Marketing Management Key Messages

8/7/2019 Marketing Management Key Messages

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KEY MESSAGES

CHAPTER 1

Firms that deliver greater customer value than their competitors are more successful in attracting, retaining,

and growing customers. All things equal, firms that successfully attract, retain, and grow customers earn profits today and promise

profits tomorrow. They are more likely to survive and grow and enhance shareholder value.

Enhancing shareholder value is an increasingly important objective for companies. Value has two sides. When firms deliver high levels of customer value, they attract, retain, and growcustomers. When firms attract, retain, and grow customers, they create value for shareholders.

Marketing as a philosophy embraces an external orientationthis is a responsibility of all organisational

members. The six marketing imperatives represent the must dos for the firm.

The four principles of marketing provide the guiding framework within which the firmimplements the six marketing imperatives.

CHAPTER 3.

To gain market insight, the firm should focus on four broad areas: market structure, market and - product

evolution, industry forces, and environmental forces:

Market Structure: The market consists of customers that require goods and services to satisfy their needs.

The firm should define the market at several levels.

Product class and product form refer to products that all suppliers offer. Product class is a broader level ofaggregation than product form.

Firms offer product items to the market a product line consists of multiple product items. Fundamental drivers of market size are population and purchasing power.

Market and Product Evolution: The life-cycle framework is a good way to think about market and product evolution.

The length of life cycles is in the order: market > product class > product form.

Life cycles have several stages: introduction, early growth, late growth, maturity, and decline each withdistinguishing characteristics. Profit-margin life cycles do not mirror sales life cycles.

Industry Forces: The five-forces model is a useful way of analysing the pressures on the firm. The five forces are current direct competitors, new direct entrants, indirect competitors, suppliers, and

buyers. Each force affects the firm in a different way.

Environmental Forces: Environmental forces have an impact on both the firm and other players in the industry.

The environmental forces are political, economic, sociocultural, technological, legal/ regulatory, and

environmental (physical) PESTLE. The PESTLE forces are in a continuous state of flux and are increasingly interconnected.

The managerial process environment is the intellectual capital for leading and managing firms.

Learning is a life-long responsibility for managers and business leaders.

CHAPTER 4.

To attract, retain, and grow customers, the firm must gain deep customer insight by answering threecritical questions:

Who are the customers? The firm should explore several issues in identifying customers:

Macro-level customersorganisations, and micro-level customersindividuals. The many different roles that individuals play in the purchase process.

Both todays customers and tomorrows customers.

Both direct customers that exchange money for the firms products and services, and indirect


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customers that receive value from the firms products and services through intermediaries.

What do customers need and want? The firm satisfies customers needs by making offers of

value. The firm should gain customer insight into: Recognised needs versus latent needs: recognised needs that customers express

expressed needs, and those they do not expressnon-expressed needs. Who receives the value the firm deliversthe organisation or an individual in theorganisation.

Features and attributes the firm builds into the product; benefits and values the firm offers to

customers.

Hierarchies of needs, features, benefits, and values, including Maslows Hierarchy of Needs,and the feature/benefit/value ladder.

Different types of value, including functional, psychological, and economic. Elements that transcend customer benefits and valuescustomer experiences.How do customers buy? The firm gains insight from the customers purchase-decision process:

The process comprises five stagesrecognising problems, acquiring information, evaluating

alternatives, making a choice, and post-purchase processes. The dominant way customers evaluate alternatives is the linear-compensatory approach.

Customers may deviate from rationality in their purchase decisions. We can usefully categorise purchase decisions into three types: routinised-response behaviour,

limited problem-solving, and extended problem-solving. Environmental factors that influence consumer purchase decisions include culture, social

class, other people, family, and the situation.

Individual influences like economic resources, time availability, cognitive resources, comfortwith technology, life-cycle stage, and lifestyle influence the consumer purchase decision. Key factors influencing organisational purchase decisions are increased corporate attention to procurement,

changes in the procurement process, reducing the number of suppliers, and evolution in buyer-seller

relationships.

CHAPTER 5.

The firm must gain deep insight about competitors that is both timely and relevant. Answering these questions is not a simple matter but, for each question, the firm can use several

approaches to improve its competitor insight.

The firm must know itself company insight but this is a simpler task.

The firm must also understand its complementers, organisations that can help the firm increase its revenues. Both independent organisations and competitors can be complementers, each in differentways.

CHAPTER 6.

Marketing research results should be actionable.

Good marketing research can give the firm a competitive advantage.

Marketing researchers should provide analysis and insight; managers make decisions. Marketing research studies should follow a rigorous process.

Marketing researchers make critical distinctions between primary and secondary research, and

qualitative and quantitative research. Both qualitative and quantitative research use several methodologies. Qualitative research is

becoming more popular.

The various techniques for collecting survey data have advantages and disadvantages.

Methods of quantitative analysis range from simple to highly complex. Many methods can assess market and sales potentials, and make market and sales forecasts.

CHAPTER 7.

Marketings first imperative is to determine and recommend which markets to address. A marketing

perspective should infuse the firms critical strategic decisions marketings responsibility is to make surethis happens by focusing on two separate elements:

Identifying potential opportunities.

Making sure that marketing provides input for other strategic actions the firm is contemplating.A systematic approach to developing, selecting, and implementing opportunities has four elements:


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Strategy for growth a set of frameworks that help the firm decide which businesses to be in

and which not to be in.

