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Marketing Management Full Course

Marketing Management Full Course

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Published by Mohamed Imam
Marketing Management Full Course
Marketing Management Full Course

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Published by: Mohamed Imam on Jan 16, 2009
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Sections

  • Definitions of marketing
  • Implications of marketing
  • The marketing concept
  • Successful marketing requires:
  • Marketing management process
  • Criticisms of marketing planning
  • Objectives of the marketing plan
  • The contents and structure of the marketing plan
  • Cautionary notes for effective planning
  • Behavioural planning problems
  • Standard Planning Framework
  • Marketing Information Systems
  • Marketing Research
  • The Marketing Research Process
  • Terminology of Marketing Research
  • Marketing Research Techniques
  • What is MKIS?
  • The Marketing Environment and Competitor Analysis
  • SWOT analysis
  • PEST analysis
  • Political/legal
  • Economic Factors
  • Socio-cultural factors
  • Technological
  • Buyer Behaviour
  • Demographic Factors
  • The Consumer Buying Process
  • Types of buyer behaviour
  • The Buying Decision Process
  • Organisational Buyer Behaviour
  • Characteristics of organisational buyer behaviour
  • Strategic Development
  • Five stages of the PLC
  • PLC exercise
  • New- Product Development Process
  • Products Decisions
  • Product and Service Classification System
  • Pricing Decisions
  • Pricing strategies
  • Channel and Distribution Tactics
  • Channel intermediaries - Wholesalers
  • Channel intermediaries - Agents
  • Channel intermediaries - Retailer
  • Channel intermediaries - Internet
  • Six basic channel decisions
  • Selection consideration
  • Potential Influence Strategies- Frazier and Sheth (1989)
  • Promotions Decisions
  • Promotions Mix
  • The Promotional Message
  • Execution styles
  • Media choice?
  • Promotional objectives
  • Implementation
  • Implementation problems
  • Implementing a programme - an action checklist
  • Total Quality and Marketing
  • Activities to establish and build customer relationships
  • Relationship marketing
  • Mckinsey 7-S framework

Definitions of marketing

‘Marketing is the management process that
identifies, anticipates and satisfies customer
requirements profitably’

The Chartered Institute of Marketing
‘The right product, in the right
place, at the right time, and at the
right price’
Adcock et al
‘Marketing is the human activity
directed at satisfying human needs
and wants through an exchange
process’

Kotler 1980


‘Marketing is a social and
managerial process by which
individuals and groups obtain
what they want and need through
creating, offering and exchanging
products of value with others’
Kotler 1991

Implications of marketing
• Who are our existing / potential customers?
• What are their current / future needs?
• How can we satisfy these needs?
• Can we offer a product/ service that the customer
would value?
• Can we communicate with our customers?
• Can we deliver a competitive product of service?
• Why should customers buy from us?
The marketing concept
• choosing and targeting appropriate
customers
• positioning your offering
• interacting with those customers
• controlling the marketing effort
• continuity of performance

Successful marketing requires:
• Profitable
• Offensive (rather than defensive)
• Integrated
• Strategic (is future orientated)
• Effective (gets results) Hugh Davidson 1972
Marketing management process
• Analysis/Audit - where are we now?
• Objectives - where do we want to be?
• Strategies - which way is best?
• Tactics - how do we get there?
• (Implementation - Getting there!)
• Control - Ensuring arrival
Why is marketing planning
necessary?
• Systematic futuristic thinking by
management
• better co-ordination of a company’s efforts
• development of performance standards for
control
• sharpening of objectives and policies
• better prepare for sudden developments
Why is marketing planning
necessary?
• Systematic futuristic thinking by management
• better co-ordination of company efforts
• development of better performance standards for
control
• sharpening of objectives and policies
• better prepare for sudden new developments
• managers have a vivid sense of participation
Criticisms of marketing planning
• Formal plans can be quickly overtaken by
events
• Elements of the plan my be kept secret for
no reason
• gulf between senior managers and
implementing managers
• the plan needs a sub-scheme of actions
Objectives of the marketing plan
• Acts as a roadmap
• assist in management control and monitoring the
implementation of strategy
• informs new participants in the plan of their role
and function
• to obtain resources for implementation
• to stimulate thinking and make better use of
resources

• Assignment of responsibilities, tasks and timing
• Awareness of problems, opportunities and threats
• Essential marketing information may have been
missing
• if implementation is not carefully controlled by
managers, the plan is worthless!
The contents and structure of the
marketing plan
• The executive summary
• table of contents
• situational analysis and target market
• marketing objectives
• marketing strategies
• marketing tactics
• schedules and budgets
• financial data and control
Cautionary notes for effective
planning
• Don’t blindly rely on mathematical and
statistical calculations. Use your judgement
as well
• Don’t ever assume that past trends can be
exploited into the future forever
• if drawing conclusions from statistical data,
make sure the sample size is sufficiently
large
Behavioural planning problems
• Planning recalcitrance: resistance and non-co-
operation by managers in planning
• fear of uncertainty in planning: a lack of comfort
in planning activities
• political interests in planning activities:resource
bargaining, padding of requirements, and
avoidance of consensus
• planning avoidance: compliance rather than
commitment to planning
Standard Planning Framework
• Analysis - where are we now?
• Objectives - where do we want to be?
• Strategies - which way is best?
• Tactics - how do we ensure arrival?
• Control - are we on the right track?
Marketing Information Systems
• Marketing Research
• What is Marketing Research?
• Process
• Terminology
• Techniques
• MKIS - Marketing Information Systems
• What is MKIS
• Components of an electronic MKIS
Marketing Research
‘the systematic gathering, recording and
analysing of data about problems relating to
the marketing of goods and services’

