Introduction to Marketing (MC4050)

Lecture Week 2Marketing process and strategic

planning

Agenda• Marketing process• Organisation’s overall Strategic planning process

MARKETING PROCESS

1. Understand the market place and customer needs and wants2. Design a customer driven marketing strategy3. Construct an integrated marketing program that delivers

superior value4. Build profitable relationships and create customer delight5. Capture value from customer to create profits and customer

equity

1. Understand the market place and customer needs

• Customer needs, wants and demands• Market offerings- products, services and

experiences.• Customer value and satisfaction• Exchanges and relationships• Market

Customer need, wants and demand• Need– state of felt deprivation

• Wants – the form human needs take as shaped by culture

and individual personality• Demands – human wants that are backed by buying power

Market offerings• Combination of Products ,Services, Information

or Experiences offered to market to satisfy need or want.

• Some marketers go beyond products and services they sell to create brand experience for consumers.

Customer value and satisfaction• How do customer choose among so many

market offerings?– Customer form expectations about the value and

satisfaction that various market offerings will deliver and buy accordingly.

• Satisfied customer will buy again and again but dissatisfied one will switch to competitor.

• So marketers should be careful to set the right level of expectations.

Exchange and relationships• Marketing occurs when people decide to satisfy

their needs and wants through exchange relationships.

• Exchange is the act of obtaining a desired object from someone by offering something in return.

• There should be a desirable exchange relationship between marketer and customer.

Markets • The set of all actual and potential buyers of

product or service.

2. Designing a customer driven strategy

• To design a winning marketing strategy, marketing manager must answer two important questions– What customer will we serve ( target market)– How can we serve these customers best

Selecting customers to serve• Company must decide who will it serve– Market segmentation as a means.

• Selecting all the customers might not be possible– Select the customers that they can serve well and

profitably

Choosing a value proposition• Value proposition is the set of benefits or value

it promises to deliver to consumers to satisfy their needs. – For example how the company differentiate

themselves from the competitors.– Red Bull gives you extra energy to fight mental and

physical fatigue.

Concepts for developing marketing strategies

• Production concept• Product concept • Selling concept• Marketing concept• Societal marketing concept

Concepts for developing marketing strategies

Production concept• customer favours products

that are easily available and affordable,

• So company focus on efficient production and distribution

• For e.g. Lenovo dominates highly sensitive Chinese market through this approach

Product concept• customer favour the

product that have good quality, performance and innovative

• Marketing strategy focus on continuous product improvements

Product concept- Marketing myopia

Concepts for developing marketing strategies

Selling concept• idea that the customers

wont buy enough of the firms product unless it undertakes a large scale selling and promotion effort,

• E.g. insurance, blood donations

Marketing concept• “sense and respond” rather

than “make and sale” philosophy

Concepts for developing marketing strategies

• Societal marketing concept– should consider consumers wants, company’s

requirements and society’s long run interest.

3. Preparing an integrated marketing plan and program

• Next step is to develop an integrated marketing program that will actually deliver the intended value to the target customers.– Marketing mix

4. Building a customer relationship• Customer relationship management– Customer perceived value • Customer evaluation of Difference between all the

benefits and all the cost of market offering compared to competitive offers• e.g. Toyota Prius

– Customer satisfaction • Depends upon the products perceived performance

relative to buyers expectations • e.g. Lexus

Customer satisfaction

5. Capturing value from customers• Creating customer loyalty and retention– customer life time value– For e.g. Lexus believes that single satisfied and loyal customer is

worth $600,000 in lifetime sales• Growing share of customer– the share they get of the customer’s purchasing in their product

categories. – E.g. supermarkets and restaurant want more “share of Stomach”, – Airlines want more “share of travel”.

• Building customer equity– combined life time value of all the company’s customer both

current and potential

Assignment for Workshop

• Explain the major trend and forces that are changing the marketing landscape and challenging marketing strategy.

To understand the role of marketing, we must first understand the organisations overall

strategic planning process

Companywide strategic planning• Each company must – find the game plan for long-run survival and growth

that makes sense given its specific situation, opportunities, objectives and resources.

• This is the focus of strategic planning,– The process of developing and maintaining a

strategic fit between organisation’s goal and capabilities and its changing marketing opportunities.

Strategic planning (contd..)• Company’s annual and long range plans deals

with the company's current business and how to keep them going.

• Whereas company's strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

Steps in strategic planning

Defining the company mission

Setting company

objectives and goal

Designing the business portfolio

Planning marketing and

other functional strategies

corporate level

Business unit, product and market level

Defining a market oriented mission• Every organisation exists to accomplish

somethingMission statement:• A statement of the organisation purpose- what

it want to accomplish in the larger environment.

• Clear mission statement will act as an “ invisible hand”, that guides people in the organization.

Mission statement (contd..)• Mission statement should be – market oriented and defined in terms of customer

needs rather than – focusing in product or technology terms.

• Product and technologies eventually become outdated, but basic market needs last forever.

Mission statement- examples• E.g. – Nike isn’t just a shoe and apparel manufacturer

rather it wants “ to bring inspiration and innovation to every athlete in the world”

– eBay’s mission isn’t simply to hold online auctions and trading. Rather its mission is “ to provide a global trading platform where practically anyone can trade practically anything you can get it on eBay.”

