Principles of marketing

chapter # 2
What Is Marketing?
The Marketing Process

Copyright © 2016 Pearson Education, Inc. 1-2

Company-Wide Strategic Planning: Defining
Marketing’s Role
Customer value driven marketing strategy
• Strategic planning - The process of developing and maintaining a
strategic fit between the organization’s goals and capabilities and its
changing marketing opportunities
Objectives & Stakeholders
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 Mission statement
• Mission statement highlights the purpose of existence
• What is our business? Who is the customer? What do consumers
value? What should our business be?
• A mission statement is a statement of the organization’s purpose—
what it wants to accomplish in the larger environment
• Acts as invisible hand that guides people in the organization
• Mission statements should be market oriented and defined in terms
of satisfying basic customer needs
 Setting goals and objectives
• Goals and objectives are targets for the future
• Goals are general (e.g. increase in sale) while objective are specific (increase
10% sales)
• Both goals are objectives should be SMART
• Specific
• Measurable
• Attainable
• Realistic
• Time bound
 Designing the business portfolio
• Business portfolio—the collection of businesses and products that
make up the company
• Business portfolio is the one that best fits the company’s strengths
and weaknesses to opportunities in the environment.
• For instance, Lakson group has a diversified portfolio
• Two import steps:
• Analyzing current portfolio
• Developing future portfolio
Analyzing portfolio
• Portfolio analysis, whereby management evaluates the products and
businesses that make up the company
• strategic business units (SBUs) - An SBU can be a company division, a
product line within a division, or sometimes a single product or brand
• A common approach is matrix approach:
• BCG matrix/growth-share matrix
Analyzing portfolio – BCG matrix
Case reading
• Red Bull: the Global Market Leader in Energy Drinks Skillfully
Manages Its Business Portfolio
• Identify portfolio of various businesses in Pakistan
• Gourmet
• Punjab group of colleges
• Lakson group
Developing strategies for growth and
downsizing
• Product/market expansion grid
 Planning Marketing: Partnering to Build Customer
Relationships
• Marketing can’t go it alone in creating customer value. Under the
company-wide strategic plan, marketing must work closely with other
departments to form an effective internal company value chain and
with other companies in the marketing system to create an external
value delivery network that jointly serves customers.

• Corporate level
Mission Goal Objective Strategies • Business level
• Operational level
Marketing – operational level role
• Marketing contributes at strategic level in many ways:
• Provides guiding philosophy
• Provides inputs to strategic planning
• Marketing design strategies to reach unit and firm objectives
• Marketing is aimed at engaging customers and creating and
harvesting value
• Key is customer relationship management
• But with partner relationship management it is not viable
• internal value chain (with other departments)
• Value delivery network (with outside world – other companies e.g. suppliers,
distributors)
Partnering with other company departments
• Marketing department ensures a good value chain
• Value chain is integration of various departments that carry out value-
creating activities to design, produce, market, deliver and support a
firm’s products
• Avoiding and overcoming conflicts and differences with other
departments
Partnering with others in marketing system
• Value delivery network – A network composed of the company,
suppliers, distributors, and, ultimately, customers who partner with
each other to improve the performance of the entire system in
delivering customer value.
• Now competition is not only in products/services but whole
marketing system
Marketing strategy and marketing mix
Customer value-driven market strategy
• Marketing strategy—the marketing logic by which the company
hopes to create this customer value and achieve these profitable
relationships.
• Deals with which customer (segmentation, targeting) and how to serve them
(differentiation and positioning)
• Dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors and who might require separate
marketing strategies or mixes is called market segmentation
• Demographical, geographical, psychographic, and behavioral
• A market segment consists of consumers who respond in a similar
way to a given set of marketing efforts
Customer value-driven market strategy
• Market targeting involves evaluating each market segment’s
attractiveness and selecting one or more segments to enter
• Product’s position is the place it occupies relative to competitors’
products in consumers’ minds
• Taglines are often used to create image in minds of customers
• Differentiating the company’s market offering to create superior
customer value.
Developing an integrated marketing mix
• The marketing mix is the set of tactical marketing tools that the firm
blends to produce the response it wants in the target market
• Marketing mix consists of everything the firm can do to engage
consumers and deliver customer value
• Product means the goods-and-services combination the company offers to
the target market
• Price is the amount of money customers must pay to obtain the product.
• Place includes company activities that make the product available to target
consumers
• Promotion refers to activities that communicate the merits of the product
and persuade target customers to buy it
Developing an integrated marketing mix
Developing an integrated marketing mix
• Acceptability is the extent to which the product exceeds customer expectations
• Affordability the extent to which customers are willing and able to pay the
product’s price
• Accessibility the extent to which customers can readily acquire the product;
• Awareness the extent to which customers are informed about the product’s
features, persuaded to try it, and reminded to repurchase
Managing the marketing efforts and marketing
return on investment
Managing the marketing efforts

• Managing the marketing process requires five marketing

management functions
Managing the marketing efforts, continued
(Analysis)
Managing the marketing efforts, continued
(Planning)
• Marketing planning involves choosing marketing strategies that will
help the company attain its overall strategic objectives
Step of marketing plan Contents of marketing plan

Current market situation

Threats and opportunities Negative and positive factors of external environment (market)

Objectives and issues States the marketing objectives that the company would like to attain

Marketing strategy how the company intends to engage target customers and create value

Action programs for implementing the marketing strategy along with the details of a supporting

Budgets Budget for marketing

Controls Controls that will be used to monitor progress, measure return on marketing
investment, and take corrective action
Managing the marketing efforts, continued
(Implementation)
• Marketing planning addresses the what and why of marketing activities,
implementation addresses the who, where, when, and how
• Marketing implementation is the process that turns marketing plans into
marketing actions
• Many managers think that “doing things right” (implementation) is as important
as, or even more important than, “doing the right things” (strategy).
• Marketing department role
• Functional organization
• Geographical organization
• Product management organization
• Marketing or customer management organization
• Combination
•
Managing the marketing efforts, continued
(Control)
• Marketing control—evaluating results and taking corrective action to
ensure that the objectives are attained
• Specific marketing goals
• Measure performance against those goals
• Evaluate the causes of any difference
• Corrective actions
• Operating control - involves checking ongoing performance against the
annual plan and taking corrective action when necessary. Its purpose is to
ensure that the company achieves the sales, profits, and other goals set
out in its annual plan. It also involves determining the profitability of
different products, territories, markets, and channels.
• Strategic control involves looking at whether the company’s basic
strategies are well matched to its opportunities.
Measuring and Managing marketing Return on
investment (ROI)
Measuring and Managing marketing Return on
investment (ROI)
• Marketing dashboards—meaningful sets of marketing performance
measures in a single display used to monitor strategic marketing
performance
 Individual task
st
to be submitted on 1 April
Company Case
Facebook: Making the World More Open
and Connected
(given on page 88)