Marketing Management: Brief edition 1. Marketing Marketing Concept 1.1 Definitions of Marketing There are many definitions of marketing. The better definitions are focused upor customer orientation and satisfaction of customer need Kotler: Marke ting is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others The Chartered Institute of Marketing: Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably The CIM definition(in common with Barwell's definition of the marketing concept) looks not only at identify ing customer needs, but also satisfying them(short-term)and anticipating them in the future(long-term retention) Adcock et al: The right product, in the right place, at the right time, at the right price This is a snappy and realistic definition that uses McCarthy's Four Ps Palmer: Marketing is essentially about marshaling the resources of an organication so that they meet the changing needs of the customer on whom the organization depends. This is a more recent and very realistic definition that looks at matching capabilities with needs Bartles: Marketing is the process whereby society, to supply its consumption needs evolves distributive systems composed of participants, who, interacting under constraints-technical (economic) and ethical (social)-create the transactions or flows, which resolve market separations and result in exchange and consumption This definition considers the economic and social aspects of marketing
Marketing Management: Brief edition 1 1. Marketing & Marketing Concept 1.1 Definitions of Marketing There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs. Kotler: Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. The Chartered Institute of Marketing: Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably. The CIM definition (in common with Barwell’s definition of the marketing concept) looks not only at identifying customer needs, but also satisfying them (short-term) and anticipating them in the future (long-term retention). Adcock et al: The right product, in the right place, at the right time, at the right price. This is a snappy and realistic definition that uses McCarthy’s Four Ps. Palmer: Marketing is essentially about marshaling the resources of an organization so that they meet the changing needs of the customer on whom the organization depends. This is a more recent and very realistic definition that looks at matching capabilities with needs. Bartles: Marketing is the process whereby society, to supply its consumption needs, evolves distributive systems composed of participants, who, interacting under constraints – technical (economic) and ethical (social) – create the transactions or flows, which resolve market separations and result in exchange and consumption. This definition considers the economic and social aspects of marketing
Marketing Management: Brief edition 1.2 The Philosophy Marketing and the Marketing Concept The marketing concept is a philosophy. It makes the customer, and the satisfaction of his or her needs, the focal point of all business activities. It is driven by senior managers, passionate about delighting their customers Drucker: Marketing is not only much boader than selling, it is not a specialized activity at all It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer 's point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise Barwell: This customer-focused philosophy is known as the marke ting concept. The marketing concept is a philosophy, not a system of marke ting or an organizational structure. It is founded on the be lief that profitable sales and satisfactory returns on investment can only be achieved by identifying, anticipating and satisfying customer needs and desires Cohen: The achievement of corporate goals through meeting and exceeding customer needs better than the competition. Jobber: Implementation of the marketing concep Tin the 1990s requires attention to three basic elements of the marke ting concept These are: Customer orientation; an organiation to implement a customer orientation; Long-range customer and societal welfare 2
Marketing Management: Brief edition 2 1.2 The Philosophy Marketing and the Marketing Concept. The marketing concept is a philosophy. It makes the customer, and the satisfaction of his or her needs, the focal point of all business activities. It is driven by senior managers, passionate about delighting their customers. Drucker: Marketing is not only much broader than selling, it is not a specialized activity at all It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise. Barwell: This customer-focused philosophy is known as the ‘marketing concept’. The marketing concept is a philosophy, not a system of marketing or an organizational structure. It is founded on the belief that profitable sales and satisfactory returns on investment can only be achieved by identifying, anticipating and satisfying customer needs and desires. Cohen: The achievement of corporate goals through meeting and exceeding customer needs better than the competition. Jobber. Implementation of the marketing concept [in the 1990’s] requires attention to three basic elements of the marketing concept. These are: Customer orientation; an organization to implement a customer orientation; Long-range customer and societal welfare
Marketing Management: Brief edition 2 Environment 2.1 The Marketing environment The macro-environment The micro-environment Politcal Factors nment Men Stakeholders Technological Socio-cultural The Marketing Environment The marketing environment surrounds and impacts upon the organization. There are on the marketing environment, namely the macro-environment the 'micro-environment and the 'internal environment 2.1.1 the macro-environment This includes all factors that can influence an organization, but that are out of their direct control. A company does not generally influence any laws(although it is accepted that they could lobby or be part of a trade organization). It is continuousl hanging, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. global ization means that there is always the threat of substitute products and new entrants. The wider environment is also ever hanging, and the marketer needs to compensate for changes in culture, politics, economics and technology
