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Studiengang Wirtschaftsinformatik: Marketing
Fachhochschule Ingolstadt: Prof. Dr. Andrea E. Raab
- 2 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
What is marketing not ?????
- 3 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
What is marketing ?????
FUTURE
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
Marketing
Marketing
- 4 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
• Nature and function of marketing
• The marketing management process
• Market / Competition
• Customer
• Market-oriented strategic planning
• Marketing program: the marketing mix
Aim
• Introduction; gives an overview on different marketing
definitions, tasks and concepts
• Focuses on marketing as a market driven philosophy; shows
the importance of the marketing management process to
understand and solve business problems
• Shows what role market/competition plays in the marketing
management process and how market/competition is
analyzed
• Shows what role the customer plays in the marketing
management process and how target markets are analyzed
and occupied
• Adresses the management challenge of designing and
implementing the best combination of marketing variables to
carry out a firm‘s strategy in its target markets
• Shows variety of decision areas in product offering,
distribution channels, pricing, communication program s
Agenda
- 5 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� What are the tasks of marketing?
� What is the marketing management process all about?
� What are the major concepts and tools of marketing?
� Learning objectives
� What are the tasks of marketing?
� What is the marketing management process all about?
� What are the major concepts and tools of marketing?
Nature and function of marketing: Learning objectives
- 6 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: Some historical perspectives on marketing
The aim of marketing has to change; today’s focus m ust be: price for value
Plato: “In well-ordered states, the storekeepers and salesmen are commonly those who are weakest in bodily strength and therefore of little use for any other purpose.”
Peter Drucker:
Cicero: “Merchants are those who are to be accounted vulgar; therefore they can make no profit except by a certain amount of falsehood.”
Karl Marx: “To believe that a coat is worth less than $ 5 as long as it remains in the hands of the tailor, but that its value rises to $ 5 when I take posession of it is ridiculous. Already in the minute when the commodity is finished, it must be worth as much as the consumer pays for it in the end.”
Convincing bygulling selling
Convincing bygulling selling
Convincing bycreating
customervalue
Convincing bycreating
customervalue
“There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superflous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.”
- 7 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Official definition (see Kotler, p. 8 [American Marketing Association])
Marketing (management) is the process of planning and executing the• conception,
• pricing and
• distribution ofideas, goods, services to create exchanges that satisfy individual and
organizational goals
Official definition (see Kotler, p. 8 [American Marketing Association])
Marketing (management) is the process of planning and executing the• conception,
• pricing and
• distribution ofideas, goods, services to create exchanges that satisfy individual and
organizational goals
Nature and function of marketing: What is marketing???
Brainstorming
- 8 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: The three aspects of marketing
�Marketing as a philosophymarketdriven corporate management, „to live with the customer“, customer oriented corporate
style
�Marketing as a medium to organize the marketplace / -spac e
Industry(sellers)Industry(sellers)
Market(buyers)Market
(buyers)
Communication
Information
Goods / services
Money
�Marketing as a method to serve customer needs -----> Marketing Mix: 4 P‘s: set of marketing
tools that the firm uses to pursue its market objectives in the target market
- 9 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: A classification of markets
�Market: various groupings of customers
� need markets
� product markets
� demographic markets
� geographic markets
� basic economic markets
�Marketplace: physical market
� consumer market(place)
� business market(place)
�manufacturer
� intermediary
� (resource, nonprofit, governmental market(place))
� global marketplace
�Marketspace: digital market
Industry(sellers)Industry(sellers)
Market(buyers)Market
(buyers)
Information
Goods / services
Money
Communication
- 10 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Broad marketingenvironment
The marketing management process
CustomerCustomer
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-culturalLegal
Legal
CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio
Tactical marketingMarketingprogram
product price place promotion
Implementation & measuring resultsImplementation+controlling organization implementation controlling
growth plan
bus. mission f.SBU’s
business goalsbusinessstrategy
competitive advantage
- 11 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: core marketing concepts - broad marketing environment
� Broad marketing environment� The broad market environment consists of for main long term factors which can have major impact
on a company
CompanyCompany
Market actors must pay close attention to the trend s and developments in the broad environment and make timely adjustments to their ma rketing strategies
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-cultural
LegalLegal
Short term controllable
factors
Short term controllable
factors
Long term factors
Long term factors
- 12 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: core marketing concepts - task marketing environment
� Task marketing environment� The task market environment consists of customer, competition and the company itself.
Our company has to deliver at least the same value to the customer in order to stay competitive. Delivering higher value would result i n competitive advantage over the competition.
Customer
CompetitionOur Company
„ value“
CompetitiveAdvantage
„ value“
- 13 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Customer needs� Customer needs
Nature and function of marketing: core marketing concepts - customer needs (1)
needs1 wants demands purchase
transaction
Marketers do not create needs: Needs preexist markete rs (Kotler, 1999, p. 11)
basicrequirement
directed to aspecific object
purchasedisposition
3 goods, services, experiences, information etc.1 see classification of needs: stated needs, real needs, unstated needs, delight needs,secret needs (Kotler, p. 21)
2 five conditions are prerequisite (Kotler, p. 12)
pre sales phase:target market / prospects (prospective customers)
are the focus
sales phase:exchange2 of any offering3
between marketer and customer
- 14 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Customer needs� Customer needs
Nature and function of marketing: core marketing concepts - customer needs (2)
needs1 wants demands purchase
transaction
Marketers do not create needs: Needs preexist markete rs (Kotler, 1999, p. 11);the marketer delivers value to the customer if the benefits of the offering are higher than the costs it causes
basicrequirement
directed to aspecific object
purchasedisposition
pre sales phase:target market / prospects (prospective customers)
are the focus
sales phase:exchange2 of any offering3
between marketer and customer
3 goods, services, experiences, information etc.4 value: benefits/costs
satisfaction
value4 delivery
after sales phase:succesful transaction
if offering deliversvalue to the customer
1 see classification of needs: stated needs, real needs, unstated needs, delight needs,secret needs (Kotler, p. 21)
2 five conditions are prerequisite (Kotler, p. 12)
- 15 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: core marketing concepts - competition
� Competition� Competition includes all the actual and potential rival offerings and substitutes that a buyer might
consider� Five forces model determining segment structural attractiveness
� Competition� Competition includes all the actual and potential rival offerings and substitutes that a buyer might
consider� Five forces model determining segment structural attractiveness
Potentialentrants (threat of mobility)
Potentialentrants (threat of mobility)
Suppliers(supplierpower)
Suppliers(supplierpower)
Industrycompetitors(segment
rivalry)
Industrycompetitors(segment
rivalry)
Buyers(buyerpower)
Buyers(buyerpower)
Substitutes(threat of
substitutes)
Substitutes(threat of
substitutes)
Because markets have become so competitive (global markets), understanding customers is no longer enough. “Competitive intelligence systems ” are necessary to permanently know competitors’ strategy and actions.
- 16 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: core marketing concepts - a company‘s value chain
Firm Infrastructure(e,g, Finance, Controlling)
Human resource management
Research & Development
Procurement
Profit
Pro
fit
Choose the value Provide the value Communicate the value
Marketsegmen-tation
Marketsegmen-tation
Market targetingMarket targeting
Product/service
positioning
Product/service
positioning
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
Sourcing
Making
Distri-buting
Ser-vicing
Distri-buting
Ser-vicing
SalesForceSalesForce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
Primary activities
Support activities
- 17 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Nature and function of marketing: core marketing concepts - marketing mix (1)
� Marketing mix:� 4 P‘s: set of marketing tools that the firm uses to pursue its market objectives in the target market
Marketing mixMarketing mix
Product
product varietyqualitydesign
featuresbrand namepackaging
sizesservices
warrantiesreturns
Product
product varietyqualitydesign
featuresbrand namepackaging
sizesservices
warrantiesreturns
Price
list pricediscounts
(cash discount =Skonto)
allowances(“Boni”)
payment periodcredit terms
Price
list pricediscounts
(cash discount =Skonto)
allowances(“Boni”)
payment periodcredit terms
Promotion
sales promotionadvertisingsales force
public relationsdirect marketing
Promotion
sales promotionadvertisingsales force
public relationsdirect marketing
Place
channelscoverage
assortments(“Auswahl,Sortiment”)locationsinventorytransport
Place
channelscoverage
assortments(“Auswahl,Sortiment”)locationsinventorytransport
Design of 4 P‘s is result of marketing strategy implem entation
- 18 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
The selling concept:traditional physical process sequence
The selling concept:traditional physical process sequence
Nature and function of marketing: the selling versus the marketing concept
The marketing concept:value creation and delivery sequence
Choose the value Provide the value Communicate the value
Marketsegmen-tation
Marketsegmen-tation
Market targetingMarket targeting
Product/service
positioning
Product/service
positioning
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
Sourcing
Making
Distri-buting
Ser-vicing
Distri-buting
Ser-vicing
Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
Make the product Sell the product
DesignproductDesignproduct ProcureProcure MakeMake PricePrice SellSell Advertise/
PromoteAdvertise/Promote DistributeDistribute ServiceService
- 19 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� How can demand be more accurately measured and forecasted?