Mission statement• Mission statement should be– Realistic (e.g. Nepal airline mission to become the worlds

largest airline could be deluding itself)– Specific (e.g. shouldn’t be too long to remember, to vague

to be meaningful and too dull to inspire)– Fit the market environment (e.g. the mission statement of

girl scout of America will be “ place where girls grow strong”)

– Based on distinctive competencies– Motivating (e.g. Microsoft aim is to help people to realize

their potential, “your potential our passion” says the company.

Setting company objectives and goals• Company needs to turn its mission into detailed

supporting objective for each level of management.

• Objective should be SMART– S- specific– M- measurable– A- achievable– R- realistic– T- time bound

Objectives and goals- exampleMonsanto- operates in agricultural biotechnology business• Mission- – improving the future of farming and food abundantly and safely.

• Overall objective- – build profitable customer relationships by developing better

agricultural product that safely help crops produce more nutrition and higher yields without chemical spraying

• Marketing objective-– So improving profit by increasing sales or reducing cost become

another major objective• Marketing strategies and programs must be developed to

support these marketing objectives.

Designing the business portfolio• The collection of businesses and products that

make up the company

• The best business portfolio is the one that best fits the company’s strength and weakness to opportunities in the environment.

Steps in business portfolio planning1. Company must analyse its current business

portfolio and decide which business should receive more, less or no investment

2. It must shape the future portfolio by developing strategies for growth and downsizing.

Analysing the current business portfolio- BCG growth share matrix

Developing strategies for growth and downsizing

• Designing the business portfolio involves– finding businesses and products the company

should consider in future• The company’s objective must be profitable

growth• Product/market expansion grid is one of the

device for identifying growth opportunities.

The product/market expansion grid

The product market expansion grid• Market penetration: – a strategy for company growth by increasing sales of

current products to current market segments without changing the product.

– E.g. Starbucks adding new stores in current market• Market development: – a strategy for company growth by identifying and

developing new market segments for current company products.

– E.g. Starbucks manager could review new demographic/geographic markets.

The product market expansion grid• Product development: – a strategy for company growth by offering modified or

new products to current market segments. – E.g. Starbucks has introduced new reduced calorie

options such as Frapuccino light blended beverages.• Diversification: – a strategy for company growth by acquiring businesses

outside the company’s current products and markets. – E.g. Starbucks purchased Hear Music, which was so

successful that it created the Starbucks new entertainment division.

Downsizing • Company not only develop strategies for

growing their business portfolio but also strategies for downsizing them.

• Downsizing is the process of reducing the business portfolio by – eliminating product of business units that are not

profitable or that no longer fit the company’s overall strategy.

Planning Marketing: partnership to build customer relationships

• Marketing plays a key role in the company’s strategic planning1. Marketing provides a guiding philosophy- • the marketing concept- company strategy should

revolve around building profitable customer relationships.

2. Marketing provides inputs to strategic planners by helping them to identify attractive market opportunities.

Planning Marketing: partnership to build customer relationships

• Marketing alone cannot produce superior value to the customer.

• Although it plays a leading role, marketing can be only a partner in attracting, keeping and growing customer.

• In addition to customer relationship management, marketers must also practice partners relationship management- value chain analysis.

Value chain analysis• Series of departments that carry out value creating activities to design,

produce, market, deliver and support the firms product.

Value chain analysis- example• Wall- Marts ability to offer the right products at

low prices depends on the contributions of people in all of the company’s departments- marketing, purchasing, information systems and operations.

Partnering with others in marketing system

• To create customer value, the firms need to look beyond the own value chain and into the value chain of suppliers, distributors, and ultimately customers.– E.g. McDonalds is capturing more than 40% of the

burger market in the world even though it is rated below burger king in taste.

– This is because McDonalds successfully partners with its franchisees, suppliers and others to jointly deliver exceptionally high customer value.

Marketing strategy and the marketing mix

Marketing strategy and the marketing mix

• Customer stand in the centre• Next come marketing strategy where company hopes to

create this customer value.– Which customer it will serve ( segmentation and targeting),

how it will serve ( differentiation and positioning)• Guided by marketing strategy, company’s design an

integrated marketing mix• To find the best marketing strategy and mix, – company engages in marketing analysis, planning and control.

• Through this activities, the company watches and adapts to the forces in the marketing environment.

Customer driven marketing strategy- market segmentation

• Dividing the market into distinct group of buyers who have distinct needs, characteristics or behaviours and who might require separate products or marketing programs.

• Markets could be segmented based upon the demographic, geographic or behavioural factors.

Customer driven marketing strategy-Market targeting

• The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

• Market niches (e.g. Ferrari) or several related market segments

Customer driven marketing strategy-differentiation and positioning

Positioning • positioning is arranging for a product to occupy a clear,

distinctive and desirable place relative to competing products in the minds of target consumers.

• E.g. BMW makes the ultimate driving machine, Ford built for the road ahead.

Differentiation • effective positioning begins with differentiation, • actually differentiating the company’s market offerings so

that it gives customer superior value.

Customer driven marketing strategy-differentiation and positioning

Developing an integrated marketing mix

• Marketing mix is the set of controllable, tactical marketing tools that firm blends to produce the response it wants in target market.

• Marketing mix consists of everything the firm can do to influence the demand for its products.

• 7ps- product, price, place and promotion, people, process and physical environment.

Marketing mix- 7 Ps