Welcome to
workshop v1.3
Samer Yamak
Associate Tutor
University of Leicester
School of Management
www.le.ac.uk
Agenda
• Overview of Marketing
• Relationship Marketing
• Marketing Design
• Marketing Mix
• Strategic Marketing
What is Marketing?
There are many definitions of marketing.
• Old Definition: Act or practice of advertising and selling a product (house Webster
dictionary of American English 1997)
• “Marketing is the process and execution of the conception, pricing, promotion, and
distribution of ideas, goods and services to create exchanges that satisfy individual
and organizational goals” (American Marketing Association, 2004).
• “Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating and exchanging value with others”
• The Simplest Definition is: “Marketing is managing profitable customer
relationships” (Kotler, 2011)
What is Marketing?
A
I
D
A
•
•
•
•
Attention
Interest
Desire
Action
Get the Attention of the intended buyers within the targeted market
segment.
Create and Interest in the product or service.
Capitalize on the Desire of the prospect for the product or service.
Ensure that the prospect takes Action to acquire the product or service
Marketing Overview
• A process for enacting exchange to mutually satisfying exchange
relationships occurring often in the market environment.
• Largely related to the particular needs and wants of the populations of
any society. Involves a suitable planning and implementation of a
marketing strategy to address a given situation.
• The real challenge of marketing is how it can help creating markets and
retaining customers in a highly competitive economy
• “Marketing Myopia” focused on why companies grow in power and then
later on decline due to their increasing focus on their products at the
expense of the needs of the customers
Role of Marketing
•Marketing is way of creating a strategy to influence (iphone!)
•The marketing environment is one you choose - not one that is
constrained
•Marketing needs to adapt to the market environment (Pepsi
cola in Japan)
•Marketing role is to create a perceived value that is better than
the competition
•Marketing is a long term strategy
“It’s more important to do what is strategically right then what is immediately profitable”.
Discuss !
Examples of Marketing Offers (Marketing Scope)
•Goods
•Physical goods, products, equipment, tools
•Services
•Airlines, hotels, Professionals like engineers / doctors / lawyers /
management consultants…
•Experiences
•Walt Disney, Wild Wadi, Hard Rock Café, Planet Hollywood
•Events
•GITEX / Riyadh, Exhibition, CeBit…
•Persons
•Tom Cruise, Angelina Jolie, Tiger Woods, Michael Schumacher
Examples of Marketing Offers (Marketing Scope)
•Places
•Beirut, Dubai, London, Sharm Al-Sheikh…
•Properties
•Emaar / Dar Al-Arkan / Tatweer etc…
•Organizations
•Emirates, Aramco P&G / J&J / Philips, STC, Mobily,
Zain…
•Information
•(Fashion magazines / Property Weekly)
Is marketing limited to “meeting needs profitably”?
•Not exactly -but to a certain extent yes
•NPOs–(they may want to realize other objectives)
•Charities ?
•Government agencies ?
•Political parties ?
•Individuals ?
•Other objectives could be:
•Raising awareness of a social cause (Righting Smoking)
•Improving health of a society by change of behavior (H1N1)
•Attracting visitors to a free exhibition at a museum
Consumers’ Needs, Wants &
Demands
Needs - state of felt deprivation
including physical, social, and
individual needs i.e hunger. Ex: You
may drink water as a need
Wants - form that a human need
takes as shaped by culture &
individual personality i.e. American &
Indian foods. Ex: You may want a
Pepsi or Barbican to quench your
thirst as a solution other then water
MARKETING should ascertain between NEEDS and WANTS which is crucial to
facilitate exchange
Identifying and Meeting human & social needs
•PROCTER & GAMBLE:
OLESTRA is a tasty but less fatty food to fight obesity
•IKEA:
Created knock-down furniture for people who wanted good furniture at a
substantially lower price and easy to assemble/dismantle and use & move
when required
•SAP:
“Outrun competition, run SAP”. SAP injected the idea of beating
competition as a need to have the SAP system bought by customers
These examples show a drive to turn a private or social need into a
profitable opportunity
NEEDS  Maslow’s Pyramid
Self
Recognition
Self Esteem
Marketing Activity
Belonging
Security
WHY??
