Marketing

(IBD/Pre MBA/BA)

Kuren Kalantari

Session 1
Marketing & market orientation

Definition of Marketing
The management process responsible for identifying anticipating and satisfying customers needs profitably.
CIM

Includes: Facilitating a mutually beneficial exchange of value between sellers and customers.

Needs, wants & demand

Need
State of felt deprivation Example: Need food

Wants
The form of needs as shaped by culture and the individual Example: Want a Big Mac

Demands
Wants which are backed by buying power

Business Philosophies
Production orientation Product orientation Selling orientation Marketing orientation Societal marketing orientation

Towards market orientation

Production & Product orientation

Sales & Marketing orientation

The marketing concept

Customer focus Relationship marketing Internal marketing

The marketing concept

The marketing concept holds that achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively than competitors (Kotler)

The scope of marketing

Product planning Branding Pricing Channels of distribution Selling Marketing communications Promotions Servicing

Relationship with other deptartments

Marketing & society

Societal marketing Social responsibility is accepting responsibilities to the various publics of an organisation which go beyond contractual or legal requirements.

Responsibilities to customers
The right to be informed of the true facts. The right to be protected. The right to safety and health protection.

Consumerism
Consumerism is a term used to describe the increased importance and power of consumers. It includes the increasingly organised consumer groups, and the recognition by producers that consumer satisfaction is the key to long-term profitability.

Other responsibilities
Employees Suppliers Competitors Others

Value of loyal customers

Lifetime customer value Cost less to be acquired, if necessary. Buy broader range of products. Cost less to be serviced. Less price sensitive. They spread +ve WOM.

Relationship marketing
RM is the process of creating, building up and managing long-term relationships with customers, distributors and suppliers. It aims to change the focus from getting customers to keeping customers.

Relationship Marketing Ladder of Loyalty

(Christopher et al., 2002).

RM vs transaction

Levels of relationships
Basic Reactive Accountable Proactive Partnership

How RM operates
Borrow the idea of customer/supplier partnerships from industry. Recreate the personal feel. Continually deepen and improve relationship.

Characteristics of RM
Focus on retention, not attraction. Emphasises benefits to customer. Long timescale. Direct and regular contact. Multiple employee/customer contact. Quality and customer satisfaction concern of all employees. Emphasis on KARM, Serv. Qual & buyer behaviour rather than marketing mix. Importance of Trust and keeping relationships. Multiple exchanges with a number of parties, network relationships.

Customer Relationship Management (CRM)

CRM describes the methodologies and ICT systems that help an enterprise manage customer relationships.

Issues in RM
Permission marketing Legislation; Data Protection Act 1998, Privacy & Electronic Communications (EC Directive) Regulations.

Session 2
Marketing planning

Marketing Planning
Executive summary Mission & corporate objectives Situation analysis/marketing audit SWOT Marketing objectives Marketing strategies Marketing tactics Budget Timetable Control Summary/conclusion

Planning
Involves: Setting objectives, quantifying targets for achievement and communication of these targets to others. Objectives: a goal which can be quantified. Strategy: the method chosen to achieve goals or objectives. Tactics: how resources are deployed in an agreed strategy.

Marketing planning process

SOSTAC
Situation Analysis Objectives Strategy Tactics Actions Control

SMART objectives

Specific Measurable Achievable Relevant Time-bounded

Situation analysis
PEST factor analysis (Macro environment) Micro and Internal environment. SWOT analysis

The marketing audit

a marketing audit is a systematic, independent and periodic examination of a companys or business units marketing environment, objectives, strategies and activities with a view of determining problem areas and opportunities and recommending a plan of action to improve the companys marketing performance (Kotler)

Components of audit
Marketing environment, macro, micro & internal. Marketing strategies Marketing systems Marketing organisation Marketing function Marketing productivity

The marketing environment

PESTEL SPICC 5 Ms Micro Macro

The Five Forces Framework

Source: Adapted from M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors 1980, Free Press, 1980, p. 4. Copyright 1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.

