Lecture 01 marketing_philosophy_and_strategy

MarketingMarketing PhilosophyPhilosophy
and Strategyand Strategy
Chapter OneChapter One

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 1-2
Key Learning PointsKey Learning Points
The marketing conceptThe marketing concept
Different organizational philosophiesDifferent organizational philosophies
about marketingabout marketing
Importance of being customer focusedImportance of being customer focused
The job of the marketing managerThe job of the marketing manager
Typical marketing organizational formsTypical marketing organizational forms
How marketing is changingHow marketing is changing
The focus of this bookThe focus of this book

What is Marketing?What is Marketing?
Marketing is the set of activities thatMarketing is the set of activities that
attempts to influence choice.attempts to influence choice.
Think about “marketing”Think about “marketing”
and the type of peopleand the type of people
who help to market awho help to market a
service.service.
Which of the hotel employeesWhich of the hotel employees
listed at left are involved inlisted at left are involved in
marketing?marketing?
Desk clerkDesk clerk
ValetValet
ConciergeConcierge
WaitressWaitress
ReservationReservation
clerkclerk

Who engages in marketing?Who engages in marketing?
Product manufacturersProduct manufacturers
GovernmentGovernment
Not-for-profit organizationsNot-for-profit organizations
ChurchesChurches
UniversitiesUniversities
PoliticiansPoliticians
Utility companies . . . Etc.Utility companies . . . Etc.

Successful marketing is difficult:Successful marketing is difficult:
There is no “formula” for marketingThere is no “formula” for marketing
success.success.
Requires considerable interaction withRequires considerable interaction with
customers.customers.
Customers often cannot accuratelyCustomers often cannot accurately
describedescribe
their needs.their needs.
Competitive action is difficult to predict.Competitive action is difficult to predict.
Customer tastes and societal trendsCustomer tastes and societal trends
changechange
frequently.frequently.
Implementing strategy precisely is difficult.Implementing strategy precisely is difficult.

Table 1.1Table 1.1
Top 10 Brands 1923 and 2005Top 10 Brands 1923 and 2005

Organizational PhilosophiesOrganizational Philosophies
The Marketing ConceptThe Marketing Concept
Emphasizes a customer focus:Emphasizes a customer focus:
Organizing resources towardOrganizing resources toward
understanding customers’ needsunderstanding customers’ needs
Offering products or servicesOffering products or services
designed to meet needsdesigned to meet needs
Profits result from serving customersProfits result from serving customers
better than the competition.better than the competition.

““The purpose of a business is toThe purpose of a business is to
create and keep a customer. Tocreate and keep a customer. To
do that you have to produce anddo that you have to produce and
deliver goods and services thatdeliver goods and services that
people want and value at prices andpeople want and value at prices and
under conditions that are reasonablyunder conditions that are reasonably
attractive relative to those offered byattractive relative to those offered by
others to a proportion of customersothers to a proportion of customers
large enough to make those priceslarge enough to make those prices
and conditions possible.and conditions possible.””
- Theodore Leavitt

IllustrationIllustration
ING DirectING Direct is one of the fastestis one of the fastest
growing banks in the world.growing banks in the world.
ING meticulously “fires” customersING meticulously “fires” customers
who cost too much or who desirewho cost too much or who desire
exceptions to operating policies.exceptions to operating policies.

Figure 1.1Figure 1.1
Strategic Approaches to theStrategic Approaches to the
MarketplaceMarketplace

Sales Driven:Sales Driven:
Focus: “What we make, we sell.”Focus: “What we make, we sell.”
Little attention paid to the customerLittle attention paid to the customer
Very aggressive selling effortsVery aggressive selling efforts
Seeks to maximize volume, not profitSeeks to maximize volume, not profit

Technology (or product) driven:Technology (or product) driven:
Focus: Research and development;Focus: Research and development;
customer needs are secondarycustomer needs are secondary
Problem: developed technology mayProblem: developed technology may
not satisfy needsnot satisfy needs
Great technology does not guaranteeGreat technology does not guarantee
company successcompany success
““Feature fatigue” commonly resultsFeature fatigue” commonly results

Marketing driven:Marketing driven:
Focus: Embraces marketing, but toFocus: Embraces marketing, but to
the point of excessthe point of excess
Enormous investments in marketingEnormous investments in marketing
researchresearch
Common in consumer goods firmsCommon in consumer goods firms
Problem: Very slow to respond toProblem: Very slow to respond to
changes in the marketplacechanges in the marketplace

““Customers doCustomers do notnot inherentlyinherently
want to buy products.want to buy products.
Products cost money and, forProducts cost money and, for
corporate buyers, reducecorporate buyers, reduce
profits. Customers buyprofits. Customers buy
products for theproducts for the benefitsbenefits thatthat
the product features provide.”the product features provide.”
- Russell S. Winer

