0 2 1 3 t s g u A ,

INTRODUCTION

The Program of Class 11. Introduction to GSB 50011-1. Syllabus Overview 1-2. A Better Way of Learning

2. Defining Marketing Management2-1. Defining Marketing 2-2. Defining Marketing Management 2-3. An Overview of Marketing Management

3. Case Discussion on the Company Case 1 (pp. 535-6)

Introduction to GSB 5001

A Definition of Success Whenever we plan to DO s.th., we wish to GET s.th. eg. 1. To study ----- ? eg. 2. To exercise ----- ? eg. 3. To play ----- ? What is the most general term for all the ?s above?

SUCCESS!!

Success means to achieve what intended (i.e., goals)

Determinants of Success

LUCK EFFORTS TALENTS / CAPABILITIES RESOURCES And others, you may think of. But the very key factor is

MANAGEMENT!!

Management There is always a better way to do anything . (T. Edison) Management is a process of finding out the better way to do it (or to achieve it successfully)! BETTER in terms of WHAT (criteria)? 1. Effectiveness 2. Efficiency 3. Ease to Adjust to Changes (internal as well as external) 4. Legal & Ethical Correctness

Management As a Process Set the goal(s), the criteria of success Find out the factors that determine the achievement of the goals both effectively and efficiently Plan what and how to do with the controllable determinants under the expected or given conditions of the uncontrollables - Both in abstract forms and concrete forms - The concept of goal-hierarchy will be helpful Implement the plans - Allocation of resources and their full utilization - organizing, staffing, & leading Control the plan, the inputs, and the utilization process

Goals, Problems, Tasks, & Targets of MGT.

TASKS What to do? How to do?THE MATTER OF INTEREST

GOALS GAP = PROBLEM NATURAL CONSEQUEN CE TIME

Pres nt

Specifi c Future

An Example of Goal-Hierarchy--The Strategic Profit ModelNet Sales

Cost of Goods Sold Operating Expenses + Interest Expense Accounts Receivable + Merchandis e Inventory + Cash + Total Current Assets

Gross Margin

Total Expenses

Net Profit Before Taxes

-

Net Profit After Taxes

Taxes

Net Sales

Net Profit Margin

xNet Sales

Return on Assets (ROA)

Total Current Assets + Fixed Assets

Total Assets

Asset Turnover

Internal & External Conditions of Management

TASKS What to do? How to do? THE MATTER OF INTEREST

GOALS GAP = PROBLEM NATURAL CONSEQUEN CE TIME

Pres nt

Specifi c Future

Our TargetOur Target

What to Give what kind of answers to which kind of pr do? How to do?GAPS Interests Problems Knowledge etc. The End State of Natural Maturity Time End of Semester

Presen t

Mapping Strategic Themes (Kaplan & Norton, HBR, Jan. 2008, p. 69)Vision: By 2013, become the leading company in our industryIncreased return on capital Financial Perspective Improve productivity Increase revenues in existing segments & markets Grow revenues in new products & services

Improve Operating Quality and EfficiencyCustomer Perspective Process Perspective

Grow High-Value Customer Relationships

Accelerate Product Innovation

Be a leader in quality Introduce & support and reliability Provide valued service, application expertise, innovative, high-performance products & Improve supply chain efficiency & effectiveness

Optimize customer Excel at technology, product development, & lif profitability

Improve quality, cost, & Expand channels, offerings, and markets Identify next-generation market opportun flexibility of operating process Build & maintain strong customer relationships

Learning & Growth Perspective

Create a High-Performance CultureExpand & build strategic skills, Capabilities and expertise

Develop leadership and an execution-drivenEnable & require continuous learning & sharing of culture

Course Learning ObjectivesTo Make a World - Standard MBA Degree Holder1.To extend capacity to lead in real world organizational settings Let acquire a leadership mindset through improving confidence in knowledge bases and through encouraging to take initiative in resolving real problems 2.To acquire profound knowledge on marketing function of business Make understand the key concepts & theories to identify the critical decisions issues of marketing 3.To develop ability to the utmost to resolve real world marketing problems Help develop the decision making power through case studies and ethics education 4.To cultivate global perspectives 5.To develop a good enough command of English Through active participation in class discussions and report writing

Decision Making ProcessValue Premise s Factual Premise s Problem Recognition Information Search & Analysis Alternatives Development Alternatives Evaluation Selection of An Alternative(s) Execution

Pedagogy1.To utilize the textbook and a few articles to understand the basic concepts and frameworks on current marketing management issues. - A mix of multiple choices and true/false quiz is given at the beginning of each session. - Q & A based lecture guides this learning process. 2. To use one or two selected cases from the textbook and/or a real world cases suggested by a volunteer for the class discussion section of each session. 3. To ask each student to hand in two individually prepared reports, each of which analyzes one assigned case. The cases will be handed out 2 weeks before the due dates. 4. To assign two examsthe one in the middle and the other at the end of the semester. The exams will be a mix of short essays and case analyses.

