Introduction to Marketing

Management

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Chapter Questions

 Why is marketing important?

 What is the scope of marketing?
 What are some core marketing
concepts?
 What are some fundamental marketing
concepts and new marketing realities?
 What are the tasks necessary for
successful marketing management?
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Chapter Questions

 How does marketing affect customer

value?
 How is strategic planning carried out at
different organizational levels?
 What does a marketing plan include?
 How can companies monitor and
improve marketing activities and
performance?
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What Is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.

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What Is Marketing Management?

Marketing management is the art and

science of choosing target markets and
getting, keeping, and growing
customers through creating, delivering,
and communicating superior customer
value.

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What is Marketed?
 Goods  Places
 Services  Properties
 Events  Organizations
 Experiences  Information
 Persons  Ideas

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What is a Market?

A market is a grouping of customers:

 Need markets
 Product markets
 Demographic markets
 Geographic markets
 Others

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Who Markets?

A marketer is someone who seeks a

response from another party, called a
prospect.

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Simple Marketing System

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Core Marketing Concepts
 Needs, wants, and  Value and satisfaction
demands  Marketing channels
 Target markets,  Supply chain
positioning, and  Competition
segmentation
 Marketing environment
 Offerings and brands
 Marketing Channels
 Impressions and
Engagements

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Needs, Wants, and Demand

 Needs—basic human requirements.

 Wants—directed to specific objects that
might satisfy the need.
 Demands—wants for specific products
backed by an ability to pay.

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Target Markets, Positioning, and
Segmentation
 Segmentation—identify and profile distinct
groups of buyers examining demographic,
psychographic, and behavioral differences.
 Target markets—segments presenting the
greatest opportunity.
 Positioning—what the offering means in the
minds of the target buyers as delivering some
central benefit(s).

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Offerings and Brands

 Value proposition—a set of benefits offered

to satisfy customers’ needs.
 Offering—a combination of products,
services, information, and experiences.
 Brand—an offering from a known source.

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Marketing Channels

 Communication channels—deliver and

receive messages from target buyers.
 Distribution channels—display, sell, or
deliver the physical product or service(s) to
the buyer or user.
 Service channels—carry out transactions
with potential buyers.

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Impressions and Engagements

 Impressions—occur when consumers view

a communication as a useful metric for
tracking the scope or breadth of a
communication’s reach.
 Engagement—the extent of a customer’s
attention and active involvement with a
communication.

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Value and Satisfaction

 Value—the sum of the perceived tangible

and intangible benefits and costs to
customers.
 “Customer value triad” = quality, service, and
price
 Satisfaction—a person’s comparative
judgment of a product’s perceived
performance (or outcome) in relation to
expectation.

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Supply Chain

The supply chain is a longer channel

stretching from raw materials to components to
finished products carried to final buyers.

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Competition

Competition includes all the actual and

potential rival offerings and substitutes a buyer
might consider.

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Marketing Environment
 Task environment  Broad environment
includes the immediate includes six
actors involved in environments:
producing, distributing,  Demographic
and promoting the  Economic
offering.  Physical
 Technological
 Political-legal
 Social-cultural

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New Marketing Realities

 Technology
 Globalization
 Social Responsibility

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New Capabilities in the Changed
Marketplace
New Consumer Capabilities:
Can use the Internet as a powerful information and
purchasing aid
Can search, communicate, and purchase on the

move
Can tap into social media to share opinions and

express loyalty
Can actively interact with companies

Can reject marketing they find inappropriate

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New Capabilities in the Changed
Marketplace
New Company Capabilities:
Can use the Internet as a powerful information and sales
channel, including for individually differentiated goods
Can collect fuller and richer information about markets,

customers, prospects, and competitors

Can reach customers quickly and efficiently via social

media and mobile marketing, sending targeted ads,

coupons, and information
Can improve purchasing, recruiting, training, and internal

and external communications

Can improve cost efficiency

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Company Orientation Toward the
Marketplace
 Production concept
 Product concept
 Selling concept
 Marketing concept
 Holistic marketing concept

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Production Concept

 Premise: consumers prefer products that are

widely available and inexpensive.
 Focus on:
 High production efficiency
 Low costs
 Mass distribution
 Marketers also use the production concept
when they want to expand the market.

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Product Concept

 Premise: consumers favor products offering

the most quality, performance, or innovative
features.
 Focus on:
 Making superior products
 Improving them over time

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Selling Concept

 Premise: customers, if left alone, will not buy

enough of the organization’s products.
 Focus on:
 Aggressive selling and promotion efforts

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Marketing Concept

 Premise: find the right product for your

customers.
 Focus on:
 Needs of the buyer

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Holistic Marketing Concept

 Premise: “everything matters” with

marketing.
 Focus on:
 Relationship marketing
 Integrated marketing
 Internal marketing
 Performance marketing

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Holistic Marketing Dimensions

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Relationship Marketing

Relationship marketing aims to build

mutually satisfying long-term relationships
with key constituents in order to earn and
retain their business.

