Download Consumer Behavior: People in the Marketplace

PGDBM MARKETING MANAGEMENT
Copyright © 2003 Prentice-Hall, Inc.
Key Questions:
• Why study Marketing Management in the PGDBM?
• How does marketing “fit “ into your job and daily life?
• What you should be able to do upon completion of the module are:
1. Display an understanding of designing and implementing
Marketing Strategies and their application
2. in the business environment
3. Have the ability to formulate strategic planning as a primary tool
in business development
4. Display conceptual skills obtained by integration of marketing
knowledge and work experience.
1-2
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Introduction
CH01
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What Is Marketing?
Marketing: typically seen as the task of creating, promoting, and
delivering goods and services to consumers and businesses.
Marketing is a process by which companies create value for customers
and build strong customer relationships to capture value from
customers in return
Marketing management is the art and science of choosing target markets
and building profitable relationships with them
 What customers will we serve?
 How can we best serve these customers?
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A Simple Marketing System
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The Four
P’s of the
Marketing
Mix
1-6
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Marketing-Mix Strategy
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Company Orientations towards the
marketplace
Production
concept
Product
concept
Selling
concept
Marketing
concept
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Societal
concept
Holistic
marketing
Company Orientations Toward the
Marketplace
The Customer/Marketing Concept
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Marketing of today to
•
•
•
•
•
•
Everyone does the marketing
Build brands through performance, not just advertising
Customer retention rather than customer acquisition
From none to in-depth customer satisfaction measurement
From over-promise, under-deliver to under-promise, over-deliver
Marketing practices are changing:
o Designing an Attractive Website
o Placing Ads and Promotions Online
o Building a Revenue and Profit Model
o Customer Relationship Marketing
 Reduce rate of customer defection
 Increase longevity of customer relationship
 Enhance growth potential through cross-selling and up-selling
 Make low profit customers more profitable or terminate them
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Developing Marketing Strategies
CH02
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Business Unit
Strategic Planning
The Business Strategic-Planning Process
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The Marketing Process
Steps in the Planning Process (marketing process)