Session Operation1.Taking a quiz of 10 questions of either multiple choices or of true/false type. 2.Summary of the key concepts and theories to be discussed. 3.Lecture in a Q & A style 4.Discussion on case(s)--selected from the textbook and/or suggested by a volunteer 5.Wrap-up and discussion on textbook discussion questions

EvaluationCOURSE ASSIGNMENTS AND POINTS ASSIGNMENTS POINTS QUIZES: 12 times 12 DISCUSSION PARTICIPATION 12 sessions 12 VOLUNTEER LEADING 6 EXAMINATIONS: Mid-Term 25 Final 25 CASES ANALYSIS REPORTS: Twice 20 (10 each) TOTAL 100 GRADING Students who achieve less than 70 points in total will fail the course, that is, they will get grade F. Among the students who pass the course, the top 20% of the course-enrolled students in the total points will get grade A+, the next 20% A, the next 30% after the next B+, and the remaining students B, at maximum. The full - time and the part - time students will be evaluated separately .

Course MottoStudy Less , Learn More !!Possible? How? Yes, through better managing learning

Management of Learning/Studying

The main goal of LEARNING is - To get knowledge useful to solve the problem at hand. Management Problems of Learning, i.e., the factors that determines the success of learnin 1. What to study - Importance of the problem the knowledge can solve - Relevance & sufficiency of knowledge to the probl 2. How to study - Efficient way of learning - Whether you can apply the knowledge to solve it 3. When to study 4. Where to study, etc.

The Principles of Accumulation & UtilizationWhen/Where/To Whom/How

Utilization

FLOWS

STOCKS

By when/What/How/How much

Accumulation

B/S Equity Debts

P/L Revenues Costs

A Mechanism of Making Money with KnowledgeAccumulation through Studying Time Knowled ge

Payment

Task

Utilization through Problem Solving

A Better Way of Learning ( . (Reading without thinking is , ) saidalways in vain; Thinking without reading is always in peril.) Learning becomes perfect only through both reading & thinking.

Nonakas Classification of Knowledge

Tacit knowledge vs. explicit knowledge Explicit knowledge can be stored and transferred easily. Only tacit knowledge is applicable to problem solving. Practice Makes (Learning) Perfect! Reading is for learning explicit knowledge, while thinking transforms explicit knowledge into tacit one.

s Interpretation of , ( ) . : Read a lot : Raise questions : Answer the questions thoughtfully : Criticize & Synthesize the answers : Execute the synthesized answer & Check the validity

CHAPTER ONE Marketing: Creating and Capturing Customer Value

Rest Stop: Previewing the Concepts1.Define marketing and the marketing process. 2.Explain the importance of understanding customers and identify the five core marketplace concepts. 3.Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy. 4.Discuss customer relationship management and identify strategies for creating value for and capturing value from customers. 5.Describe the major trends and forces that are changing the marketing landscape.

What Is Marketing?Your idea?

Marketing as an Exchange Process (Economic) Process by which two or more parties give something of value to each other to satisfy perceived needs. To actualize an exchange, some obstacles (i.e., economic discrepancies/separations) must be removed. Marketing is the process of resolving the discrepancies. Through the process, marketing creates flows & utilities. - Form Utility: Transformation of raw materials and/or labor into a finished good and/or service that the consumer desires. - Place Utility: Availability of a good and/or service where the consumer wants or needs it. - Time Utility: Availability of a good and/or service when consumer wants/needs it. - Ownership Utility: Transferring title of a good and/or service from producer to consumer.

