What do you think marketing is? Does it improve the quality of life? Is it a science or an art ? How do you define it? Marketing involves decisions which are crucial to the success of every organisation regardless of size, profit or non-profit. Marketers must market their ideas for improving prospects and performance to collegues, customers, suppliers, strategic partners and perspective employees. A strong customer focus a nd well conceived and executed marketing strategies are more nb than ever as global marketplace becomes more crowded and competitive
Accomplishing this requires the firm to Target those customer groups whose needs are most consistent with the firm’s resources and capabilities. Develop products and/or services that meet the needs of the target market better than competitors Make its products and services readily available to potential customers Develop customer awareness and appreciation of the value provided by the company’s offerings Obtain feedback from the market as a basis for continuing improvement in the firm’s offerings Work to build long-term relationships with satisfied and loyal customers Focus on customers and their needs to build and sustain a healthy topline – thru revenue that is sales. As Peter Drucker suggests everything a company does internally is a cost centre, the only profit centre is a customer whose check doesn’t bounce. A customer focus is nb why? Enables a firm to enjoy success by exploiting changes in the marketplace, by developing products and services that have superiourity over what is currently available and by taking a more focused and integrated cross-functional approach to their overall operations.
Without a top line – revenue – there can be no bottom line profit. Marketing learns what customers want and need, so the company can deliver the benefits desired Marketing helps provide the right goods and services to satisfy such wants and needs Marketing attracts and retains customers for the long term Marketing facilitates exchange relationships among people, organisations and nations. Ties in with economic Theory: As economies develop– division of labour increase specialisation increases but economies cannot benefit unless they can facilitate trade and exchange of surpluses. Nations need to penetrate all markets for its economic output Not all exchange relationships lead to long and mutually satisfying relationships
Let a vigorous debate flow for a few minutes. Then ask: Can you think of successful goods or services that were developed need first? Idea first? Post-It notes (idea first – an accident). Many hi-tech products (idea first). Gatorade (need first – Florida Gators football team). Ultimately, either starting point is okay. In the end, however, a genuine want or need must be filled or no one will buy.
3 Here’s how customer needs drive purchase decisions, at least in theory. For what kinds of goods or services is this sequence likely to hold. For what kinds is it not?
Product decisions: what must be decided here? Pricing decisions: what must be decided here? Promotion decisions: what must be decided here? Place (distribution) decisions: what must be decided here? In other words, the 4 Ps
9 There’s an abundance of decisions that marketing managers must make for every good or service they take to market, shown here. What sort of market knowledge is required to make these decisions? Customer needs – at trade and consumer levels Context – trends, etc Competitive offerings Company objectives and capabilities In short, the four Cs
Info re customer needs: seller buyer Info re product offering: seller buyer Goods or services: seller buyer Money: seller buyer
See notes for previous slide
Identify company objectives for the new product Market analysis: to understand market context and customer wants and needs Competitor analysis A marketing strategy: the 4 Ps
No: performance targets are often missed, of course. To better ensure delivery of planned performance, a good marketing plan should include: Sales forecasts and pro forma budgets against which to measure results Plan for implementation and control Refer to marketing plan project outline, if assigned
Company’s primary company goal is to satisfy customer needs Peter Drucker: The purpose of any business is to win a customer. True for all parts of the organization, i.e., cross-functional coordination The above should result in superior profitability
Advantages Promotes listening to the customer Happier customers more likely to be more loyal – good for long term profitability More customer and competitive information is likely to be obtained and used – good for profitability More likely to identify changes in market and competitive conditions – avoid being blindsided If the first two steps are done well, the third should take care of itself Helps employees focus on profit, not sales volume Possible drawbacks May lead the firm to seek to satisfy all customer groups – a possible prescription for disaster Customers may not be able to articulate what they really want and need – and will pay for! Current customers may not be the most attractive target – must avoid tyranny of current customers, if others are more attractive Implies tailoring products to different needs of different segments – may be costly Implies need for research – costs money, may slow reaction to market changes
The definition suggests that a strategy should specify: What (objectives to be accomplished) Where (on which industries and product-markets to focus) How (which resources and activities to allocate to each product-market to meet environmental opportunities and threats and to gain a competitive advantage)
Advantages of a narrowly defined mission Helps focus scarce resources Provides clear guidance re what should be done Clarifies competencies needed in the firm Can lead to better understanding of a narrow customer group or focused technological domain Advantages of a broadly defined mission Larger market to serve Facilitates evolution of the firm’s strategy with market and technological changes: e.g., railroads transportation Helps avoid being blind-sided In short, no easy answer here. One key (Abell 1980) is to think in terms of Customer groups Customer functions or needs to be satisfied Technology employed (broadly defined) Example - Disney: Jim Collins and Jerry Porras (HBR 1996) argue that while a company’s practices and strategies should change continually, its core ideology should not; i.e.: Its core values: a handful of guiding principles by which it navigates Disney: imagination and wholesomeness Its core purpose: its most fundamental reason for being Disney: to make people happy What does Disney’s core ideology tell its leaders about what kinds of products or services to offer and not to offer, or what markets to serve?