American Marketing Association
The Marketing Research Process
Set objectives
Define research Problem
Assess the value of the research
Construct a research proposal
Specify data collection method
Specify techniques of measurement
Select the sample
Data collection
Analysis of results
Present in a final report
Terminology of Marketing
Research
• Primary data - collected firsthand
• Secondary data - already exists, desk
research
• Quantitative research - statistical basis
• Qualitative research - subjective and
personal
• sampling - studying part of a ‘population’ to
learn about the whole
Marketing Research Techniques
• Interviews
• face-to-face
• telephone
• postal questionnaire
• Attitude measurement
• cognitive component (know/believe about an
act/object)
• affective component (feel about an act/object)
• conative component (behave towards an object or
act)
• Likert scale
• strongly agree
• agree
• neither agree nor disagree
• disagree
• strongly disagree
• Semantic differential scales - differences
between words e.g. practical v impractical
• Projective techniques
• sentence completion
• psychodrama (yourself as a product)
• friendly martian (what someone else might do)
• Group discussion and focus group
• Postal research questionnaires
• Diary panels - sources of continuous data
• In-home scanning - hand-held light pen to
scan barcodes
• Telephone research
• Observation
• home audit
• direct observation
• In-store testing
What is MKIS?
‘MKIS (MIS) is a set of procedures and
methods for the regular, planned collection,
analysis and presentation of information for
use in marketing decisions’

American Marketing Association
The components of a
computerised MKIS
Model
Bank
Data Bank
Statistical
Bank
MKIS
Display
unit
Marketing
Manager
The components of a
computerised MKIS
• Data bank - raw data e.g historical sales
data, secondary data
• Statistical bank - programmes to carry-out
sales forecasts, spending projections
• A model bank - stores marketing models e.g
Ansoff’s matrix, Boston Matrix
• Display unit - VDU and keyboard
The Marketing Environment and
Competitor Analysis
•SWOT analysis
•PEST analysis
•Five forces analysis
SWOT analysis
• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
PEST analysis
• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
Political/legal
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
• Legislation
• Others?

Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others?
Socio-cultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
• Others?
Technological
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
• Others?

Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
Threat of
substitutes
Potential
entrants

Threat of
entrants

Suppliers

Bargaining
power

Substitutes

Buyers

Bargaining
power

COMPETITIVE
RIVALRY

Five forces analysis
Five Forces Analysis: Key
Questions and Implications
• What are the key forces at work in the competitive
environment?
• Are there underlying forces driving competitive
forces?
• Will competitive forces change?
• What are the strengths and weaknesses of
competitors in relation to the competitive forces?
• Can competitive strategy influence competitive forces
(eg by building barriers to entry or reducing
competitive rivalry)?
Buyer Behaviour
• Dominant Family Purchase - Cozenza 1985
• Demographic Factors
• The Consumer Buying Process
• Maslow’s hierarchy of needs
• UK socioeconomic classification scheme
• Types of buyer behaviour
• The Buying Decision Process
• Organisational Buyer Behaviour
Dominant Family Purchase - Cozenza 1985
PRODUCT DOMINANT
DECISION
MAKER
TYPICAL
DECISION
Women’s casual
clothing
Wife Price, style
Vacations Syncratic (both) Whether to go, where
Men’s casual clothing Husband Type, price, style
Life insurance Husband Company, coverage
Homeowner’s
insurance
Husband Company, coverage
Household appliances Wife Style, brand, price
Demographic Factors
• Age
• Stage in family life cycle
• Occupation
• Economic circumstances
• Lifestyle
• social influence variables
• family background
• reference groups
• roles and status
The Consumer Buying Process
Consumer
Purchase Decisions
Product Choice
Location Choice
Brand Choice
Other Choices
Psychological Inputs
Culture
Attitude
Learning
Perception
Based on Cohen (1991)
Marketing Inputs
Product
Price
Promotion
Place
Maslow’s Hierarchy of Needs
Physiological
Safety
Social
Esteem
Self
Actualisation
UK socioeconomic classification scheme
Class name Social status Occupation of head of
household
% of
population
A Upper middle Higher managerial,
administrative or professional
3
B Middle Intermediate managerial,
administrative or professional
14
C1 Lower middle Supervisors or clerical, junior
managerial, administrative or
professional
27
C2 Skilled working Skilled manual workers 25
D Working Semiskilled and unskilled
workers
19
E Those at lowest levels of
subsistence
Pensioners, widows, casual or
lower-grade workers
12
Types of buyer behaviour
• Complex buyer behaviour e.g. Intel Pentium
Processor
• Dissonance-reducing behaviour (brand
reduces after-sales discomfort)
• Habitual buying behaviour e.g. salt - little
difference
• variety seeking behaviour - significant
brand differences e.g soap powder
The Buying Decision Process
• recognition of the need e.g a new PC
• choice of involvement level (time and effort justified) e.g.
two week ends
• identification of alternatives e.g. Dell, PC World
• evaluation of alternatives I.e. price, customer service,
software support, printer/scanner package
• decision - choice made e.g Epsom
• action e.g buy Epsom model from Comet
• post-purchase behaviour I.e. use, breakdowns, etc
Organisational Buyer Behaviour
‘The decision-making process by which
formal organisations establish the need for
purchased products and services, and
identify, evaluate, and choose among
alternative brands and suppliers’

