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Marketing 5210Session 1
Tony Palcheck Lake Forest Graduate School of Management
August 23, 2010
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Marketing 5210Session 1 - Agenda
1.Introductions2.Course Description
3.The Kotler bible4.Voorn text5.Grading6.Expectations
7.What is Marketing?8.Developing Marketing Strategies and Plans
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Marketing 5210Course Description Week by Week
Week # Topic
1. Introduction to Marketing2. Market Research and Analysis
Customer research
Competitor research
3. Marketing Strategy4. Product Positioning and Differentiation5. Product and Service Strategy6. Channel and Distribution Strategy7. Integrated Marketing Communications
Advertising, PR, Direct Mail, Sponsorship, Events8. Pricing Strategy9. Global Marketing and Ethics presentation preparation10.Presentations
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Marketing 5210The Marketing Pyramid
Market Research and Analysis (Weeks 1+2)
Marketing Strategy and Tactics
CreatingValue (Weeks 4,5,8)Product Positioning
DifferentiationProduct and Service Strategy
Pricing Strategy
CommunicatingValue (Week 7)
Integrated MarketingCommunications
Advertising, PR, DirectMail, Sponsorships, Events
DeliveringValue (Week 6)
Channel andDistribution Strategy
Execution
Customer researchMarket Structure andLandscape Analysis
Competitor research
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The Kotler Bible, the additionalreadings and Voorn Text
1. The Kotler Book is THE best marketing book out there
2. It IS long and takes time to read
3. While I wont cover everything in the book, I will generally follow
it
4. Some of it is repetitive
5. Voorns information will help you structure your marketing plan
6. The readings are a bit old, but the information is timeless
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Assignments Due
Kotler chapter Articles Case Studies
1 1,2 Several ----
2 3,4,5 (skim 6, 11) Several Eastman Kodak Funtime Film
1 paragraph Connectionsprospectus
3 8 (skim 6,7) Several Colgate - Palmolive 1 page prospectus of Marketing
Plan4 9,10 Several Land Rover Land Rover case analysis
5 12,13
Several Black and Decker
6 15 (skim 16) Several Autobytel Autobytel case analysis
7 17,18 (skim 19) Several Heineken
8 14 Several The pricing predicament Connections paper
9 21,22 (skim20) Several -----
10 ---- ----- 30 page Marketing plan
Week Readings Papers Due
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The Marketing Plan AssignmentSchedule your time wisely!
Week TASK TASK
Week 1 FORM TEAMSBRAINSTORMING IDEAS FOR A PRODUCT OR SERVICE
Week 2 FINALIZE PRODUCT/SERVICE SELECTION (WITHINSTRUCTOR APPROVAL)
BEGIN PROJECT PLANNING AND DIVISION OF LABOR
Week 3 CONDUCT SECONDARY RESEARCH ASSESS THE INDUSTRY/MARKET AND ENVIRONMENTALFACTORS
Week 4 CONSTRUCT SURVEYCONDUCT PRIMARY RESEARCH
IDENTIFY CUSTOMER SEGMENTS AND ANALYZECONSUMER BEHAVIOR
Week 5 CONDUCT PRIMARY RESEARCHANALYZE SURVEY RESULTSANALYZE THE COMPETITION
SELECT SEGMENTS TO BE TARGETEDDEVELOP POSITIONING STRATEGY
Week 6 FORMULATE PROJECT OBJECTIVESDETERMINE YOUR COMPETITIVE ADVANTAGE & VALUEPROPOSITION
FINALIZE POSITIONING STATEMENTDEVELOP POSITIONING MAPS
Week 7 DEVELOP FOR PRODUCT AND CHANNEL STRATEGIES ANDACTION PLANS
Week 8 DEVELOP INTEGRATED COMMUNICATIONS AND PRICINGSTRATEGIES AND ACTION PLANS
FOR SERVICES, ALSO DEVELOP STRATEGIES AND ACTIONPLANS FOR PEOPLE, PROCESSES, AND THE PHYSICALENVIRONMENT
Week 9 DEVELOP FINANCIAL STATEMENTSDETERMINE CONTROLS AND CONTINGENCIES
FINALIZE PRESENTATION AND PLAN DOCUMENT (WHICHMUST INCLUDE DETAILED NARRATIVES DESCRIBING &SUPPORTING YOUR MARKETING MIX ACTION PLANS)
Week 10 PRESENT PLAN TO PANEL OF MARKETING EXPERTS
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Grading
% of Grade Assignment to be Graded
20% Class Participation
30% Case Studies 2 at 15% each
15% Connections Assignment
35% Marketing Plan
Letter Grade Numeric RangeA 100 95.0A- < 95.0 92.0B+ < 92.0 89.0
B < 89.0 86.0B- < 86.0 83.0C+ < 83.0 80.0
Letter Grade Numeric RangeC < 80.0 77.0C- < 77.0 74.0D+ < 74.0 71.0
D < 71.0 68.0D- < 68.0- 65.0F < 65.0 0
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Expectations
1. The course is hard
2. There is a ton of reading
3. I know you have jobs, families, lives
4. You must contribute to your team and the class
5. You need to be in class to do that and earn your grade