Physiological Needs
Physiological needs can be satisfied unlike other needs that are
infinite.
GILLETTE  Which need?
From a Physiologic Need to a
need of Self Esteem and Self
Accomplishment!
The history of marketing
Orientation
Characteristics
Summary
Period
Production Era
Increase production,
economies of scale, cost
reduction
“Any color as long
as it’s black”
Up to the 40’s
Product Era
Quality is all what matters,
profit through volume
“just look at the
quality of the
paintwork”
Up to the 60’s
Sales Era
Aggressive sales, profit
through quick turnover &
volume
“You are not keen
on black, how
about a finance
deal?”
60’s and 70’s
Marketing Era
Integrated Marketing,
Defining of needs, Profit
through repeat business &
loyalty
“Let’s find out if
they want black
and will pay extra
for it”
70’s and 80’s
Marketing Evolution
MASS MARKETING
Not differentiated
Before the 70th …
SEGMENTED
MARKETING
70th and 80th
ONE to ONE
MARKETING
90th and 2000
Nowadays: all marketing forms are coexisting:
MASS MARKETING
Not differentiated
+
SEGMENTED
MARKETING
+
ONE to ONE
MARKETING
Marketing is becoming more and more diverse
Service Marketing
Operational Marketing
Development Marketing
Marketing and Operations Management (MOM)
Telemarketing
Trade Marketing
Customer Marketing
Marketing and Resources Management (MRM)
Relationship Marketing
Marketing B to C
Marketing B to B to C
Street Marketing
Channel Marketing
Direct Marketing
Marketing B to B
 Different kinds of Marketing for many
definitions of marketing
Organizational process to create value
Customer
Needs /
Expected Value
Company
Listen
Targeted Value
Communication
Company
Performance
Satisfaction
Perceived Value
Proposed Value
Experience
Ex: by closely monitoring market needs, Cirque du soleil
redefined market standards by creating a new perceived value
in the cirque business . 7 months after their launching, they
achieve more then 60% market share in US
Organizational process to create value
 Possible defaults
Customer
Company
Wrong listening
Needs /
Expected Value
Targeted Value
Too many promises
Bad
implementation
In-Satisfaction
Perceived Value
Proposed Value
Wrong interaction
What’s a perceived value?
Re-purchase
Perceived product
• Principal Product
• Performances
• Quality
• Associated services
• brand…
Satisfaction
Perceived
Value
Perceived cost
• Price
• Efforts (Lurpak)
• Time
• Risk
• Switch cost…
Experience
No Satisfaction
Value of
competition offers
Customer
run away
Consumer
For example, a store that sells primarily toys would have the adult, or purchasing unit, as
the “customer” and the children as “consumers” or “end user”.
Identifying and servicing the needs of BOTH the customer / purchasing Unit and the
consumer / end user are crucial to sustaining competitive advantage!
Consumer
What is Consumer Behavior?
• The behavior that consumers display in seeking,
purchasing, using, evaluating and disposing of
products that they expect will satisfy their needs.
• Customer Behavior is the study of how individuals
make decisions to spend their resources on need
satisfying goods and services.
The Buyer Decision Process
•Need Recognition
•Information Search
•Evaluation of Alternatives
•Purchase Decision
•Post purchase behavior
The buyer Decision Process (Cohen)
Exchange Overview
Exchange
relationship:
Restricted Exchange: A buyer and a seller with a content to
exchange such as product, service, knowledge, time or a
gift. Both parties accrue mutual benefit from the exchange
Generalized Exchange: reciprocal relationship with at least
3 parties where each party does not benefit directly from
the other. For ex: A Vendor sponsors a partner’s event with
giveaways for end users attending the event.
Complex Exchange: Mutual relationships with at least 3
parties with at least one direct exchange between every 2
parties: Vendor exchanges with wholesaler exchanges with
Retailer.
Relationship Marketing Perspective
Sales
Sales
Operational Marketing
Relationship Marketing
Retaining customers is 3 to 10 times
Less expensive than attracting new ones!
Relationship Marketing
• Unlike managerial marketing measuring success
through market share, RM concentrates on efficient
attraction and development of long-term relations
between organization and its stakeholders to realize a
financial benefit.
