Marketing Management Irina P.

Shirochenskaya, PhD (Marketing)

Marketing Management: course outline The course is specially tailored to enlarge knowledge in the field of strategic marketing, and to give a clear picture of new trends in marketing as well as to give more practical skills in the field of marketing.

The course structure

Duration: 17/6 weeks (February, 2 May, 25) Weeks 1 - 7 : strategic planning issues, segmentation, positioning Week 8 : mid-term test March, 23 Weeks 9 16 : marketing mix strategies Week 17 : group project presentations

The course structure

3 classes per week, including : Lecture (theoretical issues) Seminar (case analysis, question discussion) Mini-Project presentation (individual or in small groups of 2-4 students), project discussion

Group project presentation

Prepared in small groups of 4-5 students Choose a company Russian or overseas or imaginary Develop a strategic plan for its development Present your plan during an oral 20 minute presentation The presentation is assessed both by the tutor (50%) and the students (50%). Written report (15 pages)

Coursework

Attending at least 75% of the classes Active participation in all class activities Contributing to the topics discussed

Text:
Essential reading:
Ph. Kotler Marketing Management The Millennium Edition Prentice Hall 2000 Recommended reading: Phillip Kotler. Marketing Management 12-th edition.

Pearson Int. 2005 Lambin J.-J. Strategic Marketing. McGraw Hill. 2000 Peter Doyle. Marketing Management and Strategy 2 Edition Prentice Hall, 1998 Porter M. Competitive strategy: Techniques for Analysing Industries and Competitors, Free Press, 1980 Rudelius W. Marketing, 6th edition,, 2001

E-mail :

marketingibs@mail.ru

Lecture 1
Introduction to marketing management. Marketing concepts.

MARKETING: some definitions (1)

Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Marketing is the art of selling products.

MARKETING: some definitions (2)

There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.
Peter Drucker

Types of marketing (1)

1.
2.

3.

Marketing as business philosophy and managerial concept Marketing as a set of effective and efficient tools needed for a companys successful activity in competitive environment Marketing as a vital part of a companys managerial system

Strategic Marketing

Operational/Tactical Marketing

Holistic Marketing

Strategic marketing

Strategic marketing companys activities directed at achieving business goals by creating and delivering value to the market. Strategic marketing looks at creating and maintaining long-term profitability and maximizing companys stock value. The marketing staff must segment the market, select the appropriate target and develop the offers value positioning. The STP formula is the essence of strategic marketing (Ph. Kotler)

Operational/Tactical marketing

Tactical/operational marketing companys activities aimed at getting a certain sales volume at established markets by using tactical operations (i.e. directed at product, place, price and promotion) Developing specific product features, prices, promotion and distribution part of tactical marketing (Ph. Kotler)

Traditional physical progress sequence

Make the product

Sell the product

Des ign pro duc t

Pro duc e

Ma ke

Pri ce

Se ll

Adv ertis e/Pr om ote

Dis trib ute

Ser vice

Value creation and delivery sequence

Choose the value

Cust ome r seg men tatio n Ma rke t sel ect ion

Provide the value

Pro duct dev elop men t Ser vic e de vel op me nt

Communicate the value Sales force Sales promo tion Adv ertis ing

Val ue posi tion ing

Pri cin g

So urc ing Ma kin g

Strategic marketing

Tactical marketing

Holistic marketing
Companys activity viewed as a universal, all-embracing process, including certain types of marketing:

Integrated marketing Internal marketing Relationship marketing Social (oriented) marketing

Marketing management
Marketing (management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals
The American Marketing Association

Market-oriented strategic planning

A managerial process of developing a viable fit between the organizations objectives, skills and resources and its changing market opportunities. The aim of strategic planning is to shape the companys business and products so that they yield target profits and growth.

Marketing planning process

In order to understand MM it is vitally important to understand marketing planning process. It starts from marketing concepts, marketing audit, through to developing objectives and marketing strategies. Implementing the plan is one the most challenging areas in business

endencies of modern business development

Business globalization Emergence of multinational and transnational (Unilever, Coca-cola, Siemens, IKEA, Microsoft, City bank, etc) Development of Franchising International branding

Current trends of changes in modern companies (1)

Reengineering: From focusing on functional departments to reorganizing by key processes, each managed by multidiscipline teams. Outsourcing: From making everything inside the company to buying more goods and services from outside if they can be obtained cheaper and better. A few companies are moving toward outsourcing everything, making them virtual companies owning very few assets and, therefore, earning extraordinary rates of return. E-commerce: From attracting customers to stores and having salespeople call on offices to making virtually all products available on the Internet. Business-to-business purchasing is growing fast on the Internet. Personal selling can increasingly be conducted electronically.

