Marketing Management

Dawn Iacobucci

© 2010 South-Western, a part of Cengage Learning

What is Marketing

Chapter 1

Discussion Questions

• What is marketing?• What can marketers market?• What types of decisions do marketers

make?

Marketing and Exchange

• Marketing is an exchange between a firm and customer

CompanyCompany

CustomerCustomerThe customer seeks benefits from the company,

and expects to pay.

The company offers benefits to its customers,

and seeks profits.

Why might an exchange NOT occur?

• The criteria needed for an exchange to occur: – Must have something of value to exchange

– Need to be able to communicate

– Must be able to exchange (under 21 drinking)

– Must want to exchange

– At least 2 people needed for an exchange to occur

What is the long term benefit to having satisfaction in an exchange?

• More profitable relationship• Price insensitivity • Inelastic demand• Loyalty

What Can We Market?

What Can We Market?

Orientations

• Product/Production– Build a better mousetrap

• Selling Orientation– Let’s make a Deal

• Marketing/Customer– Building relationships with the customer

Selecting a Marketing-Oriented Strategy Is Target Marketing

Production-oriented manager sees everyone as basically similar and practices “mass marketing”

Marketing-oriented manager sees everyone as different and practices “target marketing”

Marketing IS the Business

• Marketing should permeate the entire organization

• Chief Marketing Officers (CMO) need to show results– Quantify results when possible (e.g.,

market share, revenue growth, income growth, ROIM)

Marketing Framework

Start with a Situational Analysis using the 5Cs

Marketing Framework

• Customers (for a chimps’ NPO)– Who are they?

• 20 to 40 years old

– What are they like?• Animal lovers

– Do you want to draw different customers?• Yes, other donors to NPO

• Company– What are the strengths and weaknesses?

• Financial strength (Intel)• Producing flexibility (DaimlerChrysler)• Patents (IBM)• Channel relationships (Kraft)• Loyal customer base (Starbucks)• Technical capability (3M)

Examples of Company Strength

• The One ProductHenry Ford made a wonderful car - the Model A- but that's all he made. General Motors decided that many people would like something different and were willing to pay for it. Fortunately, for Ford, he caught on quickly, but Ford almost went out of business with the thinking that one model fit everyone.

Examples of Company Weakness

Marketing Framework

• Context (for a chimps’ NPO)– What is happening in the industry that might

reshape the future business?• Economy—concerned with economy and job

security because donors might not give

• Politics—unknown—Democrats and Republicans

• Legal—NA• Technological—move more giving online• Societal—more green animal habitats

Marketing Framework

• Collaborators (for a chimps’ NPO)– Can address the customers’ needs while

strengthening B2B partnerships?• Good relations with supply chain—

partner with pet food stores• Good relations with distribution

channel members (where place ads) —broaden beyond Full Standing Inserts (FSI) in two women’s magazines (e.g., periodicals with broader demographic reach)

Marketing Framework

• Competitors (for a chimps’ NPO)– Who are the competitors that must be

consider?• Any donation behavior; other animals, health

agencies, museums, and the arts

• Competitors’ strengths—some have very good brand names

– What are their likely actions and reactions?• More advertising, lobbying, solicitation.

Marketing Framework

Proceed to Strategic Marketing Planning with STP

Marketing Framework

• Segmentation (Social network to sell travel vacation packages through testimonials and word-of-mouth—800,000 users) – Customers aren’t all the same; they vary

in their preferences, needs, and resources• Current customers—low 20s• Non-customer—40 and older• Ideal customer—mid 20s with good

disposable income

Marketing Framework

• Targeting (sell travel vacation packages)– Attracting some of those customers

makes better sense than going after others• Estimate size and profitability—buyers

$1,350 one trip every other year• Rank desirability of segments—25 to

35 better disposable income

Marketing Framework

• Positioning (sell travel vacation packages)– Communicate benefits clearly to intended

customers• High quality and high price or low quality

and low prices?—high quality, prices are high but they’re good value

• Distribution mass or exclusive—to succeed, need some scale, which suggests wide availability/presence and mass promotion if cheap (e-referral program)

Marketing Framework

Advance to Marketing Tactics with the 4Ps

Marketing Framework

• Product (small attachment for cell phone which allows user to project presentations onto wall in a small boardroom) – Will customers want what the company is

prepared to produce?• Are we high-end or basic—high-end, innovative• What are the primary features—innovative,

convenient, light

• What are the brand associations—few because minimal awareness as yet

• Where are we in product life cycle—Brand new

Marketing Framework

• Price (small attachment for cell phone) – Will customers pay what we would like to

charge?• What are the customers’ price sensitivities—

minimal, this is a cool business toy

• Offer occasional price discounts—No reason, benefits outweigh high price

• Beneficial to price differently from competitors—No competition yet, but keep price high to gain margin and spend on R&D.