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To pass this course
To pass this course, you must be able to:
1. Understand marketing in a global environment and its integrative role inorganizations.
2. Assess the marketing environment as a foundation for marketing strategydevelopment.
3. Construct an effective marketing strategy based on competitive advantagesand sound market positioning.
4. Develop tactical marketing mix components that drive an overall marketingprogram, including integrated, marketing communications.
5. Identify, evaluate, and formulate solutions to marketing problems utilizingcritical thinking skills.
6. Integrate marketing decisions into a real-world marketing plan for a productor service.
7.
1.
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Why does a Business Existand where does Marketing Fit in?
Times
Minus
Times
Divided by
This is why businesses exist!
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Why does a Business Existand where does Marketing Fit in?
Minus
Times
Times
These numbers these marketing decisionsAre driven by
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Expectations
1. Why are you here? Why did you want to get your MBA?
Why did you choose Lake Forest?
2. What do you want out of the class?
A good grade
Learning
3. What could I do to make this the best course you have
taken at Lake Forest?4. What could I do to ensure you are getting the best value
for your investment of time and money?
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Outline
1.What is Marketing?2.What gets marketed?3.Marketing is a core part of any business
All functions in a business
All products
4.Strategy development Strategic Marketing framework The Marketing plan
5.Understanding the macro environment6.Assessment tools7.The 3Cs and 4 Ps
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The Point of Marketing?
The aim of marketing is to know and understand the customer so well, the product or service fits himand sells itself. Peter Drucker
Were obviously going to spend a lot in marketing because we think the product sells itself JimAllchin, Microsoft
In the factory we make cosmetics; in the drugstore we sell hope - Charles Revlon
The point of marketing, is to make selling unnecessary - unknown
The most important thing we do is market the product. We've come around to saying that Nike is amarketing-oriented company, and the product is our most important marketing tool - Phil Knight,CEO Nike
Yes, I sell people things they don't need. I can't, however, sell them something they don't want. -
John OToole
Selling focuses on the needs of the seller; marketing focuses on the needs of the buyer. -Theodore Levitt, Harvard
Marketing is far too important to leave to the marketing department - David Packard, HP
The purpose of marketing is to sell more stuff to more people more often for more money in order tomake more profits - Sergio Zyman, Coca Cola
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What is Marketing?
1. Marketing is the process of planning and executing the conception,pricing, promotion and distribution of ideas, goods and servicesto create exchanges that satisfy individual and organizationobjectives. - American Marketing Association
2. Marketing is the art of creating, satisfying (and retaining) customers
at a profit.Peter Drucker3. Marketing views the entire business process as consisting of a tightly
integrated effort to discover, create, arouse and satisfy customerneeds. -Ted Levitt in Marketing Myopia
4. The marketing concept holds that the key to achieving organizational
goals consists in determining the needs and wants of targetmarkets and delivering the desired satisfactions more effectivelyand efficiently than competitors. Phil Kotler
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5 Core Business Processesthat all require marketing support
Core Process Description Marketing Job TitleMarket Sensing Gather and disseminate marketing
intelligenceMarket research
Product Development R&D, engineering, product
management to launch a newproduct
Product management,
Market management,Promotions
Customer acquisition Defining the target and prospectingfor customers
Product marketing,Telemarketing, Sales
Customer relationship
management
Developing the relationships to
understand their needs and sell themproducts
Sales
Fulfillment management The exchange of product for money Customer service, Marketresearch
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What Gets Marketed?
