Marketing Management BM 4804

1. Marketing ManagementBM 4804 Warin Chotekorakul Session 1, 2003

2. Ch. 1 Defining marketing for the 21st century • The questions that we should be able to respond after completing the chapter: • What is the new economy like? • What are the tasks of marketing? • What are the major concepts and tools of marketing? • What orientations do companies exhibit in the marketplace? • How are companies and marketers responding to the new challenges?

3. What is the new economy like? • What is the old economy? • Based on the “Industrial Revolution” and on managing “manufacturing” industries • Goal: efficiency • Hierarchical management being used

4. What is the new economy like? (2) • New economy • Based on the “Digital Revolution” and the management of “information” • Substantially differentiated, customized, and personalized • Less hierarchical management—Why?

5. What are the tasks of marketing? • 3 stages that a company might pass: • Entrepreneurial marketing • Formulated marketing • Intrepreneurial marketing Question: Each of the three stages requires the same marketing tasks? Yes

6. What are the tasks of marketing? (2) • Marketing is the task of creating, promoting, and delivering goods and services to consumers and businesses.

7. Demand States and Marketing Tasks • Negative demand: • occurs when the market dislikes the product • Marketing Task: to analyze why the market dislikes the product, and how to change the beliefs and attitudes • No demand: • occurswhen target market is unaware of the product • Marketing Task: to connect the benefits of the product with the needs

8. Demand States and Marketing Tasks 2 • Latent demand: • A strong need that cannot be satisfied by any existing product • Marketing task: to measure the size of the potential market and develop effective pdt • Declining demand: • Decreasing demand for the product • Marketing task: to reverse the declining demand through creative remarketing

9. Demand States and Marketing Tasks 3 • Irregular demand: • Demand varies on a seasonal, daily basis • Marketing task: to find ways to alter the same pattern of demand called “Synchromarketing” • Full demand: • Occurs when a company is satisfied with the volume of business • Marketing task: to maintain current demand level facing the changing consumer preferences and increasing competition

10. Demand States and Marketing Tasks 4 • Overfull demand: • Occurs when demand level is higher than a company can handle • Marketing task: to find ways to reduce the demand called “Demarketing” : General and Selective demarketing • Unwholesome demand: • For unwholesome products e.g. handguns, cigarettes, X-rated movies/websites • Marketing task: to get people who like these things to give them up

11. What are the major concepts and tools of marketing? • Definitions of Marketing: • Social: Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. • Managerial: Marketing is the art of selling products

12. What are the major concepts and tools of marketing? (2) • Marketing Management: the ways to achieve desired responses from other parties • Definition of Marketing Management • The art and science of choosingtarget markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value

13. Core Marketing Concepts • Segmentation and Target markets: • Segmentation or Market Segmentation isthe process of dividing a market into groups whose valuations of products are similar within groups and who differ across those groups • Market Segment isa group of actual or potential customers who can be expected to respond in a similar way to a product or service offer

14. Core Marketing Concepts (2) • Segmentation and Target markets (2): • Market Targeting isthe process of selecting segments to serve and identifying customers in target segments by evaluating the attractiveness of segments • Target Market isis a market that the company chooses to serve effectively and profitably

15. Core Marketing Concepts (3) • Marketplace, Marketspace, and Metamarket: • Marketplaceis physical (shopping in a store) • Marketspaceis digital (shopping on the net) • Metamarket is a group of complementary pdts and services that are closely related in the minds of consumers but are spread across a diverse set of industries e.g. home ownership market

16. Core Marketing Concepts (4) • Marketers and Prospects • Needs, Wants, and Demands: • Needsare the basic human requirements • Wants are specific objects that might satisfy the need • Demands are wants plusability and WTP • Censure: marketer cannot create needs, but can influence wants.

17. Core Marketing Concepts (5) • Product, Offering, and Brand: • Why does a customer buy a product (car)? If so, we can call them as Value Proposition. • What is the difference between “product • and offering”? • Is offering a subset of product? • Brand enables a customer to know the offering comes from what company

18. Core Marketing Concepts (6) • Value, Cost, and Satisfaction: • How do consumers choose among the many products that might satisfy a given need? The guiding concept is value. • Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs. • Value is the combination of Quality, Service, and Price (QSP) or Customer Value Triad

19. Core Marketing Concepts (7) • Value, Cost, and Satisfaction (2): • How to measure Value? • Value = Benefits/Costs • Exchange and Transaction: • Exchange is the act of obtaining a desired product from someone by offering something in return. • Exchange is the defining concept underlying marketing.