Kotler and Armstrong 1989
Characteristics of organisational
buyer behaviour
• Organisation purpose - Goodyear Tyres
• Derived demand - follows cars and lorries
• Concentrated purchasing - stockholdings of rubber
• Direct dealings - large purchaser of basic rubber -
no intermediaries
• Specialist activities - learns about the product
• Multiple purchase influences - DMU - Decision
making unit
Strategic Development
• Product Life Cycle (Revisited in ‘Product’)
• Bowman’s Competitive Strategy Options
• New Product Development (NPD)
Five stages of the PLC
• Product development - sales are zero, investment
costs are high
• Introduction - profits do not exist, heavy expense
of product introduction
• Growth - rapid market acceptance and increasing
profits
• Maturity - slowdown in sales growth. Profits
level-off. Increase outlay to compete
• Decline - sales fall-off and profits drop
PLC exercise
• The Ford Escort
• The Mini Cooper
• The Internet Phone
• Cadbury’s Fuse
• The Boeing 747
• The Millennium Dome
• KIT KAT
Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner.
Competitive and Corporate Strategy, Irwin, 1996.
Bowman’s Strategy Clock
•1 Low price/low added value Likely to be segment specific

•2 Low price Risk of price war and low
• margins/need to be cost leader

•3 Hybrid Low cost base and reinvestment in
• low price and differentiation

•4 Differentiation
• (a) Without price premium Perceived added value by user,
• yielding market share benefits
• (b) With price premium Perceived added value sufficient to
• bear price premium


The Strategy Clock: Bowman’s Competitive Strategy Options
• 5 Focused differentiation Perceived added value to a
particular segment, warranting
price premium

• 6 Increased price/standard
Higher margins if competitors
do not value follow/risk of
losing market share

• 7 Increased price/low value
Only feasible in monopoly
situation

• 8 Low value/standard price
Loss of market share
New- Product Development
Process
• New product strategy
• Idea generation
• Idea screening
• Concept development and testing
• Marketing strategy
• Business analysis
• Product development
• Test Marketing
• Commercialisation
Products Decisions
• Product and Service Classification
System
• The Product Life Cycle
• Introduction to product matrices
• Boston Matrix (Growth/Share)
• Ansoff’s Matrix (Product Market)
Product and Service
Classification System
• Convenience goods - little effort, relatively
inexpensive
• Shopping goods - e.g ‘white goods’, DIY
equipment, more expensive, infrequent
• Speciality goods - extensive search e.g
Jewellery, gourmet food
• Unsought goods - e.g. double glazing,
• Industrial goods
• Installations - ‘speciality’ goods of
industrial markets - plant and machinery
• Accessories - maintenance and office
equipment
• Raw materials
• components
• Business to business e.g. consultants,
accountants
The Product Life Cycle
Market Share
Market
Growth
High
Low
High Low
1. Stars
3. Question
Mark (Problem
Child)
2. Cash Cows 4. Dogs
The Boston Matrix (Growth/Share Matrix)
Market Share
Market
Growth
High
Low
High Low
FUSE
Maverick
Miniature Heroes
KIT KAT
MARS BAR
TOPIC
BOUNTY
The Boston Matrix - Chocolate Bars
Diversification
Market Penetration Market Development
Product Development
Existing Markets New Markets
N
e
w

P
r
o
d
u
c
t
s

Ansoff’s Matrix (Product/Market Matrix)
Diversification -
related or unrelated
E.g. Realignments
of the marketing
mix
E.g. Geographical
expansion
Same outlets and
sales strategy
- new product
Existing Markets New Markets
N
e
w

P
r
o
d
u
c
t
s

Ansoff’s Matrix (Product/Market Matrix)
Products Decisions
• Product and Service Classification
System?
• The Product Life Cycle stages?
• Growth/Share?
• Product Market?
Pricing Decisions
• Pricing strategies
• Pricing exercise
• Ten ways to ‘increase’ prices
without increasing price -
Winkler
Low High
Low
High
Economy
Strategy
e.g. Tesco
spaghetti
Penetration
e.g. Telewest
cable phones
Skimming
e.g. New film or
album
Premium
e.g. BA first
class

Price
Quality
Pricing strategies
• Premium pricing
• Uses a high price, but gives a good product/service
exchange e.g. Concorde, The Ritz Hotel
• Penetration pricing
• offers low price to gain market share - then
increases price
• e.g. France Telecom - to attract new corporate
clients (or Telewest cable)
• Economy pricing
• placed at ‘no frills’, low price
• e.g. Soups, spaghetti, beans - ‘economy’ brands
• Price skimming
• where prices are high - usually during introduction
• e.g new albums or films on release
• ultimately prices will reduce to the ‘parity’
• Psychological pricing
• to get a customer to respond on an emotional, rather than
rational basis
• .e.g 99p not £1.01 ‘price point perspective
• Product line pricing
• rationale of a product range
• e.g. MARS 32p, Four-pack 99p, Bite-size £1.29
• Pricing variations
• ‘off-peak’ pricing, early booking discounts,etc
• e.g Grundig offers a ‘cash back’ incentive for expensive goods
• Optional product-pricing
• e.g. optional extras - BMW famously under-
equipped
• Captive product pricing
• products that complement others
• e.g Gillette razors (low price) and blades (high
price)
• Product-bundle pricing
• sellers combine several products at the same price
• e.g software, books, CDs.
• Promotional pricing
• BOGOF e.g. toothpaste, soups, etc
• Geographical pricing
• different prices for customers in different parts of
the world
• e.g.Include shipping costs, or place onPLC
• Value pricing
• usually during difficult economic conditions
• e.g. Value menus at McDonalds