Goods
Services
Events Experiences
People
Places
Properties
OrganizationsIdeas
Information
Is fast food a product or a service?
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5 types of Needs
Type of Need Description Example
Stated What we say Inexpensive car
Real What we mean Low operating costs, notjust initial cost
Unstated What we expect Great service, in addition tolow price
Delight What the seller can do
above and beyond
Throw in the warranty and
navigation system
Secret How we want to beperceived
Smart, savvy customer
How can a marketing person pick up on all those needs?
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HolisticMarketing
MarketingSellingProductProduction
The Evolution of Marketing in an Organization
Volume orientedLow costMass distribution
Feature/performanceoriented
Better mousetrapmentality
Push mentalitySell what you
can
Shorter termthinking
Customer centricview
Some
customizationKnowledge of
competitors
Everyone in thecompany is involvedin marketing
Customer dialoguesEmbraces channel
partnersWin-win-win
Where is your company today?
The continuum of organization philosophies on marketing
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The Strategy Development Process
BusinessMission
External andInternal
environmentassessment
Goalformulation
StrategyformulationProgram
formulation
Feedback& Control
Implementation
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Strategic Marketing Framework
Research the Market Environment Economic, Demographic, Psychographic,Social, Regulatory, Political, Growth rate,Market Trends
The 3 Cs, or maybe 4ConsumersCustomersCompetitors
Company Internal research
External research
SWOT
STP
SegmentationTargetingPositioning
ProductPricePlacePromotion
The 4 Ps
Strategic Decisionsi.e. What to do?
Tactical Decisionsi.e. How to do it?
Service operations have 3 more Ps
PeopleProcessPhysical Environment
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5 Elements of the Marketing Plan
Situational analysis Demographics - Customer research Political - Competitor analysis Social - Market research
Strategy formulation Segments to pursue - Positioning of product
Product differentiation - Anticipate competitive response 4Ps in principle for each target market
Planning, Organizing, Budgeting Funding issues - Selling the story to management Staffing issues - 4Ps in great detail
Marketing Implementation Mobilizing resources - Coordinating channel members Engaging customers - Coordinating ads, IMC, etc.
Assessing Performance Feedback from customers - Fine-tuning
Feedback from channels - Innovating Internal situation - Address questions of effectiveness and efficiency
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Judging Your Marketing Plan inWeek 10
Environmental Macro SWOT Competitors Market Position
Market Research
Primary Secondary Strategy
Objectives Segmentation Targeting Positioning Sustainability
Tactics (4Ps) Product/Service Channels Promotion Pricing Alignment Specificity
Financials
Control and Contingencies
Minimal Emerging Competent Exemplary
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The Macro Environment
The digital age informationeverywhere
The global market
Deregulation,privatization
Intense Competition
Product and serviceconvergence digital
and other Clutter and saturation -
advertising andmarketing
Shifts in retailing
ExternalInformation and
technology give themmore buying powerand greater productintelligence
Multiple ways to buy
Incredible array ofavailable good andservices
Have the means tocommunicate backand share informationwith other consumers
ConsumersBetter market
research tools
More communicationschannels
More distributionoutlets
Specialization
Greater talent
Ability to customizeproducts andsolutions
Companies
D fi M k t t j t
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Define a Market, not just aProduct
Company Product Definition Market Definition (serving acustomer need)
Missouri PacificRailroad
Railroad People and goods mover
Xerox Copying Equipment Improve office productivity
Standard Oil Sell gas Supply energy
Columbia Pictures Make Movies Market entertainment
Encyclopedia
Brittanica
Sell Encyclopedias Distribute information
YOUR COMPANY ?? ??
