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Session 1 Making Marketing Value Decisions: Markets and the Marketing Process

Session 1 Making Marketing Value Decisions: Markets and the Marketing Process. Teaching staff. Instructor Name: Mr Steve James Email: steve@stevejamesconsults.com Course Co-ordinator Name: Ms Christine Armstrong Email: christine.armstrong@newcastle.edu.au.

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Session 1 Making Marketing Value Decisions: Markets and the Marketing Process

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  1. Session 1 Making Marketing Value Decisions: Markets and the Marketing Process

  2. Teaching staff Instructor Name: Mr Steve James Email: steve@stevejamesconsults.com Course Co-ordinator Name: Ms Christine Armstrong Email: christine.armstrong@newcastle.edu.au Please use private email to contact your instructor or course coordinator only when you have a question or issue of a personal nature. All other questions or comments should be posted on the appropriate thread on the Discussion Board so that all students can benefit from the dialogue. Your instructor/ course coordinator will respond to personal emails within 48 hours.

  3. Prescribed text Solomon, M.R. Marshall, G.W. & Stuart, E.W. (2012). Marketing: Real People Real Choices (7th Edn), Pearson Education Inc., Upper Saddle River, New Jersey, USA. (Pearson International Edition) ISBN-10: E994249712 ISBN-13: 9314994249712 • You are expected to read widely when preparing your assignments. In particular, you should use the resources of the university library, especially the journal literature. • Note: Consultation of lecture notes does not count as reading widely.

  4. ASSESSMENT DETAILS * Assignment returnable after approval of course results

  5. Mid Term Quiz –25% Due date: In class, Module 5, A mid term Quiz will be conducted during Module 5. The Quiz is worth 25 % of your final mark. Only the topics discussed in the first four weeks of the course are covered in this Quiz.

  6. Situational analysis report –30% Due date: In class, Week 9 (to Turnitin) Word limit: 5000 words (excludes Exec Summary, Appendices and References) • Marketing Plans commence with a thorough current Situational Analysis. • A marketing situation analysis presents data on the target market, product, distribution, competition and the macro environment. It is synthesized to identify the major strengths, weaknesses, opportunities and threats (SWOT) facing the company / product line and to highlight emerging issues. • Groups of four (or as indicated by your lecturer) are formed by mutual agreement with teaching staff (See Group Work section 15).The group is to undertake a Situational Analysis of a company selected from the following list: • Jetstar, Aldi, Cricket Australia, Taronga Zoo, • Gloria Jeans, Sanitarium, Holden, Hyundai • It is appropriate to narrow analysis to a product line if multiple products exist

  7. Situational analysis report –30% YOU ARE WELL ADVISED TO NOT EVEN THINK ABOUT PLAGIARISING OR USING THE ESSAYS YOU CAN BUY FROM THE INTERNET. IF YOU CAN FIND THEM, SO WILL TURNITIN.

  8. Individual reflective essay–45% Due date: In class, end of Week 12, (to Digital Drop Box) Word limit: 2500 words (excludes Exec Summary, Appendices and References) • A marketing plan is an essential tool for any marketer providing direction for a brand, product or organization. • A marketing plan describes the marketing environment, marketing objectives and marketing strategies. • You are required to prepare an essay that explores the nature and characteristics of the marketing plan tool. • You must incorporate academic literature to support/justify your discussion. Unsubstantiated statements will not provide credibility to your discussion. Assignment returnable after approval of course results

  9. Let's Start

  10. BE PREPARED TO QUESTION SOME OF THE MARKETING YOU ALREADY KNOW

  11. Session 1: Learning Objectives • Define marketing and discuss its role in business. • Explain the evolution of the role and process of marketing. • Accounting for Needs and Wants • What can be marketed? • Discuss value from the perspectives of customers, businesses and society. • Identify and debate social and ethical issues associated with marketing. • Explain marketing as a process to support business strategy.

  12. MARKETING: EVOLUTIONARY DYNAMISM

  13. WHAT IS MARKETING? • 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 (AMA) • The management process responsible for identifying, anticipating and satisfying customer requirements profitably (CIM)

  14. WHAT IS MARKETING? • Marketing is the art and science of creating change (disequilibrium) in markets in such a way that the change benefits the firm (or an alliance of firms) and, consequently, comparatively "disadvantages" rivals. If a market is in equilibrium, marketers are not doing their job.(*) (*) PR Dickson, PR (1996) The static and dynamic mechanics of competition: a comment on Hunt and Morgan's comparative advantage theory. Journal of Marketing | October 1, p.102 (accessed 28/11/201 at)http://peterdickson.org/Competitionmechanics1996.pdf)

  15. Marketing is EXCHANGE AND THE RESULT OF EVOLUTION • Marketing exists because people have needs and wants that they are willing to satisfy by giving up things of value (like money for goods and services). Self-sufficiency Barter

  16. Marketing is EXCHANGE AND THE RESULT OF EVOLUTION • Marketing exists because people have needs and wants that they are willing to satisfy by giving up things of value. Decentralized exchange Centralized exchange From Flower Auction Aalsmeer, plants and flowers are sent to all four corners of the globe. Buyers converge on Aalsmeer for the simple fact that it boasts the biggest supply and the best assortment.

