Session 1 -- Introduction

Marketing Management in the 21st

Century

Darlene Brannigan
Smith, Ph.D.

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 Today’s Itinerary

z At the end of class today, you will:

– Be fully informed of course deliverables
– Understand how marketing has evolved from a
transaction focus to a relationship orientation
– Know how to assess your firm’s level of market
orientation
– Be introduced to the key steps in the process of
marketing strategy development
– Understand types of marketing decisions

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 z What is the role of business?

z What is the role of marketing?

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 Peter Drucker -- 1954

z “Any business enterprise has only two basic functions:

marketing and innovation. All else is detail.”

z Implications:
– Role of marketing: Creating value for chosen customers

– Value is created by meeting customer needs

– A firm defines itself not by the product it sells, but the the
customer benefit provided.

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 The Change in Marketing

z Production Era
Seller’s Market
z Sales Era

z Marketing Era
Buyer’s Market z Relationship Era
z Partnership Era
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 Customer
Value

Benefits Costs
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 How to Under Whelm Customers and
Shareholders

z Poor Understanding of Customers and Competition

z Unfocused Competitive Position
z Me-Too Customer Value
z Excessive Customer Turnover
z Market Share Instability
z High Cost of Customer Retention and Acquisition
z Sporadic Business Unit Profits
z Accounting Maneuvers Drive Financial Results
z Stagnant Shareholder Value
z Pressure for Short-Run Results

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 What is your firm’s orientation?

z Internally focused on:

z Operations Orientation
– Unbridled cost reduction philosophies

z Financial Orientation
– Excessive orientation toward short-run profits

z Technological
– R&D & engineering with little consideration of economic benefits

– Although individual functional perspective are important and

are crucial for firm success, too heavy a focus on one or the
other can lead to inappropriate decision making.

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 What is your firm’s orientation?

z Externally Focused
– Highlights the central importance of delivering customer value as the
focal point of business operations

– Some of the most successful modern companies:

z Home Depot
z Google
z Amazon.com
z Starbucks
z The Body Shop
z Nokia
z Barnes & Noble
z Intel

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 What is a Market Orientation?

“A business is market oriented when

its culture is systematically and
entirely commuted to the continuous
creation of superior customer value.”
– (Slate & Narver, 1990)

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 Market Driven Principles

z Understand your markets

z Give the customer the final word

z Commit to leadership in the markets you serve

z Deliver total quality to guarantee customer

satisfaction

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 Pop Quiz

1. In a short sentence, describe the customers to

which your organization is primarily dedicated.

2. In order of importance, what are the five most

important benefits that target customers are
seeking?

3. How does your customer define quality?

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 Market Orientation

z Three management characteristics:

– Customer Focus: An obsession with understanding

customer needs and delivering customer satisfaction

– Competitor Orientation: Continuous recognition of

competitors’ sources of advantage, competitive position, and
marketing strategies

– Team Approach: Cross-functional teams dedicated to

developing and delivering customer solution

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 How MARKET ORIENTED is your firm?

Effective Market Sensing Processes

Cross-Functional Analysis of
Information

Shared Diagnosis and

Coordinated Action

Delivery of Superior
Customer Value
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 Market Orientation, Customer
Satisfaction and Profitability

A business with a strong market

orientation works to create,
communicate and deliver Business
customer solutions. Profitability

This approach translates Customer Satisfaction

into high levels of customer & Retention
satisfaction and
profitability. Market Orientation

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 Process of Marketing Strategy
Development

z The plan by which value in created on a sustained

basis:
– Market Analysis (4 - 5 Cs)
z Customer, Company, Competition, Context and Collaborators

– Target Market Selection and Positioning

z Segmentation, Targeting, Positioning

– Formulating the Marketing Mix (5-8 Ps)

z Product/Service, Place/ Channels, Promotion, Pricing

– Implementing & Controlling Programs: Sustaining Value

z Customer Acquisition and Retention strategies

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 Marketing Analysis (5 Cs)

z Customer Needs: What needs do we seek to satisfy?

Who is in the DMU? What is the DMP?

z Company skills: What special competence do we

possess to meet those need

z Competition: Who competes with us in meeting

those needs?

z Context: What cultural, technological, and legal

factors limit what is possible?

z Collaborators: Who should we enlist to help us and

how do we motivate them (e.g., downstream
trade (retailers) and upstream suppliers?

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 Target Market Selection and Product
Positioning

z Involves two key questions:

– Which potential buyers should the firm attempt to serve?

(The process of segmentation)

– How much customization should be offered in its programs?

Mass markets Æ Market Segments Æ Market Niches Æ Individuals

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 Selecting a Target Market
z Tantamount to choosing the “rules of the game”

z Consider:
– Firm’s comparative strengths and weaknesses vis-à-vis the
competition given the target markets purchase criteria
– Firm’s corporate goals and the fit of the segment with these
goals
– Resources necessary to market successfully to the target
market
– Needs for / availability of appropriate collaborators to market
successfully
– Likely financial returns from the segment

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 Positioning

z The issue: How do we approach the segment and do

we want potential customers to see us?

z Solving the positioning issue enables the firm to solve

the marketing mix issue – the tactical details of the
positioning strategy.

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 Traditional Marketing Mix

PRODUCT PLACE PROMOTION PRICE

Physical good Channel type Promotion Flexibility
features blend

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales Differentiation
promotion
Warranties Transportation Publicity Allowances
Product lines Storage
Branding

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 The Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”

Employees Interactive Marketing Customers

Interactive Marketing
“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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 Expanded Marketing Mix

PEOPLE PHYSICAL PROCESS

EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles

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 Expanded Mix for Services --
the 7 Ps

z Product
z Price
z Place
z Promotion
z People
z Process
z Physical Evidence

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 Marketing is Everything
OLD PARADIGM
z Marketing as only a function
z Accounting profit
z Manage the status quo
z Innovate when necessary
z Seller power
z Customers as “necessary”
z Mass markets
z Accept all orders
z A department markets
z Marketing as a one-way
process
z Supplier chooses option
z Marketing as an exchange
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NEW PARADIGM
z Marketing as a philosophy
z Shareholder value
z Manage change
z Innovation is key to LT
survival
z Customer power
z Customers as key assets
z One-to-One
z Select customers
z The firm markets
z Marketing is an interactive
process
z Customer chooses options
z Marketing as a relationship
 TEAM BREAKOUT ACTIVITY

z A. Marketing Failure
– Identify a company that recently committed a
serious marketing mistake or engaged in an
unethical” marketing practice. Explain.

z B. Marketing Success
– Identify a firm that you believe demonstrates
successful and effective marketing. Provide a brief
“case” study

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 Marketing Triangle
Applications Exercise

z Choose an organization. Who occupies each

of the three points of the triangle?
z How is each type of marketing being carried
out currently?
z Are the three sides of the triangle well aligned?
z Are there specific challenges or barriers in
any of the three areas?

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