Group 1

GS209 MARKETING MANAGEMENT

Defining Marketing
st
for the 21 Century
CHAPTER 1
J O N G KO L S U K K H A M
TERMINEZ, MAUREEN

Chapter Questions
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some fundamental marketing concepts?
4. How has marketing management changed?
5. What are the tasks necessary for successful marketing management?

Principle of Marketing
Part 1 Understanding Marketing Management
Chapter 1:Defining Marketing for the 21st Century
Dr.Philip Kotler

In This Chapter, We Will Address the

Following Questions :
1. Why is marketing important?
2. What is the scope of marketing?
3. What are some core marketing concepts?
4. How has marketing management changed in recent
years?
5. What are the tasks necessary for successful
marketing management?

What is Marketing
What Is Marketing ?
A social and managerial process by which individuals
and groups obtain what they want and need through
creating, offering, and exchanging products of value
with others.

What is Markets?
It consists of all potential consumers sharing a
particular need or want who might be wiling $& able
to engage in exchange to satisfy that need or want

What Is Marketed?
Marketers market 10 main types of entities: goods,
services, events, experiences, persons, places,
properties, organizations, information, and ideas.
Lets take a quick look at these categories.

What Is Marketed?
Marketing people are involved in marketing 10 types of entities:
goods, services, experiences, events, persons, places, properties,
organizations, information, and ideas.
Goods : clothing, food , house
Services :airlines, hotels, maintenance
Experiences : Walt Disney Worlds Magic Kingdom is an experience_
so is the Hard Rock Cafe.
Events :Olympics, tradeshows
Persons :Artists, musicians, CEOs , lawyers
Places :Cities, states, regions , factories
Properties :real estate or financial property (stocks and bonds)
Organizations :Philips, Body Shop , Universities
Information :nonfiction books, and specialized magazines; makers of CDs ,Internet Web sites
Ideas : Every market offering includes a basic idea. Charles Revson of Revlon once observed: In
the factory we make cosmetics; in the drugstore we sell hope. Products and services are platforms
for delivering some idea or benefit. Social marketers are busy promoting such ideas as Friends
Dont Let Friends Drive Drunk and A Mind Is a Terrible Thing to Waste.

Demand States
Negative demand- consumers dislike the product and may even pay to avoid it.
Ex. Dental Work, Vaccination
Nonexistent demand- consumers may be unaware of or uninterested in the
product.
Ex. Foreign Language course
Latent demand- consumers may share a strong need that cannot be satisfied by
an existing product.
Ex. Harmless Cigarette
Declining demand- consumers begin to buy the product less frequently or not at
all.
Ex. Church
Irregular demand- consumer purchases vary on a seasonal, monthly, weekly,
daily or even hourly basis.
Ex. Hotels , Mass-Transit
Full demand- consumers are adequately buying all products put into the
marketplace.
Ex. Changing Preference , Increasing Competition
Overfull demand- more consumers would like to buy the product than can be
satisfied.

Marketing
Concepts
Marketplac
e

Marketspac
e

Physica
l

Digital

Store

Interne
t

Metamarke
t
cluster of
complementar
y products
and services
spread across
a diverse set
of industries

Automobile

Core Marketing Concepts

Needs, Wants, and Demands
Needs - Basic human requirements such as for air, food, water, clothing
Want Directed at specific objects
Demands Backed by ability to pay

Target Markets, Positioning, and Segmentation

Offerings and Brands
Offering value proposition made tangible
Brand Offering from known source

Value and Satisfaction

Value Benefits / cost
Customer value triad Quality ,Service and Price
Satisfaction Products perceived performance

Marketing Channels
Communication Channels - Deliver and receive messages
Distribution Channels - Display, sell, or deliver
Service Channels Carry out transactions

Core Marketing Concepts

Supply Chain
The supply chain is a longer channel stretching from raw materials to components to
finished products carried to final buyers.

