Lecture Notes - Complete revision - Introduction to Marketing Management PDF

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complete revision - Introduction to Marketing Management...

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Chapter 1 Amazon online pioneer in selling books but now sells everything.  The success of Amazon is attributed to its customer-driven policy that starts with the customer and works backward. o For example, the Amazon.com site greets customers with their very own personalized home pages, feature offers personalized product recommendations. Thus, it creates direct, personalized customer relationships and satisfying online experiences. The company believes that if it creates superior value for customers, it will earn their business and loyalty, and success will follow in terms of company profits and returns. Marketing- create value for customers/ build strong customer relationships to get value from customers in return.  The dual goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction.  Sound marketing is critical to the success of every organization.

Five Step model of marketing process for creating and capturing customer value. 1. Companies try to understand customers 2. Create customer value 3. Build strong customer relationships 4. Companies earn the rewards of creating superior customer value 5. The rewards are sales, profits, and long-term customer equity. 5 core customer and marketplace concepts are  Needs  Wants  Demands  Market offerings (include products, services, and experience)  Value and satisfaction, exchanges and relationships, and markets. Needs is state of felt deprivation. • physical - food, clothing, warmth, and safety • social for belonging and affection • Individual for knowledge and self-expression. Wants- the form human needs take as they are shaped by culture/individual personality. • Wants are shaped by one’s society and described in terms of objects that will satisfy those needs. Wants become demands when backed by buying power Customers form expectations about value and satisfaction that market offerings will deliver. o Satisfied- buy again and tell others about their good experiences o Dissatisfied-switch to competitors and criticize the product to others.  Marketers should set the right level of expectations.

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If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed.

Marketing occurs when people decide to satisfy their needs and wants through exchange relationships. Exchange- obtaining a desired object from someone by offering something in return. Marketing consists of actions meant to make exchanges. Main elements in a marketing system. Each adds value for the next level. A company’s success at building relationships depends also on how well the entire system serves the needs of final consumers. Marketing management- choosing target markets and building profitable relationships with them.  To design a winning marketing strategy: o The target market? o The value proposition? The company:  Select the customers to serve, done through market segmentation.  Next, the company decides how it will differentiate and position itself in the marketplace.  Value proposition- the set of benefits it promises to deliver to consumers to satisfy their needs.  5 other concepts which organizations design/carry out their marketing strategies. o Production- consumers will favor available and highly affordable products. o Product- most quality, performance, and features. o Selling- will not buy enough of the firm’s products unless the firm undertakes a largescale selling and promotion effort. o Marketing- where achieving organizational goals depends on knowing the needs and wants of target markets and delivering satisfactions better than competitors. o Societal- company’s decisions should consider:  consumers’ wants,  the company’s requirements  consumers’ long-run interests  society’s long-run interests The selling concept- inside-out view that focuses on existing products and heavy selling. o The aim is to sell what the company makes. The marketing concept takes an outside-in view that focuses on satisfying customer needs o Starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers. Customer relationship management- process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.  It deals with all aspects of acquiring, keeping, and growing customers. • The key to building lasting customer relationships is to create superior customer value and satisfaction.

Customer-perceived value- the customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. • Customers often don’t judge values and costs accurately. They act on perceived value. To some consumers, value might mean sensible products at affordable prices. Customer satisfaction- the extent to which a product’s perceived performance matches a buyer’s expectations. • Higher levels of customer satisfactiongreater customer loyaltybetter company performance. • A smart person should please customers by promising only what he can deliver but surprise and give more. Hookin it up Companies can build customer relationships at many levels  A company with many low-margin customers may seek to develop basic relationships with them.  In markets with few customers and high margins, sellers want to create full partnerships with key customers. Marketers use specific tools to develop stronger bonds with customers.  Frequency programs- money if you buy alot  Loyalty programs- special benefits if buy frequently  Club programs- special benefits and create member communities. Customer lifetime value- value of the entire stream of purchases a customer makes over a lifetime Relationship groups, according to their profitability and projected loyalty.  Butterflies- satisfying and profitable transactions, try to get as much before they go buy somewhere else. Changing butterflies to loyal customers is rarely successful.  True friends have potential to generate profit for the company. o Make more deals to keep them around  The company may be able to improve the profitability of barnacles by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be fired. o Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the company’s offerings. Five major developments changing the marketing landscape and challenging marketing strategy are • Digital age • changing economic environment • growth of not-for-profit marketing • rapid globalization • Calls for more ethics and social responsibility. Digital/social media marketing: using digital marketing tools to engage consumers anywhere, at any time, via their digital devices. Mobile marketing- fastest-growing digital marketing platform. • mobile channels to make shopping easier, enrich the brand experience

