Marketing in Today's Business Milieu PDF

Chapter 1: Marketing in Today’s Business Milieu Copyright © McGraw-Hill Education  Learning Objectives Identify typical misconceptions about marketing, why they persist, and the resulting challenges for marketing managem...

Chapter 1: Marketing in Today’s Business Milieu Copyright © McGraw-Hill Education  Learning Objectives Identify typical misconceptions about marketing, why they persist, and the resulting challenges for marketing management. Define what marketing and marketing management really are and how they contribute to firm success. Appreciate how marketing has evolved from its early roots to be practiced as it is today. Recognize the impact of key change drivers on the future of marketing. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-2  Welcome to Marketing Management Marketing is relevant to everyone across all business functions. Marketing your “personal brand” helps you land a job or promotion. Source: Toyota Motor Sales, U.S.A., Inc. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-3  Marketing Misconceptions Catchy and entertaining advertisements. Pushy salespeople. Spam to your e-mail or smartphone. Famous brands and their celebrity spokespeople. Product claims that turn out to be overstated or just plain false. Marketing departments “own” the marketing initiative. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-4 More Marketing Misconceptions 1. Marketing is all about advertising. 2. Marketing is all about selling. 3. Marketing is all about the sizzle. 4. Marketing is inherently unethical and harmful to society. 5. Only marketers market. 6. Marketing is just another cost center in a firm. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-5 Behind the Misconceptions Marketing is highly visible by nature. Advertising and sales promotion seen by all. Marketing metrics: Gauging performance to drive results. “If it can’t be measured, it can’t be managed.” Marketing is more than buzzwords. Often viewed as a “necessary evil.” Too many quick-fix approaches. Need to position marketing as a respectable field. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-6  Toward the Reality of Modern Marketing Marketing is a central function and set of processes essential to any enterprise. Leading and managing the facets of marketing is a core business activity. Source: GEICO ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-7  Defining Marketing: Peter Drucker Peter Drucker, circa 1954 “There is only one valid definition of business purpose: to create a customer.….the business enterprise has two—and only two—business functions: marketing and innovation. Peter Drucker, circa 1973 “Marketing is so basic that it cannot be considered a separate function (i.e., a separate skill or work) within the business… It is the whole business seen from the customer’s point of view.” 1-8 ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Defining Marketing: AMA “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large.” American Marketing Association, 2007 ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-9  Considerations when Defining Marketing Marketing’s Stakeholders Internal and external. Societal Marketing Members of society at large are stakeholders. Green Marketing Environmentally friendly. Sustainability: Meeting needs without harming future generations. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-10  Core Marketing Concepts Value is the ratio of the bundle of benefits a customer receives from an offering compared to the costs incurred by the customer in acquiring that bundle of benefits. Exchange occurs when people give up something of value to them for something else they desire to have. Exchange usually involves money but can involve trade or barter of time, skill, expertise, intellectual capital. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-11  For Exchange to Take Place There must be at least two parties. Each party has something that might be of value to the other. Each party is capable of communication and delivery. Each party is free to accept or reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party. Source: Burberry ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-12  Marketing’s Roots and Evolution ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-13  Pre-Industrial Revolution Products were customized. One-to-one marketing. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Production Orientation Maximizing mass production via assembly line. Assumes customers will go the producer. “If you build it, they will come.” As Henry Ford said, “People can have the Model T in any color—so long that it’s black.” ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Sales Orientation Salespeople need to push the product. Production capacity increased post-WW1. New competitors flooded the market. More sophisticated financial markets pressured firms to increase sales volume and profitability. Created the image of the pushy salesperson. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Marketing Concept After World War II: Pent-up demand for consumer goods and services. Euphoric focus on family and getting back to normal. Increased production for consumer goods. Sophisticated marketing research enabled by mainframe computers. Marketing concept spread in the 1960s and 70s: Led to allowing the market to decide what products it wanted which gave rise to marketing planning. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Marketing Mix Mid-1960s: The 4 Ps, or marketing mix Product, price, place, promotion. Today: More sophisticated view of 4 Ps Products are offerings; focus is on solutions. Place is complex supply chains. Price is viewed as value; benefits/price. Promotion uses high-tech media. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Beyond the Marketing Concept Differentiation Orientation Market Orientation Relationship Orientation One-to-One Marketing ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-19  Differentiation and Market Orientation Differentiation Orientation Clearly communicates how the firms products from competitors. Market Orientation Implementation of the marketing concept. Includes customer orientation: The customer is at the core. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Relationship and One-to-One Marketing Relationship Orientation Focuses on customer retention. CRM drives customer satisfaction and loyalty. One-to-One Marketing Advocates a learning relationship so that the firm can offer customized products and services. Mass customization. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.  Change Drives Impacting the Future of Marketing Shift to product glut and customer shortage. Shift in information power from marketer to customer. Shift in generational values and preferences. Shift to distinguishing Marketing (“Big M”) from marketing (“little m”). Shift to demanding return on marketing investment. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-22  Shift to Product Glut and Customer Shortage The balance of power is shifting between marketers and their customers, both in B2C and B2B markets. Not only is a customer orientation desirable, but also in today’s market it is a necessity for survival. New Market Realities: competitors proliferate, all secrets are open secrets, innovation is universal, information overwhelms and depreciates, easy growth makes hard times, and customers have less time than ever. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-23  Shift in Information Power from Marketer to Customer Customers of all kinds have nearly limitless access to information about companies, products, competitors, other customers, and even detailed elements of marketing plans and strategies. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-24 Shift in Generational Values and Preferences Impacts the firm’s message and the method by which that message is communicated. Impacts marketing in terms of human resources. Generational changes are nothing new. ©Imeh Akpanudosen/Getty Images ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-25  Distinguishing Between Marketing (“Big M”) and marketing (“little m”) Marketing (Big M) Strategic marketing, means a long-term, firm-level commitment to investing in marketing – supported at the highest organization level – for the purpose of enhancing organizational performance. marketing (little m) Tactical marketing, which serves the firm and its stakeholders at a functional or operational level. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-26 Shift to Justifying the Relevance and Payback of the Marketing Investment How can management effectively measure and assess the level of success a firm’s investment in various aspects of marketing? Metrics must be designed for key benchmarks for improvement. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-27  Marketing Metrics Marketing is a fuzzy field. If it can’t be measured, it can’t be managed. Is marketing an expense or an investment? CEOs and stockholders expect marketing accountability. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 1-28