Marketing Strategy…… KEY CONCEPTS to review for ETS exam….
Marketing Strategy: Key Concepts 1
Concepts, key terms linked to dictionary
Link to Discussion Board
What is Marketing?
Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services that satisfy individual and organizational goals. --- AMA
Product is the platform for attracting customers.
All organizations are in the business of attracting customers.
Can the above two statements be challenged?
Is marketing selling OR does it reduce the need for selling?
Discussion Topic: Challenge the above statements, using your own experiences as reference.
What are markets?
Exchange, division of labor, positive sum relationships, barter, money reduces friction. Evolution of markets
1. Traditional bazaars
2. Separation of supply and consumption
3. Mass Markets / Media
4. Target Markets / Niche Media
5. Electonic Markets: Meta Markets
Evolution of the Marketing Concept
1. Production Concept
Demand for goods and services > Supply ... therefore consumers gladly
purchased what was being produced. Producers have a captive market.
Investment on increasing the efficiencies of production had the greatest
impact on company profitability. Thus smart businesses focused on
increasing productivity, rather than understanding the consumer. Henry
Ford's quote: "The customer can have any color car as long as it is black"
is closely identified with this era! This is appropriate for developing
countries, and evolved in the US with the advent of the industrial
2. Sales Concept
Demand = Supply ... therefore producers had to convince consumers to
purchase their products. Focus of business investment starts shifting
towards developing a robust sales mechanism in order to communicate
with consumers. The sales concept is also relevant for products consumers
do not seek out ordinarily, such as life insurance and dental treatment. 3. Marketing Concept
Supply > Demand ... therefore producers need to first understand what
consumers wanted, then produce those products, then convince consumers
to purchase those products. Target marketing and market segmentation
became the new tools to increase company profitability. 4. One 2 One (Relationship) Marketing Concept
The Marketing era evolved and saw producers further segment their
markets, targeting smaller groups of consumers within those markets.
With the potential unleashed by the microprocessor and information
technology, we are seeing targeting down to the individual, one to one. A
commonly cited example is Amazon. Notice, if you make a purchase from
this site (or similar) when you return to the site, you will receive
recommendations based on your previous purchases. This presentation is
based not only on your purchases (data stored in your cookie file allows
for this), but on purchases of others who have bought the same book and
5. Viral Marketing
An interesting thing is occuring, as we are now in a networked economy.
Our consumers are able to "talk" to each other and serve as an extended
sales force. This lateral communication and / or transaction between
customers and non-customers can serve as an opportunity for companies
viral marketing was Hotmail. This Wired to leverage. The pioneer of
article HotMale discusses this marketing "accident." Another good
example is Bluemountain.com. Since the receiver of the e-card has to visit
the site to access the card, this visit serves to promote the service to the
6. Societal Marketing Concept
Companies, more aware of society and the environment at large, promote
their affiation with the environement. Ben & Jerry's and The Body Shop
Discussion Topic: Identify other companies who follow the societal marketing concept.
Discuss the merits of this type of marketing.
Relationship with Selling and Marketing
Selling is an aspect of marketing.
Fire versus Ready, Aim and Fire
Marketing Mix, also known as the Four Ps
; Place (Distribution)
Organizations select target markets within the entire marketplace using market segmentation. They then develop a marketing mix to reach the target market.
Discussion Topic: Identify the marketing mix for a product you use. Four Cs
4 Cs: Company, Collaborators, Competition, Customers
Evaluation and Budgets
Discussion Topic: Identify a recent marketing campaign designed to create negative
American Marketing Association
SBA: The Marketing Plan
Link to Discussion Board
Return to Syllabus
Marketing Strategy: Key Concepts 2
Section 1, 2
Strategic Planning Process
1. Corporate Level
2. Business Level
3. Product Level
Higher levels (corporate) govern lower level planning processes. Strategic planning
Corporate Strategic Planning
1. Identify the company's Mission
2. Identify SBUs (customer focused)
3. Allocate Resources across SBUs (BCG Model; GE Model; Product Life Cycle;
4. Growth Strategies for SBUs (intensive; integrative; diversification) Mission Statement: Purpose; Business; Values Reason to be? Invisible hand etc. Product Terms...outdated
Market Terms...keep in touch with consumer's needs
From five years ago, and still relevant:
; AT&T is in the communications business not the telephone business.
; Visa...allows customers to exchange values...not credit cards
; 3M solves problems by putting innovation to work.
Example Mission Statements:
; Ben & Jerry's
; New York State Education's Mission
Discussion Topic: Find your company's mission statement. How well is this statement understood among employees and customers? Evaluate the missions statements above with respect to purpose, business and values.
Indentify the limiting factors with the BCG and GE models.
Insead Wharton Alliance.
Discussion Topic: Cite examples of strategic alliances. Identify alliances your company participates and why.
SBU Strategic Planning
Provides the context for the preparation of the marketing plans for the units products and services.
1. Defining Business Mission
2. Analyzing External Environment (OT) (economic, demographic, technology,
political, legal, socio and cultural, markets, competitors, collaborators etc.)
3. Analyzing Internal Environment (SW) (competitive advantages, vulnerabilities,
4. Choosing Objectives and Goals (specific, measurable, achievable and consistent)
5. Developing Business Strategies (cost leadership; differentiation; focus)
6. Preparing Programs
7. Implementing Programs (McKinsey 7-S Framework)
8. Gathering Feedback and Exercising Control
If goal is to grow a business by 15%, what other data are relevant to judge the merits of the goal?
