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Chapter 1: An Overview of Marketing
Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1
What is Marketing?
What is Marketing?
• A Philosophy
• An Attitude
• A Perspective
• A Management Orientation
A Set of Activities
• Products
• Distribution
• Promotion
• Pricing
AMA: 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.
Exchange
At Least Two Parties
Something of Value
Communication and Delivery
Freedom to Accept or Reject
Desire to Deal with Other Party
Conditions for Exchange
People giving up
something to receive something they would
rather have.
What is Marketing?
Product
Price
Place
Promo
tion
ExchangeA B
Deliverin
g
Value
Communicating
Value
CreatingValueCustomer value
and beneficial relationships
Customer valueand beneficial relationships
The Four Marketing Management Philosophies
Production
Sales
Marketing
Societal
What can we make or do best?
How can we sell more aggressively?
What do customers want and need?
What do customers want and need, and how can we benefit society?
Orientation Focus
Achieving a Marketing Orientation
Obtain information about customers, competitors, and markets
Examine the information from a total business perspective
Determine how to deliver superior customer value
Implement actions to provide value to customers
Customer Value Requirements
Offer products that perform
Earn trust
Avoid unrealistic pricing
Give the buyer facts
Offer organization-wide commitment in service and after-sales support
Co-Creation
Sales vs. Marketing Orientations
Organization’sFocus
Firm’sBusiness
ForWhom?
Primary Profit Goal?
Tools to Achieve
Selling goods and services
Everybody Maximum sales volume
Primarily promotion
InwardSales
Orientation:
Market Orientation
:
Outward Coordinated use of all marketing activities
Customer satisfaction
Specific groups of people
Satisfying wants and needs
Why Study Marketing?
Why Study Marketing?
Plays an important role in society
Vital to business survival, profits and growth
Offers career opportunities
Affects your life every day
Chapter 2: Strategic Planning for Competitive Advantage
Copyright 2012 by Cengage Learning Inc. All Rights Reserved 12
The Nature of Strategic Planning
Understand the importance of strategic marketing
and know a basic outline for a marketing plan.
Strategic Planning
The managerial process of creating and maintaining a fit between the
organization’s objectives and resources and evolving market opportunities.
The goal is long-term profitability and growth.
Why Write a Marketing Plan?LOI
• Provides a basis for comparison of actual and expected performance
• Provides clearly stated activities to work toward common goals
• Serves as a reference for the success offuture activities
• Provides an examination of the marketing environment
• Allows entry into the marketplace with awareness
Marketing Plan Elements
Defining the Business Mission
• Answers the question, “What business are we in?”
• Focuses on the market(s) rather than the good or service
• Strategic Business Units (SBUs) may also have a mission statement
Southwest Airlines Mission Statement
Source: http://www.southwestairlines.com/about_swa/mission
Strategic Business Units (SBUs)
Characteristics:An SBU HAS…
• A distinct mission and specific target market
• Control over its resources• Its own competitors• Plans independent of other SBUs
SWOT Analysis
©South-Western College Publishing
SSWWOOTT
Things the company does well.Things the company does well.
Things the company does not do well.Things the company does not do well.
Conditions in the external environment that favor strengths.Conditions in the external environment that favor strengths.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Internal
External
Scanning the Marketing Environment
The process of continually acquiring/interpreting info on the events occurring outside the organization to identify and interpret potential trends.
Scanning the Marketing Environment
Marketing Objectives
Realistic
Measurable
Time specific
Compared to a benchmark
“Our objective is to increase sales of Purina
brand cat food by 15 percent over 2009 sales of
$300 million.”
Criteria for Good Marketing Objectives
Realistic, measurable, and time-specific objectives consistent with the firm’s objectives:
1. Communicate marketing management philosophy
2. Provide management direction
3. Motivate employees
4. Force executives to think clearly
5. Allow for better evaluation of results
Competitive Advantage
Niche StrategiesNiche Strategies
CostCost
Product/Service Differentiation
Product/Service Differentiation
Types of Competitive Advantage
Types of Competitive Advantage
The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
Cost Competitive AdvantageBeing the low-cost competitor in an industry while maintaining satisfactory profit margins.
