Module 4 - Marketing Management - Mba Crash Course

MBAMaster of Business Administration

Crash Course

An association of institutional, professionals, and OFWsRiyadh, Kingdom of Saudi Arabia

The National Organization of Certified Public AccountantsRiyadh Chapter, Kingdom of Saudi Arabia

“To reach our greatest potential, we must set our sights clearly and

embrace the unknown confidently”

MODULE 4

MARKETI NGMANAGEMENT

PURPOSE OF BUSINESSPURPOSE OF BUSINESS

CUSTOMERS

EmployeesManagers

Shareholders

SuppliersCreditorsInvestors

Create and maintain value

for stakeholders

BUSINESS SUCCESS

BUSINESS SUCCESS

BUSINESS SUCCESS

PURPOSE OF BUSINESSPURPOSE OF BUSINESS

PETER DRUCKER“Revered as father of

Modern Day Management”

PETER DRUCKER“Revered as father of

Modern Day Management”

PURPOSE OF BUSINESS

CREATE & KEEP CUSTOMERS

MARKETING IS THE PROCESS BY WHICH THIS IS

ACHIEVED

CRITERIA FOR BUSINESS SUCCESSCRITERIA FOR BUSINESS SUCCESSINCREASED PERFORMANCE PURSUED IN TWO (2) FOCI

BUSINESS DO IT BETTER

Maintain Output

Reduced Input

Extract more value from existing

customers

Enhance Customer Satisfaction

Attract more customers

Enhance Customer Satisfaction

BUSINESS PERFORMANCE=DIRECT FUNCTION OF MARKETING EFFECTIVENESS

BUSINESS CAN DO MORE

INPUT

OUTPUT

Increased Output

Incremental Input

LEARNING FROM FAILURELEARNING FROM FAILURE

Mardikakis M – Long Range Planning Example: Exxon, IBM, Texaco, Union Carbide

CAUSES OF CORPORATE FAILURENatural ProcessOrganizational arteriosclerosisTaking risksOverextending resources & capabilitiesBeing overoptimisticIgnoring or underestimating competitionPreoccupation with short termBelieving in quick fixesRelying on barriers to entryOverreactingPersonality and ability of CEOBad LuckIncompatibility

MARKETING REVOLUTIONMARKETING REVOLUTION

THE MARKETING MYOPIA – BUSINESS FAILURETheodore Levin’s Article – Harvard Business Review

PRODUCT ORIENTEDRATHER THAN

CUSTOMER ORIENTED

FORCED BUSINESS IN 1960’s

FOCUS ON CUSTOMER NEEDS AND BEMARKETING LED

MARKETING REVOLUTIONMARKETING REVOLUTION

ENVIRONMENTAL PRESSURES THAT LED TO MARKETING REVOLUTION

Faster Technological Change

Shift to Slow Growth Economy

Third World Economic Capability

Fluctuating Exchange Rate

Communication & Information Trend

Changes in Social Order

MARKETING CHALLENGESMARKETING CHALLENGES

Ability to powerfully communicate your business with laser precision and your ability to deliver a clearly-defined and consistent experience -BRANDING

Create a deep connection with your core target audience - your potential raving fans! – TARGET MARKET - SEGMENTS

Design compelling offerings that pull customers in like a magnet – OFFERINGS PORTFOLIO

80% of all purchase decisions are based on emotion.

Availability of a Marketing Plan - ROADMAP

90% of small business owners do not have a plan

David Lowndes Director of Product Development for Comac, Inc


Increased specialization of Customer Needs

“Mass Marketing” – “One size fits all”

New Communication ChannelUse of different medium to reach

consumers



Increased Competition for Customer Dollars

“Growing global economy – more competitors”

Shorter Product life CycleTechnology- reaching customers quickly – creating new products”



Legislation and Regulatory Restrictions

“Imposition of regulations -Standards”

MARKETI NGVS

SELLI NG

MARKETING VS. SELLINGMARKETING VS. SELLING

MARKETING

Determine needs and wants of target market.

Deliver desired satisfaction efficiently and effectively.

SELLING

Customers ability to buy or not buy.

Stimulate consumers interest to the products.

