2Chapter Big Ideas The Big Ideas in this chapter are: Marketing is…. Major concepts and tools of marketingMarket orientationsCRM
3Marketing So what’s Marketing? Function: noun Etymology: Middle English, from Old North French, from Latin mercatus ---trade or marketplace
4MarketingMarketing is the process of planning and executing the conception, pricing, promotion, and distribution of goods, services and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment. (AMA)
5MarketingMarketing is the process of planning and executing (Management function)the conception, pricing, promotion, and distribution (4 P’s)of goods, services and ideas (Product)to facilitate satisfying exchange relationships (buying and selling)with customers (Target/Segment)in a dynamic environment. (External factors)
6Factors Influencing Company Marketing The Four P’s
9Marketing Concepts and Tools Core Marketing Concepts1. Target Markets and Segmentation2. Marketers and Prospects3. Needs, Wants, and DemandsCore Marketing ConceptsTarget Markets and SegmentationEvery product or service contains features that a marketer must translate into benefits for a target market.The consumer perceives these benefits to be available in a product and directly impacts the perceived ability to meet the consumer need(s) or want(s).Marketers and ProspectsA marketer is someone actively seeking one or more prospects for an exchange of values.A prospect has been identified as willing and able to engage in the exchange.Needs, Wants, and DemandsTo need is to be in a state of felt deprivation of some basic satisfaction.Wants are desires for specific satisfiers of needs.Demands are wants for specific products that are backed by an ability and willingness to buy them.
10Marketing Concepts and Tools 4. Product, Offering, and Brand5. Value and SatisfactionValueValue = Benefits / Costs =(Functional benefits + Emotional benefits) /(Monetary costs + Time costs + Energy costs + Psychic costs)Product or offeringAnything offered for sale that satisfies a need or want.Products consist of three primary components: goods, services and ideas.The physical product provides the desired service or action.Value and Satisfaction (A ratio)Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needsNeeds are determined according to the lowest possible cost of acquisition, ownership and use.
11Marketing Concepts and Tools 6. Exchange and Transactions7. Relationships and NetworksRelationship marketingMarketing network8. Marketing Channels9. Supply Chain10. CompetitionBrand competitionIndustry competitionForm competitionGeneric competitionExchange and TransactionsExchange means obtaining a desired product by offering something desirable in return.Five conditions must be satisfied2 partiesSomething of value to exchange between the twoEach party can communicate and deliverEach party is free to reject the offerEach party believe it is appropriate to deal with each otherA transaction is the trade of values (involves several dimensions). Barter, transferRelationships and NetworksRelationship marketing seeks long-term, “win-win” transactions between marketers and key parties (suppliers, customers, distributors).The ultimate outcome of relationship marketing is a unique company asset called a marketing network of mutually profitable business relationships.
12Marketing Concepts and Tools 11. Marketing Environment12. Marketing Mix (4 P’s)13. Marketing ProgramMarketing ChannelsThis is how you reach the target market, and it is critical.To do this the marketer can use two-way communication channels (media including- newspapers and through the Internet), versus more traditional means.The marketer also must decide on the distribution channel, trade channels, and selling channels (to effect transactions).Supply chainThe long channel process that reaches from the raw materials and components to the final product / buyers.Perceived as a value delivery system.CompetitionIncludes actual and potential rival offerings and substitutes.A broad view of competition assists the marketer to recognize the levels of competition, based on substitutability:brand – other companies with similar products to the same customer at similar prices (economy, luxury etc)industry – other companies that make the same product or class of product (autos)form – other companies that make products that supply the same service (motorcycles, bikes, trucks)generic – All companies that compete for the same dollar (durables, vacations, etc)
13Management Orientations Toward the Marketplace Production ConceptProduct ConceptSelling ConceptMarketing ConceptSocietal Marketing Concept
14CRMCRM is what?Customer relationship management (also called CRM) is defined as:“the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”
15CRMIt costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.Marketers must be concerned with the lifetime value of the customer.
16Marketing Challenges Source of marketplace changes: Technological advancesRapid globalizationContinuing social and economic shifts
17Chapter 2 company and Marketing Strategy: Partnering to Build Customer Relationships PowerPoint byKotler & Armstrong(and modified by me)
18Chapter 2 – Big Ideas Strategic planning Value creation (in many forms)
19Strategic Planning Strategic Planning is? The Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities.
21The Mission Statement What’s Mission Statement? A statement of the organization’s purposeWhat it wants to accomplish in the larger environmentShould be market oriented and defined in terms of customer needs.
22Questions a Mission Statement Should Answer What is our Business?Who is the Customer?What do Consumers Value?What Should our Business Be?