The operating principle is simple: build an

effective network of relationships with key
stakeholders, and profits will follow.

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Integrated Marketing

Integrated marketing requires the marketer

to devise marketing activities and assemble
fully integrated marketing programs that
create, communicate, and deliver value for
customers.
Two key themes are that (1) many different
marketing activities can create, communicate, and
deliver value; and (2) marketers should design
and implement each marketing activity with all
other activities in mind.
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Internal Marketing

Internal marketing ensures that everyone in

the organization embraces appropriate
marketing principles, especially senior
management.

Everyone in the organization must “think

customer.”

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Performance Marketing

Performance marketing requires

understanding the financial and nonfinancial
returns to business and society from marketing
activities and programs.

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Performance Marketing

 Financial accountability
 Social responsibility marketing
 Societal marketing concept—following the
marketing concept while preserving or enhancing
customers’ and society’s long-term well-being.

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Updating the 4 Ps

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Updating the 4 Ps
People reflects, in part, internal marketing and the fact
that employees are critical to marketing success.
Processes are all the creativity, discipline, and
structure brought to marketing management.
Programs are all the firm’s consumer-directed
activities, encompassing the old four Ps as well as a
range of other marketing activities that might not fit as
neatly into the old view of marketing.
Performance reflects the range of possible outcome
measures that have financial and nonfinancial
implications and implications beyond the company itself.

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New Marketing Realities

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Marketing Management Tasks
 Developing marketing  Shaping market
strategies and plans offerings
 Capturing marketing  Delivering value
insights  Communicating value
 Connecting with  Managing the
customers marketing organization
 Building strong brands for long term success

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Marketing and Customer Value
 The Value Delivery Process
 The Value Chain
 Core Competencies
 The Central Role of Strategic Planning

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The Value Delivery Process
Instead of emphasizing making and selling, companies
now see themselves as part of a value delivery
process.

The value creation and delivery sequence consists of

three phases:
1.Choosing the value

2.Providing the value through identifying specific

product features, prices, and distribution.
3.Communicating the value.

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The Value Chain
Value chain - tool for identifying ways to create more
customer value.

Includes the following processes:

The market-sensing process—gathering and acting

upon information about the market

The new-offering realization process—researching,

developing, and launching new high quality offerings

quickly and within budget.

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The Value Chain
 The customer acquisition process—defining target
markets and prospecting for new customers
 The customer relationship management process—
building deeper understanding of, relationships with,
and offerings for individual customers
 The fulfillment management process—receiving and
approving orders, shipping goods on time, and
collecting payment.

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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; and

3.it is difficult for competitors to imitate.

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The Central Role of Strategic
Planning
Marketers must prioritize strategic planning in three key
areas:
1.managing their businesses as an investment portfolio,

2.assessing the market’s growth rate and the

company’s position in that market,
3.establishing a strategy.

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The Central Role of Strategic
Planning
The marketing plan is the central instrument for
directing and coordinating the marketing effort,
operating at both the strategic and tactical levels.

The strategic marketing plan lays out the target

markets and the firm’s value proposition, based on an
analysis of the best market opportunities.

The tactical marketing plan specifies the marketing

tactics, including product features, promotion,
merchandising, pricing, sales channels, and service.

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Corporate and Division Strategic
Planning
All corporate headquarters undertake four planning
activities:
1.defining the corporate mission,

2.establishing strategic business units,

3.assigning resources to each strategic business unit,

and
4.assessing growth opportunities.

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Defining the Corporate Mission
A clear, thoughtful mission statement, developed
collaboratively with and shared with managers,
employees, and often customers, provides a shared
sense of purpose, direction, and opportunity.

To define its mission, a company should address Peter

Drucker’s classic questions:
What is our business?
Who is the customer?

What is of value to the customer?

What will our business be?

What should our business be?

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Establishing Strategic Business
Units
A strategic business unit (SBU) has three
characteristics:
nit is a single business, or a collection of related

businesses, that can be planned separately from the

rest of the company;
nit has its own set of competitors; and

nit has a manager responsible for strategic planning

and profit performance who controls most of the factors

affecting profit.

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Assigning Resources to Each
Strategic Business Units
Once SBUs have been defined, management must
decide how to allocate corporate resources to each
unit.

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Assessing Growth Opportunities
Assessing growth opportunities includes planning new
businesses, downsizing, and terminating older
businesses.