Competition
Competition includes all the actual and potential rival offerings and substitutes a buyer
might consider.

Marketing Environment
Task environment - Engaged in producing, distributing, and promoting the offering.
Broad environment - consists of six components: demographic environment,
economic environment, social-cultural environment, natural environment,
technological environment, and political- legal environment.

Core Marketing Concepts

Company Orientation Toward the

Marketplace
The Production
Concept

- is one of the oldest concepts in business.

- Consumer will prefer product that are widely available & Inexpensive.
- Concentrate on achieving high production efficiency, low costs and
mass distribution.
- Eg: - Lenovo and Haier in China.

The Product
Concept
- Consumers favor products offering the most quality,
performance, or
innovative features
- Make superior products and improve them over time.
- Caught in a love-affair with their poduct.

Company Orientation Toward the

The Selling
Marketplace
Concept

- Consumers and businesses, if left alone, wont buy enough of

the organizations products.
- Must undertake an aggressive selling and promotion effort.
- Practiced most aggressively with unsought goods.
- Eg: such as insurance and cemetery plots.

The Marketing
Concept

- Customer centered instead of Product centered.

- Not to find right customers for your products, but to find right
products for
your customers.
- Reactive Market Orientation Understanding and meeting
customers
expressed need.
- Proactive Market Orientation Understanding and meeting
customers
latent need.

Company Orientation Toward the

Marketplace
The Holistic Marketing
Concept

- The trends and forces that have defined the first decade of the
21st century
are leading business firms to a new set of beliefs and practices.
Marketing Memo: Marketing Right and Wrong suggests where
companies go
wrongand how they can get it rightin their marketing.
The holistic marketing concept is based on the development,
design, and implementation of marketing programs, processes,
and activities that recognize their breadth and
interdependencies.
Holistic marketing acknowledges that everything matters in
marketingand that a broad, integrated
perspective is often necessary.

Holistic Marketing Dimensions

p.19 of Marketing Management 4th Edition by Kotler & Keller

Marketing Memo:
Ten Deadly Sins of Marketing
1. The company is not sufficiently market
focused and customer driven.
2. The company does not fully understand

6. The companys marketing plans and planning

process are deficient.

its target customers.

7. The companys product and service policies

3. The company needs to better define

need tightening.

and monitor its competitors.

4. The company has not properly managed

8. The companys brand-building and

communications skills are weak.
9. The company is not well organized to carry

its relationships with its stakeholders.

on effective and efficient marketing.

5. The company is not good at finding

10. The company has not made maximum use

new opportunities.

of technology.

p.19 of Marketing Management 4th Edition by Kotler & Keller

Marketing Memo:
Ten Commandments of
Marketing
1. The company segments the market,
chooses the best segments, and develops a
strong position in each chosen segment.
2. The company maps its customers needs,
perceptions, preferences, and behavior and
motivates its stakeholders to obsess about
serving and satisfying the customers.
3. The company knows its major competitors
and their strengths and weaknesses.
4. The company builds partners out of its
stakeholders and generously rewards them.
5. The company develops systems for
identifying opportunities, ranking them, and
choosing the best ones.

6. The company manages a marketing planning system that leads to insightful

long-term and short-term plans.
7. The company exercises strong control over its product and service mix.
8. The company builds strong brands by using the most cost-effective
communication and promotion tools.
9. The company builds marketing leadership and a team spirit among its various
departments.
10. The company constantly adds technology that gives it a competitive
advantage in the marketplace.

