Summary Overview The marketing management process refers to the planning, implementation, and control of marketing activities. As indicated on the slide, these activities are continuous and decisions made in the past in one area can have implications on the other areas as well. The Marketing Management Process The ongoing process of marketing management requires attention to three key areas: Planning . Planning is required because marketing managers must seek attractive new opportunities. Customers’ needs and wants change. Marketing managers must anticipate such changes and plan how the firm will move to meet them with satisfying products. At the company-wide level, this is called strategic (management) planning -- the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities. Implementation . Implementation is the process of putting marketing plans into action. Instructor’s Note: This topic is covered in greater detail in Exhibit 2-2. Control . Control deals with assessing and evaluating marketing performance. Marketing managers are responsible for seeing to it that an implemented strategy is working. Goals and objectives are typically set and one or more measures of progress are taken to assess performance. When performance falls short of expectations, it is up to the marketing manager to take corrective action.
Market are dynamic, customers’ need, competition, and environment keep change.
Summary Overview As noted previously, strategic market planning is the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities. Strategic market planning means finding these opportunities and developing profitable marketing strategies that the company can use to capitalize on them. Understanding Strategic Market Strategy Planning Marketing Strategy . A marketing strategy specifies a target market and a related marketing mix. This provides the “big picture” of what the firm will do in some market. The two interrelated parts are: Target Market. A target market is a fairly homogeneous (similar) group of customers to whom a company wishes to appeal. Marketing Mix. A marketing mix consists of the controllable variables the company puts together to satisfy this target group. The importance of target customers cannot be over-emphasized. On the slide, the customer (C) is in the center of the controllable variables of the marketing mix. This arrangement is to remind the marketer that the efforts of the firm should always be aimed at meeting customer needs. Teaching Tip: Remind students that this diagram is also a visual reminder of the marketing concept. It does not suggest that the marketer controls the customers’ needs and wants, but rather that marketing mix decisions should meet customer needs. Target Marketing . Target marketing says that the marketing mix is tailored to meet the needs of a specific group of target customers. A company may need a different marketing mix for each distinct group of customers. Mass Marketing . This approach is not target marketing and treats all customers as the same, offering a single marketing mix combination to everyone.
Summary Overview It is useful to categorize all the variables in the marketing mix into four basic ones of Product, Place, Promotion, and Price. These “Four Ps” are combined in differing ways to match the offer made by a company to the needs and wants of different target markets. Instructor’s Note: Remind students that the customer is not part of the marketing mix. Then lead them in discussion to identify why: Because the four Ps are controllables for the marketer -- customer behaviour is not. Schemes accentuating
Summary Overview A channel of distribution refers to any series of firms or persons used to move goods from producers to final users. Channel systems can be either very long or very short. They may be relatively simple or complex. The key for understanding the contribution of the channel to better marketing effort is the matching of the best kinds and types of channels for the product or service and the effective management of the channel. Instructor’s Note: You may wish to discuss the use of added-value channels as a competitive advantage for better marketing efforts.
Decision Areas of the Four Ps Product . The product is often a tangible good that customers buy, but it can also be an intangible service, such as tax and legal preparations. Product-area decisions involve the characteristics of various kinds of products. While exceptions arise, generalizations about product classes can be learned that help marketers develop different product mixes quickly. Place . Place refers to where a product is made available to target market customers. In addition, place decisions also involve making products available when customers want them. A channel of distribution refers to the series of firms or persons between the producer of the product and the final user or consumer. Promotion . Promotion involves telling the target market about the product. Key tools of promotion include: Personal Selling. This involves direct communication between sellers and potential customers, either face-to-face or over the phone. Mass Selling. Mass selling communicates with large numbers of customers at the same time. Advertising, its main form, is any paid form of nonpersonal presentation of ideas, goods, and services by an identifying sponsor. Sales Promotion. This refers to the other types of promotion that marketers use to stimulate interest, trial, or purchase by final consumers or others in the channel. Price . In setting a price, marketing managers must consider the kind of competition in the target market as well as possible customer reactions to different price levels. Accessories
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Summary Overview A marketing program blends all of the firm’s marketing plans into one “big” plan. The marketing program combines strategy and tactics, ideas and actions, and serves as the link between planning and implementation and control. Elements of the Marketing Program Marketing Plan . A marketing plan is a written statement of a marketing strategy and the time-related details for carrying out the strategy. Marketing plans should make clear the following: 1. What marketing mix will be offered, to whom, and for how long. 2. What company resources will be needed at what rate. 3. What results are expected (this should also specify some means of control). Implementation . Implementation involves putting the marketing plan into action. During implementation, marketing managers make many operational decisions -- short-run, often “on-the-spot,” decisions to help implement strategies. Discussion Note: Effective operational decision making is critical to successful implementation. Marketing managers must use the marketing plan as a context for overall guidance -- what the company wants to do -- and then adapt individual decisions to align company efforts and objectives to changing situations. Control . Control is an ongoing process of analyzing and correcting the actions taken in implementation. Control jobs provide feedback to managers that leads them to modify their marketing strategies. Teaching Tip: Students should understand that control is not a punishment mechanism to be used only when someone makes mistakes. Businesses expect that all plans require some fine tuning and even more than that when competitive forces change quickly.
