KENT 31 BAD 67051 Marketing Management

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KENT 31BAD 67051Marketing Management

• Lecture 1
• Marketing Management Thinking,
• Decision Making,
• Positioning

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Marketing Defined

1. 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
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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

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Marketing Management

• A. Definition 2
• Marketing Management is the management of
  innovative and imitative processes to identify
  and satisfy consumers cost effectively.

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Don Kosec, TWC Business Services
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KosecImportance 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
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II. Marketing Management Philosophies

• A. Production Concept

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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

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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.

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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

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D. The Marketing Concept

• Assumes that achieving the organizations 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).

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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.

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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).

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E. The Societal Marketing Concept

• Assumes that customer satisfaction should be
  delivered in a way that maintains or improves the
  consumers and societys well-being.
• (a customers wants/needs may be at odds with
  what is good for society)
• e.g., pollution control

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III. The Marketing Concept and

• A. Synergy
• Managers must create marketing tactics that fit
  together well.
• They must coordinate implementation.

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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.

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III. The Marketing Concept and

• C. Cross Functional Decision Making Teams

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Market Orientation
Target Market
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IV. Strategic Planning

• The process of developing and maintaining a
  strategic fit between the organizations goals
  and capabilities and its changing markets.
• Developed by senior managers
• Future oriented
• Intended to create objectives and strategies for
  success against competition.
• (see PD page 6)

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IV. Strategic Planning

• The Process of developing and maintaining a
  strategic fit between the organizations goals
  and capabilities and its changing markets.
• A. Defining the Companys Mission
• B. Setting Company Objectives and Goals
• C. Corporate Strategies

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Mission Statement

• 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.
• The intent of the Mission Statement should be the
  first consideration for any employee who is
  evaluating a strategic decision.

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http//www.businessplans.org/mission.html
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Dan Muller, President, Distribution and Services,
Timken
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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?

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XI. Setting Strategic Directions

• Three and ½ Cs of where we are NOW. Understand
• Our COMPETENCIES
• Competitive Advantage
• Our CUSTOMERS
• Our COMPETITORS

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Setting Strategic Directions

• Where do we want to go?
• Grow?
• Sustain?
• Divest?
• Invest?
• Use Portfolio Analysis to help figure it out

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V. Types of Corporate GROWTH Strategies
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V. Types of Corporate Strategies

• A. Growth Strategies for Current Markets
• 1. Market Penetration

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Market Penetration

• Increase sales of EXISTING products in CURRENT
  markets.

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V. Types of Corporate Strategies

• A. Growth Strategies for Current Markets
• 1. Market Penetration
• 2. Product Development

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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.

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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

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Market Development

• Bring CURRENT products to NEW markets
• (e.g., Arm Hammer)

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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

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Market Expansion

• Taking CURRENT products to NEW DOMESTIC
  geographic areas
• International Expansion
• Regional strategy
• Multinational strategy
• Global strategy

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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

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Diversification

• Taking NEW PRODUCTS to NEW MARKETS
• (e.g., Arm and Hammer Toothpaste)

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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

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Strategic Alliances

• Total collaboration by EXCHANGING key resources
  to enhance companies performance.

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V. Types of Corporate Strategies

• A. Growth Strategies for Current Markets
• B. Growth Strategies for New Markets
• C. Consolidation Strategies
• 1. Retrenchment

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Retrenchment

• WITHDRAW from WEAKER current markets

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V. Types of Corporate Strategies

• A. Growth Strategies for Current Markets
• B. Growth Strategies for New Markets
• C. Consolidation Strategies
• 1. Retrenchment
• 2. Pruning

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PRUNING

• REDUCE the number of PRODUCTS offered in current
  markets

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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

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Divestment

• Selling off part of the business -- ELIMINATE a
  product and a current market.

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V. Types of Corporate Strategies
A. Growth Strategies for Current Markets B.
Growth Strategies for New Markets C.
Consolidation Strategies D. Other Strategies
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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.

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Other Strategies

• 2. Based on Value Disciplines
• Operational Excellence
• --Okay products, best price, least
  inconvenience
• Product Leadership
• --Innovation for best product performance
• Customer Intimacy

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VI. Product Portfolio Models

• A. The Boston Consulting Group Growth-Share
  Matrix
• (See PD page 25)

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The BCG Model
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The BCG Model in the Music Industry Def Jams
Portfolio of Artists
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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

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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

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The BCG Model -- Problem Children

• Low Market Share in High Growth Market
• High Growth Sales
• Weak Profits
• Typically, require additional Cash to become
  Dominant

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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

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The BCG Model and Coca Cola
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B. The Directional Policy Matrix
Competitive Position
Medium
Strong
Weak
Overcome, Niche, or Quit
High
Maintain Leadership
ChallengeLeader
Market Attractiveness
Challenge Leader
Manage for Earnings
Harvest
Medium
Cash Generator
Divest
Harvest
Low
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XIV. Tracking Strategic Directions with
Marketing Dashboards

• What are they?
• the visual display on a single computer screen of
  the essential information related to achieving a
  marketing objective.

