IMC IMS Section-A HO 2010-10-19T210809

10/19/2010
Page 1 IMC FH Krems: International Marketing and Sales • Klaus Kotek
International
Marketing and Sales
IMC FH Krems,
BA 2010/2011; 1. Semester
Klaus Kotek, MBA
SECTION [A]
 Kotek
SECTION [A] Page • 2 • IMC FH Krems: International Marketing and Sales • Klaus Kotek
Chapter Outlines
Is above-the-line (ATL) The importance of customer
advertisement still credible? segmentation
The major tasks of a brand, Identifying and targeting

the nature and purpose the right people
of marketing How to define a market /
segment
Different options of
orientation: producing – The aim of a company is
distribution – channel to win, keep and grow
customers
The five famous questions of
Peter Drucker (re. business Quick-Check: Targeting
purpose) the right people/group of
potential customers
For which organisations
is marketing essential – How to differentiate:
and why three major strategic options
 Kotek
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10/19/2010
For discussion What’s your

( colleague counseling) opinion: name
the difference of
“advertising” and
“marketing”.
Assume an
organisation has
to decide just for
1 instrument:
which of both is
indispensable
(advertising or
marketing)?
– What should
be chosen?
Why? (Explain
 Kotek
your thoughts)
Introduction:
What is marketing,
differences to advertising
and communication?
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Sales starts
before a
salesman calls
“ I don’t know who you are.

I don’t know your company.
I don’t know your company’s product.
I don’t know what your company stands for.
I don’t know your company’s customers.
I don’t know your company’s record.
I don’t know your company’s reputation.
Now – what was it you wanted to sell me?”
 Kotek
Is above-the-line (ATL) advertisement

still credible?
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The
future
of
advertising
 Kotek
Is there a future
for advertising?
What are the current challenges for
advertising experts nowadays?
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The
future
of
marketing
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Marketing:
market-oriented
business
management
 Kotek
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Brands
(branded products/
services)
are providing
orientation!
 Kotek
Indeed,
business has
changed –
brands and
branding haven’t.
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6
10/19/2010
Essentially, a brand =
collectively what
PEOPLE say, feel
and think about your
product, service,
company.
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Branding = using
Marketing to influence
peoples’ attitude
towards, and
perceptions of,
the brand.
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10/19/2010
Brand loyalty:
will still be earned over
time through consistent
positive experiences and
engagements with a
product, service or
company.
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Treat me
well, and
I’ll return
the favour.
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What is the nature and purpose

of Marketing?
“Marketing is a social and managerial process by which individuals
and groups obtain what they need and want through creating and
exchanging products and value with others.” (Philip Kotler et al. 2003)
“Marketing is the managerial process which identifies, anticipates,
and supplies customer requirements efficiency and profitably.
(The Chartered Institute of Marketing [CIM])
“Marketing is the process of planning and executing the conception,

promotion and distribution of ideas, goods and services to create
exchange and satisfy individual and organizational objectives.” (AMA)
“Marketing is the process of achieving corporate goals through meeting

and exceeding customer needs better than the competition.” (Jober 2003)
“Because the purpose of business is to create and keep customers, it has

only two central functions: marketing and innovation. The basic function
 Kotek
of marketing is to attract and retrain customers.” ( Peter F. Drucker, 1999)
For discussion
( colleague counseling)
Marketing relies
on the group(s)/
organisations
to be reached.
Name the
most important
addressee of
marketing
endeavours!
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The scope of Marketing

Marketing dives into a number of different applications – depending on its scope:
Consumer
Consumer marketing
marketing is concerned with the exchange process which
take place at the end of the supply chain.
Industrial
Industrial marketing
marketing examines earlier stages in the supply chain. Al-
though the goods ultimately end up in the hands of consumers, products
pass through many stages before arriving on the retailers’ shelves.
Service
Service marketing
marketing a service product is essentially intangible (name examples)
Not-for-profit
Not-for-profit marketing
marketing (concerned with those organisations whose
goals are something other than a profit): charities, universities/schools,
Government organisations, hospitals... (incl. NGO and NPO)
Small
Small business
business marketing
marketing SME (small/medium sized enterprises)
have specific problems of their own, largely related to their limited
resources and non-specialist management (mgmt.).
International
International marketing
marketing – implies an emphasis on producing goods
in one country and selling them in another (perhaps with some local
 Kotek
assembly in the destination area)
A quick
retrospection
to the
historical roots
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How it all
began –
and why
it is worth
knowing...
 Kotek
today
Different options of orientation:

Perspective “Producing”
Consideration (purchase)
Company Customer/
•Goods / Services Client
Bottle-neck
In the early days: demand was bigger than supply.