ActivityActivity
Customer driven firms focus on sellingCustomer driven firms focus on selling
benefits rather than products or services.benefits rather than products or services.
Supply one or more benefits for each ofSupply one or more benefits for each of
the sentences below:the sentences below:
Don’t sell me a house, sell me . . .Don’t sell me a house, sell me . . .
Don’t sell me toothpaste, sell me . . .Don’t sell me toothpaste, sell me . . .
Don’t sell me a movie, sell me . . .Don’t sell me a movie, sell me . . .
Don’t sell me dry-cleaning, sell me . . .Don’t sell me dry-cleaning, sell me . . .
Don’t sell me life insurance, sell me . . .Don’t sell me life insurance, sell me . . .

Customer driven:Customer driven:
Focus: Benefits desired by buyersFocus: Benefits desired by buyers
Stresses long-term relationships:Stresses long-term relationships:
Conflicts: marketing versus financeConflicts: marketing versus finance
Company reactions to crisisCompany reactions to crisis
Attitudes toward marketing:Attitudes toward marketing:
expenseexpense oror investmentinvestment??

How do organizations achieve aHow do organizations achieve a
customer orientation?customer orientation?
Information is shared among corporateInformation is shared among corporate
functions.functions.
Strategic and tactical decisions areStrategic and tactical decisions are
made cross-functionally and acrossmade cross-functionally and across
divisions.divisions.
Divisions and functions are committedDivisions and functions are committed
to execution of coordinated decisions.to execution of coordinated decisions.

Table 1.2Table 1.2
Customer Orientation ChecklistCustomer Orientation Checklist

Reversing the Value ChainReversing the Value Chain

The Dangers of Being Customer-LedThe Dangers of Being Customer-Led

Does a customer orientation and theDoes a customer orientation and the
marketing concept inhibit companiesmarketing concept inhibit companies
from developing revolutionary newfrom developing revolutionary new
products?products?
No. Marketing managers need toNo. Marketing managers need to
translate new technology into benefitstranslate new technology into benefits
that customers desire.that customers desire.

Marketing as a Value-Added Activity:Marketing as a Value-Added Activity:
Marketing adds value to someMarketing adds value to some
segments of the population.segments of the population.
Capturing value is also important.Capturing value is also important.
Sustaining value is a final concern.Sustaining value is a final concern.

Marketing Manager’s JobMarketing Manager’s Job
The main job of the marketingThe main job of the marketing
manager depends upon:manager depends upon:
The organizational structure.The organizational structure.
The industry.The industry.
The level in the organization thatThe level in the organization that
is being focused upon.is being focused upon.

Desserts Division OrganizationalDesserts Division Organizational
Chart, General FoodsChart, General Foods
CorporationCorporation

Partial Organizational Chart,Partial Organizational Chart,
Grasse Fragrances SAGrasse Fragrances SA

Regional Bell OperatingRegional Bell Operating
Company Marketing OrganizationCompany Marketing Organization

““The main job of anyone inThe main job of anyone in
marketing is to create ormarketing is to create or
implement a marketing strategyimplement a marketing strategy
for the product or service thatfor the product or service that
meets the needs of the targetedmeets the needs of the targeted
customers better than thecustomers better than the
competitorscompetitors’’ offerings andofferings and
achieves the objectives set byachieves the objectives set by
the organization.the organization.””
- Russell S. Winer

The Marketing Managers InteractionsThe Marketing Managers Interactions

““A marketing plan is aA marketing plan is a
written documentwritten document
containing the guidelinescontaining the guidelines
for the productfor the product’’s marketings marketing
programs and allocationsprograms and allocations
over the planning period.over the planning period.””
- Russell S. Winer

Hierarchy of PlanningHierarchy of Planning

Marketing Planning SequenceMarketing Planning Sequence

Table 1.3Table 1.3
Marketing Plan SummaryMarketing Plan Summary

Mobile technologyMobile technology
Customer powerCustomer power
Interactive marketingInteractive marketing
GlobalizationGlobalization
Customer relationshipsCustomer relationships
Communication challengesCommunication challenges
Emphasis on ROIEmphasis on ROI
Sustainable marketing practicesSustainable marketing practices
The Changing Nature ofThe Changing Nature of
MarketingMarketing

Anywhere, Any TimeAnywhere, Any Time

MarketingMarketing
Diffusion of Mobile Technology:Diffusion of Mobile Technology:
Allows increasingly complexAllows increasingly complex
applicationsapplications
Serves as mobile marketing platformServes as mobile marketing platform
Widely available; acts as anWidely available; acts as an
information access “flattener”information access “flattener”

MarketingMarketing
Customers are becoming moreCustomers are becoming more
powerful due to:powerful due to:
The Internet.The Internet.
Web sites and services whichWeb sites and services which
enhance interaction capabilities.enhance interaction capabilities.
Mobile technology revolution.Mobile technology revolution.