Marketing Management <ul><li>Marketing attempts to measure and anticipate the needs and wants of a group of customers and respond with a flow of need- satisfying goods and services. </li></ul>
Does marketing create value for customers and shareholders?
<ul><li>Marketing is a social process involving the activities necessary to enable individuals and organisations to obtain what they need and want through exchanges with others and to develop ongoing exchange relationships </li></ul>
Which should come first – the customer need or the product idea?
Exhibit 1.2 Customers Buy Benefits, Not Products Need Benefits sought Choice criteria Product/service features Brand/supplier chosen
<ul><li>Many firms have turned their attention to building a continuing long-term relationship between the organisation and the customer as the ultimate objective of a successful marketing strategy </li></ul>
Evolution of Marketing <ul><li>Production Era </li></ul><ul><li>Sales Era </li></ul><ul><li>Marketing Era </li></ul><ul><li>Relationship Era </li></ul>
What sort of decisions must marketing managers make to effectively serve customer needs?
Exhibit 1.6 Decisions Within the Four Elements of the Marketing Mix <ul><li>Product </li></ul><ul><li>Quality </li></ul><ul><li>Features </li></ul><ul><li>Brand name </li></ul><ul><li>Guarantees/warranties </li></ul><ul><li>Services /spare parts </li></ul><ul><li>Place </li></ul><ul><li>Numbers and types of middlemen </li></ul><ul><li>Locations/availability </li></ul><ul><li>Inventory levels </li></ul><ul><li>Transportation </li></ul>The target market <ul><li>Style </li></ul><ul><li>Options </li></ul><ul><li>Packaging </li></ul><ul><li>Price </li></ul><ul><li>Discounts </li></ul><ul><li>Allowances </li></ul><ul><li>Credit terms </li></ul><ul><li>Payment period </li></ul><ul><li>Rental/lease </li></ul><ul><li>List price </li></ul><ul><li>Promotion </li></ul><ul><li>Advertising </li></ul><ul><li>Personal selling </li></ul><ul><li>Sales promotion </li></ul><ul><li>Point-of-purchase materials </li></ul><ul><li>Publicity </li></ul>The marketing mix is the combination of controllable marketing variables that a manager uses to carry out a marketing strategy in pursuit of the firm’s objectives in a given target market.
What must change hands between marketers and their customers if these efforts are to be successful?
Exhibit 1.8 What Must Change Hands? Information About the Market And Customer Needs and Wants Information About the Product And The Offer Physical Product or Service Money or Something Else of Value SELLER BUYER
So, if one were to plan the various things to be done to market a new product, what are the basic elements that such a plan would consist of?
Are planned results always delivered in most organizations?
Guidelines for Market-Oriented Management <ul><li>Create customer focus throughout the business </li></ul><ul><li>Listen to the customer </li></ul><ul><li>Define and nurture your distinctive competence </li></ul><ul><li>Define marketing as market intelligence </li></ul><ul><li>Target customers precisely </li></ul><ul><li>Manage for profitability not sales volume </li></ul><ul><li>Let the customer define quality </li></ul><ul><li>Measure and manage customer expectations </li></ul><ul><li>Build customer relationships and loyalty </li></ul>
<ul><li>Define the business as a service business </li></ul><ul><li>Commit to continuous improvement and innovation </li></ul><ul><li>Manage culture along with strategy and structure </li></ul><ul><li>Grow with partners and alliances </li></ul><ul><li>Destroy marketing bureaucracy </li></ul>
Does having a market orientation make sense? What are the advantages? What might be the drawbacks?
Companies often talk about their strategies? What does strategy mean? A fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.
In defining their strategies, should companies pursue broadly or narrowly defined missions? What are the advantages of each approach?
Mission Statements <ul><li>Undisputed marketplace leadership – </li></ul><ul><li>The Hershey Company </li></ul><ul><li>We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world </li></ul><ul><li>The Ford Company </li></ul>
<ul><li>People love our clothes and trust our company. We will market the most appealing and widely worn casual clothing in the world </li></ul><ul><li>We will clothe the world. </li></ul><ul><li>Levi Strauss </li></ul>