Session 1- 09.13.04

1. Session 1- 09.13.04 Marketing: Introduction, Strategy and Competition

2. Professional Selling • Marketing Research • Advertising • Retail Buying • Distribution Management • Product Management • Product Development • Wholesaling Why Study Marketing? • 1/4th to 1/3rd of the civilian workforce in the U.S. performs marketing activities • Fast route up the corporate ladder

3. Why Study Marketing? • Half of every dollar spent pays for marketing costs • Better-informed consumers • Demand for customer satisfaction

4. All of the above, plus much more! What is Marketing? • Personal Selling? • Advertising? • Making products available in stores? • Maintaining inventories?

5. A Philosophy An Attitude A Perspective A Management Orientation A Set of Activities, including: Products Pricing Promotion Distribution (Place) plus What is Marketing?

6. Marketing Definitions • “A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” • “The delivery of Customer Satisfaction at a profit.”

7. Marketing Definitions American Marketing Association Definition Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and servicesto create exchanges that satisfy individual and organizational goals.

8. Key Concepts in Marketing • Needs, Wants and Demands. • From deprivation to buying power. • Products and Services • Anything that might satisfy a need or a want. Marketing Myopia ? • Value and Satisfaction • Gain minus cost. • Product’s perceived performance matches expectations.

9. Marketing Importance in a Practical Situation… You have just purchased a tennis racquet factory that has been shut down for the last few years. The automated equipment and computer system are in excellent shape, and the personnel needed to run the factory are readily available. But before jumping into production, what questions need to be asked and answered? What plans need to be made? Which of these plans concern marketing?

10. … A Significant Role and Many Questions to Answer. • What are the needs of tennis players? • Do they need more or different styles of tennis racquets? • How many different categories of tennis players are there? What kind of racquet does each category need? (Handles, sizes, shapes, weights, and prices are factors.) Which category of player does this firm want to sell to? • Estimate how many people are in this chosen category. How many of them will be playing over the next five years? How often will they buy a new racquet? • When will these customers buy? (Are there seasons or trends?) • Where are these customers located? Where do they shop for tennis racquets? • What price are these customers willing to pay? Does this price leave a profit for the company? • How will the company communicate with potential customers? What type of promotion will reach them? • How will the racquets be packaged? What type of warranty will they carry? How will the firm provide customer service? • How many other companies are making racquets? What kinds and what prices of racquets do competitors offer? • What is the industry as a whole projected to do in the next five to ten years?

11. Production concept Product concept Selling concept Marketing concept Marketing Management Management Orientations • Societal marketing concept

12. * Selling: Focus on the needs of the seller * Marketing: Focus on the needs of the buyer Selling Vs. Marketing

13. * Selling: Preoccupied converting product into cash * Marketing: Preoccupied with satisfying the needs of the customer Selling Vs. Marketing

14. * Selling: Increase profits through sales volume * Marketing: Use an integrated marketing strategy to profitably satisfy customer needs Selling Vs. Marketing back

15. Example of a Company Policy Statement Stressing Social Responsibility

16. Defining the Business Mission • Answers the question, “What business are we in and where are we going?” • Focuses on the market(s) rather than the good or service • Strategic Business Units may also have a mission statement

17. Market Oriented Realistic Characteristics of a Good Mission Statement: Fit Market Environment Distinctive Competencies Specific Motivating Defining the Company’s Business and Mission A Mission Statement is a Statement of the Organization’s Purpose.

18. Coke’s Mission Statement The Coca-Cola Company exists to benefit and refresh everyone it touches.The basic proposition of our business is simple, solid and timeless. When we bring refreshment, value, joy and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling our ultimate obligation to provide consistently attractive returns to the owners of our business.

19. PepsiCo’s Mission Statement “PepsiCo’s overall mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.” http:\\www.pepsico.com

20. CRM • CRM– Customer relationship management . . .“is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”

21. Requirementsfor Building Relationships Who are your customers What do customers value What do they want to buy How do they prefer to interact Relationship Marketing

22. CRM • It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied. • Marketers must be concerned with the lifetime value of the customer.