Marketing Management: Brief edition 3 2. Environment 2.1 The Marketing Environment The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'. 2.1.1 the macro-environment This includes all factors that can influence an organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology
Marketing Management: Brief edition 2.1.2 the micro-environment This env ironment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be mislead ing. In this context, micro describes the and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence P olitical Factors E 磁→← ociocultural Factors T 2.1.3 the internal environment All factors that are internal to the organization are known as the 'internal env ironment They are generally aud ited by applying the ' Five Ms,, which are Men, Money, Machinery, Materials and Markets. The internal environment the external. as marketers internal change internal marketing. Essentially we use marketing approaches to aid communication and change management The external environment can be aud ited in more detail using other approaches such as SWOT Analysis, Michael Porters Five Forces Analysis or PEST Analysis 2.2 SWOT Analysis SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues Once key issues have been identified they feed into marketing objectives. It can be used in conjunction with other tools for aud it and analysis, such as PESt analysis and Porters Five-Forces analysis. It is a very popular tool with marketing students because it is quick and easy to learn
Marketing Management: Brief edition 4 2.1.2 the micro-environment This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence. 2.1.3 the internal environment All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms’, which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.' Essentially we use marketing approaches to aid communication and change management. The external environment can be audited in more detail using other approaches such as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis. 2.2 SWOT Analysis SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. Once key issues have been identified, they feed into marketing objectives. It can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. It is a very popular tool with marketing students because it is quick and easy to learn
Marketing Management: Brief edition Strengths Weaknesses pportunities Threats SWOT Analysis SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. For example, strength could be your specialist marketing expertise. A weakness could be the lack of a new product. Opportunities and threats are external factors. For example, an opportunity could be a developing market such as the Internet. a threat could be a new competitor in your home market During the SwoT exercise, list factors in the relevant boxes. It's that simple A word of caution, SWOT analysis can be very sub jective. Do not rely on it too much Two people rarely come-up with the same final version of SWoT. tOws analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use it as guide and not a prescription. Adding and weighting criteria to each factor increase valid ity, but that 's another lesson SWOT Analysis - Exercise: Highly Brill Leisure Center Perform SWOT analysis based upon the following points 1. The Center is located within a two-minute walk of the main bus station and is a fifteen-minute ride away from the local railway station 2. There is a competition standard swimming pool; although it has no wave machines or whirlpool equipment as do competing local facilities 3. It is located next to one of the largest shopping centers in Britain 4. It is one of the oldest centers in the area and needs some cosmetic attention 5. Due to an increase in disposable income over the last six years, local residents
Marketing Management: Brief edition 5 SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. For example, strength could be your specialist marketing expertise. A weakness could be the lack of a new product. Opportunities and threats are external factors. For example, an opportunity could be a developing market such as the Internet. A threat could be a new competitor in your home market. During the SWOT exercise, list factors in the relevant boxes. It's that simple. A word of caution, SWOT analysis can be very subjective. Do not rely on it too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use it as guide and not a prescription. Adding and weighting criteria to each factor increase validity, but that's another lesson! SWOT Analysis - Exercise: Highly Brill Leisure Center. Perform SWOT analysis based upon the following points: 1. The Center is located within a two-minute walk of the main bus station, and is a fifteen-minute ride away from the local railway station. 2. There is a competition standard swimming pool; although it has no wave machines or whirlpool equipment as do competing local facilities. 3. It is located next to one of the largest shopping centers in Britain. 4. It is one of the oldest centers in the area and needs some cosmetic attention. 5. Due to an increase in disposable income over the last six years, local residents
