a dual life
– Peter Drucker: It's more important to do the right thing than
to do things right.
DESIGNING THE BUSINESS
PORTFOLIO
• Core competencies
• Considerations
– Fit with other SBUs
– Synergies among the SBUs
– Competition between the SBUs
STRATEGIC DIRECTION OF THE
FIRM
• CORE COMPETENCY TESTS
• Sustainable – Very long term [~10-20 years]
AND
• Competitive – Obvious customer benefits
AND
• Advantage – Access to markets
• What core competencies would you need for
Source: C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review, May 1990.
SBU STRUCTURE – An example
General Electric Corporate
GE Commercial Finance
GE Industrial
GE Money
(business loans, leases)
(appliances, lighting,
factory automation)
(consumer home loans,
credit cards)
GE Healthcare
GE Infrastructure
GE NBC Universal
(imaging, diagnostics,
life-support systems)
(aircraft engines, energy,
transportation)
(television, music, film)
THE STRATEGIC BUSINESS UNIT
[SBU]
• A UNIT OF THE FIRM THAT HAS
DIFFERENT OBJECTIVES, CAN BE
PLANNED AS A SEPARATE UNIT, AND
INTERNALLY COMPETES FOR
• PEOPLE – MONEY - DEVELOPMENT RESOURCES
OTHER SBU ISSUES
– FAIR PERFORMANCE MEASURES
– DEGREE OF AUTONOMY FOR EACH SBU
SBU
TECHNOLOGIES /
PRODUCTS /
SERVICES
MARKETS /
SEGMENTS
A
P
P
L
I
C
A
T
I
O
N
S
N
E
E
D
S
CORE VALUES
are the fundamental, passionate, and enduring
principles that guide conduct over time.
– Values and beliefs: you can not live a dual life
– Peter Drucker
It's more important to do the right thing than to do
things right.
Star Trek Enterprise
Why is a mission statement important?
2-77
We are not in the coffee business
serving people, but in the people
business serving coffee.
-Howard Schultz, Founder and Chairman of Starbucks
STRATEGIC DIRECTION
A few beginning questions
• What do we do best?
• What should we do best?
• What business[es] are we in?
• What business[es] should we be in?
• …
“MARKETING MYOPIA” *
•
•
•
•
Railroads [1800’s]
Supermarket [1930]
Color TV [Motorola, GTE, GE]
Lead with price conundrum [Kressge & K-Mart, Xidex]
• You can always get sales!
• Great marketing organizations rarely have financial
problems!
What is the myopia mistake in
Source: Theodore Levitt, “Marketing Myopia,” Harvard Business Review, July-August 1960, pp. 45-56.
MYOPIA MISTAKE: CHEESE FILTERED
CIGARETTE
U.S. PATENT 3,234,948 [1966]
APPLYING THE MARKETING MYOPIA
CONCEPT:
BUSINESS DEFINITIONS & EXTENSIONS
PRODUCT
ORIENTED
MARKET
ORIENTED
DISNEY
Theme parks
Fantasies &
What
entertainment businesses
are they in?
WAL-MART
Discount
stores
Value to
middle class
COMPANY
This slide is likely from an earlier Kotler text circa 2000-2010.
BUSINESS
EXTENSIONS
What can they
sell?
What can they
not sell?
COMPETENCIES / KEY SUCCESS
FACTORS
• NOT CORE COMPETENCIES
• YOU MUST DO THEM BETTER EVERY DAY
•
•
•
•
Customer services
Design
Engineering
?
• What key success factors would you need to
succeed with
KEY SUCCESS FACTORS FOR THE
GARBAGE CAN CHAIR
US 4,387,927
June, 1983
What skills will we need to
be really good at to
succeed with this product
that has no core
competencies?
KEY SUCCESS FACTORS FOR THE
GARBAGE CAN CHAIR
US 4,387,927
June, 1983
Always emphasize
meaningful points of
difference!
What are the meaningful
points of difference?
BCG GROWTH-SHARE MATRIX
Boston Consulting Group
Build - invest heavily
in tomorrow
Hold – But decide
quickly then act
Harvest for cash for
reinvestment in the
firm
Divest [or
discontinue] –
redeploy key
assets
Source: Adapted fromThe Experience Curve Reviewed, IV. The Growth Share Matrix of the Product Portfolio, Boston, The Boston Consulting Group, 1973.
GE / McKinsey Matrix
• Market
Attractiveness
– Market size, growth rate,
potential
– Competition
– Profitability
– Government regulation
• Business Strength
– Market share
– Customer & market
knowledge
– Cost efficiency
– Technology
Originally developed in the 1970s by McKinsey for GE.