SWOT

Porters generic strategies

STRATEGIC ADVANTAGE
Uniqueness perceived by customer IndustryDIFFERENTIATION wide
Segment only

STRATEGIC TARGET

Low cost position

OVERALL COST LEADERSHIP

FOCUS

Source: Porter

Ansoffs Growth Matrix

Products

Existing

New Product Development

Existing
Markets New

Market Penetration

Market Development

Diversification

Product market strategy

Current Current

Product
1 2

New

Market penetration
Market extension

Product 3 development
Diversification 4

Market
Souce: Ansoff
New

Existing Existing

Product
New 4

1 2

Market
New

16

Setting marketing budgets

% sales Historic Competitive parity All-you-can-afford The objective and task method

The control cycle

Session 3
Marketing research, segmentation & marketing audit

Marketing research
Marketing research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services (AMA)

Areas of relevant research

Market research Product research Price research Sales promotion research Distribution research Customer research

The marketing research process

Type of data
Primary data are data collected especially for a particular purpose, directly from the relevant source. Secondary data are data which have already been gathered and assembeld for other purposes or general reference.

Some techniques
Observation Surveys Consumer panels Trade & retails audits Pre & post testing

Secondary research
Desk research information from: Inside the firm Published Government Non-government

Research methodologies
Quantitative research gathers statistically valid, numerically measurable data, usually via a survey. Qualitative research focuses on values, attitudes, beliefs and motivations.

Market segmentation
the subdividing of a market into distinct and increasingly homogenous subgroups of customers, where any subgroup can conceivably be selected as a target to be met with a distinct marketing mix. (Cannon)

Bases of segmentation
Geographical Demographic Psychographic Geodemographic Behavioural

Demographic
Age Gender Social class Family type

Geodemographic
Acorn (CACI) Mosaic (Experian)

The Family Life Cycle

Psychographic
Activities Interests Opinions

Social stratification

Benefit segmentation

Behaviour Segmentation
End use Benefits sought Usage rate Loyalty Attitude Buyer readiness
eg usage segmentation in the soup market Dinner party starter Warming snack Meal replacement Recipe ingredient Easy office lunch

Requirements for effective segmentation

Measurability Accessibility Substantiality Homogenous

Stages of Segmentation for B2B Markets

Identify subgroups within the whole market that share common general characteristics (macro segments) Select target segments from macro segments based on differences in specific buying characteristics (micro segments)

B2B macro segmentation bases

Based on the characteristics of organisations and the broader purchasing context in which they operate.

Bases for macro segmentations tend to be observable or obtainable from secondary information.

Can be divided into different organisational characteristics.

B2B micro segmentation bases

Micro segments may exist within a macro segment. A detailed understanding of individual members of the macro segment needed (management philosophy, decision making structures, purchasing policies, etc.).
Starting with broad characteristics then developing increasingly fine detail (from understanding the industry to an organisations operating variables, purchasing approach, and finally personal characteristics).

B2B Segmentation Bases

Macro Size Location Usage rate Micro Product Applications Technology Decision making unit structures. Purchasing and decisionmaking processes Buyer-seller relationships

Targeting
the use of market segmentation to select and address a key group of potential purchasers (CIM). It involves selecting one or more customer groups and satisfying them with a tailored marketing mix.

Targeting strategies

The concentrated targeting strategy

The concentrated approach is the most focused and involves specialising on serving one specific segment. Can lead to very detailed knowledge of the target segments needs and wants.
This strategy can help keep costs down as there is only one marketing mix to manage.

Helps to develop a niche market.

The differentiated targeting strategy

Involves the development of a number of different marketing mixes for different segments.

Allows a business to tailor its offerings to suit different segments.

Spreads risk across market segments.

Requires a detailed overview of the market and its development potential.

Can dilute a companys efforts.

The undifferentiated targeting strategy

Least demanding targeting strategy.

Assumes that the market is one homogenous unit with no significant differences.
One single marketing mix serving all needs.

Relatively inexpensive.

Positioning
The place held by a product or service in the consumers mind, in realty on to the competition.

Perceptual Map

Marketing Information System (MkIS)

Internal reporting system. Marketing intelligence system. Marketing research. Analytical marketing system.