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XIV. Tracking Strategic Directions with
Marketing Dashboards

1. iDashboards Driving Business Decisions
   (http//www.idashboards.com/)

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VII. Marketing Management the Marketing Plan
A. Situation Analysis With an understanding of
the organizations mission and objectives,
Marketing Planning begins with a situation
analysis.with an eye toward opportunities and
threats. (SEE Peter and Donnelly, page 16)
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XV. The Strategic Marketing Process

• a. Situation analysis with SWOT (see PD page
  210)
• INTERNAL FACTORS
• STRENGTHS
• WEAKNESSES
• EXTERNAL FACTORS
• OPPORTUNITIES
• THREATS

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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
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b. ACTIONS based on SWOT
Type of Factor Type of Factor
Location of Factor Favorable Unfavorable
INTERNAL Strength Weakness
EXTERNAL Opportunity Threat
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VII. Marketing Management the Marketing Plan
(PD p.16-17)
CUSTOMER
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VII. Marketing Management the Marketing Plan

• B. Develop a plan
• Establish Objectives
• Select the Target Market
• Develop the Marketing Mix

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THE MARKETING MIX
PROMOTION
(Integrated Marketing Communications)
PLACE (Distribution)
PRODUCT
CONSUMER (Target Market)
(Good, Service, Idea)
PRICE
(Value)
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VIII. Marketing Research Process and Systems
for Decision Making
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Research and Intelligence provide information
necessary to clarify the unknown.
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II. Environmental Factors Affecting The
Organization
Competition
Economic
PROMOTION
Coop-erative
PRODUCT
CONSUMER
PLACE
Regulatory
PRICE
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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!
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Sources of Market Intelligence

• A. Secondary Data
• Data previously collected by someone else for a
  purpose other than the one at hand

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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

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• 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

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• 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

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• 3. Examples of Secondary Data
• Competitor Reports
• Scanner Data

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Sources of Market Intelligence

• B. Primary Data
• Data gathered and analyzed specifically for the
  purpose at hand

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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

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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

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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

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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/ )

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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.

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IX. Decision Support Systems
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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

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IX. Decision Support Systems

• D. User interaction system
• the software that manages the interface between
  the user and the system

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X. Hypercompetitive Market Research

• Cross functional teams continuously stay in
  close touch with lead consumers and suppliers

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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

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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

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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.

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• So, the members of each segment are similar with
  respect to the factors that influence demand (and
  different from one another)

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(No Transcript)
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• C. Basic Strategies
• 1. Undifferentiated Marketing
• (Market Aggregation,
• Mass Marketing)

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Undifferentiated Marketing
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Ford Motor Co. in 1925
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C. Basic Strategies

• 2. Differentiated Marketing
• Segment the market and create different
  marketing mixes for each.
• (e.g., Church Dwight Co.)

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Segment 3
Segment 1
Segment 2
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Ford Motor Co. Today http//www.fordvehicles.com/c
ars/
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C. Basic Strategies

• 3. Concentrated Marketing
• Segment the market and create a marketing mix
  for only one (or a few) segments.

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Concentrated or Niche Marketing
Segment 3
Segment 1
Segment 2
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C. Basic Strategies

• 4. Atomization
• Create a separate marketing mix for EACH
  customer
• (Mass customization)

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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

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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

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Demographic Targeting by Age
Crest targets adults with the ad and product on
the left, and children with the ad and product on
right.
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Media Household Income
Jaguar
Mercedes
100,000 90,000 80,000 70,000
60,000 50,000 40,000 30,000
20,000
Porche
Audi
Saab
BMW
Alfa Romeo
Lincoln
Volvo
Cadillac
Peugeot
Acura
Mercury
Mazda
Honda
Toyota
Buick
Chrysler
Ford
Hyundai
Plymouth
Oldsmobile
Chevrolet
Yugo
Dodge
Renault
30 35 40 45 50
55 60 65
Median Age of Buyers
July 1988
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D. Segmenting Consumer Markets

• 1. Based on Consumer Characteristics
• c. Psychographic Segmentation
• Personality
• Psychology
• Life Style

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D. Segmenting Consumer Markets

• 1. Based on Consumer Characteristics
• c. Psychographic Segmentation
• VALS/VALS2
• http//www.strategicbusinessinsights.com/vals/pres
  urvey.shtml
• PRIZM
• http//www.clusterbigip1.claritas.com/MyBestSegmen
  ts/Default.jsp?ID20

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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

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D. Segmenting Consumer Markets

• 2. Based on Consumption-related Behaviors
• c. Volume of Product Usage
• Light-, Medium-, Heavy-users
• Heavy Half
• d. Brand Loyalty

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D. Segmenting Consumer Markets

• 3. Based on Decision-related Behaviors
• a. Price Sensitivity
• b. Search Behavior
• Complex
• Limited
• Routine

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E. Segmenting Business Markets
1. Size of the account 2. Growth potential 3.
Benefits sought 4. Usage Situation 5. SIC codes
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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 segments needs and to
  create a mix for each

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F. Is It a GOOD Segment?

• 1. Is it Measurable?
• 2. Is it Meaningful?
• 3. Can it be Reached?