Obtain inexpensive raw materials
Create efficient plant operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
Sources of Cost Reduction
Experience CurvesExperience Curves
Efficient LaborEfficient Labor
No-frills Goods and Services
No-frills Goods and Services
Government SubsidiesGovernment Subsidies
Product DesignProduct Design
ReengineeringReengineering
Production InnovationsProduction Innovations
New Service Delivery Methods
New Service Delivery Methods
Product/Service Differentiation
• The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.– Brand names– Strong dealer network– Product reliability– Image– Service
Niche Competitive Advantage
• Used by small companies with limited resources
• May be used in a limited geographic market
• Product line may be focused on a specific product category
Sources of Sustainable Competitive Advantage
PatentsPatents
CopyrightsCopyrights
LocationsLocations
EquipmentEquipment
TechnologyTechnology
Customer ServiceCustomer Service
PromotionPromotion
Skills and Assets
of an
Organization
Skills and Assets
of an
Organization
Sources of Competitive Advantage
Sources ofCompetitive Advantage
Sources ofCompetitive Advantage
Cost$
Cost$
Product/ServiceDifferentiationA vs. B vs. C
Product/ServiceDifferentiationA vs. B vs. C
NicheStrategies
NicheStrategies
STRATEGY
Ansoff’s Strategic Opportunity Matrix
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
Strategic Alternatives
MarketPenetration
MarketDevelopment
Product Development
Diversification
Increase market share among existing customers
Attract new customers to existing products
Introduce new products into new markets
Create new products for present markets
Setting Strategic Direction
1. Where are we now?2. Where do we want to go?
Setting Strategic Direction – Where are we now?
• Customers• Competencies• Competitors• Business sectors• SWOT analysis• Environmental scanning
Setting Strategic Direction – Where are we now?
• Competencies – an organization’s special capabilities, including skills, technologies, and resources that distinguish it from other organizations
• Competitive advantage – a unique strength relative to competitors, often based on quality, time, cost, or innovation
• Benchmarking – discovering how others do something better than your own firm, so you can imitate or leapfrog competition. Studying operations in completely different businesses.
Setting Strategic Direction – Where do we want to go?
• Growth strategies1. Portfolio analysis
– Market growth rate versus market share
2. Market-Product analysis
– Analyze current and new products and markets
Critical Factors for Success
• Customer relationships (value)• Innovation (new and unique value)• Quality• Efficiency
Strategic Marketing ProcessThe activities of selecting and describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets.
Target Market Strategy
• Segment the market based on groups with similar characteristics
• Analyze the market based on attractiveness of market segments
• Select one or more target markets
Target Market Strategy
Appeal to the entire market with one marketing mix
Appeal to the entire market with one marketing mix
Concentrate on one marketing segment
Concentrate on one marketing segment
Appeal to multiple marketswith multiple marketing mixes
Appeal to multiple marketswith multiple marketing mixes
Segmentation• Defining markets• Dimensions to use• Identifying segments• Identifying segments to target• Segmentation approaches
Positioning• Understanding customer’s view• Positioning techniques• Evaluating segment preferences• Differentiating the marketing mix• Relationship between positioning & targeting
Focusing Marketing Strategy with Segmentation and Positioning
Market Segmentation
• Involves aggregating prospective buyers into groups that– Have common needs, and– Will respond similarly to a marketing
action
Product Segmentation
• Using different marketing mix activities (features and advertising) to demonstrate perceive differences against competing products/brands
• A firm selling two or more products with different features targeted to different market segments.– Good – Better – Best – Cost – Value – Premium
5 Steps to Segmenting Markets
• Form prospective buyers into segments