23. Customer equity The total combined customer lifetime values of all customers. Measures a firm’s performance, but in a manner that looks to the future. CRM Key Concepts • Attracting, retaining and growing customers • Building customer relationships and customer equity

24. Customer relationship levels and tools Target market typically dictates type of relationship Basic relationships Full relationships Customer loyalty and retention programs Adding financial benefits Adding social benefits Adding structural ties CRM Key Concepts • Attracting, retaining and growing customers • Building customer relationships and customer equity

25. Building Long-Term Relationships • Customer-oriented personnel • Effective training programs • Empowered employees • Teamwork

26. Strategic Planning • Strategic planning is defined as: • “The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.”

27. EVOLVING MARKET OPPORTUNITIES RESOURCES & OBJECTIVES Strategic Planning LONG RUN PROFITABILITY AND GROWTH Plus

28. The Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.

29. Provides a basis for comparison of actual and expected performance • Provides clearly stated activities to work toward common goals • Serves as a reference for the success of future activities • Allows entry into the marketplace with awareness Marketing Plan Why Write a Marketing Plan?

30. Marketing Objective A statement of what is to be accomplished through marketing activities.

31. “Our objective is to increase market share by 40% and to obtain customer satisfaction ratings of at least 90% in 2003.” Marketing Objectives Marketing Objectives Must Be: • Realistic • Measurable • Time specific • Consistent with Organization’s Priorities

32. Examples of Marketing Objectives

33. SWOT Analysis Identifying internal strengths (S)and weaknesses (W) and also examining external opportunities (O) and threats (T)

34. S Things the company does well. Internal W Things the company does not do well. O Conditions in the external environment that favor strengths. External T Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. ©South-Western College Publishing SWOT Analysis

35. Looking at the Business Portfolio • The business portfolio is the collection of businesses and products that make up the company. • The company must: • analyze its current business portfolio or Strategic Business Units (SBU’s) • decide which SBU’s should receive more, less, or no investment • develop growth strategies for adding new products or businesses to the portfolio

36. MARKET SHARE DOMINANCE HIGH LOW MARKET GROWTH RATE LOW HIGH BCG Portfolio Matrix High growth Market leaders Require cash Large profits High growth Low market share Need cash Poor profit margins $ Low growth High market share High cash flow Low growth Low market share Minimal cash flow

37. MARKET SHARE DOMINANCE HIGH LOW Sub-Notebooks and Hand-Held Computer Integrated phone/Palm devices MARKET GROWTH RATE PROBLEMCHILD LOW HIGH STAR Laptop and Personal Computers MainframeComputer CASH COW DOG BCG Portfolio Matrix Example

38. Build Provide financial resources if SBU (Problem Child) has potential to be a Star. Hold Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs. Harvest Increase short-term cash return. Appropriate for all SBUs except Stars. Divest Get rid of SBUs with low shares in low-growth markets. Strategies for Resource Allocation

39. Developing Growth Strategies Product/ Market Expansion Grid Existing Products New Products Existing Markets 1. Market Penetration 3. Product Development 4. Diversification 2. Market Development New Markets

40. Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBU’s & Measure Market Share/ Growth Problems With Matrix Approaches Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification

41. Steps in Analyzing Competitors Identifying the company’s competitors Assessing competitor’s objectives, strategies, strengths and weaknesses, and reaction patterns Selecting which competitors to attack or avoid

42. Marketing Strategies for Competitive Advantage Strategy a Company Adopts Depends on Its Industry Position

43. The segmentation process divides the total market into market segments. Target marketing determines which segment(s) are pursued. The strategic market positioningfor the product is then determined. The Marketing Process Key Elements • Analyzing marketing opportunities • Selecting target markets • Developing the marketing mix • Managing the marketing effort

44. The Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.

45. Developing the Marketing Mix Price Amount of money that consumers have to pay to Obtain the product Product “Goods-and-service” combination that a company offers a target market Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place