““Consumers want a conversation,Consumers want a conversation,
dialogue, to participate, to be more indialogue, to participate, to be more in
control. Consumers expect morecontrol. Consumers expect more
personal attentionpersonal attention –– communication,communication,
products and services that are tailoredproducts and services that are tailored
to their wants and needs. Consumersto their wants and needs. Consumers
will expect customization, so productswill expect customization, so products
and services reflect their unique wantsand services reflect their unique wants
and needs. Marketing is beingand needs. Marketing is being
redefined.redefined.””
- A.G. Lafley- A.G. Lafley

The Internet is an indispensableThe Internet is an indispensable
tool for marketers with respect to:tool for marketers with respect to:
Communications.Communications.
Pricing.Pricing.
Distribution channels.Distribution channels.
MarketingMarketing

Globalization is a key concern, as itGlobalization is a key concern, as it
creates both opportunities andcreates both opportunities and
threats. Several factors influencethreats. Several factors influence
globalization.globalization.
The EuroThe Euro
Democratization of RussiaDemocratization of Russia
Latin America emerges as a marketLatin America emerges as a market
Geopolitical eventsGeopolitical events
The emergence of China and IndiaThe emergence of China and India
MarketingMarketing

China’s global impact:China’s global impact:
One-fifth (1.3 billion) of the world’sOne-fifth (1.3 billion) of the world’s
populationpopulation
Very low-cost supplierVery low-cost supplier
Acquisition of global brandsAcquisition of global brands
India’s global impact:India’s global impact:
OutsourcingOutsourcing
Significant consumer goods marketSignificant consumer goods market
Acquisition of global brandsAcquisition of global brands
MarketingMarketing

Customer relationship managementCustomer relationship management
and database marketing:and database marketing:
Customer retention is paramount.Customer retention is paramount.
Lifetime customer valueLifetime customer value
Relationship marketing relies upon:Relationship marketing relies upon:
Database marketingDatabase marketing
• Mass customizationMass customization NikeID.comNikeID.com
Customer satisfactionCustomer satisfaction
Personalization often leads to loyalty.Personalization often leads to loyalty.
MarketingMarketing

Marketers face many marketingMarketers face many marketing
communication challenges:communication challenges:
Decline in media usage.Decline in media usage.
Increase in DVRs.Increase in DVRs.
Increase in time spent on onlineIncrease in time spent on online
and audience fragmentation.and audience fragmentation.
Decline in prime time viewership.Decline in prime time viewership.
18-24 year olds are increasingly18-24 year olds are increasingly
difficult to attract to TV.difficult to attract to TV.
MarketingMarketing

Kimberly Clark’s Media MixKimberly Clark’s Media Mix

ROI and marketing investments:ROI and marketing investments:
Pressure to measure ROIPressure to measure ROI
Pressure to develop betterPressure to develop better
strategies and programsstrategies and programs
Sustainable marketing practicesSustainable marketing practices
MarketingMarketing

Focus of the BookFocus of the Book
Ch 1: Marketing manager’s job,Ch 1: Marketing manager’s job,
marketing function, changes inmarketing function, changes in
marketingmarketing
Ch 2: Components of marketingCh 2: Components of marketing
strategy, differentiationstrategy, differentiation
Ch 3, 4, 5, 6: Collecting informationCh 3, 4, 5, 6: Collecting information
useful for marketing decisionsuseful for marketing decisions
Ch 7, 8: Product positioning, branding,Ch 7, 8: Product positioning, branding,
packaging, new productspackaging, new products

Focus of the BookFocus of the Book
Ch 9, 10, 11, 12, 13: Pricing,
communication, sales promotion,
distribution, sales, and direct
marketing decisions
Ch 14: Building long-term customer
relationships
Ch 15: Marketing services

Executive SummaryExecutive Summary
Marketing is pervasive.Marketing is pervasive.
Marketing is difficult.Marketing is difficult.
Customer retention is critical.Customer retention is critical.
Marketing concept is customer and competitorMarketing concept is customer and competitor
focused.focused.
Customer-oriented organizations invest in theCustomer-oriented organizations invest in the
customer.customer.
Technological innovation is compatible with aTechnological innovation is compatible with a
customer-orientation.customer-orientation.
Changes in the marketing environment impactChanges in the marketing environment impact
the marketing manager’s job.the marketing manager’s job.

Lecture 01 marketing_philosophy_and_strategy

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