Marketing Management Ch 2

8/12/2019 Marketing Management Ch 2

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Dr. Karim KobeissiIslamic University of

Lebanon - 2014


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Chapter 2: Marketing Process Managing !"eMarketing #$ort


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Section I: The Marketing Process


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The Marketing Process

The marketing%rocess is the logical path along which it is

appropriate to make marketing decisions. Consequently,

understanding the !e steps o" the marketing process is

crucial "or anyone looking to market a product.

In the rst "our steps, companies work to understand

consumers, create customer !alue, and #uild strong

customer relationships. In the nal step, companies capture

!alue "rom consumers in the "orm o" sales, prots, and long$

term customer equity.


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% Simplied Model o" The Marketing Process


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Step &: 'nderstand The Marketplace andCustomers (eeds, )ants * +emands

Marketing is all a#out creating !alue "or customers. So, as

the rst step in the marketing process, the company

must "ully understand consumers needs, wants,

demands and the marketplace in which it operates in

order to create and enhance customers !alues.


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Step -: +esign a Customer +ri!en Marketing Strategy

nce it "ully understands consumers and the

marketplace, marketing management can design a

customer$dri!en marketing strategy. To design a

winning marketing strategy, the marketing manager

must answer two important questions:

1) What customers will we serve (whats our target

market)?

2) How can we serve these customers best (whats our

value proposition)?


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&$ Selecting Customers to Ser!eThe company must rst decide whom it will serve. It does this

b dividing the market into segments o" customers $ /a0

market segmentation and selecting which segments it will go

a!ter " /#0 market targeting.#ome people think o! marketing

management as $nding as man customers as possi#le and

increasing demand. 1ut marketing managers know that they

cannot ser!e all customers in e!ery way. 1y trying to ser!e all

customers, they may not ser!e any customers well. Instead,

the company wants to select only customers that it can ser!e

well and prota#ly. 'ltimately, marketing managers must

decide which customers they want to target and on le!el,

timing, and nature o" their demand.


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/a0$ Market Segmentation

Market Segmentation is the su#$

di!iding o" customers into

homogenous su#$set o"

customers where any su#$set

may concei!a#ly selected as

market target to #e reached

with distinct Marketing Mi2.


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/#0$ Market Targeting

Market !argeting $ In!ol!es

e!aluating each segments

attracti!eness and selecting one

or more segments to enter

according to organi5ational

resources * o#6ecti!es. Targeting

reduces time and cost as well as

increases sales.

!arget Market & % set o" #uyers

sharing common needs or

characteristics that the company


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7!aluating Market Segments Segment Si5e and 8rowth

9 %naly5e current sales, growth rates ande2pected prota#ility "or !arious segments.

Segment Structural %ttracti!eness

9 Consider e;ects o": competitors, a!aila#ilityo" su#stitute products and, the power o"#uyers * suppliers.

Company #6ecti!es and


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-$ Choosing a >alue Proposition

The company must also decide how it will ser!e

targeted customers 4 3ow the company will:

a0 +i;erentiate itsel" in the marketplace4

#0 Position itsel" in the marketplace4

%ccordingly, the company must choose its !alue

proposition.


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+ i ; e r e n t i a t i o n

Di$erentiation is

the act o"

designing a set

o" meaning"ul

di;erences to

distinguish the

company?so;ering "rom

competitor?s

o;erings.


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P o s i t i o n i n g

Positioning is the act o"

arranging "or a product to

occupy a clear, distincti!e,

and desira#le place relati!e

to competing products in the

minds o" target consumers.


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P o s i t i o n i n g / c o n 0The end result o" positioning is the creation o" a market$"ocused

val'e %ro%osition - !"e set of bene(ts a com%any

%romises to )eliver to c'stomers to satisfy t"eir nee)s$

to answer the customers question: @)hy should I #uy your

o;er rather than a competitors o;er4A 9 it is a simple clear

statement o" why the target market should #uy the product.

*'c" val'e %ro%ositions )i$erentiate one bran) from

anot"er an) t"e %ro)'ct+s %osition can be vie,e) as t"e

main res'lt of its )i$erentiation.


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% P d t P iti i M


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% Product Positioning Map


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Positioning & *!P !"e #ssence of

*trategic Marketing

* t e % / o n s t r ' c t a M a r k e t i n g P r o g r a m ! " a t D e l i v e r s * ' % e r i o r a l ' e


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* t e % / o n s t r ' c t a M a r k e t i n g P r o g r a m ! " a t D e l i v e r s * ' % e r i o r a l ' e

In this point, the company has to de!elop an integrated marketing

program that will actually deli!er the intended !alue to target

customers. The marketing program #uilds customer relationships

#y trans"orming the marketing strategy into action. It consists o"

the rms marketing mi, the set o" marketing tools the rm uses

to implement its marketing strategy.

