Marketing Management (T Bus 504)

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Marketing

Back 1

Identifying and meeting human and social needs→ Meeting need profitably

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Marketing Management:

Back 2

choosing target markets and getting, keeping and growing customers by creating, delivering, and communicating superior customer value.

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What is Marketed?

Back 3

Goods, services, events, experiences, persons, places, properties, organizations, information, and ideas.

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Market

Back 4

groupings of customers

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Market place

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physical store

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Market space

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digital internet shopping

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Metamarket

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cluster of complementary goods and services that are closely related in the minds of consumers, but spread across different industries.
Example→ Automobile market: Cars, financing companies, insurance companies, service shops, auto magazines...etc.

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Marketer

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someone who seeks response (attention, purchase, vote) from another party, called the prospect.

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Five Functions of a CMO:

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1. strengthening brands
2. measuring marketing effectiveness
3. driving new product development based on customer needs
4. gathering meaningful customer insights
5. utilizing new marketing technology

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Process of Marketing: Fluid and continually refreshed!

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1. analyzing opportunities
2. selecting target markets
3. designing marketing strategies
4. developing marketing programs
5.managing the marketing effort

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Needs vs wants

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Needs: basic human requirements
Wants: needs that become specific to a certain brand or specific object

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Demands

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wants for a specific product and ability to pay.
Example→ Need Food Want Burger
Demand Whether you can afford the burger (willing and able to buy it)

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Types of Needs:

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Stated needs: inexpensive car
Real needs: car with low operating cost, not initial price
Unstated needs: expectation of good service from dealer
Delight needs: wants dealer to include an onboard navigation system
Secret needs: wants to be seen as a savvy customer by friends

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Target Market:

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based on examination of demographic, psychographic and behavioral differences among buyers, marketer will choose which segment presents greatest opportunity.

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Market offering:

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what the marketer is selling or “putting on the market” → can be a product, or combination of products, services or information

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Positioning:

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How the marketer presents the offering in the mind of target buyers→ what central benefit or value or use does the item provide?

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Value proposition:

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set of benefits offered to satisfy customer needs

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Brand:

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offering from a known source

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Value:

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sum of the perceived tangible and intangible benefits and costs to consumers
→ customer value triad: quality, service & price

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Satisfaction:

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comparative judgment of a product’s perceived performance compared to expectation.
dissatisfied: product performance falls short
satisfied: performance meets expectations
delighted: performance exceeds expectations

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Marketing Channels:

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1. communication channel: newspaper, magazines, radio, television, mail, phone, etc.
2. distribution channel: how sellers display, sell or deliver physical products to customers
3. service channel: warehouses, transportation firms, banks, etc., that help sellers to
carry out transactions.

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Competition:

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Actual and potential rival offerings and substitutes that buyers might consider.

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Marketing Environment

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→ task environment: immediate actors in production, distribution, promotion.
→ broad environment: demographic, economic, physical, techonolgical, politicallegal, and socialcultural environments.

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“category killers”:

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Giant retailers and online retailers which compete against traditional sellers

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reactive market orientation:

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understanding and meeting customers’ expressed need.

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proactive market orientation:

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focussing on customers’ latent needs”
probe & learn process”

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total market orientation:

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both proactive and reactive efforts

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4 p's

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price
product
place
promotion

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4 P’s designed to answer SIVA

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● Solution: How can I solve my problem?
● Information: Where can I learn more about it?
● Value: What is my total sacrifice?
● Access: Where can I find it?

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Relationship Marketing:

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aims to build mutually satisfying long term relationships between buyers and sellers.

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Integrated Marketing:

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creating marketing programs that create, communicate and deliver value to customers using a marketing mix: called the 4 P’s, which marketers use to influence buyers.

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Internal Marketing:

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everyone in the organization embraces marketing principles

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Performance Marketing:

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based on paying attention to aspects other than just
sales growth→ Using a marketing “score card” which looks at market share, customer loss rate, customer satisfaction, product quality.

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Strategic Marketing Plan –

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lays out the firm’s target markets and value propositions, based on the best marketing opportunities

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Tactical Marketing Plan –

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Specifies the marketing tactics, including product features, promotion pricing, and service.

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Core Competency 3 characteristics

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1. Competitive Advantage
2. Wide Applications
3. Difficult to Imitate

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Characteristics of Strategic business Unit (SBU):

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1. Single business or collection of related businesses
2. Own set of competitors
3. Manager responsible for strategic planning and profit performance

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SWOT Analysis

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Overall evaluation of a business’ strengths, weaknesses, opportunities and treats.