MARKETING VS. SELLINGMARKETING VS. SELLINGMARKETING CONCEPT SELLING CONCEPT

Discovers Market Needs

Product Planning and Development

Distribution of Products and Services

Guaranteed Sales Volume and ProfitsCustomers Satisfaction

Research

Production

Product Planning and Development

Promotional Methods and Selling

Distribution of Products and Services

UnGuaranteed Sales Volume and ProfitsCustomers Satisfaction

Production

Persuasive Techniques

MARKETING – OPERATIONAL DIMENSIONMARKETING – OPERATIONAL DIMENSION

Target Market

Things to be

Marketed

Marketing Organi-zations

MARKETING SYSTEM

MARKETING CORE CONCEPTSMARKETING CORE CONCEPTS

Customer Orientation

Integration Effort

Competitive Advantage

Segmentation and Positioning

Environmental Awareness

Management Guidance to achieve and maintain market share,

growth and profitability



Production Orientation

High Production and DistributionEfficiency

= Low Cost and Better Offering

Product Orientation

Good products and continuous

improvement


Determines Needs & wants and

delivering desired satisfaction

Selling Orientation

“We sell what we make”

“We make what we sell”

NOT


Integration Effort

BUSINESS KEY TASK:

CREATE AND HOLD CUSTOMERS

DEPARTMENT’S SUPPORT

TOTALOFFERINGS



BUILD ON ADVANTAGES TO MINIMIZE DISADVANTAGES

MARKET SHARE : NOT THE ONLY MEASURE TO DETERMINE COMPETITIVE POSITION



PETER DOYLE – Professor of Marketing & Strategic ManagementUNIVERSITY OF WARWICK

MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN TO EVALUATE PERFORMANCE

Increase in Market Share

New Product Ratio

Return on Investment

Capital Gain for Shareholders

MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN TO EVALUATE PERFORMANCE

MARKETING CORE CONCEPTSMARKETING CORE CONCEPTSPETER DOYLE – Professor of Marketing & Strategic Management

UNIVERSITY OF WARWICK

0

0.5

1

1.5

2

2.5

3

USA

JAP

ROI

USA

JAP

CAPITALGAIN

USA

JAP

PROD. RATIO

USA

JAP

MKT SHARE


Segmentation and Positioning

SEGMENTATIONIdentifying homogeneous market and subdividing them by applying variables

POSITIONING

Choice of target market segment Determine where business will competeChoice of differential advantageDictate how business competes


Environmental Awareness

Recognizing and responding profitably to unmet needs and

trends of the environment.

ORGANIZATION

MARKETI NG DECI SI ONS

FOUR CORE AREASFOUR CORE AREAS

MARKET SEGMENTATION

SELECTINGTARGETMARKET

MARKETPOSITIONING

MARKETPLANNING

MARKETING DECISIONS

MARKET SEGMENTATIONMARKET SEGMENTATION

IMPORTANCE OFMARKET SEGMENTATION

Better matching of customers’ needs

Enhanced profits

Enhanced opportunities for growth

Retain customers

Targeted communication

Market segment share


BASES FOR SEGMENTATION

NEEDS PROFILES


MARKET PROFILES

DESCRIPTIVE MEASURABLE CUSTOMER CHARACTERISTICS

GEOGRAPHICregion of the country

urban or rural area

DEMOGRAPHICage, sex, family sizeincome, occupation,

educationreligion, race, nationality

PSYCHOGRAPHICsocial classlifestyle type

personality type

BEHAVIORALproduct usagebrand loyaltytype of user


CRITERIA FOR SEGMENTATION

Effective : homogeneous customers but significantly different from the others.

Identifiable: business must be able to identify customers in the proposed segment.

Profitable: more segments - greater opportunity – added value

Accessible: customers can effectively reached and served.

Actionable: taking advantage of the segmentation scheme it develops.

FACTORS OF MARKET ATTRACTIVENESS

SEGMENT SIZE

SEGMENT GROWTH

PROFITABILITY

CAPABI-LITIES

COMPETI-TION


MANAGEMENT STRATEGIC CHOICES


Undifferentiated marketing : Ignoring actual or potential differences among segments. Designs a product and marketing mix that will appeal to the mass market.

Differentiated marketing: Develop different products and different marketing programs for each segment of the market.

Focused marketing: Specializing in one or small numbers of segments.

MARKET SEGMENTATION-EXAMPLEMARKET SEGMENTATION-EXAMPLEAIRLINE INDUSTRY

CLASS PASSEN-GERS

PRICEVARIABLE

COSTREVENUE

FIXEDCOST

PROFITVARIABLECOST

Undifferentiated Strategy

No Class 240 250 20 60,000 4,800 50,000 5,200

Differentiated Strategy

Economy 144 250 20 36,000 2,880

Business 72 500 40 36,000 2,880

First 24 1,000 100 24,000 2,400

TOTAL 240 96,000 8,160 50,000 37,840

MARKET POSITIONINGMARKET POSITIONING

Designing the company’s offering and image so that they occupy a

meaningful and distinct competitive position

in the target customers’ minds.

MARKET POSITIONINGMARKET POSITIONINGPOSITIONING OPTIONS

Introduce new brand - IBM

Change existing brand - Compaq

Alter beliefs about the brand - Chivas

Alter beliefs about competitive brands – Body Shop

Alter attribute importance rates - Volvo.

Introduce new or neglected attributes –Unilever – Radion Detergent.

Find a new market segment - Dunhill.

