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Marketing Management Fall 98 Introduction Ambar G. Rao John M. Olin School of Business Agenda • What is Marketing? – Marketing Process – Marketing Analysis & Planning – A Framework for Marketing Analysis • A Preview of the Course – Syllabus – What to expect?...And what is expected? • Segmentation and Positioning Some Perspective Marketing and History “In well-ordered states, storekeepers and salesmen are commonly those who are weakest in bodily strength and, therefore, of little use for any other purpose.” - Plato “Merchants are to be accounted vulgar; for they can make no profit except by a certain amount of falsehood.” - Cicero “Advertising ... is a meretricious endeavor in which psychological appeals to ‘fear’ and ‘shame’ are developed to bamboozle the public into purchasing essentially worthless packaged goods at bloated prices.” - Thorstein Veblen Some Perspective A Modern View “Corporate leaders nationwide are discovering that their most powerful competitive weapon is marketing -- the development, pricing, distribution, and promotion of products.” - Newsweek “Marketing is now central to success at any company in any business, and it is going to make the difference between winners and losers.” - Stephen Greyser, Harvard Business School “Stop being a company with its face towards the CEO and ass towards the customer” Jack Welch, CEO, G.E. Why the change over the ages? • Changing approaches to business over time – – – – the production concept the product concept the sales concept the marketing concept • Why is Marketing one of the most critical components of modern business? Key Issues in the Business Environment • Customer Satisfaction - markets are saturated and we cannot rely on pent up demand to make profits. – Must provide greater quality and value to smarter shoppers. – From mass marketing to segments of one. – Increase speed of innovation, diffusion and distribution. • Globalization – Global brands, different positioning or similar positioning in different countries? – New ideas developed in country A, designed in country B, manufactured in country C and sold in country D. • Environmental and Health Care Concerns – Must address concerns of better educated and better informed consumers. What is Marketing • A M A Definition: – Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with each other • Key – Customer needs and wants – Demand and a market where demand can be met – Choice, based on maximizing utility (or value) RAO’s Definition of Marketing Marketing = Romance + Finance Analysis Framework Company Analysis Competitor Analysis Marketing Analysis Product Competing Firms Price Promotion Distribution Product Market Customer Analysis Consumers Key Principles Successful marketing strategy entails: • Designing products, services, and programs that emphasize attributes which: • For which customers have value • Provide a sustainable differential advantage over competitors. What does this mean? • Sound customer analysis, while important, is not sufficient. • Competitors will also be striving to develop product and services that embody attributes important to customers. • Whatever attributes that our product or service embodies, must not only be important to customers, BUT • must also yield some differential advantage over competitors. • Successful marketing strategy requires sound competitive analysis in addition to customer analysis. Elements of Marketing Analysis (3 C’s) • Customer Analysis – Consumer Behavior (Perceptions, preferences, purchase, usage) – Market Characteristics (Size, growth) • Competitor Analysis – Industry Structure Analysis (Entry/exit barriers, buyers, sellers, substitutes) – Competitor Response Profiles (Capabilities, current and anticipated future actions) • Company Analysis – Economic Analysis (Costs, break-even, profitability) – Company Fit (Strengths/weaknesses, resources, mission) Steps in Formulating Marketing Strategy 1 Examine the situation and identify the marketing problems/opportunities – Short-term vs. Long-term 2 Search for a strategy to achieve short-term and longterm goals – Areas for marketing action are • Product, Price, Promotion, Place – Strategy should be • Integrative and Consistent across the 4 P’s • Robust to alternative scenarios 3 Implement and Monitor