Summary Overview Planning is crucial because it sets the course the company will follow in everything else it does. Good plans implemented poorly might still be profitable. Ill-conceived plans, even implemented well, can lose money and even threaten the survival of the company itself. The Importance of Strategic Market Planning Creative Strategy . Dramatic shifts in strategy are increasingly the norm is fast-moving markets. A focus on consumer needs and wants forces strategic planners to recognize that consumer’s don’t care about company problems -- they want products that provide superior customer value. Creative strategy is more than an interesting approach to business: It is needed for company survival. Instructor’s Note: Planning does not take place in a vacuum. Managers work within an environment of controllable variables (the 4Ps) that interacts with and is affected by other variables (marketing environment variables). Focus on Best Practices . In too many firms, managers do a poor job of planning and implementing marketing strategies and programs. This type of “death-wish” marketing is both costly and ineffective. The average marketing program does not produce great results--and that accounts for the majority of firms. On average, too many new products fail, customer satisfaction levels are too low, customer retention rates are low, return on promotional spending is close to zero, and there’s conflict in channels of distribution. It’s important to do better than what’s typical! marketing share growth, New product success rate,Advertising ROI, Promotional program, Customers satisfaction
Summary Overview The 2 x 2 grid on the slide provides a framework for marketers to think about the types of opportunities available for meeting customer needs. These four broad possibilities help marketers focus on different areas of opportunity. Four Basic Types of Opportunities Market Penetration . Market penetration means trying to increase sales of a firm’s present products in its present markets. This typically calls for a more aggressive marketing mix to increase the use or rate of purchase among current customers or to attract competitors’ customers or nonusers to the company’s products. Market Development . Market development means trying to increase sales by selling present products in new markets. This type of opportunity can focus on either opening up new channels of distribution, as in going international for the first time, or on finding new uses for the product that will logically extend into new consumer markets. Product Development . Product development means offering new or improved products to present markets. In response to the needs of present markets, this type of opportunity may add or modify product features, create several quality levels, or add more types and/or sizes of products to provide the present market with more choices. Diversification . Diversification means moving into totally different lines of business. Diversification involves both new products and new markets and presents the most challenging opportunities. Because of this dual difference, diversification involves higher risks. Locating Opportunities The text points out the changing competitive conditions within Canada (slowing population growth and leveling off of income) make it increasingly necessary for companies to pursue growth in faster-growing international markets.
Summary Overview Successful, innovative firms have strong programs for evaluating identified opportunities to help them select those most appropriate for the firm’s particular competitive position. Evaluating Opportunities Screening Criteria . Opportunities are evaluated in relation to the firm’s strengths and weaknesses, objectives of top management, and environmental trends. Quantitative criteria include sales, profit, and return on investment goals. Qualitative criteria summarize what businesses to be in, which to exclude, which weaknesses to avoid, and what strengths and trends to build on. Whole Plan Evaluation . Marketers must forecast the probable results of implementing the entire marketing strategy. Only an analysis of how the whole plan is likely to work out can provide an effective basis for comparing alternative opportunities. Return on Investment (ROI) . ROI provides a measure for comparing sales and profits against the cost of the resources the company must use to generate revenues. Some opportunities are more costly than others, a fact that can be overlooked if managers focus only on the plans and likely outcomes alone. Planning Grids . Graphical planning grids help managers summarize the interaction of several key factors identified by the company to be important to successful business ventures. In the GE Planning Grid, the interaction of factors in the three green boxes provides the kind of fit the company desires between its resources and environmental trends. Strategic Business Units (SBU) . A strategic business unit is an organizational sub-unit of a larger company that focuses on some product-markets and is treated as a separate profit center. Portfolio Management . This approach to managing multiproduct firms treats each product, division, or SBU like stock in an investor’s portfolio. The main weakness of this approach is that it encourages management to take a short run view of financial returns, often at the expense of long run commitment to the marketing concept. Evaluating Risk . Risk assessment varies from market to market. International markets may be evaluated according to the likelihood of drastic changes in the political environment. Also, risk is increasingly calculated on an “environmental sensitivity continuum” for all relevant environments.
