BU602 Marketing: Session One

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BU602 Marketing Session One

• Introduction Overview

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Session One Agenda

• Class Format Protocol
• Overview of Marketing
• Market Oriented Company
• Market Opportunity Assessment Coors Case

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Class Format

• Basic Concepts
• New Thinking/Trends
• Practice Case, Simulation, Business Press, Your
  experience
• Questions Summary

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Protocol

• My Expectations attendance, prepared,
  participate
• Your Expectations me, colleagues
• Joint Responsibility
• Engage, challenge, learn
• Fun

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Marketing Introduction - Topics

• Introduction overview
• What is marketing?
• Requisite knowledge analyses
• From analyses to strategy
• From strategy to reality - being market driven
• Delivering superior value to multiple
  stakeholders

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What is marketing how can it help?

• What is marketing?
• Marketing is the process of planning and
  executing the conception, pricing, promotion, and
  distribution of ideas, goods, and services to
  create exchanges that satisfy individual and
  organizational objectives

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Marketing Principles

• Process - a way of thinking, orientation
• Analytical - understanding knowledge
• Exchange - selective, value-based, commitment
• Integrated - within marketing other functions
• Mutual objectives - satisfy needs

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Marketing is about

• Understanding value
• Creating value
• Delivering value

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Marketing is also about

• Building access to customers
• Leveraging access to customers
• Who has access and who is trying to gain access?
• How does access explain some of the market
  dynamics that we are seeing today?

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Marketings fit within the organization

• Linkage between external internal environments
• Orientation which can permeate all areas
• Seamless organizations
• Capabilities linked to value-adding processes
• Value chain value networks

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How can it help?

• Opportunity identification evaluation- What
  business is out there? Requirements?
• What business should we pursue?
• What is our offer? Value proposition?
• How will we deliver support that offer?
• How should we assess monitor performance?
• How do we develop the capacity to continuously
  extract profits from market opportunities?

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Example What business are you in?

• Revlon?
• Rolex?
• Radio station?
• You?
• Customer-satisfying process vs. goods-producing
  process
• Customers/Needs/Technology - Business scope

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Market Strategy

• Different levels - resource allocation among
  within businesses
• Within - what business- which customers? target
  market selection?
• What is our offer to these customers? - value
  proposition, position
• How will we deliver support this offer?
  Marketing mix - products/services,
  price,communications, channels, people,
  organizational requirements
• Market performance assessment?

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Strategy Elements - Fit With Diamond E

• Product/market choice - what business should we
  pursue
• Value Proposition - our offer? Position? Why
  customers should do business with us.
• Marketing mix and business systems focus - how we
  will deliver support that offer- 4 Ps, people,
  processes

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Marketing Strategy Framework
Mgt Preferences

• Climate
• Customer
• Competitor
• Channels

Companys Resources Capabilities
Market Environment
Marketing Strategy

• Value Proposition
• Target Market
• Marketing Mix

Company Processes Systems
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Holistic Marketing Framework
1)Who is involved?
Customers
Corporation
Collaboration
Market Space
2) How can we define relevant market space?
3) What are the potential opportunities emerging
from the market space?
Potential Opportunities
4) What business capabilities and infrastructure
are required?
Business Investment
Customer Focus
Collaborative Network
Competencies
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Four Competitive Platforms
Customer focus
Collaborative Network
Competencies
Exploring Value
Cognitive Space
Competency Space
Resource Space
Business Architecture
Market Offerings
Creating Value
Customer Value
Business Domain
Partners
Marketing Activities
Operating System
Delivering Value
CRM
ERP
SCM
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Six Steps to Marketing Strategy

• Understanding
• Visioning
• Direction Setting
• Committing
• Implementing
• Sustaining

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Inputs to Strategy Formulation

• What we can do - capabilities,competencies
• What might do - innovation, creativity
• What we want to do - desires, preferences
• What we should do - market requirements

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Analytical Foundation for Marketing Decisions - 6
Cs

• Customer
• Company
• Competition
• Climate
• Channels
• Cash

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Using this analyses -

• Issue focused
• Integration of messages/cues from 6 Cs
• SWOT analysis
• Market requirements vs capabilities vs
  competition
• Market strategy - target market marketing mix
• Sell your ideas, recommendations

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Ben Jerrys a SWOT to get it growing again
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Consistency Checks

• Analyses strategy
• Target market marketing program
• Within marketing program

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Elements of the marketing mix that comprise a
cohesive marketing program
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Marketing programs for two of Rollerblades
skates, targeted at two distinctly different
customer segments fast-growing kids and fitness
skaters.
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Value to Other Stakeholders

• Employees
• Shareholders
• Partners
• Government
• Society

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The Market Oriented Company

• Characteristics
• Which Company?
• Your Company?
• Does it Matter?
• Challenges?