MARKET POSITIONINGMARKET POSITIONING

MAJOR POSITIONING ERRORS

UnderpositioningBuyers have vague idea about the product and don’t really sense anything special about it.-Crystal Clear Pepsi (1993)

OverpositioningToo narrow image of the brand. –Customer perception vs. actual.

Confused positioningConfused image – too many claims

Doubtful positioningToo hard to believe what the product claims.

MARKETI NG PLAN

MARKETI NG PLAN

MARKETING PLANMARKETING PLAN

MARKETING DECISIONS

MARKETING PLAN

IMPLEMENTATION

MA

RK

ET

ING

AU

DIT

EV

AL

UA

TIO

N


STRATEGIC FUNCTIONS

Give direction to marketing effort

Framework for allocation of resources

Basis for communication

Basis for coordination of efforts

Platform for evaluation and control


MAJOR COMPONENTS OF MARKETING PLAN

BACKGROUND ANALYSISCurrent performanceBackground analysisOpportunities and options

How well the product is performing nowFactors that led to failure & successWhere is the business leading to

MARKETING OBJECTIVESMarketing ObjectivesFinancial Objectives

Clear sales goals and target market shareProfits, Return on Investments, Cash Flow

MARKETING STRATEGYTarget market segmentDifferential advantage

Types of customers aimed atAnalysis of customers needs and profilesDefine competitors and their strategies.

MARKETING MIXProduct PromotionPrice Services

Staff

Set of marketing decisions to implement positioning strategy


MAJOR COMPONENTS OF MARKETING PLAN

ACTION PLANS

Details of implementationWho is responsibleWhen it will be doneHow much it will cost

BUDGET

Projected RevenuesExpendituresProfitsCash Flow

ORGANIZATIONAL IMPLEMENTATION

StaffOrganizational design

MARKETI NG MANAGEMENT PROCESS

The 4 P’s

MARKETI NG MANAGEMENT PROCESS

The 4 P’s

PRODUCTPRODUCT

PRODUCTPRODUCT

Bundle of Utility (satisfaction)

that buyer receives as result of lease/purchase

PRODUCTPRODUCT

MANAGERIAL DECISIONS – PRODUCT DEV’T.

PROCEED TO NEXT STAGE

GET ADDITIONAL

INFORMATION

ABANDON PRODUCT

PRODUCTPRODUCT

STEPS IN PRODUCT DEVELOPMENT

COMMERCIA-LIZATION

IDEA GENERATION

SCREENING OF IDEAS

PRODUCT DEVELOPMENT

TESTMARKETING

ECONOMIC ANALYSIS

Decline

AbandonMaturity

Sales/ProfitDecline

GrowthCompetitive

MarketAcceptance

Introductory

ProductLaunching

PRODUCTPRODUCT

PRODUCT LIFE CYCLE

VALUE

TIME

PRODUCTPRODUCT

REASONS WHY PRODUCT FAI L

Inadequate product analysis

Product deficiencies

Lack of effective marketing effort

Ease of competitive entry

Poor timing of introduction

Technical or production problems

PRODUCTPRODUCT

SOLUTIONS TO AVOID PRODUCT FAILURE

Organizational change

Better marketing research

Improved screening and evaluation of ideas

PRICEPRICE

A function of cost

Money value of a product/service

PRICEPRICE

PRICING OBJECTIVES

Profit oriented objectives –rate of return

Sales oriented objectives –volume sales

Status Quo – satisfied profit under market share

PRICEPRICE

PRICING STRATEGIES

SKIMMING – setting higher price from what market expects –PRICE FOR QUALITY.

PENETRATION PRICING –setting low initial price at certain profit – MASS MARKET TARGET

PRICEPRICE

PSYCHOLOGICAL PRICING STRATEGIES

FIXED PRICE – selling at one-price system (retailers)

VARIABLE PRICE – prices at different timings and different events

ODD-PRICE POLICY – Prices set at odd amount (ex. 99.95, 89.99)

PRICEPRICE

STEPS FOR DEVELOPING PRICING STRATEGY

Assess Price Competitiveness

Set Pricing Objectives

Strategic Price Focus

Evaluate Competitive Strategies

Measure Value to customers

Product line pricing

Target Market segment

Select Price

PRICEPRICE

PRICING OBJECTIVES AND STRATEGY

HARVEST

PRODUCT – MATURE

PRICE – HIGH

USE CASH –NEW PRODUCTS

MAINTAIN

ADJUST PRICES DEFENSIVELY

PREVENT COMPETITIVE EROSION

GROWTH

BUILD PRICE AS AGGRESSIVE WEAPON TO

BUILD SHAREOR ENTER MARKET

QUALITY LEADERSHIP

LEADER IN PREMIUM PRICE NICHE

Ex. Rolex, Bang & OlufsenRolls Royce

PLACE (DI STRI BUTI ON)PLACE (DI STRI BUTI ON)

