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MBA
Master of Business Administration
Crash Course
“To reach our greatest potential, we
must set our sights clearly and
embrace the unknown confidently”
The National Organization of Certified Public AccountantsAn association of institutional, professionals, and OFWs
Riyadh Chapter, Kingdom of Saudi Arabia
Riyadh, Kingdom of Saudi Arabia
MODULE 4
MARKETI NG
MANAGEMENT
PURPOSE OF BUSINESS
CUSTOMERS
BUSINESS
SUCCESS
BUSINESS
SUCCESS
Create and
maintain value
for stakeholders
Employees
Managers
Shareholders
Suppliers
Creditors
Investors
BUSINESS SUCCESS
PURPOSE OF BUSINESS
PURPOSE OF BUSINESS
CREATE & KEEP CUSTOMERS
PETER DRUCKER
“Revered as father of
Modern Day
Management”
MARKETING IS THE
PROCESS BY WHICH THIS IS
ACHIEVED
CRITERIA FOR BUSINESS SUCCESS
INCREASED PERFORMANCE PURSUED IN TWO (2) FOCI
BUSINESS DO IT BETTER
Extract more value
from existing
customers
Maintain Output
Enhance Customer
Satisfaction
Reduced
Input
BUSINESS CAN DO MORE
Attract more
customers
Incremental Input
INPUT
Increased Output
Enhance Customer
Satisfaction
OUTPUT
BUSINESS PERFORMANCE=DIRECT FUNCTION OF MARKETING EFFECTIVENESS
LEARNING FROM FAILURE
Mardikakis M – Long Range Planning
Example: Exxon, IBM, Texaco, Union Carbide
CAUSES OF CORPORATE FAILURE
Natural Process
Organizational arteriosclerosis
Taking risks
Overextending resources & capabilities
Being overoptimistic
Ignoring or underestimating competition
Preoccupation with short term
Believing in quick fixes
Relying on barriers to entry
Overreacting
Personality and ability of CEO
Bad Luck
Incompatibility
MARKETING REVOLUTION
THE MARKETING MYOPIA – BUSINESS FAILURE
Theodore Levin’s Article – Harvard Business Review
PRODUCT ORIENTED
RATHER THAN
CUSTOMER ORIENTED
FORCED BUSINESS IN 1960’s
FOCUS ON CUSTOMER
NEEDS AND BE
MARKETING LED
MARKETING REVOLUTION
ENVIRONMENTAL PRESSURES
THAT LED TO MARKETING REVOLUTION
Faster Technological Change
Shift to Slow Growth Economy
Third World Economic Capability
Fluctuating Exchange Rate
Communication & Information Trend
Changes in Social Order
MARKETING CHALLENGES
Ability to powerfully communicate your business
with laser precision and your ability to deliver a
clearly-defined and consistent experience BRANDING
Create a deep connection with your core target
audience - your potential raving fans! – TARGET
MARKET - SEGMENTS
Design compelling offerings that pull customers in
like a magnet – OFFERINGS PORTFOLIO
80% of all purchase decisions are based on
emotion.
Availability of a Marketing Plan - ROADMAP
90% of small business owners do not have a plan
MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc
Increased specialization of Customer
Needs
“Mass Marketing” – “One size fits all”
New Communication Channel
Use of different medium to reach
consumers
MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc
Increased Competition for Customer
Dollars
“Growing global economy – more
competitors”
Shorter Product life Cycle
Technology- reaching customers
quickly – creating new products”
MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc
Legislation and Regulatory
Restrictions
“Imposition of regulations Standards”
MARKETI NG
VS
SELLI NG
MARKETING VS. SELLING
MARKETING
Determine
needs and
wants of target
market.
Deliver desired
satisfaction
efficiently and
effectively.
SELLING
Customers
ability to buy
or not buy.
Stimulate
consumers
interest to the
products.
