MGT 6450 Marketing
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Syllabus
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Schedule & Outline
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Class e-mail
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News
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Overview of marketing
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Small group formation & discussion of products/services via
product life cycle
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Next week: market segmentation
Marketing News
• Generational Marketing
• Social Marketing News
• Advertising Age
•AMA Marketing News
•Direct Marketing News
•Marketing Today
"Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of
ideas, goods, services, organizations, and events to
create and maintain relationships that will satisfy
individual and organizational objectives."
“The societal marketing concept holds that the organization's
task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more effectively
and efficiently than competitors, in a way that preserves or
enhances the consumer's and the society's well-being. “
How is marketing
done in your
organization?
Discussion Questions
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How is marketing currently conducted in your organization? What role does a
marketing department have in helping form organizational strategy; how well
connected are they with other departments and functions in the organization;
how is market information gathered, analyzed and used?
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What are the “change drivers” that have propelled marketing to this position in
organizations? Why is strategic marketing so crucial in today's marketplace?
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In your organization, where does marketing fit with strategic planning?
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How aware are employees of the marketing concept and efforts of the
marketing department (or whomever does it)?
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Examine your organization's mission statement and define it from
product/service perspective as well as marketing perspective (who are the
customers & what needs are you committed to satisfying?)
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Using the Product Life Cycle, place your product/service line along the
continuum (Portfolio methods)
Change Drivers
Less expensive, more widely available
communications, transactions, information,
and production technologies such as:
• Internet based communication and
commerce
• Data mining
• Pattern recognition algorithms (neural
networks)
• Computer integrated design
• Rapid prototyping
• Simulation testing of designs and
prototypes
• Real time data tracking
• Nanotechnology
• Flexible manufacturing technology
• Enterprise wide software
Culturally, ethnically diverse workforce that
is more mobile:
• Political and economic conditions creating
more opportunities for markets and
supplies worldwide
• Aging workforce worldwide
• Language and culture differences
Effects of Change Drivers
Competitive environment:
• More informed customers
• More evenly distributed technological capabilities
among competitors
• More closely linked suppliers
• Easier entry for new competitors
• World wide market for supplies and workers
Business processes:
• More knowledge about customer buying patterns
• Improved forecasting ability
• Improved production scheduling and tracking
• More rapid production process design
Integration:
• Coordination of geographically dispersed operations
• Coordination of culturally diverse workforce
• Coordination of logistics and information with
dispersed networks of customer and suppliers
Workforce:
• More use of temporary workers
• Competition for skilled and knowledge workers
• Management across international cultures
• Difficulty in molding organizational cultures
What’s gone wrong with strategy?
• 75% of executive teams do not have a clear customer propositions
(idea of the mix that appeals to the target market)
• 85% of management teams spend less than one hour per month discussing
strategy
• 60% of organizations don't link strategy and budgeting
• 92% of organizations don't report on strategic lead indicators
• Less than 5% of an organization's workforce understands its strategy
• Only 51% of senior managers, 21% of middle managers, and 7% of line
employees have personal goals linked with strategy
• Organizations find that up to 25% of strategy measures change each year
• Tangible book value represented only 62% of industrial organization's market
value in 1982; in 1992 it was 38%, and 10-15% in 2000
• The failure rate of strategies is between 70-90%, mainly due to poor
implementation
SWOT or TOWS Analysis for Strategy
Information from
Market Research
Eras of Marketing
Next ?
