MGT 6450 Marketing

1. MGT 6450 Marketing • Web Main Menu • Syllabus • Schedule & Outline • Class e-mail • News • Overview of marketing • Small group formation & discussion of products/services via product life cycle • Next week: market segmentation

2. Marketing News • Generational Marketing • Social Marketing News • Advertising Age • AMA Marketing News • Direct Marketing News • Marketing Today

3. "Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives." “The societal marketing 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 competitors, in a way that preserves or enhances the consumer's and the society's well-being. “

4. How is marketing done in your organization?

5. Discussion Questions • How is marketing currently conducted in your organization? What role does a marketing department have in helping form organizational strategy; how well connected are they with other departments and functions in the organization; how is market information gathered, analyzed and used? • What are the “change drivers” that have propelled marketing to this position in organizations? Why is strategic marketing so crucial in today's marketplace? • In your organization, where does marketing fit with strategic planning? • How aware are employees of the marketing concept and efforts of the marketing department (or whomever does it)? • Examine your organization's mission statement and define it from product/service perspective as well as marketing perspective (who are the customers & what needs are you committed to satisfying?) • Using the Product Life Cycle, place your product/service line along the continuum (Portfolio methods)

7. Change Drivers Effects of Change Drivers • Competitive environment: • More informed customers • More evenly distributed technological capabilities among competitors • More closely linked suppliers • Easier entry for new competitors • World wide market for supplies and workers • Less expensive, more widely available communications, transactions, information, and production technologies such as: • Internet based communication and commerce • Data mining • Pattern recognition algorithms (neural networks) • Computer integrated design • Rapid prototyping • Simulation testing of designs and prototypes • Real time data tracking • Nanotechnology • Flexible manufacturing technology • Enterprise wide software • Business processes: • More knowledge about customer buying patterns • Improved forecasting ability • Improved production scheduling and tracking • More rapid production process design • Integration: • Coordination of geographically dispersed operations • Coordination of culturally diverse workforce • Coordination of logistics and information with dispersed networks of customer and suppliers • Culturally, ethnically diverse workforce that is more mobile: • Political and economic conditions creating more opportunities for markets and supplies worldwide • Aging workforce worldwide • Language and culture differences • Workforce: • More use of temporary workers • Competition for skilled and knowledge workers • Management across international cultures • Difficulty in molding organizational cultures

8. What’s gone wrong with strategy? • 75% of executive teams do not have a clear customer propositions (idea of the mix that appeals to the target market) • 85% of management teams spend less than one hour per month discussing strategy • 60% of organizations don't link strategy and budgeting • 92% of organizations don't report on strategic lead indicators • Less than 5% of an organization's workforce understands its strategy • Only 51% of senior managers, 21% of middle managers, and 7% of line employees have personal goals linked with strategy • Organizations find that up to 25% of strategy measures change each year • Tangible book value represented only 62% of industrial organization's market value in 1982; in 1992 it was 38%, and 10-15% in 2000 • The failure rate of strategies is between 70-90%, mainly due to poor implementation

10. SWOT or TOWS Analysis for Strategy Information from Market Research

11. Eras of Marketing Next ? Relationship/Partnering Era (1990-): Short term financial focus, downsizing, globalization, reengineering trends. Publish or perish pressure on research. Concern, trust, and investment in collaborative relationships with long term customers and competitors (e.g., Saturn owner parties, Sam’s Club memberships, etc.). Specialized interest areas; sophisticated multivariate segmentation; wide application [Problem: still short term, fragmented research, customer manipulation] Marketing Era (1950s-1980s): Mass market boom! Use of behavioral and quantitative sciences. Customer is King! Find (create) a need and fill it; (market segmentation & targeting) satisfy needs! [problem: too short term & costly] Sales Era (1925-1950s): Marketing principles. Good advertising and sales will overcome consumer resistance” (Brand image differentiation); Marketing associations & journals [problem: broad advertising not cost-effective] Production Era (1900-1925): “a good product sells itself”; offer more products! Build it and they will come! [problem: unsold inventory]. First courses with “marketing” title. Focus on distribution. Pre-Marketing Era (1750-1900): “I got it, you want it?”