The New Four Ps

Putting the right product in the right place, at the right price, at the right time.

p.25 of Marketing Management 4th Edition by Kotler & Keller

Marketing Management Task

Developing Marketing Strategies
and Plans
Capturing Marketing Insights
Connecting with Customers
Building Strong Brands
Shaping the Market Offerings
Delivering Value
Communicating Value
Creating Successful Long-Term
Growth

Marketers FAQ
1. How can we spot and choose the right market segment(s)?
2. How can we differentiate our offerings?
3. How should we respond to customers who buy on price?
4. How can we compete against lower-cost, lower-price
competitors?
5. How far can we go in customizing our offering for each
customer?
6. How can we grow our business?
7. How can we build stronger brands?
8. How can we reduce the cost of customer acquisition?
9. How can we keep our customers loyal longer?
10. How can we tell which customers are more important?
11. How can we measure the payback from advertising, sales
promotion,
and public relations?
12. How can we improve sales force productivity?
13. How can we establish multiple channels and yet manage
channel conflict?

Developing
Marketing
Strategies and
Plans
CHAPTER 2
C O RT E Z , F L O Z E R F I D A
FA B I A N , A L B E RT O

Chapter Questions:
1. How does marketing affect customer value?
2. How is strategic planning carried out at different
levels of the organization?
3. What does a marketing plan include?

Marketing and Customer

Value

T
E
G
R
A
T

Marketing and Customer

Value
value delivery process and choosing
Providing
communicating superior value

The Value Delivery Process

First
Phase

The Value Delivery Process

Second
Phase

Feature
Price
Distribution

The Value Delivery Process

Third Phase

The Value Chain

A tool for identifying was to create more customer value
because every firm is a synthesis of primary and support
activities performed to design, produce, market, deliver, and
support its product.
Michael Porter
Proposed
VALUE CHAIN

The Value Chain Primary

Activities

Firm
Infrastruct
ure

Human
Resource
Manageme
nt

Technology
Developme
nt

Procureme
nt

The Value Chain Support

Activities

Core Business Processes

The market-sensing process
The new-offering realization process
The customer acquisition process
The customer relationship management process
The fulfillment management process

Core Competencies
A core competency has three characteristics:
1. It is a source of competitive advantage and makes a
significant contribution to perceived customer benefits.
2. It has applications in a wide variety of markets
3. It is difficult for competitors to imitate

A Holistic Marketing Orientation

and Customer Value
Holistic marketing sees itself as integrating
value exploration
value creation
value delivery

The Central Role of Strategic

Planning
Figure 2.1

Planning
Corporate
planning

Implementing

Division
planning

Organizing

Business
planning

Implementing

Product
planning

Controlling
Measuring
result
Diagnosing
result
Taking
corrective
action

The Central Role of Strategic

Planning
Four organizational levels

Planning
Corporate
planning
Division
planning
Business
planning

Corporate headquarters is responsible for

designing a corporate strategic plan to
guide the whole enterprise
Division establishes a plan covering the
allocation of funds
Business unit develops a strategic plan to
carry that business unit into a profitable
future

The Central Role of Strategic

Planning
Four organizational levels

Planning
Corporate
planning
Division
planning
Business
planning
Product
planning

Marketing Plan
the central instrument for directing and coordinating the
marketing effort.

Strategic Marketing Plan

Target marketing decisions
Value proposition
Analysis of marketing opportunities

Tactical Marketing Plan

Product features
Promotion
Merchandising
Pricing
Sales channels
Service

Corporate and Division

Strategic
Planning
1.

Defining the corporate mission

2. Establishing strategic business units

3. Assigning resources to each strategic business unit
4. Assessing growth opportunities

Defining the Corporate Mission

Good
mission
characteristics.

statements

have

five

major

1. They focus on a limited number of goals.

2. They stress the companys major policies and values.
3. They define the major competitive spheres within which the
company will
operate.
4. They take a long-term view.
5. They are as short, memorable, and meaningful as possible.

Establishing Strategic Business

Units
Market definitions of a business, however, describe the business
as a customer satisfying process.
Target market definition tends to focus on selling a product or
service to a current market.
Strategic market definition, however, also focuses on the
potential market.
Dimensions that Define a Business:
customer groups
customer needs
technology

Strategic Business Units

(SBUs) Characteristics
1. It is a single business, or a collection of related businesses,
that can be planned separately from the rest of the company.
2. It has its own set of competitors.
3. It has a manager responsible for strategic planning and profit
performance, who controls most of the factors affecting profit.