GE / MCKINSEY MATRIX
Strong
Low Medium High
MARKET ATTRACTIVENESS
BUSINESS STRENGTH
Medium
Weak
SBU A
SBU B
SBU C
SBU D
Invest & grow
Selective growth
Harvest: divest
/ dissolve
Originally developed in the 1970s by McKinsey for GE. This slide is likely from an earlier
Kotler text circa 2000-2010.
HEDGEHOG ANALYSIS
• One clear simple statement
about our passionate?
• What can we be the best excel
at?
– Beware of the “best” trap!
• What are we not the best at?
• What are our economic
yardsticks?
– For example profit per customer visit,
profit per employee, …
BLUE OCEAN ANALYSIS
• Red Oceans
The industries today – known markets and
competition
• Increased competition decreases profits
• The ocean turns red with blood [lack of
sufficient profits]
•
• Blue Oceans
•
Industries and / or markets that are not
known
• Opportunity for rapid, very profitable growth
• The great blue expanse of opportunity
• A Blue Ocean Strategy video.
SWOT ANALYSIS
• Complete a comprehensive unbiased
situation analysis
• The SWOT Analysis
–
–
–
–
–
Identify all relevant trends
Analyze competitors and their trends
Understand your real competitive advantage[s]
Organization assessment [short and long term]
Research and understand the implications of
current and prospective markets, scenarios, and
technologies
SWOT ANALYSIS
Analyze your firm and your major competitors.
IP
Low cost
structure
INTERNAL
EXTERNAL
STRENGTHS
OPPORTUNITIES
BUILD
EXPLOIT
Take advantage of
Market
the firm’s
position
strengths
LEVERAGE
CONSTRAINTS
New markets,
channels
Use the firm’s
strengths to offset Acquisitions
competitive threats
VULNERABILITIES
Breadth of
offering
WEAKNESSES
THREATS
CORRECT
AVOID
Lack of
management
talent
Offset the firm’s
weaknesses
Weak finances
NPD
PROBLEMS
Counter threats
Rapidly
changing
market
New entrants
Government
regulations
This is the same concept but presented in a different way. The students seem to understand it better this way. Does it need to be cited or not? The original source is unknown.
COMPETITIVE ADVANTAGE
• The target market set[s] of real and
perceived significant and meaningfully
different features with their associated
real and perceived benefits compared
to competitive offerings.
PORTER’S THREE GENERIC
STRATEGIES
COMPETITIVE ADVANTAGE
Customer Perceived Uniqueness
C
O
M
P
E
T
I
V
E
S
C
O
P
E
INDUSTRY
DIFFERENTIATION
Perceived value
WIDE
Caterpillar, IBM
Low Cost Position
OVERALL COST
LEADERSHIP
Commodities,
Dell, Wal-Mart
MARKET
NICHE / FOCUS
SEGMENT
Understanding and focus
ONLY
No direct battles with major competitors
MIDDLE OF THE ROAD [LOSING] STRATEGY – Chrysler, Sears
Michael Porter, Harvard, Competitive Strategy, Free Press,1980 .
ASSEMBLING THE MARKETING
MIX
Every marketing program
is different so the nature of
any or all of the 4 P’s can
vary from program to
program.
Graphic is from MARKETING, Kerin, Hartley, Rudelius, 10E, McGraw-Hill Irwin, p. 42, 2011. ISBN 13: 978-0-07-352993-6
MARKETING
Theory – Application - Implementation
3
SCANNING THE MARKET
ETHICS
UNDERSTANDING YOUR
ENVIRONMENT
• Tracking trends
• Understanding market forces, changes
and trends
– Competitive
– Demographic
– Economic
• consumer income, business income
– Regulation and Enforcement
– Social
– Technological
SOCIAL FORCES: DEMOGRAPHICS
• Demographics
• World Population
7,217,647,800
+~7,000,000 per month
• U.S. Population
320,158,475 4.4%
Source: Population numbers are from the U.S. Census Bureau WWW.CENSUS.GOV, 1/13/2015 10:57 am
CHANGE IN WORLD
POPULATION
Source: United Nations Population Division, World Population Prospects, The 2008 Revision.
SOCIAL FORCES: DEMOGRAPHICS
– B2C Generations and Households
•
•
•
•
Baby Boomers: 1946 - 1964
Generation X: 1965 - 1976
Generation Y: 1977 - 1994
Millennials: 1995 +
• Generational marketing
• Marital status and types of families
SOCIAL FORCES: DEMOGRAPHICS
Population and its movement
DEMOGRAPHIC TRENDS:
POPULATION
DEMOGRAPHIC TRENDS: Rural and Urban
2009
http://www.city-data.com/county/Lubbock_County-TX.html
DEMOGRAPHIC TRENDS: AGING
http://www.census.gov/ipc/www/idb/pyramids.html
SOCIAL FORCES: DIVERSITY
• 2010 Census
– ~15% Hispanic ↑
– ~12% African
American →
– ~5% Asian
American ↑
• Multicultural
marketing
SOCIAL FORCES: CULTURE
• What are some of the elements of
culture?
