FOCUS on MARKETING ORIENTATION
Evolution of the Marketing Concept
Late 19th century: efficient production of goods allowed firms to meet strong customer demand.
Mid-1920s–early 1950s: weakened demand required that products would have to be “sold.” (personal selling, advertising, and distribution was the focus) Early 1950s–2000s: adopting a customer focus means a commitment to researching and responding to customer needs.
process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment
purchasers of organizations’ products; the focal point of all marketing activities
specific group of customers on whom an organization focuses its marketing efforts
process of planning, organizing, implementing, and controlling marketing activities to facilitate exchanges effectively and efficiently
The degree to which an exchange helps an organization achieve its objectives The process of minimizing the resources an organization must spend to achieve a specific level of desired exchanges
Marketing Management (cont’d)
opportunities and resources Determining marketing objectives Developing a marketing strategy and plans for implementation and control
How, when and by whom are marketing activities performed?
the internal structure of the marketing unit
Functions, products, regions, customer types
Marketing Management (cont’d)
marketing activities Motivating marketing personnel Developing effective internal communications within the unit
performance standards Comparing actual performance to established standards Reducing the difference between desired and actual performance
The Marketing Mix
marketing activities—product, distribution, promotion, and pricing—that a firm can control to meet the needs of customers within its target market
services, or ideas that satisfy customer needs
ready, convenient, and timely availability of products
that inform customers about the organization and its products
Pricing : Decisions and actions that establish pricing objectives and policies and set product prices
Exchange : The provision or transfer of goods, services, or ideas in return for something of value
Customer Value : The ratio between the customer’s perceived benefits and the resources used to obtain those benefits. Customer Retention: The overall objective of Retention providing value to customers continuously and more effectively than the competition, to have highly satisfied customers.
long-term, mutually satisfying buyer-seller relationships allowing for cooperation and mutual dependency
Customer Relationship Management (CRM)
information about customers to create marketing strategies that develop and sustain desirable customer relationships
O N S U M E R D E C I S I O N P R O C E S
Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution
Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture
Consumer Decision Making
Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience
Evaluation of Alternatives
Post Decision Behavior
Purchase 1. Trial 2. Repeat purchase Postpurchase Evaluation
§ The word ‘Strategy’ was initially introduced and defined in the ancient military dictionaries § § It comes from the Greek word ‘strategos’, strictly meaning a general in command of an army; it is formed from ‘stratos’, meaning army and ‘ag’, meaning to lead
§ First time in business literature by William Newman (1951)
THE CONCEPT OF ‘STRATEGY’
§ a plan of attack for winning § a plan for beating the opposition
§ a plan for achieving organisational goals § a plan for securing a competitive advantage in a given market
THE CONCEPT OF ‘STRATEGY’
“The direction and scope of an organisation over the long(er) term, which ideally matches its resources to its changing environment and, in particular its markets, customers or clients so as to meet stakeholder expectations”
Johnson & Scholes (1999)
PURPOSE OF STRATEGY
§ To set the future organisation.
§ To state how it is to create value to customers.
§ To identify what product/s and in which markets the firm will invest its resources.
§ To describe how it is to perform better than competition.
hierarchy of strategy
What is ‘sbu’
An SBU is an operating unit focus that groups a distinct set of products or services, which are sold to a uniform set of customers, facing a well-defined set of competitors. the phrase "Strategic Business Unit" came into use in the 1960s, largely as a result of General Electric's many units.
3 LEVELS OF STRATEGY
This describes a company’s overall direction in terms of growth and the management of its various businesses to achieve a balanced portfolio of products and services.
which emphasizes improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that division. How to compete in individual product-markets and support the corporate strategy
Functional strategies for the organisation’s functional areas in support of SBUs and corporate strategies
In the early 1980s, marketing strategy was defined as an indication of how each element of the marketing mix will be used to achieve the marketing objectives. “The broad conception of how product, price, promotion and distribution are to function in a coordinated way to overcome resistance to meet marketing goals”
THE INTER-RELATIONSHIP BETWEEN MARKETING AND CORPORATE STRATEGY
Ø INFORMS Ø DIRECTS Ø GUIDES Ø CONTROLS
Corporate Strategy •Specifying the organisation’s mission •Allocating resources •Defining Organisational objectives
Marketing Strategy •Identifying product market/s to compete in •Selecting market segments to target •Developing the marketing mix
Ø ACHIEVES Ø SUPPORTS
Marketing strategy development…..