The marketing information system (MkIS)

Marketing environment
Target markets

Marketing information system

Developing information Marketing intelligence Internal records Assessing information needs

Marketing managers
Analysis

Marketing channels Competitors

Publics Macroenvironment forces

Planning Implementation
Organisation Control

Marketing research

Information analysis

Distributing information

Marketing decisions and communications Source: Kotler et al

session 4
Managing the marketing mix

The basic marketing mix

Product-Service spectrum

The service marketing mix

People Process Physical evidence

The extended marketing mix

Product Promotion Price Place

The additional elements deal with the characteristics of services

People -

good training for service staff, appearance of staff, staff carefully selected, and held more accountable

Process -

fast service tills, part time staff to cover highest periods of demand, easy booking systems for appointments appearance of premises, short queues, modern equipment, pleasant waiting areas

Physical evidence -internal and external

People
Appearance Attitude Professionalism Skills/competence Commitment Behaviour Discretion/confidentiality Integrity/ethics

Process

The way the marketing tasks are achieved. Procedures Policies Automation process Information flow Capacity levels for continuous performance Speed/timing of service Queuing/accessibility arrangements

Physical evidence
Environment of service delivery Facilities Tangible evidence of purchase

session 5
Products & services

Product definitions
Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.

Product levels

Features and Benefits

Features
Attributes of products

Benefits
What it does for the customer

Customer buy benefits!

Product and Service Classifications

Consumer products Industrial products

Consumer goods
Convenience goods Shopping goods Speciality goods Unsought goods

Industrial goods
Installations Accessories Raw materials Components supplies

Branding
A brand is a name, term, sumbol or design intended to identify the product of one seller and to differentiate it from those of competitors.

Stages of the PLC

Product portfolio planning

A companys product portfolio is all the product lines and items that the company offers for sale.

BCGs Growth Share Matrix

High 20 18 16 STARS QUESTION MARKS (problem children)

Market growth

14
12

Modest + or cash flow

CASH COWS

Large negative cashflow

DOGS

10
8

6
4 2 Low 10x High

Large positive cashflow

1x

Modest + or cash flow

0.1x Low

Relative market share

New Product Development (NPD)

Why develop new products: Changing needs and wants Outpace competitors Respond to environmental Os & Ts Extend product portfolio Extend the maturity phase of PLC Refresh the product portfolio

Degrees of newness
Unquestionably new The partially new product Major product change Minor product change

Sources of new products

Licensing Acquisition Internal product development Customers Inventors Competition Patent agents Academic institutions PEST envirnment

NPD Process

The diffusion of innovation

Functions of packaging
Protection of contents Distribution Selling User convenience Compliance Promotion Mangement information

Price
Price can be defined as a measure of the value exchanged by the buyer for the value offered by the seller

Price
Price is the amount of money charged for a good or service The only marketing mix element that produces revenue Changing too much chases away potential customers, charging too little cuts revenue

The real issue is value, not price.

-Robert T. Lindgren

Factors to Consider when Setting Prices

General Pricing Approaches

Cost-Based Pricing

Break-Even Analysis and Target Profit Pricing Value-Based Pricing Competition-Based Pricing

Pricing policy
Price sensitivity refers to the effect a change in price will have on customers

Pricing Strategies
New-Product Pricing Strategies Existing-Product Pricing Strategies

Psychological Pricing
Promotional Pricing

New-Product Pricing Strategies

Market-Skimming Pricing Market-Penetration Pricing

Setting Initial Product Prices

Market Skimming
> Setting a high price for a new product to skim maximum revenues from the target market.
> Results in fewer, more profitable sales. > Popular night club charges a high cover charge

Market Penetration
> Setting a low price for a new product in order to attract a large number of guests. > Results in a larger market share. > New Marriott

Other pricing strategies

Product-Bundle Pricing Early cash recovery objective Intermediate customer pricing (RRP) Target pricing Going rate pricing Price discrimination/differential pricing Going rate pricing Quantum price Odd number pricing One coin purchase Gift purchases

Session 6
Place or distribution & Promotion or Marketing Communications

Place or distribution
Place is concerned with the selection of distribution channels used to deliver goods to the consumer.

Channel functions
Transport Stockholding & storage Local knowledge Promotion Display for sale

Value added services

Types of intermediary
Wholesalers - do not normally deal with the end consumer instead deal with other intermediaries, usually retailers. Exception to this is in the B2B market. Wholesalers do not take legal title to the goods. Retailers - sell direct to the consumer and may purchase direct from the manufacturer or wholesaler.

Types of intermediary cont.

Distributors and dealers - add value through services associated with stocking or selling inventory, credit and after sales service.

Franchises hold contracts to supply and market a product/service to the blueprint of the franchisee.
Agents and brokers have legal authority to act on behalf of the manufacturer without taking legal title to the goods or handling the products directly.

Channel structures

Channel structure = the route selected to move a product to market through the different intermediaries.

