Jim me Understanding Marketing Management Chapier 1 | Defining Marketing for the 21st Century Chapter 2 | Developing Marketing Strategies and Plants In This Chapter, We Will Address the Following Questions Why is marketing important? 2, What isthe scope of marketing? What are some core marketing concepts? |. How has marketing management changed in recent years? 5. What are the tasks necessary for successful marketing management? (ne of the ky ators in Brack (Obama's victory in the 2008 US, prosidntl lotion vs a wel dolores and wol-oreoted merkotng program,Defining Marketing for the Sst Century Formally or informally, people and organizations engage in a vast number of activities we could call marketing. Good marketing has become increasingly vital for success, ‘But what constitutes good marketing is constantly evolving and changing. The election of Barack ‘Obama as the 44th President of the United States wes attributed, in part, to the adoption of new ‘marketing practices. The ‘Obama for America® presidental campaign combined a charismatic potisian, 2 powerful message of hope, and a thoroughly integrated modem marketing program. The marketing plan needed lo accomplish to vey different goals: expand the eloc- torate ve broader messages while targeting very speci audiences, Multimedia tacts combined offine and online media, as well as free and paid media. When research showed thatthe more voters leamed about Obama, the more they identified with him, the cempalgn aie fong-form videos to tradltonal pit, broadcast, and outdoor ads. The Obama team—aided by its agency GNMB—also put the Intornet atthe heart ofthe campaign tng it sor asthe “central nervous system fr PR, advertising, advance work, fnd-ratsng, and organizing in al 0 states. Their guiding philosophy was to “build online tools to help people solt- rganize and then get out of their way.” echnlogy was means io "empower people fo do what they were interested in doing in the fst lace.” Although soclal meola ike Facebook, Meetup, YouTube, and Thtter were crucial, perhaps Obama's most powerful ctl too! was a ‘massive 13.5 milion-name e-mal ist, What were the results ofthese Good marketing is no accident, but a result of caretu! planning and execution using state-of-the-art tools and tochniques. It becomes both an art and a sclence as marketers strive to find creative new solutions to often-complex challenges amid profound changes in the 21st century nln efforts? About $500 milf (most in sums of less than $100) marketing environment. In this book, we describe how top was ralsed online from 3 millon donors; 35,000 groups organized — mparketers balance discipline and imagination to address these through the Web site, M.BarackObame.com; 1,800 videos posted {© new marketing realities. In the first chapter, we lay the YouTube; the creation of Facebook's mast popular page; and, of foundation by reviewing important marketing concepts, tools, course, the lection ofthe next President ofthe United States.1 frameworks, and Issues. The Importance of Marketing ‘The first decade ofthe 2st century challenged firms to prosper financially and even survive in the face of en unforgiving economic environment, Marketing is playing # key role in addressing those New Company Capabilities ‘The ojo social orcs cess complex challenges for rulers bat hey haves generate eo root ena o help comprntes cope and tpand + Marketers can use the Iuternet as @ powerful information and sales channel. The Internet augments marketers geographical reach to inform customers and promote prod. tet worldwide. A Website can list products and services, history business philosophy, job pportenities, and other information of interest. In 2006, a Montgomery, Alabama, fea market gained national popularity when owner Saminy Stephens’srap-style advertisement Spread viraly through the Internet, Created fr 1,500, the advertisement was viewed more than 100,000 times on YouTube and landed Stephens on The Ellen DeGeneres Show. Stephens now sells Tshirts, rng tones, ond other branded merchandise through his Web site, advises retailers about advertising, and hosts hundreds of visitors from all over the ‘world at his store each month.* + Marketers can collect fuller and richer information about markets, customers, prospects, dnd competitors, Marketers can coc fesh marketing research by using the Interet to Strange focus groups, send out questionnaires, and gather primary data in several oer wap. ‘They can assemble information about individual customers purchases, preferences, demo- eaphies and profitability. The drugstore chain CVS uses loyaly-card data to better under Stand what consumets purchase, the frequency of store visits, and other buying preferences. BxteaCave program netted an exira 30 nilion shoppers and $12 billion « year in revenue across 4,000 stores.” + Marketers can tap into social meta to amplify their brand message. Marketers can fed in formation and upéetes to consumers via blogs and other postings, support online com ties and create their own stops on the Internet supechighway. Dell Corporation's {@DellOatlet Twitter account has more than 600,000 followers, Between 2007 and June 2008, Dell took in more than $2 milion in revenue from coupons provided through Titer and another million from