MARKETING VS. SELLING
MARKETING CONCEPT
SELLING CONCEPT
Product Planning and
Development
Discovers Market Needs
Research
Production
Product Planning and
Development
Promotional Methods
and Selling
Production
Persuasive Techniques
Distribution of Products
and Services
Distribution of Products
and Services
Guaranteed
Sales Volume and Profits
Customers Satisfaction
UnGuaranteed
Sales Volume and Profits
Customers Satisfaction
MARKETING – OPERATIONAL DIMENSION
Target
Market
MARKETING
SYSTEM
Things to
be
Marketed
Marketing
Organizations
MARKETING CORE CONCEPTS
Management Guidance
to achieve and maintain market share,
growth and profitability
Customer Orientation
Integration Effort
Competitive Advantage
Segmentation and Positioning
Environmental Awareness
MARKETING CORE CONCEPTS
Customer Orientation
High Production
and Distribution
Efficiency
=
Low Cost and
Better Offering
“We sell what we
make”
NOT
“We make what
we sell”
Production Orientation
Selling Orientation
Customer Orientation
Product Orientation
Determines Needs
& wants and
delivering desired
satisfaction
Good products
and continuous
improvement
MARKETING CORE CONCEPTS
Integration Effort
BUSINESS KEY TASK:
CREATE AND HOLD CUSTOMERS
DEPARTMENT’S
SUPPORT
TOTAL
OFFERINGS
MARKETING CORE CONCEPTS
Competitive Advantage
BUILD ON ADVANTAGES TO MINIMIZE
DISADVANTAGES
MARKET SHARE : NOT THE ONLY MEASURE
TO DETERMINE COMPETITIVE POSITION
MARKETING CORE CONCEPTS
Competitive Advantage
PETER DOYLE – Professor of Marketing & Strategic Management
UNIVERSITY OF WARWICK
MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN
TO EVALUATE PERFORMANCE
Increase in Market Share
New Product Ratio
Return on Investment
Capital Gain for Shareholders
MARKETING CORE CONCEPTS
PETER DOYLE – Professor of Marketing & Strategic Management
UNIVERSITY OF WARWICK
MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN
TO EVALUATE PERFORMANCE
3
2.5
USA
2
1.5
JAP
1
JAP
USA
JAP
USA
0.5
JAP
USA
0
ROI
CAPITAL
GAIN
MKT SHARE PROD. RATIO
MARKETING CORE CONCEPTS
Segmentation and Positioning
SEGMENTATION
Identifying homogeneous market and
subdividing them by applying variables
POSITIONING
Choice of target market segment
Determine where business will compete
Choice of differential advantage
Dictate how business competes
MARKETING CORE CONCEPTS
Environmental Awareness
ORGANIZATION
Recognizing and
responding profitably
to unmet needs and
trends of the
environment.
MARKETI NG
DECI SI ONS
FOUR CORE AREAS
MARKET
SEGMENTATION
MARKET
PLANNING
MARKETING
DECISIONS
MARKET
POSITIONING
SELECTING
TARGET
MARKET
MARKET SEGMENTATION
IMPORTANCE OF
MARKET SEGMENTATION
Better matching of customers’ needs
Enhanced profits
Enhanced opportunities for growth
Retain customers
Targeted communication
Market segment share
MARKET SEGMENTATION
BASES FOR SEGMENTATION
NEEDS
PROFILES
MARKET SEGMENTATION
MARKET PROFILES
DESCRIPTIVE MEASURABLE CUSTOMER CHARACTERISTICS
GEOGRAPHIC
region of the country
urban or rural area
PSYCHOGRAPHIC
social class
lifestyle type
personality type
DEMOGRAPHIC
age, sex, family size
income, occupation,
education
religion, race, nationality
BEHAVIORAL
product usage
brand loyalty
type of user
MARKET SEGMENTATION
CRITERIA FOR SEGMENTATION
Effective : homogeneous customers but
significantly different from the others.
Identifiable: business must be able to identify
customers in the proposed segment.
Profitable: more segments - greater
opportunity – added value
Accessible: customers can effectively reached
and served.
Actionable: taking advantage of the
segmentation scheme it develops.
MARKET SEGMENTATION
FACTORS OF MARKET ATTRACTIVENESS
SEGMENT
SIZE
SEGMENT
GROWTH
PROFITABI
LITY
CAPABILITIES
COMPETITION
MARKET SEGMENTATION
MANAGEMENT STRATEGIC CHOICES
Undifferentiated marketing : Ignoring
actual or potential differences among
segments. Designs a product and
marketing mix that will appeal to the mass
market.
Differentiated marketing: Develop different
products and different marketing programs
for each segment of the market.
Focused marketing: Specializing in one or
small numbers of segments.
MARKET SEGMENTATION-EXAMPLE
AIRLINE INDUSTRY
CLASS
VARIABLE
FIXED
PASSENPRICE
REVENUE VARIABLE
PROFIT
COST
COST
GERS
COST
Undifferentiated Strategy
No Class
240
250
20
60,000
4,800
50,000
5,200
50,000
37,840
Differentiated Strategy
Economy
144
250
20
36,000
2,880
Business
72
500
40
36,000
2,880
First
24
1,000
100
24,000
2,400
96,000
8,160
TOTAL
240
MARKET POSITIONING
Designing the company’s offering
and image so that they occupy a
meaningful and distinct
competitive position
in the target customers’ minds.
MARKET POSITIONING
POSITIONING OPTIONS
Introduce new brand - IBM
Change existing brand - Compaq
Alter beliefs about the brand - Chivas
Alter beliefs about competitive brands
– Body Shop
Alter attribute importance rates - Volvo.