Vision description of an ideal future state for the firm or business unit. Mission statement that directly guides the firms search for opportunity.

Growth path a focused approach to identifying opportunities, trades off return and risk. Timing of entry market-entry options related to stage of the product life cycle. Venture portfolio the set of opportunities where the firm decides to invest. Key issues are:

Expected financial return.

Risk including the risk of generated opportunities, and the firms appetite for risk.

Timing of the contribution to profit. Independence and interdependence of individual opportunities.

Screening criteria a method for evaluating individual opportunities. Key considerations are: Objectives including growth, risk, stability, and flexibility. Compatibility (or fit) product-market fit, product-company fit, and company-market fit.

Core competence using special capabilities to achieve differential advantage over competition.

Synergy 2 + 2 = 5. Implementation specific actions to implement the firms growth strategy are:

Internal development new products and services developed through the firms efforts. Insourcing capturing greater value-added either upstream or downstream.

Outsourcing engaging other firms to conduct needed activities so the firm can focus on delivering greatercustomer value.

Acquisition purchasing an entire firm or business unit.

Strategic alliance an agreement with a partner firm to jointly exploit an opportunity. Licensing and technology purchase different ways to access technology developed by others. Equity investment taking ownership positions in startups.

CHAPTER 8.

Market segmentation is fundamental to developing a market strategy. The firm has three

separate, but related, strategic-level tasks: Conduct a market segmentation process to identify market segments. Decide which of the identified market segments to target for effort.

Develop a market segment strategy and positioning for each target segment.

We discussed items 1 and 2 in this chapter; we take up item 3 in Chapter 9. Segmentation is a process for deconstructing the market into common groups of customers.

All customers in a market segment have a similar, homogeneous need profile; customers in

other market segments have different need profiles. The firm can approach the segmentation process in two different ways, by:

Identifying groups of customers that differ in their need profiles.

Using candidate descriptor (or segmentation) variables to form groups and then seeing if these groups differin their need profiles.

The firm should avoid ineffective ways of segmenting its markets.

Useful segments must satisfy five separate criteria: differentiated, identifiable, stable, measurable,appropriate size, and accessible.

The segmentation process is a creative and analytic exercise requiring good customer insight. By contrast,

targeting requires the firm to make decisions.

Sometimes firms find commercially available standardised segmentation schemes useful. The multifactor matrix and perceptual map are alternative approaches to making targeting

decisions.

CHAPTER 9.

A market strategy has four key purposes: Providing strategic direction in the market.

Securing differential advantage.

Guiding the effective allocation of scarce resources. Achieving cross-functional co-ordination.


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The market-segment strategy has four key elements; each element has several constituent parts:

Performance objectives: The results the firm hopes to achieve:

Strategic Objectivesqualitative and directional. Strategic objectives typically fall intoone of three categories: growth and market share, profitability, and cash flow.

Operational objectivesquantitative and time-bound. Provide the numbershow much and by when. Strategic focus: The broad direction of the strategy. Has two main branchesincrease unit sales volumeand improve margins and investment returns.

Increase unit sales volume has two branches:

Focus on the firms current revenue baseby increasing customer retention and increasing customer use.

Secure new revenuesby attracting customers from competitors and/or securing newbusiness by identifying potential opportunities.

Improve margins and investment returns also has two branches: Increase revenuesby increasing prices and/or improving the sales mix. Reduce costs and assetsby reducing operating costs and/or improving asset utilisation.

Positioning: How target customers should view the firms offer. Positioning requires four key decisions:

Select customer targetsdecide on the distribution system, the level to target, and the specific individualor types of individual.

Frame competitor targetsthe competitors that the firm decides to go up against.Design the value propositionthe basic reason that target customers will prefer the firms offer to

competitors offers.Articulate the reasons to believethe supporting evidence to back up the firms claims.

Implementation Programmes: What the firm must do to execute the strategy. There are two types:

Marketing Mix: The firm must integrate product, promotion, distribution, service, and pricearound the value proposition.Supporting Functional Programmes: The firm must integrate the functional areas that

must work together to deliver the value proposition.

If the firm targets multiple market segments, each segment strategy must be distinct. The firmshould seek positive synergy among its implementation programmes.

CHAPTER 11.

The nature of brands has changed from signifiers of goods and services to symbols for constructing

relationships between firms and customers.

Relationships between the brand and customers can significantly enhance shareholder value. The firm can brand individual products, product lines, and groups of products.

For each brand, the firm should choose a brand identity and supporting associations for each brand.

Brand image is the associations customers hold about the brand. The firm should strive toachieve congruence between brand image and brand identity.

Some important items about brands and branding are:

Branding is important in both B2C and B2B. Branding is much more than advertising.

Customers are only one of several audiences for brand messages.

For product brands, we cannot assume that the brand owner is also the manufacturer. Customer brand equity and firm brand equity are two distinct constructs. Each can be monetised, but there

is no necessary relationship between the monetary value of customer brand equity and firm brand equity.

To build a strong brand, the firm must execute a process through which it: establishes brand identity,

creates brand awareness, forms brand associations and brand image, develops consistent brand quality andvalue perceptions, builds brand loyalty, and, possibly, leverages brand strength.

To sustain a strong brand, the firm should regularly measure brand health and act on the results. To secure the best results from its branding efforts, the firm should make serious decisions about variousfacets of its brand architecture.

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Marketing Management Key Messages