Assigning Resources to Each

SBU
Once it has defined SBUs, management must decide how to
allocate corporate resources to each.

Assessing Growth Opportunities

The Strategic-Planning
Gap
Figure 2.2

How can it fill the strategicplanning gap?

The first option is to identify opportunities for growth within
current businesses (intensive opportunities).
The second is to identify opportunities to build or acquire
businesses
related
to
current
businesses
(integrative
opportunities).
The third is to identify opportunities to add attractive unrelated
businesses (diversification opportunities).
DOWNSIZING AND DIVESTING OLDER BUSINESSES - Companies
must carefully prune, harvest, or divest tired old businesses to
release needed resources for other uses and reduce costs.

Organization and Organizational

Culture
What is
corporate
culture?

the shared experiences,

stories, beliefs,
and norms that
characterize an
organization.

Marketing Innovation

Business Unit
Strategic Planning
Strategic planning is defined
as:
The process of developing
and maintaining a strategic
fit between the
organizations goals and
capabilities and its
changing marketing
opportunities.

Business Unit
Strategic Planning
The Business Strategic-Planning Process

Business Unit
Strategic Planning
The Business Strategic-Planning Process

The

1. Define
Organizational
Business
Mission

Mission

Defining the organizational

mission refers to a long-term
commitment to a type of business
and a place in the market. It
describes the scope of the firm and
its dominant emphasis and values,
based on a firms history, current
management preferences, resources,
and distinctive competence, and on
environmental factors.

Business Unit
Strategic Planning
Example
Google.com is one of the leading Internet
search engines.

Googles mission is to
organize the worlds
information and make it
universally accessible and
useful.

Business Unit
Strategic Planning
The situation
analysis is known as SWOT
The Business
Strategic-Planning
Process
Analysis

Internal factors include:

1. Define
SWOT
Organizational
Analysis
Mission

Strengths - those things that you do well, the

high
value or performance points
Strengths can be tangible: Loyal customers,
very high quality products, excellent
financial condition
Strengths can be intangible: Good
leadership, strategic insights, customer
intelligence, solid reputation, high skilled
workforce
Often considered Core Competencies
Best leverage points for growth without
draining your resources

Business Unit
Strategic Planning
The Business Strategic-Planning Process
Internal factors include:

1. Define
SWOT
Organizational
Analysis
Mission

Weaknesses - Those things that prevent you from

doing what you really need to do
Since weaknesses are internal, they are within
your control
Weaknesses include: Bad leadership, unskilled
workforce, insufficient resources, poor product
quality, outdated technologies, lack of
planning, . . .

Business Unit
Strategic Planning
The Business Strategic-Planning Process
External factors include:
1. Define
SWOT
Organizational
Analysis
Mission

Opportunities - Potential areas for growth and

higher performance
External in nature marketplace, unhappy
customers with competitors, better economic
conditions, more open trading policies, . .
Internal opportunities should be classified as
Strengths

Business Unit
Strategic Planning
The Business Strategic-Planning Process
External factors include:
1. Define
SWOT
Organizational
Analysis
Mission

Threats - Challenges confronting the

organization, external in nature
Threats can take a wide range bad press
coverage, shifts in consumer behavior,
substitute products, new regulations, . . .

Business Unit
Strategic Planning
Marketing Opportunity Analysis (MOA)
Can the benefits be articulated to a target market?
Can the target market be reached with cost-effective
media and trade channels?
Does the company have the critical capabilities to
deliver the customer benefits?
Can the company deliver these benefits better than
any actual or potential competitors?
Will the rate of return meet the required threshold of
investment?