Introduce new or neglected attributes –
Unilever – Radion Detergent.
Find a new market segment - Dunhill.
MARKET POSITIONING
MAJOR POSITIONING ERRORS
Underpositioning
Buyers have vague idea about the product and
don’t really sense anything special about it.Crystal Clear Pepsi (1993)
Overpositioning
Too narrow image of the brand. –
Customer perception vs. actual.
Confused positioning
Confused image – too many claims
Doubtful positioning
Too hard to believe what the product claims.
MARKETI NG
PLAN
MARKETING PLAN
MARKETING PLAN
IMPLEMENTATION
MARKETING AUDIT
EVALUATION
MARKETING DECISIONS
MARKETING PLAN
STRATEGIC FUNCTIONS
Give direction to marketing
effort
Framework for allocation of
resources
Basis for communication
Basis for coordination of efforts
Platform for evaluation and
control
MARKETING PLAN
MAJOR COMPONENTS OF MARKETING PLAN
BACKGROUND ANALYSIS
Current performance
Background analysis
Opportunities and options
How well the product is performing now
Factors that led to failure & success
Where is the business leading to
MARKETING OBJECTIVES
Marketing Objectives
Financial Objectives
Clear sales goals and target market share
Profits, Return on Investments, Cash Flow
MARKETING STRATEGY
Target market segment
Differential advantage
Types of customers aimed at
Analysis of customers needs and profiles
Define competitors and their strategies.
MARKETING MIX
Product
Promotion
Price
Services
Staff
Set of marketing decisions to
implement positioning strategy
MARKETING PLAN
MAJOR COMPONENTS OF MARKETING PLAN
ACTION PLANS
Details of implementation
Who is responsible
When it will be done
How much it will cost
BUDGET
Projected Revenues
Expenditures
Profits
Cash Flow
ORGANIZATIONAL
IMPLEMENTATION
Staff
Organizational design
MARKETI NG
MANAGEMENT PROCESS
The 4 P’s
PRODUCT
PRODUCT
Bundle of Utility
(satisfaction)
that buyer receives as
result of lease/purchase
PRODUCT
MANAGERIAL DECISIONS – PRODUCT DEV’T.
PROCEED
TO NEXT
STAGE
GET
ADDITIONAL
INFORMATION
ABANDON
PRODUCT
PRODUCT
STEPS IN PRODUCT DEVELOPMENT
IDEA
GENERATION
PRODUCT
DEVELOPMENT
SCREENING
OF IDEAS
TEST
MARKETING
ECONOMIC
ANALYSIS
COMMERCIALIZATION
PRODUCT
PRODUCT LIFE CYCLE
VALUE
Sales/Profit
Decline
Market
Acceptance
Maturity
Abandon
Product
Launching
Growth
Competitive
Decline
Introductory
TIME
PRODUCT
REASONS WHY
PRODUCT FAI L
Inadequate product analysis
Product deficiencies
Lack of effective marketing effort
Ease of competitive entry
Poor timing of introduction
Technical or production problems
PRODUCT
SOLUTIONS TO AVOID
PRODUCT FAILURE
Organizational change
Better marketing research
Improved screening and
evaluation of ideas
PRICE
A function of cost
Money value of a
product/service
PRICE
PRICING OBJECTIVES
Profit oriented objectives –
rate of return
Sales oriented objectives –
volume sales
Status Quo – satisfied profit
under market share
PRICE
PRICING STRATEGIES
SKIMMING – setting higher price
from what market expects –
PRICE FOR QUALITY.