� methods and concepts
� examples to become trained
� How to measure segment structural attractiveness?
� What does a company need to know about the existing competitive
forces within its industry??
� Who are our competitors??
� Which competitive strategies do exist?
� Learning objectives
� How can demand be more accurately measured and forecasted?
� methods and concepts
� examples to become trained
� How to measure segment structural attractiveness?
� What does a company need to know about the existing competitive
forces within its industry??
� Who are our competitors??
� Which competitive strategies do exist?
Analyzing market opportunities: Learning objectives
- 20 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Analyzing market opportunities - the market
� What market (demand) do we talk about???
� Market: set of all actual and potential buyers of a market offer
� Potential market (not equal to market potential): set of consumers who profess a sufficient level of
interest in the market offer
� Available market: set of consumers who have interest, income, and access to a specific offer
� Target (served) market: part of the available market the company decides to pursue
� Penetrated market: set of consumers who are buying the company‘s product
� What market (demand) do we talk about???
� Market: set of all actual and potential buyers of a market offer
� Potential market (not equal to market potential): set of consumers who profess a sufficient level of
interest in the market offer
� Available market: set of consumers who have interest, income, and access to a specific offer
� Target (served) market: part of the available market the company decides to pursue
� Penetrated market: set of consumers who are buying the company‘s product
- 21 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Analyzing market opportunities - the market (2)
� Company demand� Company demand: the company‘s estimated share of market demand at alternative levels of
company marketing effort in a given period of time --> company demand function; differentdemand functions under different marketing environments; different positions on the demand function in dependence on company‘s performance perceived relative to the competitors
� Company sales forecast: is the expected level of company sales based on a chosen marketingplan and an assumed marketing environment;
� Company sales potential: sales limit approached by company demand as company marketing effort increases relative to competitors
� Company demand� Company demand: the company‘s estimated share of market demand at alternative levels of
company marketing effort in a given period of time --> company demand function; differentdemand functions under different marketing environments; different positions on the demand function in dependence on company‘s performance perceived relative to the competitors
� Company sales forecast: is the expected level of company sales based on a chosen marketingplan and an assumed marketing environment;
� Company sales potential: sales limit approached by company demand as company marketing effort increases relative to competitors
� Market demand� Market demand: total volume that would be bought by a defined customer group in a defined
geographical area in a defined time period in a defined marketing environment under a defined marketing program;
� Market demand is a function dependent on industry marketing expenditure under the precondition of a particular marketing environment , not a fixed number --> market demand function; differentmarket functions under different marketing environments
� Market potential: limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment; maximum amount of sales that might be available to all the firms in an industry under the given marketing environment
� Market demand� Market demand: total volume that would be bought by a defined customer group in a defined
geographical area in a defined time period in a defined marketing environment under a defined marketing program;
� Market demand is a function dependent on industry marketing expenditure under the precondition of a particular marketing environment , not a fixed number --> market demand function; differentmarket functions under different marketing environments
� Market potential: limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment; maximum amount of sales that might be available to all the firms in an industry under the given marketing environment
Market potential and market demand (in dependence o f industry marketing expenditure) is higher in a period of prosperty versus in a period of recession
- 22 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Analyzing market opportunities - the market (3)
� Practical method for estimating current market dema nd: Estimation of total market potential ( potential number of buyers x average quantity purchased by a buyer x price)
� often start with total population in the nation
� eliminate groups that would not buy the product --> suspect pool
� again eliminate groups that would not buy the product (after further research) ---> prospect pool
� estimate average quantity purchased by average customer per year
� estimate average price
do calculation
� Practical method for estimating current market dema nd: Estimation of total market potential ( potential number of buyers x average quantity purchased by a buyer x price)
� often start with total population in the nation
� eliminate groups that would not buy the product --> suspect pool
� again eliminate groups that would not buy the product (after further research) ---> prospect pool
� estimate average quantity purchased by average customer per year
� estimate average price
do calculation
Business marketers typically have a harder time est imating their market potential and market share (own sales / total industry sales) because th ey have no shared data to rely on (Nielsen)
- 23 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Analyzing market opportunities - the market (3)
� Practical method for estimating current market dema nd
� often start with total population in the nation
� eliminate groups that would not buy the product --> suspect pool
� again eliminate groups that would not buy the product (after further research) ---> prospect pool
� estimate average quantity purchased by average customer per year
� estimate average price
do calculation
� Practical method for estimating current market dema nd
� often start with total population in the nation
� eliminate groups that would not buy the product --> suspect pool
� again eliminate groups that would not buy the product (after further research) ---> prospect pool
� estimate average quantity purchased by average customer per year
� estimate average price
do calculation
Take worldwide mobile phone market and estimate
total market potential per anno of medium price
mobile phones (e.g. Nokia 8210, Siemens S??) and
the estimated sales potential of Nokia medium
price mobile phone (8210)
- 24 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Broad marketingenvironment
The marketing management process
CustomerCustomer
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-culturalLegal
Legal
CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio
Tactical marketingMarketingprogram
product price place promotion
Implementation & measuring resultsImplementation+controlling organization implementation controlling
growth plan
bus. mission f.SBU’s
business goalsbusinessstrategy
competitive advantage
- 25 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Competition� Five forces model determining segment structural attractiveness
� Competition� Five forces model determining segment structural attractiveness
Potentialentrants (threat of mobility)
Potentialentrants (threat of mobility)
Suppliers(supplierpower)
Suppliers(supplierpower)
Industrycompetitors(segment
rivalry)
Industrycompetitors(segment
rivalry)
Buyers(buyerpower)
Buyers(buyerpower)
Substitutes(threat of
substitutes)
Substitutes(threat of
substitutes)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
Analyzing market opportunities - the competition (1)
- 26 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� What does a company need to know about the existing competitive forces
within its industry??
� How much power do our competitors have in comparison to us?
� Who are our competitors? How many are they?
� What are their strategies?
� What are their strenghts and weaknesses?
� What are other factors that could influence the intensity of competitive actions?
� Strategies / Actions of new competition?
- industry related
- unrelated to particular industry
� How much power do we have elsewhere in the channel?
� What is the market power of our suppliers?
� What is the market power of our buyers?
� What does a company need to know about the existing competitive forces
within its industry??
� How much power do our competitors have in comparison to us?
� Who are our competitors? How many are they?
� What are their strategies?
� What are their strenghts and weaknesses?
� What are other factors that could influence the intensity of competitive actions?
� Strategies / Actions of new competition?
- industry related
- unrelated to particular industry
� How much power do we have elsewhere in the channel?
� What is the market power of our suppliers?
� What is the market power of our buyers?
Analyzing market opportunities - the competition (1a)
The more competitive forces exist and the more powe r they have, the less attractive the market (segment) is!!!
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 27 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Who are our competitors??
� Def.: competition: a group of firms that offer products / solutions that are close
substitutes for one another
� Characteristics
� cross-elasticity
� brand switching
� similarity in use
� Three levels of competition
� Brand level: suppliers of similar products to similar customers at similar prices --> cross elasticity
very high
� Industry level: suppliers of the same class of products
� Form level: suppliers which offer the same service
� Generic level: suppliers that compete for the same consumer dollars
� Who are our competitors??