Marketing Management: Brief edition ha 6. There has been a substantial decrease in the birth rate over the last ten years 7. In general people are liv ing longer and there are more local residents aged over fifty-five now than ever before 8. After a heated argument with the manager of a competing leisure center, the leader of a respected local scuba club is looking for a new venue 9. The local authority is considering privatizing all local leisure centers by the year 2000 2.3 Five Forces Analysis Five Forces Analysis Barga < dapted from M. E Porter, Competitive Strategy, Free Press, 1980. Five forces analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEst analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit)rather than a single product or range of products. For example, Dell would analyze the market for Business Computers i.e. one of its SBUs Five forces looks at five key areas namely the threat of entry, the power of bi power of suppliers, the threat of substitutes, and competitive rivalry
Marketing Management: Brief edition 6 have more money to spend on leisure activities. 6. There has been a substantial decrease in the birth rate over the last ten years. 7. In general people are living longer and there are more local residents aged over fifty-five now than ever before. 8. After a heated argument with the manager of a competing leisure center, the leader of a respected local scuba club is looking for a new venue. 9. The local authority is considering privatizing all local leisure centers by the year 2000. 2.3 Five Forces Analysis Five forces analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyze the market for Business Computers i.e. one of its SBUs. Five forces looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry
Marketing Management: Brief edition 2.3.1 the threat of entry Economies of scale e.g. the benefits associated with bulk purchasi The high or low cost of entry e. g. how much will it cost for the latest Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? Cost advantages not related to the size of the company e. g. personal contacts or knowledge that larger companies do not own or learning curve effects Will Government action e. g. will new laws be introduced that will weaken our rtant is differentiation? e.g. The Champagne brand cannot be copied This desensitizes the influence of the environment 2.3. 2 the power of buyers This is high where there a few, large players in a market e. g. the large grocery If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another 2.3.3 the power of suppliers The power of suppliers tends to be a reversal of the power of buyers Where the switching costs are high e. g. switching from one software supplier to another Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft There is a possibility of the supplier integrating forward e.g. Brewers buying Dars Customers are fragmented(not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places
Marketing Management: Brief edition 7 2.3.1 the threat of entry • Economies of scale e.g. the benefits associated with bulk purchasing. • The high or low cost of entry e.g. how much will it cost for the latest technology? • Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? • Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects. • Will competitors retaliate? • Government action e.g. will new laws be introduced that will weaken our competitive position? • How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitizes the influence of the environment. 2.3.2 the power of buyers • This is high where there a few, large players in a market e.g. the large grocery chains. • If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains. • The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another. 2.3.3 the power of suppliers • The power of suppliers tends to be a reversal of the power of buyers. • Where the switching costs are high e.g. switching from one software supplier to another. • Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. • There is a possibility of the supplier integrating forward e.g. Brewers buying bars. • Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places
Marketing Management: Brief edition 2.3. 4 the threat of substitutes Where there is product-for-product substitution e. g. email for fax where there is substitution of need e. g. better toothpaste reduces the need for dentist Where there is generic substitution(competing for the currency in your pocket) We could always do without e.g. cigarettes 2.3.5 competitive rivalry This is most likely to be high where entry is likely there is the threat of substitute products, and suppliers and buyers in the market attempt to control This is why it is always seen in the center of the diagram Exercise: The market for on-line education Place the following eight points onto the five forces model 1. Start up costs is very low 2. Students have access to books, videos, and paper-based distance learning packs 3. Companies, governments, and self-funding students invest huge amounts in their education 4. There are very few high quality web sites available 5. Traditional colleges and universities are adapting their products for on-line learning 6. Government legislation in the US and Europe encourages on-line learning 7. The more innovative learning sites give lesson for free just for the love of it 8. More people with access to the web every second 2. 4 PEST Analysis It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organizations marketing environment is made up from 1. The internal environment e.g. staff (or internal customers), office technology