Business Unit
Strategic Planning
Opportunity and Threat Matrices

Business Unit
Strategic Planning
Example

Google SWOT Analysis

Strengths
(1) Effective and efficient search
engine
technology
(2) Providing services in many
nations
(3) Sufficient fund for innovation

weaknesses
(1) lacking variety of profit sources
(2) Click Deception influences on
AdSense profits

Opportunities

Threats

(1) The cooperation between Google

and other cell phone companies is
getting mature.
(2) The development of Google Talk
and Google Checkout.

(1) Other competitors offer new

services
frequently
(2) Virus affect on internet safety
(3) Paid- search market has entering a
mature stage

Business Unit
Strategic Planning
The Business Strategic-Planning Process

Goal
1. Define
Formulatio
Organizational
Mission n

Marketing objectives establish

the firms goals for each SBU.
Objectives are described in both
quantitative terms (dollar sales,
percentage profit growth, and
market share), and qualitative
terms (image, level of
innovativeness, and industry
leadership role).
Without clearly identified
objectives, firms often fail.

Business Unit
Strategic Planning
The Business Strategic-Planning Process

1.Strategic
Define
Formulatio
Organizational
Mission n

A marketing strategy outlines the

way in which the marketing mix is
used to attract and satisfy the
target market.
Michael Porter has proposed three
generic strategies that provide a
good starting point for strategic
thinking
PORTERS GENERIC STRATEGIES
Overall Cost leadership
Differentiation
Focus strategy

Business Unit
Strategic Planning
Overall Cost leadership
This strategy concentrates on aiming to become the lowest
cost producer in the industry through economies of scale
In this way the firm can compete on price with every other
producers in the industry and earn higher unit profits
Cost reduction provides the focus of the organisations
strategy
Competitive advantage is achieved by driving down costs

Business Unit
Strategic Planning
Differentiation
A differentiation strategy calls for the development of a product
or service that offers attributes that are both unique and are
valued by customers
Customers perceive the product to be different and better than
that of rivals
As a result the value added by the uniqueness of the product
may allow the firm to charge a premium price for it

Business Unit
Strategic Planning
Focus
In a focus strategy the firm concentrates on
one (or at most a limited number of) segments
of the market
The premise behind this strategy is that the
needs of the group can be bettered served by
focussing entirely on it
The firm might feel more secure in the niche
with greater insulation from competition
A focus strategy means that the firms efforts
are not spread too thinly

Business Unit
Strategic Planning
Generic strategies: summary
Overall cost leadership
- Being the lowest cost producer in the industry as a whole
Differentiation
- The exploitation of a product or service which is believed to be
unique
Focus
- Restricting activities to only part of the market through:
- Providing goods or services at lower cost to that segment (cost
focus)
- Providing a differentiated product or service to that segment
(differentiation focus)

Business Unit
Strategic Planning
STRATEGIC ALLIANCES
Strategic alliances are partnerships in which two
or more companies work together to achieve
objectives that are mutually beneficial.
Companies may share resources, information,
capabilities and risks to achieve this.
Many strategic alliances take the form of
marketing alliances. These fall in four major
categories.

Product or service alliance

Promotional alliance
Logistics alliances
Pricing collaborations

Business Unit
Strategic Planning
Examples
Apple
According to "An Overview of
Strategic Alliances," Apple has
partnered with Sony, Motorola,
Phillips, and AT&T in the past.
Apple has also partnered more
recently with Clearwell in order to
jointly develop Clearwell's EDiscovery platform for the Apple
iPad. E-Discovery is used by
enterprises and legal entities to
obtain documents and
information in a "legally
defensible" manner, according to
a 2010 press release.

Business Unit
Strategic Planning
Hewlett Packard and Disney
Hewlett-Packard and Disney have
a long-standing alliance, starting
back in 1938, when Disney
purchased eight oscillators to use
in the sound design of Fantasia
from HP founders Bill Hewlett and
Dave Packard. When Disney
wanted to develop a virtual
attraction called Mission: SPACE,
Disney Imagineers and HP
engineers relied on HP's IT
architecture, servers and
workstations to create Disney's
most technologically advanced
attraction.