• “Product is hero.”
• “The customer can have any colour he wants, as long as it’s black.”
… automobile tycoon Henry Ford‘s usual answer to all complaints about lack of choice.
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Different options of orientation:

Perspective “Sales / Distribution channels”
Customer/
Company
Goods/ Services Client
Bottle-neck
can be bought
anytime and everywhere”
• Focus on sales und distribution channels: “Closer to the customer.”
• High importance of individual sales persons, warehouses, retailers.

Mail order business (‘catalogue shopping’) became popular.
• Online shopping or acquiring goods via online auctions are

becoming more and more important
 Kotek
Consequently, companies
Perspective “Customer” shift from product orientation
to customer orientation.
Customer/
Company
Goods/ Services
Client
John Kenneth Galbraith said: “… the change Bottle-neck

is to produce needs and fulfil these needs.”
The situation nowadays:

Normally supply is (much) bigger than demand.
• Focus on the customer and his/her specific needs or desires
• Strategy and tactics become more and more important in order
to “win the battle in the customer’s mind”
Development of tools / techniques to compete in the market:
The famous ‘Marketing Mix’ [“the 4 P’s”] is established.
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Yesterday’s
Marketing
Thinking
”Product is hero“
”Customer centric focus”

 Kotek
Yesterday’s
Marketing
Thinking
Product
Packaging
Pricing
“Marketing is the Distribution

art of finding,
developing and Communication
profiting from
opportunities” Customer
 Kotek
[“Kotler on Marketing”]
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Product
Packaging
Pricing
Power has
Distribution
fundamentally Communication
shifted from
suppliers to Customer
customers!
 Kotek
Whatever the business is, you are in...
The mission of each business

(and project) is always
to meet the customer’s needs.
More about defining
“mission” and “vision” you
will find in the chapter
“(strategic) planning ”.
… it always pays off to

heed the customer’s
standpoint!
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The 5 famous questions of Peter Drucker*)

1. What Is Our (Business) Mission?
2. Who Is Our Customer?
3. What Does The Customer Consider Value?
4. What Have Been Our Results?
5. What Is Our Plan?
*)Peter F. Drucker *19.11.1909

+ 11.11.2005 was a writer,
management consultant, widely
considered to be "the father
of modern management,” he
 Kotek
wrote 39 books and countless

scholarly and popular articles.
The aim of a company is to win, keep and

grow customers [Theodore Levitt, “The Marketing Imagination“ ]
What's essential
for a company?
To serve the
ri
right customers!
WIN:
WIN “How to gain new customers?”
KEEP
KEEP: “How to increase the loyalty of profitable customers?”
GROW
GROW: “How to raise customer’s turnover?”
Turning occasional customer into “full-time advocates”
(characteristic: he/she will recommend your company)
Enlarge number of transactions (“up-selling”)

Achieve that clients are willing to buy additional goods
or services (“cross-selling”)
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WIN
KEEP
GROW
 Kotek
For discussion
( colleague counseling) Communication
is essential.
But to achieve
business goals
strategic
thinking, and
planning is a
precondition
before starting
any tactical
activities.
Discuss for
which kind of
organisations
marketing is
 Kotek
indispensable.
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Licence to operate … – Name + explain: For

which organisations is marketing essential?
Economic organisations to win / keep/ grow customers…
raise awareness for entering a new market / target group …
establish a new industry sector/ launch of a new product range…
general (brand) awareness
IPO [initial public offering] – influence stock price (legally) …
generate attractive distribution/ cooperation partners
internal communications: create understanding / commitment …
to win new employees, e.g. ‘high potentials’ / graduates …
Institutes of (higher) education also this institutions need to work
on their reputation a high “employability rate” within their alumni!
Cultural organisations art exhibition (e.g. opening day at a
museum / gallery) multicultural understanding …
Non-profit organisations e.g. charitable (Red Cross ,
Samariterbund, WWF a.s.o.) name further examples…
Political parties + public authorities carry out public interests …
Religious organisations what do they provide that values their members?
 Kotek
Individuals/VIP’s e.g. artists, politicians, opinion leaders …
E.g. NGO’s are heavy users of marketing…

 Kotek
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Why and how to

segment customers
 Kotek
Each market is divided into various

segments… For example – one industry: over 20 various segments of cars: for specific target groups
‘Family-Vans’ B-to-B: trucks, long (black / stretched) MPV: multi pur-