20. Core Marketing Concepts (8) • Exchange and Transaction (2): • A transaction is a trade of values between two or more parties. Two types: Monetary VS Barter transactions • Transaction = Transfer / • Relationships and Networks: • Relationship Marketing: aim to build up L-T, trusting, and “win-win” relationships with customers, distributors, dealers, and suppliers • RM brings down costs on transaction and time

21. Core Marketing Concepts (9) • Relationships and Networks (2): • The final outcome of RM is the building of a unique company asset called a marketing network. • Marketing Network consists of the company and its supporting stakeholders.

22. Core Marketing Concepts (10) • 3 types of marketing channels: • Communication channels:to deliver and receive messages from target buyers • Distribution Channels:to display, sell, or deliver the physical products or services to buyer or user • Service channels:to facilitate transactions

23. Channels Communication Channels 1. Monologue 2. Dialogue Distribution Channels 1. Warehouse 2. Transportation Vehicle 3. Trade Channels 3.1 Wholesaler 3.2 Retailer 3.3 Distributor 3.4 Agent Service Channels Facilitating Organizations such as banks, Insurance companies

24. Core Marketing Concepts (11) • Supply Chain: • Describes a longer channel stretching from raw mat to components to final products that are carried to final buyers • Competition: • Brand Competition • Industry competition • Form competition • Generic competition

25. Core Marketing Concepts (12) • Marketing Environment: • Task (micro) environment (main actors) • Broad (macro) environment • Marketing Program/Plan: • To achieve the company’s objectives • Marketing mix: set of marketing tools used to pursue marketing objectives in the target market

26. Core Marketing Concepts (13) • Marketing Program/Plan (2): • Robert introduced that the sellers’ 4 Ps correspond to the customers’ 4 Cs Four Ps Four Cs Product Customer solution Price Customer cost Place Convenience Promotion Communication

27. What orientations do companies exhibit in the marketplace? • 6 company directions • The production concept • The product concept • The selling concept • The marketing concept • The customer concept • The societal marketing concept

28. 1. The Production concept • The concept holds that consumers will favor those products that are widely available and inexpensive. • The assumption holds in 2 types of situations: • Where the demand for a product exceeds supply (in 3rd World countries) • Where the product’s cost is high and has to be brought down through increased productivity to expand the market

29. 2. The Product concept • The concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. • The companies get little or no customer input, and very often they will not examine competitors’ products. • Planned Obsolescence Strategy e.g. Lancer VS Lancer Cedia by Mitsubishi

30. 2. The Product concept (2) • The product concept leads to “marketing myopia” (Levitt, 1975) which means managers often view their market from a narrow, product-oriented perspective, and this may result in missed opportunities. • For example, railroad management.

31. 3. The Selling concept • The concept holds that consumers, if left alone, will ordinarily not buy enough of the organization’s products. • Thus, the company must undertake an aggressive selling and promotion effort. • For companies with unsought products, or when companies have overcapacity. • Inside-out approach

32. 4. The Marketing concept • The concept holds that the job is not to find the right customers for your product, but the right product for your customers (outside-in approach). • Satisfying needs of the customers

33. 4. The Marketing concept (2) • 3 Types of marketing orientation: • Reactive market orientation: understanding and meeting customers’ expressed needs • Proactive marketing orientation: concentrating on customers’ latent needs • Total market orientation: combination of the above two

34. Points to study from Marketing Concept • 5 Types of Needs: • Stated needs: • Real needs: • Unstated needs: • Delight needs: • Secret needs: A fast laptop High performance, Accurate result Good service Mouse and mouse pad Smart, savvy consumers

35. Points to study…(2) • 3 types of marketing on basis of countering to customer’s needs: • Responsive Marketing • Anticipative Marketing • Creative Marketing

36. Points to study…(3) • Integrated Marketing: all the company’s departments work together to serve the customer’s interests • External Marketing: marketing directed at people outside the company • Internal Marketing: marketing directed at employees of the company

37. 5. The customer concept • Outside-in approach • One-to-one marketing • To capture a larger (market) share of each customer’s expenditures Question:Is customer share the same idea as market share?

38. 6. The societal marketing concept • The concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitorsin a way that preserves or enhances the consumer’s and the society’s well-being. • e.g., the Body Shop

39. When to Review Marketing Plan • Sales decline • Slow growth • Changing buying pattern • Increasing competition • Increasing marketing expenditures

40. Company Responses and Adjustment • Re-engineering • Outsourcing • E-commerce • Benchmarking • Partner-supplier • Alliances • Market-centered • Global and local • Decentralized

41. Marketer Responses and Adjustments • Relationship marketing • Customer lifetime value • Customer share • Target marketing • Individualization • Customer database • Integrated marketing communication • Channel as partner • Every employee a marketer • Model-based decision

42. Takeaways from Ch.1 • The old VS the new economies • The marketing tasks (and for diff DD states) • Major marketing concepts and tools • 6 Types of orientations • Company and marketer responses in the new economy