Session 1- 09.13.04
Marketing:
Introduction, Strategy and
Competition
Why Study Marketing?


1/4th to 1/3rd of the
civilian workforce
in the U.S. performs
marketing activities
Fast route up the
corporate ladder
• Professional Selling
• Marketing Research
• Advertising
• Retail Buying
• Distribution Management
• Product Management
• Product Development
• Wholesaling
Why Study Marketing?

Half of every dollar spent
pays for marketing costs

Better-informed consumers

Demand for customer
satisfaction
What is Marketing?

Personal Selling?

Advertising?

Making products available in stores?

Maintaining inventories?
All of the above, plus much more!
What is Marketing?
A Philosophy
An Attitude
A Perspective
A Management
Orientation
A Set of Activities,
including:
Products
Pricing
Promotion
Distribution
(Place)
Marketing Definitions
 “A social and managerial process by which
individuals and groups obtain what they
need and want through creating and
exchanging products and value with others.”
 “The delivery of Customer Satisfaction at a
profit.”
Marketing Definitions
American Marketing Association Definition
Marketing is the process of planning and
executing the conception, pricing, promotion,
and distribution of ideas, goods, and services
to create exchanges that satisfy individual and
organizational goals.
Key Concepts in Marketing
Meeting Consumers’ Needs,
Wants, and Demands
This interview with Jeff Manning, Executive Director of the
California Milk Processor Board, describes how the needs of
consumers led to a popular slogan.
 Needs, Wants and Demands.
 From deprivation to buying power.
 Products and Services
 Anything that might satisfy a need or a want. Marketing
Myopia ?
 Value and Satisfaction
 Gain minus cost.
 Product’s perceived performance matches expectations.
Marketing Importance in a
Practical Situation…
You have just purchased a tennis racquet factory
that has been shut down for the last few years.
The automated equipment and computer system
are in excellent shape, and the personnel needed to
run the factory are readily available.
But before jumping into production, what questions
need to be asked and answered? What plans need
to be made? Which of these plans concern
marketing?
… A Significant Role and
Many Questions to Answer.
1.
2.
3.
What are the needs of tennis players?
Do they need more or different styles of tennis racquets?
How many different categories of tennis players are there? What kind of racquet does each
category need? (Handles, sizes, shapes, weights, and prices are factors.) Which category of
player does this firm want to sell to?
4. Estimate how many people are in this chosen category. How many of them will be playing
over the next five years? How often will they buy a new racquet?
5. When will these customers buy? (Are there seasons or trends?)
6. Where are these customers located? Where do they shop for tennis racquets?
7. What price are these customers willing to pay? Does this price leave a profit for the
company?
8. How will the company communicate with potential customers? What type of promotion will
reach them?
9. How will the racquets be packaged? What type of warranty will they carry? How will the
firm provide customer service?
10. How many other companies are making racquets? What kinds and what prices of racquets
do competitors offer?
11. What is the industry as a whole projected to do in the next five to ten years?
Marketing Management
Management Orientations
Production
concept
Product concept
Selling concept
Marketing
concept
 Societal marketing concept
Selling Vs. Marketing
* Selling:
Focus on the
needs of the seller
* Marketing:
Focus on the
needs of the buyer
Selling Vs. Marketing
* Selling:
Preoccupied
converting product
into cash
* Marketing:
Preoccupied with
satisfying the
needs of the
customer
Selling Vs. Marketing
* Selling:
Increase profits
through sales
volume
* Marketing:
Use an integrated
marketing strategy
to profitably satisfy
customer needs
back
Example of a Company Policy Statement
Stressing Social Responsibility
Defining the Business
Mission

Answers the question,
“What business are we in
and where are we going?”

Focuses on the market(s)
rather than the good or service

Strategic Business Units may
also have a mission statement
Defining the Company’s Business
and Mission
A Mission Statement is a Statement of the Organization’s Purpose.
Market Oriented
Characteristics of
a Good Mission
Statement:
Realistic
Specific
Fit Market Environment
Distinctive Competencies
Motivating
Coke’s Mission Statement
The Coca-Cola Company exists to benefit and
refresh everyone it touches.
The basic proposition of our business is simple,
solid and timeless. When we bring refreshment,
value, joy and fun to our stakeholders, then we
successfully nurture and protect our brands,
particularly Coca-Cola. That is the key to fulfilling
our ultimate obligation to provide consistently
attractive returns to the owners of our business.
PepsiCo’s Mission
Statement
“PepsiCo’s overall mission is to increase the value of our
shareholders’ investment. We do this through sales growth,
cost controls and wise investment of resources. We believe our
commercial success depends upon offering quality and value to
our consumers and customers; providing products that are
safe, wholesome, economically efficient and environmentally
sound; and providing a fair return to our investors while
adhering to the highest standards of integrity.”
http:\\www.pepsico.com
CRM
CRM – Customer relationship
management . . .
“is the overall process of building and
maintaining profitable customer relationships
by delivering superior customer
value and satisfaction.”
Relationship Marketing
Who are your customers
What do customers value
Requirements
for
Building
Relationships
What do they want to buy
How do they prefer to interact
CRM
It 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.
CRM
Key Concepts
 Attracting, retaining and
growing customers
 Building customer
relationships and
customer equity
 Customer equity
The total combined
customer lifetime values of
all customers.
Measures a firm’s
performance, but in a
manner that looks to the
future.
CRM
Key Concepts
 Attracting, retaining and
growing customers
 Building customer
relationships and
customer equity
 Customer relationship levels
and tools
 Target market typically dictates
type of relationship
Basic relationships
Full relationships
 Customer loyalty and retention
programs
Adding financial benefits
Adding social benefits
Adding structural ties
Building Long-Term
Relationships

