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LECTURE 1LECTURE 1MARKETING:MARKETING:

CONCEPTCONCEPT

ORIENTATIONORIENTATION

ENVIRONMENTENVIRONMENT

AN OVERVIEW OF MARKETING MANAGEMENT-I

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Definitions of MarketingDefinitions of Marketing

The management The management

process responsible for process responsible for

anticipating and anticipating and

satisfying customer satisfying customer

requirements profitablyrequirements profitably

(Chartered Institute (Chartered Institute

ofof

Marketing)Marketing)

The process of The process of

defining, anticipating defining, anticipating

and and

creating customer needscreating customer needs

and of organizing the and of organizing the

company’s assets and company’s assets and

resources to satisfy themresources to satisfy them

for the greater profit of for the greater profit of

the customer and the the customer and the

firm firm (Anon)(Anon)

What marketing is notWhat marketing is not

““A sophisticated form of selling done A sophisticated form of selling done by graduates”by graduates”

““Advertising, sales promotion, selling, Advertising, sales promotion, selling, PR, direct mail, market research”PR, direct mail, market research”

““What the marketing department What the marketing department does”does”

““A process which increases costs”A process which increases costs”““An irrelevance to what I do”An irrelevance to what I do”

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Some definitionsSome definitions

CUSTOMERCUSTOMER Person or Person or organisation who organisation who actually buys the actually buys the product or serviceproduct or service

BUYERBUYER Same as customer Same as customer but more B2Bbut more B2B

CLIENTCLIENT A customer for whom A customer for whom a service is a service is performedperformed

CONSUMERCONSUMER The person who The person who ultimately consumes ultimately consumes or uses the end or uses the end productproduct

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Some definitionsSome definitions

PROSPECTPROSPECT A potential customerA potential customer

MARKETMARKET The actual or The actual or potential customers potential customers for a given product or for a given product or serviceservice

STAKEHOLDERSTAKEHOLDER Anyone with a stake Anyone with a stake in the organisationin the organisation

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3 Levels of Marketing3 Levels of Marketing 11stst Level: Tactical Output Level: Tactical Output

(promotional literature, advertising – (promotional literature, advertising – WHAT THEY SEEWHAT THEY SEE))

22ndnd Level: Management Process Level: Management Process (allocation of resources – WHAT WE (allocation of resources – WHAT WE

DO)DO) 33rdrd Level: Marketing Orientation Level: Marketing Orientation

(a philosophical approach to doing (a philosophical approach to doing business which puts customer at the business which puts customer at the heart of the enterprise – HOW WE ACT)heart of the enterprise – HOW WE ACT)

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MarketingOrientation

Integrated customer

focus

Long run profitsthrough customer

satisfaction

SalesOrientation

Push! Push!Sell! Sell!by promotion

Short term gains in profit via sales increases

Evolution of the Marketing Evolution of the Marketing ConceptConcept

ProductionOrientation“Any colour you

like, as long as it’s black”

Profits throughproduction controls

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TheThe Marketing ConceptMarketing Concept

Marketing ConceptThe achievement of corporate goals through

meeting and exceeding customer needs better than the competition

Customer orientationCorporate activities are focused upon

providing customer satisfaction

Integrated effortAll staff accept the responsibility for

creating customer satisfaction

Goal achievementThe belief that corporate goals can

be achieved through customer satisfaction

Marketing concept

The achievement of corporate goals through meeting and exceeding customer needs better than the

competition

Customer orientation

Corporate activities are focused upon providing customer satisfaction

Integrated effort

All staff accept the responsibility for creating

customer satisfaction

Goal achievement

The belief that corporate goals can be achieved

through customer satisfaction

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VMVVMV

What are What are Vision, Mission and Vision, Mission and ValuesValues??

What part does each of the above play What part does each of the above play in helping a company achieve its in helping a company achieve its goals?goals?

Watch the video clip of a well-known Watch the video clip of a well-known organisation, and work out their VMVorganisation, and work out their VMV

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VMVVMV

IssueIssue Possible Possible DescriptionsDescriptions

What are we What are we here for?here for?

PurposePurposeMissionMissionAimAim

Where are Where are we going?we going?