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Porter’s Generic Strategies

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1. Overall cost leadership (work to achieve the lowest production and distribution cost)
2. Differentiation (concentrate on uniquely achieving superior performance)
3. Focus (focuses on one or more narrow market segments)

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Marketing Plan Content

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1. Executive Summary
2. Table of contents
3. Situation analysis
4. Marketing Strategy
5. Financial projections
6. Implementation controls

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Marketing dashboard –

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A visual display of real-time
indicators that summarize a set of relevant
internal and external measures to ensure proper functioning.

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Measuring Marketing Plan Performance

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1. Sales Analysis
2. Market Share analysis
3. Marketing expense to sales
analysis
4. Financial analysis

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Tracking Market Shares

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1. Overall Market Share (firm’s sales expressed as a percentage of total market sales)
2. Served Market Share (All buyers who are able and willing to buy its product)
3. Relative Market Share (Market share in relation to its largest competitor)

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Customer Perceived Value

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the difference between the perceived benefits vs. perceived costs of a product offering

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Total Customer Value

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perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering.

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Total Customer Cost

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perceived costs customers expect to incur in evaluating, obtaining, using, and disposing of a given market offering (including monetary, time, energy, and psychic costs)

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Satisfaction

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a person’s feelings or pleasure or disappointment that result from the perceived performance vs. expectations

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Conformance Quality vs Performance Quality

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Conformance Quality does it meet standards?
Mercedes and Hyundai have the same conformance quality.
Performance Quality how does it perform?
Mercedes has higher performance quality.

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Customer Lifetime Value: 20/80 rule

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20% of customers usually generate 80% or more of the firms profits.

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Customer Relationship Management (CRM)

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carefully managing detailed information about
individual customers and all customer “touch points” to maximize customer loyalty. Refer to the
TESCO case.

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Touch Point

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any occasion in which a customer encounters a brand and product from actual experience to personal or mass communication to casual observation.

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Four step Framework for Individual Marketing (Peppers and Rogers)

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a.) Identify your prospects and customers
b.) Differentiate customers in terms of (1) their needs and (2) their value to the company
c.) Interact with customers to improve your knowledge about their needs
d.) Customize your products, services, or messages to customers.

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Customer Churn defection.

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Remember, it is much cheaper for a company to retain existing customers than it is to attract new ones through marketing campaigns.

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Database Marketing

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building, maintaining, and using customer databases to make contact, facilitate transactions, and build customer relationships.

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The Downside to Database Marketing and CRM

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a.) Large investment to build and man the system.
b.) Difficult to get employees to use the data
c.) Customers may resent having their data collected.
d.) The results generated may not be true.

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Consumer Behavior:

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the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires

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Reference Groups:

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consist of all the groups that have a direct (facetoface) or indirect influence on a person’s attitudes or behavior.

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Membership Groups:

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Groups having a direct influence on a person

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Aspirational Groups:

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those a person hopes to join

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Dissociative Groups:

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those whose values or behavior an individual rejects.

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Opinion Leader:

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the person who offers informal advice or information about a specific
product or product category, such as which of several brands is best. (Marketers try to reach
opinion leaders by identifying their demographic and pschographic characteristics, identifying
their preferred media, and directing messages at them.)

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Brand Personality:

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the specific mix of human traits that we can attribute to a particular brand.

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Selective Attention:

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the process of screening out the multiple (thousands daily) ads and other stimuli

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Selective Distortion:

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the tendency to interpret information in a way that fits our preconceptions.

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Belief:

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a descriptive thought that a person holds about something

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Attitudes:

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just as important as beliefs, these are a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. People have attitudes towards almost everything

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Expectancy Value Model:

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model of attitude formation that posits that consumers evaluate products and services by combining their brand beliefs the positive and negative according to importance.

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Mass Marketing mass

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mass production, distribution, and promotion. (Ford and the black Model T)

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Micromarketing

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focusing marketing on segments, niches, local areas, and individuals.

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Market segment

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group of customers who share a similar set of needs and wants

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Homogenous Preferences

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no natural segments in the markets

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Diffused Preferences

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preferences vary greatly

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Clustered Preferences

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groups of customers with shared preferences

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Types of Segmentation

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a.) Geographic change
offering based on tastes of states, regions, and cities
“Blue Blood Estates, Beltway Boomers, Latino America, Shotguns and Pickups
b.) Demographic gender,
income, generation, social class
c.) Psychographic VALS
(values and lifestyles)
d.) Behavioral Initiator,
Influencer, Decider, Buyer, User

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Market Targeting

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to
be an effective market segment, it must rate favorable on:
a.) Measurable size,
purchasing power, and characteristics
b.) Substantial large
and profitable enough to serve
c.) Accessible can
be effectively reached and served
d.) Differentiable are
conceptually distinguishable and respond differently to different
marketing mix elements and programs.
e.) Actionable effective
programs can be formulated.