PENETRATION PRICING –
setting low initial price at certain
profit – MASS MARKET TARGET
PRICE
PSYCHOLOGICAL PRICING STRATEGIES
FIXED PRICE – selling at oneprice system (retailers)
VARIABLE PRICE – prices at
different timings and different
events
ODD- PRICE POLICY – Prices set
at odd amount (ex. 99.95,
89.99)
PRICE
STEPS FOR DEVELOPING PRICING
STRATEGY
Assess Price
Competitiveness
Set Pricing
Objectives
Strategic Price
Focus
Evaluate
Competitive
Strategies
Target Market
segment
Measure Value
to customers
Product line
pricing
Select Price
PRICE
PRICING OBJECTIVES AND STRATEGY
HARVEST
PRODUCT – MATURE
PRICE – HIGH
GROWTH
BUILD PRICE AS
AGGRESSIVE WEAPON TO
BUILD SHARE
OR ENTER MARKET
USE CASH –NEW PRODUCTS
MAINTAIN
QUALITY
LEADERSHIP
ADJUST PRICES DEFENSIVELY
PREVENT COMPETITIVE
EROSION
LEADER IN PREMIUM PRICE
NICHE
Ex. Rolex, Bang & Olufsen
Rolls Royce
PLACE ( DI STRI BUTI ON)
PLACE
Selection and
management of
channels and product
flow to consumers
PLACE
CHANNEL OPTIONS
DIRECT
MARKETING
Advertising
SALES FORCE
Own sales
force
Telephone
INTERMEDIARY
MARKETING
Merchants
Agents
Another firm
Mail
Facilitators
Catalogues
Contract
Force
PLACE
TYPES OF CHANNEL
MARKETING SYSTEMS
CONVENTIONAL MARKETING
CHANNEL
VERTICAL MARKETING SYSTEM
HORIZONTAL MARKETING
SYSTEM
MULTI- CHANNEL MARKETING
SYSTEM
CONVENTIONAL
MANUFACTURER
delivery
ordering
Design
Make
Brand
Price
Promote
Sell
WHOLESALERS
delivery
ordering
RETAILERS
Buy
Stock
Promote
Display
Sell
Deliver
Finance
END CONSUMERS
VERTICAL
MANUFACTURER
Marks & Spencer
Mercedez Benz
Shell
WHOLE
SALER
RETAILER
END CONSUMERS
Design
Make
Brand
Price
Promote
Buy
Stock
Display
Sell
Deliver
Finance
HORIZONTAL
Two or more autonomous organizations at
the same level cooperate in exploiting
market opportunities
Reduces risks of resources at
individual level
Speed to penetrate new market
Access to new technologies and
knowledge
Philips & Dupont – Devt of Compact Discs
Toyota & Gen Motors – assembly of cars
MULTI CHANNEL
Using multiple channels to satisfy differing
needs of segments and customers
HP
Sells pc through own sales force
Use computer stores
Direct Marketing
Value Added Resellers
PROMOTI ON
MARKETI NG
COMMUNI CATI ON MI X
MARKETING COMMUNICATION MIX
ADVERTISING
Any paid form of non- personal
presentation and promotion of
ideas, goods, or services by an
identified sponsor.
PERSONAL SELLING
Personal presentation by the
firm’s sales force for the
purpose of making sales and
building customer
relationships.
MARKETING COMMUNICATION MIX
SALES PROMOTION
Short- term incentives to
encourage the purchase or
sale of a product or service.
PUBLIC RELATIONS
Building good relationships
with the public by publicity
for a "corporate image.
MARKETING COMMUNICATION MIX
DIRECT MARKETING
Direct communications with
carefully targeted individual
consumers to obtain an
immediate response and
cultivate lasting customer
relationships.
SETTI NG THE
PROMOTI ON MI X
SETTING THE PROMOTION MIX
VALUE
Advertising
Public Relations
Branding
Personal Selling
Advertising Decreases
Sales Promotion
Personal Selling
Reminder/Presuasion
Sales/Profit
Decline
Market
Acceptance
Product
Launching
Growth
Competitive
Introductory
Pre-Introduction
Light Advertising
Pre Introduction Publicity
Introduction
Heavy Advertising
Public Relations
Sales Promotions
Advertising Decrease
Public Relation Decrease
Sales Promotion-Limited
Personal Selling
Abandon
Maturity
Decline
TIME
ADVERTISING GOALS
ADVERTISING
ADVERTISING
OBTAIN
AROUSE
HOLD
GET
STAGES IN ADVERTISING CYCLE
INTRODUCTORY ADVERTISING
Develop consumer awareness
COMPETITIVE ADVERTISING
Emphasis such as “Better”
“Improved” “ No 1”
RETENTIVE ADVERTISING
Develop consumer loyalty by
repetitive advertising
Marketing Effectiveness
ORGANIZATION
Measure of
quality of
relations
EFFICIENCY
“Doing things right”
ENVIRONMENT
EFFECTIVENESS
“Doing the right things”
OVERCOMING CHALLENGES
THE
COMMUNI CATI ON
OPTI MI ZATI ON PROCESS
David Lowndes
OPTIMIZATION PROCESS
ANALYSIS
Evaluate current communication materials in relation
to the following Critical Success Factors (CSF)
Specific objectives & desired response- campaign materials.
Target markets
Industry norms, best practices, business environment
Value of transaction or sales
Customization and personalization needs
Audience demographics
Competitive program offerings
Business and marketing objectives
Product lifecycles
Inventory quantities, shelf life and value
Usage and reorder patterns
Design requirements and constraints
Corporate graphic standards
Production options and costs
Delivery options and costs
Privacy and other regulatory compliance
OPTIMIZATION PROCESS
RE-ENGINEERING
REVISE
RE-DESIGN
COMBINE
ELIMINATE
ADD
GOAL : Align copy graphics and production
processes to maximize response rates,
manage costs.
OPTIMIZATION PROCESS
AUTOMATION
Automate production
Integrate technology into
designs and strategies to gain
competitive advantage.
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