people who stasted at‘ivitter and went on to buy « new computer ‘on the company's Web site” ‘Marketers ean facilitate and speed external communication among customers. Marketers can also cteate or benefit from online and offline “burr though brand advocates and userDEFINING MARKETING FOR THE 21ST CENTURY | CHAPIER1 16. communities. Word-of-mouth marketing agency BzzAgent has assembled a nationwide volunteer army of 600,000 consumers who join promotional programs for produets and services they deem worth talking about.” In 200, Dunkin’ Donuts hired BrzAgent to help launch a new espresso beverage, Latte Lite. Three thousand trained volunteers (called BuzAgents) in 12 test markets experienced the Latte Lite formed their opinions, engaged in natural conversations about the produc, and reported back to BzzAgent vie the company’s reporting interface, After four weeks, product sales had increased by more than 15 percent in test markets °° + Marketers can send ads, coupons, samples, and information to customers who have ree quested them or given the company permission fo send them. Micro-target marketing and {seo-way communication are easier thanks to the proliferation of special-interest magezines, ‘TV channels, and Internet newsgroups. Extranets linking suppliers and distributors let firms send and receive information, place orders, and make payments more efficiently. The com- pany can also interact with each customer individually to personalize messages, services, and the relationship, + Marketers can reach consumers on the move with mobile marketing. Using GPS technol- gy; marketers can pinpoint consumers’ exact location and send them messoges at the mall with coupons good only that day, a reminder of an item on their wishlist, and a relevant perk (buy this book today and get a free coffee at the bookstore’ coffee shop). Location- based advertising i atractive because it reaches consumers closer tothe point of sale Firms «can also advertise on video iPods and reach consumers on their cell phones through mo= bile marketing.** * Companies cau make and sell individually differentiated goods, ‘Thanks to advances in fac= tory customization, computer technology, and database marketing software, customers can buy M&M candies, TABASCO jugs, or Maker’s Mark bottles with their names on thems Wheaties boxes or Jones soda cans with their pictare on the fromt; and Heinz ketchup bottles with customized messages.”* BMW's technology allows buyers ta design their own cat models fiom among 350 variations, with 500 options, 90 exterior colors, and 170 teims. The company claims that 80 percent ofthe cars bought in Europe and up to 30 percent bought inthe United States are built to order + Companies can improve purchasing, recruiting, training, and internal aud external comsunications, Firms can recrait new employees online, and many have Internet training Droducts for their employees, dealers, and agents. Retailer Patagonia has joined Walt Disney, General Motors, and McDonald’ in embracing corporate blogging to communi ‘ate with the publicand employees. Patagonis’s The Cleanest Line posts envieom- ‘ental news, reports the results of its sponsored athletes, and posts pictures and descriptions of employees’ favorite outdaor locations > * Companies can facilitate and speed up internal connmunication among ‘heir employees by using the Internet as a private intranet. Employees can {query one another, seek edvice, and download or upload needed information from and to the company’s main computer, Seeking a single online employee Portal that transcended business units, General Motors launched a platform, called mySocrates in 2006 consisting of announcements, news, links, and historical information. GM credits the portal with $17.4 million in cost savings to date. Companies can improve their cost efficiency by skillful use of the Internet. Coxporate buyers can achieve substantial savings by using the Internet to compare sellers" prices and purchase materials at auction, or by Posting their own terms in reverse auctions, Companies can improve logistics and operations to reap sitbstantial cost savings while improving accuraey and service quality Marketing in Practice Not surprisingly, these new matketing forces and capabilities have profoundly hanged marketing management. In theory, the marketing planning process consists of analyzing marketing opportunites, selecting target markets, designing marketing Companies are ineeasingly allow ing customers 1 customize thele products, such as with personalized messages on the fron labels of ‘ategies, developing marketing programs, and managing the marketing effort.ro parr) PRUNES EUSP teanu Gh ca (Co WETS LANs In practice, however, in the highly competitive marketplaces that are more often the norm, ‘marketing planning is more Puid and is continually refreshed. ‘Companies must lvays be moving forward with marketing programs innovating products and services, staying in touch with customer needs, and seeking new advantages rather than rely ast strengths. This is especialy teuc of incorporating the Internet into marketing plans. Mi rust ty to balance increased spending on search advertising, social media, direct e-mail, and textSMS marketing efforts with appropriate spending on traditional