Relationship/Partnering Era (1990-): Short term financial focus, downsizing, globalization,
reengineering trends. Publish or perish pressure on research. Concern, trust, and investment in
collaborative relationships with long term customers and competitors (e.g., Saturn owner parties,
Sam’s Club memberships, etc.). Specialized interest areas; sophisticated multivariate
segmentation; wide application [Problem: still short term, fragmented research, customer
manipulation]
Marketing Era (1950s-1980s): Mass market boom! Use of behavioral and quantitative
sciences. Customer is King! Find (create) a need and fill it; (market segmentation & targeting)
satisfy needs! [problem: too short term & costly]
Sales Era (1925-1950s): Marketing principles. Good advertising and sales will overcome consumer
resistance” (Brand image differentiation); Marketing associations & journals [problem: broad
advertising not cost-effective]
Production Era (1900-1925): “a good product sells itself”; offer more products! Build it and
they will come! [problem: unsold inventory]. First courses with “marketing” title. Focus on
distribution.
Pre-Marketing Era (1750-1900): “I got it, you want it?”
Pre-Marketing Era (1750-1900)
• “I got it, you want it?”
• Cottage industries making narrow
specialties with little variation
• Often family businesses
• Generally for local trade
• Word of mouth promotion
• Example: China 1986 basket and wood
shipping containers
Production Era (1900-1925):
[problem: unsold inventory]...
• “A good product sells itself”
(unsold inventory)
• offer more products!
• Focus on distribution
• First courses with “marketing”
title
Sales Era (1925-1950s)
• Marketing principles
• Good advertising and sales will
overcome consumer resistance”
• Brand image differentiation
• Marketing associations & journals
• problem: broad advertising not costeffective
Marketing Era (1950s-1980s)
• Mass market boom!
• Use of behavioral and quantitative
sciences
• Customer is King!
• Find (create) a need and fill it
• problem: too short term & costly
• market segmentation & targeting,
satisfy needs! (high sales, low
prices)
Relationship/Partnering Era (1990-)
• Short term financial focus, downsizing,
globalization, reengineering trends.
Hummer Party
• Concern, trust, and investment in
collaborative relationships with long term
customers and competitors (e.g., Saturn
owner parties, Sam’s Club memberships, etc.).
• Publish or perish pressure on research.
• Specialized interest areas; sophisticated
multivariate segmentation; wide application
• Problem: still short term, fragmented
research, customer manipulation
Sam’s Club
Social Media Marketing (2005-)
• Widespread availability of technology
enables lower cost channels
• Online interactivity provides for
promotion and information gathering
• Growth of social networking makes for
ubiquitous advertising opportunities
• Search specification allows for targeted
advertising
• Viral marketing spread through the
web via web, e-mail, blogs, video, and
other mobile media
Innovation &
Product Development:
death of an idea
Marketing decreases
costs, improves the
quality of ideas, and
ensures better fit with the
marketplace
64 ideas
1 idea
Testing time
• 10% of ideas reach the test market stage
• 50% of new products fail in test marketing
• 50% of those fail on national launch
• only 2.5% ever enter the marketplace
• 1 entrant for every 64 ideas
• the average new product that fails costs about $50 million
• some product failures have losses of over $100 million for some
companies
The Four Ps
Product
• Product variety
• Quality
• Design
• Features
• Accessories
• Brand name
• Packaging
• Sizes
• Services
• Warranties
• Returns, repairs & support
Place
• Distribution channels
• Coverage
• Assortments
• Locations
• Inventory management
• Warehousing availability
• Order processing
• Transportation costs
Price
• List price
• Wholesale pricing
• Seasonal pricing
• Discounts
• Price flexibility
• Allowances
• Payment period
• Payment methods
• Credit terms
• Product bundling
Target
Market
Promotion
• Sales promotion
• Personal selling
• Advertising
• Sales force
• Public relations
• Direct marketing
$
Vishay Semiconductor Company
Example: Products positioned along the product lifecycle
Fairchild Semiconductor Product Lifecycle
But sometimes it
crashes…
Effects &
responses
Introduction
Growth
Maturity
Decline
Competition
None of importance
Some emulators
Many rivals competing
Few with rapid
shakeout
Overall strategy
Market establishment;
persuade early adopters