Chapter 2- Company and Marketing Strategies: Partnering to Build Customer Value and Relationsips

Strategic plan- Process of developing and maintaining a strategic fit between the organization’s goals/capabilities and its changing marketing opportunities.  Companies prepare annual plans, long-range plans, and strategic plans. o The annual and long-range plans deal with the company’s current businesses and how to keep them going. o However, the strategic plan involves adapting the firm to take advantage of opportunities in its changing environment. Steps in strategic planning: 1. At the corporate level, company starts by defining its purpose and mission. 2. The mission becomes detailed supporting objectives that guide the entire company. 3. Headquarters decides what portfolio of businesses and products is best for the company and how much support to give each one. Marketing planning- at the business-unit, product, and market levels.  Supports strategic planning with more detailed plans for specific opportunities. Mission statement- organization’s purpose .  A sound mission has: o What is our business? Who is the customer? o What do consumers value? What should our business be?  Should be market oriented and defined in terms of satisfying basic customer needs.  Emphasize the company’s strengths and tell forcefully how it intends to win in the marketplace.  A company’s mission should focus on customers and the customer experience the company seeks to create. Business portfolio- collection of businesses and products that make up the company. • The best is the one that best fits the company’s SWOT • The planning involves two steps. 1. Must analyze its current business portfolio and determine which businesses should receive investment 2. Must shape future portfolio by developing strategies for growth and downsizing. Strategic planning: major activity is business portfolio analysis- process when management evaluates the products and businesses that make up the company.  Steps for analyzing portfolios. 1. Identify the key businesses that make up the company, called strategic business units (SBUs) 2. Assess the attractiveness of its various SBUs and decides how much support each deserves.

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Strategic Planning purpose: to find ways which the company can better use its strengths to take advantage of attractive opportunities in the environment. Most portfolio analysis methods evaluate SBUs on two important dimensions: 1. Attractiveness of the SBU’s market or industry 2. Strength of the SBU’s position in that market or industry.

Classification of company’s SBUs. Market growth rate- measure of market attractiveness. Relative market share- measure of company strength in the market. The growth-share matrix defines four types of SBUs. 1. Stars are high-growth, high-share 2. Cash cows, are low-growth, high-share 3. Question marks are low-share business units in high-growth markets. 4. Dogs are low-growth, low-share. The 10 circles in the growth-share matrix represent the company’s 10 current SBUs. The product/market expansion grid- portfolio-planning tool for identifying growth opportunities through market penetration, market development, product development, or diversification. Steps are: 1. market penetration- make more sales to current customers without changing the original products. 2. market development- identifying and developing new markets for its current products. 3. product development by offering modified or new products to current markets. 4. Diversification- buying businesses beyond the firm’s current products and markets. The marketing concept suggests the company strategy should revolve around creating customer value and building profitable relationships with important consumer groups. • Provides inputs to strategic planners by helping to identify attractive market opportunities and assessing the firm’s potential to take advantage of them. • Within individual business units, marketing designs strategies for reaching the unit’s objectives. To create customer value, the firm needs to look beyond its own value chain and into the value chains of its suppliers, distributors, and its customers.  The customer value delivery networks- network made up of  the company, its suppliers, its distributors, and its customers  who partner with each other to improve the performance of the entire system.  Competition takes place between the entire value delivery networks created by these competitors. o For example, Toyota’s performance against Ford depends on the quality of Toyota’s overall value delivery network versus Ford’s. Even if Toyota makes the best cars, it might lose in the marketplace if Ford’s dealer network provides more customer-satisfying sales and service. The strategic plan defines the company’s overall mission and objectives. Thus,  marketing strategy- the company hopes to create customer value and achieve profitable customer relationships.

The company designs a marketing mix made up of factors under its control due to marketing strategy which are • Product • Price • Place, and promotion. • To find the best marketing strategy/mix, it engages in o Marketing analysis, planning, implementation, and control. Market segmentation- dividing a market into groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.  A market segment- group of consumers who respond in a similar way to a given set of marketing efforts. Simply a group of people with similarities Market targeting- evaluating market segment’s attractiveness and selecting which segments to enter.  Should target segments in which it can make the greatest customer value and keep it over time. After a company decided the market segment to enter, it needs to determine how to differentiate its market offering for each targeted segment and what positions it wants to occupy in those segments. Positioning- arranging for a product to occupy a clear/desirable place relative to competing products in the minds of target consumers. Effective positioning begins with differentiation- differentiating the market offering to create superior customer value. Marketing mix- set of tactical marketing tools that the firm blends to produce the response it wants in the target market  Product- the goods-and-services combination the company offers to the target market.  Price Place- activities that make the product available to target consumers.  PromotionAn effective marketing program blends the marketing mix elements into an integrated marketing program designed to achieve the company’s marketing objectives by delivering value to consumers. Criticism of 4 P’s:  The four Ps underemphasize certain important activities. Service Product: like banking, airline, and retailing services which fall under products.  Packaging should be included as it is considered one of the product decisions.  Main criticism: they emphasize only the seller’s viewpoint.  To cater to the buyer’s viewpoint of customer value and relationships, the four Ps might be better described as the four Cs. o Customer solution, Customer cost, Convenience, and Communication. Four marketing management functions 1. Analysis2. Planning- develop strategic plans and translate them into marketing and other plans

