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KENT 31KENT 31
BAD 67051BAD 67051Marketing ManagementMarketing Management
Lecture 1Marketing Management Thinking,
Decision Making,& Positioning
Marketing DefinedMarketing 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 ManagementMarketing 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 ManagementMarketing Management
A. Definition 2Marketing Management is the management of “innovative and imitative processes” to identify and satisfy consumers cost effectively.
Don Kosec, TWC Business Don Kosec, TWC Business ServicesServices
Kosec…Importance of Marketing to Kosec…Importance of Marketing to Time Warner Business ServicesTime 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 II. Marketing Management PhilosophiesPhilosophies
• A. Production Concept
A. Production ConceptA. 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 ConceptB. 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 ConceptC. 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 ConceptD. 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 ConceptD. 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: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 E. The Societal Marketing ConceptConcept
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 III. The Marketing Concept and:and:
A. Synergy–Managers must create
marketing tactics that fit together well.
–They must coordinate implementation.
III. The Marketing Concept III. The Marketing Concept and: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.
C. Cross Functional Decision Making Teams
III. The Marketing Concept and:III. The Marketing Concept and:
Market OrientationMarket Orientation
Customer Orientation
CompetitorOrientation
Interfunctional Coordination
PROFITS
Target Market
IV. Strategic PlanningIV. 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 PlanningIV. 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 MissionB. Setting Company Objectives and
GoalsC. Corporate Strategies
Mission StatementMission 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.html2-21
Dan Muller, President, Dan Muller, President, Distribution and Services, TimkenDistribution and Services, Timken
Mission/Vision at TimkenMission/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 DirectionsXI. 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 DirectionsSetting Strategic Directions
b) Where do we want to go?
i. Grow?
ii. Sustain?
iii. Divest?
iv. Invest?
Use Portfolio Analysis to help figure it out
2-25
Products Markets
Present Products
New Products
Present Customers
Market Penetration (more of same products to same market)
Product Development (new product to same market)
New Customers
Market Development/ Expansion (same product to new market)
Diversification (new product into new markets)
V. Types of Corporate V. Types of Corporate GROWTH StrategiesGROWTH Strategies
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets–1. Market Penetration
Market PenetrationMarket Penetration
• Increase sales of EXISTING products in CURRENT markets.
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets– 1. Market Penetration
–2. Product Development
Product DevelopmentProduct DevelopmentDevelop 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 V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets1. Market Penetration2. Product Development
B. Growth Strategies for New Markets1. Market Development
Market DevelopmentMarket Development
• Bring CURRENT products to NEW markets
• (e.g., Arm & Hammer)
V. Types of Corporate V. Types of Corporate StrategiesStrategies
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 ExpansionMarket Expansion
• Taking CURRENT products to NEW DOMESTIC geographic areas
• International Expansion–Regional strategy–Multinational strategy–Global strategy
V. Types of Corporate V. Types of Corporate StrategiesStrategies
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
DiversificationDiversification
• Taking NEW PRODUCTS to NEW MARKETS
• (e.g., Arm and Hammer Toothpaste)
V. Types of Corporate V. Types of Corporate StrategiesStrategies
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 AlliancesStrategic Alliances
• Total collaboration by EXCHANGING key resources to enhance companies’ performance.
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current MarketsB. Growth Strategies for New Markets
C. Consolidation Strategies–1. Retrenchment
RetrenchmentRetrenchment
• WITHDRAW from WEAKER current markets
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New MarketsC. Consolidation Strategies
– 1. Retrenchment
–2. Pruning
PRUNINGPRUNING
• REDUCE the number of PRODUCTS offered in current markets
V. Types of Corporate V. Types of Corporate StrategiesStrategies
A. Growth Strategies for Current MarketsB. Growth Strategies for New MarketsC. Consolidation Strategies
– 1. Retrenchment– 2. Pruning
–3. Divestment
DivestmentDivestment
• Selling off part of the business -- ELIMINATE a product and a current market.