The ma6or marketing mi2 tools are classied into "our #road groups,

called the !our %s o" marketing: product, price, place, and

promotion. To deli!er on its !alue proposition, the rm must rst

create a need$satis"ying market o;ering /product0. It must decide

how much it will charge "or the o;ering /price0 and how it will

make the o;ering a!aila#le to target consumers /place0. Binally, it

must communicate with target customers a#out the o;ering and

persuade them o" its merits /promotion0.The rm must #lend each


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e at ons % ' ng oc s 'stomer a 'e an


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e at ons % ' ng oc s 'stomer a 'e an*atisfaction

The key to #uilding

lasting customer

relationships is to

create superior

customer !alue and

satis"action. Satised

customers are more

likely to #e loyal

customers and gi!e

*t 5 t l 6


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*te% 5 a%t're al'e 6rom'stomers in et'rn

The nal step in!ol!es capturing !alue in return

in the "orm o" current and "uture sales, market

share, and prots. 1y creating superior

customer !alue, the rm creates highly satised

customers who stay loyal and #uy more. This, in

turn, means greater long$run returns "or the

rm.


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Section II: Managing The Marketing7;ort

Intro)'ction


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Intro)'ctionSo "ar we ha!e "ocused on the marketing in

marketing management.(ow, lets turn to the

management. In "act, in addition to #eing good

at the marketing in marketing management*

companies also need to pay attention to the

management. anaging the marketing process

re+uires the !our marketing management

Managing Marketing: %nalysis Planning


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Managing Marketing: %nalysis, Planning,Implementation, and Control

I- 7nalysis


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I- 7nalysisManaging the marketing "unction #egins with a complete

analysis o" the companys situation. The marketer should

conduct a S)T analysis, #y which he e!aluates the

companys o!erall strengths /S0, weaknesses /)0,

opportunities /0, and threats /T0.

*trengt"s include internal capa#ilities, resources, and

positi!e situational "actors that may help the company

ser!e its customers and achie!e its o#6ecti!es.

8eaknesses include internal limitations and negati!e

situational "actors that may inter"ere with the companys

per"ormance. 9%%ort'nities are "a!ora#le "actors or

trends in the e2ternal en!ironment that the company may

7nalysis :con;


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7nalysis :con; The company should analy5e its markets and marketing

en!ironment to nd attracti!e opportunities and

identi"y en!ironmental threats.

The company should analy5e company strengths and

weaknesses as well as current and possi#le marketing

actions to determine which opportunities it can #est

pursue.

!"e goal of *89! analysis is to matc" t"e

com%any+s strengt"s to attractive o%%ort'nities

in t"e environment ,"ile eliminating or

overcoming t"e ,eaknesses an) minimi


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I I - P l a n n i n g

Planning is a management process that managers use to identi"y

and select appropriate goals and courses o" action "or an

organi5ation. The organi5ational plan that results "rom the

planning process details the goals o" the organi5ation and

species how managers intend to attain those goals. !"'s

%lanning is bot" a goal-making an) a strategy-making

%rocess.

)h + Pl i T k Pl i i ti 4


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)here +oes Planning Take Place in rgani5ations4

In large organi


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7 * t r a t e g i c P l a n s


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7 - * t r a t e g i c P l a n s

=o, )o com%anies com%ete an) s'ccee)

in a global market %lace>

ne part o" the answer is a commitment to

creating and retaining satised customers.

The second part is adapting to a continuously

changing marketplace through market$

oriented strategic planning. This is the "ocus

o" strategic %lanning?!"e contin'o's

%rocess of )evelo%ing an) maintaining a

strategic (t bet,een t"e organi


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Corporate Strategic Planning

%t the corporate le!el, all companies start the strategic

planning process #y undertaking three planning

acti!ities:

&. +ening the corporate di!ision mission.

-. Setting company o#6ecti!es and goals.

D. +esigning the #usiness port"olio.

Strategic Planning at Corporate =e!els


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Strategic Planning at Corporate =e!els

& +ening the Corporate Mission


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&. +ening the Corporate Mission

The corporate mission is a statement o" the

companys purpose 9 what it wants to

accomplish in the larger en!ironnement.


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-. Setting Company #6ecti!es and 8oals

The company needs to

turn its mission into

detailed supporting

o#6ecti!es "or each

le!el o" management.