Ten ways to ‘increase’ prices
without increasing price - Winkler
• Revise the discount structure
• Change the minimum order size
• Charge for delivery and special services
• Invoice for repairs on serviced equipment
• Charge for engineering, installation
• Charge for overtime on rushed orders
• Collect interest on overdue accounts
• Produce less of the lower margin models in
the line
• Write penalty clauses into contracts
• Change the physical characteristics of the
product
Channel and Distribution Tactics
• Bucklin’s definition of distribution
• Today’s system of exchange
• Channel intermediaries
• Six basic channel decisions
• Selection consideration
• Potential Influence Strategies - Frazier and Sheth
(1989)
• Frequencies of use of influence strategies - Frazier
and Summers (1984)
A channel of distribution
comprises a set of institutions
which perform all of the
activities utilised to move a
product and its title from
production to consumption

Bucklin - Theory of Distribution Channel Structure (1966)
Negotiation
Promotion
Contact
Transporting and storing
Financing
Packaging
Money
Goods
Today’s system of exchange

P
r
o
d
u
c
e
r
s

U
s
e
r
s

Channel intermediaries -
Wholesalers
• Break down ‘bulk’
• buys from producers and sell small quantities to
retailers
• Provides storage facilities
• reduces contact cost between producer and
consumer
• Wholesaler takes some of the marketing
responsibility e.g sales force, promotions

Channel intermediaries - Agents
• Mainly used in international markets
• Commission agent - does not take title of
the goods. Secures orders.
• Stockist agent - hold ‘consignment’ stock
• Control is difficult due to cultural
differences
• Training, motivation, etc are expensive
Channel intermediaries - Retailer
• Much stronger personal relationship with
the consumer
• Hold a variety of products
• Offer consumers credit
• Promote and merchandise products
• Price the final product
• Build retailer ‘brand’ in the high street

Channel intermediaries - Internet
• Sell to a geographically disperse market
• Able to target and focus on specific segments
• Relatively low set-up costs
• Use of e-commerce technology (for payment,
shopping software, etc)
• Paradigm shift in commerce and consumption
Six basic channel decisions
• Direct or indirect channels
• Single or multiple channels
• Length of channel
• Types of intermediaries
• Number of intermediaries at each level
• Which intermediaries? Avoid intrachannel
conflict
Selection consideration
• Market segment - must know the specific segment
and target customer
• Changes during plc - different channels are
exploited at various stages of plc
• Producer-distributor fit - their policies, strategies
and image
• Qualification assessment - experience and track
record must be established
• Distributor training and support
Potential Influence Strategies-
Frazier and Sheth (1989)
• Indirect influence strategies - information is
merely exchanged with channel member
personnel
• Direct unmediated strategies - consequences
of a poor response from the market are
stressed
• Reward and punishment strategies - given
to channel members and their firms
• Direct unweighted strategy or request -
producer’s wishes are communicated . No
consequences are applied or mentioned
• Direct mediated strategies - specific action
is requested and consequences of rejection
are stressed
– e.g.1 control of retail pricing
– e.g.2 minimum order size
– e.g.3 salesperson training
– e.g.4 physical layout of store
– e.g. 5 territorial and customer restrictions
Mean
use
Most
frequently
used
Tied for
most
frequently
used
Never
used
Information
exchange
49% 62% 6% 8%
Requests 27 13 7 11
Recommend
ations
19 8 7 23
Promises 15 4 9 37
Threats 10 1 5 53
Legalistic
pleas
6 0 3 59
Frazier and Summers (1984)
Frequencies of use of Influence Strategies
Promotions Decisions
• Elements in the communication process
• Promotions mix
• The promotions message
• Executions style
• Media choice?
• Promotional objectives

Media
Message
Sender Encoding
Response Feedback
Noise
Decoding Receiver
Elements in the Communication Process
• Sender - party sending the message
• Encoding - message in symbolic form
• Message - word, pictures and symbols
that the sender transmits
• Media - the communication channel
e.g radio
• Decoding - receiver assigns meaning to
symbols encoded by the sender

• Response - reaction of the receiver after
being exposed to the to the message
• Feedback - the part of the receiver’s
response after being communicated to the
sender
• Noise - unplanned static or distortion during
the communication process e.g. competitor
action (Creature Comforts?)
Promotions Mix
• Personal selling
• Telemarketing
• Direct mail
• Trade fairs and exhibitions
• Commercial television
• Newspapers and magazines
• Radio
• Cinema
• Point of sale displays
• Packaging
The Promotional Message
Grab ATTENTION
Excite INTEREST
Create DESIRE
Prompt ACTION
AIDA
Execution styles
• Slice of life e.g. OXO
• Lifestyle e.g. After Eight mints
• Fantasy e.g .Turkish Delight
• Mood or image e.g. Timotei shampoo
• Musical e.g .Gap
• Personality symbol e.g. Richard Branson
• Technical expertise e.g.Vorsprung durch
Technik - Audi
• Scientific evidence e.g. Whiskers
• Testimonial evidence e.g. Ian Botham

