Marketing Management

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Marketing Management

• Exam One
• Lecture One

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Presentation Themes

• Marketing Management and Concept
• Exchanges and Demand States
• Strategic Planning Process
• Four Ps and Four Cs
• Market Orientation
• New Era for Strategic Marketing

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What is Marketing?
Marketing is an organizational function and a
set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders.
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What is Marketing Management?
Marketing management is the art and science of
choosing target markets and getting, keeping,
and growing customers through creating,
delivering, and communicating superior customer
value.
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Selling is only the tip of the iceberg
There will always be need for some selling. But
the aim of marketing is to make selling
superfluous. The aim of marketing is to know and
understand the customer so well that the product
or service fits him and sells itself. Ideally,
marketing should result in a customer who is
ready to buy. All that should be needed is to
make the product or service available. Peter
Drucker
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The Marketing Concept

• An organization should seek to make a profit by
  serving the needs of customers
• The purpose of the marketing concept is to rivet
  the attention of marketing managers on serving
  broad classes of customer needs
• The principal task of the marketing function
  operating under the marketing concept is to find
  effective and efficient means of making the
  business do what suits the interests of customers

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Major Types of Marketing
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For an exchange to occur.

• There are at least two parties.
• Each party has something that might be of value
  to the other party.
• Each party is capable of communication and
  delivery.
• Each party is free to reject the exchange offer.
• Each party believes it is appropriate or
  desirable to deal with the other party.

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What is Marketed?
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Marketing Goods
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Marketing Ideas Friends Dont Let Friends
Drive DrunkThis is the watch Stephen
Hollingshead, Jr. was wearing when he encountered
a drunk driver. Time of death 655 p.m.
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Corporate Social Initiatives
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Demand States
Nonexistent
Latent
Negative
Irregular
Declining
Full
Unwholesome
Overfull
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Key Customer Markets
Consumer Markets
Global Markets
Nonprofit / Government Markets
Business Markets
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The marketplace isnt what it used to be
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Company Orientations
Production
Product
Selling
Marketing
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The Strategic Planning Process

• Organizational growth based on products and
  markets
• Four paths organizations take in order to grow
• Market penetration strategies
• Market development strategies
• Product development strategies
• Diversification
• Organizational strategies based on competitive
  advantage
• Competitive advantage is an ability to outperform
  competitors in providing something that the
  market values
• Porter suggests strategies based on cost
  leadership or a strategy based on differentiation
  

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The Strategic Planning Process

• Organizational strategies based on value
• Customer value has become critical for
  marketers as well as customers
• To succeed firms must seek to build long-term
  relationships with their customers by offering
  unique value

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The Strategic Planning Process

• Choosing an appropriate strategy
• Management should select those strategies
  consistent with its mission and capitalize on the
  organizations distinctive competencies
• A sustainable competitive advantage can be based
  on either the assets or skills of the
  organization
• The key to sustaining a competitive advantage is
  to continually focus and build on the assets and
  skills that will lead to long-term performance
  gains

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The Strategic Planning Process

• Choosing an appropriate strategy
• Management should select those strategies
  consistent with its mission and capitalize on the
  organizations distinctive competencies
• A sustainable competitive advantage can be based
  on either the assets or skills of the
  organization
• The key to sustaining a competitive advantage is
  to continually focus and build on the assets and
  skills that will lead to long-term performance
  gains

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The Four Ps
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Marketing Mix and the Customer

• Four Ps
• Product
• Price
• Place
• Promotion

• Four Cs
• Customer solution
• Customer cost
• Convenience
• Communication

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Core Concepts

• Needs, wants, and demands
• Target markets, positioning, segmentation
• Offerings and brands
• Value and satisfaction

• Marketing channels
• Supply chain
• Competition
• Marketing environment
• Marketing planning

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I want it, I need it

• 5 Types of Needs
• Stated needs
• Real needs
• Unstated needs
• Delight needs
• Secret needs

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Marketing Management Tasks

• Developing marketing strategies
• Capturing marketing insights
• Connecting with customers
• Building strong brands

• Shaping market offerings
• Delivering value
• Communicating value
• Creating long-term growth

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Market-Driven Strategy

• All business strategy decisions should start with
  a clear understanding of markets, customers, and
  competitors.
• The market and the customers that form the market
  should be the starting pint in shaping business
  strategy.

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Characteristics of a Market-Driven Strategy
Becoming Market- Orientation
Determining Distinctive Capabilities
Achieving Superior Performance
Customer Value/ Capabilities Match
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Why Pursue a Market-Driven Strategy?