7ach manager should

ha!e o#6ecti!es and #e

responsi#le "or reaching

them.

D +esigning the 1usiness Port"olio


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D . +esigning the 1usiness Port"olio8uided #y the companys mission statement and o#6ecti!es,

management now must plan its b'siness %ortfolio ? t"e

collection of b'sinesses an) %ro)'cts t"at make '% t"e

com%any.

The #est #usiness port"olio is the one that #est ts the companys

strengths and weaknesses to opportunities in the en!ironment.

1usiness port"olio planning in!ol!es two steps:

&0 The company must analy5e its current business port!olio and

determine which businesses should recei!e more, less, or no

in!estment.

-0 The company must shape the "uture port"olio #y de!eloping

strategies "or growth and downsi5ing.

na y< ng e 'rren 's ness


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na y< ng e 'rren 's nessPortfolio

The ma6or acti!ity in strategic planning is #usiness %ortfolio

analysis where#y management e!aluates the products and

#usinesses that make up the company. The company will want to

put strong resources into its more prota#le #usinesses /S1's0

and drop its weaker ones.

The purpose o" strategic planning is to nd ways in which the

company can #est use its strengths to take ad!antage o"

attracti!e opportunities in the en!ironment. So most standard

port"olio analysis methods e!aluate S1's on two important

dimensions: the attracti!eness o" the S1's market or industry

and the strength o" the S1's position in that market or industry.

The #est$known port"olio$planning method is the growth Share

Matri2 that was de!eloped #y the 3oston ons'lting @ro'%.


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a% ng e ' 're 's ness


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a% ng e ' 're 's nessPortfolio

nce it has classied its S1's, the company must

determine what role each will play in the "uture. It canpursue one o" "our strategies "or each S1':

&0 $ The company can in!est more in the #usiness unit to

buildits share.

2)"The companycan invest ,ust enough to holdthe #-s

share at the current level.

D0$ The company can harvest the #-* milking its short"

term cash ow regardless o! the long"term e/ect.

E0$ The company can divest the #- b selling it or

phasing it out and using the resources elsewhere.

1usiness 'nits Strategic Planning


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1usiness 'nits Strategic Planning

%t the #usiness unit le!el, each

#usiness unit de!elops its own

strategic plan to carry that #usiness

unit into a prota#le "uture.

The Strategic Planning Process at S1'


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The Strategic Planning Process at S1'=e!el

1 $ M a r k e t i n g P l a n s


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1 M a r k e t i n g P l a n sThe marketing plan is a "unctional le!el plan that

"ormulates a scheme "or marketing a product or a#rand. It is the central instrument "or directing

and coordinating the marketing e;ort.

Marketing planning in!ol!es choosing marketing

strategies that will help the company attain its

o!erall strategic o#6ecti!es.

Fotler and %rmstrong /-G&G0 state that each

#usiness, product and #rand should ha!e its own

marketing plan.

arac er s cs o a ar e ng


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arac er s cs o a ar e ngPlan

- % marketing plan may #e de!eloped "or a long

term period /H years0, medium term period or

short term period /one year0.

- % marketing plan may #e de!eloped as a

standalone document or as part o" a #usiness

plan.

Contents o" a Marketing Plan


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Contents o" a Marketing Plan

The #asic sections o" a typical product or

#rand marketing plan include:

&. 72ecuti!e summary

-. Current marketing situationD. Threats * pportunities analysisE. #6ecti!es * Issues

. Marketing strategyJ. %ctions programsK. 1udgetsL. Controls * Contingency plans

1asic Sections o" a Typical Product or 1randM k ti Pl


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Marketing Plan

1. #ec'tive s'mmary

The e2ecuti!e summary Presents a #rie" summary

o" the main goals and recommendations o" the

plan "or management re!iew, helping top

management nd the plans ma6or points

quickly. % ta#le o" contents should "ollow the

e2ecuti!e summary.

/ 0


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/con02. 'rrent marketing sit'ation+escri#es the target market and a companys position in it,

including in"ormation a#out the market, product per"ormance,competition, and distri#ution. This section includes the"ollowing:

% market description that de$nes the market and ma,orsegments and then reviews customer needs and "actors in themarketing en!ironment that may a;ect customer purchasing.

%product review that shows sales* prices* and gross marginso! the ma,or products in the product line.

% re!iew o" competition that identi$es ma,or competitors andassesses their market positions and strategies "or productquality, pricing, distri#ution, and promotion.

% re!iew o" distribution that evaluates recent sales trends andother developments in ma,or distribution channels.