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Single Segment Concentration pros and cons

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Pro can specialize and serve one segment well; if first on scene, can be very profitable
Con If segment turns sour, lose big $ (putting all eggs in one basket)

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Selective Specialization

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Go after separate, unrelated segments that are profitable

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Product Specialization

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Alter the same product to appeal to different segments

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Market Specialization

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concentrate on the many needs of particular customer group.
Con group may shrink.

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Full Market Coverage

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usually the strategy of very large firms (GM, Microsoft)

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Segmentation →

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The process of putting consumers into segments. A market segment is a group of consumers that is similar in such a way that they share similar needs and preferences.

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Targeting →

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The process of identifying a market segment whose demands your product can meet.

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Positioning →

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the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market
○ Goal of positioning is to locate the brand in the minds of consumers to maximize
the potential benefit to the firm.

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PointsofDifference
(PODs) →

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attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe they couldn’t find to the same extent with a
competitive brand. Essentially, “how is your product different from your competitors?”

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PointsofParity
(POPs) →

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associations that aren’t necessarily unique to the brand but may in fact be shared with other brands.

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Creating Competitive Advantage:

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Creating competitive advantage consists of (1)
differentiating your brand; (2) identifying and analyzing your competitors; (3) developing
competitive strategies.

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Porter’s 5 Competitive Forces →

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Porter identifies 5 competitive forces that determine the attractiveness of a market or market segment (in terms of ability to earn longterm profits).
These are CEBSS:

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CEBSS

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Competitors, Potential Entrants, Buyers, Suppliers, Substitutes

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Industry competitors →

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a market segment is unattractive if it already contains many strong or aggressive competitors

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Potential entrants →

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you have to take into account barriers to entry and exit. The most attractive market segment has high entry barriers and low exit barriers so that new firms
can enter, while poor performing firms can exit easily.

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Buyers →

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A segment is unattractive is the buyers possess strong or growing bargaining
power

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Suppliers →

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A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied.

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Substitutes →

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A segment is unattractive when there are many actual or potential substitutes for a product.

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3 main variables when analyzing a competitors’ strengths and weaknesses:

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Share of market → target market share
● Share of mind → The percentage of customers who named the competitor responding to
the statement, “Name the first company that comes to mind in this industry.”
● Share of heart → The percentage of customers who named the competitor in responding
to the statement, “Name the company from which you would prefer to buy the product.”

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Important to categorize competitors as:

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● Strong versus weak
● Close versus distant → Most companies compete with rivals that resemble them the
most, yet it is also important to recognize distant competitors (i.e. Cocacola’s
close competitor is Pepsi, but its top competitor is really tap water, not Pepsi).
● “Good” versus “Bad” → i.e. plays by the industry rules or does not.

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Position Defense →

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occupying the most desirable market space in consumers’
minds.

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Flank Defense →

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be aware of weaknesses in your brand and defend against attack in those areas. For example, if you are very high quality but force customers to pay a price premium for that, you are vulnerable from attack on the price side of things. Be prepared!

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Preemptive Defense →

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a good offense is the best defense. Strike first to disable
your rival.

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Counteroffensive Defense →

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When attacked, attack back.

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Mobile Defense →

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Continually expand and broaden your market so that you stay one step ahead of your competitors.

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Contraction Defense →

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Large companies sometimes must recognize that they can no longer defend all their territory. The best course of action is a planned and strategic contraction to focus more resources on a smaller market.

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Frontal attack →

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Let’s say you have a dominant product B and a challenger A. A attacks B. B talks about cavity protection, and A ALSO talks about cavity protection.

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Flanking →

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Dominant player B. Dominant challenger A finds a GAP and tries to occupy
it. This is the flanking strategy. An example here is GSK (Aquafresh). Can’t fight Crest directly, so we will get into the space of oral care by creating Sensodyne and occupying the gap of gum protection and gum health. Flanking your competitor by recognizing and
exploiting a market weakness.

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Encirclement Attack →

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Encircle dominant player B by a “blitz” of marketing activity. You have to have VERY deep pockets in order to do this. A good example is Kindle challenging the iPad

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Bypass Attack →

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The lead player is too big, so I’m gonna look at other categories and make my mark out there. For example, Pepsi starts to diversify into food items because Coke is too dominant in the cola market.

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Guerilla Warfare →

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Small, intermittent attacks. Examples are: Trader Joes going against Wal Mart or other bigger chains.

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Counterfeiter →

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duplicating the leader’s product and package and selling it on the black market.

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Cloner

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emulating the leader’s products, name and packaging with slight variations.
Examples are FruityO’s versus Fruit Loops Cereal.

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Imitator

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copying some things from the leader but maintaining differentiation in packaging, pricing and so on.

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Adaptor →

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improving the leader’s products, perhaps for different markets.

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test

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done