Analyzing Market Opportunities
Developing Marketing Strategies
Planning Marketing Programs
Managing the Marketing Effort
o Annual-plan control
o Profitability control
o Strategic control
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Factors
Influencing
Company
Marketing
Strategy
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Marketing Strategy
 Marketing strategy is a firm’s overall program for selecting and
satisfying a target market through a careful balance of the elements
of the marketing mix
 Marketing Strategy
 Positioning
 Product Management
 Pricing
 Distribution
 Marketing Communications
 Marketing Research
 Factors influencing marketing strategy:
 Organisational objectives and resources
 Attitude to change and risk
 Market structure and opportunities
 Competitor strategies
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Product Portfolio Analysis
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Marketing Strategy
Strategic planning and analysis
1. Situation analysis
a. Internal analysis
i. Determine if company is production orientated
(sells what it makes) or market (makes what it
can sell) orientated (customer, competitor,
integrated decision making) – p 90
ii. Strengths and weaknesses of organisation
iii. Balance scorecard = internal abilities
 Vision, long term and short term objective
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Marketing Strategy
A SWOT analysis
is a method of
studying
organizational
resources and
capabilities to
assess the firm’s
strengths and
weaknesses and
scanning its
environment to
identify
opportunities and
threats
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Marketing Strategy
Strategic planning and analysis
Growth opportunities and strategies can be identified by
using the Ansoff Growth Matrix
Three cells:
 Market penetration (current products in current
markets)
 Market development (current products in new markets)
 Product development (new products in current
markets)
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Marketing Strategy
Strategic planning and analysis
2. Customer analysis
a. Segmentation (i.e. Geographic, demographic)
b. Target (i.e. Undifferentiated, customized)
c. Positioning – value hierarchy and customer
satisfaction
d. Competition analysis – chosen brand
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Marketing Strategy
Strategic planning and
analysis
3. Industry analysis
a. Macroenvironment
(past and future/
opportunity and
treat) - PESTLE
analysis
b. Industry
attractiveness –
Porter’s 5
Forces
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Marketing Strategy
Strategic planning and analysis
4. Competitor analysis
a. 2 steps:
i. Competitor analysis to identify, assess and
select key competitors
• Consider if competitor is rival or future
collaboration partner
ii. Determine competitive marketing strategies
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Contents of a Marketing Plan
Contents of the Marketing Plan
 Executive Summary
 Current Marketing Situation
 Opportunity and issue analysis
 Objectives
 Marketing strategy
 Action programs
 Financial projections
 Implementation controls
4-24
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Gathering information and scanning
the environment
CH03
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Marketing Information System
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The Company’s Microenvironment
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The Company’s
Macroenvironment
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Importance of environmental
scanning
• The environment is continually changing, so purposeful
scanning by management is necessary to keep abreast of
change
• Scanning is necessary to determine which factors in the
environment pose a threat to the enterprise’s present goals
and strategy
• Scanning is also necessary to determine which factors in
the environment present opportunities for the more effective
attainment of the goals of the enterprise by modifying its
present strategy
• Enterprises that scan the environment systematically are
more successful than those that do not.
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Marketing Research and Forecasting
demand
CH04
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Developing Marketing Information
Marketing research is the systematic design, collection, analysis, and
reporting of data relevant to a specific marketing situation facing an
organization
 Consists of 4 steps:
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Forecasting & demand measurement
Market Demand - The marketer’s first step in evaluating marketing opportunities
is to estimate total market demand.
Market Forecast - Only one level of industry marketing expenditure will actually
occur. The market demand corresponding to this level is called the market
forecast.
Market Potential - The market forecast shows expected market demand, not
maximum market demand
Company Demand - is the company’s estimated share of market demand at
alternative levels of company marketing effort in a given time period.
Company Sales Forecast - is the expected level of company sales based on a
chosen marketing plan and an assumed marketing environment.
Company Sales Potential - is the sales limit approached by company demand as
the company marketing effort increases relative to that of competitors.
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Estimating current demand
Total Market Potential
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Area Market Potential
Market-Buildup Method
Multiple-Factor Index Method
Industry Sales and Market Shares
Estimating Future Demand
Survey of Buyers’ Intentions
Composite of Sales Force Opinions
Expert opinion
Past Sales Analysis
Market Test Method
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Creating customer value, satisfaction
and loyalty CH05
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Creating value, satisfaction &
loyalty
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Analysing consumer & business
markets CH06
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Characteristics Affecting Consumer
Behaviour
Factors Influencing Consumer Behaviour
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The Buyer Decision Process
Buyer Decision Making Process
Consumer
processes
information to
arrive at
brand choices
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Consumer
buys the most
preferred
brand due to
attitudes of
others or
Unexpected
situational
factors
Satisfaction or
dissatisfaction
due to
consumer’s
expectations
and product’s
perceived
performance.
Customer
satisfaction is
a key to
building
profitable
relationships
with
consumers
Purchasing/ Procurement process
8 stages:
1. Problem
recognition
6. Supplier
selection
7. Orderroutine
specification
2. General
need
description
5. Proposal
solicitation
8.
Performance
review
3. Product
specification
4. Supplier
search
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Business Markets vs Consumer
Markets
Business Markets
Consumer Markets
Fewer, larger buyers
Multiple sales call
Close supplier-customer relationship
Derived demand
Professional purchasing
Inelastic demand
Several buying influences
Fluctuation demand
Geographically concentrated buyers
Direct purchasing
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Market Segments and Targets
CH07
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Market Segmentation
Requirements for Effective Segmentation
 To be useful, market segments must be:
Measurable
Accessible
Differentiable
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Substantial
Actionable
Market Segmentation
Market segmentation is the
division of a market into distinct
groups of buyers who have distinct
needs, characteristics, or behaviour
and who might require separate
products or marketing mixes
Market segment is a group of
consumers who respond in a similar
way to a given set of marketing
efforts
Geographic
segmentation
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
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Market Targeting
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Differentiation and Positioning
Product position is the way the
product is defined by consumers on
important attributes —the place the
product occupies in consumers’
minds relative to competing products