� Def.: competition: a group of firms that offer products / solutions that are close
substitutes for one another
� Characteristics
� cross-elasticity
� brand switching
� similarity in use
� Three levels of competition
� Brand level: suppliers of similar products to similar customers at similar prices --> cross elasticity
very high
� Industry level: suppliers of the same class of products
� Form level: suppliers which offer the same service
� Generic level: suppliers that compete for the same consumer dollars
analyzing market opportunities -the competition (2)
A detailed knowledge of number and type of competit ion in all categories is necessary in order to build up a competitive advantage
Mar
ket
com
petit
ion
Indu
stry
com
petit
ion
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 28 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Factors affecting rivalry among existing competitor s
� Numerous or equally balanced competitors
� Slow industry growth
� High fixed or storage costs
--> need to operate at capacity and to cut costs
� Lack of product differentiation (in the eyes of the customers)
� Capacity augmented in large increments
--> (threat of) overcapacity in the industry
� High exit barriers
� Factors affecting rivalry among existing competitor s
� Numerous or equally balanced competitors
� Slow industry growth
� High fixed or storage costs
--> need to operate at capacity and to cut costs
� Lack of product differentiation (in the eyes of the customers)
� Capacity augmented in large increments
--> (threat of) overcapacity in the industry
� High exit barriers
analyzing market opportunities -the competition (3)
The more investment is involved and the slower the pay back comes, the more aggressive competitors fight against each other and the more difficult profitable market penetration is
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 29 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Barriers to enter
� Economies of scale
� Experience curve (learning curve)
� Cost advantages independent of scale
--> partnerships to suppliers
� Capital requirements
� Switching costs of customers
� Access to existing distribution channels
--> partnerships to intermediaries
� Strong existing customer relationships
� Government policy
� Expected retaliation from existing competitors
--> price battle, decreasing industry margins
� Barriers to enter
� Economies of scale
� Experience curve (learning curve)
� Cost advantages independent of scale
--> partnerships to suppliers
� Capital requirements
� Switching costs of customers
� Access to existing distribution channels
--> partnerships to intermediaries
� Strong existing customer relationships
� Government policy
� Expected retaliation from existing competitors
--> price battle, decreasing industry margins
Analyzing market opportunities -the competition (4)
The more barriers to enter exist, the easier profit able market penetration is for existing competitors
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 30 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Competitive strategy & strategic groups� Strategic group: group of firms in an industry following the same or similar strategic dimensions
� Dimensions for mapping: mobility barriers or factors that deter movement of firms from one strategic position to another in the industry
� Competitive strategy & strategic groups� Strategic group: group of firms in an industry following the same or similar strategic dimensions
� Dimensions for mapping: mobility barriers or factors that deter movement of firms from one strategic position to another in the industry
Analyzing market opportunities - the competition (5)
A company must carefully decide which strategic gro up to compete in and then closely watch its key competitors which are in the same strategic group
Challenger
Follower
Leader
Nicher / Visionary
GeminiCoopers &Lybrand
ATKearney
Price Waterhouse
McKinsey
Bain
AndersenConsulting
Ernst &YoungCSC
Deloitte & Touche
EDS
Booz Allen
Mercer Mgt.
KPMG
AMS
DMR
SHLSystemhouse
Arthur D Little
Integration (completeness of consulting capability)
Quelle: GartnerGroup 1998
Implementation capability
BCG
Example: Top Management Consulting Companies
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 31 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Competitive strategy & strategic groups: Automotive industry� Competitive strategy & strategic groups: Automotive industry
Analyzing market opportunities - the competition (5a)Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
1. Established Niche Player
Volum
e
3. “Commodity”- Player 2. Dominant Player
Illustrative
4. Endangered Player
Competitive advantages
- 32 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� For buyers� For buyers
Analyzing market opportunities -the competition (6)
Bargaining power is high when ...
� For suppliers� For suppliers
supplier “my” company:buyer of my supplier /supplier of my buyer
Choose the value Provide the value Communicatethe value
Choosethe value
Providethe value
Communicatethe value
Choosethe value
Providethe value
Communicatethe value
buyer
A detailed knowledge of buyers and suppliers positi on in the industry is necessary in order to strenghten the own bargaining power of a com pany
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
? ?
- 33 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� Market segmentation - why and how?
� What kind of marketing strategies do exist? Which patterns of target
market selection do exist?
� How to position a product / service in the competitive landscape?
� What concepts of differentiation do exist?
� How does a consistent positioning strategy look like?
� Learning objectives
� Market segmentation - why and how?
� What kind of marketing strategies do exist? Which patterns of target
market selection do exist?
� How to position a product / service in the competitive landscape?
� What concepts of differentiation do exist?
� How does a consistent positioning strategy look like?
Market segmentation / target market selection / customer analysis: Learning objectives
- 34 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Broad marketingenvironment
The marketing management process
CustomerCustomer
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-culturalLegal
Legal
CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio
Tactical marketingMarketingprogram
product price place promotion
Implementation & measuring resultsImplementation+controlling organization implementation controlling
growth plan
bus. mission f.SBU’s
business goalsbusinessstrategy
competitive advantage
- 35 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Target markets (“target marketing”)� Target markets (“target marketing”)
� Identify segmentation
variables and segment
the market
� Develop profiles of
resulting segments
� Identify segmentation
variables and segment
the market
� Develop profiles of
resulting segments
� Evaluate the
attractiveness of each
segment
� Select the target
segment(s)
� Evaluate the
attractiveness of each
segment
� Select the target
segment(s)
� Identify possible
positioning concepts for
each target segment
Select, develop and
signal the chosen
positioning concept
� Identify possible
positioning concepts for
each target segment
Select, develop and
signal the chosen
positioning concept
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Choose the value Provide the value Communicate the value
Marketsegmen-tation
Marketsegmen-tation
Market targetingMarket targeting
Product/service
positioning
Product/service
positioning
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
Sourcing
Making
Distri-buting
Ser-vicing
Distri-buting
Ser-vicing
Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
Market segmentation / target market selection / customer analysisTaskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 36 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Market segmentation
� Market segmentation is the process of identifying homogeneous groups of buyers
requiring different marketing strategies to influence their consumption
� Organizations have limited resources
� Consumers may be too numerous, widely scattered and varied in their needs
� Competing organizations my be better able to attract certain groups of customers
(segments) in the market
� Each organization should, therefore identify the most attractive parts of the market that it
could effectively serve (--> target market)
� Market segmentation
� Market segmentation is the process of identifying homogeneous groups of buyers
requiring different marketing strategies to influence their consumption
� Organizations have limited resources
� Consumers may be too numerous, widely scattered and varied in their needs
� Competing organizations my be better able to attract certain groups of customers
(segments) in the market
� Each organization should, therefore identify the most attractive parts of the market that it
could effectively serve (--> target market)
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Market segmentation / target market selection /customer analysis (2)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 37 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Market segmentation - questions to ask
� Who are our customers? Purchaser / User
� What do our customers buy? Amount, brand, features, price
� What do our customers do with the products? Usage situation
� Where do they buy? Retailer, factory shop, Internet
� When do they buy? Time of year, week, day; on sale versus full price
� How do they choose? Decision participants‘ roles, decision process, information sources
� Whey do they selecet a product? Functional attributes, service, image, brand equity
� Will they buy it again? Degree of satisfaction, intentions
� sensitivity to marketing mix: product/service, price, distribution, advertising/promotion
� Market segmentation - questions to ask
� Who are our customers? Purchaser / User
� What do our customers buy? Amount, brand, features, price
� What do our customers do with the products? Usage situation
� Where do they buy? Retailer, factory shop, Internet
� When do they buy? Time of year, week, day; on sale versus full price
� How do they choose? Decision participants‘ roles, decision process, information sources
� Whey do they selecet a product? Functional attributes, service, image, brand equity
� Will they buy it again? Degree of satisfaction, intentions
� sensitivity to marketing mix: product/service, price, distribution, advertising/promotion
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Market segmentation / target market selection /customer analysis (3)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 38 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Market targeting - evaluate market segments� Market targeting - evaluate market segments