marketing communications. But they must do s0 in tough economic times, when accountability has become a top priority and returns on investment are expected from every marketing activity. “Marketing Insight: Marketing, in an Age of Turbulence” offers some recommendations for adjusting to new marketing realities. _ Marketing Insight a Marketing in an Age of Turbulence The sovore economic recession of 2008-2009 caused marketers to e- think best practices of management. Philip Keller and John Castione ‘see management entering a naw Age of Turbulenoe in which chaos, risk, and uncertainy characterize many industres, markets, and com: panies, According to thom, turbulence is the new normal, punctuated by ‘riod and interment spurts of prosperity and downturn—inclucing ‘extended downtums amounting to recession, or even depression. They 800 many new challanges in the foreseeable future, and une past re- ccssions, there may bo no assurance that a raturn to past management practices would ever be successful agal ‘According to Kotler and Castine, marketers should aivays be ready to activate automatic responses whan turbulence whips up and ‘chaos relgns in. Thy recommend marketer Keop these eight factors in mind as they create “chaotcs marketing strategies." 1. Secure your market share from core customer segments, This Is nota tino to get greedy, so get your core customer segments fumly socurad, and be prepared toward off attacks from competi- tors seeking your most prolable and iyal customer. 2, Push aggressively for grater marketshare trom compettors. Al companies fight fr marketshare, and in tubulent anc chaotic tims, ‘many have been weekened. Sishing marketing budgets and sales ‘raw expenses fs a sure sign a competitor is uctng under pres- sure, Push aggrescivly oad to your core custome segments atthe ‘oxpense of your weakened competion. 3. Research customers more now, because thelr needs and Wants are in flux, Everyone is under pressure dung times of ur- bulence and chaos, and all customers~even those in your cre segments witor you know so well—are changing, Stay close to ‘om es never Defoe, Research thom more than eter. Dot fd yourself using ol, tried-and-true marketing messages that no Tongor resonate wih them Minimaly maintain, but seek to increase, your marketing budget, With your compottors agaressively marketing to your core customers, this isthe worst ime to think about cutting any thing in your marketing budget that targets them. a fact, you need to add tot, or take enonay ava from forays into totally new cus- tomer segments. Its ime to secur the home front 5. Focus on all that’s safe and emphasize coe values. When tu- baulence i searing everyone Inthe market, most customers feo to bigher ground. They need to fee the safely and sacurty of your company and your products and services, Do everything possile {a tel ther tat continuing to do business with you is sta, and to sell tam products and services that keep making them foe safe. 6. Drop programs that aren't working for you quickly. Your mar- ting budgots will aways be scrutinize, in good times and bad times, If anyone to cut one of your programs, letitbo yu, belore anyone ese spots any ineffective ones. I you'e nat watching, rest assured someone els I, including your peers whose budgets could be proteoted rom the ax, 7. Dont discount your best brands. Discounting your established ‘and most successful ands tells the market two things: your pris vere to high befor, and your products wert be wrth the pric in the future onoe the discounts are gon. you want o 2p- peal fo more frugal customers, create @ now brand wit fower prices. This lets value-conscios customer say clase to you, wth cut alienating those stil wing to pay for your higher-priced brands. Once the turbulence subsides, you tay consider discon: Sing the valve produc ine—or not 8, Save the strong; lose the weak. In turbulent markets, your strongest brands and produc must became even stronger. There's no time or one tobe wasted on maxghnal brands o: products Dat lack tong value popostions and asolié custome base. Appeal tO saety and velue fo nfrcestong brands and product and service oferings, Remembey, your brands can newer be steng encugh, es pecialy agains the waves of a tucbulnt economy. Source: Bnd on ip Kote and. A Cain, Chote: The Busse and Marsan Ago Tatssence at Yk: AMACOM, 200999, 189-158DEFINING MARKETING FOR THE 21ST CENTURY THE NEW CMO The rapidly changing marketing environment is putting even greater demands on marketing executives. A well-publicized survey revealed that the average CMO tenure at US. companies is about 28 months, well below the average tenue of CBOs (54 months) or other C-kyel positions. One explanation is that the role of marketing-~and thus management expectations —vaties widely among firms. Harvard’s Gail McGovern and John Queleh find tremendous variability in CMO responsibilities and job descriptions. “Another challenge CMOs face is that the sucess factors for top marketers are many and varied. CMOs must have strong quantitative skis but also well-honed qualitative skills they must have an independent, entrepreneurial attitude but also workin lose harmony with other departments such nd they must capture the“voice” and point of view of consumets yet have a keen bottom. standing of how matketing creates value within their orgenization.