– Buttle (1996): It is cheaper to retain a customer
then to attract new one
– Czepiel (1990): It is 5 to 10 times more expensive
to attract a new customer then to retain an
existing one.
• RM is a major part of a larger movement generated by
the increasing need to get closer to customer
Relationship Marketing
• RM fails in consumer markets due to lack of interest real
relationship, persistence of aggressive advertising and
sale promotion-driven strategies (hit & run).
• Yet, RM was still used in consumer market (i.e. loyalty
cards, retail clubs, helplines, direct mail…)
– Gillette / Head & Shoulders road show
– Red bull competition of cars, bikes, motorcycles
– Dell international hotlines and
Same-Business-Day visit
– Sony’s 10% rebate for every SR 5,000+ purchase.
• RM is often customized by practitioners who tailor
marketing theories only to enhance firms performance
Measurement of Marketing
• Marketers should prove their contribution to
shareholder value by:
– generating profits,
– reducing costs,
– developing markets,
– ensuring close relationships with customers,
– ensuring that the organization has enough
resources to maintain and enhance market
position
– Being responsive to the market
Measurement of Marketing
• While marketers rely on financial indicators (sales
income, sales growth…), it is difficult to isolate
marketing activities from other internal activities.
• The solution was to use Brand equity to allow brand
owner to monitor the evolution of the brand and
compare the effectiveness of marketing performance
– Brand equity is the confidence a customer group has in a
product/service & their willingness to purchase that
brand relative to competing brands.
– BE can be measured by customer loyalty, market share,
customer awareness, customer preference and intent to
purchase (BE = Tangible assets – Financial value of firm)
Marketing Stages
• Know the market
– using market researches and systematic and
objectives studies
• Adapt to Market
– creating an offer with an attractive perceived
added value that is different
• Influence the Market
– communicating strong promises
Marketing Functions
•Research Marketing
–Market study (surveys)
–Competition positioning (Nielsen, Gartner in IT, etc.)
–Control of the marketing efficacy
•Strategic Marketing
–Choosing a targeted market
–Define the positioning of the company or the brand positioning
–4P (Product concept + services, Price strategy, distribution channels
–Communication strategy
–Relationship strategy
•Operational Marketing
–Building communicational and promotional campaign
–Actions with selling people
–Direct marketing
–Distribution and merchandising
–Customer service
Market Segmentation
• Marketing Segmentation: is “Dividing a market into
distinct groups of buyers who have distinct needs,
characteristic, or behavior and who might require
separate products or marketing mix”
(Kotler & Keller, 2011).
Example of Segmentation
Demographic:
- Gender
- Age
- Physical characteristics (eye color, height, etc.)
- How many people live under the same roof
- Family structure (married, divorced, etc.)
- etc.
Geographic:
- Continent
- Region of the world
- Size of the city
- Climate
- etc.
Psychographic:
- Interests
- Activities
- Opinions
- etc.
Behavioral:
- Occasions
- User status
- Loyalty status
- etc.
Target Marketing
• Target Marketing: “The process of evaluating each
market segment’s attractiveness and selecting one
or more segments to enter”
(Kotler & Keller, 2011).
Targeting – Different strategic options
Undifferentiated
Marketing
Differentiated
Marketing
• Due to low competition
• Because of undifferentiated products
• To keep a competitive cost structure (ex: easyJet)
• To cover all segments with adapted assortment (ex: L’Oreal,
P&G, Harrods. Etc.)
• to cover only selected segments highly profitable (ex: the “Big
Four”  Deloitte & Touch, Ernest & Young, KPMG, Price
Waterhouse Cooper working only with big companies)
Concentrate
Marketing
• Concentration on main segments
• Concentration on a niche
Customized
Marketing
•1-1 marketing
•more and more common (ex: Direct Marketing)
Market Positioning
• Market Positioning: “Arranging for a products to
occupy a clear, distinctive and desirable place
relative to competing products in the mind of target
consumers” (Keller, 2011).
Positioning
- 6 criteria for a good Positioning •Your POSITIONING has to be:
•Clear
•Attractive
•Credible
•Different
•Profitable
•Long-lasting
Positioning – Crucial for your
Marketing Strategy
The chosen POSITIONING will
influence your strategy
Product
strategy
!