Customer-oriented personnel

Effective training programs

Empowered employees

Teamwork
Strategic Planning
Strategic planning is defined as:
“The process of developing and
maintaining a strategic fit between the
organization’s goals and capabilities and its
changing marketing opportunities.”
Strategic Planning
EVOLVING
MARKET
OPPORTUNITIES
RESOURCES
&
OBJECTIVES
LONG RUN
PROFITABILITY
AND GROWTH
The Marketing Plan
A written document that acts
as a guidebook of marketing
activities for the marketing
manager.
Why Write a Marketing
Plan?

Provides a basis for comparison of actual
and expected performance

Provides clearly stated activities to work
toward common goals

Serves as a reference for the
success of future activities

Allows entry into the
marketplace with awareness
Marketing Objective
A statement of what is to be
accomplished through
marketing activities.
Marketing Objectives
Marketing Objectives Must Be:
 Realistic
 Measurable
 Time specific
 Consistent with
Organization’s
Priorities
“Our objective is to
increase market share
by 40% and to obtain
customer satisfaction
ratings of at least 90%
in 2003.”
Examples of Marketing
Objectives
SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O) and
threats (T)
SWOT Analysis
S
W
O
T
Things the company does well.
Internal
External
Things the company does not do well.
Conditions in the external environment
that favor strengths.
Conditions in the external environment
that do not relate to existing strengths
or favor
areasCollege
of current
weakness.
©South-Western
Publishing
Looking at the Business
Portfolio


The business portfolio is the collection of
businesses and products that make up the
company.
The company must:
analyze its current business portfolio or Strategic
Business Units (SBU’s)
decide which SBU’s should receive more, less, or no
investment
develop growth strategies for adding new products or
businesses to the portfolio
BCG Portfolio Matrix
MARKET SHARE DOMINANCE
High growth
Market leaders
Require cash
Large profits
HIGH
LOW
MARKET GROWTH RATE
HIGH
LOW
High growth
Low market share
Need cash
Poor profit margins
$
Low growth
High market share
High cash flow
Low growth
Low market share
Minimal cash flow
BCG Portfolio Matrix
Example
MARKET SHARE DOMINANCE
HIGH
SubNotebooks
and Hand-Held
Computer
STAR
LOW
MARKET GROWTH RATE
HIGH
Laptop and
Personal
Computers
CASH
COW
LOW
Integrated
phone/Palm
devices
PROBLEM
CHILD
Mainframe
Computer
DOG
Strategies for Resource
Allocation
Build
Provide financial resources if SBU
(Problem Child) has potential to be a Star.
Hold
Preserve market share if SBU is a successful
Cash Cow. Use cash flow for other SBUs.
Harvest
Divest
Increase short-term cash return.
Appropriate for all SBUs except Stars.
Get rid of SBUs with low shares in
low-growth markets.
Developing Growth Strategies
Product/ Market Expansion Grid
Existing
Products
Existing
Markets
1. Market
Penetration
New
Markets
2. Market
Development
New
Products
3. Product
Development
4. Diversification
Problems With Matrix
Approaches
Can be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU’s & Measure Market Share/ Growth
Focus on Current Businesses, But Not future Planning
Can Lead to Unwise Expansion or Diversification
Steps in Analyzing Competitors
Identifying the
company’s
competitors
Assessing competitor’s
objectives, strategies,
strengths and weaknesses,
and reaction patterns
Selecting which
competitors to
attack or avoid
Marketing Strategies for
Competitive Advantage
Strategy a Company
Adopts
Depends on Its
Industry Position
The Marketing Process
Key Elements
 Analyzing marketing
opportunities
 Selecting target markets
 Developing the marketing
mix
 Managing the marketing
effort
 The segmentation process
divides the total market into
market segments.
 Target marketing determines
which segment(s) are
pursued.
 The strategic market
positioning for the product is
then determined.
The Marketing Mix
A unique blend of product,
distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target market.
Developing the Marketing
Mix
Price
Product
Amount of money
that consumers
have to pay to
Obtain the product
“Goods-and-service”
combination that a
company offers a
target market
Target
Customers
Intended
Positioning
Activities that
persuade target
customers to buy
the product
Promotion
Company activities
that make the
product available
Place