(e.g. Espace, distance vans, etc. limousines: for states- pose ~ ATV: all
Voyager, Sharan) men, stars, executives terrain vans…
Estate car / B-to-B: small vans, 4WD: affordable
station wagon: Top-class vs. Luxury car for small off-
pick-ups: different cars: Mercedes,
room for family / types for different road usage
sporting goods Maybach, Bentley …
purposes Luxury 4WD: e.g.
‘Golf-class’: sub- R. Rover, Lexus,
segment: diesel / Mercedes, BMW
economical … (HMMWV) High
“Fun”/Retro cars: Mobility Multi Pur-
Mini, Fiat 500 pose: e.g. Hummer
Small low price Expensive sport
cars (< 10.000,-€) cars: e.g.
Porsche, Ferrari
Small city cars,
incl. ‘fun-factor’ …and even more
(e.g. Smart / segments are
Convertible) being developed
In the beginning of
mass-production … and each market segment needs
(“Model T”): few a differentiated marketing mix.
segments, no extras
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Provide additional
examples of your own…
• … regarding specific categories
for selected market segments.
( ‘Teamwork’)
 Kotek
A crucial question …
… which Customer do you want to reach?

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Identifying and targeting

the right people
The days of mass marketing are long gone. Understanding how
customers differ in their preferences is critical. Not surprisingly,
customer segmentation has become an integrated part of any
marketing strategy! – To target a selected group makes sense, because
we can fully concentrate and fulfil their specific needs
in a profitable way.
• The role of segmentation has to be linked to an overall marketing
strategy
• In the following you find the basic criteria of segmentation
(especially regarding the “total market”)
What is not explained in this chapter:

• New technologies and sophisticated modelling systems
(e.g. “data-mining” within databases, conjoint analysis, RFM etc.)
 Kotek
How to define a
market / segment
Characteristics of segmentation: b-to-c target groups / markets
GEOGRAPHIC DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIOURAL

CHARACTER- CHARACTER- CHARACTER- ORIENTED CHA-
ISTICS ISTICS ISTICS RACTERISTICS
• Country • Sex • Personality • Life style
• Region/district • Age (life experience) • Attitude • Hobbies

• Marital status • Sports club
• Size of the city/ • Approach to life
(children: yes/no) • Cultural interests
village
• Education • Religion • Memberships
• Environment / in associations:
place of residence • Profession private interests
(job status) or job related
• Consumer
• Financial / Income • Habitual
spending area
( free to spend !) behaviour
 Kotek
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How to define a
market / segment
Characteristics of segmentation: b-to-b target sectors / markets
GEOGRAPHIC DEMOGRAPHIC FINANCIAL BEHAVIOURAL

CHARACTER- CHARACTER- CHARACTER- ORIENTED CHA-
ISTICS ISTICS ISTICS RACTERISTICS
• Country • Segment/type of • Initial capital – • Type of company

industry (SIC-code) company's capital (public, joint-stock,
• Region/district owner-oriented…)
• Year of
• Turnover, profita-
• Size of the city/ foundation • Mgmt.-structure
bility, financial
village • Market position standing, credit- • Memberships
• Environment / (in comparison
worthiness in associations,
place of residence to direct and chamber of
indirect • Orientation of
• Consumer / competitors) main customers commerce etc.
customer • # of workers/ (sector, financial • Cooperation
spending area employees standing…) partners (‘cluster’)
 Kotek
25 examples of micro-segmentation: creating new terms,

describing target group's behaviour: “Yuppies” vs. “Yuffies”
• “young urban professionals” “young urban failures”
• “Frupies” Frustrated urban professionals (former Yuppies – currently in a midlife crisis)
• “Frumpies” Former radical upward moving people (“upward climber)
• “Bobos” Thinking like Hippies, working/earning like Yuppies
• “Milkies” Modest introverted luxury keeper “Ucos” ultra consumers
• “Dobies” Daddy older, baby younger / “Mobies” Mom older, baby younger
• “Slobbies” Slow but better working people – no quick buying decisions (but evaluated)
• “Yetties” Young, entrepreneurial, tech-based, twenty-something
• “TAP’s” Technically advanced persons” (technique freaks)
• “Dinks” Duple income no kids / “Dins” (… no sex: it’s all about working hard…)
• “Laptogs” Living apart together (couples, which stay together but separate living)
• “Globos” Skiing: Canada; relaxing: Maldives; shopping in London, Paris, Dubai…
• “Lohas” Lifestyle of health and sustainability; “Hanks” Health + nature keeper
• “Skippies” School kids with income purchasing power (~10-16y. willing to spend!)
• “Puppies” Poor urban professionals (mostly various jobs, no fixed income)
• “Grumpies Selpies/2nd Lifer” Grown up and mature (45-55/60) „Cashing out“
• “Woopies” Wheel of older people (retired but still working) “Yollies” young old leisure…
• “Leonardos” well educated, broad interested in culture, politics and new media…
 Kotek
• “Lovos” Lifestyle of voluntary simplicity (consumption renouncement) * “Uhu” („< 100“)
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10/19/2010
Key issue: Where to meet the right target group?