Business Unit
Strategic Planning
Starbucks - Kraft
Starbucks and Kraft had an
alliance where Starbucks coffee
will be distributed through Kraft
only, Both companies will benefit:
Starbucks gains quick entry into
25,000 supermarkets in USA,
supported by marketing muscle
of 3,500 Kraft salespeople and
Kraft tops off its coffee line with
the best-known premium brand
and gains quick entry into the
fast-growing premium coffee
segment.

Business Unit
Strategic Planning
The Business Strategic-Planning Process

1. Define
Program
Formulation &
Organizational
Implementation
Mission

A tactical plan specifies the shortrun actions (tactics) that a firm

undertakes in implementing a
given marketing strategy. It has
three basic elements:
Specific Tasks
Time Frame
Resource Allocation

Business Unit
Strategic Planning
The Business Strategic-Planning Process
Monitoring results compares the actual
performance of a firm, SBU, or product against
the planned performance for a specified
period.
1.Feedback
Define
Organizational
and
Mission
Control

Successful companies often employ the

following strategies to assure success:
Continuous monitoring of performance
Regular use of proper strategy adjustments
Maintenance of a customer-oriented focus
Stressing positive written and oral
communication among employees and
channel members.

Product Planning: The Nature

and Contents of a Marketing
Plan
Marketing plan
Is a written document that summarizes what the
marketer has learned about the marketplace and
indicates how the firm plans to reach its marketing
objectives.
It contains tactical guidelines for the marketing
programs and financial allocations over the
planning period.
A marketing plan is one of the most important
outputs of the marketing process.
It provides direction and focus for a brand,
product or company.

Product Planning: The Nature

and Contents of a Marketing
Plan
Marketing Plan Contents
Executive summary and table of contents. The
marketing plan should open with a table of contents
and brief summary for senior management of the
main goals and recommendations.
Situation analysis. This section presents relevant
background data on sales, costs, the market,
competitors, and the various forces in the
macroenvironment. How do we define the market,
how big is it, and how fast is it growing? What are
the relevant trends and critical issues? Firms will use
all this information to carry out a SWOT analysis.

Product Planning: The Nature

and Contents of a Marketing
Plan
Marketing strategy. Here,
the marketing manager
defines the mission, marketing and financial objectives,
and needs the market offering is intended to satisfy as
well as its competitive positioning. All this requires inputs
from other areas, such as purchasing, manufacturing,
sales, finance, and human resources.
Financial projections. Financial projections include a
sales forecast, an expense forecast, and a break-even
analysis. On the revenue side is forecasted sales volume
by month and product category, and on the expense side
the expected costs of marketing, broken down into finer
categories. The break-even analysis estimates how many
units the firm must sell monthly (or how many years it
will take) to offset its monthly fixed costs and average

Product Planning: The Nature

and Contents of a Marketing
Plan

Implementation controls. The last section

outlines the controls for monitoring and adjusting
implementation of the plan. Typically, it spells out
the goals and budget for each month or quarter, so
management can review each periods results and
take corrective action as needed. Some
organizations include contingency plans.

Product Planning: The Nature

and Contents of a Marketing
Plan
Evaluating a Marketing Plan
1. Is the plan simple? Is it easy to understand and act on? Does it
communicate its content clearly and practically?
2. Is the plan specific? Are its objectives concrete and measurable?
Does it include specific actions and activities, each with specific dates
of completion, specific persons responsible, and specific budgets?
3. Is the plan realistic? Are the sales goals, expense budgets, and
milestone dates realistic? Has a frank and honest self-critique been
conducted to raise possible concerns and objections?
4. Is the plan complete? Does it include all the necessary
elements? Does it have the right breadth and depth?