Marketing Facilitates Exchange

-Marketing Functions -Marketing Activities - Marketing Flows

Economic Separations & MarketingSeparations Information Valuation Quantity Quality Ownership Spatial Temporal Payment Risks FunctionsInformational Value Matching Accumulation Allocation Sorting Out (Type; Grade) Assortment Buying Selling

Activitiesmarket research, ad, promotion, self-choice, complaining

price negotiation, marcomm.accumulation, allocation, packagingstandardization, classification by kind or by grade

CommercePhysical DisSupporting

combining items across types and/or grades contracting, title transfer, physical deliverycollection, distribution, stocking, embarking/debarking, check-up, packaging

Transportation Storage Financing Insurance

inventory mgt., debarking, packaging, distributive processing

risk mgt., safety mgt., risk pooling

factoring, loan, credit provision/collection

What Is Marketing? Simple definition: Marketing is managing profitable customer relationships. Goals: 1.Attract new customers by promising superior value. 2.Keep and grow current customers by delivering satisfaction.

Marketing Defined 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. Marketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. - OLD view of marketing: Making a sale telling and selling - NEW view of marketing: Satisfying customer needs

Definition of Marketing w.r.t. Biz Goals (Function, Process, or System of) Facilitating EXCHANGE of Managing DEMAND for the outputs of a firm of Managing CUSTOMER SATISFACTION with the firm of Managing CUSTOMER RELATIONS to the firm et cetera

Marketing as a Dynamic Organizational Process

Major Business FunctionsBiz Firms under the Capitalism: Seeking Profits through Production of Added Values and Sell themThe main role of marketing is selling the output(s), but, to sell the outputs smoothly, coordination is inevitable.

PROCUREMENT (RESOURCES )

TRANSFORMAT ION (ADD VALUE)

SELLING (REVENUE)

The Mechanism of Profit GenerationProperties - Cores - Others Price Costs - Various Economies - Technology Profits Benefits & Experience Valu e Costs

Purchase = Sales

3 Major Issues Determining Biz Performance Value Drivers - Biz Models - Competitive Advantages Cost Drivers & Value Drivers - Resources Procurement & Allocation (Costs & Quality) - Value Drivers (Sales & Price) Sustainability of Biz Model Sustainability of Competitive Advantages Sustainability of Good Relations

How to Sustain?

How to Make Profits

How to Make Sales?

3 Issues of Biz Performance and Marketing Value Drivers - Biz Models - Competitive Advantages Cost Drivers & Value Drivers - Resources Procurement & Allocation (Costs & Quality) - Value Drivers (Sales & Price) Sustainability of Biz Model Sustainability of Competitive Advantages Sustainability of Good Relations Regis McKenna says

How to Sustain?

How to Make Profits

How to Make Sales?

Marketing is Everything.

Different Views on MarketingAcademia Traditional View Marketing Modern View Marketing Field/Practice Marketing/SellingStrategic Mgt. Marketing Operations Supply Chain Human Resources Finance

A Simple Model of the Marketing Process Understand the marketplace and customer needs and wants. Design a customer-driven marketing strategy. Construct an integrated marketing program that delivers superior value. Build profitable relationships and create customer delight. Capture value from customers to create profits and customer quality.

Core Marketing Concepts Needs, wants, and demands Target markets, positioning, and segmentation Offerings and brands Value and satisfaction Exchange and relationships Marketing channels Supply chain Competition Marketing environment

A Market and a Marketer A Market:- Is the set of actual and potential buyers of a product who share a need or want that can be satisfied through exchange relationships. - Is a grouping of customers: need markets, Product markets, demographic markets, geographic markets, etc. Goods Services Events Experiences Persons Places Properties Organizations Information Ideas

What is Marketed?

A marketer is someone who seeks a response from another party, called a prospect.

Needs, Wants, and Demands Needs: basic human requirements Wants: directed to specific objects that might satisfy the need Demands: wants for specific products backed by an ability to pay

Needs, Wants, and Demands Needs: State of felt deprivation including physical, social, and individual needs. - Physical needs: Food, clothing, shelter, safety - Social needs: Belonging, affection - Individual needs: Learning, knowledge, selfexpression Wants: Form that a human need takes, as shaped by culture and individual personality. Demand = Wants + Buying Power

Need/Want Fulfillment Needs and wants are fulfilled through a marketing offer. Market Offerings - Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. - Products: Persons, places, organizations, information, ideas. - Services: Activity or benefit offered for sale that is essentially intangible and does not result in ownership. - Brand experiences: . . . dazzle their senses, touch their hearts, stimulate their minds.

Offerings and Brands Value proposition: a set of benefits offered to satisfy customers needs Offering: a combination of products, services, information, and experiences. Brand: an offering from a known source

Marketing Myopia Occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the wants and lose sight of the needs.