VisionVisionGoal, destinationGoal, destinationStrategic IntentStrategic Intent

What beliefs What beliefs will guide our will guide our behaviour?behaviour?

Values, credibilityValues, credibilityEthos, principlesEthos, principlesGuidelines, rulesGuidelines, rules

?

Review - the marketing conceptReview - the marketing concept

BUYER(consumer)Satisfaction

SELLER(provider)Profit

SOMETHING OF VALUE

SOMETHING OF VALUE

money, credit, donations, labour, goods

goods, services, ideas

Exchange process

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The Marketing EnvironmentThe Marketing Environment

Company

Microenvironment

Macroenvironment

Legal

Political

Technological

Social

Economic

Suppliers Customers

Distributors

Competitors

VMV

S W

O T

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WHY scan the environment?WHY scan the environment?

““Assessing the potential impact of likely changes in Assessing the potential impact of likely changes in the environment offers organisations an advantage the environment offers organisations an advantage over their competitors by enabling decision-makers to over their competitors by enabling decision-makers to narrow their range of options.narrow their range of options.

It is clear that, in a dynamic & complex business It is clear that, in a dynamic & complex business environment, attempting to forecast sometimes environment, attempting to forecast sometimes discontinuous trends is fraught with difficulty…..discontinuous trends is fraught with difficulty…..

However, However, to do nothing is even more dangerousto do nothing is even more dangerous for an organisation, as is over-reliance on internal for an organisation, as is over-reliance on internal sources of information, rather than sources of information, rather than external channels”external channels”

Scanning the environment

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Model 1 - Model 1 - Using Using PEST/PESTEL analysis to PEST/PESTEL analysis to

scan thescan the “MACRO” environment “MACRO” environment

ORGANISATIONORGANISATION

Legal

Political

Social

Ecological

Technological

Economic

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Some possible PEST factorsSome possible PEST factors Political / LegalPolitical / Legal

1.1. Deregulated marketsDeregulated markets2.2. Taxation policyTaxation policy3.3. International trade policyInternational trade policy4.4. Joint Ventures legislationJoint Ventures legislation

Social / Social / EcologicalEcological1.1. Population demographicsPopulation demographics

(household size, no of cars)(household size, no of cars)2.2. Income distributionIncome distribution3.3. Level of environmental Level of environmental

concernconcern4.4. Attitudes to work & leisureAttitudes to work & leisure5.5. Education levelsEducation levels

EconomicEconomic 1.1. Business cycleBusiness cycle2.2. Interest rates / inflationInterest rates / inflation3.3. Unemployment levelUnemployment level4.4. Raw materials availabilityRaw materials availability5.5. Disposable incomeDisposable income

TechnologicalTechnological1.1. Govt spending on researchGovt spending on research2.2. Speed of take-up of new Speed of take-up of new

technologytechnology3.3. Barriers to entry Barriers to entry 4.4. Impact of InternetImpact of Internet5.5. Merging of “ unrelated” Merging of “ unrelated”

sectors e.g. banks & sectors e.g. banks & telecommstelecomms

Note: EXAMPLES ONLY!

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Model 2 – Using 5 Forces analysis to scan the “MICRO” environment

IndustryIndustryCompetitorsCompetitors

Intensity ofIntensity ofRivalryRivalry

BuyersSuppliers

NewEntrants

Substitutes

Threat ofThreat ofNew EntrantsNew Entrants

Threat ofThreat ofSubstitutesSubstitutes

BargainingBargainingPower ofPower ofSuppliersSuppliers

BargainingBargainingPower ofPower ofBuyersBuyers

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5 Forces example: 5 Forces example: (Mobile phones)(Mobile phones)

StrongAirtel

RelianceVodaphone

WeakCost of licence

High barrier to entryHuge cost to 3G New functions?

StrongCustomers have many competing offers, some

including airtime, some not.

Cheap deals throughInternet

WeakNokia

MotorolaEricsson

Competing stronglyFor share of

Mature market

MediumCustomers returning to

land linesConvergence with PDAs

Location technology

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Basic information we needBasic information we need Who are they?Who are they? Who could they/should Who could they/should

they be? they be? How are their How are their

needs/expectations needs/expectations met?met?

