Marketing Management

• Exam One
• Lecture One

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 Presentation Themes

• Marketing Management and Concept

• Exchanges and Demand States
• Strategic Planning Process
• Four P’s and Four C’s
• Market Orientation
• New Era for Strategic Marketing

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 What is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.

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What is Marketing Management?

Marketing management is the

art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.

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Selling is only the tip of the iceberg

“There will always 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
is to make the product or service
available.”
Peter Drucker
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 The Marketing Concept

• An organization should seek to make a profit

by serving the needs of customers
• The purpose of the marketing concept is to
rivet the attention of marketing managers on
serving broad classes of customer needs
• The principal task of the marketing function
operating under the marketing concept is to
find effective and efficient means of making
the business do what suits the interests of
customers
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 Major Types of Marketing
Type Description
Product Marketing designed to create exchange for
tangible products
Service Marketing designed to create exchanges for
intangible products
Person Marketing designed to create favorable actions
toward persons
Place Marketing designed to attract people to places

Cause Marketing designed to create support for ideas,

causes, or issues or to get people to change
undesirable behaviors
Organization Marketing designed to attract donors, members,
participants, or volunteers
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 For an exchange to occur….

1. There are at least two parties.

2. Each party has something that might
be of value to the other party.
3. Each party is capable of
communication and delivery.
4. Each party is free to reject the
exchange offer.
5. Each party believes it is appropriate or
desirable to deal with the other party.
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What is Marketed?
Goods
Goods
Services
Services
Events
Events &
& Experiences
Experiences
Persons
Persons
Places
Places &
& Properties
Properties
Organizations
Organizations
Information
Information
Ideas
Ideas
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Marketing Goods

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Marketing Ideas:
Friends Don’t Let Friends
Drive Drunk

This is the watch

Stephen Hollingshead, Jr.
was wearing when he
encountered a drunk
driver.
Time of death 6:55 p.m.

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Corporate Social Initiatives

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 Demand States

Negative Nonexistent Latent

Declining Irregular

Full Overfull Unwholesome

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 Key Customer Markets
Consumer Markets Global Markets

Business Markets Nonprofit / Government

Markets

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The marketplace isn’t what it used to be…

Changing
Changing technology
technology
Globalization
Globalization
Deregulation
Deregulation
Privatization
Privatization
Empowerment
Empowerment
Customization
Customization
Convergence
Convergence
Disintermediation
Disintermediation
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Company Orientations

Production Product

Selling Marketing

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The Strategic Planning Process
• Organizational growth based on products and markets
– Four paths organizations take in order to grow
• Market penetration strategies
• Market development strategies
• Product development strategies
• Diversification
• Organizational strategies based on competitive
advantage
– Competitive advantage is an ability to outperform
competitors in providing something that the market values
– Porter suggests strategies based on cost leadership or a
strategy based on differentiation
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The Strategic Planning Process

• Organizational strategies based on

value
–“Customer value” has become critical
for marketers as well as customers
–To succeed firms must seek to build
long-term relationships with their
customers by offering unique value

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The Strategic Planning Process

• Choosing an appropriate strategy

– Management should select those strategies
consistent with its mission and capitalize on the
organization’s distinctive competencies
– A sustainable competitive advantage can be
based on either the assets or skills of the
organization
– The key to sustaining a competitive advantage is
to continually focus and build on the assets and
skills that will lead to long-term performance gains
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The Strategic Planning Process
Choosing an appropriate strategy
– Management should select those strategies
consistent with its mission and capitalize on the
organization’s distinctive competencies
– A sustainable competitive advantage can be
based on either the assets or skills of the
organization
– The key to sustaining a competitive advantage is
to continually focus and build on the assets and
skills that will lead to long-term performance
gains
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The Four P’s

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Marketing Mix and the Customer

Four P’s Four C’s

• Product • Customer solution
• Price • Customer cost
• Place • Convenience
• Promotion • Communication

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 Core Concepts

• Needs, wants, and • Marketing channels

demands • Supply chain
• Target markets, • Competition
positioning, • Marketing
segmentation environment
• Offerings and brands
• Marketing planning
• Value and
satisfaction

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 I want it, I need it…

5 Types of Needs

• Stated needs
• Real needs
• Unstated needs
• Delight needs
• Secret needs

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Marketing Management Tasks

• Developing marketing • Shaping market

strategies offerings
• Capturing marketing • Delivering value
insights • Communicating
• Connecting with value
customers • Creating long-term
• Building strong growth
brands

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 Market-Driven Strategy
• All business strategy decisions
should start with a clear
understanding of markets,
customers, and competitors.

• The market and the customers that

form the market should be the
starting pint in shaping business
strategy.
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Characteristics of a Market-Driven Strategy

Becoming Market-
Orientation

Achieving Superior Determining

Performance Distinctive
Capabilities

Customer
Value/
Capabilities
Match
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 Why Pursue a Market-Driven Strategy?