Current trends of changes in modern companies (2)

Benchmarking: From relying on self-improvement to studying "world-class performers" and adopting "best practices." Alliances: From trying to win alone to forming networks of partner firms. Partner-suppliers. From using many suppliers to using fewer but more reliable suppliers who work closely in a "partnership" relationship with the company. Market-centered: From organizing by products to organizing by market segment. Global and local: From being local to being both global and local. Decentralized: From being managed from the top to encouraging more initiative and "entrepreneurship" at the local level

Procter & Gamble

Strategic Alliances

Major marketing themes as the millennium approaches (1)

Relationship marketing: From focusing on transactions to building long-term, profitable customer relationships. Companies focus on their most profitable customers, products, and channels. Customer lifetime value: From making a profit on each sale to making profits by managing customer lifetime value. Customer share: From a focus on gaining market share to a focus on building customer share. Companies build customer share by offering a larger variety of goods to their existing customers. They train their employees in cross-selling and upselling.

Relationship marketing
Marketing should be considered in the broader context of the wider public and society, that is carry out marketing activity in the way that is socially acceptable, ethically driven proactively incorporated into the organizations vision, mission, culture and day-to-day business activity. Recognition of corporate social responsibility is an important part of business behaviour and a key marketing issue in todays world

Major marketing themes as the millennium approaches (2)

Target marketing: From selling to everyone to trying to be the best firm serving well-defined target markets. Individualization: From selling the same offer in the same way to everyone in the target market to individualizing and customizing messages and offerings. Customers will be able to design their own product features on the company's Web page. Customer database: From collecting sales data to building a rich data warehouse of information about individual customers' purchases, preferences, demographics, and profitability. Integrated marketing communications. From heavy reliance on one communication tool such as advertising or sales force to blending several tools to deliver a consistent brand image to customers at every brand contact.

Major marketing themes as the millennium approaches (3)

Channels as partners: From thinking of intermediaries as customers to treating them as partners in delivering value to final customers. Every employee a marketer: From thinking that marketing is done only by marketing, sales, and customer support personnel to recognizing that every employee must be customer-focused. Model-based decision making: From making decisions on intuition or slim data to basing decisions on models and facts on how the marketplace works.

Concepts in marketing

Production concept Product concept Selling concept Market concept Societal concept

Production concept

Consumers will prefer products that are widely available and inexpensive Developing or underdeveloped marketers Mass production and low costs
Price sensitive customers

Product concept

Consumers will favour the products that offer most quality, performance and innovative features Constant product improvement Consumers admire well-made products and appreciate quality Products with little or no marketing input Marketing myopia

Selling concept

Consumers and businesses if left alone will not buy enough. The organizations must undertake the aggressive selling and promotion effort Overcapacity and unsought goods To sell what we want rather than make what the market wants Public identifies marketing as promotion and selling

Marketing concept

The key to achieving its organizational goals consists of a company being more effective and efficient in creating customer value to its chosen target markets

Marketing vs. selling concept

Selling focuses on the seller;

marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his products into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming. Theodore Levitt

Determinants of Customer Delivered Value

Factory Products Selling and Promotion Profits through Sales Promotion

The selling concept

Target market

Customer needs

Integrated marketing

Profits through Customer satisfaction

The marketing concept

Four pillars of marketing concept

1.
2. 3. 4.

Target market Customer needs Integrated marketing Profitability

Types of Customer Needs

1.
2.

3.
4.

5.

Stated needs (the customer wants an inexpensive car) Real needs (the customer wants a car whose operating cost, not its initial price, is low) Unstated needs (the customer expects good service from the dealer) Delight needs (the customer would like the dealer to include a gift of a U.S.road atlas) Secret needs (the customer wants to be seen by friends as a savvy consumer

Types of marketing based on needs

Responsive marketing. A responsive marketer finds a stated need and fills it. 2. Anticipative marketing An anticipative marketer looks ahead into what needs customers may have in the near future. 3. Creative marketing A creative marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond.
1.

Integrated Marketing
Integrated marketing takes place on two levels: First, the various marketing functions - sales force, advertising, customer service, product management, marketing research - must work together. Second, marketing must be embraced by the other departments; they must also "think customer." ("Marketing is far too important to be left only to the marketing department! David Packard of Hewlett-Packard )

1.

2.

Integrated Marketing

External marketing is marketing directed at people outside the company. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Internal marketing must precede external marketing. It makes no sense to promise excellent service before the company's staff is ready to provide it.

Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their objectives. The major objective of private firms is profit; The major objective of nonprofit and public organizationst is surviving and attracting enough funds to perform useful work. Private firms should not aim for profits as such but to achieve profits as a consequence of creating superior customer value. A company makes money by satisfying customer needs better than its competitors.

Traditional Organization Chart versus Modern Customer-Oriented Company Organization Chart

a) Traditional organization chart (b) Modern customer-oriented organization chart

Source: Ph. Kotler Marketing Management

In your opinion, how many companies follow this concept?

Unfortunately, not many!

And still .

Body Shop Procter & Gamble , Marriot Hotels, Wal-Mart, Nordstrom, Sony, Toyota, Cannon, IKEA, Electrolux, Nokia, Lego, Marks & Spencer, Disney
And some others

How about Russian companies? Are there any? If you know, please share with us!

Why follow this concept?

Sales decline Slow growth Changing buying patterns Increasing competition Increasing marketing expenditures

Societal concept

Determine the needs, wants and interests of target markets and deliver desired satisfaction more effectively and more efficiently than competitors in a way that preserves consumers and societys wellbeing Build social and ethical consideration to the marketing practices Balance between conflicting criteria of profits, consumer wants and public interest

Social responsibility: definitions

The obligations and accountability to society of individuals and organizations above and beyond their primary functions and interests. Corporate social responsibility relates to actions which are above and beyond that required by law. (McWilliams and Siegel, 2001)

Social responsibility: definitions (2)

Corporate social responsibility is one of business' contributions to achieving sustainable development. It is about business behaving responsibly towards society and the environment ensuring economic development is sustainable. It is a term describing the way in which businesses take account of the impacts of their operation, processes and products on the economy, society and the environment on a local, regional, national and global level; maximizing benefits to the business as well as society and the environment, whilst minimizing any downsides.

Marketing and social responsibility

Corporate social responsibility (CSR) refers to the attention of business to: community involvement socially responsible products and processes socially responsible employee relation

Egg's Corporate Social Responsibility Statement

Our core values at Egg are honesty, integrity and respect for people. We respect our people's individuality and diversity, encouraging them to develop their careers in a stimulating environment in keeping with our values. Our customers are the reason we exist and we constantly look to offer them the products and services that put them in control of their money.
ww.egg.com

Environmentalist - green marketing

Wastage, effluent, emissions of fumes and acid rain have to be taken seriously by manufacturers. Due to the high level of industrialization in the modern world, the environment is under constant threat from global warming. In recent times we have experienced severe weather effects, such as heavy rain, gales and significant flooding. All of this relates to environmentalism and as such means that organizations must in the future consider their strategy in relation to these issues.

Marks and Spencer go Carbon Neutral

In January 2007 Marks and Spencer announced a 200 million 'eco-plan to make it carbon neutral in 5 years, as its contribution to the battle against climate change. By 2012 MS said it would be carbon neutral, send no waste to landfill and 'set new standards in ethical trading'. Marks and Spencer will also focus on sourcing its food from the UK and Ireland as it looked to reduce air freight costs. Food brought into the UK by plane would be labeled 'flown'. Marks and Spencer are contributing towards the significant debate about long-term sustainability of business and resources, and aim to cut energy consumption and use renewables. It suggests that the plan they have in place would be consistent with taking 100 000 cars off the road each year. Marks and Spencer's actions signal the first in a range of changes that see organizations aiming to tackle the enormous challenges of climate change and waste. This is a very good example of 'green marketing' particularly as Marks and Spencer confirmed that they will continue to sell great qualify, stylish and innovative products, but want to increase sales as opposed to costs, making the customer experience as important and valuable but changing business practices to retain profitability. www.marksandspencer.com

The rise in consumerism

A major element of social responsibility is considering the impact of consumerism. Although consumers have had rights, enforceable by law, for many years, they have not really been effective because of the cost of taking legal action. The consumerist movement is a way of taking agreed action for specific purposes, such as opposing the building of an additional airport terminal at Heathrow in London. Such schemes are often associated with local initiatives. The consumer movement is a diverse collection of independent individuals, groups and organizations seeking to protect the rights of consumers.

Consumerism: what is it?

Consumerism is an organized movement of concerned citizens and government to enhance the rights and powers of buyers in relation to sellers (Kotler, P., 1995)
(Strategic Marketing for Non-Profit Organizations, 5th edition, Prentice Hall).

Is a social force designed to protect the consumer by organizing legal, moral and economic pressures on business
(Cravens, D. and Hills, G. (1970) 'Consumerism: A Perspective for Business', Business Horizons, 13, 2123).

What is the situation concerning consumerism in Russia?

What about other countries?

Thank you for attention