Lecture 1

Introduction to Marketing ( Chapters 1,2,&5)

By Usama Saleh

A Prerequisite for this course

A project for Egypt ( your own project). A marketing plan template of a product or service of your concern from the internet. (Please , learn how each step of a marketing plan was developed).

I will provide you with consultation and guidance along the course to develop the marketing plan.

Marketing is everywhere

Discussion

About Marketing

Marketing profoundly affects our day-to-day lives. Good marketing has become an increasingly vital ingredient for business success. Good marketing is no accident, but a result of careful planning and execution. It is both an art and a science

Miss Understandings of Marketing !

Linking marketing with advertising and personal selling. Poor definitions presented by nonprofessional or scholarly persons. Dictionaries poor definition of marketing.

Home exercise: bring a marketing definition from the internet, a dictionary , and a marketing textbook.
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How Marketing is Important?

How are you sure ?

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Importance of Marketing
To Society 80 Million Egyptians need different types of commodities . That endure exchanges between producers and consumers. Marketing to influence the behavior and attitude of people. 2. To Business Profits ,or growth ,or survival are the optimal goals; marketing assess the consumers needs or wants and managing offering, communication and distribution. 3. To People - % of manpower in marketing activities or res., communication, distribution, retailing, - Affects life style and attitudes of people and stratifying customers.
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Market Versus Marketing What is a Market? What is Marketing ?

A Market

Is not the ordinary markets (marketplace the physical entity when you go to Al Abour or 6th of October Wholesale market or Al Guiza walk-side Market )
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A Market
.

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Market Definition

" A market consists of all the actual and potential customers sharing a particular need or wants who might be willing and able to engage in exchange to satisfy that need or want

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Analysis of Market definition

Actual Customers ( those who buy your products or services)

Potential customers ( called prospects) ( could be individuals and households or organizations

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Needs ( the basic human requirements e. g. food, water , clothing, housing education and entertainments):

Theses needs become wants when they are directed to specific objects that might satisfy specific need; for instance, less fat food.

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Does Marketing Create or Satisfy Needs?

Think about : 1. The needs for economic shelters for many Egyptians, 2. The needs health care programs in Delta and Upper Egypt. 3. The needs for freedom ( Current Political needs that the government should stratify). Marketing merely reflects societal needs and wants.
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Wants : The form human needs take as shaped by culture and individual personality.

Demands are wants for specific products backed by an ability to pay.

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Demand States
Negative Nonexistent Latent

Declining

Irregular

Full

Overfull

Unwholesome

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Types of Markets

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The different types of markets

1-Consumer Market

Companies selling mass consumer goods and services.

This require clear sense of their target

customers and what needs to be satisfied

Companies create brand names with

distinguished features and quality and distribution channels backed with strong promotion .
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2-Business Markets Professional buyers of goods and services 3- Global Marketing Mode of entry ( export/ licensing/ JV/ FDI (

4- Nonprofit and Governmental Market `Companies selling their goods to nonprofit organizations such as charities, universities or governments.

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Marketing

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Marketing

Definition : " Marketing is a social and managerial

process by which individuals and groups obtain what they

need and want through creating, offering and exchanging products of value with others "

(Philip Kotler , Marketing management ,7th E, prentice Hall International 1991).

Other definitions ( please read about them; more developed definitions by AMA)

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The American Marketing Associations Definition

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

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1- Creating
Need s
Want s

Social & managerial process

Marketing
Demand s

2- Offering

3- Exchanging

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Marketing Involves:
Social Process
Managerial process
1 - Planning 2 - Organizing 3 - Coordinating 4 - Communicating

Communications PR Information Consumer behavior B2B behavior Customer relationship

5 - Controlling
6 - Decision making
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Needs

wants

Demand s

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Creating
Developing new Products

Offering
-Positioning -Promoting -Advertising

Exchanging

-Channels -Sales force - Contract

Positioning : Volvos core positioning is safety but the buyer is promised more benefits (long lasting, service, warranty)
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Products/ offerings and brands:

Value:

Physical Non physical

Price Service Quality

(Benefits perceived)

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Value

Value increases with quality and service and decreases with price. Value = Benefits Cost
benefits= functional benefits + emotional benefits Costs= Monetary costs+ time costs+ energy costs+ psychic cost

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Creating Customer Value: The value chain

Michael Porters value Chain identifies nine strategically relevant activities that create value and costs (five primary and four support activities). Help developing core competency to achieve competitive advantage e.g. low cost.

