Transcript KENT 19 BAD 67051 Marketing Management

KENT 31
BAD 67051
Marketing Management
Lecture 1
Marketing Management Thinking,
Decision Making,
& Positioning
Marketing Defined
a)
“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.”
b)…and a bit of controversy about the definition
Marketing Management
A. Definition 1
“…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.” [ugh]
Marketing Management
A. Definition 2
Marketing Management is the
management of “innovative and
imitative processes” to identify and
satisfy consumers cost effectively.
Don Kosec, TWC Business
Services
Kosec…Importance of Marketing to
Time Warner Business Services
“Marketing Drives Sales”
Collect
Marketing
Trends and
Data,
Helps to
determine
incentives,
Use
research
and tools to
Drive Sales
through
Brand
Awareness
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.
• Peter and Donnelly say:
“An organization should seek to make a profit
by serving the needs of customer groups”
(p. 4).
•
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 also 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 well-being.
(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. Cross Functional Decision
Making Teams
Market Orientation
Target Market
Customer Orientation
PROFITS
Competitor
Orientation
Interfunctional
Coordination
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.
(see P&D page 6)
IV. Strategic Planning
The Process of developing and
maintaining a strategic fit between the
organization’s goals and capabilities
and its changing markets.
A. Defining the Company’s Mission
B. Setting Company Objectives and
Goals
C. Corporate Strategies
Mission Statement
a)
The mission statement should be a clear and
succinct representation of the enterprise's
purpose for existence. It should incorporate
criteria addressing concepts such as the
moral/ethical position of the enterprise, public
image, the target market, products/services, the
geographic domain and expectations of growth
and profitability.
b)
The intent of the Mission Statement should be
the first consideration for any employee who is
evaluating a strategic decision.
http://www.businessplans.org/mission.html
2-21
Dan Muller, President,
Distribution and Services, Timken
Mission/Vision at Timken
WAS “World-wide Leader
in Bearings and Steel”
BUT that put them in a
“strategic box”
NEW “Improving
Customer Performance”
Allows “out of the box
thinking!”
For customers who are
WILLING TO PAY for
the VALUE we create.
Remember “At a Profit?”
XI. Setting Strategic Directions
a)
Three and ½ C’s of where we are NOW.
Understand:
i. Our COMPETENCIES
1) Competitive Advantage
ii. Our CUSTOMERS
iii. Our COMPETITORS
2-24
Setting Strategic Directions
Where do we want to go?
i. Grow?
ii. Sustain?
iii. Divest?
iv. Invest?
Use Portfolio Analysis to help figure it out
b)
2-25
V. Types of Corporate
GROWTH Strategies
Products
Markets
Present
Products
New
Products
Present
Customers
Market
Penetration
Product
Development
(more of same
products to same
market)
(new product to
same market)
New
Customers
Market
Development/ Diversification
(new product into
Expansion
(same product to
new market)
new markets)
V. Types of Corporate
Strategies
A. Growth Strategies for Current
Markets
– 1. Market Penetration
Market Penetration
•
Increase sales of EXISTING
products in CURRENT markets.
V. Types of Corporate
Strategies
A. Growth Strategies for Current
Markets
– 1. Market Penetration
– 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
A. Growth Strategies for Current Markets
1. Market Penetration
2. Product Development
B. Growth Strategies for New
Markets
1. Market Development
Market Development
•
Bring CURRENT products to
NEW markets
• (e.g., Arm & Hammer)
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
– 2. Market Expansion
Market Expansion
•
Taking CURRENT products to NEW
DOMESTIC geographic areas
•
International Expansion
– Regional strategy
– Multinational strategy
– Global strategy
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
– 2. Market Expansion
– 3. 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
– 2. Market Expansion
– 3. Diversification
– 4. 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 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
(See P&D page 25)
The BCG Model
STAR
PROBLEM
CHILD
CASH COW
DOG
High
MarketGrowth 10%
Rate
Low
0%
10X
Low
High
Market Dominance
0.1X
The BCG Model in the Music Industry –
Def Jam’s Portfolio of Artists
Ne-Yo
STAR
High
Kanye
West
MarketGrowth 10%
Rate
CASH COW
PROBLEM
CHILD
The
Dream
Playaz Circle
DOG
Low
Jay-Z
0%
10X
Low
High
Market Dominance
LL COOL
J
0.1X
2-50
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 -- 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
The BCG Model -- Problem
Children
Low Market Share in High Growth
Market
– High Growth Sales
– Weak Profits
– Typically, require additional Cash to
become Dominant
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 and Coca Cola
STAR
High
MarketGrowth 10%
Rate
Dasani
CASH COW
PROBLEM
CHILD
Full Throttle
DOG
Low
Coca-Cola Classic
0%
10X
Hi-C
Low
High
Market Dominance
Coke Blak
0.1X
2-55
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
XIV. Tracking Strategic Directions
with Marketing Dashboards
a)
•
What are they?
