Principles of Marketing:

Introduction to Marketing
Session 01
 Agenda

• Introduction to Marketing

• The Market concept

• The Marketing plan

Principles of Marketing 10/11 Session 01 2

 Introduction to Marketing:
Definitions of Marketing

AMA AMA AMA

(1985) (2004) (2007)

• … the process of • … an organizational • … the activity, set

planning and function and a set of institutions, and
executing of processes processes

• the conception, • for creating, • for creating,

pricing, promotion, communicating, communicating,
and distribution and delivering delivering and
value to customers exchanging
• of ideas, goods and offerings
services • and for managing
customer
• to create relationships in • that have value for
exchanges that ways customers, clients,
satisfy individual partners, and
and organizational • that benefit the society at large
objectives organization and
its stakeholders

Principles of Marketing 10/11 Session 01 3

 Introduction to Marketing:
The basic building blocks of Marketing (1/2)

• The satisfaction

• of individual and organizational needs (objectives)

• through products (ideas, goods and services)

• exchanged

• on the market

Principles of Marketing 10/11 Session 01 4

 Introduction to Marketing:
The basic building blocks of Marketing (2/2)

Deficiency felt by the consumer

Need

what is offered to satisfy the need

Product (either a physical product or a service)

the result of the interaction between the

Satisfaction consumer and the product

the transaction enabling the consumer to

Exchange obtain a product in exchange for money (price)

the whole group of current and potential

Market clients of a product

Principles of Marketing 10/11 Session 01 5

 Introduction to Marketing:
Marketing as a four step approach

• Marketing Intelligence
 Which types of market opportunities exist?

• Marketing Strategy
 What can be done to make opportunity profitable?

• Marketing Mix
 How can it be done (Product, Price, Promotion, Place)?

• Market Monitoring
 Are we successful in doing it?

Principles of Marketing 10/11 Session 01 6

 Introduction to Marketing:
Different roles of Marketing (1/2)

Type of demand Role Example

Low Analyze and convert Brand switching

Absent Excite and stimulate TV-Projectors

Latent Create and innovate Linux vs. Windows

Declining Remarketing Benefits of milk

Irregular Repositioning X-Mas trees

Excessive Demarketing Alcohol consumption

Undesirable Antimarketing Smoking kills

Principles of Marketing 10/11 Session 01 7

 Introduction to Marketing:
Different roles of Marketing (2/2)

Source: Sullivan, Elisabeth A. (2008), "Just say No: Demarketing teaches good marketers how to turn an unprofitable customer away," Marketing news, 42 (7), 17;
Haenlein, Michael, Andreas M. Kaplan, and Detlef Schoder (2006), "Valuing the real option of abandoning unprofitable customers when calculating customer
lifetime value," Journal of marketing, 70 (3), 5 – 20; Kotler, Philip and Sidney J. Levy (1971), "Demarketing, yes, demarketing," Harvard business review, 49 (6),
74 - 80

Principles of Marketing 10/11 Session 01 8

 Agenda

• Introduction to Marketing

• The Market concept

• The Marketing plan

Principles of Marketing 10/11 Session 01 9

 The Market concept:
Market definition

A market is specified according to a

product or a category of products for
a given geographic area

It is made up of a group of actors

(physical persons or corporate entities)
offering products
to satisfy the needs of consumers

Principles of Marketing 10/11 Session 01 10

 The Market concept:
Current vs. potential market

Consumers Consumers
Current market Current market not not
of competitors of the company using interested in
product product

Potential market
of the company
Current market
of the industry
Potential market of the industry

Current market
= Penetration Rate
Potential market

Principles of Marketing 10/11 Session 01 11

 The Market concept:
Types of competition

Market type Competition

Principal market Direct brand competition

(e.g. mp3 players) (e.g. Apple vs. Philips)

Substitution market Direct product competition

(e.g. mobile phones, Wi-Fi radio) (e.g. Apple vs. Motorola)

Support market Indirect competition

(e.g. digital music download) (e.g. iTunes vs. Torrent)

Generic market Purchasing power competition

(e.g. music consumption) (e.g. music vs. restaurant visit)

Principles of Marketing 10/11 Session 01 12

 Exercise 1:
Characterize the market of “Hôtel de Crillon”

Principles of Marketing 10/11 Session 01 13

 Agenda

• Introduction to Marketing

• The Market concept

• The Marketing plan

Principles of Marketing 10/11 Session 01 14

 The Marketing plan:
The Marketing plan – A semantic problem

Plan Key questions Time horizon

Strategic plan • Who are we? > 5 years

• Where do we go?

Marketing plan • In which market? 3-5 years

• With which offers?

Commercial plan • How? 1 year

• By means of what?

