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Marketing Management Summary - BT1203
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Complete summary of the contents of Marketing Management!
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Marketing Management – BT1203Week one:
Lecture one
A company can be successful based on customer relationships, whether they sell benefits or a product, and
if they have a motive that everyone can relate to.
Fundamentals of contemporary marketing:
- Marketing analysis
- Market strategy; segmentation-targeting-positioning
- Marketing tactics; 4 P; product, place, promotions, and price.
What is marketing?
Identifying and serving customer needs profitably.
What can be marketed?
Goods, services, places, people, ideas
What should marketing be?
Marketing = creating value for all stakeholders, primarily customers
Orientation; external/customer-focused
Goal: profit through customer satisfaction (relationship, life-time value)
Means: determines the needs and wants of customers. Deliver the desired benefits more efficiently than
competitors.
“The aim of marketing is to make selling superfluous” & “The aim of marketing is to know and understand
the customer so well that the product or service fits him and se
“There are only two important functions in business: Marketing and Innovation; everything else is cost.”
Troubles with focusing on customer needs:
× Businesses often focus on self or focus on competitors, and they are not hearing the customers.
Company orientation toward the marketplace
- Production orientation – “Do what it takes to cut costs”
- Product orientation – “Design a technically superior product”
- Selling orientation – “Sell more of what we make”
- Marketing orientation – “Meet customers’ needs better than competitors”
Product vs Customer-centric view of business
Company Product definition Market definition
Xerox We make copying equipment We help improve office
productivity
Shell Oil We sell gasoline We supply energy
Columbia Pictures We make movies We provide entertainment
× Insights into needs are often hard to uncover. Stated vs. Latent needs
Stated needs = the needs people will communicate
Latent needs = the needs people will not tell you but they do have.
,Functional vs. Emotional needs -> you need both for selling
Functional: quality, reliability, durability, low price, service, convenience, efficiency.
Emotional: sense of achievement, being cool, sense of belonging, sense of freedom.
What is customer value?
How can you make value to give to your customer?
Customer value = perceived benefits – perceived sacrifice
Benefits can be both tangible and intangible.
Costs include acquiring and use
Ways to get marketing wrong:
- Attending to wrong type of market research
- Focusing on internal capabilities, not consumer needs
- Overpromising (and reducing perceived quality)
- Diluting the brand (making it weaker)
Readings:
Marketing Strategy – An Overview
Strategy: plan of action designed to achieve certain defined objectives. Strategies are developed at multiple
levels in the organization; corporate, divisional, business unit, and departmental.
Objectives: sales volume, rate of growth, profit percentages, market share, and return on investment (ROI).
Marketing strategy: it is at the heart of any business plan to take account of the firm’s core competencies
as well as its resource limits. It consists of elements:
- Product/market selection: what markets will we serve and with what product lines?
- Price: discounts, payment plans, rentals, promotions.
- Distribution systems: wholesale and retail channels.
- Market communications: print and advertising, direct mail, displays, sampling.
, - Product service: repair shops, spare parts inventories.
- Technical service: helping to support customers’ product operations.
- Plant location: defines geographic market boundaries.
- Brand strategy: choosing between brands etc.
Marketing mix: the combination of these several factors, and the relative emphasis on each in a marketing
program.
Product/marketing selection:
‘a product is the total package of attributes the customer obtains when making a purchase’
Product meaning must be defined in terms of the full range of benefits, risks, and disadvantages the buyer
obtains with purchase and use.
Perceived value: customer’s existing perception of the product.
Potential value: what the buyer can be educated to recognize.
Market: to a place where buyers and sellers meet, in this case it’s a pocket of latent demand.
Market segment: a set of potential customers that are alike in the way they perceive and value the product,
in their buying behaviour, and in the way they use the product. There are several dimensions:
1. Demography: customer -> family income, age, sex, ethnicity, and educational background.
Industrial -> enterprise size, type.
2. Geography: areas of a country/world, economical shipping distance (plant location), globalization.
3. Psychographic variables: senior citizens, baby-boomers, teenagers, couch potatoes etc.
The comparable segmentation variable in industrial sectors might be corporate culture.
4. Product application and use: use and how it fits into a process or system can vary.
The purpose of market segmentation is to delineate groups of potential buyers according to their needs,
market potential, and buying behaviour.
Product/market selection criteria:
- Product value: target the segment in which the product or service makes its greatest contribution.
- Long-run growth potential
- Resource commitments: can the resources be made available to compete in some high potential
market, and does the estimated return on assets justify the investment?
- Competitive positioning: competition focused.
first-mover: the one to get there first
- Company-product/market fit: might the new product obsolete or cannibalize the sales of existing
product offering without increasing total profitability?
The art of pricing:
The prices of products and services are determined by the interplay of five factors:
1. Supply/demand conditions: the supply of something interacts with market demand to set basic
price levels.
2. Production and overhead costs:
Fixed costs: advertising, sales
Variable costs: labour and materials
3. Competition: cost factors set the floor for prices, competition establishes the ceiling.
Firms may legally respond to competitive price pressures in three ways:
- Differentiating their products: any unique benefits may be translatable in premium prices.
, - Attempting to dampen intrabrand competition among their resellers: intrabrand competition tends
to put pressure on price levels as resellers of the same brand compete for market share in the
regions they serve -> Interbrand competition.
- Exercising brand leadership: the largest firm in the industry can change prices and sometimes the
others will follow or not.
4. Buyer bargaining power
Buyers have strength in the fact that they account for a significant proportion of the sales and that
they have multiple options for meeting their needs.
Sellers have negotiating strength to the extent that they offer differentiated products.
5. Product value to potential customers: ‘the worth of a thing is the price it will bring’.
Black-market phenomenon: low-priced products sold in one market will make their way across
segments into markets where higher prices would normally prevail.
Skimming pricing: with new products in new markets sellers may elect to price high to reach those
segments for which the product has the greatest value and then bring the price down over time to
tap other pockets of demand. -> maximize unit profit in early stages and to gain market experience
at low market volume levels.
Penetration pricing: to price low to achieve high market share before competitors can react or
break into some existing market. -> large market share and dominant competitive position.
Channels of Distribution
Installed base: the volume of its brand currently in use
Distribution channels consist of the firm’s personal
salesforce (wholesale distributors and retail
outlets), and electronic commerce channels.
- Sell direct to customers?
yes no
use a reseller
- Will the reseller be recruited selectively or
intensively
Primary components of any distribution system:
1. Direct sales reps: employees of the firm
2. Sales agents: independent operators who carry the lines of several suppliers
3. Distributors: buy from many suppliers -> amazon?
4. Retail outlets: pharmacies, restaurants, gas stations etc.
example: Wal-Mart
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