Price strategy
Distribution
strategy
Communication
strategy
The positioning has to be constant through time! (if
you change your positioning too often, you will lose
your customers)
BRAND Definition
A brand is a collection of symbols, experiences and associations
connected with a product, a service, a person or any other artifact
or entity.
Is Barack Obama a brand?
Marketing Mix
• Marketing Mix:
“The set of controllable tactical marketing tools –
product, price, place and promotion – that the firm
blend to produce the response it wants in the target
market” (Kotler & Armstrong, 2011).
Marketing Mix
4 Ps  Product
Here are some questions to assess the competitiveness and ‘fit’ of your
product:
• Does the product has the right positioning in the market?
• Does it serve a particular segment of the market?
• Is it a mass market or a niche product?
• Is it differentiated enough to stand out against the competition?
• What kind of brand equity does the product uphold?
• What are some of the issues/risks associated with the “image” or “perception”
of the brand relative to other brand in the market?
• What are some of the features that can be added to the product that would add
to the value or the perception of the value to the consumer?
• What are some of the packaging issue that might present an opportunity or
impediment to increased sales?
• Does my packaging reflects the positioning of the product? If mass market, does
it have mass market appeal?
• How does the product achieving in the overall strategy of the company?
• How does the product relate to other products produced by the company?
• What kind of financial role is the product playing (ie. Cash cow, long term profit
potential, etc.)
4 Ps  Product
POSITIONING MAP
This is a helpful framework to analyze where the product is positioned against competitors and
consumer segments and to help you to determine if there is any untapped opportunity in the
market.
High
Branded
Commodities
Premium
Commodities
Under
Priced?
Price
Low
Low
Value
High
4 Ps  Price
Getting the right price for the product is extremely important for the success of a company.
However, the right price is not easy to determine. Depending on the price elasticity of the
product, 1% increase in price could drive to -20% or +25% in sales!
Factors that determine the price
•
Customer’s perceived value
•
The cost to produce COGS
Low cost = bigger profit margin
•
The price paid previously = the expected price:
if consumer are used to pay a certain price for the product, it is very difficult to convince
them to pay $20 more. However, if the perceived value of the value is higher than what they
paid in the past, then there’s room to capture some consumer surplus.
•
The price of substitutes:
the price of a product is driven down if the product can be easily substituted by another that
serves the same function.
“There are two fools in every market.
One charges too little; One charges too much.” (Russian proverb)
4 Ps  Price
Competition pushes
price down
Perceived value
to consumer
Surplus value created for the conusmer
Price of a
substitute
Set price here!
Expected price
Cost of goods sold
Marketing pushes
price up
0$
Profit margin: Value created for the seller
Price Elasticity
Impact of price changes on sales volume
Demand is elastic if
a price increase has a
large negative impact
on sales volume.
Demand is inelastic if
a price increase has
little or no impact
on sales volume.
4 Ps  Place
The distribution channel that is selected and the outlets at which the product is sold MUST
be aligned with the positioning of the product and focused customer segment. (McDonalds
corner locations)
Here are a few questions you should ask yourself:
•
•
•
•
•
•
Which channels are most closely aligned with the company's strategy?
• Does the company need to build new channels or eliminate existing one?
What functions does the company want the channels to serve?
Does it make more sense to go direct to the end user or deliver the product through
intermediaries?
What are the economics of the channel?
• Who needs to capture what margin?
• Does it fit in the intended selling price of the product?
How much control is the company willing to give up on the delivery of the product?
• Is the company willing to work in conjunction with the distribution channel, by monitoring its
timeliness and service, or by placing most of the weight on the channels in meeting customer
needs?
• What would be the relationship of the company's sales force in this arrangement?
How would the company address any potential shifts in power to the channel?
4 Ps  Promotion
Promoting and developing a specific brand for the product captures the most value not
only by the supplier in being able to increase the sales volume and per unit margin, but
also by the consumer in developing a certain perception of the product.
Promotion and branding can consist of a number of elements such as traditional
advertising (mass and niche), or no advertising to maintain certain perception of
exclusivity, word of mouth, direct mail, etc.
•
•
•
•
•
•
What messages are we trying to communicate? What is the objective?
• Is the goal to achieve a household name? Build loyalty? Defend the product’s positioning?
