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Comm 103Intro to Business Management
Marketing
Fall 2013
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Wk Date Topic Simulation
8 OCT 28
NOV 1
Introduction to Marketing
Reading: Chapters 10 & 11
2ndRequired TA
meeting between Oct
28thand Nov 10th
9 NOV 4
NOV 8
Pricing; Introduction to Operations Management
Reading: Chapters 9 & 14
2ndStrategy memo
due Friday, Nov 8th
10 NOV 11
NOV 15
SPECIAL TOPIC: GRANT HALL TALKS
(1:30 pm on November 14th
)Four QSB professors (Gagnon, Mufti, Dacin, Brohman) will
each do a 1520 minute talk on an issue of practical
importance in todays economy and business environment.
Attendance at this event is mandatory for all Comm 103
students. There will be no formal class sessions for Comm 103
this week.
11 NOV 18
NOV 22
Managing HR, Ethics & CSR; Introduction to New Ventures
Reading: Chapters 4, 8 and 15
12 NOV 25
NOV 29Foundation Simulation Presentations
Second Half
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This Weeks Agenda
3-hour session
Marketing Fundamentals 1.5-hour session
In-Class Activity (Case)
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Marketing Fundamentals
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Role of Marketing
Simple Definition
Design, develop and communicate value.
Demonstrate
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Marketings value to the organization can be summarized in
three key statements:
1. Marketing should tell us wherewe should compete.
2. Marketing should tell us howwe should compete.
3. Marketing should communicate wheneither of the above
should be changed.
Marketings Impact
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The Marketing Equation
MarketPosition
MarketingEffort
Value(which
translates toprofitable
market share)
Value Proposition
Marketing Mix
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Business System Analysis
Key
Partners
Key
Activities
Key
Resources
Value
Proposition
Cost Structure
Company-Centric Analysis
Customer
Segments
Revenue
Market-Centric Analysis
Adapted from: Business Model Generation, Osterwalder, Pigneur
8
Demonstrate
& Deliver
ValueDomain of Marketing
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Strategy & Marketing
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Marketing Strategy (Ansoff)
MarketPenetration
ProductDevelopment
Market
DevelopmentDiversification
10
Current Product New Product
NewMa
rket
Curre
ntMarket
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Customers, Competitors and Company
Customer
Analysis
Basis of Targeting and
Segmentation
Competitors
Analysis
Influence Positioning
& Differentiation
Company
3C Analysis
Influences Resource
Deployment & Focus
SWOT Analysis
Assess Market Fit Assess Product Fit
Portfolio Management
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Understanding Customers
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Markets & Buyer Behavior
B2CUnderstanding
Consumer Markets
and Buyer Behaviour
B2BUnderstanding
Organizational Markets
and Buyer Behaviour
13
ProblemRecognition
InformationSearch
Evaluation ofAlternatives
PurchaseDecision
PostpurchaseBehaviour
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Consumer Decision Making
14
InitialConsideration
of Options
ActiveConsideration
andEvaluation of
Options
Point ofPurchase
Post PurchaseInfluence
CommittedCustomer Loop
Future or ongoing
purchases
Initial purchases or non-
loyal repurchasesLoyal Customer Loop
Decision Disruption
Opportunity/Threat
Much more emphasis on consumer involvement2 way flow
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Impact of Influencers
15
Initial Consideration SetPre-determined
purchase order
Active Option
Evaluation
Purchase
Decision
Post Purchase
Performance &
Future Decisions
1. Influencers
Company Driven
Marketing
Past Experience
Consumer Driven
Marketing
Channel Interaction
2. Influencers
Consumer Driven
Marketing
Channel Interaction
Company Driven
Marketing
Past Experience
3. Influencers
Channel Interaction
Consumer Driven
Marketing
Company Driven
Marketing
Past Experience
Product Performance Below Expectations
Committed
Customer
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Customer ProfilingWhat Does Your Customer Base Want?
