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Introduction to Marketing

Professor Andrés MusalemMarketing Management

Fuqua School of Business

Introduction What’s

Marketing? Three C’s

Customer Company Competition

Four P’s Product Promotion Price Placement

Summary

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Let’s start with a simple word association task…

MARKETING

In-class exercise:

Write down the first WORD that comes to mind

Does Marketing Matter?

Does Marketing Matter?

Background:

Santiago, Chile

Ph.D., Wharton

Ind. Engineering

How long?

MBA, U. of Chile

Find x:

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Research: Quantitative Marketing

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Teaching Interests:

Market Research Pricing Marketing Management GATE (global academic travel experience):

South America Marketing Practicum:

Hobbies:

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Agenda

Teaching Philosophy Course overview Ford Ka Marketing management

Analysis (The 3 C’s) Planning (The 4 P’s)

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Teaching Philosophy

Lesson first, Problem second versus

Problem first, Lesson second

“Experience is a hard teacher because she gives the test first, the lesson afterward.”

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Course OverviewGoals:

1. Have fun & get you to learn.

2. Frameworks: Marketing Situation Analysis:

Company, Customer, and Competition Marketing Planning and Implementation:

Price, Promotion, Place, Product

3. Tools: Perceptions, Preferences, Customer Lifetime Value,

Economic Value, Brand Associations, Diffusion of new products.

4. Skills: Case analysis Group effectiveness Idea Communication

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Course Overview Syllabus

Class format Lectures and cases.

Grading Cases, participation, final exam Graded assignments: weekend following discussion.

Course Materials: Required: Cases and some articles (see syllabus) Optional: Textbook, press articles in course pack.

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Study Teams

Action: Name a representative who will be responsible

for submitting assignments.

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Team Member Name

Effort level Effectiveness

Total 100% 100%

Peer Evaluation

Your Name: ___________________________________________Team number : ______________________________________________In the chart below, write in the name of each team member, including

yourself. Estimate the relative effort level and the amount that each team member contributed to the effectiveness. The first column should indicate relative effort and work level while the second column indicates the degree to which each individual contributed to the success of your team.

Your estimates can range from 0% to 100% but should sum to 100%.

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Honor Code

We take it very seriously It benefits students

Best cases, problems Equal playing field Coordination with other classes

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You may not get information on cases from Fuqua students in other classes or study

groups Students or resources at other schools Electronic means

You may not give the information to others at Duke or elsewhere

Your support is critical for this policy

Honor Code

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Administrative Issues:

Platform: Announcements Assignment submission Handouts and other materials

Seating Chart

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Roadmap for the rest of course

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Frameworks:

Marketing Situation Analysis• Company, Customer, and Competition (3C’s)

Marketing Planning• Price, Promotion, Place, Product (4P’s)

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Who are the customers?

Why do they buy (Value Proposition)? Economic value to the customer: Cost-Benefit Understanding customer psychology: Intangibles What are they sensitive to (e.g., price, features, etc.)

How many?

Lifetime value, loyalty, customer satisfaction.

Frameworks: 3 C’s - Customers

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Customer Analysis: RFID

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Customer Analysis: RFID

Sorensen Associates: RFID

technology to track shoppers path inside grocery stores. (PathTracker®)

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Frameworks: 3C’s - Company

Company Strategy: Mission, Objectives Portfolio Analysis:

Identify SBU’s Evaluate SBU’s: for example, BCG, GE matrices.

Portfolio Design: Build a pipeline of SBU’s at different stages Portfolio growth: expand new/existing

products/markets.?

Market Growth Rate

Relative Market Share

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Identify Competitors Industry Analysis (5 Forces) Strengths Weaknesses - Opportunities

Threats: SW: Company versus Competitors OT: Industry

Competitive reactions

Frameworks: 3C’s - Competition

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Southwest Effect: Competitive Reactions

1. Increase in passengers per day each way (PDEW )

2. Drop in average fare3. Effects on surrounding airports (lower

demand)

BWI-SDF Fares and PDEW

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997

Fares

PDEW

Source: Southwest Airlines: An In-Depth Review

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How might the 3 C’s vary by country?

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Combining the 3 C’s

Wal*Mart quits Germany (85 stores, $2.55 billion, 2006):

Customers? Competition?

Company?

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Integration4P’s 3C’s

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Integration:

3C’s 4P’sWhat’s the right

price for Angiomax?

How should Ford promote the adoption of the Ford

Ka?

Should Starbucks invest in

improving its customer service?

Should Team Sameer use a

traditional promotional approach?

Should XM air ads? Should

Unilever launch a new product for

the low income

segment in Brazil?

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4P’s: Marketing Planning -

Price, Promotion, Place, Product

4P’s: Marketing Planning -

Product, Price, Place, Promotion

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Define the product Core benefit—essence Basic, Expected, Augmented and Potential Product First Mover Advantage

Frameworks: 4P’s - Product

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Price is the only P that captures valueÞ Small changes in price lead to major profit impact

The issues What is the value to customers of the benefits the

product provides? How much does it cost to deliver these benefits? How much do or will customers have to pay to get these

same or substitute benefits elsewhere (i.e., from competitors)?

Frameworks: 4P’s – Pricing

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Importance of Pricing(Price leverage for selected firms)*

Creates operating profit improvement of:

28.7%

26%

16.7%

6.4%

*From Dolan and Simon (1996)

1% improvement in price at

17.5%

Philips

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Channels exist when they are more efficient than direct distribution:

Channel decisions/issues: Channel depth Channel breadth Channel conflict/coordination

M

M

M

C

C

CD

Manufacturer

Consumers

Manufacturer StoreRetailer

Frameworks: 4P’s – Place

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Frameworks: 4P’s - Promotion The promotional plan: Target market Objectives Message Media Mix Budget Measure the results Coordinate the process

Awareness Interest Desire Action

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Promotion and Brand Associations

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Profitability (A Reality Check)

Are assumptions realistic? Breakeven analysis

Can we sell breakeven volume at given price?

How are other company businesses affected (cannibalization)?