Customer Value and Satisfaction Value : the sum of the perceived tangible and intangible benefits and costs to customers - Customer value triad = quality, service, & price Satisfaction : a persons comparative judgment of a products perceived performance (or outcome) in relation to expectation Care must be taken when setting expectations: - If performance is lower than expectations, satisfaction is low. - If performance is higher than expectations, satisfaction is high.

Exchanges and Relationships Exchange: Act of obtaining a desired object from someone by offering something in return Relationships: Marketing actions build and maintain relationships with target audiences involving an idea, product, service, or other object.

Modern Marketing Systems Main elements in a modern marketing system include: - Suppliers - Company (marketer) - Marketing intermediaries or Marketing Channels - Final users (consumers) - Competitors Major environmental forces effect each element. - Task environment includes the immediate actors involved in producing, distributing, and promoting the offering. - Broad environment includes six environments: Demographic Economic Physical Technological Political-legal Social-cultural

Marketing Management The art and science of choosing target markets and building profitable relationships with them. - Requires that consumers and the marketplace be fully understood. - Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value. Designing a winning marketing strategy requires answers to the following questions: 1. What customers will we serve? - What is our target market? 2. How can we best serve these customers? - What is our value proposition?

Demand Management Demand management Finding and increasing demand, also changing or reducing demand, as in demarketing. Demarketing Temporarily or permanently reducing the number of customers or shifting their demand.

Demand and Marketing TasksCharacteristics of DemandNegative D D < Supply Quantit y No Demand Latent D Declining D D = Perfect D Supply D > Exceeding D Supply Existence Unhealthy D Mismatch Fluctuating D

Market TasksConverse Stimulate Develop Rebuild Maintain Reduce Destroy Match

NamesConversional Stimulating Developmental Remarketing Maintenance Demarketing Countermarketin g Synchromarketin g

Timing

Selecting Customers to Serve Market segmentation - Dividing the market into segments of customers -Identify and profile distinct groups of buyers examining demographic, psychographic, and behavioral differences. Target marketing - Selecting one or more segments to cultivate. Target market - Segments presenting the greatest opportunity

Choosing a Value Proposition Value proposition: The set of benefits or values a company promises to deliver to consumers to satisfy their needs. Value propositions dictate how firms will differentiate and position their brands in the marketplace. Positioning: what the offering means in the minds of the target buyers as delivering some central benefit(s).

Marketing Management OrientationsOrganizations design and carry out their marketing strategies under five alternate concepts: Production Concept Product Concept Selling Concept The Marketing Concept Societal Marketing Concept

Production Concept Premise : Consumers prefer products that are widely available and inexpensive. Focus on : - High production efficiency - Low costs - Mass distribution

Product Concept Premise : Consumers favor products offering the most quality, performance, or innovative features. Focus on : - Making superior products - Improving them over time

Selling Concept Premise : Customers, if left alone, will not buy enough of the organizations products. Focus on : - Aggressive selling and promotion efforts

The Marketing Concept A marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors. Premise : Find the right product for your customers. Focus on : - Needs of the buyer

The Selling and Marketing Concepts ContrastedConcept Starting point Focus Means Ends

Selling

Factory

Existing products

Selling and Profits thru promoting Sales volume

Marketing

Market

Customer needs

Integrated (holistic ) marketing

Profits thru Customer satisfaction

Societal Marketing Concept Societal marketing conceptfollowing the marketing concept while preserving or enhancing customers and societys long-term well-being. Premise : Find the right product for your customers and for the society in the long run. Focus on : -Needs of the buyer from a long-term perspective -Long-term well-being of the society -Balance among companys profit, consumers need satisfaction, and societys long-run welfare.

Holistic Marketing Concept Premise : Everything matters with marketing. Focus on :- Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. - Integrated marketing requires the marketer to devise marketing activities and assemble fully integrated marketing programs that create, communicate, and deliver value for customers. - Internal marketing ensures that everyone in the organization embraces appropriate marketing principles, especially senior management. Everyone in the organization must think customer. - Performance marketing emphasizes financial accountability and social responsibility marketing

The Integrated Marketing Plan Transforms the marketing strategy into action. Includes the marketing mix and 4 Ps of marketing: - Product - Price - Place (Distribution) - Promotion

Building Customer Relationships Customer relationship management ( CRM ) : The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. CRM deals with all aspects of acquiring, keeping, and growing customers. Customer value and satisfaction are the keys.