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Opportunities for profit • size• growth potential
Opportunities for profit • size• growth potential
Customer
Competitive intensity • unmet needs• entry barriers
Competitive intensity • unmet needs• entry barriers
Competition
• firm’s objectives• firm’s capabilities
• firm’s objectives• firm’s capabilities
CompanyTargetmarket
selection
Targetmarket
selection
Market segmentation / target market selection /customer analysis (4)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 39 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Market targeting - select the target segment(s)
� Five patterns of target market selection
� Single segment concentration: concentrated marketing
� Selective specialization: differentiated marketing
� Product specialization: rather undifferenciated marketing
� Market specialization: rather differenciated marketing
� Full market coverage
- undifferentiated marketing
- differentiated marketing
� Market targeting - select the target segment(s)
� Five patterns of target market selection
� Single segment concentration: concentrated marketing
� Selective specialization: differentiated marketing
� Product specialization: rather undifferenciated marketing
� Market specialization: rather differenciated marketing
� Full market coverage
- undifferentiated marketing
- differentiated marketing
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Because differenciated marketing leads to both higher sales and higher costs, there isno general statement concerning this strategy’s pro fitability
Market segmentation / target market selection /customer analysis (5)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 40 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Product/service positioning
� Def. Positioning: act of designing the company’s offering and image to occupy a
distinctive place in the target market’s mind
� Product/service positioning involves formulating a competitive position for the product
and developing an appropriate marketing mix
� Determine unique differentiating benefits (unique selling proposition; unique advertising
proposition
� Design the marketing mix that will establish appropriate perceptions of the brand among
customers
� Positioning statement: To Y (target audience), X is the brand of (frame of reference) that
delivers a benefit Z (point of difference) because of ... (supporting claim)
� Product/service positioning
� Def. Positioning: act of designing the company’s offering and image to occupy a
distinctive place in the target market’s mind
� Product/service positioning involves formulating a competitive position for the product
and developing an appropriate marketing mix
� Determine unique differentiating benefits (unique selling proposition; unique advertising
proposition
� Design the marketing mix that will establish appropriate perceptions of the brand among
customers
� Positioning statement: To Y (target audience), X is the brand of (frame of reference) that
delivers a benefit Z (point of difference) because of ... (supporting claim)
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Positioning is not what you do to the product, but how the product is perceived in the mind of the consumer
Market segmentation / target market selection /customer analysis (6)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 41 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Perceptual maps: a major tool in positioning resear ch� Perceptual maps: a major tool in positioning resear ch
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
The closer two products are, the more similar they are in customers’ minds; the furthest a product is on the imaginery line, the best the produc t is perceived concerning this attribute
Low calorie
For adults
Picks me upFor teens
Sweet
Natural
Diet Pepsi
Diet Coke
Coke
Pepsi
Sprite
Seven up
Fanta
Orange Crush
Market segmentation / target market selection /customer analysis (7)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 42 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Example of positioning: beers as people� Example of positioning: beers as people
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Beer Brand At a party As his hobbies As his occupation
Budweiser Older guy Watch ball games,rake leaves
Businessman
Heineken Gentleman Polo Rich guy
Michelob Smoke a pipe Philately,philosophy, classicmusic
Free lancer
Becks Charming guy Sailing CEO
Paulaner Cozy type of guy Beergarden Governmentemployed
Miller Good guy, friendly Golf, tennis Junior executives
Eder Drunk Guns Laborer
Market segmentation / target market selection /customer analysis (8)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 43 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Summary: towards an effective positioning strategy
� Who (which customer segments) should we serve?
� segmentation analysis
� What differentiates us from our competitors in meeting the needs of our target segment?
How should we position our product so as to highlight our differential advantage over the
competitors?
� competition analysis (what benefits are currently offered?)
� customer analysis per segment (what benefits are most needed?)
� differentiation analysis (how can we differentiate our company?)
� positioning analysis (how can we translate our product characteristics into benefits sought?)
� Summary: towards an effective positioning strategy
� Who (which customer segments) should we serve?
� segmentation analysis
� What differentiates us from our competitors in meeting the needs of our target segment?
How should we position our product so as to highlight our differential advantage over the
competitors?
� competition analysis (what benefits are currently offered?)
� customer analysis per segment (what benefits are most needed?)
� differentiation analysis (how can we differentiate our company?)
� positioning analysis (how can we translate our product characteristics into benefits sought?)
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Market segmentation / target market selection / customer analysis: summary (2)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 44 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Summary: internally consistent positioning strategy
Hanna Andersson, a $ 40 million clothing firm in Portland, Oregon, U.S.
� Target segment: Socially conscious, eco-sensitive parents, looking to save time
� Product : 100 % cotton clothing for kids, endlessly washable
� Distribution: mail-order, serviced by highly trained phone reps.
� Promotions: policy on returned clothing that no longer fits; 20% of original price credited
towars next purchase; donates returned clothes to charity
�Product/Services + Channel differentiation; benefit + user positioning
� Summary: internally consistent positioning strategy
Hanna Andersson, a $ 40 million clothing firm in Portland, Oregon, U.S.
� Target segment: Socially conscious, eco-sensitive parents, looking to save time
� Product : 100 % cotton clothing for kids, endlessly washable
� Distribution: mail-order, serviced by highly trained phone reps.
� Promotions: policy on returned clothing that no longer fits; 20% of original price credited
towars next purchase; donates returned clothes to charity
�Product/Services + Channel differentiation; benefit + user positioning
Market segmentationMarket segmentation Product/servicepositioning
Product/servicepositioningMarket targetingMarket targeting
Market segmentation / target market selection /customer analysis: summary (3)
Taskenvironment Customer
CustomerCompany
CompanyCompetition / Industry
Competition / Industry
- 45 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� Corporate strategy
� What are the processes towards an effective corporate strategy?
� Why and how to define strategic business units (SBU’s)? Which
strategies to pursue for which SBU’s?
� How to develop a corporate growth plan?
� Business strategy
� What are the processes towards an effective business strategy?
� How to do a SWOT analysis?
� Why and how to develop competitive advantages
� Why and how to develop core competencies
� How to formulate goals?
� How to define a business strategy?
� Learning objectives
� Corporate strategy
� What are the processes towards an effective corporate strategy?
� Why and how to define strategic business units (SBU’s)? Which
strategies to pursue for which SBU’s?
� How to develop a corporate growth plan?
� Business strategy
� What are the processes towards an effective business strategy?
� How to do a SWOT analysis?
� Why and how to develop competitive advantages
� Why and how to develop core competencies
� How to formulate goals?
� How to define a business strategy?
Market oriented strategic planning (corporate / business level): Learning objectives
- 46 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Broad marketingenvironment
Market oriented strategic planning: company analysis
CustomerCustomer
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-culturalLegal
Legal
CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio
Tactical marketingMarketingprogram
product price place promotion
Implementation & measuring resultsImplementation+controlling organization implementation controlling
growth plan
bus. misssionf. SBU’s
business goalsbusinessstrategy
competitive advantage
- 47 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Market oriented strategic planning: corporate strategic planning
Corporatestrategy/businessstrategy
corporate mission
strategic business units
product portfolio growth plan
target markets business goalsbusinessstrategy
competitive advantage
...
...
� The corporate strategic planning process consists o f 4 components:� The corporate strategic planning process consists o f 4 components:
By doing the corporate planning process, a company establishes the framework within the business units prepare their plans
Define the corporate mission
Define the corporate mission
Identify the strategic business units
Identify the strategic business units
Analyze the current portfolio
Analyze the current portfolio
Develop a corporate plan for new
business growth
Develop a corporate plan for new
business growth
- 48 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� The corporate mission
� What is our business? Who is our customer? What customer benefits do we provide?
� Firms must avoid marketing myopia (not only short term oriented)
� The corporate mission should reflect 3 elements:� limited number of objectives
- market share, innovation, productivity, quality, profitability
- be visionary
� major policies and values- customers, stakeholders, employes, suppliers, distributors
� major competitive scopes- industry scope
- products and applications scope
- competence scope- market-segment scope
- vertical scope
- geographical scope
� The corporate mission
� What is our business? Who is our customer? What customer benefits do we provide?