The development of marketing strategy can be seen at three main levels. First, the core strategy of the company is selected and the marketing objectives and the broad focus for achieving them are identified. Second, market segments and targets better than the competition is identified.
Third level, a marketing department capable of putting the strategy into practice must be created. The marketing department, at this stage is responsible for developing the marketing mix programs that can convey both the positioning and the products/services to the target market.
Marketing strategy development to British Airways (BA)
First level, the company’s core strategy and marketing objectives have been set to ensure that BA is the “customer’s first choice through the delivery of an unbeatable travel experience”. Second level, BA has elected to provide overall superior service and good value for money in every market segment in which it competes. At third level, BA’s marketing program including advertising, pricing, distribution and customer services have been designed to support its product/services.
Marketing Strategy Orientation
Should the development of marketing strategy be oriented by
Ø Consideration of customers or Ø Ø Consideration of competitors
organisation having a market orientation make sense? What are the advantages?
• Promotes listening to the customer • • Happier customers more likely to be retained easily – good for long term profitability • • More customer and competitive information is likely to be obtained and used – good for profitability • • More likely to identify changes in market and competitive conditions – avoid being blindsided • • Helps employees focus on profit, not sales volume
WORK OUT ?
ØState your career strategy and your stakeholders
SHARE HOLDERS EMPLOYEE CUSTOMERS SUPPLIERS & DISTRIBUTORS
WEBSTER’S MARKETING PRINCIPLES
that serve to guide marketing thought and action in marketing strategy development Principle 1: Focus on customers Principles 2: only compete in markets where you can establish a competitive advantage Principle 3: customers do not buy products Principle 4: Marketing is too important to leave to the marketing department Principle 5: Markets are heterogeneous Principle 6: Markets and customers are constantly changing
Recent developments affecting the strategic role of marketing
Globalization Increased Importance of Service Information Technology Relationships across functions and firms
Corporate growth strategies
Current Products New products
Market penetration strategies
Product development strategies
Market development Diversification strategies strategies
should come first – the customer need or the product idea?
Planning framework for strategy making process
4 main ways of approaching marketing strategy – by Douglas west & John ford
Analysing a strategic marketing problem & developing the solution (the strategy) through a carefully thought-out process
It can help to see the big picture occasionally throughout the process. It can involve some inspiration & insight, but largely the process is one of painstakingly doing your homework
of seeing the overall decision is sometimes greater than thinking about it first is basically insight and Insight often only comes after a period of preparation, illumination & verification.
(1) do something, (2) make sense of it (3) repeat the successful parts & discard the rest.
Many companies have successfully diversified their businesses by a process of figuring out what worked & what did not
How-to rules keeping managers organised enough to be able to seize opportunities Boundary rules help managers to pick the best opportunities based geography, customers or technology Priority rules are about allocating resources amongst competing opportunities Timing rules relate to the rhythm of key strategic processes Exit rules are about pulling out from past opportunities
What is competitive marketing strategy
market-oriented strategy that establishes a profitable & sustainable market position for the firm against all forces that determine industry competition by continuously creating & developing a competitive advantage from the potential sources that exist in a firm’s value chain.”
Some advantages are sustainable over a long period of time while others can be duplicated by competitors almost immediately. Establishing a competitive advantage means that a firm builds a wall around its position in the competitive market.
must marketing managers understand to engage in effective marketing practice?
• • The Company: resources, capabilities, and strategies • • The environmental context: broad trends • • Current and potential Customers: needs, wants, characteristics • • Competitors: strengths, weaknesses, competitive trends • • In other words, the 4 Cs