*© One survey asked 200 senior-level marketing executives which innate and learned qualities were most important; here are their answers” Innate Qualities + Learned Qualities + Risktaker + Global experience Willingness to make decisions Multichannel expertise + Problem-solving ability ‘Cross-industry experience Digital focas Operational knowledge + Change agent + Results-oriented Perhaps the most important role for any CMO is to infuse «customer perspective and orienta- tion in business decisions affecting any customer touch point (where a customer directly or indi- rectly interacts with the company in some form). The CMO of lodging franchisor Choice Hotels Intemational, Chris Malone, is tesponsible for directing virtually al customer-facing efforts for the fem, including: the company’s central reservations systems, including its call centers, Web site, and relationships with outside travel vendors such as Travelocity and Orbite; and * Heading up the company’s global group sales efforts with organizations such as AAA, AARP, and professional sports teams, MARKETING IN THE ORGANIZATION Although an effective CMO is crucial, increasingly marketing is not done only by the merketing department, Because marketing must affect every aspect of the customer experience, marketers must properly manage all possible touch Points—store layouts, package designs, product functions, employee training, and shipping and logistics methods. Marketing must also be influential in key general management activities, sich as reduct innovation and new-business development. To create a strong marketing organization, ‘marketers must think like executives in other departments, and executives in other departments ‘must think more like marketers.” Aste late David Packard of Hewlett-Packard observed, “Marketing is far too important to leave ‘0 the marketing department.” Companies now know that every employee has an impact on the ‘customer and must see the customer as the source of the company’s prosperity. So they'te begin- ring to emphasize interdepartmental teamwork to manage key processes, They're emphasizing the smooth management of core business processes, such as new product realization, customer acqui- sition and retention, and order falllment. Company Orientation Toward the Marketplace Given these new marketing realities, what philosophy should guide a company’s matketing efforts? Increasingly, marketers operate consistent with the holistic marketing concep. Lt st review the ‘olution of earlier marketing ideas. CHAPTER 1 w1. PART 1 LGC eINICS ‘The Production Concept “The production concept sone ofthe olds concepts in bins It hold that consumes prefer producs tat ar dly salable and inepensie: Manager of prodectonaveted business Conomtat on aciving bigh production eine low ots and mass dtcbutin, This xe ae Legend (encipal owner cna Group) and domesticepincs lant te ae acentge of ee cheton concept shen they Want toexpand ear ‘The Product Concept The product concept proposes that consumers favor products offering the most quality, performance, or innovative features, However, managers are sometimes caught in a love affaic with their products. They might commit the “better-mousetrap” fallacy, believing a better product will by itself lead people to beat a path to their door. A new or improved product will nat necessarily be successful unless i's priced, distributed, advertised, and sold properly The Selling Concept the sling concep holds that consumers and businesey if et alone, won't buy enough of the orgntstons products Iti practiced mos aggressively with sought goods~-goods bayer don't nal think of buying such basutance and emery plots when fens with everenpacty at to sll what they make, rather than mike what the market wan Matketng based on had selling is skye assumes customers cosed into buying «prot not only won't return or bd-mouth ior complain to consumer organizations but bay it again The Marketing Concept ‘The marketing concept emerged in the mid-1950s" as a customer-centered, sense-and-respond Dhikecophy. Te ob sto find not he ight casomers for yur product bu height pou Foc yout core Del drut pu pect erate Bor age et Bathe poe ee ae comple the mating conp bl hat he yo ashevng onpnizational goals isbing more a cree bers eigicicet a reriecnentr tren tngetmavtetHarveds Theodore Levit drow a perepine contrast between the sling ond ae Selling focuses on the needs ofthe seller; marketing on the needs of the buyer. Selling is preeccupied with the seller’ need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole clus- ter of things associated with creating, delivering, and finaly consuming it? Several scholaes found that companies embracing the marketing concept at that time achieved superior performance:® The Holistic Marketing Concept Without question, the tends and foes that hae defined the Est decade of he 2st emery ze eng bones fie fo ane set of ble end pats "Marketing Meme Marketing beg eea eey eee g tt ee ther macketing The halts masting concn bated on the development, desig nd implementation of snarling programs process and acti ht cope nr teh and intecepenencs Holic macketng acing tht everyting mutts ix ntkting--and thu 2 brood te eee armen