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MBA

Master of Business Administration
Crash Course

“To reach our greatest potential, we
must set our sights clearly and
embrace the unknown confidently”

The National Organization of Certified Public AccountantsAn association of institutional, professionals, and OFWs
Riyadh Chapter, Kingdom of Saudi Arabia Riyadh, Kingdom of Saudi Arabia

MODULE 4
MARKETI NG
MANAGEMENT
PURPOSE OF BUSINESS

CUSTOMERS

BUSINESS BUSINESS
SUCCESS SUCCESS
Create and
maintain value
for stakeholders

Employees Suppliers
Managers Creditors
Shareholders Investors

BUSINESS SUCCESS

PURPOSE OF BUSINESS

PURPOSE OF BUSINESS
CREATE & KEEP CUSTOMERS

MARKETING IS THE
PETER DRUCKER PROCESS BY WHICH THIS IS
“Revered as father of
Modern Day ACHIEVED
Management”
CRITERIA FOR BUSINESS SUCCESS
INCREASED PERFORMANCE PURSUED IN TWO (2) FOCI

BUSINESS DO IT BETTER Extract more value
from existing
customers
Maintain Output

Reduced Enhance Customer
Input Satisfaction

BUSINESS CAN DO MORE Attract more
customers

Incremental Input
INPUT Enhance Customer
Satisfaction
Increased Output

OUTPUT

BUSINESS PERFORMANCE=DIRECT FUNCTION OF MARKETING EFFECTIVENESS

LEARNING FROM FAILURE
Mardikakis M – Long Range Planning
Example: Exxon, IBM, Texaco, Union Carbide
CAUSES OF CORPORATE FAILURE
Natural Process
Organizational arteriosclerosis
Taking risks
Overextending resources & capabilities
Being overoptimistic
Ignoring or underestimating competition
Preoccupation with short term
Believing in quick fixes
Relying on barriers to entry
Overreacting
Personality and ability of CEO
Bad Luck
Incompatibility
MARKETING REVOLUTION
THE MARKETING MYOPIA – BUSINESS FAILURE
Theodore Levin’s Article – Harvard Business Review

PRODUCT ORIENTED
RATHER THAN
CUSTOMER ORIENTED

FORCED BUSINESS IN 1960’s

FOCUS ON CUSTOMER
NEEDS AND BE
MARKETING LED

MARKETING REVOLUTION
ENVIRONMENTAL PRESSURES
THAT LED TO MARKETING REVOLUTION

Faster Technological Change
Shift to Slow Growth Economy
Third World Economic Capability
Fluctuating Exchange Rate
Communication & Information Trend
Changes in Social Order
MARKETING CHALLENGES

Ability to powerfully communicate your business
with laser precision and your ability to deliver a
clearly-defined and consistent experience -
BRANDING

Create a deep connection with your core target
audience - your potential raving fans! – TARGET
MARKET - SEGMENTS

Design compelling offerings that pull customers in
like a magnet – OFFERINGS PORTFOLIO
80% of all purchase decisions are based on
emotion.

Availability of a Marketing Plan - ROADMAP
90% of small business owners do not have a plan

MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc

Increased specialization of Customer
Needs
“Mass Marketing” – “One size fits all”

New Communication Channel
Use of different medium to reach
consumers
MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc

Increased Competition for Customer
Dollars
“Growing global economy – more
competitors”

Shorter Product life Cycle
Technology- reaching customers
quickly – creating new products”

MARKETING CHALLENGES
David Lowndes
Director of Product Development for Comac, Inc

Legislation and Regulatory
Restrictions
“Imposition of regulations -
Standards”
MARKETI NG
VS
SELLI NG

MARKETING VS. SELLING

MARKETING SELLING

Determine Customers
needs and ability to buy
wants of target or not buy.
market.
Stimulate
Deliver desired consumers
satisfaction interest to the
efficiently and products.
effectively.
MARKETING VS. SELLING
MARKETING CONCEPT SELLING CONCEPT

Product Planning and
Discovers Market Needs
Development
Research Production

Product Planning and Promotional Methods
Development and Selling
Production Persuasive Techniques

Distribution of Products Distribution of Products
and Services and Services

Guaranteed UnGuaranteed
Sales Volume and Profits Sales Volume and Profits
Customers Satisfaction Customers Satisfaction

MARKETING – OPERATIONAL DIMENSION

Target
Market

MARKETING
SYSTEM
Things to Marketing
be Organi-
Marketed zations
MARKETING CORE CONCEPTS
Management Guidance
to achieve and maintain market share,
growth and profitability

Customer Orientation
Integration Effort
Competitive Advantage
Segmentation and Positioning
Environmental Awareness