If there is a gap between future desired sales and

projected sales, corporate management will need to
develop or acquire new businesses to fill it.

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Assessing Growth Opportunities
One option is to identify opportunities for growth within
current businesses (intensive opportunities).

A second option is to build or acquire businesses

related to current businesses (integrative
opportunities).

A third option is to add attractive unrelated businesses

(diversification opportunities).

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Business Unit Strategic Planning
Process

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Business Unit Strategic Planning
Process
The Business Mission

Each business unit needs to define its specific mission

within the broader company mission.

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Business Unit Strategic Planning
Process
SWOT Analysis

External Environment (Opportunity and Threat)

Analysis

A business unit must monitor key macroenvironment

forces and significant microenvironment factors that
affect its ability to earn profits. It should track trends
and important developments and any related
opportunities and threats.

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Business Unit Strategic Planning
Process
Marketers need to be good at spotting opportunities
created from:
Converging industry trends.

Making a buying process more convenient or efficient.

Meeting the need for information and advice.

Customizing an offering.

Introducing a new capability.

Delivering products or services faster.

Offering a much lower price.

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Business Unit Strategic Planning
Process
To evaluate opportunities, companies can use market
opportunity analysis (MOA) and ask questions like:

1.Can we articulate the benefits convincingly to the

defined target market(s)?
2.Can we locate the target market(s) and reach them
with cost-effective media and trade channels?
3.Does our company possess or have access to the
critical capabilities and resources we need to deliver
the customer benefits?

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Business Unit Strategic Planning
Process
To evaluate opportunities, companies can use market
opportunity analysis (MOA) and ask questions like:

4.Can we deliver the benefits better than any actual or

potential competitors?
5.Will the financial rate of return meet or exceed our
required threshold for investment?

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Business Unit Strategic Planning
Process
An environmental threat is a challenge posed by an
unfavorable trend or development that, in the absence
of defensive marketing action, would lead to lower
sales or profit.

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Business Unit Strategic Planning
Process
Internal Environment (Strengths and Weaknesses)
Analysis

Each business needs to evaluate its internal strengths

and weaknesses. Clearly, the business doesn’t have to
correct all its weaknesses, nor should it gloat about all
its strengths. The big question is whether it should limit
itself to those opportunities for which it possesses the
required strengths or consider those that might require
it to find or develop new strengths.

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 Business Unit Strategic Planning
Process
Goal Formulation

Goals are objectives that are specific with respect to

magnitude and time.
The business unit sets these objectives and then
manages by objectives (MBO). Objectives must be:
narranged hierarchically, from most to least important;

nquantitative whenever possible;

nrealistic; and

nconsistent

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Business Unit Strategic Planning
Process
Strategy Formulation
Goals indicate what a business unit wants to achieve;
strategy is a game plan for getting there.

Michael Porter has proposed three generic strategies

that provide a good starting point for strategic thinking:
1.Overall cost leadership.

2.Differentiation

3.Focus

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Business Unit Strategic Planning
Process
Strategy and Implementation

Strategy addresses the what and why of marketing

programs and activities; implementation addresses the
who, where, when, and how.

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The Marketing Plan
A 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.

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The Marketing Plan
Contents of a Marketing Plan

Executive summary and table of contents.

Situation analysis.

Marketing strategy.

Marketing tactics.

Financial projections.

Implementation controls.

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From Marketing Plan to Marketing
Action
Most companies create yearly marketing plans. They
start planning well in advance of the implementation
date to allow time for marketing research, analysis,
management review, and coordination between
departments. As each action program begins, they
monitor ongoing results, investigate any deviation from
plans, and take corrective steps as needed to keep
marketing performance on track. Some firms prepare
contingency plans so they can update and adapt the
marketing plan at any time.

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Marketing Implementation,
Control, and Performance
Marketing implementation is the process that turns
marketing plans into action assignments and ensures
they accomplish the plan’s stated objectives.

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Marketing Implementation,
Control, and Performance
Two complementary approaches to measuring
marketing productivity are:
1.marketing metrics to assess marketing effects and

2.marketing-mix modeling to estimate causal

relationships and measure how marketing activity affects
outcomes.

Marketing dashboards are a structured way to

disseminate the insights gleaned from these two
approaches.
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Marketing Control
Marketing control is the process by which firms
assess the effects of their marketing activities and
make necessary changes and adjustments.

With strategic control, the firm should periodically

reassess its strategic approach to the marketplace,
using a marketing audit, a comprehensive,
systematic, independent, and periodic examination of a
company’s or business unit’s marketing environment,
objectives, strategies, and activities, to identify problem
areas and opportunities and recommend a plan for
improving marketing performance.
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Types of Marketing Control

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The Control Process

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