Download Market

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Marketing
BMEGT20MW01
Department of Management and Corporate
Economics, building Q, room B 303b
email: [email protected]
Gyorgyi Dano
Lecturer: Gyorgyi Dano
Exam schedule, materials
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https://goo.gl/xxma7s
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uti.bme.hu
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Materials
Kotler, P., Armstrong, G. (2016):
Principles of Marketing
16th Edition, Pearson
Lecture slides
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Chapter 1,2,3,4,7
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Learning option
MyMarketingLab
http://www.pearsonmylabandmastering.com
Optional!
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Registration instructions: Student Registration Handout for
MyMarketingLab.pdf
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Marketing is a process by
which companies create value
for customers and build strong
customer relationships in order
to capture value from
customers in return.
Philip Kotler
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Definition of marketing
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The Marketing Process
- marketing in a nutshell
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States of felt deprivation.
Wants
Demands
Form that needs take as they
are shaped by culture and
individual personality.
Wants backed by buying power.
Marketers do not create needs, they influence wants!
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Needs
Physical - food, clothing, warmth, safety
Social - belonging and affection
Individual - knowledge and self-expression
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a product is only a tool to solve
a consumer problem…
Market offerings are some
combination of products, services,
information, or experiences offered to a
market to satisfy a need or want.
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Marketing myopia is
focusing only on
existing wants and
losing sight of
underlying consumer
needs.
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A Market is the set of actual and potential buyers
of a product or service. These buyers share a
particular need or want that can be satisfied
through exchange relationships.
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• What customers will we serve
(what’s our target market)?
• How can we serve these customers
best (what’s our value proposition) ?
Production
concept
Product
concept
Selling
concept
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Marketing
concept
Societal
Marketing
concept
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What philosophy should guide these
marketing strategies?
Company orientations (concepts)
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Production orientation
"Any customer can have a
car painted any colour that
he wants, so long as it is
black.„ (Henry Ford)
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Consumers: available, Company: improving
highly affordable
production
products
and distribution efficiency
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Product orientation
Company:
continuous product
improvements
marketing myopia?
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Consumers: the most
quality, performance and
innovative features
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Consumers: do not buy
enough
https://www.youtube.com/watch?v=aLKJFSi14gk
unsought goods
Company:
aggressive selling
and promotion
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Selling orientation
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Consumers:
value and
satisfaction; existing
and latent needs
Company:
determining
consumer wants and
being more effective
than competitors; find
the right products for
your customers
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Marketing orientation
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concept is the idea that a
company should make
good marketing decisions
by considering
consumers’ wants, the
company’s requirements,
consumers’ long-term
interests, and society’s
long-run interests.
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Societal marketing
list recognizes
companies that have
had a positive social
impact through
activities that are part
of their core business
strategy.
http://beta.fortune.com/change-the-world
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Fortune’s “Change the World” list - doing
good for society and running a
successful business The Change the World
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Target
market
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The marketing mix:
set of tools (four Ps)
the firm uses to
implement its
marketing strategy. It
includes product, price,
promotion, and place.
Integrated marketing
program:
comprehensive plan
that communicates and
delivers the intended
value to chosen
customers.
4P – 4C
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(Traditional vs. Value based view of the Marketing Mix)
Product
Customer
4C
Customer solution
Price
Customer cost
Place
Convenience
Promotion
Communication
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Seller
4P
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 satisfied customers remain loyal and
talk favorably to others about the company
and its products
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Customer relationship management
is the overall process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction.
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The difference between
total customer value and
total customer cost.
Customer satisfaction
The extent to which a
product’s perceived
performance matches a
buyer’s expectations.
Total customer value =
It is the bundle of benefits customers expect from a
product or service.
Total customer cost =
It is a bundle of costs customers expect to incur in
evaluating, obtaining, using and disposing of a product
or service.
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Customer-perceived value
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Total Customer
Value
Monetary
cost
Time
cost
Energy
cost
Psychic
cost
Delivered
value
Total Customer
Cost
Kotler (2000:35)
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Product
value
Service
value
Personnel
value
Image
value
Share of customer is the portion of the
customer’s purchasing that a company
gets in its product categories.
Customer lifetime value is the value of
the entire stream of purchases that the
customer would make over a lifetime of
patronage.
Customer equity is the total combined
customer lifetime values of all of the
company’s current and potential
customers.
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The environment of a company
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The macroenvironment consists of
larger societal forces that affect the
microenvironment.