Discussion Topic: Create a SWOT analysis of your own business (business unit).
Focus on product and market, focus on detailed marketing strategies for achieving the product's objectives in a target market.
Consider the difference between strategic marketing and tactical marketing. Marketing Planning Process includes:
1. Analyzing marketing opportunities
2. Researching and selecting target markets
3. Designing marketing strategies
4. planning marketing programs (marketing mix)
5. implementation and control
Put another way:
1. Situation Analysis
o Corporate Capabilities and Culture
o Customer Analysis
o Competitive Analysis
o Macro Issues
o SWOT Analysis
o Alternative Strategies
2. Action Plans
o Evaluation and Recommendations
o Marketing Mix Elements (Product, Price, Promotion, Place)
3. Implementation and Evaluation
o Forecasting and Budgeting
o Measures of Effectiveness
Discuss Can Priceline Remain Profitable wrt strategic planning issues.
Identify the four Cs: Customer, collaborator, competition and company
Consider past and future growth strategies Consider the four Ps: Price, Product, Promotion and Place.
More sales by value in B2B than B2C.
o MRO (Maintenance, Repair and Operations) 80% business purchases
In order to:
o Increase Sales
o Cut Costs
o Meet Social and Legal Requirements Customers are:
o Businesses for Profit
Characteristics of Business Customers:
o Risk Averse
o Fewer and Larger
o Nature of Demand (Derived, Inelastic, Fluctuating)
o Purchase versus Lease
Buying Process consists of:
o Problem Recognition
o General Need Description
o Product Specification
o Supplier Search
o Proposal Solicitation
o Supplier Selection
o Order Routine Specification
o Performance Review
Modified depending on whether: Straight rebuy, Modified rebuy or New task.
Contrast this with the Consumer buying process?
Who makes the purchasing decision? What are the contextual elements that impact the decision?
What is included in purchase: re: customer service levels etc.
Evolution of Business Buying
o Develop relationships versus adversarial contest: Extranets; increase lock-
o Geographic Concentration: Ecosystems
The Evolution of B2B: Lessons From the Auto Industry
GE Global eXchange Services
Dell Medium and Large Business Home Page
Dealing with Competition
Porter's five basic forces of competition: 29. Threat of new entrants
30. Rivalry among existing competitors
31. Bargaining power of suppliers
32. Bargaining power of buyer
33. Threat of substitutes
Whenever you make choices with respect to your customers (business or final consumers) you need to be aware how your competition changes as a function of your decisions. Understanding the prisoners dilemma model is useful. Clearly
your relation compared to other competitors is important (market leader versus follower for instance) and the nature of the marketplace (monopoly, oligopoly and monopolistic competition).
Consequences of zero percent financing for autos?
Need to consider competitors AND customers for decisions. Importance of competitive intelligence.
Classification of competitors (brand, industry, form, generic) Keep competitors?
Industry Concept of Competition:
o Impacts of Barriers to Entry and Exit
o Number of sellers and degree of competition (monopoly, oligopoly,
monopolistic competition, pure competition)
o Cost Structure
o Degree of Vertical Integration
o Degree of Globalization
Priceline, Expedia and American Airlines versus Travel Agent market place.
Discussion Topic: Identify and discuss other industries prone to disruptive technologies.
SBA: The Marketing Plan
The Marketing Audit Comes of Age
How to Write a Mission Statement
Link to discussion board
Return to Syllabus
Marketing Strategy: Key Concepts 3
Customers are increasingly important.
One of multiple stakeholders that need to be addressed (employees, stockholders, suppliers and distributors) ---Grotto Pizza Mission
Corporate culture needs to be consumer-centric (begins with the mission)
Acquire customers (set expectations) versus retain customers (do expectations fit with reality) Perceived value (quality, service and value) versus delivered value
Beat customer expectations. (delight customers) How do customers perceive quality, how do you offer it better than your competitors?
; Evolution of Marketing Concept supports this:
; Competition in the Marketplace increasing (and global)
; Technology (DB and communications) allows
customers to learn more ---look at the evolution.
Relationship Marketing Management
Need to build satisfaction through customer relationship development activities.
Relationship Marketing, process of attracting and retaining customers. Add financial benefits, social benefits and structural ties.
Life-time Value of a customer versus cost of acquiring a customer
Customer Acquisition Math Example:
Cost of Sales Call $500
Succes of Sales Call: 1 / 5
Cost of new customer $2,500 (not including overhead) Average Life Value of Customer:
Annual Customer Revenue: $10,000
Average Life Time: 3 years
Profit Margin: 10%
Life Time Value: $3,000
This looks at averages, not at different consumers. Do not try to satisfy all customers ... some more profitable than others. Fire customers, or move them to higher profitability (increase price, reduce cost of service). 20-80-30 rule
Customers don't ordinarily complain, they simply don't buy, and they may tell others! Encourage complaints to filter to your company. (See Kellogg discussion)
Cost of lost customers?
Surveying lost customers
Discussion Topic: How does your company process customer complaints. what is done with them re: interaction with customer and changing business process?
(Alternatively, as a customer, how have your complaints been handled?)
Internal marketing needs
Making Customer Relationship Management Work