Marketing Management Fall 98 Introduction Ambar G. Rao John M. Olin School of Business

Agenda What is Marketing? –Marketing Process –Marketing Analysis & Planning –A Framework for Marketing Analysis A Preview of the Course –Syllabus –What to expect?...And what is expected? Segmentation and Positioning

Some Perspective Marketing and History “ In well-ordered states, storekeepers and salesmen are commonly those who are weakest in bodily strength and, therefore, of little use for any other purpose.” - Plato “Merchants are to be accounted vulgar; for they can make no profit except by a certain amount of falsehood.” - Cicero “Advertising... is a meretricious endeavor in which psychological appeals to ‘fear’ and ‘shame’ are developed to bamboozle the public into purchasing essentially worthless packaged goods at bloated prices.” - Thorstein Veblen

Some Perspective A Modern View “Corporate leaders nationwide are discovering that their most powerful competitive weapon is marketing -- the development, pricing, distribution, and promotion of products.” - Newsweek “Marketing is now central to success at any company in any business, and it is going to make the difference between winners and losers.” - Stephen Greyser, Harvard Business School “Stop being a company with its face towards the CEO and ass towards the customer” - Jack Welch, CEO, G.E.

Why the change over the ages? Changing approaches to business over time –the production concept –the product concept –the sales concept –the marketing concept Why is Marketing one of the most critical components of modern business?

Key Issues in the Business Environment Customer Satisfaction - markets are saturated and we cannot rely on pent up demand to make profits. –Must provide greater quality and value to smarter shoppers. –From mass marketing to segments of one. –Increase speed of innovation, diffusion and distribution. Globalization –Global brands, different positioning or similar positioning in different countries? –New ideas developed in country A, designed in country B, manufactured in country C and sold in country D. Environmental and Health Care Concerns –Must address concerns of better educated and better informed consumers.

What is Marketing A M A 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 each other Key –Customer needs and wants –Demand and a market where demand can be met –Choice, based on maximizing utility (or value)

RAO’s Definition of Marketing Marketing = Romance + Finance

Analysis Framework Product Market Customer Analysis Consumers Competitor Analysis Competing Firms Company Analysis Marketing Analysis Product Price Promotion Distribution

Key Principles Successful marketing strategy entails: Designing products, services, and programs that emphasize attributes which: For which customers have value Provide a sustainable differential advantage over competitors.

What does this mean? Sound customer analysis, while important, is not sufficient. Competitors will also be striving to develop product and services that embody attributes important to customers. Whatever attributes that our product or service embodies, must not only be important to customers, BUT must also yield some differential advantage over competitors. Successful marketing strategy requires sound competitive analysis in addition to customer analysis.

Elements of Marketing Analysis (3 C’s) Customer Analysis –Consumer Behavior (Perceptions, preferences, purchase, usage) –Market Characteristics (Size, growth) Competitor Analysis –Industry Structure Analysis (Entry/exit barriers, buyers, sellers, substitutes) –Competitor Response Profiles (Capabilities, current and anticipated future actions) Company Analysis –Economic Analysis (Costs, break-even, profitability) –Company Fit (Strengths/weaknesses, resources, mission)

Steps in Formulating Marketing Strategy 1Examine the situation and identify the marketing problems/opportunities –Short-term vs. Long-term 2Search for a strategy to achieve short-term and long- term goals –Areas for marketing action are Product, Price, Promotion, Place –Strategy should be Integrative and Consistent across the 4 P’s Robust to alternative scenarios 3Implement and Monitor