–
• The changing attitudes and roles of
men and women
• What are some changing values?
–
ECONOMIC FORCES
• The health of the economic and
behavior
– Inflation
• Results in
– Recession
• Results in
• Monthly indicators
• B2C University of Michigan Survey
• B2B Purchasing Managers Survey
ECONOMIC FORCES: LEVELS OF
CONSUMER INCOME
Gross Income
is the total amount of money made in one year without
any deductions.
Disposable Income is the money a consumer
has left after paying taxes.
Discretionary Income
is the money that remains after paying for taxes and
typical expenses.
TECHNOLOGY FORCES: THE
ELECTRONIC SOCIETY
• Marketplace
• Marketspace
• Electronic commerce
– B2C
• Changing payment alternatives
– B2B
PORTER’S FIVE FORCES MODEL:
Industry Analysis
What is the
bargaining power
of your key
suppliers?
What is the
bargaining power
of your key
customers?
What are the
barriers to entry?
What is the
threat of
substitute
products and/or
services?
What is the
threat of
significant new
entrants?
What is the
amount of rivalry
among existing
competitors?
See Michael E. Porter, Competitive Strategy, New York Free Press, 1980, for more information.
GOVERNMENT FORCES: FEDERAL
LAWS AND REGULATION
• Regulation
– Laws, regulations, filings, …
• Fair competition
– Sherman Antitrust Act [1890]
– Clayton Act [1914]
– Robinson-Patman Act [1936] for resellers
GOVERNMENT FORCES: FEDERAL
LAWS AND REGULATION
• Intellectual property protection
–
–
–
–
–
Copyright Law
Trademark Law
Patent Law
Trade Secret Law
Knowledge Management
GOVERNMENT FORCES: FEDERAL
LAWS AND REGULATION
• Pricing
• Distribution
– Exclusive
– Exclusive territory
– Requirement contracts
– Tying arrangements / contracts
ETHICS – LAWS - GUIDELINES,
REGULATIONS, AND COMPLIANCE
ETHICAL
LEGAL AND
COMPLIANT
WITH
GUIDELINES
AND
REGULATIONS
ILLEGAL
UNETHICAL
BUSINESS FORCES: ETHICS
• Business cultures around the world
• Transaction ethics
– Caveat emptor
– Caveat venditor
– Federal Trade Commission
BUSINESS FORCES: ETHICS
• Competition around the world
– Economic espionage
– Bribes and kickbacks
– Corruption Perceptions Index
• Transparency International
MARKETING
Theory – Application - Implementation
4
CONSUMER MARKETING [B2C]
MARKETS AND CONSUMER
BEHAVIOR
WHAT IS A CONSUMER?
• The ultimate user [B2C or B2C]
that selects, purchases, uses, and
disposes of goods or services to
satisfy needs and wants.
• U. S. consumer motivation
– Needs are never fully satisfied.
– New needs emerge as old needs are
satisfied.
– People who achieve their goals set new
and higher goals for themselves.
A MODEL OF BUYER BEHAVIOR
Product
Price
Marketing and
Other Stimuli
Economic
Technological
Place
Cultural
Promotion
Other
Buying
Decision
Process
Product Choice
Buyer’s Black Box
Buyer’s Response
Buyer
Characteristics
Purchase
Timing
Brand Choice
Amount →
Seller Choice
VALUE
This slide is likely from an earlier Kotler text circa 2000-2010. Some words have been changed or deleted.
CONSUMER BEHAVIOR
Problem recognition
The purchase decision process consists of five stages.
FEEDBACK
Graphic is from MARKETING, Kerin, Hartley, Rudelius, 10E, McGraw-Hill Irwin, p. 112,
2011. ISBN 13: 978-0-07-352993-6
CONSUMER BEHAVIOR
Information search
• Internal search
– Your existing knowledge base
• External search
– Personal sources
– Public sources
– Market sources
• Ads, internet, sales brochures, sales people, …
CONSUMER BEHAVIOR
Purchase Evaluation
• Evaluation criteria
– The attributes of a product and/or service
the consumer uses to compare different
items. [You-Tube]
• Consideration set
– The group of brands and products that a
consumer considers acceptable . [TV]
CONSUMER BEHAVIOR
The purchase decision
• Once the consumer believes they
understand the real and perceived
value of a purchase they must decide
– from whom to buy,
– where to buy,
– when to buy, and
– how to buy.