the visual display on a single computer
screen of the essential information
related to achieving a marketing
objective.
2-57
XIV. Tracking Strategic Directions
with Marketing Dashboards
b)
iDashboards – Driving Business Decisions
(http://www.idashboards.com/)
2-58
VII. Marketing Management & the
Marketing Plan
A. Situation Analysis
With an understanding of the organization’s
mission and objectives, Marketing Planning
begins with a situation analysis….with an
eye toward opportunities and threats.
(SEE Peter and Donnelly, page 16)
XV. The Strategic Marketing
Process
a. Situation analysis with SWOT (see P&D page 210)
i.
INTERNAL FACTORS
1) STRENGTHS
2) WEAKNESSES
ii.
EXTERNAL FACTORS
1) OPPORTUNITIES
2) THREATS
2-60
Hunt on importance of SWOT
Few techniques
from the MBA
are used more
than the SWOT
analysis
When you talk
strategy, you go
back to SWOT to
ask the deep
questions!
From the
analysis you can
develop
appropriate
strategies
b. ACTIONS based on SWOT
Type of Factor
Location of Factor
Favorable
Unfavorable
Strength
Weakness
INTERNAL
EXTERNAL
MATCH
CONVERT
MATCH
Convert/Avoid
Opportunity
Threat
2-62
VII. Marketing Management & the Marketing Plan
(P&D p.16-17)
CUSTOMER
VII. Marketing Management & the
Marketing Plan
B. Develop a plan
•Establish Objectives
•Select the Target Market
•Develop the Marketing Mix
THE MARKETING MIX
PROMOTION
(Integrated Marketing
Communications)
PRODUCT
CONSUMER
(Good, Service, Idea)
(Target
Market)
PRICE
(Value)
PLACE
(Distribution)
VIII. Marketing Research:
Process and Systems for
Decision Making
Research and Intelligence provide information
necessary to clarify the “unknown.”
II. Environmental Factors Affecting
The Organization
Competition
Economic
PROMOTION
Regulatory
PRODUCT
CONSUMER
PLACE
Cooperative
PRICE
Technology
Social
Michael Scott, Head Chief, Dunder Mifflin
How have you
adapted?
RECOGNIZE
the factor and
then
….IGNORE
IT????
Teaching Point:
This is
EXACTLY what
some managers
DO!
Sources of Market Intelligence
A. Secondary Data
Data previously collected by
someone else for a purpose other
than the one at hand
Sources of Market Intelligence
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 Intelligence
B. Primary Data
Data gathered and analyzed
specifically for the purpose at
hand
Sources of Market Intelligence
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 Intelligence
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 Intelligence
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 Intelligence
C. Types of Primary Data
4. Other
– Trade Shows
– Reverse Engineering
5. Research Firms:
Marketing Research Companies at
GreenBook (http://www.greenbook.org/ )
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
XII. Market Segmentation
A. The MARKET is the set of
all actual and potential buyers
of a product.
B. A MARKET SEGMENT is a
group of consumers with
distinct, shared needs.