Media choice?
• Marketing objectives
• Definition of problem e.g falling awareness
• Evaluation of different tools
• choice of optimum mix of promotional
methods
• Integration into overall marketing
communication programme
Exercise - What beliefs and expectations do you have
about the following brands? How far are these due to
promotion as opposed to personal experience?
• Fairy liquid
• Persil washing powder
• Midland Bank
• Virgin Radio
• Nissan
• Tesco
Promotional objectives
• To support sales increases
• To encourage trial
• To create awareness
• To inform about a feature or benefit
• To remind
• To reassure
• To create an image
• To modify attitudes
Implementation
• The implementation process
• An action checklist
• Total quality and marketing
• Managing the organisation/stakeholder interface
• Activities to establish and build customer
relationships
• Relationship marketing
• McKinsey 7-S framework
Marketing
Strategy
Tactical
Decisions
Implementing the
Marketing Mix
Monitoring
Results
Internal
Factors
External Factors
Adaptation of
strategy/tactics
The Marketing Implementation Process
Berman and Evans 1985
Implementation problems
• Internal problems e.g change of
management
• External problems e.g. changing
competition
• Poor planning e.g. Hoover’s flight tickets
• Poor intelligence e.g. 1985 Coca-Cola
• Poor execution
Implementing a programme -
an action checklist
• Agree the implementation strategy
• Agree a timeframe
• Draw up detailed implementation plans
• Set up a team of stakeholders
• Establish good project management
• Personalise the case for change
• Ensure participation
• Create a sense of purpose and urgency to
tackle real problems which have prevented
progress in the past
• motivate
• be prepared for conflict
• Be willing to negotiate
• Anticipate stress
• Build skills
• Build in the capacity for learning
• Monitor and evaluate
Total Quality and Marketing
• Quality is what customers say it is.
• Juran and TQM
• zero defects
• right first time
• continuous improvement
• Statistical process control (SPC)
• New relationships with suppliers (JIT)
• Quality Assurance e.g BS EN ISO 9000
Managing the
organisation/stakeholder interface
• External and internal relationships
• Accountability of managers
• Marketer projects an image and style
• Ethical responsibilities towards consumers
• Social responsibility
• dangerous products e.g. cigarettes
• dishonest marketing and promotion
• the abuse of power
• the availability of information

Activities to establish and build
customer relationships
• Need for long term relationships
• UACCA - ‘expensive’ in promotional terms
• Build sales to existing customers
• Improving service quality
• Auditing the fulfilment of customer needs
• Cause a cultural change to a marketing
orientation - Marketing Myopia Levitt
(1960)
Relationship marketing
• The consistent application of up-to-date knowledge of
individual customers to product and service design . . . . In
order to develop a continuous and long-term relationship’
Cram
• Not mass marketing. Aimed at individual.
• Customer retention not attraction
• Long term, ongoing relationships
• Regular customer contact
• Spirit of trust

Mckinsey 7-S framework
• Strategy
• Structure
• Systems
• Share values
• Style
• Skills
• Staff

‘The right product, in the right place, at the right time, and at the right price’ Adcock et al

‘Marketing is the human activity directed at satisfying human needs and wants through an exchange process’ Kotler 1980

‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler 1991

Implications of marketing
• Who are our existing / potential customers? • What are their current / future needs? • How can we satisfy these needs?
• Can we offer a product/ service that the customer would value? • Can we communicate with our customers? • Can we deliver a competitive product of service?

• Why should customers buy from us?

The marketing concept • choosing and targeting appropriate customers • positioning your offering • interacting with those customers • controlling the marketing effort • continuity of performance .

Successful marketing requires: • Profitable • Offensive (rather than defensive) • Integrated • Strategic (is future orientated) • Effective (gets results) Hugh Davidson 1972 .

Ensuring arrival .Getting there!) Control .how do we get there? (Implementation .which way is best? Tactics .Marketing management process • • • • • • Analysis/Audit .where do we want to be? Strategies .where are we now? Objectives .

Why is marketing planning necessary? • Systematic futuristic thinking by management • better co-ordination of a company’s efforts • development of performance standards for control • sharpening of objectives and policies • better prepare for sudden developments .

Why is marketing planning necessary? • Systematic futuristic thinking by management • better co-ordination of company efforts • development of better performance standards for control • sharpening of objectives and policies • better prepare for sudden new developments • managers have a vivid sense of participation .

Criticisms of marketing planning • Formal plans can be quickly overtaken by events • Elements of the plan my be kept secret for no reason • gulf between senior managers and implementing managers • the plan needs a sub-scheme of actions .

Objectives of the marketing plan • Acts as a roadmap • assist in management control and monitoring the implementation of strategy • informs new participants in the plan of their role and function • to obtain resources for implementation • to stimulate thinking and make better use of resources .

• Assignment of responsibilities. the plan is worthless! . tasks and timing • Awareness of problems. opportunities and threats • Essential marketing information may have been missing • if implementation is not carefully controlled by managers.

The contents and structure of the marketing plan • • • • • • • • The executive summary table of contents situational analysis and target market marketing objectives marketing strategies marketing tactics schedules and budgets financial data and control .

Cautionary notes for effective planning • Don’t blindly rely on mathematical and statistical calculations. Use your judgement as well • Don’t ever assume that past trends can be exploited into the future forever • if drawing conclusions from statistical data. make sure the sample size is sufficiently large .

padding of requirements.Behavioural planning problems • Planning recalcitrance: resistance and non-cooperation by managers in planning • fear of uncertainty in planning: a lack of comfort in planning activities • political interests in planning activities:resource bargaining. and avoidance of consensus • planning avoidance: compliance rather than commitment to planning .

which way is best? Tactics .how do we ensure arrival? Control .where do we want to be? Strategies .Standard Planning Framework • • • • • Analysis .where are we now? Objectives .are we on the right track? .

Marketing Information Systems • Marketing Research • • • • What is Marketing Research? Process Terminology Techniques • MKIS .Marketing Information Systems • What is MKIS • Components of an electronic MKIS .

recording and analysing of data about problems relating to the marketing of goods and services’ American Marketing Association .Marketing Research ‘the systematic gathering.

The Marketing Research Process Set objectives Define research Problem Assess the value of the research Construct a research proposal Specify data collection method Specify techniques of measurement Select the sample Data collection Analysis of results Present in a final report .

collected firsthand • Secondary data .statistical basis • Qualitative research .studying part of a ‘population’ to learn about the whole .already exists.subjective and personal • sampling . desk research • Quantitative research .Terminology of Marketing Research • Primary data .