PriceCustomer
ValueCustomer
Accessibility&
ConvenienceCustomer
RelationshipCustomer
Differentiation
adds minimal
value
Differentiation
drives value
Price Impact is Material in
Purchase Decision
Price Impact carries little value
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Innovators2.5%
Early adopters13.5%
Early majority34%
Late majority34%
Laggards16%
Consumer Adoption Process
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Customers develop and purchase on the basis of buying criteria.
The trick is to know which buying criteria command the highestweightingfor the customer segment or micro-segment beingtargeted.
Buying Criteria can be grouped around 5 common themes
Functionalityof the product (performance)
Personal Taste of aesthetic attributes
Augmented Servicesaccessibility/ease of purchase, purchaserisk reduction strategies, post-purchase risk reduction strategies,etc.
Psychological benefits perceived to be incorporated into theproduct
Social Leader/group influencestrends, peer pressure, referrrals,etc.
Quality Further Broken Down
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Ensure it understands who are the decision-makers and what the key
decision criteria are that are being used to make the purchasedecision.
Positioncompanys productas a solutionto a customers problem(maximize the buying criteria).
Builds a path of positive linkage with influencers.
Creates opportunities for disruption at the time and place ofpurchase, or layers in insulation to minimize competitive disruption.
Ensures that customers gain the full benefit from making thepurchase.
What is Marketings Focus in All of This?
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The value of their ATR per interaction
The Value of their ATM per interaction
The frequency of their purchase
The duration of their relationship with us (desertion/churn)
The acquisition cost of procuring them
Our ability to increase the first four points and reduce the fifth
point.
The Equality of CustomersWhat is the Real Story?
ATR = Average Transaction Revenue
ATM = Average Transaction Margin
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The Marketing Process
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The Six Rs of Marketing Value Generation
SixRs
Right Need
RightSolution
Right ValueProposition
RightConnector
Right Price
RightMessage
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Putting it All Together - Marketing Process
MarketingResearch
Segmentation
Target Market
ValuePropositionDevelopment &Profiling(Positioning)
Marketing MixDevelopment
Message riflingandconcentration
Evaluate and Adjust
Right Need & FitRight SolutionP/Q
Relationship
Right
ConnectionRight Message
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Segmentation
Various MarketSegments
Marketing
Research
TargetMarket
Marketing
EffortTransitioning from the shot gun to the rifle approach
Right Need & Fit
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Key Takeaways from Research, Segmentation, and Targeting
MarketingMix
Development
Who is/are ourcustomers(s)?
What is their
need/want?
What do they value?
How do they buy?
Interact
with
Targeted
Customer
Value Positioning
Marketing Effort
& Focus
Value Proposition
Development
Willingness to
Pay
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The Marketing Effort
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Customer Base Model
CustomerAcquisition+ CustomerRetention
CustomerDesertion(Degree ofChurn)
Customer Base = (Existing Customers + New Customers)
Deserting Customers
Committed
Customers
Loyal Customers
Preference Forming Customers
Casual Customers
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Create yourmarketing mix and
develop your
communicationrifling
Uncover factors whichdrive consumer
preference
Segment the marketaccording to the
importance of thesefactors
granulation, micro-segmentation
Assess yourperformance level
relative to thefactors driving buyer
preference
Assess relative tocurrent competitorsand future potential
competitors
Transitioning from Positioning to Marketing Effort
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Strategy and Marketing
Business Strategy
Marketing Strategy
(Who to Target &How to Reach)
Marketing Tactics
Pricing Strategy
Profit = Price - Cost
Product Strategy
(Value Proposition)
Tangible ,Intangible,
Augmentation
Distribution(Connection
Strategy)
ChannelDevelopment
Communication
Positioning
Be the best!
Be the cheapest!
Be the most focused!
