Marketing management english

Chapter 1 Marketing management

Defining marketing

Finance, operations, accounting and other business functions are all dependent on sufficient demand for products and services from customers; in fact, if we are not able to sell products we can’t sustain the economic activity. Financial success depends on the marketing ability => that is why all good marketing gives good results => If we are able to do marketing well we reach new products that enrich people’s lives.

Netflix -> good service that is able to reach a lot of customers all over the world.

Marketing’s value is also that it helps to introduce new products that enrich people’s lives. It also creates new jobs and engages firms in social responsible activities.

Uber -> a new way to get taxi.

In marketing there are many effects: Just a short time ago Myspace, Yahoo, Blockbuster were leaders in their industries; now they have been overtaken by new services such as Snapchat, Google, Facebook, Netflix, Amazon. => Firms must constantly move forward because marketing brings innovation.

The role of marketing is always to have the customer at the centre of the organization. => Marketing and Innovation are the two basic functions that proved results in the business enterprise.

Winning marketing

Skillful marketing is a never ending pursuit, with businesses adapting and thriving in these changing times.

Pinterest -> it’s a very fast social media in growing and it is famous especially for women; it doesn’t sell anything, they are giving a service for free and the company lived with the data taken from the users.

“Network first, revenue later” -> it is focused on and has been valued for $25 billions.

Marketing is not only sales => customers are at the center. Marketing is the science and art of exploring, creating, delivering value to satisfy the needs of a target market at a profit.

The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy; all that should be needed then is to make the product or service available => Advertising and Sales are the final part.

Zara -> doesn’t make special advertisement but it takes fast fashion, in few weeks it gives the customers new collections every season and in this way it can reach better the preference and feedback of consumers. It produces about 12000 styles per year.

Benetton -> is focused on provocative advertising to gain attention rather than embracing real customer understanding.

Levinson: “Marketing is not an event (advertising is an event) but a process… it has a beginning, a middle, but never an end, for it is a process. You improve it, perfect it, change. But you never stop it completely.”

-> Most of the people see only the upper part of the iceberg and think that marketing is just advertising, communication and selling, because they can’t see the process.

Marketing’s role in creating demand

Marketing is able to create demand but this demand must be in the market already. => Great marketing is when you see an unfulfilled need and launch an appropriate offering and the offering matches this need; in this way you reach demand and profitable sales.

Innocent Drinks is a marketing success story with simple drinks based on crushed fruit. It has been founded by three Cambridge University graduates. They understood that people are not interested in something influenced but prefer natural products in food and drinks, so they were able to distribute a big amount of juice bottles in Europe.

Needs and wants

Needs -> are basic human requirements such as air, food, water, clothing, shelter. We also have strong needs for recreation, education and entertainment.

Wants -> These needs become wants when directed to specific objects that might satisfy the need. For example: a German consumer may look for a sandwich, a Dutch consumer may choose raw herring.

=> Marketers do not create needs, the needs pre-exist. They fulfill a need, and along other social factors, they influence wants.

Fitbit: this products entered the market because of the increase in demand for healthier and more active life. The steep rise and growth of Fitbit reflects the trend towards wearable technologies in general, and also self-management through self-monitoring.

European marketing realities

Purchase power in every country is different; there are some countries in Europe with more or less purchase power, different political, historical and geographical characteristics.

3 forces of the today environment => technology, globalization, social responsibility => these forces are influencing consumers and companies capabilities and consequently also products and services.

Technology

Web, mobile and social are core technologies that are now dominant within society. However, adoption across Europe is not uniform.

Smartphones and social media is an ever increasing range of innovative technologies that could be impactful for marketing. They include technologies such as Internet of Things (IoT), robotics, data analytics, artificial intelligence and so on.

=> The digital technologies are the biggest opportunity to interact with customers; and understanding customers we can give them the right product and service.

We have different technologies to reach customers -> marketers think on the “three screens”: TV, smartphones, computer.

Globalisation

It is a force in which there are a lot of advances in transportation and communication. It has also made countries increasingly multicultural, influences coming from other countries.

=> Many companies are using a different approach: marketing glocal (global+local) by managing customers locally within their area, nationally within their borders and also globally on the world stage.

Social responsibility

Companies have a corporate social responsibility to understand how the company has an impact on the society, planet and on our lives.

Capitalism and other systems can cause social issues as wealth concentrations, poverty, pollution, water shortages, climate change and wars.