Channel decisions
Choosing distribution channels 1. Direct distribution 2. Indirect distribution

Consumer channel structures

B2B channels structures

Other considerations
Number of intermediate stages to be used. Extent of manufacturer support given. Manufacturer channel domination aspirations. Manufacturer marketing integration objectives.

Factors in channel decisions

Customers Product characteristics Distributor characteristics Competitor channel choice The suppliers own characteristics

Distribution strategies

Marketing communications
All forms of communication between an organisation and its customers and potential customers. (BPP)

Marketing communications is an audience centred activity designed to encourage engagement between participants. (Fill)

Relative importance of promotional tools

The interrelationships between tools, media and audiences

Above and below the line

Factors affecting emphasis of tools

Push or pull strategy Type of product/market PLC Buyer readiness stage

Session 7
Marketing in context

Marketing in context
Classic marketing context: - FMCG - Consumer durables B2B Services Not for profit (NFP) SMEs

B2B market categories

Capital goods Components & materials Supplies Business services

B2B product distinction

Conformity with standards Technical sophistication High order values Irregularity of purchase

B2B DMU
The DMU is all those individuals and groups who participate in the purchasing decision process, who share some common goals and the risks arising from the decision.

B2B DMU participants

Users Influencers Deciders Approvers Buyers Gatekeepers

Marketing mix differences

Product - Large service element (e.g. training) - Custom built - Packaging for protection - Efficiency features important Price - Less fixed - negotiable

Characteristics of Business Markets

Fewer, larger buyers Close suppliercustomer relationships Professional purchasing Many buying influences Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing

Marketing mix differences

Differences between B2B and consumer marketing (1 of 3)

Differences between B2B and consumer marketing (2 of 3)

Differences between B2B and consumer marketing (3 of 3)

Differences between services & products

Service communication model

NFP categories
Non-profit organisation marketing (hospitals & colleges) Social marketing: seek to shape social attitudes.

Distinctive NFP characteristics

Objectives: not profit based Control of marketing activities
Difficult as most objectives are non-quantitative

Target markets Marketing mixes

Target markets
Beneficiaries Supporters Regulators: formal bodies (Charities

Commission) Stakeholders: trustees, managers, staff & representatives of beneficiaries

Marketing Mix
Product: Ideas as well as goods and services. Price: Financial cost less important than opportunity cost. Place: sometimes problematic as reliance is on volunteers.

Promotion
Objectives different from B2B & B2C. Message development:
- Rational, emotional and moral framework. - Reward & situation framework. - Attitude change framework.

Promotional methods
-

Paid advertising Unpaid (public service advertising) Sales promotion PR Personal selling & communication Direct marketing

Small or Medium Sized Enterprises (SME)

Limited resources Most marketing activities to support personal selling.

Marketing in micro enterprises

Under 10 employees Lack financial & human resources. Most are service businesses. Distribution through mail order, specialist retailers, client premises, or Internet. Promotion: WOM

WOM & Viral marketing

WOM is the speading of information through human interaction alone. Viral marketing means spreading a brand message using wom or w.o.mouse, from a few points of dissemination.

Conventional promotion
Direct marketing Door drops Public relations Advertising Sales promotion

The global context

Globalisation: The growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services, and also through the more rapid and widespread diffusion of technology. Not just an economic phenomenon, but frequently described as such.

What are the drivers

Media developments More travel Better infrastructures ICT Trade agreements, political changes and deregulation The power of multinational organisations

International marketing mix considerations

Product strategies
Creating a global product Adapting the product to local conditions Developing a country specific product.

Arguments for product standardisation

Economies of scales
- Production -R&D - Marketing

Consumer mobility Technology complexity

Arguments for product adaptation

Greater sales Differences in local conditions Political factors: taxation, legislation, pressure of
public opinion

Local producers

Place
Major entry modes - Export: Direct or indirect - Contractual: Licensing or franchising - Investment: Sole venture or joint venture

Promotion
Usually must be adapted. Cultural factors Language Geographical remoteness (media penetration)

Media problems
Availability Costs Coverage Lack of information on the characteristics of the target market.

Price
Exchange rates Average income

The virtual marketplace

E-commerce is typically, the online version of a business process or commercial activity that is already available offline. This is opposed to E-business, which is an entirely new business model that could NOT exist without the capabilities of the Internet.

Virtual markets
B2B B2C B2E G2C C2C

B2B E-commerce
E-procurement Tactical B2B Strategic B2B