Perceptions

Impressions

Feelings
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Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive
advantages to build a position by providing
superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
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Marketing Mix & an Integrated
Marketing Program
The marketing mix is the set of tools
(four Ps) the firm uses to implement its
marketing strategy. It includes product,
price, promotion, and place.
Integrated marketing program is a
comprehensive plan that communicates
and delivers the intended value to
chosen customers.
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Branding
CH08
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Branding
D
E
F
I
N
E
D
A Brand is a promise to deliver specific benefits associated with
products or services to consumers
Brand is the name, term, sign, or design—or a combination of
these—that identifies the maker or seller of a product or service
Brand equity is the differential effect that the brand name has on
customer response to the product and its marketing
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8- 50
Branding
Brand represents the consumer’s perceptions and feelings about a
product and its performance.
It is the company’s promise to deliver a specific set of features,
benefits, services, and experiences consistently to the buyers
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Branding
E
X
P
L
A
I
N
E
D
For the
manufacturer
For the
consumer
Represents
Ownership
Delivers a
Promise
Distinguishes
from Competitors
Offers
Consistency
Adds Value
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Branding Strategy
D
E
F
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N
E
D
Brand Management is the overall coordination of a brand’s
equities to create long-term brand growth through overseeing
marketing mix strategies
This can be managed by:
• Consistent brand message
• Manage customer experience
• Focus on long-term growth
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8- 53
Branding Strategy: Building Strong Brands
Brand Development Strategies
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Dealing with Competition
CH09
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Analyzing Competitors
 Strengths and Weaknesses (do a SWOT analysis)
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Competitive Forces
Five Forces Determining Segment
Structural Attractiveness
Threat of:
1. intense segment
rivalry
2. new entrants
3. substitute products
 buyers’ growing
bargaining power
 suppliers’ growing
bargaining
power
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Designing Competitive Strategies
Hypothetical
Market Structure
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Designing Competitive Strategies
 Market-Leader Strategies
 Expanding the Total Market
 New Users
 Market-penetration strategy
 New-market segment strategy
 Geographical-expansion strategy
 New Uses
 More Usage
 Defending Market Share
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Designing Competitive Strategies
 Defense Strategies
 Position Defense
 Flank Defense
 Preemptive Defense
 Counteroffensive Defense
 Mobile Defense
 Market broadening
 Principle of the objective
 Principle of mass
 Market diversification
 Contraction Defense
 Planned contraction
(Strategic withdrawal)
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Designing Competitive Strategies
 Market-Challenger Strategies
 Defining the Strategic Objective and Opponent(s)
 It can attack the market leader
 It can attack firms of its own size that are not doing
the job and are underfinanced
 It can attack small local and regional firms
 Choosing a General Attack Strategy
•Price-discount
•Lower price goods
•Prestige goods
•Product proliferation
•Product innovation
•Improved services
•Distribution innovation
•Manufacturing cost reduction
•Intensive advertising promotion
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Designing Competitive Strategies
 Market-Follower Strategies
 Innovative imitation or
Product innovation
 Four Broad
Strategies:
 Counterfeiter
 Cloner
 Imitator
 Adapter
 Market-Nicher Strategies
 High margin versus high
volume
 Nicher Specialist Roles
•End-user specialist
•Vertical-level specialist
•Customer-size specialist
•Geographic specialist
•Product or product-line
specialist
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Product
CH10
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What Is a Product?
Product is anything that can be offered in a market for attention,
acquisition, use, or consumption that might satisfy a need or want
Product features are a competitive tool for differentiating a product from
competitors’ products
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Product Life-Cycle Strategies
 Product development
 Sales are zero and investment costs mount
 Introduction
 Slow sales growth and profits are nonexistent
 Growth
 Rapid market acceptance and increasing profits.
 Maturity
 Slowdown in sales growth and profits level off or decline
 Decline
 Sales fall off and profits drop
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Product-market expansion growth
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Designing and managing services
CH11
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What is a Service?
 Any act of performance that one party can offer another
 that is essentially intangible and does not result in the
ownership of anything; its production may or may not be
tied to a physical product.
Three Types of
Marketing
Company
External
marketing
Internal
marketing
Employees
Cleaning/
maintenance
services
Financial/
banking
services
Interactive
marketing
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Restaurant
industry
Customers
Designing and managing services
Intangibility
Inseparability
Services cannot
be seen, tasted,
felt, heard, or
smelled before
purchase
Simultaneous
production
and consumption
Characteristics
Services
Variability
Perishability
Quality of
services depends
on who provides
them and when,
where, and how
Services cannot
be stored for
later sale or use
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Services Marketing Mix
 Extension of the 4-Ps, to 7-Ps by adding people, physical
evidence and process
 Allows more thorough analysis of the marketing ingredients
necessary for successful services marketing
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Designing and managing services
SERVQUAL Instrument
 The SERVQUAL survey has two parts:
 customer expectations and
 customer perceptions
 The SERVQUAL instrument is used to perform a gap
analysis. Gaps affect the perceptions of services
quality.
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Designing and managing services
Word-of-mouth
communication
Personal needs
Past experience
Expected service
Gap 5
Perceived service
CUSTOMER
PROVIDER
Gap 4
Service delivery
Gap 3
Service quality
specifications
Gap 1
Gap 2
Management perceptions
of customer expectations
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External
communications
to customers
Designing and managing services
Determinants of Service Quality
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Reliability
Responsiveness
Assurance
Empathy
Tangibles
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Designing and managing services
Improving Service Quality
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
Listening
Reliability
Basic service
Service design
Recovery
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
Surprising customers
Fair play
Teamwork
Employee research
Servant leadership
• Invest in good hiring and training procedures
• Standardize the service-performance process
• Monitor customer satisfaction
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Designing and managing services
Developing Brand Strategies for
Services
 Choosing brand elements
 Establishing image dimensions
 Devising branding strategy
 I.e. Hotels will look at segmentation from economy to luxury, pricebased strategy, Alliances and Affiliations Within the Hospitality
Sector, Brand Extensions (translating their brand name into products
and non-hotel-oriented products), Co-Branding with Outsourced
Services
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Pricing Strategies
CH12
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Nine Price-Quality Strategies
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Setting
Pricing
Policy
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Marketing-Mix Alternatives
Strategic Options
Reasoning
Consequences
1. Maintain price and
perceived quality.
Engage in selective
customer pruning.
Firm has higher
customer loyalty. It is
willing to lose poorer
customers to
competitors.
Smaller market share.
Lowered profitability.
2. Raise price and
perceived quality.
Raise price to cover
rising costs. Improve
quality to justify higher
prices.
It is cheaper to
maintain price and
raise perceived
quality.
Smaller market share.
Maintained
profitability.
3. Maintain price and
raise perceived
quality.
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Smaller market share.
Short-term decline in
profitability. Long-term
increase in
profitability.
Price-Reaction Program for
Meeting a Competitor’s Price Cut
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Networks, Channels and
Intermediaries
CH13
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Integrated Marketing Channels
 Distribution is about getting the product or service to the
customer as conveniently as possible; it deals with access and
availability
 The role of distribution entails:
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


