Introduction to Business Marketing

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Introduction to (Business) Marketing
Rob Menko Rotterdam School of Management /
Erasmus Graduate School of Business
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Table of content

• Marketing Philosophy
• Consumer and Business Marketing
• Marketing Planning
• Marketing Planning Problems

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Some General Observations

• The marketing function is only one part of the
  company responsible for excellent marketing
• Therefore, we prefer market based management
  through a market led team
• The main issue is creating value for the customer
  (at a profit)

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Marketing and shareholder value
(elaboration of JM, 1998)
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• Marketing is not the art of finding clever ways
  to dispose of what you make.
• Marketing is the art of creating genuine customer
  value.
• It is the art of helping your customer become
  better off.
• The marketers watchwords are quality, service
  and value.

Philip Kotler S.C. Johnson Son Distinguished
Professor of International Marketing Kellogg
Graduate School of Management
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The 13 dimensions of value
Source Lapierre, 2000
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A customer is ...

• A customer is not dependent on us.
• We are dependent on him.
• He is not an interruption of our work.
• He is the purpose of it.
• He is not an outsider of our business.
• He is a part of it.
• We are not doing him a favour by serving him.
• He is doing us a favour by giving us an
  opportunity to do so.

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Marketing

• Marketing is a human activity directed at
  satisfying
• needs and wants through exchange processes.
• Needs
• Wants

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Aim of marketing

• Consumer marketing to make life more pleasant
  for consumers
• Business marketingto make sure that your
  customers earn more money by using your
  product/offering/value proposition

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Key concepts in Business Marketing

• Business System/ Demand Chain
• Customers Customer
• Co-Development
• Account Management
• Total Lifetime Value
• Account teams
• Product and Process Innovation
• Strategic Alliances

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Major Challenges for Business Marketers

• Achieve profitable growth
• Better organize and market the marketing function
  itself
• Get the marketing basics right (STP)
• Refine the marketing budget process and metrics
• Build markets through higher customer-value total
  offerings
• Better manage changing distribution channel
  relationships
• Deploy the power of B2B brands
• Compete more aggressively in global markets
• Master e-business tools

Source ISBM study, 2004
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Essential skills and knowledge

• Understanding Marketing metrics/ Managing
  profitability
• Improving networking and partnering skills
• Honing strategic skills
• Developing a customer focus
• Mastering fundamental marketing skills
• Understanding customer value
• Building global marketing skills
• Gathering market and competitive intelligence
• Understanding branding
• Building new product development skills
• Developing e-business skills
• Managing services marketing

Source ISBM survey, 2004
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Conclusions of ISBM survey

• Focus on producing customer value
• Issues in global business (e.g. dealing with
  cultural differences)
• Learn your marketing basics
• Awarenss of changing distribution
• Branding
• Relate marketing plans/projects to ABC
• e-business
• NPD

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Market Focus A Strategic Necessity

• The assets of the firm have little value without
  customers
• A key task for the firm is therefore to create,
  attract, and retain customers
• Customers are attracted through offers of value
  and retained through satisfaction
• The task of the marketing function is to define
  how customers perceive value and satisfaction
• The value and satisfaction actually received by
  customers is affected by the performance of the
  whole organisation
• The whole organisation must therefore be market
  focused

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Marketing Department

• Marketing is too important to be left to the
  marketers
• The size of the marketing department is inversely
  related to the market orientation of the
  organization
• The role of the marketing department is to make
  itself superfluous

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Kotler on Marketing

• The marketing organization will have to redefine
  its role from managing customer interactions to
  integrating and managing all the companys
  customer-facing processes.