Summary Overview Graphical planning grids help managers summarize the interaction of several key factors identified by the company to be important to successful business ventures. In the GE Planning Grid shown here, the interaction of factors in the three green boxes provides the kind of fit the company desires between its resources and environmental trends. GE uses this grid to evaluate its SBUs for expansion, maintenance, and elimination decisions. CEO Jack Welsh is considered one of the best in the business, with 10 year ROI the second best of all major companies (1986-1996). Discussion Note: Ask students to guess who number one was in that period. Nope, not Bill Gates. Roberto Guiezeta and Coca-Cola. The former Coke CEO recently died of cancer. Strength SIZE ,growth share position margins portfolio
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Summary Overview In the ever-increasing interdependency of the global economy, marketing managers should consider international opportunities. Reasons to Consider International Opportunities It’s a Small World . From a business standpoint, the world is getting smaller -- and therefore more accessible to profitable business growth. There are two reasons for this. First, traditional barriers to international trade such as tariffs, regulations, monetary differences, and distribution are improving in favor of more trade. Second, telecommunications infrastructure -- the highway to move information -- is rapidly improving and expanding. Teaching Tip: Anyone who thinks you can’t make money on the Internet should visit the Dell Computer web site. In 1997, Dell did a million dollars a day in web-based computer sales. In 1998, CEO Michael Dell announced the firm was doing $6 million a day, much of it coming from Europe! Economies of Scale . Successful expansion into international markets can help drive down per unit manufacturing costs. Early Start in New Markets . Innovators and early market share leaders stand the best chance of making profits. Getting there first in new international markets may be the key to long-term success for many firms. Better Trends . The combination of variables affecting how well a firm competes may be better in international markets.
Evaluating Risk Risk assessment varies from market to market. And the farther you go from familiar territory, the greater the risk of making big mistakes. But not all products--or marketing mixes--involve the same risk. Think of the risks as running along a continuum of environmental sensitivity. Some products are relatively insensitive to the economic and cultural environment they’re placed in. Most industrial products are relatively insensitive. At the other end of the continuum we find highly sensitive products that may be difficult or impossible to adapt to all international situations. Consumer products closely linked to other social or cultural variables are at this end of the continuum. pepsi
Basic Marketing, 13th edition
Chapter 2: Strategic Market Planning and the Evaluation of Marketing Opportunities
A.The Management Job In Marketing <ul><li>1. Marketing management process </li></ul><ul><li>---is the process of (1) planning marketing activities,(2)directing the implementation of the plans, and (3)controlling these plans. </li></ul><ul><li>2.See exhibit 2-1 </li></ul>
The Marketing Management Process 2-2 Whole-Company Strategic Management Planning Adjust Plans as Needed Exhibit 2-1 Marketing Planning Implement Marketing Plan(s) and Program Control Marketing Plan(s) and Program
Marketing managers should seek new opportunities <ul><li>----- Marketing managers must seek attractive new opportunities, as customers’ needs change or as the organization’s ability to meet customers’ needs changes. </li></ul><ul><li>----- We should match resources to market opportunities. </li></ul>
Strategic management planning concerns the whole firm <ul><li> Strategic (management) planning is the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities. </li></ul><ul><li>---- Strategic (management) planning is a top-management job that includes planning not only for marketing activities but also for production, research and development, and other functional area. </li></ul>
NOTE <ul><li>** In this text we’ll focus on marketing strategic planning . It is not on whole—company planning </li></ul><ul><li>** We will use the term strategic planning and strategic market planning to mean the same thing. </li></ul>
<ul><li>B. WHAT IS STRATEGIC MARKET PLANNING </li></ul><ul><li>Strategic market planning means finding attractive opportunities and developing profitable marketing strategies. </li></ul>