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Value creation and delivery consists of three parts: 1. Choosing ,or defining the value: segment the market, define target market, develop offering. 2. Providing the value ( or value development ): product features, prices, and distribution channels. 3. Communicating the value, or value delivering process) : sales force, advertising, and promotional tools).
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Marketing And Developing the 4Ps

.

Four Ps
Product Price

Four Cs
Customer solution Customer cost

Place
Promotion

Convenience
Communication
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Value and Customer Satisfaction: The Basic goal

The extent to which a products perceived performance matches a buyers expectation. Measuring and monitoring customers satisfaction ( Marketing research techniques:
surveys, mystery shoppers, period surveys, number of complains, defection rate)

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A Further Goal : Customers Loyalty

Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. Building Loyalty approaches: interaction with customers, developing loyalty programs, personalizing marketing, and creating ties.
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The outcomes of value proposition/ loyalty

Customer profitability( customers profitability analysis, page 171). Lifetime value (calculating the total of the discounted lifetime value of all of its customers, see page 172).

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The Scope of Marketing

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Marketing people are involved in marketing 10 types of entities: 1. Goods 2. Services 3. Experience( climbing Mountain Everest)/ 4. Events( Olympics/concert/conference) 5. Persons ( celebrity marketing: examples)

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6.

7.
8.

9. 10.

Places ( cities new residents: examples) Properties ( real states/stock/ bonds) Organizations ( corporate identity ads and news) Information Ideas( social marketing and say no to drugs(

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Marketing Process ( How is marketing done? )

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How is marketing done

marketing is not done only by the marketing department.

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Marketing process:
" The marketing process consists of analyzing marketing opportunities, researching, and selecting target markets, designing marketing strategies, planning marketing programs and organizing, implementing and controlling the marketing efforts" .
(Philip Kotler , Marketing management ,7th E, prentice Hall International 1991).
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Marketing Processes
SWOT analysis
Segmentation

Planning Organizing Communicating Coordinating Controlling Marketing Mix

Positioning

Target Market

Strategy

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Model of Marketing Process

.

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Marketing Management

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What is Marketing Management ?

Marketing management definition The art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value .
Philip Kotler

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Marketing Management Tasks

Develop market strategies and plans Capturing marketing insights (MIS) Connect with customers Build strong brands Shaping market offerings Delivering value Communicating value Creating long-term growth
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Part 11 Marketing Orientations

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1. Production Concept
Consumer base+ mass production+ low price products + Demands exceeds supply

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2. The Product concept

Consumer + quality product Product continuous improvement by a firm Disadvantages:
Poor identification of consumer needs and wants The failure of certain product (Market Myopia)

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3. The Selling Concept

Exert pressure on consumer by a producer

Direct contact to introduce the product To meet over capacity by a firm

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4. The Marketing Concept

Satisfying the needs and wants of targeted

consumers

The ambition to get a customer satisfaction

The marketing concept rests on four pillars:

target market, customer needs, integrated

marketing and profitability).
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5- Customers Relationship Management Concept (CRM)

CRM is the process of carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty. Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer

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Data base/ Data warehousing/ Data mining

Developing Database Key Concepts 1. Customers data base 2. Business data base 3. Mailing list Using the Database To : identify prospects target offers deepen loyalty reactivate customers To avoid mistakes and reduce marketing costs

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Adopts different strategies: Reduce the rate of defection Increase longevity Enhance share of wallet Terminate low-profit customers Focus more effort on high-profit customers

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Holistic Marketing Concept

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Marketing Plans Formats

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Some people, in hurry, summarize it as:

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An Incomplete Marketing Plan Layout

Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

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In search of A well established Marketing Plan Format

Home exercise Snatch a copy of a marketing plan form a text book, or internet and then list its components on a separate sheet.

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A marketing plan consists of 2 levels :

1-The strategic Level ( involves a market study and measuring demand, segmentation, targeting, positioning, and determining marketing objectives and strategy).
2-The Tactical Level ( involves designing the marketing programs, budgeting, implementation and evaluation of performance.
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Are you ready to develop and write your marketing plan?

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It has to be concrete

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Challenges in Marketing and The New Marketing Realities

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Challenges in Marketing
1.

2.

3.

