Intro Marketing Elearning

Marketing process and concepts

Laurence COGAN Autumn 2009 – ESC 2nd Year

Sessions’ Organization: Syllabus

• • • • • • •

Session 1: Introduction to marketing Session 2: Product policy (1) Session 3: Product policy (2) Session 4: Pricing Policy Session 5: Promotion policy Session 6: Communication policy Session 7: Case study Babolat

⇒ Final exam

Sessions’ Organization • • -

7 sessions 4 marks One oral presentation A written report (25% of the mark) Case study (25% of the mark) A final exam (50% of the final mark)

Session 2: each group presents the brand of their choice (5 minutes) Session 4: 2 groups present the product policy (15 minutes) Session 5: 2 groups present the pricing policy (15 minutes) Session 6: 2 groups present the distribution policy (15 minutes) Session 7: Case study Babolat (each group responds to one question)

Final Report Ethnic & minority groups’ products • Ethnic products: ‘ brand’s product or service targeting an ethnic group’. • Exotic/foreign products • Organic products • Can also include minority groups’ products: – – – –

Disabled people Children Teenagers Seniors…

Types of ethnic/exotic products

• • • • • • • •

Food Clothes Accessories & jewels Cosmetics Hair products Furniture Decor Others…

Lecture Outline  Evolution of marketing concept  Core concepts of marketing  Marketing tools  Marketing environment

Discussion

• According to you, what were the key marketing innovations of the last 30 years ?

How can we define marketing?

Exercise Definition of marketing? • You’re attending a business diner and the subject of the discussion is about the new marketing management policies

⇒How would you define marketing?

Marketing & Sales Concepts Starting point

Company

Focus

Means

Ends

Existing

Selling & promoting

Profits through Sales volume

products

The selling concept

Market

Customer needs

Integrated marketing

Profits through Customer satisfaction

The marketing concept

Definition • American Marketing Association (AMA) «Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals.»

History of Marketing Thought First Bartering

1800

Début 1900

Marketing is not economics

1960 Marketing research

College courses In distribution

1930 First marketing theories

1970 Becomes a major Business fonction

1980 à 1990 Focus on customer & external environnement

Michael R. Czinkota and Masaaki Kotabe, Marketing Management, 2nd Edition

Production Marketing Strategies Main issues

• Products are costly • Demand is bigger than supply’s potential

Ford T

Price : $ 825 on 1st October 1908 Productivity in 1908 : 12H et 8 minutes to assemble a Ford T Productivity in 1980: 2 H et 35 minutes Slogan : My customer can choose the colour of his car… as long as it’s black!

Lecture Outline  Evolution of marketing concept  Core concepts of marketing  Marketing tools  Marketing environment

Core Marketing Concepts Needs, Needs,wants wants&&demands demands

Markets Markets

Exchange, Exchange,transactions transactions &&relationships relationships

Products, Products,services services &&experiences experiences

Value, Value,satisfaction satisfaction &&quality quality

Source: Principles of Marketing. by Kotler, Armstrong, Saunders and Wong

Needs, wants & demands Demands Needs backed up by purchasing power & resources

Desires Desire for a particular product used to satisfy a need and influenced by culture, society & personality

Needs Difference between a consumer’s actual state & desired state: • psychological needs • physiological needs

Maslow’s Hierarchy of Needs Drugs

Mobile phones

Show that you’re successful

Ex: for young people

Self-actualization

New molecules Ex: DHEA, Viagra

Esteem Love/Belonging

Be reachable everywhere

Safety Physiological

Vaccines, vitamins, Sleeping pills Ex: diabetic

What can you satisfy customers’ demands & needs? • Products – Anything that can be offered to a market to satisfy a need or a want

ex. People, places, organizations

• Services – Activities or benefits offered for sale, that are essentially intangible and don’t result in the owing of anything ex. Banks, airflights, hair cuts, hotels.

