Chapter 1 Marketing Managing Profitable Customer Relationships Power

Chapter 1 Marketing: Managing Profitable Customer Relationships Power. Point by Kotler & Armstrong (and modified by me) 1 Copyright © 2003 Prentice-Hall, Inc.

Chapter Big Ideas § The Big Ideas in this chapter are: § Marketing is…. § Major concepts and tools of marketing § Market orientations § CRM 2 Copyright © 2003 Prentice-Hall, Inc.

Marketing § So what’s Marketing? § Function: noun § Etymology: Middle English, from Old North French, from Latin mercatus --trade or marketplace 3 Copyright © 2003 Prentice-Hall, Inc.

Marketing § Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of goods, services and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment. (AMA) 4 Copyright © 2003 Prentice-Hall, Inc.

Marketing § Marketing is the process of planning and executing (Management function) § the conception, pricing, promotion, and distribution (4 P’s) § of goods, services and ideas (Product) § to facilitate satisfying exchange relationships (buying and selling) § with customers (Target/Segment) § in a dynamic environment. (External factors) Copyright © 2003 Prentice-Hall, Inc. 5

Factors Influencing Company Marketing The Four P’s 6 Copyright © 2003 Prentice-Hall, Inc.

Elements of a Modern Marketing System 7 Copyright © 2003 Prentice-Hall, Inc.

Core Marketing Concepts 8 Copyright © 2003 Prentice-Hall, Inc.

Marketing Concepts and Tools § Core Marketing Concepts 1. Target Markets and Segmentation 2. Marketers and Prospects 3. Needs, Wants, and Demands 9 Copyright © 2003 Prentice-Hall, Inc.

Marketing Concepts and Tools 4. Product, Offering, and Brand 5. Value and Satisfaction § Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs) 10 Copyright © 2003 Prentice-Hall, Inc.

Marketing Concepts and Tools 6. Exchange and Transactions 7. Relationships and Networks Relationship marketing Marketing network 8. Marketing Channels 9. Supply Chain 10. Competition § § Brand competition Industry competition Form competition Generic competition 11 Copyright © 2003 Prentice-Hall, Inc.

Marketing Concepts and Tools 11. Marketing Environment 12. Marketing Mix (4 P’s) 13. Marketing Program 12 Copyright © 2003 Prentice-Hall, Inc.

Management Orientations Toward the Marketplace Production Concept Selling Concept Product Concept Societal Marketing Concept 13 Copyright © 2003 Prentice-Hall, Inc.

CRM § CRM is what? § Customer relationship management (also “the overall process of building and called CRM) is defined as: maintaining profitable customer relationships by delivering superior customer value and satisfaction. ” 14 Copyright © 2003 Prentice-Hall, Inc.

CRM § It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied. § Marketers must be concerned with the lifetime value of the customer. 15 Copyright © 2003 Prentice-Hall, Inc.

Marketing Challenges § Source of marketplace changes: § Technological advances § Rapid globalization § Continuing social and economic shifts 16 Copyright © 2003 Prentice-Hall, Inc.

Chapter 2 company and Marketing Strategy: Partnering to Build Customer Relationships Power. Point by Kotler & Armstrong (and modified by me) 17 Copyright © 2003 Prentice-Hall, Inc.

Chapter 2 – Big Ideas § Strategic planning § Value creation (in many forms) 18 Copyright © 2003 Prentice-Hall, Inc.

Strategic Planning is? The Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities. 19 Copyright © 2003 Prentice-Hall, Inc.

Steps in Strategic Planning 20 Copyright © 2003 Prentice-Hall, Inc.

The Mission Statement § What’s Mission Statement? § A statement of the organization’s purpose § What it wants to accomplish in the larger environment § Should be market oriented and defined in terms of customer needs. 21 Copyright © 2003 Prentice-Hall, Inc.

Questions a Mission Statement Should Answer What is our Business? Who is the Customer? What do Consumers Value? What Should our Business Be? 22 Copyright © 2003 Prentice-Hall, Inc.

Mission Statements Should: Be Realistic Be Specific Fit the Market Environment Be Based on Distinctive Competencies Be Motivating 23 Copyright © 2003 Prentice-Hall, Inc.

Designing the Business Portfolio § A business portfolio is what? § The business portfolio is the collection of businesses and products that make up the company. § During the strategy process a company must do what? § analyze its current business portfolio or Strategic Business Units (SBUs), § decide which SBUs should receive more, less, or no investment, § develop growth strategies for growth or downsizing. 24 Copyright © 2003 Prentice-Hall, Inc.

Portfolio Analysis § A portfolio analysis is what? § An evaluation of the products and business making up the company. § Resulting in? § Identifying where resources are directed or taken away § Invest in to more profitable businesses and § Divest in weaker ones (phased down or dropped). 25 Copyright © 2003 Prentice-Hall, Inc.

Strategic Business Unit § A SBU is what? (hint: ) § A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. § Can be a company division, a product line within a division, or sometimes a single product or brand. 26 Copyright © 2003 Prentice-Hall, Inc.

Strategic Planning Tools § BCG’s growth share matrix § Ansoff’s product/market expansion grid 27 Copyright © 2003 Prentice-Hall, Inc.