� Firms must avoid marketing myopia (not only short term oriented)
� The corporate mission should reflect 3 elements:� limited number of objectives
- market share, innovation, productivity, quality, profitability
- be visionary
� major policies and values- customers, stakeholders, employes, suppliers, distributors
� major competitive scopes- industry scope
- products and applications scope
- competence scope- market-segment scope
- vertical scope
- geographical scope
Define the corp. missionDefine the corp. mission Analyze the current portfolio
Analyze the current portfolio
Identify the strategic business units
Identify the strategic business units
Develop a corp. plan f. new business growth
Develop a corp. plan f. new business growth
A mission statement should be guided by a vision th at provides a direction for the company for the next 10 to 20 years; it should give directi on to the company itself and to the external environment
Market oriented strategic planning: corporate strategic planning (2)
- 49 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� The strategic business unit
� Def.: a SBU is a single business or group of related businesses that can be planned idependently from other company businesses (distinct mission, customers, competitors,resources or technologies, responsibility for profitability)
� Criteria for definition:� common consumer need or similar consumer characteri stics (target markets)
� common technology or manufacturing process
� same channels of distribution
� etc.
� Guided by the corporate mission and objectives, the firm must select a collection of businesses or products, known as business portfolio
� The strategic business unit
� Def.: a SBU is a single business or group of related businesses that can be planned idependently from other company businesses (distinct mission, customers, competitors,resources or technologies, responsibility for profitability)
� Criteria for definition:� common consumer need or similar consumer characteri stics (target markets)
� common technology or manufacturing process
� same channels of distribution
� etc.
� Guided by the corporate mission and objectives, the firm must select a collection of businesses or products, known as business portfolio
Define the corp. missionDefine the corp. mission Analyze the current portfolio
Analyze the current portfolio
Identify the strategic business units
Identify the strategic business units
Develop a corp. plan f. new business growth
Develop a corp. plan f. new business growth
Companies should define their business units in ter ms of customer needs, not products or technology
Market oriented strategic planning: corporate strategic planning (3)
- 50 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Portfolio analysis: The BCG matrix (growth-share ma trix)� Portfolio analysis: The BCG matrix (growth-share ma trix)
Define the corp. missionDefine the corp. mission Analyze the current portfolio
Analyze the current portfolio
Identify the strategic business units
Identify the strategic business units
Develop a corp. plan f. new business growth
Develop a corp. plan f. new business growth
A healthy portfolio is a balanced one; an unbalance d portfolio has too many dogs and/or question marks
Market oriented strategic planning: corporate strategic planning (4)
low < 10%
Relative market share
Market growth rate
Starshigh > 10%
10 1 0,1
? ? ?
Question marks
Cash cows Poor dogs
cash flow
divest
cash flowreinvest
noinvest
invest SBU’s businessvolume
market growth rate: annual growthrate of the market
relative market share: SBU’s market sharerelative to that of itslargest competitorin the segment
- 51 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Portfolio analysis: The BCG Matrix - strategies to p ursue� Portfolio analysis: The BCG Matrix - strategies to p ursue
Define the corp. missionDefine the corp. mission Analyze the current portfolio
Analyze the current portfolio
Identify the strategic business units
Identify the strategic business units
Develop a corp. plan f. new business growth
Develop a corp. plan f. new business growth
Market oriented strategic planning: corporate strategic planning (5)
low
Relative market share
Market growth rate
high
high low
� Stars
� market leaders
� fast growing
� require investment to grow
� Strategy
� protect share
� reinvest earnings through price cuts,product improvement, more efficiency
� obtain large share of new users
� Question marks
� rapid growth
� poor profit margins
� enormous demand for cash
� Strategy
� invest to aggressively build share
� buy existing shares by acquiring
� Cash cows
� profitable products
� generate more cash than needed for share maintenance
� slow sales growth
� Strategy
� maintain market dominance
� invest in process technology improvement and price leadership, R&D in other product markets
� Dogs� many products may fall in this
category� cost disadvantage - few growth
opportunities at reasonable cost� markets not growing
� Strategy� focus on a specialized, defendable
segment� harvest: cut back all support to
maintenance� divest (sell); abandon (delete f. line)
- 52 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Corporate growth plan: Ansoff’s product-market expans ion grid� Corporate growth plan: Ansoff’s product-market expans ion grid
Define the corp. missionDefine the corp. mission Analyze the current portfolio
Analyze the current portfolio
Identify the strategic business units
Identify the strategic business units
Develop a corp. plan f. new business
growth
Develop a corp. plan f. new business
growth
Market oriented strategic planning: corporate strategic planning (6)
currentmarkets
� Market penetration� increase market share
� increase product usage� frequency of usage
� more usage
� new uses
newmarkets
current products new products
� Product development� product line extensions
� new products for same market
� Market development� expand markets for existing products
� geographical expansion
� target new segments
� Diversification� vertical integration
� forward integration
� backward integration
� diversify into related businesses
� diversify into unrelated businesses
- 53 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Market oriented strategic planning: business strategic planning
CustomerCustomer CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio growth plan
bus. mission f.SBU’s
business goalsbusinessstrategy
competitive advantage
...
� The core business strategic planning process consis ts of 4 components:� The core business strategic planning process consis ts of 4 components:
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
Broad marketingenvironment Economic
EconomicTechnological
TechnologicalSocio-cultural
Socio-culturalLegalLegal
- 54 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Market oriented strategic planning: business strategic planning (2)
The core competencies of a company must fit with th e marketing opportunities the company seeks
� SWOT analysis: overall evaluation of strenghts, weak nesses, opportunities and threats of a business
� External environment analysis (opportunity and threat analysis)
� opportunity analysis:
purpose: discern new marketing opportunities (area of buyer need in wich a business can perform
profitability) out of key macroenvironment forces and key microenvironment actors
� threat analysis:
purpose: identify environmental threats (challenge posed by an unfavorable trend or development
that would lead to deterioration in sales or profit)
� Characterize business‘s overall attractiveness
� Internal environment analysis (strenghts/weaknesses analysis)
� evaluate internal strenghts and weaknesses of different competencies periodically by using a
„checklist for performing strenghts/weknesses“)
� SWOT analysis: overall evaluation of strenghts, weak nesses, opportunities and threats of a business
� External environment analysis (opportunity and threat analysis)
� opportunity analysis:
purpose: discern new marketing opportunities (area of buyer need in wich a business can perform
profitability) out of key macroenvironment forces and key microenvironment actors
� threat analysis:
purpose: identify environmental threats (challenge posed by an unfavorable trend or development
that would lead to deterioration in sales or profit)
� Characterize business‘s overall attractiveness
� Internal environment analysis (strenghts/weaknesses analysis)
� evaluate internal strenghts and weaknesses of different competencies periodically by using a
„checklist for performing strenghts/weknesses“)
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
- 55 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Market oriented strategic planning: business strategic planning (3)
Core competencies often go through the whole compan y and range over several SBU’s
� Core competencies of a company:
� Characteristics of a core competence
� source of competitive advantage* in that it makes a significant contribution to perceived customer
benefits
� provides potential access to a wide variety of markets
� difficult for competitors to imitate
� Core competencies are the collective learning in the organization, especially how to
coordinate diverse production skills and integrate multiple streams of technology
� Examples:
� Honda has a core competence in engine design and manufacturing of cars, motorcycles and lawn
mowers
� Sony has a core competence in miniaturization (walkman, video camera, camcorder)
� Core competencies of a company:
� Characteristics of a core competence
� source of competitive advantage* in that it makes a significant contribution to perceived customer
benefits
� provides potential access to a wide variety of markets
� difficult for competitors to imitate
� Core competencies are the collective learning in the organization, especially how to
coordinate diverse production skills and integrate multiple streams of technology
� Examples:
� Honda has a core competence in engine design and manufacturing of cars, motorcycles and lawn
mowers
� Sony has a core competence in miniaturization (walkman, video camera, camcorder)
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
* Def. Competitive advantage: a company‘s ability to perform in one ore more ways that competitors cannot or will not match
- 56 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Market oriented strategic planning: business strategic planning (4)
Market driven organizations often have distinctive ca pabilities in market sensing, customerlinking and channel bonding
� Additional sources of competitive advantage:� Distinctive capabilities: describe excellence in broader business processes than
technical and production processes (core competencies)
� Additional sources of competitive advantage:� Distinctive capabilities: describe excellence in broader business processes than
technical and production processes (core competencies)
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
� Capabilities
� specialized knowledge of segmented needs
� customer service orientation
� design expertise
� trade relationships
� ability to utilize relevant technologies and transform them into products with clear benefits
� systems design capabilities
� Capabilities
� specialized knowledge of segmented needs
� customer service orientation
� design expertise
� trade relationships
� ability to utilize relevant technologies and transform them into products with clear benefits
� systems design capabilities
� Resources
� distribution coverage
� financial structure and access tocapital
� shared experience with related businesses
� low cost manufacturing and/or distribution systems
� production capacity
� control of raw material sources
� Resources
� distribution coverage
� financial structure and access tocapital
� shared experience with related businesses
� low cost manufacturing and/or distribution systems
� production capacity
� control of raw material sources
- 57 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Market oriented strategic planning: business strategic planning (5)
The more consequent a business is managed by object ives, the better the results will be; “you always get what you measure”
� Goal formulation:
� Def.: Defining financial objectives (profits, target profit margin, ROI, cash flow etc.) and
marketing objectives (sales, volume, market share, in addition: consumer awareness,
number of dealers, average cost per unit etc.) with respect to magnitude and time period
� Question: What does a business want to achieve?