Arranging for its sale and transfer of title
Promoting the product
Storing the product
Assuming some risk during distribution.
 Intermediaries (middlemen) perform many of the
distribution functions on behalf of suppliers
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Integrated Marketing Channels
Channel design is a strategic marketing tool
Four decisions can help a firm design a distribution channel:
1. Determine the role distribution will play in achieving its
objectives;
2. Determine the type of channel needed and if intermediaries
will be needed or not;
3. Determine the intensity of distribution;
4. Determine the specific intermediaries which will be used.
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Integrated Marketing Channels
Selecting the Type of Channel
 some firms will distribute directly:
o producerconsumer (direct)
 others will use a number of intermediaries:
o
o
o
o
producerretailerconsumer
producerwholesalerretailer consumer
produceragentretailerconsumer
produceragentwholesaleretailerconsumer
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Integrated Marketing Channels
 3 channels: Consumer goods, Business goods and Services are
distributed through 3 different channels.
 Some producers are not content to use only a single distribution
channel and use multiple channels (dual distribution)
 multiple channels are used to reach business and consumer
markets, or to carry different groups of products or may be
used to reach different segments of the seller’s market;
different sizes of buyers or different regions of the country
 Multiple channels can frustrate middlemen and cause conflicts
in the channels.
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Integrated Marketing Channels
Vertical Marketing Systems (VMS)
 a tightly coordinated distribution channel designed to improve
operating efficiency and marketing effectiveness.
 Corporate VMS: One firm owns other firms in channel or the
entire channel: Goodyear
 Contractual VMS: Independents work together for much
greater effectiveness: IGA
 Administered VMS: Relies on economic power of one channel
member: Kraft General Foods
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Retailing, Wholesaling & Logistics
Changes in the Retail Environment
 New retail forms and combinations (forum shops –
entertainment retailing)
 Competition between store-based and non-store-based
retailing
 Growth of giant retailers
 Decline of middle market retailers
 Growing investment in technology
 Global profile of major retailers
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Retailing, Wholesaling & Logistics
Functions of Wholesalers:
 Selling and promoting
 Buying and assortment building
 Bulk breaking
 Warehousing
 Transportation
 Financing
 Risk bearing
 Market information
 Management services and counseling
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Integrated Market Communications
CH14
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The Communication Process
Common Communication Platforms
Advertising
Sales
Promotion
Public
Relations
Personal
Selling
Direct
Marketing
Print and
broadcast ads
Contests,
games,
sweepstakes,
lotteries
Press kits
Sales
presentation
Catalogs
Packagingouter
Premiums and
gifts
Speeches
Sales
meetings
Mailings
Packaging
inserts
Sampling
Seminars
Incentive
programs
Telemarketing
Motion
pictures
Fairs and
trade shows
Annual reports Samples
Electronic
shopping
19-90
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Steps in
Developing
Effective
Communication
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Developing and Managing an Advertising
Program
 Setting the Advertising Objectives by using the Five Ms of
Advertising
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New Market Offering
CH15
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New-Product Development
Reasons for new product failure
Overestimation of market size
Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition
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New-Product Development Process
Major Stages in New-Product Development
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Managing New-Product Development
New-Product Development Strategies
Customer-centered new
product development
focuses on finding new ways
to solve customer problems
and create more customer
satisfying experiences
 Begins and ends with solving
customer problems
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Managing New-Product Development
New-Product Development Strategies
Team-based new-product development is a
development
approach
where
company
departments work closely together in crossfunctional teams, overlapping in the productdevelopment process to save time and increase
effectiveness
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Managing New-Product Development
New-Product Development Strategies
Systematic new-product
development is an
innovative development
approach that collects,
reviews, evaluates, and
manages new-product
ideas


