Marketing ManagementA Strategic Perspective

Dr Gaël BonninProf. & Researcher Marketing Department RMS

Course Objectives

• Opportunity to enhance core competencies :– Deep understanding of the role of marketing and of its

key components– Ability to design a successful marketing strategy and

to create customer satisfaction and value– Application of marketing concepts to real life business

problems and ability to find solutions (gauged via a case study project) within a group context

– Team work and cohesion– communication in English

2

Grades• Cases (team) • Exam (individual)• Participation (individual, includes individual

preparation of cases)• Individual preparation of cases is

compulsory: 1 page with your name and the issue for the case and possible solutions

3

Course Outline

Session 1 – AM Introduction to classMarket Orientation and market knowledge (marketing research, consumer & organizational behavior)

Session 1 – PM Cases: Customer mobile phone + The launching of the super bock ‘mini’

Session 2 – AM Market strategy (market analysis, segmentation, targeting, definition of value proposition)

Session 2 – PM Case: Xiameter

Session 3 – AM Marketing mix 1 : product and price

Session 3 – PM Case study: Unilever

Session 4 – AM Marketing mix 2 : place and promotion

Session 4 – PM Case study: Unilever

Session 5 EXAM

4

References

• Readings– Lambin J-J. (2012), Market-driven management: strategic and

operational marketing, Dunod

• Other references– Solomon M.R., Marshall G.W. and Stuart E.W (2011), Marketing: Real

People, real choices, Pearson– Solomon M., Bamossy G., Askegaard S. and Hogg M.K. (2010),

Consumer Behaviour, a European perspective, Prenctice Hall– Malhotra N.K. (2009), Marketing research: an applied orientation,

Pearson

• In french– Goudey A. et Bonnin G. (2011), Marketing pour Ingénieurs, Dunod

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Session 1.The Marketing Concept

& Market Knowledge

1. The marketing concept

2. Understanding consumers

3. Market research

Business model components (Christensen et al, 2006)

Value Proposition• Target customer• Job to be done

• Offering

Profit Formula• Revenue model• Cost structure• Margin Model

• Resource Velocity

Key Processes• Processes

• Rules and metrics• Norms

Key Resources• People, tech, IS, channels, ecosystem, alliances, brands

Market and environmental trends

Market and environmental trends

Market and environmental trends

Market and environmental trends

7

Competition for customers

Competition for resources

7

The marketing concept

A key premiseThe path to creating value for the firm and it’s stakeholders lies in providing

superior value to customers

AMA 2007

“The activity carried out by organizations and individual , through institutions and process,

that allows to create, communicate, deliver and exchange offers that have value for the

consumers, customers, marketers and the society »

8

The marketing conceptTactic Marketing mix (product,

price, place, promotion)

Strategy Where to compete? (territory/segments)How to compete? (Positioning/value proposition)

CultureMarket

orientation (Norms&Values,

Behavior,

Devices,

e.g. theoretical

equipment, market

information syste

m)

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The Marketing Information System

10

http://www.youtube.com/watch?v=H95LrJgrHr8

Decision Process (1)Product-oriented management

Make the product/service Design, procure, make

Sell the product/service price, sell,

advertise/promote, distribute, service

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Choose the Value Segmentation,

market selection, value positioning

Provide the ValueProduct & service

development, pricing,

sourcing/making, distributing

Communicate the Value

Sales force, sales promotion, advertising

Decision Process (2)Marketing-oriented

Value creation and delivery sequence

Strategic Marketing Tactical Marketing (mix marketing)

12

Decision process (3) –Market- oriented

MARKET & VALUE

VALUE CHAIN &

RESOURCES/COMPETENCI

ESStrategic orientations, adapted from Trinquecoste, 1999

Detection of a market opportunity

Identify the needed market

competitive advantage

Plan the needed resources and competencies

Detection of a distinctive

competency/ resource

Maintain or increase the existing distinctive

competency

Detect the markets that enable the firm to turn the distinctive competency into

competitive advantage?ALIGNMENT?

13

Session 1.The Marketing Concept

& Market Knowledge

1. The marketing concept

2. Understanding consumers

3. Market research

Marketing decisions rest on (implicit) theories of consumer/organization behavior

Consumer

Choose the value

Provide and

communicate the value

Hypothesis for action

Market research

e.g. Design change

What is the influence of shape/color on

purchasing behavior?

e.g.Design change

What methods to choose the best

option?