� SBU sets these objectives and manages by objectives (MBO)
� Objectives must meet four criteria:
� objectives must be arranged hierachically
� objectives should be stated quantitatively
� objectives should be realistic
� objectives must be consistent
� Goal formulation:
� Def.: Defining financial objectives (profits, target profit margin, ROI, cash flow etc.) and
marketing objectives (sales, volume, market share, in addition: consumer awareness,
number of dealers, average cost per unit etc.) with respect to magnitude and time period
� Question: What does a business want to achieve?
� SBU sets these objectives and manages by objectives (MBO)
� Objectives must meet four criteria:
� objectives must be arranged hierachically
� objectives should be stated quantitatively
� objectives should be realistic
� objectives must be consistent
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
- 58 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Market oriented strategic planning: business strategic planning (6)
Succesfull companies pursue distinctive strategies c onsisting of many different but consistent and synergistic activities that would be hard for competitors to imitate as a whole
� Strategy formulation:
� Def.: Strategy is a game plane for achieving the set of goals
� Question: How does a business want to achieve its goals?
� Three generic types of marketing strategies (Michael Porter):
� overall cost leadership: lowest production and distribution costs --> price chaeper than
competitors --> large market share
� differentiation: achieving superior performance over the competition in an customer benefit area
(service leader, quality leader, style leader, technology leader etc.)
� focus: business focuses on one or more narrow market segments; in the segment the firm
pursues either cost leadership or differentiation
� Porter defines strategy „as the creation of a unique and valuable position involving a
different set of activities“
� Strategy formulation:
� Def.: Strategy is a game plane for achieving the set of goals
� Question: How does a business want to achieve its goals?
� Three generic types of marketing strategies (Michael Porter):
� overall cost leadership: lowest production and distribution costs --> price chaeper than
competitors --> large market share
� differentiation: achieving superior performance over the competition in an customer benefit area
(service leader, quality leader, style leader, technology leader etc.)
� focus: business focuses on one or more narrow market segments; in the segment the firm
pursues either cost leadership or differentiation
� Porter defines strategy „as the creation of a unique and valuable position involving a
different set of activities“
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
- 59 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Example Southwest Airline’ s marketing strategy: fi t and sustainable� Example Southwest Airline’ s marketing strategy: fi t and sustainable
flexible unioncontracts
flexible unioncontracts
15-minutegate turnaround
15-minutegate turnaround
standardized fleetof 737 aircraft
standardized fleetof 737 aircraft
no connection with other airlinesno connection
with other airlines
no mealsno meals
Market oriented strategic planning: business strategic planning (7)
Define the business mission
Define the business mission
SWOT analysisSWOT
analysisGoal
formulationGoal
formulationStrategy
formulationStrategy
formulation
frequentreliable
departure
frequentreliable
departure
limitedpassenger
service
limitedpassenger
service
Short haul,point-to-point
route betweenmiddle-of-nowhere
airports
Short haul,point-to-point
route betweenmiddle-of-nowhere
airports
very lowticket pricesvery low
ticket pricesHigh air-craft utili-
zation
High air-craft utili-
zation
lean,highly
productivecrew
lean,highly
productivecrew
no baggagetransfers
no baggagetransfers
limited use oftravel agents
limited use oftravel agents
no seat assignment
no seat assignment
automatic ticke-ting machines
automatic ticke-ting machineshigh level
of employeestock ownership
high levelof employee
stock ownership
- 60 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� What is the marketing program all about?
� What is the concept of the product life cycle all about? Which marketing
strategies are appropriate at each stage of the product life cycle?
� What are the characteristics of products?
� Which decisions to take concerning the marketing mix element “product”?
� Learning objectives
� What is the marketing program all about?
� What is the concept of the product life cycle all about? Which marketing
strategies are appropriate at each stage of the product life cycle?
� What are the characteristics of products?
� Which decisions to take concerning the marketing mix element “product”?
Marketing program summary / Marketing program - product: Learning objectives
- 61 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Strategic marketing
Taskenvironment
Broad marketingenvironment
The marketing management process
CustomerCustomer
EconomicEconomic
TechnologicalTechnological
Socio-culturalSocio-culturalLegal
Legal
CompanyCompanyCompetitionCompetition
SWOT (Strenghts/Weaknesses/Opportunities/Threats) analysisMarketingreview+forecast
Corporate/businessstrategy
corporate mission
strategic business units
product portfolio
Tactical marketingMarketingprogram
product price place promotion
Implementation & measuring resultsImplementation+controlling organization implementation controlling
growth plan
bus. mission f.SBU’s
business goalsbusinessstrategy
competitive advantage
- 62 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� The processes of tactical marketing� The processes of tactical marketing
Provide the value
Marketing program: Marketing mix
Tactical marketingMarketingprogramproduct price place promotion
...
...
The marketing concept:value creation and delivery sequence
Communicate the value
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
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Making
Distri-buting
Ser-vicing
Distri-buting
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Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
A company’s positioning strategy must change as the product (and the market) change over time
...
- 63 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Product management� Product management
Provide the value
Marketing program: Marketing mix - product management
Tactical marketingMarketingprogramproduct price place promotion
...
...
The marketing concept:value creation and delivery sequence
Communicate the value
Productdevelop-
ment
Productdevelop-
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Servicedevelop-
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Servicedevelop-
mentPricingPricing
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Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
A company’s positioning strategy must change as the product (and the market) change over time
...
- 64 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Product management: the concept of the product life cycle
� Characteristics of the product life cycle concept
� products have a limited time
� product sales pass through distinct stages, each posing different challenges, opportunities, and problems to
seller
� profits rise and fall at different stages of the product life cycle
� products require different marketing, financial, manufacturing, purchasing, and human resource strategies in
each stage of their life cycle
� Product life cycle curve is typically divided into four stages
� introduction
� growth
� maturity
� decline
� Product management: the concept of the product life cycle
� Characteristics of the product life cycle concept
� products have a limited time
� product sales pass through distinct stages, each posing different challenges, opportunities, and problems to
seller
� profits rise and fall at different stages of the product life cycle
� products require different marketing, financial, manufacturing, purchasing, and human resource strategies in
each stage of their life cycle
� Product life cycle curve is typically divided into four stages
� introduction
� growth
� maturity
� decline
Marketing program: Marketing mix - product management (2)
Not all products exhibit a bell shaped product life cycle with the four typical stages
Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
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PricingPricing
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- 65 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Characteristics of product life cycle stages� Characteristics of product life cycle stages
Marketing program: Marketing mix - product management (3)
Each product stage has different objectives and req uires a different marketing strategy
Provide the value
Productdevelop-ment
Productdevelop-ment
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introduction growth maturity decline
sales low rapidly rising peak declining
cost/customer high average low low
Profits negative rising high declining
Customers innovators early adopters middle majority laggards(“Bummler”)
competitors few growing stable, begin todecline
declining
marketingobjectives
create productawareness,
induce producttrial
maximizemarket share
maximize profitwhile defending
share
reduceexpenditureand milk the
brand
- 66 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Marketing strategies for product life cycle stages� Marketing strategies for product life cycle stages
Marketing program: Marketing mix - product management (4)
Each product stage has different objectives and req uires a different marketing strategy
Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
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introduction growth maturity decline
product basic product productextensions
diversifybrands/models
phase out weakitems
price cost + marketpenetration
price to matchcompetition
cut price
distribution selective intensive more intensive selective
advertising awarenessamong early
adopers/dealers
awareness/interest i. mass
market
stress branddifference/
benefits
reduce to neededlevel to retain
hard-core loyals
salespromotion
heavy toinduce trial
reduce to exploitheavy demand
increase toencourage brand
switching
reduce tominimal level
- 67 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Product management: the market pioneer “advantage” (pioneer: to be first in the
market)
� Product management: the market pioneer “advantage” (pioneer: to be first in the
market)
Marketing program: Marketing mix - product management (5)Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
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average market share
consumer goods industrial goods
pioneer ? ?
early follower ? ?
late entrant ? ?