Marketing Management: Brief edition 8 2.3.4 the threat of substitutes • Where there is product-for-product substitution e.g. email for fax where there is substitution of need e.g. better toothpaste reduces the need for dentists. • Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. • We could always do without e.g. cigarettes. 2.3.5 competitive rivalry • This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram. Exercise: 'The market for on-line education' Place the following eight points onto the five forces model 1. Start up costs is very low 2. Students have access to books, videos, and paper-based distance learning packs 3. Companies, governments, and self-funding students invest huge amounts in their education 4. There are very few high quality web sites available. 5. Traditional colleges and universities are adapting their products for on-line learning. 6. Government legislation in the US and Europe encourages on-line learning. 7. The more innovative learning sites give lesson for free just for the love of it. 8. More people with access to the web every second. 2.4 PEST Analysis It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up from: 1. The internal environment e.g. staff (or internal customers), office technology
Marketing Management: Brief edition wages and finance. et 2. The microenvironment e.g. our external customers, agents and distributors suppliers, our competitors, etc 3. The macro-environment e.g. Political(and legal) forces, Economic forces, Socio-cultural forces and Technological forces These are known as pest factors 2. 4.1 political factors The political arena has a huge influence upon the regulation of businesses, and the spend ing power of consumers and other businesses. You must consider issues such as 1. How stable is the political environment? 2. Will government policy influence laws that regulate or tax your business? 3. What is the government's position on marketing ethics? 4. What is the government's policy on the economy? 5. Does the government have a view on culture and religion? 6. Is the government involved in trad ing agreements such as EU, NAFTA, AsEAN, or others? 24.2 economic factors Marketers need to consider the state of a trading economy in the short and long-terms This is especially true when planning for international marketing. You need to look at I Interest rates 2. The level of inflation Employment level per capita 3. Long-term prospects for the economy Gross Domestic Product(GDP)per capita and so on 2.4.3 socio-cultural factors The social and cultural influences on busine ss vary from country to country. It is very important that such factors are considered. Factors include 1. What is the dominant religion? 2. What are attitudes to foreign products and services? 3. Does language impact upon the diffusion of products onto markets? 4 How much time do consumers have for leisure?
Marketing Management: Brief edition 9 wages and finance, etc. 2. The microenvironment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-cultural forces, and Technological forces. These are known as PEST factors. 2.4.1 political factors The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as: 1.How stable is the political environment? 2.Will government policy influence laws that regulate or tax your business? 3.What is the government's position on marketing ethics? 4. What is the government's policy on the economy? 5. Does the government have a view on culture and religion? 6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others? 2.4.2 economic factors Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at: 1. Interest rates 2. The level of inflation Employment level per capita 3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on 2.4.3 socio-cultural factors The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include: 1.What is the dominant religion? 2.What are attitudes to foreign products and services? 3.Does language impact upon the diffusion of products onto markets? 4.How much time do consumers have for leisure?
Marketing Management: Brief edition 5. What are the roles of men and women within society? 6. How long are the population living? Are the older generations wealthy? 7. Do the population have a strong/weak opinion on green issues? 2. 4. 4 technological factors Technology is vital for competitive advantage, and is a major driver of global ization Consider the following points 1. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2. Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc? 3. How is distribution changed by new technologies e. g. books via the Internet, flight kets. auctions. etc? 4. Does technology offer companies a new way to communicate with consumers e. g banners, Customer Relationship Management(CRM), etc? Malaysia.Exercise PEST Analysis aB时hanu South chire .st borneo INDONESIA INDONESIA Sourcewww.odci.go /October 2000 Consider the following OdCI information and conduct a pest analysis. Government type: constitutional monarchy note: Malaya(what is now Peninsular Malaysia) formed 31 August 1957; Federation of Malaysia(Malaya, Sabah, Sarawak, and Singapore) formed 9 July 1963(Singapore left the federation on 9 August 1965); nominally headed by the paramount ruler and a bicameral Parliament consisting of a
Marketing Management: Brief edition 10 5.What are the roles of men and women within society? 6.How long are the population living? Are the older generations wealthy? 7.Do the population have a strong/weak opinion on green issues? 2.4.4 technological factors Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points: 1. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc? 3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc? 4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc? Malaysia - Exercise PEST Analysis Source: www.odci.gov/ October 2000 Consider the following ODCI information and conduct a PEST analysis. Government type: constitutional monarchy note: Malaya (what is now Peninsular Malaysia) formed 31 August 1957; Federation of Malaysia (Malaya, Sabah, Sarawak, and Singapore) formed 9 July 1963 (Singapore left the federation on 9 August 1965); nominally headed by the paramount ruler and a bicameral Parliament consisting of a