Relationship Building Blocks Customer perceived value: Customers evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers. - Perceptions may be subjective - Consumers often do not objectively judge values and costs. Customer satisfaction: Dependent on the products perceived performance relative to a buyers expectations. - Customer satisfaction often leads to consumer loyalty. - Some firms seek to DELIGHT customers by exceeding expectations.

Customer Relationship Levels and Tools Loyalty and retention programs build relationships and may feature: - Financial Benefits e.g., frequency marketing programs - Social Benefits e.g., club marketing programs - Structural Ties Focus is on relating directly to profitable customers, for the long term.

Changing Nature of Relationships Selective relationship management: Customer profitability analysis eliminates losing customers and selects profitable ones. Relating more deeply and interactively via blogs, social network Web sites, email, and video sharing. - Marketing by attraction vs. intrusion Increased amounts of consumer generated marketing.

Partner Relationship Marketing Marketing partners help create customer value and assist in building customer relationships. Partners inside the firm: - All employees customer focused - Teams coordinate efforts toward customers Partners outside the firm: - Supply chain management - Strategic alliances

Capturing Value From Customers Customer Lifetime V alue ( CLV )- The entire stream of purchases that the customer would make over a lifetime of patronage.

Share of Customer- The share a company gets of the customers purchasing in their product categories.

Customer Equity- The combined discounted customer lifetime values of all the companys current and potential customers. - Classify customers by loyalty and potential profitability - Manage accordingly

Customer Relationship Groupsindusty

Source: Renartz, Werner and V. Kumar (2002), Mismanagement of Customer Loyalty," HBR, July, p. 92.

Customer Relationship Groups and Strategy

Source: Renartz, Werner and V. Kumar (2002), Mismanagement of Customer Loyalty," HBR, July, p. 93.

Changing Marketing Landscape The digital age Rapid globalization Call for more ethics and social responsibility Growth of not-for-profit marketing

Key Functions of the CMO Strengthening the brands Measuring marketing effectiveness Driving new product development based on customer needs Gathering meaningful customer insights Utilizing new marketing technology

Rest Stop: Reviewing the Concepts1.Define marketing and the marketing process. 2.Explain the importance of understanding customers and identify the five core marketplace concepts. 3.Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide strategy. 4.Discuss customer relationship management and identify strategies for creating value for and capturing value from customers. 5.Describe the major trends and forces that are changing the marketing landscape.

Case Discussion

P&Gs Tide Building RelationshipsValue Creation for TideHistory: Tide is an innovative brand, historically positioned on the basis of superior functional performance. At Issue: Competitors can copy product benefits quickly, but can not copy feelings toward the brand. Challenge: Understand what the brand means to consumers and how it fits into their lives. Goal: Speak eye-to-eye with consumers.

Building RelationshipsResearch Process: Explored the emotional connections women have with their laundry via consumer immersion. Findings: Women are linked emotionally to clothing. Fabrics allow women to express their attitudes, personality, and multiple facets of being female. Tide Knows Fabrics Best campaign featured rich visual imagery and meaningful emotional connections. Result: 7% sales increase.

Discussion Questions for Build-A-Bear1.Give examples of needs, wants, and demands that Build-ABear Customers demonstrate, differentiating each of these three concepts. What are the implications of each on Build-A-Bears action? 2.In detail, describe all facets of Build-A-Bears product. What is being exchanged in a Build-A-Bear transaction? 3.Which of the five marketing management concepts best describes Build-A-Bear Workshop? 4.Discuss in detail the value that Build-A-Bear creates for its customers. 5.Is Build-A-Bear likely to be successful in continuing to build customer relationships? Why or why not?

Session Wrap-up

Discussion Issues1.Explain the goal of marketing and how companies achieve it. 2.Compare and contrast customer needs, wants, and demands. 3.Why is target market selection important for a customerdriven marketing strategy? How might target market selection impact customer satisfaction? 4.Name and describe the five different marketing management orientations. Which orientation do you believe your school follows when marketing its MBA program? 5.Explain the difference between share of customer and customer equity. How does an understanding of share of customer help marketers attain higher customer equity? 6.Discuss how the Internet impacts marketing.

This is a PPT file introducing the course and marketing management. Please read the file. It is strongly recommended to read chapter 1 and Company Case 1 (pp. 535-536) of the textbook before attending the class.