Most studies indicate that the market pioneer gains the most advantage; but: there is not necessarily a correlation between market share and profitability
- 68 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� What is a product??� Def. a product is anything that can be offered to a market to satisfy a want or need (including
physical objects, services, persons, places, organizations, ideas)
� What is a product??� Def. a product is anything that can be offered to a market to satisfy a want or need (including
physical objects, services, persons, places, organizations, ideas)
Marketing program: Marketing mix - product (1)
Successful companies add benefits to their offering that not only satisfy customers but also surprise and delight them
Provide the value
Productdevelop-ment
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corebenefit
basic product
expected product
augmented product
potential product core benefit: the fundamental service or benefitthat the customer is really buying
basic product: a product’s parts, styling, features,brand name, packaging and otherattributes that support core benefits
expected product: a set of attribute and conditions buyersnormally expect
augmented product: additional services/benfits built aroundthe basic/expected product
potential product: all the possible augmentations and transformations the product might undergo in the future
- 69 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Product and services decisions� Product attribute decisions
� product quality: ability to perform its function� product features� product design, process of designing a product‘s style and function
� Product mix decisions: how many products/product lines to carry?� Branding decisions: to brand or not to brand a product?� Packaging decisions
� process of designing and producing the container or wrapper for a product� packaging concept: what should the package be or do for the product?
---> packaging has to support the product‘s positioning and marketing strategy
� Label decisions� label identifys the product/brand, grades the product, describes the product characteristics, promotes product
� Product-support service decisions� Product-support services augment basic products� function: handle complaints and adjustments, credit service, maintenance, repair, technical service, other
service, consumer information---> an active customer-service department ccordinates all the company‘s services, creates consumer satisfaction and loyalty and helps the company to differentiate itself from competitors
� Product and services decisions� Product attribute decisions
� product quality: ability to perform its function� product features� product design, process of designing a product‘s style and function
� Product mix decisions: how many products/product lines to carry?� Branding decisions: to brand or not to brand a product?� Packaging decisions
� process of designing and producing the container or wrapper for a product� packaging concept: what should the package be or do for the product?
---> packaging has to support the product‘s positioning and marketing strategy
� Label decisions� label identifys the product/brand, grades the product, describes the product characteristics, promotes product
� Product-support service decisions� Product-support services augment basic products� function: handle complaints and adjustments, credit service, maintenance, repair, technical service, other
service, consumer information---> an active customer-service department ccordinates all the company‘s services, creates consumer satisfaction and loyalty and helps the company to differentiate itself from competitors
Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
Servicedevelop-ment
PricingPricing
Sourcing
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Distri-buting
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Marketing program: Marketing mix - product (2)
- 70 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� What are the essential questions concerning the marketing mix element
“price”?
� What are the process steps towards setting an appropriate pricing policy?
� How to estimate price elasticity of demand?
� What are the components of a so called price playing field?
� What are the six possible methods for selecting a pricing method?
� What other factors for selecting the final price does a company have to
determine?
� Additional factors in practice to identify an optimal pricing strategy?
� Learning objectives
� What are the essential questions concerning the marketing mix element
“price”?
� What are the process steps towards setting an appropriate pricing policy?
� How to estimate price elasticity of demand?
� What are the components of a so called price playing field?
� What are the six possible methods for selecting a pricing method?
� What other factors for selecting the final price does a company have to
determine?
� Additional factors in practice to identify an optimal pricing strategy?
Marketing program: Marketing mix - Price / Learning objectives
- 71 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Pricing� Pricing
Provide the value
Marketing program: Marketing mix - pricing
Tactical marketingMarketingprogramproduct price place promotion
...
...
The marketing concept:value creation and delivery sequence
Communicate the value
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
Sourcing
Making
Distri-buting
Ser-vicing
Distri-buting
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Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
The price captures the customer value provided by p roduct, promotion and placement
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- 72 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Essential questions concerning pricing
� How much can I charge and still make the sale?
� How should a price be set on a product or service for the first time?
� How should a product mix be priced?
� How should the price be adapted to meet varying circumstances and opportunities?
� When should the company initiate a price change, and how should it respond to a competitor‘s price
change?
� function of customers and competition
� How much money can I make?
� function of internal costs
� Essential questions concerning pricing
� How much can I charge and still make the sale?
� How should a price be set on a product or service for the first time?
� How should a product mix be priced?
� How should the price be adapted to meet varying circumstances and opportunities?
� When should the company initiate a price change, and how should it respond to a competitor‘s price
change?
� function of customers and competition
� How much money can I make?
� function of internal costs
The adaquate price of a product should primarily be a function of customers and competition, secondly a function of internal costs
Provide the value
Productdevelop-ment
Productdevelop-ment
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Marketing program: Marketing mix - pricing (2)
- 73 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Provide the value
� Setting pricing policy: a six step procedure� Setting pricing policy: a six step procedure
Selecting the final price
Selecting the final price
Selecting a pricing method
Selecting a pricing method
Analyzingcompetitors’scosts, prices,
and offers
Analyzingcompetitors’scosts, prices,
and offers
Estimating costs
Estimating costs
Determining demand
Determining demand
Selecting the price objectiveSelecting the
price objective
� 5 possible objectives
� survival
� maximum current profit
� maximum market share
� maximum market skimming
� product-quality leadership
� 5 possible objectives
� survival
� maximum current profit
� maximum market share
� maximum market skimming
� product-quality leadership
� Different types of costs accounting
� Economies of scale
� Experience curve
� Target Costing
� Different types of costs accounting
� Economies of scale
� Experience curve
� Target Costing
� 3 possible cases
� firm’s offer is similar to comp.
� firm’s offer is inferior to comp.
� firm’s offer is superior to comp.
� 3 possible cases
� firm’s offer is similar to comp.
� firm’s offer is inferior to comp.
� firm’s offer is superior to comp.
� possible methods
� Cost-plus-Kalkulation
� RetrogradeKalkulation
� possible methods
� Cost-plus-Kalkulation
� RetrogradeKalkulation
� Consider additional factors
� psychological pricing
� influence of other marketing-mix elements
� firm’s pricing policies
� impact of price o. other parties
� Consider additional factors
� psychological pricing
� influence of other marketing-mix elements
� firm’s pricing policies
� impact of price o. other parties
� Measure demand curve for a product
� Estimate price elasticity of demand
� Measure demand curve for a product
� Estimate price elasticity of demand
Productdevelop-ment
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Marketing program: Marketing mix - pricing (3)
- 74 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Setting pricing policy: a six step procedure� Setting pricing policy: a six step procedure
Determining demand
Determining demand
� Demand curve: shows the market’s probable purchase quantity at alternative prices� Demand curve: shows the market’s probable purchase quantity at alternative prices
price
quantity demanded per period
price
quantity demanded per period
inelastic demand: price increase leads to relatively small decline in demand
elastic demand:price increase leads to a substantial drop in demand
Provide the value
Productdevelop-ment
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Marketing program: Marketing mix - pricing (4)
- 75 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Setting pricing policy: a six step procedure� Setting pricing policy: a six step procedure
� Price playing field� Price playing fieldEconomic value = maximum price
Selecting a pricing method
Selecting a pricing method
Variable costs = minimum priceprofit goals
competition
� customer
� price sensitivity
� fairness
� company
� goals
� image
� situation
�market share
�costs
� competition� situation
�market share�costs
� co-operation� differentiation
� collaborators� trade� suppliers
Provide the value
Productdevelop-ment
Productdevelop-ment
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Marketing program: Marketing mix - pricing (5)
- 76 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
Cost-Plus-Kalkulation
Was wird uns ein Produkt kosten?(Und wie können wir das auf den Kunden
überwälzen?)
