Introduction to Marketing

Introduction

Professor Andrés Musalem
Marketing Management
Fuqua School of Business

Three C’s
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
Customer
Company
Competition
Four P’s
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
What’s
Marketing?
Product
Promotion
Price
Placement
Summary
1
In-class exercise:

Let’s start with a simple word association
task…
MARKETING
Write down the first WORD that comes to mind
2
Does Marketing Matter?
Does Marketing Matter?
Background:
Santiago, Chile
Ind. Engineering
Find x:
How
long?
MBA,
U. of Chile
Ph.D., Wharton
Research: Quantitative Marketing
6
Teaching Interests:

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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

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Analysis (The 3 C’s)
Planning (The 4 P’s)
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Teaching Philosophy

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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 Overview
Goals:
1.
Have fun & get you to learn.
2.
Frameworks:


3.
Tools:

4.
Marketing Situation Analysis:
 Company, Customer, and Competition
Marketing Planning and Implementation:
 Price, Promotion, Place, Product
Perceptions, Preferences, Customer Lifetime Value,
Economic Value, Brand Associations, Diffusion of new
products.
Skills:



Case analysis
Group effectiveness
Idea Communication
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Course Overview

Syllabus
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Class format
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Grading
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Lectures and cases.
Cases, participation, final exam
Graded assignments: weekend following discussion.
Course Materials:
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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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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%.
Team Member
Name
Effort level
Effectiveness
Total
100%
100%
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Honor Code
We take it very seriously
 It benefits students


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Best cases, problems
Equal playing field
Coordination with other classes
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Honor Code

You may not get information on cases
from



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
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
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Administrative Issues:

Platform:



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Announcements
Assignment submission
Handouts and other materials
Seating Chart
16
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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Frameworks: 3 C’s - Customers

Who are the customers?
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Why do they buy (Value Proposition)?
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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.
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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:

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Identify SBU’s
Evaluate SBU’s: for example, BCG, GE matrices.
Portfolio Design:

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Build a pipeline of SBU’s at different stages
Portfolio growth: expand new/existing Market
Growth
products/markets.
Rate
?
Relative Market Share
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Frameworks: 3C’s - Competition

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Identify Competitors
Industry Analysis (5 Forces)
Strengths Weaknesses - Opportunities
Threats:
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
SW: Company versus Competitors
OT: Industry
Competitive reactions
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Southwest Effect: Competitive
Reactions
BWI-SDF Fares and PDEW
350
300
250
200
Fares
150
PDEW
100
50
0
1993
1.
2.
3.
1994
1995
1996
1997
Increase in passengers per day each way
(PDEW )
Drop in average fare
Effects on surrounding airports (lower
demand)
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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Integration
4P’s  3C’s
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Integration:
3C’s

4P’s
What’s the right
price for
Angiomax?
Should XM
air ads? How should Should Unilever
Ford promote launch a new
the adoption of product for the
the Ford Ka?
low income
segment in
Brazil?
Should Team Sameer
use a traditional
promotional
approach?
Should
Starbucks
invest in
improving its
customer
service?
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4P’s:
4P’s:
Marketing
Planning- Marketing Planning
Product,
Price, Place,
Promotion
Price,
Promotion,
Place,
Product
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Frameworks: 4P’s - Product

Define the product

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Core benefit—essence
Basic, Expected, Augmented and Potential Product
First Mover Advantage
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Frameworks: 4P’s – Pricing

Price is the only P that captures value

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Small changes in price lead to major profit impact
The issues

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
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)?
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Importance of Pricing
(Price leverage for selected firms)*
1% improvement in price at
Creates operating profit improvement of:
28.7%
Philips
26%
17.5%
16.7%
6.4%
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*From Dolan and Simon (1996)
Frameworks: 4P’s – Place

Channels exist when they are more
efficient than direct distribution:
M
M
C
D
M

Channel decisions/issues:

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
Channel depth
Channel breadth
Channel conflict/coordination
C
C
Manufacturer
Retailer
Manufacturer Store
Consumers
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Frameworks: 4P’s - Promotion
The promotional plan:

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Target market
Objectives
Message
Media Mix
Budget
Measure the results
Coordinate the process
Awareness
Interest
Desire
Action
34
Promotion and Brand Associations
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Profitability (A Reality Check)
Are assumptions realistic?
 Breakeven analysis

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Can we sell breakeven volume at given
price?
How are other company businesses
affected (cannibalization)?
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