Reliable equipment Reasonable price On time delivery Financing possiblities

Renault

Attentive after sales service

trucks Profitable price On time payment

Customer company

Needs or recognition of a problem? Desired state A Need appears : No more bread… Television doesn’t work… The flat is too small… Friends use make-up…

An opportunity arises : ADSL allows you… With red fruit… Why pay more… The real luxury…

Actual state Source : Solomon, 1996

Differences between Products & Benefits PRODUCTS

• Physical attributes • Example: 2 mm drill

BENEFITS

• What customer wants • Example: a 2mm hole

“Customers don’t buy products, They seek to acquire benefits” Michael R. Czinkota and Masaaki Kotabe, Marketing Management, 2nd Edition

What is marketing ?



Delivery of customer satisfaction at a profit



Managing profitable customer relationships

 Attracting new customers  Retaining actual customers 

Marketing doesn’t amount to « sales » or « advertising »

What is a market?

Economic definition

Marketing definition

Place where buyers and sellers meet to exchange their products

Potential & actual customers of a product

Definition of a Market

A market can be defined according to a product or a product line range in given time at a given place. A market is made of all actors influencing consumption patterns.

Why people buy products?

• Three basic reasons – To satisfy needs – To solve problems – To make themselves feel good

Lecture Outline  Evolution of marketing concept  Core concepts of marketing  Marketing tools  Marketing environment

Difference in terms of marketing strategy? In terms of Mix?

Strategic Marketing General Procedure Segmentation

Competitors’ Analysis

Resources & Capabilities Choice of Target market

Choice of A difference Chosen position

Implementation of Marketing mix

Perceived position Source : Marion et al, 2003

Segmentation

Targeting

Positioning

What is market segmentation ? Dividing a market into different customers groups :

Each group is composed of buyers with very similar needs, characteristics or behaviour

The groups have to be as distinctive as possible and might require separate products or mixes

In using pertinent segmentation criteria

Shampoo Market • -

Segmentation according to the demand according to the socio-demographic criteria (age, sexe, gender, profession, social class…) According to the type of hair (fine, greasy…) Purchase location (hairdresser’s, supermarkets…)

•

Segmentation by benefit required (volume, antidandruffs, aging hair…)

⇒ Helps to describe the customers (qualitatively & quantitatively) ⇒ ex: women aged 50 years + and buying their shampoo at the hairdresser’s

Segmentation

Targeting

Positioning

What is market targeting ? Choose one or several segment(s)

According to to its its According potential :: potential Volume Volume Value Value Growth Growth Revenue Revenue … …

According to to the the According firm’sstrenghts. strenghts. firm’s Resources, Resources, Capabilities :: Capabilities Patent Patent Technology Technology Brand Brand Know-how Know-how … …

Target Market – Choice of products

Attractiveness-strenghts Matrix

Segment’s attractiveness

Ex. : Mobile Phones

Professionnals Young People Show-offs

Firm’s strenghts Source : Marion et al, 2003

Segmentation

Targeting

Positioning

Market Positioning

‘ Arranging for a product, a service, a company, an institution or even an individual, a distinctive and desirable place relative to competing products in the mind of the target markets. Positioning is not what you do to a product. Positioning is what you do in the mind of the prospect. What matters is how potential buyers see the product. ‘

Source : Ries & Trout, 1981

Positioning : 2 examples

‘Actimel is a new way for the whole family to start their morning which helps to reinforce the body’s natural defense mechanisms’

‘Pouss’Mousse is a new line of modern soaps which allows to clean one’s hands in an amusing way for the entire family’

Implementation of target positioning The marketing mix Product

Price

5€

20 €

Place

Supermarkets

Drugstores

Promotion

Ikea desired positioning

⇒Vision: a good product range of designed home furnishing products sold at Ikea stores only at a reasonable price. ⇒Desired market positioning: « IKEA offer

a wide range of well designed, functional home furnishing products at prices so low that as many people as possible (especially young people) will be able to afford them. »

Marketing Mix Positioning at IKEA • Product : an extensive & coherent product range. Flat-pack furniture, functional and appealing, good quality and reasonably priced (« democratic design »)