-> The marketing task is thus to determine the needs, wants, and interest of target markets and satisfy them more efficiently that competitors while preserving or enhancing consumers’ and society’ long-term well-being.

New consumer capabilities

Some dramatically effects come from these 3 forces, bringing new consumer capabilities.

Across Europe, a generation of digital natives exists, who grew up with technology, but far behind adoption in Asia.

Digital engagement for social media exists across age groups, with “digital immigrants” and the “grey population” embracing technology.

There are many consequences:

• Showrooming: Consumers use the internet as a powerful info interaction and engaging in comparing products in stores but buying online.
• Mobile: Consumers embrace and purchasing on the go everywhere.
• Generating content: Tap into social media editing and engaging. Marketers tap into this by with their customers online.
• Less tolerant to advertisement: Consumers can be less tolerant to advertisement because we are more informed and are not very friendly in being interrupt watching an advertisement and we are able to distinguish between advertisement and other types of communication.

=> So consumers now have more capabilities to understand marketing.

Ex: Starbucks idea -> they have an area in the web site in which consumers can write their Starbucks idea.

New company capabilities

• Personalization: Companies use the internet as a powerful information and sales channel for personalization and customization.
• Data analytics: They use the data analytics as a core and to gain richer insights about markets, customers and competitors.
• Location-dependent information: Companies embrace mobile and location-dependent information with GPS technology.
• Automation: Companies are moving towards increased automation, robotics, and the internet of things (IoT).

=> So consumer today have more power and companies must understand this power using information from consumers to bring new products, services and values.

Marketing philosophy

Production philosophy: The production philosophy holds that consumers prefer products that are widely available and inexpensive. Businesses concentrate on achieving high production efficiency, low costs, and mass distribution.

Product philosophy is different because in this case the company is concentrated not in the production but in the product - this means that the company wants to create the best product with the biggest qualities that consumers want. The risk is that if we are in love with our products we could lost customers because we don’t think so much about them.

Kodak: was over-focused on product and lacked of focus on the customer missing opportunities in digital photography.

Selling philosophy: With selling philosophy businesses practice aggressively unsought offerings and hard selling.

=> The marketing philosophy emerged in the mid 1950s as a “customer-centered, sense-and-respond philosophy” that a total company effort to achieve customer satisfaction at a profit.

We must focus on customers -> the company tries to obtain the customers’ satisfaction by satisfying their needs.

Jeff Bezos -> he created a company that is customer obsessed -> this means that if you receive an order from Amazon you can also use it and refund it in 30 days, 24/7 you are assisted by an employee.

The holistic marketing approach

This approach is based on the fact that each function and part of a company can be marketing oriented => this means that everything matters in marketing -> it is important to work within each department to place the customer at the centre of the organization.

Holistic marketing includes:

• Internal marketing -> Marketing department, senior management and others.
• Integrated marketing -> Communications, price, product and services.
• Performance marketing -> Sales revenue, brand and customer equity, ethic, legal, social.
• Relationship marketing -> Customers, employees, partners.

7Ps of the marketing mix

With the Holistic Marketing Concept we do not talk anymore of 4Ps but of 7Ps.

• 4P: Product, price, promotion, place.
• 3 extra areas: People, processes, physical evidence.

People -> are those working in the company.

Process -> design, technology and so on used for the production.

Physical evidence -> service environment, experience landscape and so on.

Chapter 3 Developing marketing strategies and plans

-> Marketing is not only communications and tactics, before we need to think about strategies that must be done with plans.

In today’s highly competitive global markets, the task of any business is to form lasting relationships with customers by delivering customer-perceived value at a profit.

-> To have a good relationship with customers we have to deliver a good product/service that could be least for a long time.

Porter value chain

Porter thought about a value chain within the company. Every company sector takes a value; his vision is to have a value for every part of activities and managers must understand how much every activity cost and can create performance.

-> This is an internal vision because we should also think about what a company is able to do.

Firms are a synthesis of activities performed to design, produce, market, deliver and support the final market offering.

Core competencies

Adidas -> is a good company in doing sport shoes; they create the model and design the shoes, then they outsource the production; they concentrate on the design and with will be the next shoes to introduce in the market.

Ikea -> is concentrated on the design, is able to deliver to customers and they have to mount the furniture. Ikea doesn’t invest in mounting the furniture.

Unilever -> abandons spreads accepting £6 billion for its spreads brands Flora, I Can’t Believe It’s Not Butter and Stork.