<ul><li> What is a marketing strategy </li></ul><ul><li>Marketing strategy Specifies a target market and a related marketing mix. </li></ul>
<ul><li>(1) Target market—A fairly homogeneous group of customers to whom a company wishes to appeal. </li></ul><ul><li>(2)Marketing mix—The controllable variables that the company puts together to satisfy a target group. We also call it 4P’s </li></ul>
Marketing mix --- “4Ps ” <ul><li>Product: everything the target group receives </li></ul><ul><li>Price: everything the target group gives up to receive it </li></ul><ul><li>Place: everything that is done to give the customer possession </li></ul><ul><li>Promotion: everything the customer hears about the other three Ps </li></ul>
C. Selecting A Marketing-Oriented Strategy Is Target Marketing <ul><li> </li></ul><ul><li>Target Marketing---A marketing mix is tailored to fit some specific target customers. </li></ul>
<ul><li> Mass Marketing---The typical production-oriented approach that aims at everyone vaguely with the same marketing mix. </li></ul><ul><li>----It assumes that everyone’s need are some. </li></ul>
NOTES <ul><li>1) Mass marketing and mass marketers are different </li></ul><ul><li>2) Target marketing can still mean big markets and profits. </li></ul><ul><li>--Target marketing is not limited to small market segments—only to fairly homogeneous ones. </li></ul>
A Marketing Strategy 2-3 Exhibit 2-2 The Marketing Mix C
D. Developing Marketing Mixes For Target Markets <ul><li> The four Ps make up a marketing mix </li></ul><ul><li>See exhibit 2-3 </li></ul><ul><li># Customer is not part of the marketing mix </li></ul>
The Four Ps of the Marketing Mix 2-4 Exhibit 2-3 Product Place Price Promotion C
Let’s see the 4P’s <ul><li> Product—The good or service for the target’s needs </li></ul><ul><li>The product area is concerned with developing the product for target market. This offering may involve a physical good, a service, or a blend both. Keep in mind that product is not limited to physical good </li></ul>
Place—Reaching the target <ul><li> Place is concerned with all of the decisions involved in getting the right product to the target market’s place. </li></ul><ul><li>** channel of distribution---is any series of firm or individuals who participate in the flow of product from producer to final user or consumer. </li></ul><ul><li>See exhibit 2-5 </li></ul>
Four Examples of Basic Channels of Distribution for Consumer Products Manufacturer or Producer Consumer Procter & Gamble Del Monte Nissan CIBC Wholesaler Wholesaler Retailer Wholesaler Retailer Retailer 2-6 Exhibit 2-5
Promotion---Telling and selling the customer <ul><li> Promotion is concerned with telling the target market about the right product. </li></ul><ul><li>Promotion includes personal selling, mass selling( advertising and publicity), sales promotion. </li></ul>
<ul><li> Price--- making it right </li></ul><ul><li>*Each of the four Ps contribution to the whole </li></ul><ul><li>See exhibit 2-4 </li></ul><ul><li>Strategy jobs must be done together. </li></ul>
Strategy Decision Areas Organized by the Four Ps 2-5 Exhibit 2-4 Product Physical Goods Service Features Quality Level Accessories Installation Instructions Warranty Product Lines Packaging Branding Place Objectives Channel Type Market Exposure Kinds of Middleman Kinds and Locations of Stores How to Handle Transporting and Storing Service Levels Recruiting Middlemen Managing Channels Promotion Objectives Blend Salespeople Kind Number Selection Training Motivation Advertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares? Sales Promotion Publicity Price Objectives Flexibility Level over Product Life Cycle Geographic Terms Discounts Allowances
E . The Marketing Plan Is A Guide to Implementation and Control <ul><li> Marketing plan fill out marketing strategy </li></ul><ul><li>Marketing plan—is written statement of a marketing strategy and the time-related detail for carrying out the strategy. </li></ul>
<ul><li>Implementation puts plans into operation </li></ul><ul><li>Implementation—putting marketing plans into operation. </li></ul><ul><li>Operational decisions—short-run decisions to help implement strategies. </li></ul><ul><li>Control is analyzing and correcting what you’ve done </li></ul>
<ul><li> Several plan make a whole marketing program </li></ul><ul><li>Marketing program Blends all of the firm’s marketing plans into one big plan. </li></ul><ul><li> </li></ul>
Elements of a Firm’s Marketing Program A Firm’s Marketing Program 2-7 Exhibit 2-7 Target Market Marketing Mix Marketing Strategy Time-Related Details and Control Procedures Marketing Plan Other Marketing Plans + + + = = =