15

• New purchase

• Re-purchase (new features)

• Re-purchase (same)

BUYCLASS

1. Need recognition2. Need features3. Suppliers search4. First selection of suppliers5. Proposal analysis6. Negotiation 7. Choice of suppliers8. evaluation

BUYPHASES

BUYGRID

Organizational Buyer Behavior« MATBUY »

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ENVIRONMENT

ATMOSPHERE - power / dependency - distance (cultural, social)- cooperation / conflict - individual and collective perceptions

Interaction1. Range

- transaction (ST)

-relation (LT) 2. Content

- products / servicesinformation- financial

- social3. Form

- interpersonal- negotiations- adaptations

- mediated flows

Supplier1. Social system

- culture-behavior*

2. Organization- technology- structurestrategy

3. Individuals- objectives

- expectancies-experience

Customer1. Social system

- culture- Behavior*

2. Organization- technology- structurestrategy

3. Individuals- objectives

- expectancies-experience

Organizational Buyer BehaviorThe IMP relational model

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Opinion leader

Buyer User

Prescriber

Decision maker

Organizational Buyer BehaviorRoles in the purchase unit

Payer

18

A simplified model of consumer behavior

Decision Process- Need recognition

- Perception- Memorization

- Attitude

Stimuli- Products

- Word of mouth- Advertising

Behavior -Purchase

- Consumption experience- Satisfaction/value creation

Factors affecting the behavior

- Consumer (age, …)- Environment

(culture, family, etc.)

Feedback

19

Purchase decision making process

1. Need Recognition

2. Information Search

3. Alternative Evaluation

4. Purchase

5. Post-purchase Evaluation 20

• Need: deprivation sensation stemming from a gap between an actual state and a desired state

• Motivation : strength that drives the consumer to act

Needs and motivation

Desired state

Actual state

Need(explicit/latent)

Information search

Lack of knowledge about

the product

Cost/advantage

ratio <0

Norms

Purchase probability

Non purchase

21

Alternatives Evaluation

Attributes selection(colour, price, packaging, etc.)

Brands selection(brands and products)

Performance assessment of the products

based on their attributes

Implementation of the decision rules

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Alternatives Evaluation Attributes Selection

Product attributes

Knownattributes

Unknownattributes

Importantattributes

Determiningattributes

Salientattributes

Assessment Phase Choice Phase

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Alternatives Evaluation Brands and Products Selection

Universal Set

Awareness Set

Consideration Set Consumption Context

Choice Set

Final Choice

Consideration set is the set of brands brought to the consumer’s mind in a particular choice occasion

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Summarizing perceptions of brands: perceptual map

25

The formation of attitude

Attitude: relatively global and enduring evaluation of an object, issue, person, or action

The aim of marketing is to change attitudes towards the brand/product

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Cognitive •Beliefs

Affective •Feelings

Conative •Behavioral intentions

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• The models of attitude formation– Compensatory models: multi-attribute model– Non compensatory models : conjonctive, disjonctive,

lexicographic models

Attitude formation

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Attitude formation

The multi-attribute model

Attribute Importance Brand A Brand B Brand C

Price Solidity Design Color

5 3 4 2

2 4 5 2

5 2 2 2

5 3 3 3

46 43 52 4

****

====

1012204

The consumer calculates an attitude for each alternative (sums up (importance of the attribute x evaluation of the alternative for

the attribute) for all the attributes)

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Attitude formation

The conjonctive model

Attribute Minimum threshold

Brand A Brand B Brand C

Price Solidity Design Color

4 3 3 2

2 4 5 2

5 2 2 2

5 3 3 3

4

The consumer eliminates all the brands under a minimum threshold

30

Attitude formation

The disjonctive model

Attribute Importance Brand A Brand B Brand C

Price Solidity Design Color

5 3 4 2

2 4 5 2

5 2 2 2

5 3 3 3

4

The consumer selects the most important attribute and then selects the brand(s) with the highest score for the

attribute

31

Attribute Importance Brand A Brand B Brand C

Price Solidity Design Color

5 3 4 2

2 5 4 2

5 2 2 2

5 3 3 3

4

Attitude formation

The lexicographix model

The same as the disjonctive model. But, if two brands or more score equally, the consumer selects the following

attribute by order of importance and chooses the brand with the highest score for this attribute.