CUSTOMER FOCUS:
THE VALUE OF A SATISIFIED CUSTOMER
• Customer retention [satisfaction]
• Keeping disenchanted customers
• Getting new customers [prospects]
• The problem of ex-customers
– No longer need the product
– Unhappy with the product
CONSUMER BEHAVIOR
Postpurchase
Consumer’s Expectations of
Product Quality
Performance
Ease of use
…
Satisfied Customer
Unsatisfied Customer
COGNITIVE DISSONANCE
Doubt or regret about a purchase
CLASSIFICATION OF
CONSUMER PRODUCTS
Convenience Products
Shopping Products
> Frequently purchased
> Little effort
> Low priced
> Numerous locations
> Considerable selection time & effort
> Moderately brand loyal
> Comparison shop
> Few locations
Staples, impulse items
Clothing, appliances, services
Specialty Products
Unsought Products
> Unique characteristics
> Significant purchase efforts
> Brand – limited locations
> Little awareness or interest until need
> Require much advertising & personal
selling
Hobby purchases, Rolex watch
Insurance, some innovations
Evaluate how
Emergency Products
you think about
these different
> Unexpected need
> Speed with little to no brand loyalty
types of
purchases.
Emergency room, ambulance, towing
This slide is likely from an earlier Kotler text circa 2000-2010.
CONSUMER BEHAVIOR
Involvement and problem solving
• Involvement is the total of the personal,
social, and economic significance of
the purchase to the consumer.
– Routine problem solving
• A pack of gum
– Limited problem solving
• A new business suit
– Extended problem solving
• Your first new house
CONSUMER BEHAVIOR
Involvement and problem solving
• Low involvement product marketers should
– Focus on easy to identify and remember
– Avoid stockouts
– Reduce cognitive dissonance with ads,
POP displays, …
• High involvement product marketers should
– Promote, picture, and stress benefits
– Strong sales skills, service, and consumer
engagement
CONSUMER BEHAVIOR
Situational influences
• SOCIAL SURROUNDINGS
– Where is the store? What type of people?
• PHYSICAL SURROUNDINGS
– What do you notice when you go into a store?
• TIME
– Does the time of day affect your shopping?
– How do you shop if you are in a hurry?
• MOODS
– How does being unhappy affect your shopping?
– How does the amount of money you have …
CONSUMER BEHAVIOR
Four types of buying decisions
HIGH INVOLVEMENT
[Quality – Service – Facts]
Use personal sales –
quality, facts, service
LOW INVOLVEMENT
[Obvious differences]
Use advertising, POP,
emotional perceptions
Significant
differences
between
brands
Complex
Buying
Behavior
VarietySeeking
Behavior
Few
differences
between
brands
DissonanceReducing Buying
Behavior
Habitual
Buying
Behavior
DURABLE GOODS
[Furniture, appliances,
long-lasting items…]
Use subjective appeals,
advertising
NON-DURABLE GOODS
[Grocery items, frequent
purchases, …]
Use sales promotion,
price
This slide is likely from an earlier Kotler text circa 2000-2010.
CUSTOMER INVOLVEMENT
CLASS EXERCISE
Quality
Canned
peas
Color
Price
Brand
Distance
CONSUMER BEHAVIOR
Psychological influences - Maslow
CONSUMER BEHAVIOR
Psychological influences - Maslow
• Personality type
• Self-concept
• Normal perception
– Selective perception to selective retention
• Subliminal perception
CONSUMER BEHAVIOR
Psychological influences - RISK
• Methods of consumer risk reduction
– Obtain Seals of Approval
– Provide
•
•
•
•
Free trials or samples
Simple and complete instructions
Warranty or guarantee
Endorsements
– Strengthen the relationship leading to
• Brand loyalty
– The propensity to purchase the same brand over
time.
CONSUMER BEHAVIOR
Psychological influences - ATTITUDES
• Attitude formation is a learned behavior
based on
– Values
• Fundamental basis of one’s beliefs and way of
life
– Beliefs
• A perception of expectations
CONSUMER BEHAVIOR
Psychological influences - ATTITUDES
• Attitude change
– Changing beliefs
• The brand
• Its attributes
– Importance of each attribute
– New product beliefs and attributes
CONSUMER BEHAVIOR
Psychological influences - LIFESTYLE
$
R
E
S
O
U
R
C
E
S
CONSUMER BEHAVIOR
Psychological influences - INFLUENCERS
• Opinion leaders – personal and social
• Word of mouth
• Reference groups
CONSUMER BEHAVIOR
Psychological influences - FAMILY
Graphic is from MARKETING, Kerin, Hartley, Rudelius, 10E, McGraw-Hill Irwin, p. 129,
2011. ISBN 13: 978-0-07-352993-6
CONSUMER BEHAVIOR
Social influences - SOCIAL
• Class
– Upper, middle, lower [working]
• Culture
– Subculture
• African-American, Asian-American, Hispanic
buying patterns
THE CONSUMER
PERCEPTION
IS
THEIR REALITY!
TEST REVIEW
• You need to learn the
• Models
• Vocabulary
• You need to understand
• What you do with each part of the model
• Relationships
• Select the best answer!