V. Types of Corporate StrategiesV. Types of Corporate Strategies
A. Growth Strategies for Current Markets
B. Growth Strategies for New Markets
C. Consolidation Strategies
D. Other Strategies
Other StrategiesOther 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 StrategiesOther Strategies2. 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 VI. Product Portfolio Models
A. The Boston Consulting Group Growth-Share Matrix
(See P&D page 25)
The BCG ModelThe BCG Model
STAR
CASH COW
PROBLEMCHILD
DOG
Market-Growth
Rate
High
10%
Low
0%
Market Dominance10X High Low 0.1X
The BCG Model in the Music Industry – The BCG Model in the Music Industry – Def Jam’s Portfolio of ArtistsDef Jam’s Portfolio of Artists
STAR
CASH COW
PROBLEMCHILD
DOG
Market-Growth
Rate
High
10%
Low
0%
Market Dominance10X High Low 0.1X
2-50
Kanye West
Jay-Z
The Dream
Playaz Circle
LL COOL J
Ne-Yo
The BCG Model -- Cash CowsThe BCG Model -- Cash CowsDominant 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 -- DogsThe 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 The BCG Model -- Problem ChildrenChildren
Low Market Share in High Growth Market– High Growth Sales– Weak Profits– Typically, require additional Cash to
become Dominant
The BCG Model -- StarThe 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 ColaThe BCG Model and Coca Cola
STAR
CASH COW
PROBLEMCHILD
DOG
Market-Growth
Rate
High
10%
Low
0%
Market Dominance10X High Low 0.1X
2-55
Dasani Full Throttle
Coca-Cola ClassicHi-C Coke Blak
B. The Directional Policy MatrixB. The Directional Policy MatrixCompetitive Position
MarketAttractiveness
High
Medium
Low
MediumStrong Weak
MaintainLeadership
ChallengeLeader
Cash Generator
ChallengeLeader
Manage forEarnings
Harvest
Harvest
Divest
Overcome,Niche, orQuit
XIV. Tracking Strategic Directions XIV. Tracking Strategic Directions with Marketing Dashboardswith 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 XIV. Tracking Strategic Directions with Marketing Dashboardswith Marketing Dashboards
b) iDashboards – Driving Business Decisions (http://www.idashboards.com/)
2-58
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing 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 XV. The Strategic Marketing ProcessProcess
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 SWOTHunt 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 SWOTb. ACTIONS based on SWOT
Type of Factor
Location of Factor
Favorable Unfavorable
INTERNAL
Strength Weakness
EXTERNAL
Opportunity Threat
CONVERT
Convert/Avoid
MATCH
MATCH
2-62
VII. Marketing Management & the Marketing PlanVII. Marketing Management & the Marketing Plan (P&D p.16-17)(P&D p.16-17)
CUSTOMER
VII. Marketing Management & the VII. Marketing Management & the Marketing PlanMarketing Plan
B. Develop a plan
•Establish Objectives
•Select the Target Market
•Develop the Marketing Mix
THE MARKETING MIXTHE MARKETING MIX
PROMOTION
PRODUCT
PRICE
PLACE
(Distribution)
CONSUMER
(Target Market)(Good, Service, Idea)
(Integrated Marketing Communications)
(Value)
VIII. Marketing Research: VIII. Marketing Research: Process and Systems for Process and Systems for
Decision MakingDecision Making
Research and Intelligence provide information necessary to clarify the “unknown.”
II. Environmental Factors Affecting II. Environmental Factors Affecting The OrganizationThe Organization
Competition
Regulatory
Economic
Technology Social
PROMOTION
PRODUCT
PRICE
PLACECONSUMERCoop-erative
Michael Scott, Head Chief, Dunder MifflinMichael 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 IntelligenceSources of Market Intelligence
A. Secondary Data
Data previously collected by someone else for a purpose other than the one at hand
Sources of Market IntelligenceSources 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 IntelligenceSources of Market Intelligence
B. Primary Data
Data gathered and analyzed specifically for the purpose at hand
Sources of Market IntelligenceSources of Market IntelligenceC. Types of Primary Data1. 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
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
Sources of Market IntelligenceSources of Market IntelligenceC. Types of Primary Data4. Other