How loyal are they?How loyal are they? How do they rate the How do they rate the

company – company – product/price/serviceproduct/price/service

How do they rate the How do they rate the company in relation to company in relation to the competition?the competition?

What relevant broad What relevant broad macro changes are macro changes are taking place?taking place?

Who are they and what Who are they and what are their objectives?are their objectives?

Are they likely to Are they likely to change?change?

What is happening to What is happening to market share?market share?

Can we compare our Can we compare our profitability with their profitability with their profitability?profitability?

What are their strengths What are their strengths and weaknesses?and weaknesses?

How do customers rate How do customers rate the competition in the competition in relation to our relation to our company?company?

What will provoke the What will provoke the biggest retaliation from biggest retaliation from the competition?the competition?

CUSTOMERS COMPETITORS

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Internal analysisInternal analysis

What are we doing right?What are we doing right?What are we doing wrong?What are we doing wrong?What are our internal strengths?What are our internal strengths?What are our internal weaknesses?What are our internal weaknesses?

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Use the preceding steps to help complete the SWOT.Use the preceding steps to help complete the SWOT. SWOT should come at end of Marketing Audit and SWOT should come at end of Marketing Audit and

summarize it.summarize it. Highlight the key issues from the SWOT, - summary Highlight the key issues from the SWOT, - summary

of the issues and implications for the company.of the issues and implications for the company.

• Should provide a Should provide a succinct, interesting and readablesuccinct, interesting and readable summary of the state of the business and the external factors summary of the state of the business and the external factors and trends impacting on it.and trends impacting on it.

• Beware! Inherent simplicity of the technique is often its Beware! Inherent simplicity of the technique is often its undoingundoing

• Can become vague, confused, irrelevant, lacking in directionCan become vague, confused, irrelevant, lacking in direction• A strength is only a truly a strength if you are stronger than A strength is only a truly a strength if you are stronger than

your competitors on that attributeyour competitors on that attribute

Bringing Macro/Micro/Internal information Bringing Macro/Micro/Internal information together - Marketing Audit Summary – together - Marketing Audit Summary –

Model 3 - Model 3 - SWOTSWOT

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An example of a SWOTAn example of a SWOT

• StrengthsStrengths• Strong market research Strong market research

teamsteams• Distribution networkDistribution network• Strong financial resourcesStrong financial resources• Service ReputationService Reputation

• OpportunitiesOpportunities• Deregulated markets for Deregulated markets for

utilities utilities • Competitors prices rising Competitors prices rising

due to currency fluctuationdue to currency fluctuation• Strategic alliance Strategic alliance

possibilitiespossibilities

• Weaknesses Weaknesses • Admin costs 20% Admin costs 20%

higher in UK than higher in UK than elsewhereelsewhere

• Major competitors Major competitors more innovativemore innovative

• Little synergy between Little synergy between divisionsdivisions

• ThreatsThreats• EC widening may bring EC widening may bring

in low cost competitorsin low cost competitors• Business activity in Business activity in

world economy world economy starting to slowstarting to slow

Effective use of SWOTEffective use of SWOT

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

MatchingStrategies

ConversionStrategies

ConversionStrategies

Model 4Model 4 - The - The Marketing PlanMarketing Plan

Corporate objectives

Marketing audit

SWOT

Marketing objectives/strategies

Alternative plans/mix

Programmes

Measure/review

Assumptions

Estimate results

FEEDBACK

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10 benefits for you from Marketing 10 benefits for you from Marketing PlanningPlanning

1.1. Hitting the Hitting the bestbest customer targets customer targets2.2. Winning new customersWinning new customers3.3. Expanding marketsExpanding markets4.4. Beating the competitionBeating the competition5.5. Keeping abreast of market developmentsKeeping abreast of market developments6.6. Using resources to best advantageUsing resources to best advantage7.7. Improving internal communicationsImproving internal communications8.8. Minimising threats to Reduce risk and Minimising threats to Reduce risk and

surprisesurprise9.9. Identifying company strengths Identifying company strengths

and weaknessesand weaknesses10.10. Achieving consistencyAchieving consistency

It looks like hard work – why bother?