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Lecture

STRATEGIC MARKETING MANAGEMENT

Basic Marketing concepts

Dr. Kalliopi Chatzipanagiotou Lecturer in Marketing University of Glasgow

The overall aims of this module are:

Review the essentials of marketing management Understand the impact of strategic marketing decisions on the firm Gain insight into the real world frustrations/rewards of making strategic marketing decisions Learn how to develop a marketing plan

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Learning Objectives
By the end of the course you should be able to: Understand the key concepts and strategic planning not only as a process for achieving organizational goals but also as a means of building long-term relationships with customers Understand the importance of the planning process within the context of strategic marketing and developing a marketing plan Utilize the tools, concepts and models for strategic marketing evaluation, decision and implementation Design a marketing programme based on conducting effective marketing research, developing marketing capabilities and competitive advantages Implement and coordinate a strategic marketing programme

Course Schedule
Week
1 2 3 4 5 6 7 8 9 10 Course Introduction Marketing: A Basic Review Writing a Marketing Plan Collecting and Analyzing Marketing Information Developing Competitive Advantage and Strategic Focus Developing Goals and Objectives Customers, Segmentation, and Target Marketing Product Strategy/ Branding and Positioning Pricing and Distribution Strategy Integrated Marketing Communication I Integrated Marketing Communication II Marketing Implementation and Control/ Developing Long-Term Customer Relationships

Topics

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Information regarding the course:

10 sessions, 2 hours each Moodle 2 site You automatically gain access to the classes you are registered for. If not, contact the course administrator The course exam constitutes 100% of the overall mark. The examination (2 hours) will be based on essay questions.

Tutorials
3 tutorials
These cases are as follows: USA Today: Innovation and Evolution in a Troubled Industry (is included in textbook) IKEA Looks to Further Penetrate the U.S. Market (is included in textbook) Apple's Winning Marketing Strategy (download it from MOODLE 2)

Effective tutorials require conscientious preparation before class. Thus, in order to be ready for class discussion of a case, please Read the case through rather quickly for familiarity. Read the case a second time. Study all the exhibits carefully. Decide what the strategic issues are. Try to answer the case questions Start your analysis of the issues with some number crunching. Use whichever tools and techniques of strategic analysis are called for. Support your opinions with reasons and evidence. Develop an appropriate action plan and set of recommendations.

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Organize your study:

The slides should be the guide for the topics. It is VERY IMPORTANT to study more thoroughly the concepts covered in our sessions based on the books that are given to you as references.

Core reading:
O. C. Ferrell and M. Hartline, (2011), Marketing Management Strategies - 5th edition (ISBN 9780538467445), Cengage Learning.

Supplementary texts and readings:

o o o o o o J. Fahy and D. Jobber (2012) (4th ed.). Foundations of Marketing. Mc Graw Hill Hollensen, S. (2011) (5th ed.), Global Marketing: A decision-oriented approach, London: Financial Times Prentice Hall. D. West, J. Ford, Essam Ibrahim (2010), Strategic Marketing: Creating Competitive Advantage, Second Edition, Oxford University Press. Kotler P. & Keller K., 2006, Marketing Management, Pearson Prentice Hall, 12th Edition. Hollensen, S. (2011) (5th ed.), Global Marketing: A decision-oriented approach, London: Financial Times Prentice Hall. Lambin J.J., Chumpitaz R., Schuiling I., 2007, Market- Driven Management, MacMillan, 2nd edition.

What is Marketing?

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Identifying the Marketing Concept

Identifying the Marketing Concept

The process of obtaining something of value by offering something in return; typically obtaining products for money

BUSINESS

CUSTOMER

The Management of this Exchange

Business Business Business

2
2 2

Consumer (B2C) Business (B2B) Government (B2G)

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Basic Marketing Concepts: What Is Exchange?

Five Conditions of Exchange
o o o o o

There must be at least two parties to the exchange. Each party has something of value to the other party. Each party must be capable of communication and delivery. Each party must be free to accept or reject the exchange. Each party believes it is desirable to exchange with the other party.