•
So, the members of each
segment are similar with respect
to the factors that influence
demand (and different from one
another)
Family
Mobile
Need for Speed
Entry-level Car
C. Basic Strategies
1. Undifferentiated
Marketing
(Market Aggregation,
Mass Marketing)
The firm
Undifferentiated
Marketing
Product
Price
Place
Price
The
xxxxxxxxxx
Target Market
Ford Motor Co. in 1925
Model
Model
Model
T
T
T
Model
Model
Model
T
T
T
Model
Model
Model
T
T
T
C. Basic Strategies
2. Differentiated Marketing
Segment the market and
create different marketing
mixes for each.
(e.g., Church & Dwight Co.)
The firm
Product
Price
Place
Price
Segment
1
Product
Price
Place
Price
Segment
2
Product
Price
Place
Price
Segment
3
Ford Motor Co. Today
http://www.fordvehicles.com/cars/
Focus
Fusion
Mustang
Taurus
Fusion
Hybrid
Edge
Escape
Thunderbird
Ford GT
C. Basic Strategies
3. Concentrated Marketing
Segment the market and
create a marketing mix
for only one (or a few)
segments.
The firm
Concentrated
or Niche
Marketing
Product
Price
Place
Price
Segment
1
Segment
2
Segment
3
C. Basic Strategies
4. “Atomization”
Create a separate
marketing mix for EACH
customer
(Mass customization)
D. Segmenting Consumer
Markets
1. Based on Consumer Characteristics
a. Geographic Segmentation
• Regional: NE, SW, Midwest
• Size: County, City, SMSA
• Density: Rural, Suburban,
Urban
• Climate
D. Segmenting Consumer
Markets
1. Based on Consumer Characteristics
b. Demographic Segmentation
• Age, sex, family size, family life
cycle, income, occupation,
education, religion, race,
nationality
Demographic Targeting by Age
Crest targets adults with the ad and product on the left, and
children with the ad and product on right.
Media Household Income
Jaguar
Mercedes
$100,000
Porche
90,000
Audi
80,000
Saab BMW
70,000
Alfa Romeo
60,000
Peugeot
50,000
Volvo
Acura
Lincoln
Cadillac
Mazda Honda Toyota
Mercury
Ford
Buick Chrysler
Hyundai
Plymouth Chevrolet Oldsmobile
Yugo
Dodge
Renault
40,000
30,000
20,000
30
35
40
45
50
55
Median Age of Buyers
60
65
July 1988
D. Segmenting Consumer Markets
1. Based on Consumer Characteristics
c. Psychographic Segmentation
• Personality
• Psychology
• Life Style
D. Segmenting Consumer
Markets
1. Based on Consumer Characteristics
c. Psychographic Segmentation
• VALS/VALS2
•
http://www.strategicbusinessinsights.com/vals/presurvey.
shtml
• PRIZM
–
http://www.clusterbigip1.claritas.com/MyBestSegments/Def
ault.jsp?ID=20
D. Segmenting Consumer Markets
2. Based on Consumption-related Behaviors
a. Product Usage-Situation
• “Reason” for the purchase (e.g., when it
is used)
b. Benefit (need) Segmentation
• “Why” the product is bought
D. Segmenting Consumer Markets
2. Based on Consumption-related Behaviors
c. Volume of Product Usage
• Light-, Medium-, Heavy-users
• “Heavy Half”
d. Brand Loyalty
D. Segmenting Consumer Markets
3. Based on Decision-related Behaviors
a. Price Sensitivity
b. Search Behavior
• Complex
• Limited
• Routine
E. Segmenting Business Markets
1.
2.
3.
4.
5.
Size of the account
Growth potential
Benefits sought
Usage Situation
SIC codes
Muller on Segmentation at Timken
Primarily by industry
•Primary metals
•Wind energy
•Power generation
•Cement
•Automotive
•Off highway construction
vehicles
And then further
with micro segmentation
•Short lead time
•Longer life
•More productivity
Challenge to discover the
segment’s needs and to
create a mix for each
F. Is It a “GOOD” Segment?
1. Is it Measurable?
2. Is it Meaningful?
3. Can it be Reached?