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Selling and marketing concepts contrasted
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The strategic triangle
Source D. Hennessey
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Dimensions of market-driven management
Source Adapted from George Day Market Driven
Strategy, 1990
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Business market planningA functionally
integrated perspective
Source Hutt Speh, 2000
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Formulating Business marketing strategyVital
cross-functional connections
Source Hutt Speh
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Marketing planning structure
Source D. Hennessey
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A framework for business marketing management
Source Hutt Speh
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The marketing planning structure
Source Hutt Speh
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Overview of analysis
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Environmental factors (PEST)

• olitical / legal factors
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Foreign trade regulations
• Employment law
• Government stability
• ocial / cultural factors
• Populations demographics
• Income distribution
• Social mobility
• Lifestyle changes
• Attitudes to work and leisure
• Consumerism
• Levels of education

• conomic factors
• Business cycles
• GNP trends
• Interest rates
• Inflation
• Unemployment
• Disposable income
• Energy availability and cost
• echnological factors
• Government spending on research
• Government and industry focus on technological
  effort
• New discoveries / developments
• Speed of technology transfer
• Rates of obsolescence

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Critical questions about Marketing Strategy

• 1. Suitability Is there a sustainable
  advantage?
• (e.g., assess the strategy in light of the
  capabilities of the business and the likely
  responses of key competitors)
• 2. Validity Are the assumptions realistic?
• (e.g., assumptions concerning sales, profits,
  competition)
• 3. Realism Do we have the skills, resources,
  and commitments?
• (e.g., adequate sales force, advertising budget,
  commitment of key personnel including top
  management)
• 4. Consistency Does the strategy hang together?
• (e.g., Is it internally consistent across the
  functional areas in
• the firm?)

Source Adapted from George S. Day. Tough
Questions for Developing Strategies Journal of
Business Strategy, 7 (Winter 1986)
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Critical questions about Marketing Strategy(II)

• 5. Vulnerability What are the risks and
  contingencies?
• (e.g., If important assumptions are wrong, what
  are the risks inherent in the strategy?)
• 6. Adaptability Can we retain our flexibility?
• (e.g., If a major contingency occurs, could the
  strategy be
• reversed?)
• 7. Financial Desirability How much economic
  value is created?
• (e.g., the attractiveness of expected performance
  relative to the probable risk)

Adapted fromGeorge S. Day. Tough Questions for
Developing Strategies Journal of Business
Strategy, 7 (Winter 1986)
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Problems most often encountered

• No clear linkeage to other plans (previous, BP)
• No analysis of competitor strategy
• Competitors seen as static
• No content, just buzz words
• The form is correct, but no sense of main issues,
  urgency
• 90 analysis, 10 action
• No projected PL
• No action plan

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Organizational issues

• Plan is seen as ritual
• Plan is static
• No contingency plan
• No real support for plan
• Plan is never consulted after agreement
• Only the financial objectives are relevant, not
  the marketing strategy

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Planning process

• Who starts(top down or bottom up)
• Who is involved(staff or line)
• How much time(do we get or take)
• How new(zero base or adaptation)

• How much guidance(is it or can it be)
• How realistic(realistic or game playing)
• Part of job (job description)

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Marketing planning
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Time problems
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Co-operation problems
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Knowledge problems
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Content problems
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Implementation problems
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Marketing planning is often considered

• a necessary evil
• to be done in the spare hours
• not to be consulted after it is completed
• a yearly ritual
• a window dressing performance
• a justification of current positionan exercise
  in futility

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Though marketing planning should be

• Creative
• Intellectual
• Challenging
• Sharing
• Guiding
• Action oriented
• Stimulating
• and Fun

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The ritual
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Action minded
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Objectives

• explicit
• realistic
• acceptable
• consistent
• prioritised
• dynamic
• influential
• measurable
• ambitious / challenging

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The ideal forecast
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Unclear objectives
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Marketing controlFinish and start of marketing
management
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The Process
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Main shortcomings of plans(content)
Source Howard Sutton, The Marketing Plan in the
1990s, The Conference Board, Report no. 951,
1990, p. 62.
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Most critical problemsin preparing marketing
plans
Source Howard Sutton, The Marketing Plan in the
1990s, The Conference Board, Report no. 951,
1990, p. 61.
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Marketing planContent items objectives,
strategies and action programs(all companies
combined, N 223)
Source Howard Sutton, The Marketing Plan in the
1990s, The Conference Board, Report no. 951,
1990.