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Product IssuesThe 3 Cs
Positioning =Differentiation+ Segmentation
CompetitorsCompany
Standardized Customized
Customer
Cost and Complexity
Degree of Customization
Breadth of product line
Few ManyCost and Complexity
Constant conflict
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Tools for Assessing Growth Opportunities
Current Products New Products
CurrentMarket
Market-penetrationstrategy
Productdevelopmentstrategy
New
Markets
Market
developmentstrategy
Diversification
strategy
High
Low
HighLow
Probability of Success
Attra
ctiv
enessof
Market
Assessing the Attractiveness ofan Opportunity
High
Low
HighLow
Probability of Occurrence
Assessing athreat
S
eriousn
ess
Planning for Growth
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Market Selection Segmentation,Targeting, Positioning
What markets should we serve? Most important decision Define your strengths and weaknesses vs. environment and
competitorsWhat form should the product take? How value-added? Do we compete on price? May compete with customers or upset suppliers
What should the product do for the user? What is the cluster of benefits Differential advantageFor whom is the product most important? Would like to select that segment Market research is necessary
Some basic questions to ask
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The 4 Ps
Marketing is satisfying the needs of the customersby means of the product and the whole cluster ofthings associated with creating, delivering, andfinally consuming it. - Theodore Levitt, Harvard
Th 4 P
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The 4 Ps(the whole cluster of things)
The 4Ps do not exist in isolation, they are highly interdependent
ProductVarietyQualityDesignFeaturesBrand namePackagingSizesServicesWarranties
PriceListDiscounts,
coupons,rebates
Payment periodCredit Terms
PlaceChannelsCoverageLocationsInventoryDistribution
PromotionSalesAdvertisingPRDirect MarketingSponsorships
Productmanagement
Design, R&D
EngineeringManufacturingLogisticsSupply chainQA
FinanceCredit
Strategy andPlanning
TrafficWarehousing
AdvertisingPR
SalesDistributorsTechnical service
De
cisionstobe
made
Departments
thatma
ke
them
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Generic Strategies
Your company had better be able to say either1.They have cost leadership
2.They have performance (value) leadership3.They are the best in serving a specific segment of the
market
or you may need to start looking foryour next company
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Distribution Considerations
Channel structure depends on: the nature of the goods in question
the buying process used to acquire them the firms strategy and internal capabilities
Logistics, physical distribution are other important consideration
The channel decision is often the longest term decision you will makein marketing strategy
Indirect Direct
Exclusive
Selective
Intensive
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Pricing Issues
Pricing Philosophies
SkimScorched
Earth
Methods used to set prices:
1.Cost-based - simplest method, but can undermine profitability
2.Competition-based- may represent lower limit even more than cost-based,ignores product differentiation
3.Value-based - most sophisticated method, requires deep customer knowledge
Pricing itself conveys a message about the product
P i V l
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Price vs. ValueUnderstanding the real costs
Purchase Price + Time Lost in Transacting
+ Time Lost in Correcting Errors
+
Quality Variation +
Returns, Rejections +
Risk of Non-performance +
Cost of Ownership, Maintenance, Tech Service Needs
= Total Cost
Purchase price is only one component, not the whole enchilada!
Promotion Tactics
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Promotion TacticsPush vs. Pull
Push Trade promotion, spiffs Deals Special commissions for
distributors
Short term focus Price-oriented Volume-oriented
Sometimes tactics are driven by short-term problems/needs.Industrial marketers tend to rely too much on push
sales incentives are built around itshort term focus is a problem generally
PullAdvertisementsDemand creationFocus on customers customerLong term channel equity
Value-orientedProfit-oriented
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Communication Alternatives
HIGH
LOW
COST
National Account Management
Personal Selling with demo center
Trade shows
Industrial Stores
Telemarketing with catalog
Telemarketing
Catalog selling
Direct mail
Media ads in trade publications
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Trends
Trends
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Top 10 Marketing Trends
Maturity of markets in all developed countries
Slower growth, rising productivity overcapacity in many industries Must create demand growth, not just manage it as in the past
Must develop products and services customers didnt realize they needed and now cant dowithout
Parity products, parity price too many choices!
