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Understanding MarketingManagement
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Definition of Marketing
Marketing is the activity, set of institutions, andprocesses for creating, communicating, delivering,and exchanging offerings that have value for
customers, clients, partners, and society at large.(October 2007, AMA)
Marketing is meeting needs profitably.
Marketing management is the art and science ofchoosing target markets and getting, keeping, andgrowing customers through creating, delivering, andcommunicating superior customer value.
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Peter Druckers Perspective
on Marketing
There will always, one can assume, be needfor some selling. But the aim of marketing is
to make selling superfluous.T
he aim ofmarketing is to know and understand thecustomer so well that the product or servicesfits him and sells itself. Ideally, marketing
should result in a customer who is ready tobuy. All that should be needed then is tomake the product or service available.
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What is Marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
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Case: (Miyazaki)
2007123
3654001822230165
Trendy2007
GQ2007
2008
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National Milk Processors
Education Program
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Core Marketing Concepts
Needs, wants and demands
Target markets, positioning, and
segmentation Offerings and brands
Value and satisfaction
Marketing channels: consist ofcommunication channels, distributionchannels, and service channels.
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Core Marketing Concepts
Supply chain: a longer channel stretchingfrom raw materials to components to final
products that are carried to final buyers. Competition
Marketing environment: consist of the taskenvironment and the broad environment
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Needs, Wants and Demands
Needs (): the basic human requirements.
Physical: food, clothing, shelter, safety
Social: belonging, affection Individual: learning, knowledge, self-expression
Wants (): when needs are directed tospecific objects that might satisfy the need.
Demands (): wants for specific productsbacked by an ability to pay.
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Does Marketing Create or SatisfyDoes Marketing Create or Satisfy
Needs?Needs?
Take a position: Marketing shapesTake a position: Marketing shapes
consumer needs and wants versusconsumer needs and wants versus
Marketing merely reflectsMarketing merely reflectsthe needs and wants ofthe needs and wants of
consumers.consumers.
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Responsive, Anticipative, and
Creative Marketing
A responsive marketer finds a stated need and fillsit.
An anticipative marketer looks ahead into what
needs customers may have in the near future. A creative marketer discovers and produces
solutions customers did not ask for but to which theyenthusiastically respond. Akio Morita () once proclaimed that Sony doesnt
serve markets; Sony creates markets. The Walkman is aclassic example.
3M: Our goal is to lead customers where they want to gobefore they know where want to go.
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Demand States and Marketing
Tasks
Marketing managers are responsible fordemand management. Negative demand counter marketing, e.g.
insurance. Non-existent demand stimulus, e.g.
encyclopedias.
Latent demand developing, e.g. solar energy,
Kindle. Declining demand remarketing, e.g.Arm &
Hammerand Listerine ().
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Can you name a category of productsCan you name a category of products
for which your negative feelings havefor which your negative feelings havesoftened?softened?
What precipitated this change?What precipitated this change?
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Company Orientations Toward
the Marketplace
The production concept
The productconcept
The sellingconcept The marketingconcept
The holisticmarketingconcept
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The Production Concept
The idea that consumers will prefer products that arewidely available and inexpensive.
Focus: high production efficiency, low costs, and
mass distribution mass marketing.
It is useful when (1) the demand for a productexceeds the supply (e.g., developing countries suchas China); (2) the products cost is too high.
Examples: Fords Model-T, Coca-Cola, standard rawmaterials and components.
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The Product Concept
The idea that consumers will prefer productsthat offer the most quality, performance, or
innovative features. Focus: making superior products and
improving them over time.
Examples: digital camera, CPU.
Better mousetrap fallacy
Marketing myopia (Theodoes Levitt, 1960)
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The Selling Concept
The idea that consumers will not buy enoughof the firms products unless it undertakes a
large-scale selling and promotion effort. The selling concept assumes that customers
who are coaxed into buying the product willlike it. Or, if they dont like it, they will
possibly forget their disappointment and buyit again later.
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The Selling Concept
Sergio Zyman (Coca-Colas former vicepresident of marketing): the purpose ofmarketing is to sell more stuff to more people
more often for more money to make moreprofit.
Focus: undertake an aggressive selling andpromotion effort.
Practiced most aggressively with unsoughtgoods (e.g., insurance, encyclopedias, andfuneral plots).
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The Marketing Concept
The idea that the key to achieving organizationalgoals consists of the company being more effectivethan competitors in creating, delivering, and
communicating superior customer value to itschosen target markets.
The marketing concept emerged in the mid-1950s.
Slogans: Find wants and fill them, Love thecustomer, not the product, and We do it all for you(Toyota).
Three hurdles: organized resistance, slow learning,and fast forgetting.
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Selling Concept vs. Marketing
Concept
Selling concept Marketing concept
Focus on the needs of the
seller(Theodore Levitt,1960)
Focus on the needs of the
buyer(Theodore Levitt,1960)
The manufacturer: This is
what I make, wont youplease buy it
The consumer: This is
what I want, wont youplease make it
Inside-outperspective Outside-in perspective
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Contrast between the Selling Concept
and the Marketing Concept
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The Marketing Concept
Segment marketing
/
46/54 39
80%
82.9%
5
70.9%
48/52 39
80%
80.8%
5
61.8%
71/29 30
91.4%
63.1%
5
62.1%
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An Example of Segment
Marketing
(October 2008)
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An Example of Segment
Marketing
(October 2008)
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An Example of Segment
Marketing
(October 2008)
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An Example of Segment
Marketing
(October 2008)
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The Extreme of the Marketing
Concept The CustomerConcept
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Is mass marketing dead?Is mass marketing dead?