Access BasedNeeds Based
Variety Based
Customer
Profiling
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FourPillars of
Marketing
Value Proposition
(Product Strategy)
Connecting withCustomers(Distribution Strategy)
Pricing Strategy
CommunicationStrategy
Build around key buying criteria
which drive meaningful value
Advertising, Sales Promotion,Publicity, Personal Selling, using
alternate media sources such as
social marketing
AccessibilityExtensive,
Selective, Exclusive, Multi-
Channel, Terms, Service Support,
etc.
Dynamic pricing model
tapping into an almost
customized pricing approach.
S l d d C id i
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Value propositionTotal Product Concept
Brands
Positioning
Product Lifecycle
Product Line Management
New Product Development
Selected Product Considerations
S l t d Ch l C id ti
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Structure
Direct Indirect
Mixed
Strategy
Exclusive
Intensive
Selective
Logistics & Physical Distribution
Selected Channel Considerations
Selected Communications Considerations
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Advertising
Promotion
Personal Sales
Publicity & PR
Events
Direct & Interactive
Selected Communications Considerations
S l t d P i C id ti
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PIMS v. ROS
Skimming v. Penetration Cost Base:
Composition of the base
% within your control
Market pressures
(which may impact the cost base)
Volume and dollars required to B/E
Good costs and bad costs
Costs vs. competition
Selected Price Considerations
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The Pull of Industry Structure
Focused System ModelExtensive Reach System10 Million customers at $100 each
to generate $1 Billion in Sales
1000 customers at $1 million each to
generate $1 Billion in Sales
Pull of commoditization Innovate to the next level of
complexity (reinvent)
Solution FocusEnhanced
Features
Experience
Focus
Core
Features
T diti l Vi P d tC t i A h
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Product
CustomerSegment
CustomerSegment
CustomerSegment
CustomerSegment
CustomerSegment
Traditional ViewProduct Centric Approach
Company creates new product
Company identifies segments to
target
Company develops marketing
mix
Company uses company
generated mass promotion
strategy to blanket targeted
segment
Company uses aggregate sales
and profitability to measure
performance
Transitioning towards Customer Centric Approach
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Customer
Products
Products
ProductsProducts
Products
Transitioning towards Customer Centric Approach(leveraging data management, streaming, & Predictive Analytics)
Company seeks to cultivate
customers
Products are developed in
response to customer needs
Company develops marketing
mix
Company customizes approach
depending on customer needs
and pre-purchase behaviour
Company assesses on the basis
of lifetime value (CLV) or equity
(CE)Thinking of the customer as a
market of one
F I fC t C t i M k ti
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Individualize youractivities according to
customer preference andinterest
Involvethe
customer inyour
activities
Initiatethe generation ofcustomer/user content in
your marketing plan
Integrateyour
marketing
activities in away that you
do notbecome anuisance
Four Is of Customer-Centric Marketing
4 Is
Individualize
Involve
Initiate
Integrate
P i P iti i
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Market-based
DifferentiatedPlayer Low Cost Leader
with Market-based
Differentiation
Price Positioning
Low Cost
Leader
Non-
Differentiated
Player
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Marketing Mix Execution5 Integration Components
Demand Potential - Grow, Maintain/Defend, Harvest (Product
Life Cycle & Market Attractiveness)
Customer FocusNew, Existing
PricingROS, PIMS
Positioningcurrent, new Industry Structural Shiftscommoditization, differentiation,
consolidation
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Product Life Cycle Management
Life Cycle Outcomes
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Life Cycle Outcomes
$0
$$$
Revenue
Time
Industry
Growth
Curve
Company B
Company A
Company C
Company D
Company E
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Product Life Cycle
Product
Inception
Product
Commercial-ization
Introduction
(Launch)Growth Maturity
Decline
Breakpoint
Go or No Go Decisions
Time
What drives the cycle?
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Product Life Cycle
ProductInception
ProductCommercial-
izationIntroduction
Growth Maturity Decline
Cash Burn
ProfitabilitySales
TimeCapitalization Well
What drives the cycle?
Demand
Repurchase Rate