• Form products to be sold into groups• Develop a market product grid and
estimate size of market• Select target markets• Design marketing activities to each
target market
Criteria for Forming Segments
• Potential for increased profit/ROI• Similarity of needs• Difference of needs• Feasibility of marketing action to
reach the targeted segment• Simplicity of cost of assigning
potential buyers to a segment
Ways to Segment Consumer Markets
• Customer Characteristics– Geographic– Demographic– Socioeconomic– Psychographic
• Buying Situations– Outlet type– Benefits sought– Usage– Awareness and intentions– Behavior
Ways to Segment Consumer Markets
Broad product-market (or generic market) name goes here (The bicycle-riders product-market)
Submarket 1(Exercisers)
Submarket 2(Off-road
adventurers)
Submarket 3(Transportation riders)
Submarket 4(Socializers)
Submarket 5(Environmentalists)
Market Segmentation Defines Possible Target Markets
Behavioral dimensions for segmenting consumer markets• Benefits sought• Thoughts• Rate of use• Type of problem solving• Rate of use• Information required• Brand familiarity• Purchase relationship• Kind of shopping• Needs
Segmenting business markets
• Kind of relationship• Purchasing methods• Type of customer• Segmentation• Type of buying situation• How customers will use the product
Marketing Mix – 4P’s
Marketing Mix: The “Four Ps”
The starting point of the
“4 Ps”
Includes Physical unit Package Warranty Service Brand Image Value
Product
Products can be… Tangible goods Ideas Services
Marketing Mix: The “Four Ps”
Product availability where and when customers want them
All activities from raw materials to finished products
Ensure products arrive in usable condition at designated places when needed
Place
Marketing Mix: The “Four Ps”
Promotion Role is to bring about
exchanges with target markets by:
Informing Educating Persuading Reminding
Includes integration of:
Personal selling
Advertising
Sales promotion
Public relations
Marketing Mix: The “Four Ps”
Price Price is what a buyer must
give up to obtain a product.
The most flexible of the “4 Ps”-- quickest to change
Competitive weapon
Price x Units Sold = Total Revenue
Strategic Marketing Process
Following Up the Marketing Plan
• Implementation
• Evaluation
• Control
• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic
Effective Strategic Planning
• Effective Strategic Planning requires…
• Continual attention – ongoing rather than annual
• Creativity – challenging
assumptions
• Management Commitment – support and participation from the top
Chapter 3: Ethics and Social Responsibility
Civil Society
Six Modes of Social Control
Ethics
Laws
Formal and Informal Groups
Self Regulation
The Media
Active Civil Society
Ethical Behavior
63
EthicsEthics
The moral principles or values
that generally govern the
conduct of an individual.
People usually base their individual choice of ethical theory on their life experiences• Deontology• Utilitarianism• Casuist• Moral Relativists• Virtue Ethics
Ethical Decision Making
Influential Factors
Extent of Problems
Top Management Actions
Potential Consequences
Social Consensus
Probability of Harm
Time UntilConsequences
Number Affected
Code of Ethics
Code of Ethics- A guideline to helpmarketing managers and other
employees make better decisions.
Creating Ethical Guidelines
• Helps identify acceptable business practices
• Helps control behavior internally
• Avoids confusion in decision making
• Facilitates discussion about right and wrong
Ethical Guidelines and Training
Exhibit 3.3
Arguments for Social Responsibility
Corporate Social Responsibility
Stakeholders
Employees
Management
Customers
Local Community
Suppliers
Owners
Sustainability
70
The idea that socially responsible companies will
outperform their peers by focusing on the world’s social
problems and reviewing them as opportunities to build
profits and help the world at the same time.
Cause-Related Marketing
The cooperative efforts of a “for-profit” firm and a “non-profit” organization for mutual benefit.
“Five Questions to Ask Before Participating in a Cause-Related Marketing Program”• Is this company committed?• How is the program structured?• Who does the program benefit?• How will the organization that benefits use my money?• Is the program meaningful to me?