Creates an innovation-oriented
culture
Yields a large number of newproduct ideas
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Global Marketing
CH16
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Global Marketing Today
Global firms ask a number of basic questions:

What market position should we try to establish in our own
country, in our economic region, and globally?

Who will our global competitors be, and what are their strategies
and resources?

Where should we produce or source our product?

What strategic alliances should we form with other firms around
the world?
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Competing on a
Global Basis
Major Decisions
in International
Marketing
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Factors drawing companies into the
international arena:
 Global firms offering better products or lower prices can attack the
company’s domestic market
 The company discovers that some foreign markets present higher
profit opportunities than the domestic market
 The company needs a larger customer base to achieve economies
of scale
 The company wants to reduce its dependence on any one market
 The company’s customers are going abroad and need servicing.
Copyright © 2003 Prentice-Hall, Inc.
Deciding Whether To Go Abroad: Risks
 The company might not understand foreign customer preferences
and fail to offer a competitively attractive product
 The company might not understand the foreign country’s business
culture or know how to deal effectively with foreign nationals
 The company might underestimate foreign regulations and incur
unexpected costs
 The company might realize that it lacks managers with international
experience
 The foreign country might change its commercial laws, devalue its
currency, or undergo a political revolution and expropriate property
Copyright © 2003 Prentice-Hall, Inc.
Deciding How to
Enter the Market
Five Modes of
Entry into Foreign
Markets
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Deciding on the Global Marketing
Program
Product
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Deciding on the Global Marketing
Program
Price & Promotion
Uniform pricing is the same price in all markets but does not
consider income or wealth where the price may be too high in some or
not high enough in other markets
Market-based pricing is the price the market can pay but does not
consider actual costs
Standard markup pricing is a price based on a percentage of cost
but can cause problems in countries with high costs
Promotion: Companies can either adopt the same communication
strategy they use at home or change it for each market
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Deciding on the Marketing
Program
 Place (distribution channels)
 Seller’s international marketing
headquarters
 Channels between nations
 Channels within foreign nations
Whole-Channel Concept
for International Marketing
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Holistic Marketing
CH17
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Holistic marketing
•
is the idea that “everything matters” with marketing.
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How Can CEOs Create a
Marketing-Focused Company?
 Convince senior management of the need to become customer
focused
 Appoint a senior marketing officer and marketing task force
 Get outside guidance
 Change the company’s reward measurement and system
 Hire strong marketing talent
 Develop strong in-house marketing training programs
 Install a modern marketing planning system
 Establish an annual marketing excellence recognition program
 Shift from a department focus to a process-outcome focus
 Empower the employees
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What is Cause-Related Marketing?
Cause-related marketing is marketing that links the
firm’s contributions to a designated cause to
customers engaging directly or indirectly in revenueproducing transactions with the firm.
Branding a cause related marketing program:
 Self-branded: Create Own Cause Program
 Co-branded: Link to Existing Cause Program
 Jointly branded: Link to Existing Cause Program
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Types of Marketing Control

Annual plan control
 Sales analysis & Sales-to-expense ratios
 Market share analysis
 Financial analysis
 Market-based scorecard analysis

Profitability control

Efficiency control
 Logistics costs as a percentage of sales
 Percentage of orders filled correctly
 Percentage of on-time deliveries
 Number of billing errors

Strategic control

Marketing Audit
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