• Does the message portray the total customer experience?
What are some of the barriers to communicate the desired message?
Does the promotion/branding focus on the long term view of relationship-building with the
consumer?
• Does it encourage repeat purchasing? Focus on customer retention?
How is the marketing strategy different from the competition?
• How will the competition react?
Which vehicle will you use to influence the decision making process?
• Pull strategy (direct at end user): use of advertising, direct mail, telemarketing, word of
mouth, consumer promotions
• Push strategy: use the trade promotion, sales aids and/or sales training programs
How much money is allocated to marketing?
Marketing Environment
• Includes:
– Micro-environment: actors close to the company
that affect its ability to serve its customers.
– Macro-environment: larger societal forces that
affect the microenvironment.
• Considered to be beyond the control of the
organization.
PESTLE - Actors in the Macroenvironment
•Political
•Tax Policies
•International Trade regulations
•Contract Enforcement law
•Employment Laws
•Government Organization
•Competition Regulation
•Political Stability
•Safety Regulations
•Economic
•Interest rates & monetary policies
•Government spending
•Unemployment Policy
•Taxation
•Exchange rates
•Inflation
•Social
•Income Distribution
•Demographics, Population
•Labor / Social mobility
•Lifestyle changes
•Work/career and leisure attitudes
•Education
•Fashion
•Health consciousness
•Living conditions
PESTLE - Actors in the Macroenvironment
•Technological
•Government spending
•Industry focus
•New inventions and development
•Rate of technology transfer
•Life cycle & speed of technological obsolescence
•Energy use and costs
•Changes in IT and Internet
•Changes in Mobile Technology
•Legal
•Current and impending legislation
•Employment, competition and health and safety
•Anticipated changes in legislation in main trading partner countries
•Governmental trading policies
•Regulatory bodies of the industry
•Environmental
•Pollution created by the product or service
•Recycling possibilities
•Attitudes to the environment from the government, media and consumers
Porter 5 Forces
Objective: Assess the industry if it’s attractable and decide whether a company should enter / exit the industry or find a
position in the industry where it can best defend itself against these forces or can influence them in its favor.
Case Study : Le Paris
A French soft drink company, Le Paris, is looking to diversify its
holding by investing in a new fast food chain in the US. You are
hired to determine whether they should pursue this path and, if
so, how they should go about execution?
Use the Porter’s five forces model
as a basis for your answer
Duration: 20 min.
Porter’s Generic competitive strategies
Sources of Competitive advantage
Cost
Industry
Wide
Industry
Scope
Differentiation
Cost
Differentiation
LeadershipStuck in Strategy
the middle
Segment Only
Focus (Niche) Strategy
Low-Cost Provider Strategies
Low-cost leadership means low overall costs, not
just low manufacturing or production costs!
The keys to success are:
• Make the entire firm aiming at constantly achieving
meaningful lower costs than rivals
• Include features & services in product offering that buyers
consider essential
• Find approaches to achieve a cost advantage in ways
difficult for rivals to copy or match
Translating a Low-Cost Advantage into Higher
Profits
Option 1: Use lower-cost edge to
under-price competitors and attract
price-sensitive buyers in enough
numbers to increase total profits (Baik)
Option 2: Maintain present price, be
content with present market share,
and use lower-cost edge to earn a
higher profit margin on each unit sold,
thereby increasing total profits (Mcdonalds)
Differentiation Strategies
Objective
• Incorporate differentiating features that cause buyers
to prefer firm’s product or service over brands of rivals
Keys to Success
• Find ways to differentiate that create value for buyers
and are not easily matched or cheaply copied by rivals
• Not spending more to achieve differentiation than the
price premium that can be charged
Benefits of Successful Differentiation
A product / service with unique,
appealing attributes allows a firm to

Command a premium price and/or

Increase unit sales and/or

Build brand loyalty
= Competitive Advantage
Which
hat is
unique?