MARKETING CORE CONCEPTS

Customer Orientation

High Production “We sell what we
and Distribution make”
Efficiency NOT
=
Low Cost and “We make what
Better Offering we sell”
Production Orientation Selling Orientation
Customer Orientation Product Orientation
Determines Needs Good products
& wants and and continuous
delivering desired improvement
satisfaction
MARKETING CORE CONCEPTS

Integration Effort

BUSINESS KEY TASK:

CREATE AND HOLD CUSTOMERS

DEPARTMENT’S TOTAL
SUPPORT OFFERINGS

MARKETING CORE CONCEPTS

Competitive Advantage

BUILD ON ADVANTAGES TO MINIMIZE
DISADVANTAGES

MARKET SHARE : NOT THE ONLY MEASURE
TO DETERMINE COMPETITIVE POSITION
MARKETING CORE CONCEPTS

Competitive Advantage
PETER DOYLE – Professor of Marketing & Strategic Management
UNIVERSITY OF WARWICK
MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN
TO EVALUATE PERFORMANCE

Increase in Market Share

New Product Ratio

Return on Investment

Capital Gain for Shareholders

MARKETING CORE CONCEPTS
PETER DOYLE – Professor of Marketing & Strategic Management
UNIVERSITY OF WARWICK
MEASURES USED BY AMERICAN AND JAPANESE BUSINESSMEN
TO EVALUATE PERFORMANCE
3

2.5
USA

2

1.5
JAP
JAP
1 USA
JAP

USA
0.5
JAP
USA
0
ROI CAPITAL MKT SHARE PROD. RATIO
GAIN
MARKETING CORE CONCEPTS

Segmentation and Positioning

SEGMENTATION
Identifying homogeneous market and
subdividing them by applying variables

POSITIONING
Choice of target market segment
Determine where business will compete
Choice of differential advantage
Dictate how business competes

MARKETING CORE CONCEPTS

Environmental Awareness

ORGANIZATION

Recognizing and
responding profitably
to unmet needs and
trends of the
environment.
MARKETI NG
DECI SI ONS

FOUR CORE AREAS

MARKET
SEGMENTATION

SELECTING
MARKET MARKETING TARGET
PLANNING DECISIONS MARKET

MARKET
POSITIONING
MARKET SEGMENTATION
IMPORTANCE OF
MARKET SEGMENTATION

Better matching of customers’ needs
Enhanced profits
Enhanced opportunities for growth
Retain customers
Targeted communication
Market segment share

MARKET SEGMENTATION
BASES FOR SEGMENTATION

NEEDS PROFILES
MARKET SEGMENTATION
MARKET PROFILES
DESCRIPTIVE MEASURABLE CUSTOMER CHARACTERISTICS

DEMOGRAPHIC
GEOGRAPHIC age, sex, family size
region of the country income, occupation,
urban or rural area education
religion, race, nationality

PSYCHOGRAPHIC BEHAVIORAL
social class product usage
lifestyle type brand loyalty
personality type type of user

MARKET SEGMENTATION
CRITERIA FOR SEGMENTATION
Effective : homogeneous customers but
significantly different from the others.

Identifiable: business must be able to identify
customers in the proposed segment.

Profitable: more segments - greater
opportunity – added value

Accessible: customers can effectively reached
and served.

Actionable: taking advantage of the
segmentation scheme it develops.
MARKET SEGMENTATION
FACTORS OF MARKET ATTRACTIVENESS

SEGMENT SEGMENT
SIZE GROWTH

PROFITABI CAPABI-
LITY LITIES

COMPETI-
TION

MARKET SEGMENTATION
MANAGEMENT STRATEGIC CHOICES

Undifferentiated marketing : Ignoring
actual or potential differences among
segments. Designs a product and
marketing mix that will appeal to the mass
market.

Differentiated marketing: Develop different
products and different marketing programs
for each segment of the market.

Focused marketing: Specializing in one or
small numbers of segments.
MARKET SEGMENTATION-EXAMPLE
AIRLINE INDUSTRY

PASSEN- VARIABLE FIXED
CLASS PRICE REVENUE VARIABLE PROFIT
GERS COST COST COST

Undifferentiated Strategy
No Class 240 250 20 60,000 4,800 50,000 5,200

Differentiated Strategy
Economy 144 250 20 36,000 2,880

Business 72 500 40 36,000 2,880

First 24 1,000 100 24,000 2,400

TOTAL 240 96,000 8,160 50,000 37,840

MARKET POSITIONING

Designing the company’s offering
and image so that they occupy a
meaningful and distinct
competitive position
in the target customers’ minds.
MARKET POSITIONING
POSITIONING OPTIONS
Introduce new brand - IBM

Change existing brand - Compaq

Alter beliefs about the brand - Chivas
Alter beliefs about competitive brands
– Body Shop

Alter attribute importance rates - Volvo.