It’s all about the right
media placement!
The smaller the target groups
and…
the harder to identify these
people … the more
expensive is the right targeting!
S.t. impossible to identify where
to meet these groups and which
specific media matters most…
Famous advert for an

media agency: “It’s all
about the right placement –
that makes the difference.”
 Kotek
Customers should not be treated equally:

What determines the value of a customer ?
Key success factor:
To account for the increasing
importance of the
customer value factors
• Up-Buying
• Monetary (revenues) • Cross-Buying?
• Referrals
• Customer-based revenues
• Customer profitability • Customer-based costs
• Expected rate
• Customer lifetime value • Discounted value
 Kotek
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Quick check: does a market segment

go together with your company?
USP: Unique
Size of the market? Selling Proposition
Profitability?
USP: Unique
Sustainability? Satisfaction
Proposition
Does the new target group fit to your existing group(s) of customers?
Experience available (in-house) and specific know-how at hand?
Do you have adequate knowledge how to treat this target group?
Access to the segment (e.g. via existing distribution channels)?
Competitors: strengths / weaknesses in this market segment?
Are you able to provide a competitive advantage? (“Reason why”)
Consumer benefit? USP (= Unique Selling Proposition – R. Reevers)
At least: supply a specific EVP (= Extra Value Proposition)!
 Kotek
Customer segmentation has to be in line with the chosen

business model. – Which area are you ready to sacrifice?
How to deliver: Think about the distribution channel! Convenient?

Even in the area of distribution you have to chose – and sacrifice:
Which distribution channels are competing with each other?
To which customer segment do you want to offer very specific

services/goods? – And which segments of customers do not match
your concept?
Look at your existing customer database: “80/20 rule”:
generating 80% of the revenue within 20% of your customers!
What to do with (groups of) customers with whom you lose money?
Try to get rid of these selected customer groups?
Which – unique – product range can you provide? – Do you provide

a competitive advantage? – Why should a customer prefer your offer?
 Kotek
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Develop a strategy for

innovation and growth
Marketing is not a battle of products; it’s
Do not try “to be everybody's darling”. a battle of perceptions. Al Ries/Jack Trout
Have a clear focus ! Predefine your favoured market / segment !
You have to choose for whom you want to be No.1 – or No.2.

(The market research experts call it: “to be in the relevant set”)
Otherwise you cannot compete in the long run!
Positioning …in the mind of your target group.

In which field are you an expert?
Differentiation …via relevant, unique products / services.
“Act differently than the others.”
 Kotek
WHERE WHAT HOW

to to do in a to make
compete different way money
Choose Choose your Choose your

your market(s): differentiation: business process:
by geography best product (?) by solutions
by category best relationship(?) by supply
customer segments best price (?) by distribution
Identify Competitive Business

opportunities advantage model
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24
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What to do in a different way: 3 major strategic options

(“The Discipline of Market Leader” by Michael Treacy, Fred Wiersema)
Leading by Product innovations (best quality, high speed in innovating

– competing with own product range – keep time to market as short as possible)
Leading by Customer partnership (not aiming at a single transaction,
focus on customer loyalty, solutions based on individual customer-needs. B-to-B!)
Leading by Lowest life-cycle costs (fair quality of product/service, no
advanced innovations – and sacrificing of outperformance, few individual services)
Best Product (leading

via innovations)
Better? – Different? – Cheaper?
Don’t try to excel in all 3
capacities (characteristics
of your business model.)
“You never
get fired for
A clear focus is key to success!
hiring IBM”
Best Service (partnership,

strong focus on individual Best Price (no outstanding
customer needs. Esp. B-to-B) innovations or services)
 Kotek
Additional recommendations to succeed & lead

(CONT. – by Michael Treacy, Fred Wiersema – and Michael Porter)
The middle way is the trap (“squeezed in the middle”)

Become best at one of the three value disciplines (product/service-
strategy, customer intimate firm, best price throughout operational excellence)
Achieve an adequate performance level in the other two disciplines.