  17. REFLECT ON THE VARIOUS EXCHANGES JUST DISCUSSED. WHO DETERMINES WHAT IS VALUE IN EACH CASE? Things of value are to be understood as goods or services that are ASSESSED POSITIVELY by THE CONSUMER - AS PERCEIVED BY THE CONSUMER. So value is ‘perceived value’

  18. FIRM orientation ORIENTATION refers to a philosophy of doing business, conditioning what businesses do and how. That is, what does it entail, who is responsible for what, ... Orientation implies a way of thinking about marketing. This way of thinking has changed over time (NOTE: Change over time does not imply evolution in orientation. One firm may have more than one orientation (e.g. May depend on product and/or market).

  19. Major eras in the evolution of marketing thought (1) • Production(management philosophy) • Emphasizes the most efficient ways to produce and distribute products. Marketing had little importance. • Sales(management philosophy) • Aggressive selling to move goods to consumers. • Some people still think marketing = advertising + sales. • Relationship/Consumer orientation(management philosophy, focus on satisfying consumers’ needs & wants) • Quality management is important to retain customers long-term (e.g. TQM). Marketing means dialogue and collaboration with customers.

  20. Major eras in the evolution of marketing thought (2) • Triple Bottom Line (management philosophy) • Seeks to maximize financial, social, and environmentalbottom lines (i.e. make $$ and contribute to society). • Social marketing concept - marketers must satisfy customers’ needs in ways that benefits society, as well as delivering value to the company. • Sustainability - Creating products that meet present needs while ensuring that future generations can have their needs met • Greater focus on accountability - ROI(Return on Investment) is the direct financial impact of a company’s expenditure of resources (e.g. time or money)

  21. A DIFFERENT LOOK AT THE Development in marketing thought Service Dominant Logic (SD-L) Sustainability marketing Digital marketing

  22. MARKETING: A PROCESS TO DEAL WITH MARKETS

  23. Marketing IS THE PROCESS OF DEALING WITH MARKETS (i.e.a group of people / firms) ‘Consumer markets’ involve the end users of products (goods and/or services) ‘Business markets’ involvefirms who produce to serve other firm’s products

  24. The type of market and Marketing process depends on the market participants B2C – Business to Consumer Marketing B2B – Business to Business Marketing C2C – Consumer to Consumer Marketing WHO ARE THE PARTICIPANTS/STAKEHOLDERS IN THESE ACRONYMS? B2A A2B B2G G2B B2A

  25. Business Stakeholders Groups of people who can affect or are affected by the achievement of an organization’s purposes - Freeman, R. (1984) Strategic Management: a stakeholder approach, Boston. Jones, R. (2005). Finding sources of brand value: Developing a stakeholder model of brand equity. Journal of Brand Management, 13(1), 43-63.

  26. marketing is a processMarkets consist of people Modern marketing is about understanding markets and meeting their needs and wants. ‘Needs’ are things (e.g. food, water, clothing, housing). Customers feel deprived if their needs are not met. Maslow's hierarchy of needs ‘Wants’ are more sophisticated. We may not need a certain type of food or TV but we surely feel the want.

  27. More about Needs and wants ‘Needs’ and ‘wants’ are different but related we ‘want’ to have a ‘need’ met in a particular way Needs Wants Hence, ‘Needs’ and ‘Wants’ are used together. A business that takes into account, and seeks to satisfy customers need and wants is market oriented. Customer satisfactionis a measure of how well needs and wants are met

  28. About customer satisfaction (Q3) • We need to understand customer satisfaction as a relative and dangerous concept. • Satisfactionismeasured at a point in time.So your job as a marketer is not done when your customers are satisfied. • As customers’ needs and wants change over time, so today’s satisfaction is tomorrow’s dissatisfaction..

  29. What can be marketed?Any ‘product’: any good, service, or idea What need or want is met for each type of product? • Consumer g & s • physical good (cereal) • service (airline) • Need __________________ • Want: __________________ • B2B g & s • Intel components • Cleaning contractor • Need __________________ • Want: __________________ • Not for Profit • Red Cross • Salvation Army • Need __________________ • Want: __________________ • Ideas, places, people • Anti-litter campaign • Jackie Chan • Paris -tourism destination • Need __________________ • Want: __________________

  30. COURSE ASSUMPTION 1 MARKET ORIENTATION Market orientation is generally understood as the implementation of the ‘marketing concept’ - a philosophy of doing business, which puts the customer’s needs at the centre of the organisation, while accounting for the environment where a business operates (including all other market participants, such competitors and government). Mullins,J., Walker Jr, O., Boyd Jr, H. and Larreche, J. (2005) Marketing Management: A Decision-Making Approach, 5thEdt, McGraw-Hill / Irwuin, Sydney

  31. Customer Satisfaction Total Company Effort MARKETING CONCEPT COMPETITIVE MARKETS TheMarketingConcept Interest of Society Profit

  32. Please always keep the market orientation philosophy in mind. Ask yourself: What would be different if I was using a different philosophy (e.g. monopolist orientation)?