Introduce new or neglected attributes –
Unilever – Radion Detergent.

Find a new market segment - Dunhill.

MARKET POSITIONING
MAJOR POSITIONING ERRORS
Underpositioning
Buyers have vague idea about the product and
don’t really sense anything special about it.-
Crystal Clear Pepsi (1993)

Overpositioning
Too narrow image of the brand. –
Customer perception vs. actual.

Confused positioning
Confused image – too many claims

Doubtful positioning
Too hard to believe what the product claims.
MARKETI NG
PLAN

MARKETING PLAN

MARKETING DECISIONS
MARKETING AUDIT
EVALUATION

MARKETING PLAN

IMPLEMENTATION
MARKETING PLAN
STRATEGIC FUNCTIONS

Give direction to marketing
effort

Framework for allocation of
resources

Basis for communication

Basis for coordination of efforts

Platform for evaluation and
control

MARKETING PLAN
MAJOR COMPONENTS OF MARKETING PLAN

BACKGROUND ANALYSIS How well the product is performing now
Current performance Factors that led to failure & success
Background analysis Where is the business leading to
Opportunities and options

MARKETING OBJECTIVES Clear sales goals and target market share
Marketing Objectives Profits, Return on Investments, Cash Flow
Financial Objectives

MARKETING STRATEGY Types of customers aimed at
Target market segment Analysis of customers needs and profiles
Differential advantage Define competitors and their strategies.

MARKETING MIX
Product Promotion Set of marketing decisions to
Price Services implement positioning strategy
Staff
MARKETING PLAN
MAJOR COMPONENTS OF MARKETING PLAN

Details of implementation
Who is responsible
ACTION PLANS
When it will be done
How much it will cost

Projected Revenues
Expenditures
BUDGET Profits
Cash Flow

ORGANIZATIONAL Staff
IMPLEMENTATION Organizational design

MARKETI NG
MANAGEMENT PROCESS
The 4 P’s
PRODUCT

PRODUCT

Bundle of Utility
(satisfaction)
that buyer receives as
result of lease/purchase
PRODUCT
MANAGERIAL DECISIONS – PRODUCT DEV’T.

PROCEED
TO NEXT
STAGE

GET
ADDITIONAL ABANDON
INFORMATION PRODUCT

PRODUCT
STEPS IN PRODUCT DEVELOPMENT

IDEA PRODUCT
GENERATION DEVELOPMENT

SCREENING TEST
OF IDEAS MARKETING

ECONOMIC COMMERCIA-
ANALYSIS LIZATION
PRODUCT
PRODUCT LIFE CYCLE

VALUE

Sales/Profit
Decline
Market
Acceptance
Maturity Abandon

Product
Launching

Growth Decline
Competitive

Introductory

TIME

PRODUCT

REASONS WHY
PRODUCT FAI L
Inadequate product analysis
Product deficiencies
Lack of effective marketing effort
Ease of competitive entry
Poor timing of introduction
Technical or production problems
PRODUCT

SOLUTIONS TO AVOID
PRODUCT FAILURE

Organizational change

Better marketing research

Improved screening and
evaluation of ideas
PRICE

A function of cost

Money value of a
product/service

PRICE
PRICING OBJECTIVES

Profit oriented objectives –
rate of return

Sales oriented objectives –
volume sales

Status Quo – satisfied profit
under market share
PRICE
PRICING STRATEGIES

SKIMMING – setting higher price
from what market expects –
PRICE FOR QUALITY.

PENETRATION PRICING –
setting low initial price at certain
profit – MASS MARKET TARGET

PRICE
PSYCHOLOGICAL PRICING STRATEGIES

FIXED PRICE – selling at one-
price system (retailers)

VARIABLE PRICE – prices at
different timings and different
events

ODD- PRICE POLICY – Prices set
at odd amount (ex. 99.95,
89.99)
PRICE
STEPS FOR DEVELOPING PRICING
STRATEGY

Assess Price Target Market
Competitiveness segment

Set Pricing Measure Value
Objectives to customers

Strategic Price Product line
Focus pricing

Evaluate
Select Price
Competitive
Strategies

PRICE
PRICING OBJECTIVES AND STRATEGY

HARVEST GROWTH
PRODUCT – MATURE BUILD PRICE AS
AGGRESSIVE WEAPON TO
PRICE – HIGH BUILD SHARE
OR ENTER MARKET
USE CASH –NEW PRODUCTS

MAINTAIN QUALITY
LEADERSHIP
ADJUST PRICES DEFENSIVELY
LEADER IN PREMIUM PRICE
PREVENT COMPETITIVE NICHE
EROSION
Ex. Rolex, Bang & Olufsen
Rolls Royce
PLACE ( DI STRI BUTI ON)