/ 0


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/con0

/. !"reats 9%%ort'nities analysis

%ssesses ma6or threats and opportunities that the

product might "ace, helping management to

anticipate important positi!e or negati!e

de!elopments that might ha!e an impact on the

rm and its strategies.

/ 0


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/con0

4. 9bAectives Iss'es

States the marketing o#6ecti!es that the

company would like to attain during the plans

term and discusses key issues that will a;ect

their attainment. Bor e2ample, i" the goal is to

achie!e a & percent market share, this section

looks at how this goal might #e achie!ed.

1asic Sections o" a Marketing Plan /con0


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g

5. Marketing *trategy

7 strategy is an ID#7 aconce%t'ali


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!"e Pro)'ctBmarket e%ansion gri)is a

tool "or identi"ying company growth

opportunities through:

&0 Market Penetration

-0 Market +e!elopment

D0 Product +e!elopment

E0 +i!ersication

Developing Strategies for Growth and Downsizing


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Market %enetrationis a growth strategyincreasing sales to current marketsegments without changing the product

Market )evelo%mentis a growth strategythat identies and de!elops new marketsegments "or current products



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Pro)'ct )evelo%mentis a growth strategythat o;ers new or modied products toe2isting market segments

Diversi(cation is a growth strategythrough starting up or acquiring#usinesses outside the companys currentproducts and markets

The Bour 8rowth Strategies o" the Product$Market 8rowthMatri2


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Matri2



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Do,nsi


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-$JL

gS1'

!erall Cost =eadership

+i;erentiation

Cost Bocus

+i;erentiation Bocus


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1asic Sections o" a Marketing Plan /con0


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1asic Sections o" a Marketing Plan /con0C. 7ction Programs B !actics

- 7 tactic is an action t"at ,e take to eec'te t"e strategy.

-@'i)e) by t"e marketing strategy t"e com%any s%ecify

an) )esigns t"e marketing tactics t"at it ,ill 'se to

im%lement t"e marketing strategy.

Bor e2ample: one strategy to gain market share would #e #rand

#uilding. %s part o" a company?s #rand #uilding strategy, they

may adopt di;erent tactics like /a0 online ad!ertising and /#0

cele#rity supports.


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/con0


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/con0

. 3')get

+etails a supporting marketing #udget that is

essentially a pro6ected prot$and$loss statement. It

shows e2pected re!enues /"orecasted num#er o"

units sold and the a!erage net price0 and e2pected

costs o" production, distri#ution, and marketing. The

di;erence is the pro6ected prot. nce appro!ed #yhigher management, the #udget #ecomes the #asis

"or materials #uying, production scheduling,

personnel planning, and marketing operations.

/con0


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/con0E. ontrols ontingency Plans

This section presents the means that insure the

achie!ement o" o#6ecti!es. ur marketing plan must

#e pro!ided with control mechanisms to estimate the

rele!ance o" the strategies at regular inter!als, and

#ring the changes which are required, when it is

necessary /contingency Plans0. It is the role o"

marketing management to insure this "ollow$up.

eFeion


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eFeionThe plans de!eloped at the

"unctional le!el /e.g.,

marketing plan nancial

planN0 must #e

consistent with and help

an organi5ation achie!e

its o#6ecti!es at #oth the

#usiness and corporate

I I I - Im% lementat ion


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I I I - Im% lementat ionPlanning good strategies is only a start toward success"ul marketing. %

#rilliant marketing strategy counts "or little i" the company "ails to

implement it properly. Marketing im%lementation is the process that

turns marketing plans into marketing actions to accomplish strategic

marketing o#6ecti!es. )hereas marketing planning addresses the what

and why o" marketing acti!ities, implementation addresses the ,"o,"ere ,"en an) "o,.

Many managers think that @doing things rightA /implementation0 is as

important as, or e!en more important than, @doing the right thingsA

/strategy0. The "act is that #oth are critical to success, and companies

can gain competiti!e ad!antages through e;ecti!e implementation.

I- ont r o l


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1ecause many surprises occur during the implementation o" marketing plans,

marketers must practice constant marketing control ? eval'ating t"e

res'lts of marketing strategies an) %lans an) taking correctiveaction to ens're t"at t"e obAectives are attaine).

Marketing control in!ol!es "our steps:

&0Management sets specic marketing goals

-0Management then measures its per"ormance in the marketplace

D0Management e!aluates the causes o" any di;erences #etween e2pected

and actual per"ormance

E0Management takes correcti!e action to close the gaps #etween goals and

per"ormance. This may require changing the action programs or e!en

changing the goals.

Documents

Marketing Management Ch 2