12. Pre-Marketing Era (1750-1900) • “I got it, you want it?” • Cottage industries making narrow specialties with little variation • Often family businesses • Generally for local trade • Word of mouth promotion • Example: China 1986 basket and wood shipping containers

13. Production Era (1900-1925): [problem: unsold inventory]... • “A good product sells itself” (unsold inventory) • offer more products! • Focus on distribution • First courses with “marketing” title

14. Sales Era (1925-1950s) • Marketing principles • Good advertising and sales will overcome consumer resistance” • Brand image differentiation • Marketing associations & journals • problem: broad advertising not cost-effective

15. Marketing Era (1950s-1980s) • Mass market boom! • Use of behavioral and quantitative sciences • Customer is King! • Find (create) a need and fill it • problem: too short term & costly • market segmentation & targeting, satisfy needs! (high sales, low prices)

16. Relationship/Partnering Era (1990-) • Short term financial focus, downsizing, globalization, reengineering trends. • Concern, trust, and investment in collaborative relationships with long term customers and competitors (e.g., Saturn owner parties, Sam’s Club memberships, etc.). • Publish or perish pressure on research. • Specialized interest areas; sophisticated multivariate segmentation; wide application • Problem: still short term, fragmented research, customer manipulation Hummer Party Sam’s Club

17. Social Media Marketing (2005-) • Widespread availability of technology enables lower cost channels • Online interactivity provides for promotion and information gathering • Growth of social networking makes for ubiquitous advertising opportunities • Search specification allows for targeted advertising • Viral marketing spread through the web via web, e-mail, blogs, video, and other mobile media

18. Innovation & Product Development: death of an idea

19. 64 ideas Ideas 1 idea Testing time Marketing decreases costs, improves the quality of ideas, and ensures better fit with the marketplace • 10% of ideas reach the test market stage • 50% of new products fail in test marketing • 50% of those fail on national launch • only 2.5% ever enter the marketplace • 1 entrant for every 64 ideas • the average new product that fails costs about $50 million • some product failures have losses of over $100 million for some companies

20. The Four Ps Product Price • Product variety • Quality • Design • Features • Accessories • Brand name • Packaging • Sizes • Services • Warranties • Returns, repairs & support • List price • Wholesale pricing • Seasonal pricing • Discounts • Price flexibility • Allowances • Payment period • Payment methods • Credit terms • Product bundling Target Market Place Promotion • Distribution channels • Coverage • Assortments • Locations • Inventory management • Warehousing availability • Order processing • Transportation costs • Sales promotion • Personal selling • Advertising • Sales force • Public relations • Direct marketing

22. $

26. Vishay Semiconductor Company Example: Products positioned along the product lifecycle

27. Fairchild Semiconductor Product Lifecycle

28. But sometimes it crashes…

31. Team activity: Construct a product life cycle diagram for one of the companies in your team What’s your product lifecycle mix?

33. Low point share but may have high growth rate and therefore potential, but require high effort to grow; risky new ventures may become stars or dogs High growth business strong in competitive market; high point share & ideal business; promote question marks & support R&D Low relative share and low expected growth rate; may generate enough points to sustain but not competing; possible niche market; consider divestment Low growth business with low point share; were stars but have lost their attractiveness; finance question marks and stars

34. Enterprise Resource Planning System (ERP): BCG Matrix of products

35. Relative market share • Profit margins • Ability to compete on price & quality • Knowledge of customer & market • Competitive strengths & weaknesses • Technological capability • Caliber of management The GE/McKinsey Matrix Business Strengths High Medium Low Invest in, growth strategy • Market size & growth • Industry profit margins • Competitive intensity • Seasonality • Cyclicity • Economies of scale • Technology • Social, environmental, legal, & human impacts Monitor performance, selective strategy Industry Attractiveness High Medium Low No growth or investment, consider divestment or liquidation

37. Ansoff’s Product/Market Matrix Existing products New Products • Market Penetration: • Increase product purchase in existing markets (withdrawal, do nothing, consolidate, retrenchment) • Revitalize brand image • Coordinate advertising and sales training • Adapt to market change • Increase market share • Increase consumer usage (frequency, quantity, new application) • Product Development: • Introduce new products into existing markets; can be risky & expensive • Product launch • Add product features & refinements • Develop new products for same market Existing Markets • Market Development: • Explore new markets for existing products; when distinctive competencies rest with product not market • Expanding geographic distribution • Targeting new customer segments • Diversification: • introduce new products into new markets; horizontal, vertical, conglomerate • Acquisition/merger • New business venture New Markets

38. Conclusions about marketing matrix models-- • There is a risk of using matrix models is misclassifying businesses • Use multiple models to ensure better coverage • Know the strengths and limits of each model; when to use and avoid them • Integrate the information from matrices with other sources of information and comparison • Don't let the matrix make decisions-- people make decisions!

39. Next Week: Market S-e-g-m-e-n-t-a-t-i-o-n • Be able to describe yourself using segmentation concepts • Be able to discuss how your company uses (or can use) segmentation • Explore a market segment for your company and how that might add value to your business