Retrograde Kalkulation
./. verbindliche Zielgewinnrate
VOM MARKT ERLAUBTE KOSTEN:
Ziel-Herstellkosten
Ziel-Entwicklungskosten
Ziel-Vertriebs- undVerwaltungskosten
Was darf uns ein Produkt kosten?(Und wie können wir das erreichen)
MATERIALKOSTENMaterialgemeinkosten
FertigungslöhneFertigungsgemeinkosten
HERSTELLKOSTEN
EntwicklungsgemeinkostenVerwaltungsgemeinkosten
Vertriebsgemeinkosten
SELBSTKOSTEN
Gewinnzuschlag
+++
+++
+
VerkaufspreisVerkaufspreis
ZielpreisZielpreis
Provide the value
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Marketing program: Marketing mix - pricing (6)
- 77 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Setting pricing policy: identify an optimal pricing strategy in the practice� discounts and allowances
� cash discounts� quantity discounts� functional discounts� seasonal discounts� allowances
- trade-in allowances- promotional allowances
� two-part pricing� amusement parks: admission + per ride� car rentals: fixed fee + mileage
� product -bundling pricing� discriminatory pricing
� customer-segment pricing� product-form-pricing� image pricing� location pricing� time pricing
� Setting pricing policy: identify an optimal pricing strategy in the practice� discounts and allowances
� cash discounts� quantity discounts� functional discounts� seasonal discounts� allowances
- trade-in allowances- promotional allowances
� two-part pricing� amusement parks: admission + per ride� car rentals: fixed fee + mileage
� product -bundling pricing� discriminatory pricing
� customer-segment pricing� product-form-pricing� image pricing� location pricing� time pricing
Provide the value
Productdevelop-ment
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Marketing program: Marketing mix - pricing (7)
- 78 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� Which role does distribution play for manufacturers and buyers
� What work is performed by marketing channels?
� Learning objectives
� Which role does distribution play for manufacturers and buyers
� What work is performed by marketing channels?
Marketing program: Marketing mix - place / Learning objectives
- 79 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Distributing products� Distributing products
Provide the value
Marketing program: Marketing mix - place (1)
Tactical marketingMarketingprogramproduct price place promotion
...
...
The marketing concept:value creation and delivery sequence
Communicate the value
Productdevelop-
ment
Productdevelop-
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Salesforce
Salesforce
Salespro-
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Adver-tising
Adver-tising
The decision for a distribution system affects all other marketing mix elements and its crucial for a succesfull value creation and delivering proces s
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- 80 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Some basics about distributing� A distribution system ... is a key (external) resource. Normally it takes years to build, and it is not easily
changed. It ranks in importance with key internal resources such as manufacturing, research, engineering,
and field sales personnel and facilities. It represents a significant corporate commitment to large number of
independent companies (as a rule) whose business is distribution - and to the particular markets they serve.
� Def. market channels: sets of interdependent organizations involved in the process of
making a product or service available for use or consumption
� Why is a channel or intermediary needed?Intermediaries smooth the flow of goods and services ... This procedure is necessary in order to bridge the
discrepancy between the assortment of goods and services generated by the producer and the assortment
demanded by the customer. The discrepancy results from the fact that manufacturers typically produce a
large quantity of a limited variety of goods, whereas consumers usually desire only a limited quantity of a
wide variety of goods
� Some basics about distributing� A distribution system ... is a key (external) resource. Normally it takes years to build, and it is not easily
changed. It ranks in importance with key internal resources such as manufacturing, research, engineering,
and field sales personnel and facilities. It represents a significant corporate commitment to large number of
independent companies (as a rule) whose business is distribution - and to the particular markets they serve.
� Def. market channels: sets of interdependent organizations involved in the process of
making a product or service available for use or consumption
� Why is a channel or intermediary needed?Intermediaries smooth the flow of goods and services ... This procedure is necessary in order to bridge the
discrepancy between the assortment of goods and services generated by the producer and the assortment
demanded by the customer. The discrepancy results from the fact that manufacturers typically produce a
large quantity of a limited variety of goods, whereas consumers usually desire only a limited quantity of a
wide variety of goods
Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
Servicedevelop-ment
PricingPricing
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Making
Sourcing
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Marketing program: Marketing mix - place (2)
Distri-buting
Servicing
Distri-buting
ServicingServicing
A marketing channel performs the work of moving goo ds from producers to consumers and hereby overcomes the time, place and possession gap s
- 81 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Distributor’s economic role: sales and logistics� Distributor’s economic role: sales and logistics
Provide the value
Productdevelop-ment
Productdevelop-ment
Servicedevelop-ment
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PricingPricing
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Marketing program: Marketing mix - place (3)
Distri-buting
Servicing
Distri-buting
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manufacturermanufacturer distributordistributor customercustomertransferred business
coststransferred business
costs
� manufacturer todistributor
� inventory
� transportation
� selling
� order handling
� credit
� communication
� information /market feedback
� customer todistributor
� inventory
� shrinkage
� freight
� technical support
� service
The distributor takes over costs from manufacturer a ls well as from customer in terms of sales and logistics
- 82 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Learning objectives
� What is communication / promotion all about?
� What major models of communication do exist?
� What is integrated marketing communications all about?
� Learning objectives
� What is communication / promotion all about?
� What major models of communication do exist?
� What is integrated marketing communications all about?
Marketing program: Marketing Mix - communication / Learning objectives
- 83 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Communication of value through integrated marketing communication� Communication of value through integrated marketing communication
Provide the value
Marketing program: Marketing mix - promotion
Tactical marketingMarketingprogramproduct price place promotion
...
...
The marketing concept:value creation and delivery sequence
Communicate the value
Productdevelop-
ment
Productdevelop-
ment
Servicedevelop-
ment
Servicedevelop-
mentPricingPricing
Sourcing
Making
Sourcing
Making
Salesforce
Salesforce
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
Companies must communicate with present and potenti al stakeholders and the public in order to acquaint themselves and their products
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- 84 -Prof. Dr. Andrea E. RaabFachhochschule Ingolstadt
� Marketing communications mix: five major models of communication
� Advertising: paid form of nonpersonal presentation and promotion of ideas, goods, or services
� Sales promotion: variety of short-term incentives to encourage trial or purchase of a product or service
� Public relations and publicity: variety of programs to promote or protect a company‘ image or its individual products
� Personal selling: face-to-face interaction with prospective customer(s) for the purpose of making presentations, answering questions, and procuring orders
� Direct marketing: use of mail, telephone, fax, e-mail, or Internet to communicate directly with specific customers and prospects
� Marketing communications mix: five major models of communication
� Advertising: paid form of nonpersonal presentation and promotion of ideas, goods, or services
� Sales promotion: variety of short-term incentives to encourage trial or purchase of a product or service
� Public relations and publicity: variety of programs to promote or protect a company‘ image or its individual products
� Personal selling: face-to-face interaction with prospective customer(s) for the purpose of making presentations, answering questions, and procuring orders
� Direct marketing: use of mail, telephone, fax, e-mail, or Internet to communicate directly with specific customers and prospects
Marketing program: Marketing mix - promotion (2)
Integrated marketing communications combine a varity of communication models or disciplines to provide clarity, consistency, and ma ximum communications’ impact through the seamless integration of discrete messages
Communicate the value
Salespro-
motion
Salespro-
motion
Adver-tising
Adver-tising
Salesforce
Salesforce
Advertising
Public relations/publicity
Sales promotion
Personalselling
Directmarketing
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