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Model of attitude formation depends on

RoutineLimited problem

solving process

Extensive problem

solving process

Product complexity Product involvment

Brands’ differentiation

Low High

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Prior Expectations and Norms

Perceived performance

Dissatisfaction

SatisfactionPositive

Negative

DisconfirmationComparison

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Post-consumption (1)Satisfaction

Satisfaction is defined as pleasurable fulfillment. That is, the consumer senses that consumption fulfills some need, desire, goal,

or so forth and that this fulfillment is pleasurable

Post-consumption (2)Value

Perceived benefits

Affective benefits

Instrumental benefits

Relational benefits

identity benefits

Customer Value

Perceived sacrifice

Time costs

Monetary costs

Psychological costs

Energy costs

+ -

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« Perceived value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given »

(Zeithaml, 1988)

Value is not perceived quality• Perceived quality: evaluation of the superiority of a product and not

the service to the consumer, • High quality does not lead to consumption, poor quality does not lead

to non consumption

Post-consumption (2)Value in a B2B context

• Labor.

• Energy

• Productivity

Cost decrease Attractiveness for the end customer

Risk decrease

.. /..

New features

3M Repositionable adhesive for diapers P&G

LYCRA : charm, functionality for clothes

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Post-consumption (3) Consumer Loyalty

« Loyalty is a deeply held commitment to

rebuy or repatronize a preferred

product/service consistently in the future,

thereby causing repetitive same-brand or same

brand-set purchasing, despite situational

influences and marketing efforts having the

potential to cause switching behavior » (Oliver,

1997)

37

Post-consumption (3)Consumer Loyalty

Latent loyalty

Brake or Variety seeking

No loyalty

Real loyaltyConviction

Fake loyaltyLazy

satisfaction, inertia,

perceived risk

Purchase behavior

Pre

fere

nce Loyalty scenarii

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Session 1.The Marketing Concept

& Market Knowledge

1. The marketing concept

2. Understanding consumers

3. Market research

The different types of market research

• Strategic market research, control and monitoring of market, segmentation, positioning

• Product : concept, name, packaging, acceptance, taste

• Communication : audience, pre and post tests, media-planning, image

• Price, distribution, sales force• General research on the mix

40

The Marketing Research Process

Marketing issue

Research issue and question, purpose

and objectives

Data collectionData analysisInterpretation

of results

Decision Making

Study design

- sampling- Information

gathering methods

(qualitative vs

quantitative)- Data

analysis methods 41

A guideline for research question formulation

• To explore (and understand) a phenomenon

• To describe behaviors and situations• To test (to explain, to predict) the links

between variables• To model some variables and their

marketing consequences, in order to make a decision

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Sources of Information in Market Research

Internal data

External data

Secondary data

standardized marketing data

primary data

Salesorder to payment cyclecost datadata from distribution channeldata from buyers

State departmentsProfessional bodiesNewspapers, books, InternetAnnual reports, balance sheetsPrivate research

Point of sale dataRetailers, wholesalers or consumers panelScanning data

Market surveyObservationExperimental research

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Marketing problem and research question formulation

Case Marketing problem

Research question

Information source

Analysis method

Quebec Government

How to stop the increase in

motorbike crash in Quebec?

Understand the

underlying value system

and the connection with risky

driving

Existing advertisements

Exploratory methods, psycho-semiotic analysis

44

Marketing problem and research question formulation

Case Marketing problem

Research question

Information source

Analysis method

Tire producer How to increase the market share

by launching a new product (narrow tire)?

To understand the reason for liking narrow

tiresTo identify and

describe segments with

a favorable attitude

To anticipate the sales for

the new product

Interview, market survey

Market survey

Market survey and existing

data

Exploratory method, content analysis

MDA for preferences

Decision making systems

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Marketing problem and research question formulation

Case Marketing problem

Research question Information source

Analysis method

Car producer

How to position on the market?

To observe, to describe competitors

actions

Panels, market survey

Descriptive methods,

classification, typologic analysis

Consultant firm

Is there a need to improve product quality?

To observe and to describe dimensions

of qualityTo identify explicative variables of customer

satisfaction, To distinguish between

buyers and non buyers

Market survey Descriptive methods, PCA

Explicative methods,

regression and discriminant

analysis

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Marketing problem and research question formulation

Case Marketing problem

Research question

Information source

Analysis method

Food producer

What packaging and what price to

choose for a new

product?

To explain and predict the

most effective mix between

packaging and price

To anticipate sales volume

Experimentation Explicative methods (variance analysis)

47

The Real function of a market research

– A decrease in, and not an elimination of, risk– To support a decision already made– To compare between alternatives– To dismiss some alternatives

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Two types of studies

– Qualitative studies• Limited sample• Open-ended

questions• Non quantified data• Analysis based on

intuition, high risk of subjectivity

• Conclusion : suggestion

– Quantitative studies• Large sample,

reasoned choice• Closed questions,

structured questionnaire

• Quantified data• Objective and

formal analysis• Conclusion :

recommendation

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The quantitative studies

• Experimentation• Survey

– Sample– Questionnaire construction– Data analysis

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Outcome Outcome

Usual condition Test condition

Control group Experimentalgroup

Experimentation

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Survey

• Direct communication between the interviewer and the respondent

• Possibility to collect a lot of data on the same person on a single occasion

• Disadvantages depend on the data collection technique (e.g. mail, Internet, face-to-face)