PLACE

Selection and
management of
channels and product
flow to consumers
PLACE

CHANNEL OPTIONS

DIRECT SALES FORCE INTERMEDIARY
MARKETING MARKETING

Advertising Own sales Merchants
force
Telephone Agents
Another firm
Mail Facilitators
Contract
Catalogues Force

PLACE
TYPES OF CHANNEL
MARKETING SYSTEMS
CONVENTIONAL MARKETING
CHANNEL

VERTICAL MARKETING SYSTEM

HORIZONTAL MARKETING
SYSTEM

MULTI- CHANNEL MARKETING
SYSTEM
CONVENTIONAL
Design
Make
MANUFACTURER Brand
Price
ordering delivery Promote
Sell

WHOLESALERS
Buy
Stock
ordering delivery
Promote
Display
RETAILERS Sell
Deliver
Finance

END CONSUMERS

VERTICAL

MANUFACTURER
Design
Make
Marks & Spencer Brand
Price
Mercedez Benz Promote
WHOLE
Buy
Shell SALER
Stock
Display
Sell
Deliver
Finance
RETAILER

END CONSUMERS
HORIZONTAL
Two or more autonomous organizations at
the same level cooperate in exploiting
market opportunities

Reduces risks of resources at
individual level

Speed to penetrate new market

Access to new technologies and
knowledge
Philips & Dupont – Devt of Compact Discs
Toyota & Gen Motors – assembly of cars

MULTI CHANNEL
Using multiple channels to satisfy differing
needs of segments and customers

HP Sells pc through own sales force
Use computer stores
Direct Marketing
Value Added Resellers
PROMOTI ON
MARKETI NG
COMMUNI CATI ON MI X

MARKETING COMMUNICATION MIX

ADVERTISING
Any paid form of non- personal
presentation and promotion of
ideas, goods, or services by an
identified sponsor.

PERSONAL SELLING
Personal presentation by the
firm’s sales force for the
purpose of making sales and
building customer
relationships.
MARKETING COMMUNICATION MIX

SALES PROMOTION
Short- term incentives to
encourage the purchase or
sale of a product or service.

PUBLIC RELATIONS
Building good relationships
with the public by publicity
for a "corporate image.

MARKETING COMMUNICATION MIX

DIRECT MARKETING
Direct communications with
carefully targeted individual
consumers to obtain an
immediate response and
cultivate lasting customer
relationships.
SETTI NG THE
PROMOTI ON MI X

SETTING THE PROMOTION MIX
VALUE
Advertising Decreases
Sales Promotion
Advertising Personal Selling
Public Relations Reminder/Presuasion
Branding Advertising Decrease
Personal Selling Public Relation Decrease
Sales Promotion-Limited
Personal Selling
Sales/Profit
Decline
Market Abandon
Acceptance Maturity

Growth Decline
Product
Competitive
Launching
Introductory TIME
Pre-Introduction
Light Advertising
Pre Introduction Publicity
Introduction
Heavy Advertising
Public Relations
Sales Promotions
ADVERTISING GOALS

ADVER-
TISING

ADVERTISING

OBTAIN

AROUSE

HOLD

GET
STAGES IN ADVERTISING CYCLE

INTRODUCTORY ADVERTISING
Develop consumer awareness

COMPETITIVE ADVERTISING
Emphasis such as “Better”
“Improved” “ No 1”

RETENTIVE ADVERTISING
Develop consumer loyalty by
repetitive advertising

Marketing Effectiveness

ORGANI- Measure of
ENVIRON-
ZATION quality of
MENT
relations

EFFICIENCY EFFECTIVENESS
“Doing things right” “Doing the right things”
OVERCOMING CHALLENGES

THE
COMMUNI CATI ON
OPTI MI ZATI ON PROCESS
David Lowndes

OPTIMIZATION PROCESS
ANALYSIS
Evaluate current communication materials in relation
to the following Critical Success Factors (CSF)
Specific objectives & desired response- campaign materials.
Target markets
Industry norms, best practices, business environment
Value of transaction or sales
Customization and personalization needs
Audience demographics
Competitive program offerings
Business and marketing objectives
Product lifecycles
Inventory quantities, shelf life and value
Usage and reorder patterns
Design requirements and constraints
Corporate graphic standards
Production options and costs
Delivery options and costs
Privacy and other regulatory compliance
OPTIMIZATION PROCESS
RE-ENGINEERING

REVISE
RE-DESIGN
COMBINE
ELIMINATE
ADD

GOAL : Align copy graphics and production
processes to maximize response rates,
manage costs.

OPTIMIZATION PROCESS
AUTOMATION

Automate production

Integrate technology into
designs and strategies to gain
competitive advantage.
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