Marketing Manager’s Framework C Product Place Price Promotion Cultural and social environment Resource and objectives of firm Competitive environment Economic and technological environment Political and legal
YOUR HOMEWORK <ul><li>READ THE CASE OF PAGE 43, </li></ul><ul><li>--- Strategic marketing planning --- The watch industry . </li></ul><ul><li>Question : </li></ul><ul><li>What do you think form the case? </li></ul>
Distribution of Different Firms Based on Marketing Performance 2-8 2% 2% 14% 14% Total Failure Poor Fair Good Exceptional (Well below average) (Below average) (Well above average) (Above average) 68% (Average Marketing Program) Death-wish marketing Best-practices marketing Exhibit 2-9
G. What are attractive opportunities? <ul><li>1. Breakthrough opportunities are best </li></ul><ul><li>Opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time. </li></ul><ul><li>It’s hard to continue providing superior value to target customers if competitors can easily copy your marketing mix. </li></ul>
<ul><li>2. Competitive advantage is needed--- At least </li></ul><ul><li>A firm has a marketing mix that target market see as better then a competitor’s mix. </li></ul><ul><li>There are three basic types of advantage: lower cost, higher quality, and customer focus. </li></ul>
Types of Opportunities Market Penetration Market Development Product Development Diversification Present Products New Products Four Basic Types of Opportunities Present Markets New Markets 2-9 Exhibit 2-10
H. Types of opportunities to pursue <ul><li>1. Market penetration </li></ul><ul><li>----Trying to increase sales of a firm’s present products in its present markets, probably through a more aggressive marketing mix. </li></ul>
<ul><li>22. Market development </li></ul><ul><li>---Trying to increase sales by selling present products in new market. </li></ul><ul><li>Firms try advertising in different media to reach new target customers. Or they may add channels of distribution or new store in new area. </li></ul><ul><li>Example: McDonald’s, KFC </li></ul>
<ul><li>3. Product development </li></ul><ul><li>----means offering new or improved products for present markets. </li></ul><ul><li>By identifying the present market’s needs, a firm may see way to add or modify product features, create several quality levels ,or add more types or size to better satisfy customers. </li></ul><ul><li>For example: Microsoft </li></ul>
<ul><li>1. Diversification </li></ul><ul><li>---Means moving into totally different lines of business—perhaps entirely unfamiliar products, market, or even levels in the production-marketing system. </li></ul>
I. HOW TO EVALUATE OPPORTUNITIES <ul><li>Developing and applying screening criteria </li></ul>Criteria Quantitative Qualitative ----Sales, profit, ROI ( return on investment ) ----Some kind of statement
Sales and Cost Curves of Two Strategies In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to abandon this product as too costly. 2-10 Dollars Total cost Years Sales 0 1 2 3 4 5 Product A
Use Panning Grids To Evaluate A Opportunities <ul><li>We use General Electric (G E) method to evaluate a portfolio of opportunities </li></ul><ul><li>BUSINESS STENGTHS </li></ul><ul><li>- --- size, growth, share, position, profitability margins, technology position, image, pollution ,strength/weakness . </li></ul><ul><li>INDUSTRY ATTRACTIVENESS </li></ul><ul><li>- ---size, market growth, price, market diversity, competitive structure, industry profitability, technical role, environment factors . </li></ul>
Evaluating Opportunities 2-11 Business Strength Industry Attractiveness High Medium Low High Medium Low No Growth Borderline Growth Exhibit 2-13
Multi-product firms have a difficult strategic planning job <ul><li>----Multi-product firms use </li></ul><ul><li>Strategic business unit </li></ul><ul><li>----- An organizational unit that focuses its efforts on some product-market and is treated as a separate profit central. </li></ul><ul><li>Portfolio management </li></ul><ul><li>--- An approach, It Treats alternative product, division, or strategic business unit as though they are share investments to be bought and sold using financial criteria. </li></ul>
Considering International Opportunities 2-12 Better Trends? Smaller World Competitive Advantage Early Start
Continuum of Environmental Sensitivity 2-13 Exhibit 2-14 Insensitive Sensitive Basic commodity-type consumer products Industrial products Consumer products that are linked to cultural variables
QUIZ <ul><li>List the four types of marketing opportunities and define each type: </li></ul><ul><li>A </li></ul><ul><li>B </li></ul><ul><li>C </li></ul><ul><li>D </li></ul>