The new marketing realities ( IT, globalization, deregulation, privatization , competition, industry convergence, retail transformation, disintermediation) New Consumer Capabilities( buying Power, info. Access, voice power, Choices) New Company Capabilities (R&D, outsourcing, Knowledge management,IT)

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Part 111

Toward Developing a Marketing Plan: Corporate, business, and marketing strategy

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Levels of strategic Planning

Most large companies consist of 4 organizational levels

Corporate

Division

Business Unite
Product Level ( product line, Brand) MKT Plan

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Planning at four organizational levels: (1) Corporate strategic plan: to guide whole enterprise; allocates resources. (2) Division plan: allocates resources for divisions. (3) Business unit strategic plan: departmental level plan (4) Marketing plan: specific product-market plan

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Identifying the companys strategic business unites

Large companies normally manage quite different businesses (portfolio). Examples: Orascom ( Egypt) Americana ( Kuwait) Coca Cola (USA) AL Rajahi ( Saudi Arabia)

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The Portfolio Matrix

Market Growth Rate
.
20%18%H 16%14%12%10%8%6%L 4%2%0
10x
H L

Stars

Question marks

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Cash cow

?2
7

Dogs

8 6
4x 2x 1.5x 1x .5x .4x .3x .2x .1x
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Relative Market Share

Strategic Planning: Definition

strategic planning addresses long-term needs and sets comprehensive action directions for an organization or a subunit.

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Strategic formulation Porters Generic Strategies

Overall cost leadership

Differentiation( quality leadership)

Focus
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Business strategy : What is it?

The strategic business plan indicates the action agenda for the business development, marketing , quality, product and technology, human resources, manufacturing/facilities, and finance. Coordinated business and marketing strategies is developed by Market- Driven organization.

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Business unit strategic planning 8 Steps

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The Business strategic- planning process is presented by the following figure.

Each business unites within the corporation needs to define its specific mission within the broader corporate mission. The mission statement should indicate the broad goals and policies of the business unites( regarding customers , employees, and stakeholders, in general).
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Company Mission (Examples)

MICROSOFT Empower people through great software any time, any place, and on any device.

DISNEY Create shareholder value by continuing to be the worlds premier entertainment company from a creative, strategic, and financial standpoint.

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Factors Influencing Company Marketing Strategy

Marketing intermediaries

Demographic/ economic environment

Product

Technical/ physical environment

Suppliers

Place

Target Price customers

Publics

Promotion

Political/ legal environment

Social/ cultural environment

Competitors
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Formulating product Market Strategies

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Growth Strategies: Ansoffs Product/Market Expansion Grid

Existing products
Product

New products

Existing markets
Market

1. Market penetration

3. Product development

New markets

2. Market development

4. Diversification
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Strategy Selection
Based on :

organizations definition, mission , capabilities, market capacity and behavior, environmental factors, competitive activities. Analysis of the costs and benefits of alternative strategies and their probabilities of success.

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Starbucks: Case Study Page 85

Read through in the classroom .

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Marketing Research Role in Marketing Strategic Planning

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Marketing Research and the strategic Marketing Planning

Marketing Research plays an important role in: 1- Situational Analysis (to assess an opportunity). This includes: market analysis( gather information on product markets and forecasting and gathering information relevant to macro environmental trends . Market segmentation Competitors analysis

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Marketing Research and the strategic Marketing Planning

2- Target marketing analysis ( Identifying the needs and wants) 3- Positioning ( the link with consumers) 4- New product Planning ( concept and product testing by a researcher ) 5- Marketing program Development( marketing mix): A) Pricing strategy as subject of demand potential and sensitivity and sales forecast at various price level . B) Product ( customer satisfaction studies and service quality studies) C) Distribution strategy ( single or multiple channel ) , retailing research and logistic assessment . D) Integrated marketing communication

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Marketing Research and the strategic Marketing Planning

7- Strategy implementation and control Where MR assesses the product during PLC and how customers perceive its value and also the MR forecast the effect of macroenvironmnet of the marketing strategy. 8- Monitors marketing performance and Evaluation.

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SOWT ANALYSIS

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1- Self Assessment of your company or your small business

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2- Analyzing the marketing Environment

A ) The Micro Environment

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B) The Macro environmental Forces Analysis

Demographic Environment Economic Physical Technological Political-Legal Social-cultural

End
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