23Mission Statements Should: Be RealisticBe SpecificFit the Market EnvironmentBe Based on Distinctive CompetenciesBe Motivating2-11
24Designing the Business Portfolio A business portfolio is what?The business portfolio is the collection of businesses and products that make up the company.During the strategy process a company must do what?analyze its current business portfolio or Strategic Business Units (SBUs),decide which SBUs should receive more, less, or no investment,develop growth strategies for growth or downsizing.
25Portfolio Analysis A portfolio analysis is what? An evaluation of the products and business making up the company.Resulting in?Identifying where resources are directed or taken awayInvest in to more profitable businesses andDivest in weaker ones (phased down or dropped).
26Strategic Business Unit A SBU is what? (hint: )A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses.Can be a company division, a product line within a division, or sometimes a single product or brand.
28Analyzing Current SBU’s: BCG Growth-Share Matrix Relative Market ShareHigh LowStarsHigh growth & shareMay need heavyinvestment to growEventually, growth will slowQuestion MarksLow share SBUs in high growthmarketsRequire cash to holdmarket shareBuild into Stars or phase out?Market Growth RateLow HighCash CowsLow growth, high shareEstablished, successfulSBU’sProduce cashDogsLow growth & shareGenerate cash to sustain selfDo not promise to be cashsources
29Problems With Matrix Approaches Can be Difficult, Time Consuming, Costly to ImplementDifficult to Define SBUs & Measure Market Share/GrowthFocus on Current Businesses, Not Future PlanningProblems With Matrix ApproachesCan Place too Much Emphasis on GrowthCan Lead to Poorly Planned Diversification
30Product/Market Expansion Grid ExistingNewMarket PenetrationProduct DevelopmentExistingM A R K E TMarket DevelopmentNewDiversification2-32
31Value Value is what? Function: noun Pronunciation: 'val-(")yü Etymology: past participle of Latin valEre – to be worth, be strong, be powerful, be influential, be healthyMeaning:“Relative worth, utility, or importance”ValueValue = Benefits / Costs=(Functional benefits + Emotional benefits)(Monetary costs + Time costs + Energy costs + Psychic costs)
32Value Proposition Value Proposition is what? A set of benefits offered by an organization to satisfy a customer’s needs, wants and demands
33Value Chain So what’s a Value Chain? A Michael Porter concept A tool to conceptualize and identify ways to create more customer value9 Activities5 primary activitiesInbound logistics, operations, outbound logistics, marketing and sales, service4 support activitiesProcurement, technology development, human resources, firm infrastructure
35Value Delivery Network So what’s a value delivery network?A network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system
36Value Delivery Network Company’s Value ChainDistributorsSuppliersCustomers
37Market Segmentation So what’s market segmentation? The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs.A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.
38Target Marketing So what’s target marketing? Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter or target.Target segments that can sustain profitability.
39Market PositioningArranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”)Process begins with differentiating the company’s marketing offer so it gives consumers more value.
40The Marketing MixThe set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.Consists of the 4 P’sProductPricePlacePromotion
43Major Sections of Product/Brand Plan Executive SummaryCurrent Marketing SituationAnalysis of Threats and OpportunitiesObjectives for the BrandMarketing StrategyAction ProgramsMarketing BudgetControls
45Marketing Concept Value Creation The Marketing Concept: Assumes the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.Target Market - no company can operate in every market and satisfy every need.Customer Needs - it’s not enough to just find the market; marketers must also understand their customer's needs and wants. This is not a simple task.Integrated Marketing - all of a company’s departments must work together to serve the customer’s interests. This begins among the various marketing functions and carries out into other departments.Profitability - the ultimate purpose of marketing is to help organizations achieve profitability goals.Hurdles to Adopting the Marketing Concept:Organized Resistance - some departments see marketing as a threat to their power in the organizationSlow Learning - despite efforts by management, learning comes slowFast Forgetting - here is a strong tendency to forget marketing principles
46Value and Value Proposition The relative worth, utility or importanceValue = Benefits / Costs =(Functional benefits + Emotional benefits) /(Monetary costs + Time costs + Energy costs + Psychic costs)Value PropositionA set of benefits offered by an organization to satisfy a customer’s needs, wants and demands
47Value ChainA tool to conceptualize and identify ways to create more customer value9 Activities5 primary activitiesInbound logistics, operations, outbound logistics, marketing and sales, service4 support activitiesProcurement, technology development, human resources, firm infrastructure
49Value Delivery Network A network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system
50Value Delivery Network Company’s Value ChainDistributorsSuppliersCustomers
51Market SegmentationThe process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs.A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.
52Target Marketing So what’s target marketing? Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.Target segments that can sustain profitability.
53Market PositioningArranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”)Process begins with differentiating the company’s marketing offer so it gives consumers more value.
54The Marketing MixThe set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.Consists of the 4 P’sProductPricePlacePromotion