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Market Oriented Companies

• Superior skills in understanding satisfying
  customers
• Beliefs - Customers interests drive behaviour
• Ability to generate, disseminate, use superior
  info about customers competitors
• Coordinated application of interfunctional
  resources to create superior customer value

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This orientation is achieved and sustained by
making appropriate moves along four interlocking
dimensions.
4 Interlocking Dimensions of Market-Driven
Management
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Market-Driven Organizations

• Market-Sensing
• Centered on customers.
• Take an outside-in view of strategy.
• Demonstrate an ability to sense market trends.
• Market monitoring is frequent and intensive.
• Customer-Linking
• Possess special skills for creating and managing
  close customer relationships.
• Special attention is given to the choice of
  which. customers to serve collaboratively.
• Develop
• The appropriate structural linkages.
• Information systems.
• Management processes.

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Market Orientation, Customer Satisfaction
Profitability
Business Profitability
Customer Retention
Market Orientation
Marketing Knowledge
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Market Based Strategies Profitable Growth
Strategies to Grow Market Demand
Strategies to Enter/Exit Markets
Strategies to Gain Market Share
Strategies to grow Customer Purchases
Net Marketing Contribution Market Demand X
Market Share X ( Revenue per
Customer Variable Cost per
Customer) Marketing Expenses
Strategies to Lower Variable Cost per Customer
Strategies to Increase Market Efficiency
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Challenges Market Orientation Strategy
Implementation

• Strategy
• Staff
• Style
• Skills
• Systems
• Structure
• Shared values

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Market Orientation Facilitators/Barriers

• Buy-in
• People skills
• Resources (Time )
• Reward/punishment system
• Information/knowledge
• Bureaucracy
• Inter-functional cooperation
• Culture
• Management Support

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The New Marketing Concept

• Global Customer
• Value-Delivery Strategy
• Customer Knowledge
• Selective Customer Focus
• Customer Loyalty
• Innovation
• Mass Customization
• Corporate Alignment - processes, structure,
  culture
• Loyal Customers Employees
• Market Intelligence
• Learning Organization
• Network

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Executing The New Marketing Concept - Guidelines

• Customer Focus Throughout
• Listen to the Customer
• Define Nurture Distinctive Competence
• Define Marketing as Market Intelligence
• Target Customers
• Manage For Profitability Not Sales
• Customer Value - Guiding Star
• Customer Defines Quality
• Measure Manage Customer Expectations
• Build Customer Relationships Loyalty
• Define Business as a Service Business
• Continuous Improvement Innovation
• Partners Alliances
• Destroy Marketing Bureaucracy

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Traditional Goods- Centred Logic
Evolving to a New Dominant Logic for Marketing
JM, Jan2004
Emerging Service-Centred Logic
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What is needed? - Kotler

• Marketing is not filling its potential
• Marketing must become the driver of business
  strategy
• Marketing must become more holistic in its scope
• A key need is for companies to move to
  technology-enabled marketing (TEM)
• Companies can win through a strategy of either
  cost-reduction, improved customer experience,
  business model innovation, improved product
  quality, or super or multiple-niching

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Recap - Summary

• Marketing is a process
• Value understanding, creation, delivery
• Analytical foundation - internal external
• Opportunity identification evaluation
• Value is ultimately determined in marketplace
• Marketing strategy - market choice integration
  of mix elements
• Marketing needs to be integrated with other
  functions to deliver value

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Market Environment Market Opportunity Assessment

• Environmental Forces Affecting Strategy
• Macro Forces PEST, Climate
• Micro Forces Customers,Competition, Channels -
  Industry Players
• Market Opportunity Identification Evaluation
• Summary Questions

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Business is About Capitalizing on Change

• Change is inevitable
• Rate Trajectory of Change
• Change creates opportunities - also challenges
• Anticipate, Understand, Interpret, Act

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Strategy - A Change Process

• Changing Environment - arena, players, equipment,
  rules, game are constantly changing
• Requirement for Success - Deliver superior value
  to our stakeholders - customers, shareholders,
  employees, partners, society
• Understand, create, deliver superior value in a
  dynamic environment

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Drivers of Environmental Change

• Globalization - f of drivers - market, cost,
  government, competition, technology, capital
• Technology - new products/services, manufacturing
  processes, marketing channels
• Customers - needs, expectations, demands
• Companies - innovation

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Strategic Responses

• Restructuring, re-engineering, re-invention,
  e-everything
• Functional integration
• Value chain management
• Core competencies/capabilities
• Alliances,outsourcing,networking
• Superior value - service, innovation, operational
  excellence
• Benchmarking
• Business activity rationalization
• Stakeholders - customers,employees,partners,shareh
  olders,society
• Operations - efficiency,responsive,flexible
• Customer-centric capabilities structures
• Management - leadership,vision,empower,knowledge
  breadth

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Marketing Challenges

• Customers are becoming more sophisticated price
  sensitive
• They are short of time want more convenience
• They see growing product parity among suppliers
• They are less brand sensitive - more accepting of
  reseller and generic brands
• They have high service expectations
• They have decreased supplier loyalty
• They use multiple channels

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Questions Posed By Marketers -

• How can we spot choose the right market
  segments to serve?
• How can we differentiate our offering from
  competitive offerings?
• How should we respond to customers who press us
  for a lower price?
• How can we compete against low-cost, lower priced
  competitors from here and abroad?
• How far can we go in customizing our offering for
  each customer?
• What are the major ways in which we can grow our
  business?
• How can we build stronger brands?
• How can we reduce the cost of customer
  acquisition?
• How can we keep our customers loyal for a longer
  period?
• How can we tell which customers are important?
• How can we measure the payback from advertising,
  sales promotion, and public relations?
• How can we improve sales force productivity?
• How can we establish multiple channels and yet
  manage channel conflict?
• How can we get the other company departments to
  be more customer oriented?