Take a position: Mass marketing isTake a position: Mass marketing isdead versus Mass marketing is still adead versus Mass marketing is still a
viable way to build a profitable brand.viable way to build a profitable brand.
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Joint Strike Fighter (JSF)
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The Holistic Marketing
Concept
Based on the development, design, andimplementation of marketing programs,processes, and activities that recognize theirbreadth and interdependencies.
An approach to marketing that attempts torecognize and reconcile the scope and
complexities of marketing activities.
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Holistic Marketing Dimensions
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Integrated Marketing
The marketers task is to devise marketingactivities and assemble fully integratedmarketing programs to create, communicate,and deliver value for consumers.
McCarthys four Ps (the sellers point of view)
Product
Price Place
Promotion
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Integrated Marketing
From a buyers point of view, each marketingtool is designed to deliver a customer benefit.
Solution: How can I solve my problem?
Information: Where can I learn more about it?
Value: What is my total sacrifice to get thissolution?
Access: Where can I find it?
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The FourPComponents of the
Marketing Mix
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Marketing-Mix Strategy
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Internal Marketing
The task of hiring, training, and motivatingable employees who want to serve customerswell.
Marketing must be embraced by the otherdepartments (e.g. production, finance, andhuman resource); they must also think
customer.
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Question: What would you do if you were the VP of
marketing in this airline? How would internal marketing
be ofhelp? Show specific examples
An Example of a Coordination Problem that
Requires Effective Internal Marketing
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Socially Responsible Marketing
The Societal Marketing Concept
The idea that holds that a company shouldmake good marketing decisions byconsidering consumers wants, thecompanys requirements, consumers long-run interests, and societys long-run interests.
Examples: Body Shop, HSBC, Dell Asia in
Malaysia, Bata Indonesia. Johnson & Johnsons Tylenol ($240 million), (NT 120 million), .
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An Example of the Social
Marketing Concept Earth Tree
FairTrade
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CustomerRelationship
Management (CRM)
The overall process of building and maintainingprofitable customer relationships by deliveringsuperiorcustomer value andsatisfaction.
The ultimate outcome of relationship marketing is aunique company asset called a marketing network.
A marketing network consists of the company andits supporting stakeholders customers, employees,
suppliers, distributors, retailers, ad agencies,university scientists, and others with whom it hasbuilt mutually profitable business relationships.
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Customer Lifetime Value and
Equity
Customer lifetime value: the value of theentire stream of purchases that the customerwould make over a lifetime of patronage.
Lexus: $600,000; Taco Bell: $12,000;Supermarket: $50,000.
Customer equity: the total combined
customer lifetime values of all of thecompanys customers.
Cadillac vs. BMW
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An Example of Selective
Relationship Management
(Southwest Airlines)
Herb Kelleher
Kelleher
(p. 42, December 2007)
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CustomerRelationship Groups
Projected loyalty
High
Low
Long-termcustomers
Short-termcustomers
Good fit betweencompanys offerings andcustomers needs; high
profit potential
Limited fit betweencompanys offerings and
customers needs; lowprofit potential
Little fit between companysofferings and customers
needs; lowest profitpotential
Good fit betweencompanys offerings and
customers needs; highest
profit potential
Strangers
Butterflies True Friends
BarnaclesProfitability
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Share ofCustomer
The portion of the customers purchasing inits product categories that a company gets.
Methods to increase share of customer Offer greater variety to current consumers
Train employees to cross-sell and up-sell in orderto market more products and services to existingcustomers.
Amazon: books, music, videos, gifts, toys,consumer electronics, office products, and soon.
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Customer Satisfaction
The extent to which a products perceivedperformance matches a buyers expectation.
Smart companies aim to delight customers bypromising only what they can deliver, thendelivering more than they promise.
Examples: Lexus; Southwest Airlines;
Seasons Hotels; Nordstrom department store.
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Satisfying CustomerComplaints
Rate of dissatisfaction: 25%; rate ofcomplaint in dissatisfaction: 5%.
50% of complaints report a satisfactoryproblem resolution.
Examples: Williams-Sonoma; EnterpriseRent-A-Car.
On average, satisfied 3 people, anddissatisfied 11 people.
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customer lifetime value
(p. 44, December 2007)
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Satisfying CustomerComplaints
Rate of complainant repurchase
Resolved Resolvedquickly
Majorcomplaints
34% 52%
Minorcomplaints
52% 95%
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What is your strategy to deal with anWhat is your strategy to deal with an
unsatisfied customer?unsatisfied customer?
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CustomerRelationship Levels
and Tools
Level of relationship: basic reactive (e.g.P&G)accountableproactivepartnership(e.g. Boeing).
Tools:
Add financial benefits, e.g. frequent-flier program.
Add social benefits, e.g. club marketing program.
Add structural ties, e.g. McKesson; FedEx.
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Levels ofRelationship
Marketing
High margin Mediummargin
Low Margin
Many customers/distributors
Accountable Reactive Basic or reactive
Medium number ofcustomers/
distributors
Proactive Accountable Reactive
Few customers/distributors
Partnership Proactive Accountable
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Case: Harley-Davidson
Harley Owners Group (H.O.G.)
H.O.G. benefits include Hog Tales, a touringhandbook, emergency road service, a
specially designed insurance program, theftreward service, discount hotel rates, and aFly & Ride program.
The company also maintains an extensiveWeb site devoted to H.O.G., which includesinformation on club chapters, events, and aspecial members-only section.
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In 1981, American Airlines first
introduced the AADVANTAGEfrequent-flier program.When other
airlines copy this strategy, do they
engage in the prisoners
dilemma?
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Prisoners Dilemma
layer 1 Player 2Cooperate Fink
Cooperate 2, 2 -3, 3
Fink 3, -3 -2, -2
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