Marketing Research Techniques • Interviews • face-to-face • telephone • postal questionnaire • Attitude measurement • cognitive component (know/believe about an act/object) • affective component (feel about an act/object) • conative component (behave towards an object or act) .

practical v impractical • Projective techniques • sentence completion • psychodrama (yourself as a product) • friendly martian (what someone else might do) .g.differences between words e.• Likert scale • • • • • strongly agree agree neither agree nor disagree disagree strongly disagree • Semantic differential scales .

• • • • Group discussion and focus group Postal research questionnaires Diary panels .hand-held light pen to scan barcodes • Telephone research • Observation • home audit • direct observation • In-store testing .sources of continuous data In-home scanning .

analysis and presentation of information for use in marketing decisions’ American Marketing Association . planned collection.What is MKIS? ‘MKIS (MIS) is a set of procedures and methods for the regular.

The components of a computerised MKIS Data Bank Statistical Bank MKIS Display unit Marketing Manager Model Bank .

The components of a computerised MKIS • Data bank .VDU and keyboard .g Ansoff’s matrix.stores marketing models e.raw data e.g historical sales data.programmes to carry-out sales forecasts. secondary data • Statistical bank . spending projections • A model bank . Boston Matrix • Display unit .

The Marketing Environment and Competitor Analysis • SWOT analysis • PEST analysis • Five forces analysis .

SWOT analysis • Strengths (internal) • Weaknesses (internal) • Opportunities (external) • Threats (external) .

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PEST analysis • Political factors • Economic factors • Socio-cultural factors • Technological factors .

Political/legal • • • • • • • Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others? .

Economic Factors • • • • • • Inflation Employment Disposable income Business cycles Energy availability and cost Others? .

Socio-cultural factors • • • • • • • Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others? .

Technological • • • • • • New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others? .

.Five forces analysis Potential entrants Threat of entrants Suppliers Bargaining power COMPETITIVE RIVALRY Buyers Bargaining power Threat of substitutes Substitutes Source: Adapted from M. Free Press. E. p. Porter. Competitive Strategy. 1980. 4.

Five Forces Analysis: Key Questions and Implications • What are the key forces at work in the competitive environment? • Are there underlying forces driving competitive forces? • Will competitive forces change? • What are the strengths and weaknesses of competitors in relation to the competitive forces? • Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)? .

Cozenza 1985 Demographic Factors The Consumer Buying Process Maslow’s hierarchy of needs UK socioeconomic classification scheme Types of buyer behaviour The Buying Decision Process Organisational Buyer Behaviour .Buyer Behaviour • • • • • • • • Dominant Family Purchase .

style Company. coverage Company. style Whether to go.Dominant Family Purchase . price .Cozenza 1985 PRODUCT Women’s casual clothing Vacations Men’s casual clothing Life insurance Homeowner’s insurance Household appliances DOMINANT DECISION MAKER Wife Syncratic (both) Husband Husband Husband Wife TYPICAL DECISION Price. where Type. brand. price. coverage Style.

Demographic Factors • • • • • • Age Stage in family life cycle Occupation Economic circumstances Lifestyle social influence variables • family background • reference groups • roles and status .

The Consumer Buying Process Marketing Inputs Product Price Promotion Place Purchase Decisions Product Choice Consumer Location Choice Brand Choice Other Choices Psychological Inputs Culture Attitude Learning Perception Based on Cohen (1991) .

Maslow’s Hierarchy of Needs Self Actualisation Esteem Social Safety Physiological .

casual or lower-grade workers % of population 3 14 27 25 19 12 . administrative or professional Intermediate managerial. administrative or professional Skilled manual workers Semiskilled and unskilled workers Pensioners.UK socioeconomic classification scheme Class name A B C1 C2 D E Social status Upper middle Middle Lower middle Skilled working Working Those at lowest levels of subsistence Occupation of head of household Higher managerial. administrative or professional Supervisors or clerical. widows. junior managerial.

Types of buyer behaviour • Complex buyer behaviour e.g soap powder .significant brand differences e.g.little difference • variety seeking behaviour . salt . Intel Pentium Processor • Dissonance-reducing behaviour (brand reduces after-sales discomfort) • Habitual buying behaviour e.g.

use. etc .g. Dell.The Buying Decision Process • recognition of the need e.e. breakdowns. two week ends • identification of alternatives e.g a new PC • choice of involvement level (time and effort justified) e.e.g.choice made e. price. customer service.g buy Epsom model from Comet • post-purchase behaviour I. printer/scanner package • decision . software support. PC World • evaluation of alternatives I.g Epsom • action e.

and choose among alternative brands and suppliers’ Kotler and Armstrong 1989 . evaluate. and identify.Organisational Buyer Behaviour ‘The decision-making process by which formal organisations establish the need for purchased products and services.

Characteristics of organisational buyer behaviour • • • • Organisation purpose .Decision making unit .Goodyear Tyres Derived demand .learns about the product • Multiple purchase influences .follows cars and lorries Concentrated purchasing .large purchaser of basic rubber no intermediaries • Specialist activities .stockholdings of rubber Direct dealings .DMU .

Strategic Development • Product Life Cycle (Revisited in ‘Product’) • Bowman’s Competitive Strategy Options • New Product Development (NPD) .

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heavy expense of product introduction • Growth .Five stages of the PLC • Product development . Increase outlay to compete .slowdown in sales growth. investment costs are high • Introduction .rapid market acceptance and increasing profits • Maturity .sales are zero. Profits level-off.profits do not exist.

• Decline .sales fall-off and profits drop .

PLC exercise • • • • • • • The Ford Escort The Mini Cooper The Internet Phone Cadbury’s Fuse The Boeing 747 The Millennium Dome KIT KAT .