The Give and Get of Marketing

BUSINESS
The business gives the customer gets
Goods/Services Price Value Brand Warranty Convenience

CUSTOMER
The customer gives the business gets
Money Time Energy Commitment Experience Knowledge Expectations

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Basic Marketing Concepts: Marketing Defined

Marketing (2005 AMA definition)
an organizational function and a set of business processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing (2007 AMA definition)

the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Marketing Concept dimensions

Conditioning Learning Marketing Concept Dimensions

Classical Conditioning Philosophical

Operant Conditioning Behavioural

Classical Conditioning is Think in Marketing the process of using way established relationship between a Orientation stimulus and Customer a response to cause a Competitor Orientation learning Coordination Interfunctional

satisfying results Act in Marketing way are

Behaviors with Reinforcement results from rewards : the more rewarding repeated. the response , the strongest Behaviors with the likelihood of the purchase unsatisfying results being repeated. 4Ps are avoided.

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4 Ps
Place-Decisions regarding Channel type Intermediaries Outlet location Transportation Storage Managing channels

Product

Product- Decisions regarding Physical good features Quality level Accessories Packaging Warranties Branding

Place

Target Market

Price
Price-Decisions regarding Price level Flexibility Discounts Terms Differentiation

Promotion-Decisions regarding Salespeople (selection, training, Incentives) Advertising (media types, types of advertising) Sales promotion Publicity Internet/web strategy

Promotion

Did he do Marketing?
Product: Ice-Cream Promotion: Stop me and Buy Place: A motorcycle and sidecar-Through the
different neighborhoods Price:5 Cents Excellent Customer Relationship Marketing He knew everything about his customers He was aware of their needs, about the competition, the market opportunities and so on.

Albert Winstone, selling ice-cream, circa 1930.

All photography Copyright Ben Vear at Winstones Ice Cream, www.winstonesicecream.co.uk.

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From these humble beginnings, Winstones has grown considerably and is now a substantial supplier to a number of national supermarket chains and major retail outlets

He was not only doing Marketing BUT He was thinking in a Marketing Way!

Three conditions must be met before the marketing concept can be applied

Marketing Concept
Customer Orientation
Corporate activities focus upon providing customer satisfaction

Integrated Effort
All staff accept the responsibility for creating customer satisfaction

Goal Achievements
The belief that corporate goals can be achieved through customer satisfaction

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The evolution of Marketing Thoughts

Production Capabilities
(a) Production Orientation

Manufacture Product

Customers

This orientation refers in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily.

Implications of this orientation includes: Pricing based on the costs of production and distribution Research limited to technical product research Packaging design primary to protect product Minimal promotion and advertising, limited to raising awareness of the existence of the product

The evolution of Marketing Thoughts

Products and Services (b) Sales Orientation Aggressive Sales Effort Customers

Refers to business ability to make profits on using powerful selling techniques to persuade consumers to buy them, rather than on customer needs

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The evolution of Marketing Thoughts

Customer Needs Potential Market Opportunities Marketing Products and Services Customers

(c) Customer Orientation

It is a culture rather than an individual process. It s the norms, mindsets, values and behaviours of employees; alongside the structure, systems and control of the company, that put the customers needs in the center of all firms activities.

These three orientations are presented as being chronological

Production Capabilities Manufacture Product

Customers

(a) Production Orientation

Products and Services

(b) Sales Orientation Customer Needs

Aggressive Sales Effort

Customers

Potential Market Opportunities

Marketing Products and Services

Customers

(c) Customer Orientation

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Transactional and Relationship Marketing

In other words
The modern Marketing Concept can be expressed as

the achievement of the corporate goals through meeting and exceeding customers needs better than the competition

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The nature of customer value

The value of a product is the mental estimation a consumer makes of it. Customers and not organizations define what represents value. The value in the marketplace varies from place to place as well as from market to market.

Customer Value = Perceived Benefits - Perceived Sacrifice (Costs)

Perceived benefits: can be derived from the product, the associated service and the image of the company/product (Functional benefits + Emotional benefits) Perceived Sacrifice: is the total cost associated with buying the product (Monetary costs + Time costs + Energy costs +Psychic costs)

Perceived Benefits can be derived from

Image

Delivery

After-sales service

Guarantees
Packaging

Performance

Design

Quality

Spare parts Staff behaviour

Functional features

Technology

Size

Brand
Company Reputation

Country of origin

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Four Forms of Customer Value

One of the most powerful customer motivations to purchase
A product is perceived as being cheaper than those offered by competitors The performance of the product is perceived as high quality