• Price: excellent value for money • Distribution: IKEA stores are located at the outskirts of towns (first Show rooms)

• Communication: catalogue (main marketing tool)+ advertising campaigns (billboards) + TV ad

Marketing-Mix

Communication Mix Physical distribution

Product Mix Product line range Design concept Color appeal Style Package Brand name Service function Warranties

Price Mix Price structure Payment terms Costs

Supplies Inventory Storage Transportation Warehousing Distribution channels Retailers Distributors Wholesalers Export/import

Advertising Sales catalog Field sales force Telephone sales Public relations Direct mail Sales promotion Premiums & discounts Merchandising Research Electronic interaction

Nespresso brand positioning

Leader in the capsule coffee market, Nespresso intends to redefine the way coffee is drunk at home, as well as in offices, restaurants and cafés. The idea is to give the consumers the opportunity to drink an excellent coffee.

Nespresso: What else? • -

Product policy Selection of the best coffee beans Technological innovation to allow a high quality blend Accessories & peripheric services Strong design

• Pricing policy - Coffee marchine from € 179 to €1,749, & capsules at 33c • Distribution: exclusive • Communication - A prestigious ambassador - Club Nespresso

Marketing strategy & environment

Laurence Cogan

Situation Analysis & Strategic Choices External analysis opportunities, threats, trends uncertainties & strategic choices

-

Opportunities Threats

Internal analysis strenghts, weaknesses, problems constraints & strategic options

-

Strenghts Weaknesses

Identification Of Strategic options

Selection of the best strategy

Marketing Diagnostic Procedure MACRO INTERNAL

EXTERNAL MICRO

Goals

O

T

S

MARKET DIAG.

MIX Variables

W

INT. DIAG.

DIAGNOSTIC

Organization’s environments General Environment

Global Environment

Specific environment Microenvironment Deregulation

Technological Natural

Political

Publics Suppliers

Legal

Current competitors

Organization

Buyers

Intermediaries Potential competitors

Demographic

Economic

Sociocultural

Privatisation

The environment is made of actors and forces affecting the management’s capacity to develop and maintain a competitive advantage and successful relationships with its customers.

Company’s specific environment Competitors Competitors

Suppliers

Intermediaries

Intermediaries

Customers Markets

Intermediaries

Suppliers

Intermediaries

Competitors Competitors

Suppliers

Competitors Competitors

Suppliers Competitors Competitors

The micro-environnement (specific environment) Forces that affect directly the decisions and actions of a company Source: Marketing: An Introduction, by Kotler & Armstrong

Marketing’s Micro-environnement



Customers – Those who purchase a company’s goods or services



Competitors – Those who serve the target market with similar products or services against whom a company must gain a competitive advantage



Suppliers – Those who provide the resources necessary to produce goods and services – an important link in the “value delivery system”



Intermediaries – Help the company promote, sell, distribute goods to the final buyers (marketing & financial)



Publics – Any group that perceives itself having an interest in a company’s ability to achieve its objectives Source: Marketing: An Introduction, by Kotler & Armstrong

Company’s general environment Demographic Demographic Cultural Cultural

Economic Economic

Political Political

Natural Natural Technological Technological

The Macro-environnement (general environnement) Forces that affect directly the microenvironnement and indirectly the decisions and actions of a company Source: Marketing: An Introduction, by Kotler & Armstrong

Contents of a Marketing Plan Executive Summary Quick review of plan for quick management review

Current Marketing Situation Audit of market, product, competition & distribution

SWOT Analysis Key strenghts, weaknesses, opportunities & threats

Objectives and Issues Objectives in terms of sales, market share and profits

Marketing Strategy Broad approach to achieve the plan’s objectives

Action Programs What will be done, by whom, when it will be done and how much it will cost

Budgets Profit & loss statement that forecast the financial outcomes of the plan

Controls How the program of the plan will be monitored? Laurence COGAN ESC Dijon

Questions???