Keep improving the one superior position in the chosen discipline so
as not to lose out to a competitor
Keep becoming more adequate in the other two disciplines, since
competitors keep raising customers’ expectation about what is
adequate.
Choose a specific position: best quality ? most reliable ?
best performance? best value for money? least expensive?
most prestigious (image)? most durable? safest? fastest?
best designed or styled? easiest to use ? most convenient ?
 Kotek
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10/19/2010
Find additional examples…
Differentiation:
… regarding these 3 specific possibilities of dominating a market:
name some companies and explain their characteristics (customer
segments, product range, distribution channel). – You are free to
chose good as well as bad examples. Related to Austria and of
course also international ones:
A] product strategy ( ‘Teamwork’ # 1)
B] customer intimate firm ( ‘Teamwork’ # 2)
C] best price throughout operational excellence( ‘Teamwork’ # 3)
Positioning:
Find some examples: companies with a clear position.
The specific appearance (image) makes it easy for (potential)
customers to identify their preferred suppliers. ( ‘Teamwork’ # 4)
 Kotek
Marketing: a universal discipline. –

However different practice in different countries
different relationships
„shared values“
Society
Company Consumer
Competitor
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26
10/19/2010
Discussion Questions
(1) Provide an overview of strategic options how to succeed in a
market.
(2) What is the role of marketing in order to become a leader in the
defined industry / service sector?
(3) What is a market segment? – Name the most important criteria.
(4) What do you think is the core idea of market segmentation?
(5) Can you provide some typical segmentation criteria for
– private customers and
– commercial clients?
(6) Name some indicators to allow a quick check regarding the
profitability (in your business area) of potential market segments.
(7) You want to re-engineer your business.
Explain the most important issues you will have to consider
 Kotek
thx☻
© Klaus Kotek
The contents of this presentation were prepared by Klaus Kotek.

No reliance may be placed for any purposes whatsoever on the
information contained in this document or on its completeness.
No representation or warranty, express or implied, is given by or
on behalf of the author. – No liability is accepted for any
information or opinions.
 Kotek
27

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10/19/2010

Page 1 IMC FH Krems: International Marketing and Sales • Klaus Kotek

The major tasks of a brand, Identifying and targeting

For discussion What’s your

“ I don’t know who you are.

Is above-the-line (ATL) advertisement

Page 7 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 8 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 9 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 10 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 11 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 12 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 13 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 14 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 15 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Page 16 IMC FH Krems: International Marketing and Sales • Klaus Kotek

What is the nature and purpose

“Marketing is the process of planning and executing the conception,

“Marketing is the process of achieving corporate goals through meeting

“Because the purpose of business is to create and keep customers, it has

of marketing is to attract and retrain customers.” ( Peter F. Drucker, 1999)

The scope of Marketing

assembly in the destination area)

Page 20 IMC FH Krems: International Marketing and Sales • Klaus Kotek

Different options of orientation:

In the early days: demand was bigger than supply.

Different options of orientation:

• Focus on sales und distribution channels: “Closer to the customer.”

• High importance of individual sales persons, warehouses, retailers.

• Online shopping or acquiring goods via online auctions are

John Kenneth Galbraith said: “… the change Bottle-neck

The situation nowadays:

”Customer centric focus”

“Marketing is the Distribution

Whatever the business is, you are in...

The mission of each business

… it always pays off to

The 5 famous questions of Peter Drucker*)

*)Peter F. Drucker *19.11.1909

wrote 39 books and countless

The aim of a company is to win, keep and

 Enlarge number of transactions (“up-selling”)

Licence to operate … – Name + explain: For

Individuals/VIP’s  e.g. artists, politicians, opinion leaders …

E.g. NGO’s are heavy users of marketing…

Why and how to

Each market is divided into various

‘Family-Vans’ B-to-B: trucks, long (black / stretched) MPV: multi pur-

… which Customer do you want to reach?

Identifying and targeting

What is not explained in this chapter:

GEOGRAPHIC DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIOURAL

• Country • Sex • Personality • Life style

• Region/district • Age (life experience) • Attitude • Hobbies

GEOGRAPHIC DEMOGRAPHIC FINANCIAL BEHAVIOURAL

• Country • Segment/type of • Initial capital – • Type of company

25 examples of micro-segmentation: creating new terms,

• “Lovos”  Lifestyle of voluntary simplicity (consumption renouncement) * “Uhu” („< 100“)

Key issue: Where to meet the right target group?

Famous advert for an

Customers should not be treated equally:

Quick check: does a market segment

)Peter F. Drucker 19.11.1909

Enlarge number of transactions (“up-selling”)

Individuals/VIP’s e.g. artists, politicians, opinion leaders …

• “Lovos” Lifestyle of voluntary simplicity (consumption renouncement) * “Uhu” („< 100“)

How to deliver: Think about the distribution channel! Convenient?

Have a clear focus ! Predefine your favoured market / segment !

Positioning …in the mind of your target group.

Leading by Product innovations (best quality, high speed in innovating