–Trade Shows–Reverse Engineering
5. Research Firms:Marketing Research Companies atGreenBook (http://www.greenbook.org/ )
IX. Decision Support SystemsIX. 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.
MarketingIntelligence
Internal recordsand reports
MarketingResearch
Database
Data Collection System Decision Support System
Analytic Models
InteractionSystem
IX. Decision Support Systems
IX. Decision Support SystemsIX. Decision Support SystemsB. 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 X. Hypercompetitive Market ResearchResearch
Cross functional teams continuously stay in close touch with lead consumers and suppliers
XI. Global Market ResearchXI. Global Market ResearchA. 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 ResearchXI. 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 SegmentationXII. Market SegmentationA. 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.
Need for Speed
Family Mobile
Entry-level Car
• So, the members of each segment are similar with respect to the factors that influence demand (and different from one another)
C. Basic Strategies
1. Undifferentiated Marketing
(Market Aggregation,
Mass Marketing)
Product
Price Place
Price
The firm
TheTarget Marketxxxxxxxxxx
Undifferentiated Marketing
Ford Motor Co. in 1925Ford Motor Co. in 1925
Model
T
Model
T
Model
T
Model
T
Model
T
Model
T
Model
T
Model
T
Model
T
C. Basic StrategiesC. Basic Strategies
2. Differentiated Marketing
Segment the market and create different marketing mixes for each.
(e.g., Church & Dwight Co.)
Product
Price Place
Price
The firm
Product
Price Place
Price
Product
Price Place
Price
Segment 1
Segment 2
Segment 3
Focus Fusion Mustang
Taurus
Escape Thunderbird Ford GT
EdgeFusion Hybrid
Ford Motor Co. Todayhttp://www.fordvehicles.com/cars/
C. Basic StrategiesC. Basic Strategies
3. Concentrated Marketing
Segment the market and create a marketing mix for only one (or a few) segments.
Product
Price Place
Price
The firm
Segment 1
Segment 2
Segment 3
Concentrated or NicheMarketing
C. Basic StrategiesC. Basic Strategies
4. “Atomization”
Create a separate marketing mix for EACH customer
(Mass customization)
D. Segmenting Consumer D. Segmenting Consumer MarketsMarkets
1. Based on Consumer Characteristicsa. Geographic Segmentation
• Regional: NE, SW, Midwest• Size: County, City, SMSA• Density: Rural, Suburban, Urban• Climate
D. Segmenting Consumer D. Segmenting Consumer MarketsMarkets
1. Based on Consumer Characteristics
b. Demographic Segmentation• Age, sex, family size, family life cycle, income, occupation, education, religion, race, nationality
Demographic Targeting by AgeDemographic Targeting by Age
Crest targets adults with the ad and product on the left, and children with the ad and product on right.
30 35 40 45 50 55 60 65
$100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
JaguarMercedes
PorcheAudi
LincolnCadillac
Saab BMW
Volvo
Acura
MercuryBuick Chrysler
Oldsmobile
FordPlymouth Chevrolet
DodgeRenault
Yugo
Hyundai
Mazda Honda Toyota
Peugeot
Alfa Romeo
Media Household Income
Median Age of BuyersJuly 1988
D. Segmenting Consumer Markets
1. Based on Consumer Characteristics
c. Psychographic Segmentation• Personality• Psychology• Life Style
D. Segmenting Consumer D. Segmenting Consumer MarketsMarkets
1. Based on Consumer Characteristicsc. Psychographic Segmentation
• VALS/VALS2• http://www.strategicbusinessinsights.com/vals/
presurvey.shtml
• PRIZM– http://www.clusterbigip1.claritas.com/MyBestSegments/Defaul
t.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. Size of the account
2. Growth potential
3. Benefits sought
4. Usage Situation
5. SIC codes
Muller on Segmentation at TimkenMuller on Segmentation at TimkenPrimarily 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?F. Is It a “GOOD” Segment?
1. Is it Measurable?
2. Is it Meaningful?
3. Can it be Reached?