Analyzing Current SBU’s: BCG Growth-Share Matrix Relative Market Share High Low Question Marks Low Market Growth Rate High Stars • High growth & share • May need heavy investment to grow • Eventually, growth will slow Cash Cows • Low growth, high share • Established, successful SBU’s • Produce cash ? • Low share SBUs in high growth markets • Require cash to hold market share • Build into Stars or phase out Dogs • Low growth & share • Generate cash to sustain self • Do not promise to be cash sources 28 Copyright © 2003 Prentice-Hall, Inc.

Problems With Matrix Approaches Can be Difficult, Time Consuming, Costly to Implement Difficult to Define SBUs & Measure Market Share/Growth Focus on Current Businesses, Not Future Planning Can Place too Much Emphasis on Growth Can Lead to Poorly Planned Diversification 29 Copyright © 2003 Prentice-Hall, Inc.

Product/Market Expansion Grid PRODUCT MARKET Existing New Existing Market Penetration Product Development New Market Development Diversification 30 Copyright © 2003 Prentice-Hall, Inc.

Value § Value is what? § Function: noun § Pronunciation: 'val-(")yü § Etymology: past participle of Latin val. Ere – to be worth, be strong, be powerful, be influential, be healthy § Meaning: “Relative worth, utility, or importance” 31 Copyright © 2003 Prentice-Hall, Inc.

Value Proposition § Value Proposition is what? § A set of benefits offered by an organization to satisfy a customer’s needs, wants and demands 32 Copyright © 2003 Prentice-Hall, Inc.

Value Chain § § § So what’s a Value Chain? A Michael Porter concept A tool to conceptualize and identify ways to create more customer value § 9 Activities § 5 primary activities § Inbound logistics, operations, outbound logistics, marketing and sales, service § 4 support activities § Procurement, technology development, human resources, firm infrastructure 33 Copyright © 2003 Prentice-Hall, Inc.

The Generic Value Chain 34 Copyright © 2003 Prentice-Hall, Inc.

Value Delivery Network § So what’s a value delivery network? § A network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system 35 Copyright © 2003 Prentice-Hall, Inc.

Value Delivery Network Company’s Value Chain Distributors Suppliers Customers Copyright © 2003 Prentice-Hall, Inc. 36

Market Segmentation § So what’s market segmentation? § The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs. § A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. 37 Copyright © 2003 Prentice-Hall, Inc.

Target Marketing § So what’s target marketing? § Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter or target. § Target segments that can sustain profitability. 38 Copyright © 2003 Prentice-Hall, Inc.

Market Positioning § Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e. g. , Chevy Blazer: “Like a rock”) § Process begins with differentiating the company’s marketing offer so it gives consumers more value. 39 Copyright © 2003 Prentice-Hall, Inc.

The Marketing Mix § The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. § Consists of the 4 P’s 1. 2. 3. 4. Product Price Place Promotion 40 Copyright © 2003 Prentice-Hall, Inc.

The 4 P’s of the Marketing Mix 41 Copyright © 2003 Prentice-Hall, Inc.

Managing the Marketing Effort Strategic Tactical 42 Copyright © 2003 Prentice-Hall, Inc.

Major Sections of Product/Brand Plan Executive Summary Current Marketing Situation Analysis of Threats and Opportunities Objectives for the Brand Marketing Strategy Action Programs Marketing Budget Controls Copyright © 2003 Prentice-Hall, Inc. 43

Marketing Control Process 44 Copyright © 2003 Prentice-Hall, Inc.

Marketing Concept Value Creation 45 Copyright © 2003 Prentice-Hall, Inc.

Value and Value Proposition § Value § The relative worth, utility or importance § Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs) § Value Proposition § A set of benefits offered by an organization to satisfy a customer’s needs, wants and demands 46 Copyright © 2003 Prentice-Hall, Inc.

Value Chain § A tool to conceptualize and identify ways to create more customer value § 9 Activities § 5 primary activities § Inbound logistics, operations, outbound logistics, marketing and sales, service § 4 support activities § Procurement, technology development, human resources, firm infrastructure 47 Copyright © 2003 Prentice-Hall, Inc.

The Generic Value Chain 48 Copyright © 2003 Prentice-Hall, Inc.

Value Delivery Network § A network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system 49 Copyright © 2003 Prentice-Hall, Inc.

Value Delivery Network Company’s Value Chain Distributors Suppliers Customers Copyright © 2003 Prentice-Hall, Inc. 50

Market Segmentation § The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs. § A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. 51 Copyright © 2003 Prentice-Hall, Inc.

Target Marketing § So what’s target marketing? § Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. § Target segments that can sustain profitability. 52 Copyright © 2003 Prentice-Hall, Inc.

Market Positioning § Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e. g. , Chevy Blazer: “Like a rock”) § Process begins with differentiating the company’s marketing offer so it gives consumers more value. 53 Copyright © 2003 Prentice-Hall, Inc.

The Marketing Mix § The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. § Consists of the 4 P’s 1. 2. 3. 4. Product Price Place Promotion 54 Copyright © 2003 Prentice-Hall, Inc.

The 4 P’s of the Marketing Mix 55 Copyright © 2003 Prentice-Hall, Inc.