The Marketing Process

• Peter Drucker stated in the early 1970s, that the purpose of a business is to create a customer
• Theodore Levitt added in his book The Marketing Imagination, that a business must create and keep a customer
• Levitt also noted that achieving those goals requires differentiating what you do and how you operate
• In a connected world, adding a third purpose to make customers active ambassadors for your brand is valuable

The Marketing Process

• Benson Shapiro helps in answering how to achieve differentiation by showing the relationship among customer-centered marketing
• The six key elements are : Marketing strategy formation, Marketing Planning, Programming/allocating/budgeting, Implementation, Monitoring/auditing, Analysis and research
• Exhibit 1 shows the relationships among those six parts

Definition of the steps of the Marketing Process

• Marketing strategy formation: Sets the overall long-term goals and approach to the marketplace
• Marketing Strategy Formation typically involve deciding the specific customer groups to serve, customer wants to address, and how to create value for customers.
• Marketing planning: The time horizon for planning can vary
• Plans need to be reworked regularly in dynamic situations
• In stable situations, the basics of a plan extend over two or three years
• Programming, allocating, and budgeting: Sets near-term objectives and detailed plans, including how resources will be allocated
• Implementation: Execute the programs specified
• Monitoring and auditing: Evaluate results against goals and develop corrective action plans
• Analysis and research: Gather necessary data from inside and outside the company to support the four action steps, and should be ongoing

Marketing strategy formation

• This reading focuses on the market strategy formation stage
• In this stage, an organization articulates its overall goals, especially which kinds of customers it will seek to create and keep
• It outlines the approach for achieving those goals
• Marketing strategy is a blueprint by which firms plan to compete

Essential Reading

• There is no one standard way to market a product or service effectively
• Organizations often adopt different strategies for their different offerings, therefore approach must be tailored to the circumstances.
• Firms within the same industry might employ different approaches
• Samsung Electronics launched 1969 with a low-cost strategy, but focused on developing manufacturing expertise to compete on the basis of the highest-quality product later

Customer Differences

• Customer differences in what they value mean that some customers fit the capabilities and aspirations of a given company more naturally.
• The market will be populated with products of varied specifications, promoted and distributed in a variety of ways, and priced at different levels

Exhibit 2 Schematic of Marketing Strategy Formation Process

• This process contains Analysis, Decisions, and Outcomes
• It contains key marketing information relating to the 5C's, Action plan, Aspiration, and the customer goals

Overview of Marketing Strategy Formation

• There are three interrelated elements: analysis, decisions, and outcomes
• Organizations need to make two different sets of decisions: the aspiration decision and the action plan decision
• The aspiration decision indicates the firm's hopes in the market involving three steps: segmenting the market, targeting a specific group, determining desired positioning
• Steps are known as STP (segmenting, targeting, and positioning)
• Once aspiration decision are final, firm works out its action plan, i.e., the four Ps of the marketing mix
• Three elements of the plan create value for the customers i.e. product, promotion, mechanism
• The final element is price which captures value funds operations and provides profit.
• In order to make good aspiration and action plan, an organization needs to analyze customer, company, collaborators, competition, and context

Customer Analysis

• Tries to understand how potential customers make a purchase decision in a product category.
• First, it looks to see who is involved, an individual or group
• It specifies the decision-making unit (DMU), and analysis turns to understanding the decision-making process (DMP).
• Often formal market research is often useful to understand the buying criteria of the targeted segment to ensure the target markets wants in short, a product/market fit.

Company Analysis

• The second C of developing a marketing strategy involves company strengths and weaknesses.
• Peloton attempted to design a product that fit the market, and to ensure that the product and approach fit the company's existing skill set
• Assessing product/company fit requires an understanding of the firm's finances, research and development (R&D) capability, manufacturing capability, and other assets.
• An influential concept, developed by Prahalad and Hamel is core competency
• Two key elements of core competency are to (1) significantly contribute to perceived customer value, and (2) be difficult for competitors to imitate

Collaborator Analysis

• Analyzing the set of external assets that may be accessed to complement those of the company
• Peloton's company analysis identified needs like money for R&D and manufacturing capacity at large scale
• Peloton used Kickstarter, enlisted 2 core manufacturing partners, as collaborators

Competitive Analysis

• Winning the customer acquisition game requires creating more value (benefits minus costs) for customers than any other options known to them.
• The firm must identify current and likely competitors in the future
• Assess other's offerings and how they address it.
• Must have a fundamental understanding of strengths and weaknesses.

Context Analysis

• Context shapes what is possible, and the context is always changing
• For Peloton, this context analysis identified cultural trends related to social media interactions and online communities
• Culture can shift quickly, so must be monitored
• Politics, regulation, law, and social norms to consider
• Must design marketing strategies without a carefully developed point of view on the regulatory context

The Aspiration Decision

• Specifies what the firm hopes to achieve in the market as it involves: segmenting the market, targeting a specific group, and service positioning
• In fact, many companies renounce some potential customers so they can focus exclusively on a select customer group whose wants their product is particularly suited to serve.
• When looking at customer segments and how the purchase process varies marketers fine-tune the marketing mix to meet the needs of chosen customers
• Markets is segmented in a variety of of ways

A target market selection decision is critical

• This is because customers ultimately set their own purchase criteria and thus dictate the rules by which the marketing game will be played.
• This should consider the firm's corporate goals and the fit of the segment with these goals.

Positioning

• If we pursue this segment, how would we approach it and what would members see in us.
• These answers should be formalized in a positioning statement that should specify: The target customer, The wants of that customer, product type and category, The key benefit
• A meaningful target market selection provides focus by excluding some customers from the market served
• Position in a way that will deliver the greatest value to target customers

The Action Plan: The Marketing Mix Decision

• An organization can address the marketing mix decision or action plan once the aspiration decision has been made
• Marketing Mix is the set of activities composing a firm's marketing program

Product Decisions

• The product or service offered is the centerpiece of the marketing mix.
• The product offering is best conceptualized as the complete set of ways that a firm delivers value to its chosen customers
• Product line breadth refers to variety and # of product lines one offers
• Product Line depth is key decision: How deep should a given product line be? How many offerings of a given type?
• There can be a 'good, better, best' approach
• Product lines are directed at appealing to different segments
• Distinguishing products by price or quality instead offer similar items to appeal to tastes (clothing in colors, Gatorade of flavors)

Evolving Product Lines

• Modifying and introducing "new and improved" features to existing items become quite common
• The addition of a item beside existing items can represent trade up, higher premium, or trade down, decrease in functionality, cheaper pricing
• Robert Cooper has identified the key success drivers with the customers' voice
• Then testing is done by a prototype being put in front of the customer for feedback and revised
• Testing can be done in a number of ways from surveys, taste tests, stores, and consumer goods/beta tests for industrial goods

Promotion Decisions

• How organizations communicate with potential customers about product positioning
• First create product awareness then knowledge of the product, and level of interest in purchasing to make trial purchase
• Ultimately reinforce when customer has product value is communicated
• Previously organization controlled brand communication, but now customers get info actively about brand, give ratings, etc. on social media
• Zero Moment of Truth, Google advocates for customers as they begin their search for information
• Today companies offer consumer reviews
• In today's digital world, unpaid consumers are becoming brand ambassadors

Planning is Key

• Because of the variety of steps in the process of creating customers it requires integrated communications
• This brings together media and personal selling efforts; advertising, sales promotion, and public relations
• 6 M's model: Market, Mission, Message, Media, Money, and Measurement
• By formalizing a positioning statement, an organization will be able to answer the market and mission questions, give an answer for the message question