PLACEPLACE

Selection and management of

channels and product flow to consumers

INTERMEDIARY MARKETING

Merchants

Agents

Facilitators

PLACEPLACE

CHANNEL OPTIONS

DIRECT MARKETING

Advertising

Telephone

Mail

Catalogues

SALES FORCE

Own sales force

Another firm

Contract Force

TYPES OF CHANNEL MARKETING SYSTEMS

TYPES OF CHANNEL MARKETING SYSTEMS

PLACEPLACE

CONVENTIONAL MARKETING CHANNEL

VERTICAL MARKETING SYSTEM

HORIZONTAL MARKETING SYSTEM

MULTI-CHANNEL MARKETING SYSTEM

CONVENTIONALCONVENTIONAL

MANUFACTURER

WHOLESALERS

RETAILERS

END CONSUMERS

ordering

ordering

delivery

delivery

DesignMakeBrandPricePromoteSell

BuyStockPromoteDisplaySellDeliverFinance

VERTICALVERTICAL

MANUFACTURER

WHOLESALER

RETAILER

END CONSUMERS

DesignMakeBrandPricePromoteBuyStockDisplaySellDeliverFinance

Marks & Spencer

Mercedez Benz

Shell

HORIZONTALHORIZONTAL

Two or more autonomous organizations at the same level cooperate in exploiting

market opportunities

Reduces risks of resources at individual level

Speed to penetrate new market

Access to new technologies and knowledge

Philips & Dupont – Devt of Compact DiscsToyota & Gen Motors – assembly of cars

MULTI CHANNELMULTI CHANNEL

Using multiple channels to satisfy differing needs of segments and customers

HP Sells pc through own sales forceUse computer storesDirect Marketing Value Added Resellers

PROMOTI ONMARKETI NG

COMMUNI CATI ON MI X

PROMOTI ONMARKETI NG

COMMUNI CATI ON MI X

ADVERTISINGAny paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

MARKETING COMMUNICATION MIXMARKETING COMMUNICATION MIX

PERSONAL SELLINGPersonal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

SALES PROMOTIONShort-term incentives to encourage the purchase or sale of a product or service.


PUBLIC RELATIONSBuilding good relationships with the public by publicity for a "corporate image.

DIRECT MARKETINGDirect communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships.


SETTI NG THE PROMOTI ON MI X

SETTI NG THE PROMOTI ON MI X

Decline

Abandon

Advertising DecreasePublic Relation DecreaseSales Promotion-LimitedPersonal Selling

Maturity

Sales/ProfitDecline

Advertising DecreasesSales PromotionPersonal SellingReminder/Presuasion

Introductory

ProductLaunching

Pre-IntroductionLight AdvertisingPre Introduction Publicity

IntroductionHeavy AdvertisingPublic RelationsSales Promotions

GrowthCompetitive

MarketAcceptance

AdvertisingPublic RelationsBrandingPersonal Selling

SETTING THE PROMOTION MIXSETTING THE PROMOTION MIX

VALUE

TIME

ADVERTISING GOALSADVERTISING GOALS

ADVER-TISING

ADVERTISINGADVERTISING

GET

HOLD

AROUSE

OBTAIN

STAGES IN ADVERTISING CYCLESTAGES IN ADVERTISING CYCLE

INTRODUCTORY ADVERTISINGDevelop consumer awareness

COMPETITIVE ADVERTISINGEmphasis such as “Better”“Improved” “ No 1”

RETENTIVE ADVERTISING Develop consumer loyalty by repetitive advertising

Marketing Effectiveness

ORGANI-ZATION

ENVIRON-MENT

Measure of quality of relations

EFFICIENCY“Doing things right”

EFFECTIVENESS“Doing the right things”

OVERCOMING CHALLENGESOVERCOMING CHALLENGES

THE COMMUNI CATI ON

OPTI MI ZATI ON PROCESSDavid Lowndes

OPTIMIZATION PROCESSOPTIMIZATION PROCESS

ANALYSISEvaluate current communication materials in relation to the following Critical Success Factors (CSF)

Specific objectives & desired response-campaign materials.Target marketsIndustry norms, best practices, business environmentValue of transaction or salesCustomization and personalization needsAudience demographicsCompetitive program offeringsBusiness and marketing objectivesProduct lifecyclesInventory quantities, shelf life and valueUsage and reorder patternsDesign requirements and constraintsCorporate graphic standardsProduction options and costsDelivery options and costsPrivacy and other regulatory compliance


RE-ENGINEERING

REVISERE-DESIGNCOMBINEELIMINATEADD

GOAL : Align copy graphics and production processes to maximize response rates, manage costs.


AUTOMATION

Automate production

Integrate technology into designs and strategies to gain competitive advantage.

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Module 4 - Marketing Management - Mba Crash Course

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