The marketing process

Marketing Orientation

• Companies operate in a market which consists of a set of Controllable and uncontrollable variables.

• Uncontrollable variables constitute the Environment, amongst other variables, which offers both opportunities and threats.

• The companies marketing plans and it’s constituents are the controllable variables.

THE MARKETING PROCESS

The Marketing Process consists of :• Analyzing marketing opportunities

– Internal & External analysis: SWOT analysis– Analyzing the portfolio of the organization

• GE Matrix & BCG Matrix• Ansoffs Matrix

• Developing a Marketing Plan– Selecting Target Markets– Designing a Marketing Strategy– Developing the Marketing Mix– Managing the marketing effort– Defining control processes– Conducting marketing audit

CUSTOMER ORIENTATION

Understanding the buyers Black Box

• Who buys or uses -- Consumer profile• What does he buy -- Product / services• When does he buy -- Purchase cycle / Occasion• Where does he buy -- Distribution decisions• How does he buy -- Decision making process• Why does he buy -- Buying motivation

THE MARKETING CHALLENGE

WHAT IS THEREFORE THE MARKETING CHALLENGE

Marketing challenge

• The marketing challenge is to carefully manage the uncontrollable variables so as to take advantage of the opportunities and avoid the threats while making use of the controllable variables.

• According to Neil Borden:

A marketing manager is a mixer of ingredients, one who is constantly engaged in fashioning creatively a mix of marketing procedures and policies in his efforts to produce a profitable result.

MARKETING MIX

The 4 P’s of Marketing & The 4’C’s • Product Customer solution• Price Customer cost• Place Convenience• Promotion Communication

Additional 3 P’s of Services Marketing• People• Processes• Physical evidence

Elements of the Marketing Mix

PRODUCT PRICE

PLACE PROMOTION

Core product & its variantDesign featuresBranding & extensionsPackaging

List priceDiscount & allowancesCredit & payment normsNegotiation & Tendering

Distribution channelsDealer managementTransportation & LogisticsRetailing & FranchisingMarket coverage

AdvertisingSales PromotionPublic RelationsPersonal selling

DESIGNING A BUSINESS PORTFOLIO

• Collection of businesses and products constitutes a business portfolio

SBU—a unit of the company that has a separate mission/objectives

• Organization’s must evaluate where to invest

Companies need to evaluate SBU’s to decide on priorities of investment or focus

• Analyze the current portfolio

• Develop growth strategies

PORTFOLIO ANALYSIS--TOOLS

• BCG Growth Share Matrix---evaluates a SBU in terms of it’s relative market share (compared to the leader) and the growth in the sector/industry

• GE Model---an improvement over the growth share matrix using dimensions of market attractiveness and business strength

BCG GROWTH SHARE MATRIX

RELATIVE MARKET SHARE

GROWTH RATE

QUESTIONMARKS ???

STARS

CASH COWS DOGS

H

LH L

BCG -example

SBU Market share of SBU

Market share of next competitor

Market growth rate

Relative Market share of SBU

A 20% 40% 10% 0.5

B 30% 10% 6% 3.0

C 12% 60% 12% 0.2

D 10% 40% 25% 0.25

E 20% 10% 20% 2.0

BCG example

RELATIVE MARKET SHARE

GROWTH RATE

QUESTIONMARKS ???

STARS

CASH COWS

DOGS

C

D

E

B

H

L

H L

A

30

`15

001x10x

Rel Mkt Share

A…..0.5B…..3.0C…..0.2D…..0.25E…..2.0

BCG MATRIX• Question Marks

– Operate in high growth rate markets, have low relative market share

– Require high infusion of funds– Usually enters the industry as a question mark

• Stars– A successful ?? becomes a Star i.e achieves high relative

market share in a high growth market– Needs to retain leadership, hence must keep investing

• Cash Cows– Where market growth rate declines but business maintains

high relative market share– Requires no/minimal infusion of funds

• Dogs– In a declining market, business loses market share– Generates low or no profits

STRATEGIC OPTIONS: Assigning Resources

• Build---Opportunity for a ? to expand the market & build market share/ increase relative market share

• Hold---Preserve market share, especially if a cash cow with minimal or no investment

• Harvest---Encash the opportunity by a gradual phase out process with no additional investment; capitalize on the short term opportunity. Cash cows or ?? can adopt before pulling out. May reduce future value of business.

• Divest---Appropriate for ?? or Dogs, in favor of investing elsewhere. Opportunity to encash when the business is otherwise healthy & doing well.

STRATEGIES FOR GROWTH

ANSOFF’S Product – Market Grid

Existing products

New Products

Existing markets

New Markets

MARKETPENETRATION

PRODUCTDEVELOPMENT

MARKETDEVELO0MENT DIVERSIFICATION

PURPOSE: To decide whether to deploy resources on existing/new Products, depending on the attractiveness of existing/new markets

MARKETING PLAN

• Executive summary---a birds eye view of the plan• Table of contents• Current Marketing situation

– Product– Market & Distribution– Competition

• Opportunity & Threat analysis• Marketing Objectives• Marketing Strategy---4 P’s + STP• Action program

– How will it be done—who will do it--what is to be done--what will it cost--when will it be done--where will it be done

• Projected Profit & Loss statement and budgets• Controls• Contingency Plan

MARKETING PLAN

• Contingency planTata Steel may have bagged Corus, but there’s a small part of the story that you probably aren’t aware of…..

“In such a big acquisition, you always have to consider all the scenarios. What to do in case steel prices fell, in case coal prices rose, in case the bid for Corus failed…there was a Plan B”

….Mr. B. Muthuraman, MD Tata Steel*.

* Economic Times, February 7,2007