=> Some companies disinvest and abandons some areas of business because things change and there are some trends and reason for those this companies don’t want to invest anymore. They can concentrate on other companies.

Business realignment may be necessary to maximize core competencies:

• Re-defining the business concept of “big idea”.
• Re-shaping the business scope.
• Re-positioning the company’s brand identity.

Burberry was also one of the first firm to invest in digital.

The role of the corporate strategy

Marketing is not an activity done only with some specific campaigns; it requires companies to understand the customer perceived value, to create it, deliver it and capture it.

Only a few companies stand out as master marketers.

-> These companies focus on the customer and are organized to respond effectively to changing customer needs.

We need to think about a strategic planning, implementation and control (measuring results, and taking corrective actions).

Most large companies have three key organizational levels: corporate level, division level, SBU level -> for each level we need to plan for implement and control the activities.

-> Corporate headquarter thinks about corporate strategy and is responsible for designing a plan to guide the whole enterprise.

-> Each division establishes a plan covering the allocation of funds to each of its strategic business units (SBUs).

-> Each SBU develops a strategic plan to generate a profitable future and develops a marketing plan.

Strategic part and tactical part

The marketing plan is divided in a strategic part and a tactical part:

• In the strategic part -> The company states the target markets and the customer-perceived value offerings.
• In the tactical part -> We think about marketing activities, including product features, promotions, merchandising, pricing, sales channels and service.

Corporate level: corporate and divisional strategic planning

Corporate headquarters define four important planning activities:

• Defining the corporate mission.
• Defining the business.
• Assigning resources to each strategic business unit (SBU).
• Evaluate growth opportunities.

Mission

To define its mission, a company ought to reply Drucker’s classic questions:

• What is our business?
• Who is the customer?
• What is value for the customer?
• What will our business be?
• What should our business be?

A clear mission statement provides employees with shared sense of purpose, direction and opportunity.

Good mission statements:

• Limited number of goals.
• They stress the company’s major policies, values, culture.
• Take a long-term view.
• It is ideally brief, flexible and distinctive.
• Define the major competitive spheres within which the company will operate.

There are different Competitive sphere:

• Industry -> DuPont prefers to operate in the industrial market; Siemens operate in both industrial and consumer markets.
• Market segment -> Aston Martin makes only high-performance sports cars for a high-end market.
• Vertical -> Ford owned its own rubber plantations, glass manufacturing plants and steel foundries.
• Geographical -> Volkswagen and Unilever operate in almost every country in the world.

Ex. Tesla mission is very brief: Elon Musk put his mission with him in some conferences => accelerate the world’s transition to suitable energy.

Vision

The company vision is more associated with future corporate goals; How the company sees itself in the next years.

-> It could be vague or precise but they give the organization a sense of purpose.

Good leaders create a vision for an organization, articulate it and motivate employees to adopt and achieve it.

Ex. LinkedIn vision is to create economic opportunity for everyone that is working; the mission is to connect professionals to make them more productive and successful.

Paypal vision is to everyone to participate in the global economy; the mission is to make money circulate faster for everyone.

Defining the business

Companies often define their businesses in terms of products: they are in the “auto business” or the “clothing business”.

-> But market definitions of a business are superior to product definitions.

Viewing businesses in terms of customer needs can suggest additional growth opportunities.

-> A business can define itself in terms of customer groups, customer needs and technology.

Large companies normally manage quite different businesses, each requiring its own strategy.

Ex. Virgin -> it manages different brand and business such as virgin active, virgin mobile, virgin casino, hotels, flights; some businesses are profitable, some are not available, and some are ops.

Strategic business unit (SBU)

Each SBU must be well defined and has 3 characteristics:

• It is a single business that can be planned separately from the rest of the company; because there are different customer groups and different competitors.
• It has its own set of competitors.
• It has a manager responsible for strategic planning and profit performance.

-> The purpose of identifying the company’s SBUs is to develop separate strategies.

-> Management must decide how to allocate corporate resources in SBUs.

Boston Consulting Group Matrix

They develop a matrix with 2 dimensions used as criteria to make investment decisions: market share and market growth.

Key assumptions:

• Market growth has an adverse effect on cash flow because of the investment in manufacturing facilities, equipment and marketing needed to finance growth;
• Market share has a positive effect on cash flow as profits are related to market share.

Star: Firms are profitable because they are market leaders but require substantial investment to finance growth and meet competitive challenges.