•The Results Will Be Meaningful If–Population has been defined correctly–Sample is representative of the population–Respondents selected are able and willing to cooperate–Questions are understood by the respondents–Respondents have the knowledge, opinions, attitudes, or facts required–Interviewer correctly understands and records the response

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Methods of Data Collection

• Personal Interview

• Telephone Interview

• Mail Survey

• Fax Survey

• E-mail Survey

• Web-based Survey

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Measures in quantitative surveys

• Single-Item Scales : one item to measure a construct

• Itemized-category Scales: options to indicate his/her opinions about the object being measured.

– What is your overall satisfaction with McDonald’s Hamburgers? Very satisfied

Quite Satisfied

Somewhat satisfied

Not at all satisfied

• Rank-order Scales: respondents arrange objects in ascending or descending order with regard to some criterion.

• 54

Multiple-Item Scales : multiple items to measure a construct

Likert scales

• Service is reliable 1 2 3 4 5

• Premises are clean 1 2 3 4 5

• Employee are responsive 1 2 3 4 5

Totally agree

55

Measures in quantitative surveys

Totally disagree

Measurement in quantitative survey

• Constant Sum Scale: respondents allocate a fixed number of rating points among several objects to reflect relative preference

• Share 100 points among the following attributes of this brand of PC:

Clock Speed: 30Hard drive size: 20RAM size: 10Price: 40

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• Semantic differential scale:• Give us your opinion about the Financial Times.

– Low price ___ ___ ___ ___ ___ High price– Good local coverage ___ ___ ___ ___ ___ Bad local coverage– Good global coverage ___ ___ ___ ___ ___ Bad global coverage– Regular delivery ___ ___ ___ ___ ___ Irregular delivery

Measurement in quantitative survey

57

Pretesting the questionnaire

• Pretesting Specific Questions For• Variation• Meaning• Task difficulty• Respondent interest and attention

• Pretesting the Questionnaire• Flow of the questionnaire• Length

58

Qualitative studies

Non-directive interviews

Respondents given freedom to

respond within the bounds of the topics of interest to the interviewer.

Semi-structured interviews

The interviewer attempts to

cover a specific list of topics or sub-areas. The timing, exact

wording and the time allotted to each question is

left to the interviewer’s

discretion.

Focus group

5 to 8 people are interviewed at the same time

59

http://www.youtube.com/watch?v=Sfnh5BTQgrI

Qualitative studies

• Projective techniques

– Assumption: individuals are not always disposed to tell the truth. Use other mechanisms (than direct questions) to understand their motivations…

• Observation

– To see what people really do and not what they say they do

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• The context– The launching by Nestlé of its new instant

coffee in the USA after WWII– Blind tests : taste OK– Poor sales– Market survey (questionnaire) : taste is the

declared problem– How to overcome the paradox?

An example of projective method

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• Diagnosis– A hidden brake to consumption

• How to identify this brake?– Two identical shopping lists (except for coffee

: A = Nescafé instant coffee, B = coffee beans Maxwell House)

– Consumer had to describe the personality of each of the person

An example of projective method

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An example of projective method

• 2 packages of sandwich bread

• 1 can of carrots• Nescafé instant

coffee• 2 cans of peaches• 5 kg of potatoes

• 2 packages of sandwich bread

• 1 can of carrots• Maxwell House

coffee beans• 2 cans of peaches• 5 kg of potatoes 5

kg de pommes de terre

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• Test results– 48% of people think the person with the A list

is lazy (4% for the B list)– 48% said for A person is unable to plan its

purchases and for 12% is spendthrift– For 16% A person are mean wives

An example of projective method

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• Explanation– Purchase motives were not verbalizable– The function of coffee and the role of the woman at that time

• Purchase brake was not the taste but the positioning of the product : a quick to make coffee

• The role of the mother : to take care of her family• Coffee requires know-how, preparation, and shows

how the mother is devoted to her family• The substitution of coffee beans for instant coffee

breaks the links between the mother, her role and her family

An example of projective method

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• Implication– Change of Nescafé ‘s positioning : the

supplementary available time for the mother to dedicate to its family, thanks to the simplification of coffee preparation is put forward

– Two other examples• Beer• Clearasil

An example of projective method

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A Projective Test for a Beer

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A Projective test for Clearasil

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