• Strong supporting logic
• Achievements of companies displaying
  market-driven characteristics are impressive
• Examples include
• Dell Inc.
• Louis Vuitton
• Southwest Airlines
• Ferguson Enterprises
• Payless ShoeSource
• Wal-Mart
• Hormel Foods

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Becoming Market Oriented

• Customer is the focal point of the organization
• Commitment to continuous creation of superior
  customer value
• Superior skills in understanding and satisfying
  customers
• Requires involvement and support of the entire
  workforce
• Monitor rapidly changing customer needs and wants

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Becoming Market Oriented

• Determine the impact of changes on customer
  satisfaction
• Increase the rate of product innovation
• Pursue strategies to create competitive advantage

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Characteristics of Market Orientation

• Customer Focus
• What are the customers value requirements?
• Competitive Intelligence
• Importance of
• understanding the
• competition as well as the
• customer
• Cross-Functional Coordination
• Remove the walls between
• business functions
• Performance Consequences
• Market orientation leads to
• superior organizational performances

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Becoming a Market-Oriented Organization
Information Acquisition
Cross-Functional Analysis of Information
Shared Diagnosis and Coordinated Action
Delivery of Superior Customer Value
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Market Orientation

• Information Acquisition
• Gather relevant information on customers,
  competition, and markets
• Involve all business functions

• Inter-functional Assessment
• Share information and develop
• innovative products with
• people from different functions

• Shared diagnosis and action
• Deliver superior customer value

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Distinctive Capabilities

• Capabilities are complex bundles of skills and
  accumulated knowledge, exercised through
  organizational processes, that enable firms to
  coordinate activities and make use of their
  assets.

George S. Day, Journal of Marketing, October
1994, p.38.
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Southwest Airlines Distinctive Capabilities

• Organizational Processes
• Southwest uses a point-to-point route system
  rather than the hub-and-spoke design used by many
  airlines. The airline offers services to 57
  cities in 29 states, with an average trip about
  500 miles. The carriers value proposition
  consists of low fares and limited services (no
  meals). Nonetheless, major emphasis throughout
  the organization is placed on building a loyal
  customer base. Operating costs are kept low by
  using only Boeing 737 aircraft, minimizing the
  time span from landing to departure, and
  developing strong customer loyalty. The company
  continues to grow by expanding its point-to-point
  route network.

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Southwest Airlines Distinctive Capabilities

• Skills and Accumulated Knowledge
• The airline has developed impressive skills in
  operating its business model at very low cost
  levels. Accumulated knowledge has guided
  management in improving the business design over
  time.

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Southwest Airlines Distinctive Capabilities

• Coordination of Activities
• Coordination of activities across business
  functions is facilitated by the point-to-point
  business model. The high aircraft utilization,
  simplification of functions, and limited
  passenger services enable the airline to manage
  the activities very efficiently and to provide
  on-time point-to-point services offered on a
  frequent basis.
• Assets
• Southwests key assets are very low operating
  costs, loyal customer base, and high employee
  esprit de corps

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Capabilities
Disproportionate (higher) contribution to
superior customer value
Compelling Logic of Distinctive Capabilities
Provides value to customers on a
more cost-effective basis
Source George S. Day, Journal of Marketing,
October 1994, p. 38.
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Capabilities
Desirable Capabilities
Applicable to Multiple Competition Situations
Superior to the Competition
Difficult to Duplicate
Source George S. Day, Journal of Marketing,
October 1994, 49.
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Organizations Process
EXTERNAL EMPHASIS
INTERNAL EMPHASIS

• Financial management
• Cost control
• Technology development
• Integrated logistics
• Manufacturing/ transformation processes
• Human resources management
• Environment health and safety

• Market sensing
• Customer linking
• Channel bonding
• Technology monitoring

• Customer order fulfillment
• Pricing
• Purchasing
• Customer service delivery
• New product/service development
• Strategy development

Source George S. Day, Journal of Marketing,
October 1994, 41.
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Matching Customer Value and Distinctive
Capabilities
Value Requirements
Distinctive Capabilities
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Creating Value For Customers

• Customer Value
• Value for buyers consists of the benefits less
  the costs resulting from the purchase of
  products.
• Superior value positive net benefits

• Creating Value
• Customer value is the outcome of a process that
  begins with a business strategy anchored in a
  deep understanding of customer needs.

Source C. K. Troy, The Conference Board Inc.,
1996, 5.
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Value Composition
Benefits
Value (gain/loss)
Costs (sacrifices)
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Becoming Market Driven
Market Sensing Capabilities
MARKET-DRIVEN STRATEGIES
Customer Linking Capabilities
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Market Driven Initiatives

• Market Sensing Capabilities
• Effective processes for learning about markets
• Sensing
• Collected information needs to be shared across
  functions and interpreted to determine proper
  actions.
• Customer Linking Capabilities
• Create and maintain close customer relationships

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Challenges of a New Era for Strategic Marketing

• Strategic marketing faces unprecedented
  challenges and opportunities
• Turbulent markets
• Intense competition
• Disruptive innovations
• Escalating customer demands
• Ethical Challenges
• Societal and Global Change
• Social Responsiveness of Organizations

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Escalating Globalization

• It is important to understand the differences
  (and similarities) between the developed
  economies and the new world beyond.
• Market opportunities
• Competitive threats
• Partnering opportunities
• Outsourcing initiatives
• The worlds poor

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Technology Diversity and Uncertainty

• Radical New Product Opportunities
• Nanotechnology
• Private space travel
• The digital home
• Self-cleaning windows
• Finland was ranked 1 in global
  competitiveness in 2004 by the World Economic
  Forum because of strong skills in adapting to new
  technology, proactive business practices, and
  nurturing a culture of innovation
  (www.weforum.org).

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Ethical Behavior and Social Responsiveness

• Increasingly demanding ethical challenges
• Corporate responsibility
• Responsibilities to stakeholders