Product Differentiation
Potential product
• Possible but not expected adons e.g. car valeting at Suleiman
Al Habib’s clinic, Riyadh
Augmented
product
• Add-ons beyond expectation of
consumer – freshness of coffee,
superior taste,
Expected product
• What consumers expect
• Acceptable taste, functionality
in software
Core product
• Generic product• software, coffee, education
Focus / Niche Strategies
• Involve concentrated attention on a narrow piece of the
total market
Objective
Serve niche buyers better than rivals
Keys to Success
• Choose a market niche where buyers
have distinctive preferences, special
requirements, or unique needs
• Develop unique capabilities to serve
needs of target buyer segment
Applications of PLC Assessment
• Can provide a detailed breakdown of the magnitude of
various supply chain impacts along each step in the product
lifecycle
• Can be used to model different product & packaging
development design options
• Useful for determining the product mix for the different
stages in the life cycle.
Benefits of PLC
• The product life cycle concept helps
marketing managers to plan alternate
marketing strategies to address the
challenges that their products are likely to face
• Useful for monitoring sales results over time and comparing
them to those of products having a similar life cycle
• The life cycle concept may apply to a brand or to a category
of product.
• Its duration may be as short as a few months for a fad item
or a century or more for product categories such as the
gasoline-powered automobile.
Limitations of PLC
• Products do not always have a clearly
predictable life
• The specific life cycle curves followed
by different products can vary substantially
• The life cycle concept is not well-suited for
forecasting of product sales
• The product life cycle may become self-fulfilling
BCG Matrix
BCG or Growth-Share Matrix
Stars:
- Leaders in business; generate good cash
- Use large amounts of cash to maintain position
- Best profit growth & investment opportunities available to company
Cash Cows:
- Superior market position at Low costs
- High Profits & Cash generation
- Company foundations (pay overhead, cash for other invest.)
Dogs:
- Poor competitive positions, poor profits/growth (“Cash Traps”)
- Should minimize assets remaining in this category
Question Marks:
- High cash needs due to growth stages
- Low cash generation due to low market share
Benefits of Growth-Share Matrix
Disaggregate a company into business units and analyse their
strengths compared to business opportunities
Devise separate strategies for each business unit. Allocate
resources where needed to manage the portfolio.
Corporate strategy comes down to managing a portfolio of products
BCG Matrix is NOT about market share and market growth; it’s
about mobilizing the organization resource to interact with external
circumstances.
Ansoff’s Product/Market Expansion Grid
Existing Products
New Products
Existing
markets
Market
Penetration
Product
Development
New
markets
Market
Development
Diversification
Value Chain
The supply chain through which a product/service goes through to reach the end consumer.
Supplier
Manufacturer
Wholesaler
Retailer
End Customer
Asking a number of insightful questions on the effectiveness and efficiency of certain steps in the
value chain would display insightful understanding of the internal workings of the company.
Value Chain Model by Porter
Porter argues that the ability of an enterprise to generate profits depends on
its ability to realize added value, its ability to derive revenues in its downstream
markets in excess of its costs of production (P.38)
7S Framework
SWOT Analysis
• The core seems simple; strategy is concerned with
identifying opportunities in the external environment
to exploit outperforming rivals.
• The most important part of
SWOT analysis is not developing
the 4 lists of strengths,
weaknesses, opportunities,
and threats, but rather using the
4 lists to draw conclusions and
build strategies to act on them.
Innovation in Marketing
Marketing
Research
Targeting
Markets
• Creates new ways to conduct research including more
sophisticated methods for monitoring and tracking customer
behavior and analysis data
• Allows for extreme target marketing where marketing-to-person is replacing mass
marketing. For customer services, technology makes it easier to manage relationships and
allows for rapid response to customer’s needs
Product
• Creates new digital products/services. Incorporation of innovation into
existing product/service enhances value by offering improved quality,
features & reliability at a lower price
Promotion
• New techniques allow better matching of promotion to customer activity
and individualized promotion. Makes it easier for sellers to offer product
suggestions and promotional tie-ins
Distribution
Pricing
• Creates new channels for distribution and transaction (e.g. e-commerce) that include
making it easier for buyers to place orders. Allows more control over inventory
management and closer monitoring of product shipment
• Enables the use of dynamic pricing
Implementation
 Scenario Planning
Control
 Scenario Planning
Control  GAP Analysis
SMART Objective: Specific, Measurable, Acceptable, Realizable, Time-able
Control  GAP Analysis
Control  GAP Analysis
Control  GAP Analysis
End of MDO Module
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