KENT 29 BAD 67051 Marketing Management

1. KENT 29BAD 67051Marketing Management Lecture 1 Marketing Management Thinking, Decision Making, & Positioning

2. Text Definition Marketing is a social process involving the activities necessary to enable individuals and organizations to obtain what they need and want through exchanges with others and to develop ongoing exchange relationships.

3. AMA Definition (2004) Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

4. AMA Definition (2007) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

5. …or Marketing is the anticipation, management, and satisfaction of demand through the exchange process.

6. Marketing Management A. Text Definition “…the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives.” (p.14) [ugh]

7. Marketing Management B. Philip Kotler and Kevin Lane Keller (2006) define marketing management as "the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering, and communicating superior customer value."

8. Marketing Management C. Peter Drucker (a management guru) wrote: "Because the purpose of business is to create a customer, the business enterprise has two--and only these two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business .”

9. Marketing Management D. Marketing Management is the management of “innovative and imitative processes” to identify and satisfy consumers more cost effectively than their competitors.

10. II. Marketing Management Philosophies A. Production Concept

11. A. Production Concept Assumes consumers want products that are available and highly affordable. Implies management should focus on improving production and distribution efficiency. Useful when: • demand exceeds supply • product cost is too high

12. B. Product Concept Assumes consumers want product that offer the most quality, performance, and features. Implies the firm should make continuous product improvements. Places the focus on the product, not the customer.

13. C. Selling Concept Assumes consumers will not buy enough product unless there is a strong sales and promotional effort. Useful for: • unsought goods • nonprofit areas

14. D. The Marketing Concept Assumes that achieving the organization’s goals depends on determining and satisfying consumers more effectively and efficiently than competitors. • Mullins, Walker, and Boyd say: “Market-oriented firms…[are]…among the most profitable and successful at maintaining strong competitive positions in their industries over time” (p. 34).

15. D. The Marketing Concept • Three parts to the concept: • The satisfaction of consumers’ needs, wants, and desires, • at a profit (or to attain organizational goals), • through an integrated effort within the firm.

16. Notes: Firms must identify and satisfy customers’ needs AND continue to do so! Competition FORCES sellers to focus on the consumer. Consumers must be seen in the context of all environmental/market factors (managers must have a “market orientation”).

17. E. The Societal Marketing Concept Assumes that customer satisfaction should be delivered in a way that maintains or improves the consumer’s and society’s well-being. (a customer’s wants/needs may be at odds with what is good for society e.g., pollution control)

18. III. The Marketing Concept and: A. Synergy • Managers must create marketing tactics that fit together well. • They must coordinate implementation.

19. III. The Marketing Concept and: B. Hypercompetition • Competitive Advantages do not last. Customer Satisfaction and competition require innovation, cost advantages, and quality enhancements. • Changes create new market segments, with new needs.

20. III. The Marketing Concept and: C. Relationships • Long term alliances with external entities (customers, channel members, and suppliers) • Cross Functional Decision Making Teams within the organization

21. Customer Orientation Market Opportunities Environmental Context PROFITS Competitor Orientation Company Orientation

22. IV. Strategic Planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing markets. Developed by senior managers • Future oriented • Intended to create objectives and strategies for success against competition.

23. IV. Strategic Planning A. Defining the Company’s Mission B. Setting Company Objectives and Goals • Source of Competitive Advantage • Development Strategy for Growth • Allocation of Resources • Search for Synergy

24. Products Current New Markets Products Products Current Market Product Customers Penetration Development New Market Customers Development/ Diversification Expansion V. Types of Corporate GROWTH Strategies

25. V. Types of Corporate Strategies • Growth Strategies for Current Markets Increase sales of EXISTING products to CURRENT markets = • 1. Market Penetration

26. Market Penetration Increase sales of EXISTING products to CURRENT markets. • Increase Market Share • Increase Usage

27. V. Types of Corporate Strategies A. Growth Strategies for Current Markets Develop NEW PRODUCTS for CURRENT markets = • 2. Product Development

28. Product Development Develop NEW PRODUCTS for CURRENT markets to: • Meet changing CUSTOMER needs and wants, • Match new COMPETITIVE offerings, • Take advantage of NEW TECHNOLOGY, and • Meet the needs of SPECIFIC market segments.

29. V. Types of Corporate Strategies • Growth Strategies for New Markets Bring CURRENT products to NEW markets = 1. Market Development/Expansion

30. Market Development • Bring CURRENT products to NEW markets • (e.g., Arm & Hammer)

31. Market Expansion • Taking CURRENT products to NEW DOMESTIC geographic areas • International Expansion • Regional strategy • Multinational strategy • Global strategy

32. V. Types of Corporate Strategies • Growth Strategies for New Markets Taking NEW PRODUCTS to NEW MARKETS = 2. Diversification

33. Diversification • Taking NEW PRODUCTS to NEW MARKETS • (e.g., Arm and Hammer Toothpaste)

34. V. Types of Corporate Strategies A. Growth Strategies for Current Markets • 1. Market Penetration • 2. Product Development B. Growth Strategies for New Markets • 1. Market Development/Market Expansion • 2. Diversification • 3. Strategic Alliances

35. Strategic Alliances • Total collaboration by EXCHANGING key resources to enhance companies’ performance.

36. V. Types of Corporate Strategies A. Growth Strategies for Current Markets B. Growth Strategies for New Markets C. Consolidation Strategies • 1. Retrenchment

37. Retrenchment • WITHDRAW from WEAKER current markets

38. V. Types of Corporate Strategies A. Growth Strategies for Current Markets B. Growth Strategies for New Markets C. Consolidation Strategies • 1. Retrenchment • 2. Pruning

39. PRUNING • REDUCE the number of PRODUCTS offered in current markets

40. V. Types of Corporate Strategies A. Growth Strategies for Current Markets B. Growth Strategies for New Markets C. Consolidation Strategies • 1. Retrenchment • 2. Pruning • 3. Divestment

41. Divestment • Selling off part of the business -- ELIMINATE a product and a current market.

42. V. Types of Corporate Strategies A. Growth Strategies for Current Markets B. Growth Strategies for New Markets C. Consolidation Strategies D. Other Corporate Strategies

43. Other Strategies 1. Based on Competitive Advantage • Low Cost Leader or • Differentiation --Offer a unique value to customers based on: Design, quality, service, variety, etc.

44. Other Strategies 2. Based on Value Disciplines • Operational Excellence --“Okay” products, best price, least inconvenience • Product Leadership --Innovation for best product performance • Customer Intimacy

45. VI. Product Portfolio Models A. The Boston Consulting Group Growth-Share Matrix

46. STAR PROBLEM CHILD High Market- Growth Rate 10% CASH COW DOG Low 0% High Low 10X 0.1X Market Dominance/Relative Market Share The BCG Model

47. The BCG Model -- Cash Cows • Dominant in Low Growth Market • Low Growth Sales • Strong Profits • Generate a Large Cash Flow • Do NOT require Cash Resources to be Reinvested • PROFITS flow to APPROPRIATE Problem Children

48. The BCG Model -- Problem Children • Low Market Share in High Growth Market • High Growth Sales • Weak Profits • Typically, require additional Cash to become a Dominant Star

49. The BCG Model -- Star • Dominant in High Growth Market • High Growth Sales • Profitable, but requires attention • Requires Cash and Resources to stay Dominant • Will be a Cash Cow in the Future

50. The BCG Model – Dogs • Low Market Share in Low Growth Market • Low Growth Sales • Weak Profits • Typically, generate a Little Cash Flow (or have a weak future) • Not a good candidate for Cash Resources to be Reinvested