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The microenvironment consists of the
actors close to the company that affect
its ability to service its customers.
Macroenvironment:






Demographic
Economic
Natural
Technological
Political and legal
Cultural and social
Microenvironment:
 Company
 Suppliers
 Intermediaries
 Competitors
 Public
 Consumers
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The environment of a company
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Demography is the study
of human populations size, density, location, age,
gender, race, occupation,
and other statistics.
Demographic
environment involves
people, and people make
up markets.
• Ageing population
• Rising life
expectancy
• Declining fertility rate
• Increasing number of
working women
• Smaller family size
• Urbanization
• etc.
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Demographic Environment
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Economic Environment
Industrial economies are richer markets.
Subsistence economies consume most of
their own agriculture and industrial output.
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Economic environment consists of factors
that affect consumer purchasing power
and spending patterns.
Natural resources that are needed as inputs by
marketers or that are affected by marketing
activities.
Trends:
• Increased shortages of raw materials
• Increased pollution
• Increased government intervention
• Increased environmentally sustainable
strategies
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Natural Environment
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• Most dramatic force in changing
the marketplace
• New products, opportunities
• Concern for the safety of new
products
Everything will be connected!
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Technological Environment
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Political and Legal Environment
Laws, government agencies, and pressure
groups that influence or limit various
organizations and individuals in a given
society.
Cultural environment consists of institutions
and other forces that affect a society’s basic
values, perceptions, and behaviors.
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Cultural and Social Environment
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• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
Suppliers
• Provide the
resources to
produce goods
and services
• Treat as partners
to provide
customer value
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Company
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Intermediaries
Help the company to promote, sell and
distribute its products to final buyers.
Competitors
• Marketing services
agencies
• Financial intermediaries
Firms must gain strategic advantage by
positioning their offerings against competitors’
ones.
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• Resellers
• Physical distribution firms
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Publics
Government publics
Local publics
General public
Internal publics
Citizen-action
publics
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Any group that has an actual or potential
interest in or impact on an organization’s
ability to achieve its objectives.
Media publics
Financial publics
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Financial publics: This group influences the company’s ability to
obtain funds.
Media publics: This group carries news, features, and editorial
opinion.
Government publics: Management must take government
developments into account.
Citizen-action publics: A company’s marketing decisions may be
questioned by consumer organizations, environmental groups,
minority groups, and others.
Local publics: This group includes neighborhood residents and
community organizations.
General public: A company needs to be concerned about the
general public’s attitude toward its products and activities.
Internal publics: This group includes workers, managers,
volunteers, and the board of directors.
Consumer markets consist of individuals.
Business markets buy goods and services for
further processing or use in their production
processes, whereas reseller markets buy goods
and services to resell at a profit.
Government markets consist of government
agencies that buy goods and services to produce
public services or transfer the goods and services
to others who need them.
International markets consist of these buyers in
other countries, including consumers, producers,
resellers, and governments.
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Customer
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Strategic planning
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The process of developing and maintaining
a strategic fit between the organization’s
goals and capabilities and its changing
marketing opportunities.
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The mission
Product oriented:
We sell tools and
home repair and
improvement items.
Market oriented: We
empower consumers
to achieve the homes
of their dreams.
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A mission is a general, enduring statement
of overall organizational purpose.
The mission statement should be market
oriented!
Setting Company Objectives and
Goals
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• Build profitable
customer
relationships
• Invest in research
• Improve profits
• Increase market
share
• Create local
partnerships
• Increase promotion
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Business objectives Marketing objectives
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Business portfolio planning
Business portfolio planning involves two steps:
• analyzing current business portfolio and
determining which businesses should receive more,
less, or no investment
• shaping the future portfolio by developing
strategies for growth and downsizing
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Business portfolio: the collection of
businesses and products that make up
the company.
On the vertical axis, market growth rate provides a
measure of market attractiveness. On the horizontal
axis, relative market share serves as a measure
of company strength in the market.
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BCG Matrix
Market share
The total number of
units of a product
expressed as a
percentage of the total
number of units sold
by all competitors in
the market.
Relative market
share
Market share of a
company or a
business unit divided
by that of its largest
competitor.