Price Value

Performance Value

Customer Value Relational Value

Quality of service received by the customers

Emotional Value
The emotional bond consumers built with the product

(a) Price Value

(b) Emotional Value

EXAMPLES

(c) Performance Value (e.g Dyson) (d) Relational Value

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Goods vs. Services

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Health Care (medical practice, hospital, eye care, dentistry) Financial Services (banking, investment services, insurance) Professional Services (accounting, legal, architectural) Hospitality (restaurant, hotel/motel, bed & breakfast, ski resort, rafting) Travel (travel agency, airline, theme park) Others (hair styling, plumbing, lawn maintenance, health club, interior design)

Characteristics of Services
Intangibility

Services are intangible cannot be seen, tasted, felt, heard or smelled before purchase.
Services are produced and consumed simultaneously. Services are highly variable Services cannot be stored.

Inseparability
Heterogeneity Perishability

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Goods
Tangible

vs. Services
Intangible

Resulting Implications
-Services cannot be inventoried -Services cannot be easily patented -Services cannot be readily displayed or communicated -Pricing is difficult -Service delivery and customer satisfaction depend on employee and customers action -Service quality depends on many uncontrollable factors -There is no sure knowledge that the service delivered in matches what was planned and promoted -Customers participate in and affect the transaction -Customers affect each other -Employees affect the service outcome -Mass production is difficult -It is difficult to synchronize supply and demand with services -Services cannot be returned or resold

Standardized

Heterogeneous

Production separate from consumption

Simultaneous production and consumption

Nonperishable

Perishable

Source:Parasuraman et al. (1985)

Servuction Model
Service1 Processes and systems
Customer

Personnel

Backstage

Frontline
Customer

Direct Relationships Indirect Relationships

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Servuction in a real world

Invisible

Visible

Procedures
Employees Ingredients Equipment Logistics

Employees Customers Environment

(Tangibles +Intangibles)

Servuction in a real world

Invisible

Visible

Procedures
Employees Equipment Logistics Planning

Major Service Producer Audience /Customers Environment (Tangibles +Intangibles)

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Servuction Model
People
All human actors who play a part in service delivery and thus influence the buyers perceptions: namely, the firms personnel, the customer, and other customers in the service environment.

Physical Evidence

The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Process

The actual procedures, mechanisms, and flow of activities by which the service is deliveredthe service delivery and operating systems.

Product
PEOPLE Employees (Recruiting, Training, Motivation, Rewards, Teamwork) Customers (Training)

7 Ps
Price

Place
Target Market

People

Promotion
PHYSICAL EVIDENCEFacility design Equipment Signage Employees dress Other tangibles (e.g Business cards; lecture notes)

PROCESSES Flow of activities (Standardized, customized) Number of steps Customer involvement

Processes

Physical evidence

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Scale of elemental dominance

Good

good

Source: Czinkota and Ronkainen (1995, p. 526)

B2B vs. B2C Marketing

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Identifying the B2B Marketing Concept

BUSINESS

BUSINESS

The Management of this Exchange

The management process responsible for the facilitation of exchange between producers of goods and services and their organisational customers. B2B marketing and purchasing is a complex and risky business involving a number of different parties.

Definition of B2B Marketing

A material, item or service that company sells to another company (customer) in order to use them for one of the following reasons:
To produce its own products/services To facilitate company operations To incorporate them as components on its own products (OEMs) To sell them (as intermediary) to other companies or endcustomers
In B2B the products and the services are sold for any other reason than the personal consumption It is NOT the nature of the product; it is the reason for the TRANSACTION

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B2B customers
Commercial Enterprises (Banks; Hotels; etc.) Retailers or Wholesalers that purchase products for resale to others.

Public and Private institutions (hospitals, colleges and universities, churches, museums etc.)
Government (federal, state, local)

B2B
Market
Fewer and larger buyers Geographical concentration

B2B vs. B2C market B2C

Many buyers Standardization Service important but less than for business products List prices

Product

Relatively technical in nature Customization Delivery, services very important Competitive bidding for unique items, list prices standardized items Emphasis on personal selling Direct channel to market Buying Center. Diverse group of organization members makes decisions Relatively Enduring and complex

Price Promotion Place Decision buying process Customer relationship

Emphasis on advertising A number of intermediaries Individual or household unit makes the decisions Comparatively, infrequent contact, short duration

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