Faulkner. Irwin. See C.Bowman’s Strategy Clock Source: Based on the work of Cliff Bowman. 1996. Competitive and Corporate Strategy.Bowman and D. .

The Strategy Clock: Bowman’s Competitive Strategy Options •1 •2 • •3 • •4 • • • • Low price/low added value Low price Hybrid Likely to be segment specific Risk of price war and low margins/need to be cost leader Low cost base and reinvestment in low price and differentiation Differentiation (a) Without price premium Perceived added value by user. yielding market share benefits (b) With price premium Perceived added value sufficient to bear price premium .

• 5 Focused differentiation Perceived added value to a particular segment. warranting price premium Increased price/standard Higher margins if competitors do not value follow/risk of losing market share Increased price/low value Only feasible in monopoly situation Low value/standard price Loss of market share • 6 • 7 • 8 .

New.Product Development Process • • • • • • • • • New product strategy Idea generation Idea screening Concept development and testing Marketing strategy Business analysis Product development Test Marketing Commercialisation .

Products Decisions • Product and Service Classification System • The Product Life Cycle • Introduction to product matrices • Boston Matrix (Growth/Share) • Ansoff’s Matrix (Product Market) .

e. infrequent • Speciality goods .g Jewellery.g. more expensive.g ‘white goods’. DIY equipment. gourmet food • Unsought goods .Product and Service Classification System • Convenience goods . double glazing. .little effort. relatively inexpensive • Shopping goods .extensive search e.e.

accountants .• Industrial goods • Installations .plant and machinery • Accessories .‘speciality’ goods of industrial markets . consultants.g.maintenance and office equipment • Raw materials • components • Business to business e.

The Product Life Cycle .

Cash Cows 4.The Boston Matrix (Growth/Share Matrix) Market Share High Market Growth Low 1. Question Mark (Problem Child) 2. Dogs High Low . Stars 3.

The Boston Matrix .Chocolate Bars Market Share High Market Growth Low FUSE Maverick Miniature Heroes KIT KAT MARS BAR High TOPIC BOUNTY Low .

Ansoff’s Matrix (Product/Market Matrix) New Products Existing Products Existing Markets New Markets Market Penetration Market Development Product Development Diversification .

Geographical expansion Diversification related or unrelated .new product E. Realignments of the marketing mix Same outlets and sales strategy .g.Ansoff’s Matrix (Product/Market Matrix) New Products Existing Products Existing Markets New Markets E.g.

Products Decisions • Product and Service Classification System? • The Product Life Cycle stages? • Growth/Share? • Product Market? .

Pricing Decisions • Pricing strategies • Pricing exercise • Ten ways to ‘increase’ prices without increasing price Winkler .

g.g.g. New film or album .Quality Low Economy Strategy e.g. BA first class Low Price High Skimming e. Tesco spaghetti High Penetration e. Telewest cable phones Premium e.

Pricing strategies • Premium pricing • Uses a high price. Soups.g.to attract new corporate clients (or Telewest cable) • Economy pricing • placed at ‘no frills’.g. Concorde. beans .then increases price • e.g. low price • e. The Ritz Hotel • Penetration pricing • offers low price to gain market share . France Telecom .‘economy’ brands . spaghetti. but gives a good product/service exchange e.

rather than rational basis • .usually during introduction • e.g 99p not £1. Bite-size £1.29 • Pricing variations • ‘off-peak’ pricing.01 ‘price point perspective • Product line pricing • rationale of a product range • e. early booking discounts.g new albums or films on release • ultimately prices will reduce to the ‘parity’ • Psychological pricing • to get a customer to respond on an emotional. Four-pack 99p.g Grundig offers a ‘cash back’ incentive for expensive goods .g. MARS 32p.• Price skimming • where prices are high .e.etc • e.

soups. toothpaste.BMW famously underequipped • Captive product pricing • products that complement others • e.g. books.g Gillette razors (low price) and blades (high price) • Product-bundle pricing • sellers combine several products at the same price • e.g software. • Promotional pricing • BOGOF e. CDs.• Optional product-pricing • e.g. etc . optional extras .

g.Include shipping costs. or place onPLC • Value pricing • usually during difficult economic conditions • e. Value menus at McDonalds .g.• Geographical pricing • different prices for customers in different parts of the world • e.

installation Charge for overtime on rushed orders Collect interest on overdue accounts .Winkler • • • • • • • Revise the discount structure Change the minimum order size Charge for delivery and special services Invoice for repairs on serviced equipment Charge for engineering.Ten ways to ‘increase’ prices without increasing price .

• Produce less of the lower margin models in the line • Write penalty clauses into contracts • Change the physical characteristics of the product .

Frazier and Sheth (1989) • Frequencies of use of influence strategies .Channel and Distribution Tactics • • • • • • Bucklin’s definition of distribution Today’s system of exchange Channel intermediaries Six basic channel decisions Selection consideration Potential Influence Strategies .Frazier and Summers (1984) .

Theory of Distribution Channel Structure (1966) .A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption Bucklin .

Today’s system of exchange Promotion Contact Negotiation Producers Transporting and storing Financing Packaging Money Goods Users .

Channel intermediaries Wholesalers • Break down ‘bulk’ • buys from producers and sell small quantities to retailers • Provides storage facilities • reduces contact cost between producer and consumer • Wholesaler takes some of the marketing responsibility e.g sales force. promotions .

does not take title of the goods. • Stockist agent . motivation.Channel intermediaries . etc are expensive . Secures orders.Agents • Mainly used in international markets • Commission agent .hold ‘consignment’ stock • Control is difficult due to cultural differences • Training.