Stars: generate considerable income
Strategy: invest more funds for future growth
Cash Cows: generate strong cash flow
Strategy: use profits to finance growth of Stars and
Question Marks
Question Marks: have potential to become a Star
Strategy: either invest more funds for growth or
consider disinvesting
Dogs: generate little profits
Strategy: consider withdrawing
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Elements of the BCG Matrix
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The Product/Market Expansion Grid
Existing
products
New
products
New
markets
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Existing
markets
Market penetration
strategy

Increase market share
Increase product usage:
frequency, quantity, new
application

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
Market development
strategy

Expand markets for existing
products:
geographic expansion,
target new segments
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Product improvement
Product line extensions
New products for the same
markets
Diversification
strategy



Vertical Integration (forward or
backward)
Diversification into related
businesses
Diversification into unrelated
businesses
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Product development
strategy
Internal
External
Positive
Negative
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SWOT Analysis
A marketing objective
should be:
• Realistic
Marketing planning • Measurable
• Time specific
involves choosing
• Compared to a
marketing strategies benchmark
that will help the
„To increase sales of
company attain its Purina brand cat food by
overall strategic
15% over
objectives.
2017 sales of $300 million.”
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Marketing
planning
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Marketing information system (MIS) refers
to the people and procedures dedicated
to assessing information needs, developing
the needed information, and helping
decision makers to use the information to
generate and validate actionable customer
and market insights.
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Marketing Information Systems (MIS)
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Marketing Information Systems (MIS)
Marketing intelligence
Marketing research
Competitive Marketing Intelligence: is the systematic
collection and analysis of publicly available information
about consumers, competitors, and developments in the
marketing environment.
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Internal data
Internal databases:
are collections of
consumer and market
information obtained
from data sources
within the company
network.
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What is Marketing Research?
Marketing research is the systematic
design, collection, analysis, and reporting
of data relevant to a specific marketing
situation facing an organization.
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Marketing Research Process
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Exploratory research: Marketing research to
gather preliminary information that will help define
problems and suggest hypotheses.
Descriptive research: Marketing research to better
describe marketing problems, situations, or
markets, such as the market potential for a product
or the demographics and attitudes of consumers.
Causal research: Marketing research to test
hypotheses about cause-and-effect relationships.
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Research Objectives
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Developing the Research Plan
Management problem
Research objectives
How the results will help management decisions
Budget
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Information needed
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Secondary data
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Information that already exists
somewhere, having been collected for
another purpose.
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Secondary data
Lower cost
Relevant
Obtained quickly
Accurate
Cannot collect
otherwise
Current
Impartial
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Advantages
Disadvantages
- data may not be
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Primary data
Information collected
for the specific purpose
at hand.
Observation
observing relevant people, actions,
and situations
Survey
asking people questions about their
knowledge, attitudes, preferences,
and buying behavior
Experiment
selecting matched groups of subjects,
giving them different treatments,
controlling related factors, and
checking for differences in group
responses
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Research Approaches
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Qualitative vs. Quantitative
Research
Research questions
Quantitative
Qualitative
Blythe (2006:239)
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What?
When?
Where?
Why?
Who?
How?
How many?
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Flexibility
Poor
Quantity of data that can be Good
collected
Telephon
e
Personal
Online
Good
Fair
Excellent
Excellent
Good
Good
Control of interviewer
effects
Control of sample
Excellent Fair
Poor
Fair
Fair
Excellent
Good
Excellent
Speed of data collection
Poor
Excellent
Good
Excellent
Response rate
Poor
Poor
Good
Good
Cost
Good
Fair
Poor
Excellent
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Mail
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Contact Methods
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Sample: A segment • Sampling unit
of the population
• Sample size
selected for
• Sampling
marketing research procedure
to represent the
population as a
whole.
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Sample
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Research Instruments
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• Questionnaires
• Mechanical devices
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Implementing the Research Plan
• Collecting the information
• Processing the information
• Analyzing the information
• Interpret findings
• Draw conclusions
• Report to management
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Interpreting and Reporting
Findings
Designing a customer-driven
marketing strategy
Select customer to serve
Decide on a value proposition
Segmentation
Divide the total market into
smaller segments
Differentiation
Differentiate the market offering
to create superior customer value
Create
value for
targeted
customer
Positioning
Position the market offering in the
minds of target customers
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How will we serve
them?
Which customers
will we serve?
Targeting
Select the segment or
segments to enter
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Market segmentation
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Dividing a market into smaller segments
with distinct needs, characteristics, or
behavior that might require separate
products or marketing mixes.
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Marketers rarely limit their segmentation
analysis to only one or a few variables.