  33. UNDERSTANDING VALUE WHAT IS BEING SOLD IS UNLIKELY TO BE PERCEIVEDEQUALLY BY BUYERS & SELLERS.

  34. VALUE SUPPLIERS WANT TO COVER COSTS & TO MAKE AS MUCH PROFIT AS POSSIBLE (OR TO MAXIMISE WHATEVER OBJECTIVE THEY HAVE) CUSTOMERS SEEK TO MAXIMISE THE BENEFITS RECEIVED FROM WHAT THEY BUY

  35. GROSS VALUE SUM OF ALL PERCEIVED BENEFITS - SUM OF ALL PERCEIVED COSTS This applies to both buyers and sellers NET VALUE

  36. WHEN CUSTOMERS CHOOSE BETWEEN SUPPLIERS, THEY ARE BASICALLY COMPARING NET VALUES PERCEIVED BENEFITS PERCEIVED COSTS NET VALUE MARKETING STRATEGIES MUST FOCUS ON NET VALUE TO ACHIEVE COMPETITIVE ADVANTAGE THE FIRM THAT OFFERS THE HIGHEST NET VALUE IS LIKELY TO ACHIEVE COMPETITIVE ADVANTAGE

  37. main ideas underlying Value • Value to the customer • The most common meaning of value is the ratio of costs (price) to benefits. Costs may be more than price, (e.g convenience, quality, location); Benefits may be more than quality (e.g. brand name, features). • Value Proposition (by a supplier) • Refers the whole bundle of benefits to the customer. • Emphasis is on the question: “What makes this product different?” • Suppliers identify and communicate their value propositions.

  38. main ideas underlying Value • Value is in the eye of the beholder • Because it’s not just about price, and its not just about quality. Value is really a combination of factors, such as price, quality, convenience, delivery/credit, before and after the sale service, etc. • Different buyers weight the importance of each element differently, so while some consumers find price more important the before or after the sale service for certain items, other consumers may feel just the opposite. • Marketers need to understand which factors are important to the majority of their customers, so that they can present a strong value proposition.

  39. Value to the firm • Relationship marketing regards customers as partners, i.e.,, the emphasis moves from a transaction to a connection that may involve co-production; • Why? It is more expensive to attract new customers than to retain current ones • Calculating customer lifetime value (CLV) allows a company to decide which customers are “worth keeping” versus those which should be “fired”. • CLV is about valueto the firm

  40. Value AND COMPETITIVE ADVANTAGE To gain competitive advantage, a business needs to: • Identify and develop a distinctive competency or capability (an ability to outperform the competition) • Turn the distinctivecompetency / capability into a differentiating benefit for customers • Ensure consumers see the value proposition as superior to that offered by competitors • Examples: • BMW automobiles • McDonalds fast food restaurants

  41. Value AND SUSTAINABLE COMPETITIVE ADVANTAGE As long as the value proposition is perceived by consumers as superior to competing value propositions, competitive advantage is sustainable over time. Capabilities and / or competencies that are unique to a firm imply that other firms cannot offer the same benefits to consumers -- hence the firm’s value proposition is also unique.

  42. Differentiating Benefit? What benefit does this product provide that may be important to consumers? Are the benefits unique when compared to the competition? What distinctive competencies are they based on? Do you think this competitive advantage is sustainable over time?

  43. COURSE ASSUMPTION 2 MARKET ORIENTATION Competitive advantage results from VALUE CREATION / INNOVATION

  44. Value Chain THE VALUE CHAIN REFERS TO A SERIES OF ACTIVITIES INVOLVED IN DESIGNING, PRODUCING, MARKETING, DELIVERING, AND SUPPORTING ANY PRODUCT. The value chain for goods consists of • Inbound logistics • Operations • Outbound logistics • Marketing final product • Service The ‘support’ or after sales service is often the differentiating feature. Why?

  45. THE DARK SIDE OF MARKETING • Marketing is often criticized • Illegal practices occur sometimes (e.g., failure to disclose all relevant facts) • Some marketing activities have negative effects on society (e.g. excessive use of paper resources) • The dark side of marketing includes: • Addictive consumption, exploitation, illegal activities, collusion, …

  46. Do marketers manipulate consumers? Or should people be held responsible for their own choices? This ad is critical of the current trend of lawsuits brought against fast-food companies by people who blame their health problems on the fast food industry. It’s Debatable! WHAT DO YOU THINK? Visit ConsumerFreedom.com

  47. marketing AS A PROCESS Marketing Planning (thinking carefully and strategically about the big picture) • Analyzing the marketing environment • Developing a marketing plan • Deciding on a market segment • Choosing the marketing mix - Product, Price, Promotion, Place and Process We cover these areas throughout the modules

  48. The ‘P’sof the marketing mix Note that the 4Ps have been extended to 5Ps or 7Ps in most texts The 5Ps also account for service Processes (interactions and interfaces) When 7Ps are used, the ‘extra’ Ps are for process, people and physical elements

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