Marketing Framework

• Place (small attachment for cell phone) – Where and how will customers purchase

the market offering?• Will we be extensive or selective—

Extensive• Use more pull or push—Pull• Any conflicts to resolve—Still forging

relationships

Marketing Framework

• Promotion (small attachment for cell phone) – What can we tell the customers or do for them

to entice them to purchase?• Our marketing communications (advertising)

goals—Search engines, get into Sharper image• How to measure ad effectiveness—Click-

throughs

• How to budget across IMC—Aim for Business Week, Forbes

Framework Considerations

• 5 Cs, STP and 4 Ps are interdependent– Marketers must understand how one

decision impacts other decisions

• The 5 Cs are in flux– Marketers must consistently monitor and

adjust strategy accordingly

Consumer Product Classes

HomogeneousHomogeneous

HeterogeneousHeterogeneous

Shopping ProductsShopping Products

Specialty ProductsSpecialty Products

Convenience ProductsConvenience Products ImpulseImpulse

EmergencyEmergency

New UnsoughtNew Unsought

Regularly UnsoughtRegularly UnsoughtUnsought ProductsUnsought Products

StaplesStaples

Problem Solving Continuum

Routinized Response Behavior

Routinized Response Behavior

Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed

Limited Problem Solving

Limited Problem Solving

Extensive Problem Solving

Extensive Problem Solving

High involvementInfrequently purchased

Expensive High risk

Much information desired

Low involvement High involvement

Business Product Classes – How They Are Defined

Installations; important capital items

Accessories; short lived capital items Raw Materials;

unprocessed expense items

Component Parts & Materials; expense items that become a part of the final product

MRO Supplies

Professional Services

Business Product Classes

Little

Little

None

Little

StraightRebuy

Organizational Buying Processes

Characteristics

Time required

Multiple influences

Review of suppliers

Information needed

Type of Process

Much

Much

Much

Much

New-TaskBuying

Much

Much

Much

Much

New-TaskBuying

Medium

Some

Some

Some

ModifiedRebuy

Much

Much

Much

Much

New-TaskBuying

Little

Little

None

Little

StraightRebuy

Types of Shopping

Multiple Influence and Roles in the Buying Center

GatekeepersGatekeepersDeciders

(power to select & approve suppliers)

Deciders (power to select & approve suppliers)

Influencers (write technical specifications)

Influencers (write technical specifications)

UsersUsers

Buyers (work with suppliers & arrange

terms of sale)

Buyers (work with suppliers & arrange

terms of sale)

BuyingCenter

Purchase Decision Making

Two Models for How Buyers Decide

• Lexicographic method– Compare brands by most important attribute;

brands that make the cut go into consideration set; then compare on next important attribute, etc.

• Average method– One attribute can’t make or break a brand– If a brand is strong on one attribute and average

on another, it will still dominate a brand that was average on all of its attributes

This Book…

• Assumes global customers• Assumes omnipresence of the Internet• Gives fresh, fun examples• Trains you to think like a marketer• Defines terms as necessary• Offers lists of factors to consider • Gives “how to” guidance when feasible

This Book…

• Each chapter opens with the Marketing Framework to maintain a focus on the big picture while also highlighting key concepts and tools about to be covered.

This Book…

• Begins each chapter with coverage of “What” is the topic and “Why” it should matter to you

• Every chapter then addresses the question of “How do I do this successfully?”

Book Layout

Study Question 1

• Marketers try to figure out what _____ want and then they try to figure out how to provide it and make money doing so.

– a. business owners

– b. advertisers

– c. customers

– d. companies

Study Question 2

• Marketers help/work with all of the following EXCEPT

–a. athletes.–b. department stores.

–c. hotels.

–d. All can be helped by marketers.

Study Question 3

• Which of the following is NOT part of the 5Cs? –a. context–b. corporation–c. customer–d. competitors

Study Question 4

• What order is correct for a situation analysis?–a. 5Cs, 4Ps, STP–b. 5Cs, STP, 4Ps–c. 4Ps, 5Cs, STP–d. STP, 5Cs, 4Ps

Study Question 5

• B2B marketers have said there are three kinds of purchases - new buy, modified rebuy, and

–a. alternate rebuy.

–b. convenience rebuy.

–c. old buy.–d. straight rebuy.