Must find new ways continually to augment and enhance
Uniqueness is critical, otherwise you just get back to parity
Customization by customer Rising customer expectations
Time pressure, time poverty
We sell to people not just companies
Lower prices are almost always expected Decline in marketing productivity
Sales forces are getting more important in creating, sustaining and communicating value. Alsogetting more costly
Purchasing staffs have been reduced. Customers are harder to reach
Must be easy to deal with. Reduction of vendor bases
500 TV channels coming, special interest magazines, DVRs as filter
Self-sufficiency fallacy (vertical integration in mainly a thing of the past)
Focus on core competencies and differential advantages; things done uniquely well
Farm out everything else, some fairly critical, but not central to mission
Switch fixed costs to variable wherever possible
More demands are being put on vendors, but less time to see them
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Top 10 Marketing Trends
Market fragmentation
Segments of one, not just large homogeneous clusters
Requires mass customization response
Customer Relationship Management is critical
Sales people must become consultants, value-merchants Acceleration of technology
Shorter product life cycles, shorter lead times
Power shift to retailers and to others closest to the actual customer
Helps competitors get better, faster
General speed-up of systems Rapid loss of competitive advantage
Third world suppliers often, patents are irrelevant
Info is freely available and cheaper to access
Core competencies become obsolete - must find new ones continually
Increasing Government regulation
Affects all developed countries
Industrialization as nuisance
Globalization
Standardization of quality, specs, ISO-9000, etc.
Standardization of pricing within limits
Fast info flow
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Changes in the Retail Environment
Wholesalers are an endangered species as retailers partner directly with manufacturers
Electronic channels continue to evolve
Share of mind competition continues to heat up: Down Up Network TV Cable TV Movies Videos
Newspapers Computer services Supermarkets Alternative formats
Private label will continue to grow, as the store becomes a brand to a great extent. Era ofexpansion is ending this is the era of market share battles.
Conventional retail formats are losing share to new ones: Category killers, supercenters,electronic shopping
Key is to operate on lower gross margins, lower operating expenses, less inventory, andfaster turns.
Boundaryless supply chains from production line to checkout line are evolving, driven inlarge part by the Internet.
Consumers are demanding more choice, consistency, convenience, and service for lesstime, money, effort, and risk
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Women wield market power
Consumers spend $3.5 Trillion annually and women control or influence: 83% of all purchase decisions 90% of new vehicle purchases 46% of mens wear 66% of home computers 82% of supermarket purchases
70% of appliance choices
Also keep in mind: Women handle 75% of family finances Home ownership by women has increased 25% in fifteen years Women represent 40% of business travelers, up from 1% in 1970 43% of persons with assets over $500,000 are women Less than 25% of new mothers quit working Women own 53% of all stock
Source: N.W. Ayers
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To Summarize
Marketing, done effectively, is more of an operating philosophy ofbusiness than merely a functional area and could/should toucheach other functional area.
The elements of the marketing plan include
Situational analysis
Strategy formulation
Planning, Organizing, Budgeting
Marketing Implementation
Assessing Performance
The rate of change in the world is accelerating on every dimension,and it is critical that our approach to customers changes as well
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Summary
Strategic Marketing Framework 5 Elements of the Marketing Plan
The 3 Cs The 4 Ps
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Assignments Due
Kotler chapter Articles Case Studies
1 1,2 Several ----
2 3,4,5 (skim 6, 11) Several Eastman Kodak Funtime Film
1 paragraph Connectionsprospectus
3 8 (skim 6,7) Several Colgate - Palmolive 1 page prospectus of Marketing Plan4 9,10 Several Land Rover Land Rover case analysis
5 12,13 Several Black and Decker
6 15 (skim 16) Several Autobytel Autobytel case analysis
7 17,18 (skim 19) Several Heineken
8 14 Several The pricing predicament Connections paper
9 21,22 (skim20) Several -----
10 ---- ----- 30 page Marketing plan
Week Readings Papers Due