Principles of Marketing 10/11 Session 01 15

 The Marketing plan:
Typical structure

External
analysis

Mission SWOT Marketing Action

Diagnosis Control
statement analysis strategy plan

Internal
analysis

Principles of Marketing 10/11 Session 01 16

 The Marketing plan:
Mission statement

• Builds on the general mission of the organization

– What is the objective of our organization?
– Who are our clients?
– Which type of value do we offer to them?

• A mission statement needs to be realistic, motivating and

individual to the organization; it is the “invisible hand” that
guides all decisions

“Unilever's mission is to add Vitality to life.

We meet everyday needs for nutrition,
hygiene and personal care with brands that
help people feel good, look good and get
more out of life.”

Principles of Marketing 10/11 Session 01 17

 The Marketing plan:
External and Internal analysis

External analysis Internal analysis

(Opportunities/ Threats) (Strengths/ Weaknesses)

• Environment (PEST analysis) • Product (line) profitability

– Political/ legislative • Customer (group) profitability
– Economical
– Socio-cultural • Product positioning:
– Technological – Product features
– Price
• Market – Communication
– Customers – Distribution modes
– Distribution – Sales force
– Commercial organization
• Competition
– Players
– Strengths/ Weaknesses

Principles of Marketing 10/11 Session 01 18

 External and Internal analysis:
PEST analysis

Political/ legislative Economical &

aspects Socio-cultural aspects
• Deregulation Development • Changes in
• Liberalization of market to demography
• Degree of be analyzed • Changes in
international purchasing power
openness • Changes in consumer
expectations

Technological aspects
• Advances in
information and
communication
systems
• Increased need
towards technology
transfer and
standardization

Principles of Marketing 10/11 Session 01 19

 The Marketing plan:
SWOT analysis

Positive Negative
points points

Internal Strength Weakness

analysis S W

External Opportunity Threat

analysis O T

Principles of Marketing 10/11 Session 01 20

 Exercise 2:
SWOT analysis

• Imagine you are a consultant working for the Ministry of Tourism

in Vietnam

• Make a SWOT of the city of your city as a tourist destination

Principles of Marketing 10/11 Session 01 21

 The Marketing plan:
Diagnosis

• Combination of key elements identified during internal and

external analysis

• Main questions:
– Do our strengths allow us to take advantage of opportunities
in the market and cope with foreseeable threats ?
– Are our weaknesses serious considering the evolution of
external environment ?

• Main objective:
– What will be our situation in three years if we maintain the
present marketing strategy ?

Principles of Marketing 10/11 Session 01 22

 The Marketing plan:
Marketing strategy

STP approach Objectives

• Segmentation • Financial objectives:

– Sales/ Profit
• Targeting – Shareholder value
– Geographical market
– Customer segment • Marketing objectives:
– Market share
• Positioning – Distribution coverage
(representation of the product in
the mind of the (potential)
• Consumer objectives:
consumer)
– Awareness
– Absolute
– Loyalty
– Relative to other products

Principles of Marketing 10/11 Session 01 23

 Marketing strategy:
Financial objectives

Source: Rao, Ramesh K. S. and Neeraj Bharadwaj (2008), "Marketing initiatives, expected cash flows and shareholders' wealth," Journal of marketing, 72 (1), 16 –
26; Luo, Xueming (2008), "When marketing strategy first meets Wall Street: Marketing spendings and firms' initial public offerings," Journal of marketing, 72 (5),
98 – 109; Gupta, Sunil, Donald R. Lehmann, and Jennifer Ames Stuart (2004), "Valuing customers," Journal of marketing research, 41 (1), 7-18

Principles of Marketing 10/11 Session 01 24

 The Marketing plan:
Action plan

• What should be done? When? How?

• By whom? With which resources?

• Product:
– Branding, New Product Development
• Price:
– By customer group, By point-of-sales, By country
• Promotion:
– Advertising, Direct Marketing, Sales promotions
• Place:
– Traditional distribution network, e-Commerce

Principles of Marketing 10/11 Session 01 25

 The Marketing plan:
Control

Marketing plan

Annual plan

Objectives Budget

Results Expenditures

Realization

Principles of Marketing 10/11 Session 01 26

 Course structure:
Session plan (1/2)

External
analysis

Mission SWOT Marketing Action

Diagnosis Control
statement analysis strategy plan

Internal
analysis

Principles of Marketing 10/11 Session 01 27

 Course structure:
Session plan (2/2)

Marketing
research

(2)
CRM

STP Product
Mission approach Price
Diagnosis Promotion
Control
statement
(3) Place

(4-7)

Internal
analysis

Consumer behavior (2)

Principles of Marketing 10/11 Session 01 28

 Course structure

• Session 2: Consumer behavior & Market research

• Session 3: Segmentation, Targeting and Positioning

• Session 4: Product (Branding & New Product Development)

• Session 5: Price and Customer Value Management

• Session 6: Place (Distribution, e-Commerce)

• Session 7: Communications (Advertising, Direct Marketing, Promotion)

Principles of Marketing 10/11 Session 01 29