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How well are we doing in dealing with change?

• Casualties - good companies going bad
• Commoditization
• Decreased Customer Loyalty
• Failed mergers/acquisitions
• Struggling for growth profits
• Capacity management relative to market
  requirements
• But also some clear winners, dominant players

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Some Tools To Help in Reading Interpreting
Environments

• Backcasting - Visioning Tracking
  Requirements/Enablers
• Demography lifestyles
• Mapping Industry Transformation - value chains,
  value networks, profit pools, player roles
  activity
• Push-pull forces/Force field analysis

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Industry Transformations

• What to look for?
• Value chain - players, roles, profits, new
  entrants
• Integration, Disintermediation Reintermediation
• Value provision - information, physical
  processes, commoditization, distinctive
  specialization
• Sources of power - market access, customer base,
  product/services, capital, networks
• Push-pull forces
• Conventions
• Mergers/acquisitions/alliances - within, outside

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Summary

• Change is inevitable - no steady state
• How we embrace it will determine whether we
  survive or not
• Soul searching - vision, capabilities,
  strategies, relationships
• New challenges skill requirements
• Comfortable anxiety focus on the upside

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What Constitutes a Market/Business Opportunity?

• Where do you look?
• How do you evaluate them?

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Coors Case

• What should you consider when evaluating this
  opportunity?
• Role of research?
• Which studies?
• What did you learn?

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Lessons From Coors Case

• Market Opportunity/Feasibility studies usually
  require estimates of industry demand, market
  share, investment, costs, performance
• Link research to management problem or decision
• Role of research - anticipate research results
  and how these will solve the management problem
• Start with secondary data
• The costs of information is real and usually
  constrained
• Cheap information - need to consider quality
• Dont spend because you have the funds - look for
  the value

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Research Techniques

• Market Mapping
• Concept Testing products/services, ads
• Customer Decision Making Preferences
• Media usage
• Performance Modeling
• Forecasting Propensity models
• Behavioural data - transaction capture, loyalty
  programs - need to complement with
  cognitive/attitudinal
• Surveysite.com

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Competitive Intelligence

• Strategic perspective - offensive vs defensive
• Direct indirect competition
• Diversity of needs within organization
• Diversity of sources - reports, speeches, net,
  customers, partners, etc.
• Ongoing, captured communicated - used
• Leakage - what you are telling competitors
• Specialized skills resources

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Summary - Research Market Intelligence

• Uncertainty reduction - effective decision making
  
• Abundance of data - not intelligence
• Behavioural cognitive/attitudinal
• System - technology people, ongoing
• Learning organization
• Utilization - capture, communicate/share

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Framework for Diagnosing Market Opportunity

• How can a firm generate new business ideas?
• What value can a company unlock or introduce?

Seed Opportunity in Existing or New Value System

• Can the new business fulfill an unmet or
  underserved customer need?

Uncover Opportunity Nucleus Identify Unmet and
Underserved Needs
Investigative Stages

• Which segments of the market are most attractive
  to serve?
• What is their profile?

Identify Target Segments

• Does the firm have the resources and
  capabilities to support the new business and
  serve the customer needs?

Declare Companys Resource-Based Opportunity for
Advantage

• Is the new opportunity attractive from a
  financial, competitive and technology standpoint?

Assess Competitive, Technological and Financial
Opportunity Attractiveness

• Based on the overall analysis, should the firm
  launch the new business?

Make Go / No-Go Assessment
Final Decision
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Evaluate Capabilities to Deliver Value
Resources and Assets Needed
Provided by the Company
Provided Through Partnerships

• Categories of Partners
• Complementor partners
• Capability partners

• Types of Capabilities
• Customer-facing
• Internal
• Upstream

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Factors to Assess the Opportunity
Competitive Intensity
Customer Dynamics

• Number of competitors
• Competitors strengths and weaknesses

• Unconstrained opportunity
• Segment interaction
• Rate of growth

Opportunity Assessment
Technology Vulnerability
Microeconomics

• Technology adoption
• Impact of new technologies

• Market size
• Profitability

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Overall Opportunity Assessment
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Business Attractiveness Assessment
Selective Short-Term
High
Priority
Realization Ease
Selective Long-Term
Avoid
Low
Low
High
Magnitude of the Opportunity
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Summary Assessing Market Opportunities

• A market opportunity analysis framework helps
  structure your analyses thinking
• Opportunities linked to value provision
• Customers determine value need to understand
  customer decision process
• Involves identifying pursuing most attractive
  customers
• Need to source the required resources to deliver
  value to customers
• Assessing the attractiveness involves looking at
  a number of factors 6 Cs
• Culminates in a go/no-go assessment