Retailer • Much stronger personal relationship with the consumer • Hold a variety of products • Offer consumers credit • Promote and merchandise products • Price the final product • Build retailer ‘brand’ in the high street .Channel intermediaries .

Internet • • • • Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment. etc) • Paradigm shift in commerce and consumption . shopping software.Channel intermediaries .

Six basic channel decisions • • • • • • Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict .

their policies.Selection consideration • Market segment .experience and track record must be established • Distributor training and support .different channels are exploited at various stages of plc • Producer-distributor fit .must know the specific segment and target customer • Changes during plc . strategies and image • Qualification assessment .

consequences of a poor response from the market are stressed • Reward and punishment strategies .given to channel members and their firms .information is merely exchanged with channel member personnel • Direct unmediated strategies .Potential Influence StrategiesFrazier and Sheth (1989) • Indirect influence strategies .

5 territorial and customer restrictions .g.1 control of retail pricing e.g.4 physical layout of store e. No consequences are applied or mentioned • Direct mediated strategies .3 salesperson training e.2 minimum order size e.• Direct unweighted strategy or request producer’s wishes are communicated .g.g.g.specific action is requested and consequences of rejection are stressed – – – – – e.

Frequencies of use of Influence Strategies Mean use Information exchange Requests Recommend ations Promises Threats Legalistic pleas 49% 27 19 15 10 6 Most frequently used 62% 13 8 4 1 0 Tied for Never most used frequently used 6% 8% 7 7 9 5 3 11 23 37 53 59 Frazier and Summers (1984) .

Promotions Decisions • • • • • • Elements in the communication process Promotions mix The promotions message Executions style Media choice? Promotional objectives .

Elements in the Communication Process Sender Encoding Message Media Decoding Receiver Noise Feedback Response .

receiver assigns meaning to symbols encoded by the sender .g radio • Decoding .word.party sending the message • Encoding . pictures and symbols that the sender transmits • Media .• Sender .the communication channel e.message in symbolic form • Message .

the part of the receiver’s response after being communicated to the sender • Noise .• Response . competitor action (Creature Comforts?) .unplanned static or distortion during the communication process e.reaction of the receiver after being exposed to the to the message • Feedback .g.

Promotions Mix • • • • • • • • • • Personal selling Telemarketing Direct mail Trade fairs and exhibitions Commercial television Newspapers and magazines Radio Cinema Point of sale displays Packaging .

The Promotional Message Grab Excite Create Prompt ATTENTION INTEREST DESIRE ACTION AIDA .

OXO e.Gap e.Turkish Delight e.g. Richard Branson .g.g. After Eight mints e.Execution styles • • • • • • Slice of life Lifestyle Fantasy Mood or image Musical Personality symbol e.g .g. Timotei shampoo e.g .

g. Ian Botham .Vorsprung durch Technik . Whiskers • Testimonial evidence e.g.g.Audi • Scientific evidence e.• Technical expertise e.

g falling awareness Evaluation of different tools choice of optimum mix of promotional methods • Integration into overall marketing communication programme .Media choice? • • • • Marketing objectives Definition of problem e.

Exercise .What beliefs and expectations do you have about the following brands? How far are these due to promotion as opposed to personal experience? • • • • • • Fairy liquid Persil washing powder Midland Bank Virgin Radio Nissan Tesco .

Promotional objectives • • • • • • • • To support sales increases To encourage trial To create awareness To inform about a feature or benefit To remind To reassure To create an image To modify attitudes .

Implementation • • • • • The implementation process An action checklist Total quality and marketing Managing the organisation/stakeholder interface Activities to establish and build customer relationships • Relationship marketing • McKinsey 7-S framework .

The Marketing Implementation Process Marketing Strategy Tactical Decisions Internal Factors Implementing the Marketing Mix External Factors Monitoring Results Adaptation of strategy/tactics Berman and Evans 1985 .

Hoover’s flight tickets • Poor intelligence e.g.Implementation problems • Internal problems e.g. 1985 Coca-Cola • Poor execution .g.g change of management • External problems e. changing competition • Poor planning e.

Implementing a programme an action checklist • • • • • • • Agree the implementation strategy Agree a timeframe Draw up detailed implementation plans Set up a team of stakeholders Establish good project management Personalise the case for change Ensure participation .

• Create a sense of purpose and urgency to tackle real problems which have prevented progress in the past • motivate • be prepared for conflict • Be willing to negotiate • Anticipate stress • Build skills • Build in the capacity for learning • Monitor and evaluate .

g BS EN ISO 9000 .Total Quality and Marketing • Quality is what customers say it is. • Juran and TQM • zero defects • right first time • continuous improvement • Statistical process control (SPC) • New relationships with suppliers (JIT) • Quality Assurance e.

cigarettes dishonest marketing and promotion the abuse of power the availability of information .Managing the organisation/stakeholder interface • • • • • External and internal relationships Accountability of managers Marketer projects an image and style Ethical responsibilities towards consumers Social responsibility • • • • dangerous products e.g.

‘expensive’ in promotional terms Build sales to existing customers Improving service quality Auditing the fulfilment of customer needs Cause a cultural change to a marketing orientation .Marketing Myopia Levitt (1960) .Activities to establish and build customer relationships • • • • • • Need for long term relationships UACCA .

.Relationship marketing • The consistent application of up-to-date knowledge of individual customers to product and service design . Customer retention not attraction Long term. . . ongoing relationships Regular customer contact Spirit of trust . In order to develop a continuous and long-term relationship’ Cram • • • • • Not mass marketing. Aimed at individual.

Mckinsey 7-S framework • • • • • • • Strategy Structure Systems Share values Style Skills Staff .

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