to try product
Market penetration;
persuade mass market to
prefer the brand
Defense of brand
position; check
competitor inroads
Prepare removal; drain
brand of all benefits
Profits
Negligible due to high
production & marketing
costs
Reach peak levels due to
high prices & growing
demand
Increased competition
cuts into profit margins
& total profits
Declining volume
pushes costs to levels
that eliminate profits
Retail prices
High to recover
excessive launch costs
High to take advantage
of growing demand
What traffic will bear;
avoid price wars
Low enough to permit
liquidation of inventory
Distribution
Selective as distribution
is built up
Intensive; use small
trade discounts since
dealers eager to store
Intensive; heavy trade
allowances to retain
shelf space
Selective; unprofitable
outlets slowly phased
out
Advertising
strategy
Aim at needs of early
adopters
Make mass market
aware of brand benefits
Advertise to differentiate similar brands
Emphasize low price to
reduce stock
Advertising
emphasis
High to generate
awareness & interest in
early adopters & dealers
to stock the brand
Moderate to let sales rise
on momentum of wordof-mouth
Moderate since most
buyers are aware of
brand characteristics
Minimum expenditures
to phase out product
Consumer roles
& promotion
expenditures
Heavy to entice target
groups with samples,
coupons, etc. to try
brand
Moderate to create
brand preference
(advertising for this)
Heavy to encourage
brand switching to
convert buyers into
loyal users
Minimal to let the
brand coast by itself
What’s your product lifecycle mix?
Team activity: Construct a
product life cycle diagram
for one of the companies
in your team
Low point share but may have
high growth rate and therefore
potential, but require high effort
to grow; risky new ventures may
become stars or dogs
Low relative share and low expected
growth rate; may generate enough
points to sustain but not competing;
possible niche market; consider
divestment
High growth business strong in
competitive market; high point share &
ideal business; promote question
marks & support R&D
Low growth business with low point
share; were stars but have lost their
attractiveness; finance question marks
and stars
Enterprise Resource Planning System (ERP): BCG
Matrix of products
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The GE/McKinsey Matrix
Relative market share
Profit margins
Ability to compete on price & quality
Knowledge of customer & market
Competitive strengths & weaknesses
Technological capability
Caliber of management
Business Strengths
Low
Medium
Market size & growth
Industry profit margins
Competitive intensity
Seasonality
Cyclicity
Economies of scale
Technology
Social, environmental, legal,
& human impacts
High
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Industry Attractiveness
High
Medium
Low
Invest in,
growth
strategy
Monitor
performance,
selective strategy
No growth or
investment, consider
divestment or
liquidation
Ansoff’s Product/Market Matrix
Existing products
Existing
Markets
New
Markets
New Products
Market Penetration:
Product Development:
• Increase product purchase in existing
markets (withdrawal, do nothing,
consolidate, retrenchment)
• Revitalize brand image
• Coordinate advertising and sales
training
• Adapt to market change
• Increase market share
• Increase consumer usage (frequency,
quantity, new application)
• Introduce new products into existing
markets; can be risky & expensive
• Product launch
• Add product features & refinements
• Develop new products for same
market
Market Development:
Diversification:
• Explore new markets for existing
products; when distinctive
competencies rest with product not
market
• Expanding geographic distribution
• Targeting new customer segments
• introduce new products into new
markets; horizontal, vertical,
conglomerate
• Acquisition/merger
• New business venture
Conclusions about marketing matrix models--
• There is a risk of using matrix models is misclassifying
businesses
• Use multiple models to ensure better coverage
• Know the strengths and limits of each model; when to use and
avoid them
• Integrate the information from matrices with other sources of
information and comparison
• Don't let the matrix make decisions-- people make decisions!
Next Week: Market
S-e-g-m-e-n-t-a-t-i-o-n
• Be able to describe yourself using
segmentation concepts
• Be able to discuss how your
company uses (or can use)
segmentation
• Explore a market segment for your
company and how that might add
value to your business