Rather, they often use multiple
segmentation bases in an effort to
identify smaller, better defined target
groups.
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Multiple Segmentation
Bases for segmenting consumer
markets
nations, regions,
states, counties,
cities, etc.
Psychographic
segmentation
social class, values,
lifestyles, personality
Demographic
segmentation
age, gender, generation, family size, family life
cycle, income, occupation, education, religion,
race, and nationality, etc.
Behavioral
segmentation
knowledge, attitudes, uses, or responses to a
product (occasions, benefits sought, user
status, usage rate, loyalty status)
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Geographic
segmentation
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Measurable: The size, purchasing power, and profiles of the
segments can be measured.
Accessible: The market segments can be effectively reached and
served.
Substantial: The market segments are large or profitable enough to
serve.
Differentiable: The segments are conceptually distinguishable and
respond differently to different marketing mix elements and
programs.
If men and women respond similarly to marketing efforts for soft
drinks, they do not constitute separate segments.
Actionable: Effective programs can be designed for attracting and
serving the segments.
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Effectiveness of the Segmentation
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Market Targeting
A company should only enter segments in which
it can create superior customer value and gain
advantages over its competitors.
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Target market consists of a set of
buyers who shares common needs or
characteristics that the company
decides to serve.
•
•
•
Selecting segments that have the right size and growth
characteristics is a relative matter. The largest, fastest-growing
segments are not always the most attractive ones for every company.
Smaller companies may target segments that are smaller and less
attractive, in an absolute sense, but that are potentially more profitable for
them.
Structural factors that affect long-run segment attractiveness include
strong and aggressive competitors, new entrants, substitute products,
power of buyers relative to sellers, and powerful suppliers who can
control prices, quality, or quantity of ordered goods and services.
Some attractive segments can be dismissed quickly because they do
not mesh with the company’s long-run objectives. Or the company may
lack the skills and resources needed to succeed in an attractive
segment.
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Evaluating Market Segments
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Target Marketing Strategies
Targeting
narrowly
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Targeting
broadly
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Company
marketing
mix
Market
Model T Ford, „one size fits all”
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Undifferentiated marketing targets the whole
market with one offer.
• mass marketing (using the same marketing mix
for all consumers)
• focuses on common needs rather than what’s
different
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Company
marketing mix 1
Company
marketing mix 2
Company
marketing mix 3
Segment 1
Segment 2
Segment 3
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Differentiated marketing targets several different
market segments and designs separate offers for
each.
• goal is to achieve higher sales and stronger
position
• more expensive than undifferentiated marketing
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Concentrated marketing (or niche marketing)
targets a small share of a large market.
• limited company resources
• knowledge of the market
• more effective and efficient
Segment 1
Segment 2
Segment 3
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Company
marketing
mix
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Micromarketing is the practice of tailoring
products and marketing programs to suit the tastes
of specific individuals and locations.
Local marketing involves tailoring brands and
promotion to the needs and wants of local
customer groups. (cities, neighborhoods, stores)
Individual marketing involves tailoring products
and marketing programs to the needs and
preferences of individual customers.
Also known as: one-to-one marketing, mass
customization, markets-of-one marketing.
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Differentiation and Positioning
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• Perceptions
• Impressions
• Feelings
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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.
• Identifying a set of possible
competitive advantages to build a
position
• Choosing the right competitive
advantages
• Selecting an overall positioning
strategy
• Communicating and delivering the
chosen position to the market
Product
Services
Channels
People
Image
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Choosing a Differentiation and
Positioning Strategy
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Through product differentiation, brands can be differentiated on features,
performance, or style and design., Subway differentiates itself as the healthy
fast-food choice.
Some companies gain services differentiation through speedy, convenient, or
careful delivery. For example, First Convenience Bank of Texas offers “Real
Hours for Real People.” It is open seven days a week, including evenings.
Firms that practice channel differentiation gain competitive advantage through
the way they design their channel’s coverage, expertise, and performance.
Amazon.com for example, set themselves apart with their smooth-functioning
direct channels.
Companies can also gain a strong competitive advantage through people
differentiation - hiring and training better people than their competitors do.
Even when competing offers look the same, buyers may perceive a difference
based on company or brand image differentiation. The chosen symbols,
characters, and other image elements a brand chooses must be communicated
through advertising that conveys the company’s or brand’s personality.
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Value Proposition
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The brand’s full positioning is called
its value proposition - the full mix of
benefits on which the brand is
positioned.
நன்றி
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