 Strong supporting logic

 Achievements of companies displaying market-driven
characteristics are impressive
 Examples include:
Dell Inc.
Louis Vuitton
Southwest Airlines
Ferguson Enterprises
Payless ShoeSource
Wal-Mart
Hormel Foods

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 Becoming Market Oriented
• Customer is the focal point of the organization
• Commitment to continuous creation of
superior customer value
• Superior skills in understanding and
satisfying customers
• Requires involvement and support of the
entire workforce
• Monitor rapidly changing customer needs and
wants

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 Becoming Market Oriented

• Determine the impact of changes on

customer satisfaction
• Increase the rate of product innovation
• Pursue strategies to create competitive
advantage

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Characteristics of Market Orientation
 Customer Focus
What are the customer’s value requirements?
 Competitive Intelligence
Importance of
understanding the
competition as well as the
customer
 Cross-Functional Coordination
Remove the walls between
business functions
 Performance Consequences
Market orientation leads to
superior organizational performances
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Becoming a Market-Oriented
Organization
Information
Acquisition

Cross-Functional
Analysis of Information

Shared Diagnosis
and Coordinated
Action

Delivery of
Superior Customer
Value 1-32
 Market Orientation
 Information Acquisition
 Gather relevant information on customers,
competition, and markets
 Involve all business functions

 Inter-functional Assessment
 Share information and develop
innovative products with
people from different functions

 Shared diagnosis and action

 Deliver superior customer value
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 Distinctive Capabilities

“Capabilities are complex bundles of

skills and accumulated knowledge,
exercised through organizational
processes, that enable firms to
coordinate activities and make use of
their assets.”

George S. Day, Journal of Marketing, October 1994, p.38.

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 Southwest Airline’s Distinctive Capabilities

• Organizational Processes
Southwest uses a point-to-point route system rather than
the hub-and-spoke design used by many airlines. The
airline offers services to 57 cities in 29 states, with an
average trip about 500 miles. The carrier’s value
proposition consists of low fares and limited services (no
meals). Nonetheless, major emphasis throughout the
organization is placed on building a loyal customer base.
Operating costs are kept low by using only Boeing 737
aircraft, minimizing the time span from landing to
departure, and developing strong customer loyalty. The
company continues to grow by expanding its point-to-point
route network.

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 Southwest Airline’s Distinctive Capabilities

• Skills and Accumulated Knowledge

The airline has developed impressive skills in
operating its business model at very low cost
levels. Accumulated knowledge has guided
management in improving the business design
over time.

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 Southwest Airline’s Distinctive Capabilities

• Coordination of Activities
Coordination of activities across business
functions is facilitated by the point-to-point
business model. The high aircraft utilization,
simplification of functions, and limited
passenger services enable the airline to manage
the activities very efficiently and to provide on-
time point-to-point services offered on a
frequent basis.
• Assets
Southwest’s key assets are very low operating
costs, loyal customer base, and high employee
esprit de corps
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 Capabilities
Disproportionate (higher)
contribution to superior
customer value

Compelling
Logic of Distinctive
Capabilities

Provides value to
customers on a more
Source: George S. Day, Journal of Marketing, October 1994, p. 38.
cost-effective basis1-38
 Capabilities

Desirable
Desirable
Capabilities
Capabilities

Applicable to Superior to the

Multiple Competition
Competition
Situations

Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
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 Organization’s Process
EXTERNAL INTERNAL
EMPHASIS EMPHASIS
Outside-In Inside-Out
Processes Processes
Spanning Processes

 Market sensing  Customer order  Financial management

fulfillment  Cost control
 Customer linking
 Pricing  Technology
 Channel bonding
 Purchasing development
 Technology
monitoring  Customer service  Integrated logistics
delivery  Manufacturing/
 New product/service transformation
development processes
 Strategy development  Human resources
management
Source: George S. Day, Journal of Marketing, October 1994, 41.  Environment health1-40
and
safety
Matching Customer Value and
Distinctive Capabilities

Value Requirements

Distinctive
Capabilities

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 Creating Value For Customers
Customer Value:
 Value for buyers consists of the benefits less
the costs resulting from the purchase of
products.
 Superior value: positive net benefits

Creating Value:
 “Customer value is the outcome of a
process that begins with a business
strategy anchored in a deep
understanding of customer needs.”
Source: C. K. Troy, The Conference Board Inc., 1996, 5.
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 Value Composition

Product

Services
Benefits
Employees

Image
Value
(gain/loss)
Monetary
costs Costs
Time
(sacrifices)
Psychic and
physical costs

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 Becoming Market Driven

Market Sensing
Capabilities

MARKET-DRIVEN
STRATEGIES

Customer Linking
Capabilities
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 Market Driven Initiatives
• Market Sensing Capabilities
• Effective processes for learning about
markets
• Sensing:
• Collected information needs to be shared
across functions and interpreted to
determine proper actions.
• Customer Linking Capabilities
• Create and maintain close customer
relationships
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 Challenges of a New Era for
Strategic Marketing
 Strategic marketing faces unprecedented
challenges and opportunities:
Turbulent markets
Intense competition
Disruptive innovations
Escalating customer demands
 Ethical Challenges
 Societal and Global Change
 Social Responsiveness of Organizations
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 Escalating Globalization
It is important to understand the differences
(and similarities) between the developed
economies and the new world beyond.

• Market opportunities
• Competitive threats
• Partnering opportunities
• Outsourcing initiatives
• The world’s poor
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 Technology Diversity
and Uncertainty
Radical New Product Opportunities
• Nanotechnology
• Private space travel
• The digital home
• Self-cleaning windows

Finland was ranked #1 in global competitiveness in

2004 by the World Economic Forum because of strong
skills in adapting to new technology, proactive
business practices, and nurturing a culture of
innovation (www.weforum.org).
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 Ethical Behavior and Social
Responsiveness

• Increasingly demanding ethical

challenges

• Corporate responsibility

• Responsibilities to stakeholders

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