3. Implementation-company turns the plans into actions 4. Control- measuring and evaluating the results of marketing activities and taking corrective action where needed Finally, marketing analysis provides the information and evaluations needed for all the other marketing activities. Managing the marketing function begins with analysis of the company’s situation.  SWOT analysis o Overall evaluation of the company’s strengths (S), weaknesses (W), opportunities (O), and threats (T).  Strengths:  Weaknesses:  Opportunities Threats- unfavorable external factors or trends that may present challenges to performance. Marketing plan- choosing marketing strategies that will help the company attain its overall strategic objectives. 1. Executive summary- reviews major assessments, goals, and recommendations. 2. The main section of the plan presents a detailed SWOT analysis of the current marketing situation as well as potential threats and opportunities. 3. Major objectives for the brand and outlines the specifics for achieving them. 4. Marketing strategy- strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. o Outlines how the company intends to create value for target customers in order to capture value in return. o The planner explains how each strategy responds to the threats, opportunities, and critical issues spelled out earlier in the plan. 5. Action Program: how marketing strategies will be turned into specific action programs 6. Controls- will be used to monitor progress, measure return on marketing investment, and take corrective action. Marketing implementation- turning marketing strategies/plans into marketing actions to accomplish strategic marketing objectives.  who, where, when, and how. Marketing planning: what and why of marketing activities Marketing return on investment-net return from a marketing investment divided by the costs of the marketing investment.  Measures the profits generated by investments in marketing activities.  Companies can assess in terms of standard marketing performance measures, like brand awareness, sales, or market share.  Assembled through o Marketing dashboards- sets of marketing performance measures in a single display used to monitor strategic marketing performance.

customer-centered: A measure of marketing impact like customer acquisition/engagement/retention/lifetime value/equity. Measures also capture future performance resulting from stronger customer relationships. o

Figure shows marketing expenses as investments that produce returns in the form of more profitable customer relationships.  Marketing investments result in improved customer value and satisfaction o which in turn increases customer attraction and retention. o This increases individual customer lifetime values and the firm’s overall customer equity.  Increased customer equity, in relation to the cost of the marketing investments, determines return on marketing investment. CHAPTER 3- Analyzing the Marketing Environment Marketing environment- outside forces that affect marketing management’s ability to build and maintain successful relationships with target customers.  Consists of:  Microenvironment- actors close to the company that affect its ability to serve its customers.  Macroenvironment- larger societal forces that affect the microenvironment. Actors in Microenvironment 1. Suppliers provide the resources needed by the company to produce its goods and services. 2. Marketing intermediaries-help the company promote, sell, and distribute its products to final buyers. 3. Marketers must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. 4. Publics- any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. 5. Customers- most important actors in the company’s microenvironment. Forces in Macroenvironment 1. Demographic- study of populations in terms of size, density, location, age, gender. Factors are: I. Changing age/family structures. II. Changing American household (marriage)- each group has distinctive needs and buying habits. III. Geographic shifts in population IV. Increasing diversity- Marketers face diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers. 2. Economic environment: factors that affect consumer purchasing power and spending patterns. Factors are: I. Nations vary.

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 Industrial economies- rich markets for many different kinds of goods. Subsistence- consumes most of their own agricultural and industrial output; offer few market opportunities. Developing- can offer outstanding marketing opportunities for the right kinds of products. Distribution of income has created a tiered market

3. Natural Environment- physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. A. Shortages of raw materials- firms making products that require scarce resources face large cost increases, even if the materials remain available. B. Increased pollution C. Increased government intervention in natural resource management. Environmental sustainability- effort to create a world economy that the planet can support forever. 4. Technology- New technologies excite marketers.  Radio-frequency identification or RFID- track products through various points in the distribution channel.  Government agencies investigate ban potentially unsafe products. Regulations have resulted in higher research costs and longer times between new product ideas and their introduction.  Should be aware of regulations when applying new technologies/developing new products. 5. Political Environment- Laws, government agencies, and pressure groups that influen...