MARK1012 SAMPLE MARKETING FUNDAMENTALS

COURSE WORK

UNIVERSITY OF NEW SOUTH WALES

Part A: The MarketPresented by Professor Mohammed Razzaque

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Contents by TopicPart A: The MarketTopic 1: Introduction to Marketing 1 Topic 2: Marketing Strategy and Environment 18 Part 1: Marketing Strategy 19

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Table of ContentsPart A: The Market Topic 1: Introduction to Marketing 1

Definitions of Marketing 2 What Aspects Stand Out in These Definitions? 2

Micro- vs Macromarketing 2 What Do the Marketing Function and Marketers Do? 2

The Marketing Process 3 Step #1: Understanding the Marketplace and Customer Needs 4

Needs, Wants and Demand 4 Products, Value, Cost & Satisfaction 5 Exchange, Transactions and Relationships 5 Markets, Marketing and Marketer 6

Step #2: Designing A Customer-Driven Marketing Strategy 6 Managing Demand 6 A Simple Marketing System 7 Main Actors and Forces in a Modern Marketing System 8 Evolution of Domains of Marketing 8 Evolution of Marketing Philosophies 9 How Marketing Activities are Conducted: Five Concepts 9 Marketing & Selling Concepts 10 The Societal Marketing Concept 10

Step #3: Preparing an Integrated Marketing Plan 11 Step #4: Building Customer Relationships 11

The Range of Marketing Relationships 12 The Changing Nature of Customer Relationships 12 Capturing Value From Customers 13 Challenges and Changes 13

Pulling it All Together 14 Integration of Marketing with Other Business Functions 15 Perceived ‘Bad Aspects’ of Marketing 15

Topic 2: Marketing Strategy and Environment 18 Part 1: Marketing Strategy 19

Strategic Planning: A Task and a Process 19 Define the Mission 19

Defining a Market‐Oriented Mission 20 �iii

MARK1012Setting Objectives 20 The Business Portfolio 21

Designing the Business Portfolio 21 The BCG Growth‐Market Strategy Matrix 22

Develop Growth (Downsizing) Strategies 23 Planning Marketing 23

Partnering To Build Customer Relationships 23 Marketing Strategy and the Marketing Mix 24

Managing the Marketing Effort 25 Contents of Marketing Plan 26

Implementing The Marketing Plan 27 Marketing Organisation for Implementation 27

The Relationship Between Analysis, Planning, Implementation and Control 28 Measuring and Managing Return on Marketing Investment 28 Strategic Planning Summary 29

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Topic 1: Introduction to Marketing

Lecture 1

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Definitions of Marketing1. Marketing  is the management function responsible for assuring that every aspect of the

organisation focuses on customer relationships by delivering superior value.”2. 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 others. (Kotler)

3. The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

What Aspects Stand Out in These Definitions?

• Value creation for customer• Value exchange• Customer Relationship• Value capture from customers

• To provide value to stakeholders.

Micro- vs Macromarketing

What Do the Marketing Function and Marketers Do?

Marketers create value by:

• identifying customers’ need; • designing goods and services (& ideas) to meet those needs,• communicating information about those to prospective buyers; • making them available to prospective buyers; • pricing them to reflect costs, competition and customers’ ability to buy; • providing necessary after-sale service and follow-up to ensure customer satisfaction

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• converts societal needs into profitable opportunities.• create customers through the creation of utilities

The benefits or customer value received by users of the product:

The Marketing ProcessCreating Value for Customers and Building Customer Relationship

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Step #1: Understanding the Marketplace and Customer NeedsCore Marketing Concepts

Needs, Wants and Demand

Needs: A state of felt deprivation of some basic satisfaction. Not created by society or by marketers, they are natural and exist in the very texture of human biology.

Human needs for food, clothing, shelter

Wants: Desires for specific satisfiers of the deeper needs. Continually shaped and reshaped by social forces such as families, religion, schools, business organisations

Muslims want halal meat

Demands: Wants for specific products that are backed by an ability and willingness to buy them. Wants become demand when backed by purchasing power.

Many people want a Lexus, only a few are able to buy

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Products, Value, Cost & Satisfaction

Products: Anything that can be offered to satisfy a need or want.Value, Cost, Satisfaction: Consumers’ product choice set

Value = perceived benefits gained from having or using the product - (minus) cost of obtaining it.

Customers are value maximizers within the bounds of search costs and limited mobilty, knowledge and income. Their satisfaction is linked to value.

Satisfaction is the level of a person’s felt state resulting from comparing a product’s perceived performance or outcome in relation to person’s expectation.

Exchange, Transactions and Relationships

Exchange: way to obtain products or services. Marketing occurs when people decide to satisfy needs and wants through exchange. Conditions that must be satisfied for an exchange to take place are:

• there must be two parties;• each must have something to offer;• each must be willing to deal and free to decide; and • each must be able to communicate and deliver

Transactions: the basic unit of exchange;Relationship: building long-term relationship

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Markets, Marketing and Marketer

Step #2: Designing A Customer-Driven Marketing Strategy Marketing Management

‘The art and science of choosing target markets and building profitable relationships with them’.

Successful marketing activities need to be managed and so marketing management involves the analysis, planning, implementation and control of these activities. The aim is to design a customer‐driven marketing strategy that produces profitable customer relationships by facilitating exchanges that result in customer value by meeting or exceeding customer expectations.

Managing Demand

Marketing management involves managing demand, which in turn involves managing customer relationship:

Type of Demand

Negative demand major part of the market dislikes the product

No demand consumers are unaware uninterested in the product

Latent demand there is more demand than being satisfied

Declining demand demand for the product is declining

Irregular demand demand pattern is irregular, i.e., seasonal

Full demand company is satisfied with the volume it sells

Overfull demand demand is more than the company can handle

Unwholesome demand demands for unwholesome products

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MARK1012Selecting customers to serve: To exceed customer expectations, marketing managers must be able to meet the quality and quantity of product demanded by customers so that the optimal demand for the product is reached. This may require demarketing, i.e., temporary or permanentreduction of demand for the product.

Creating excitement: Involves increasing customer involvement and interaction to develop and strengthen relationships.

Choosing a value proposition: A marketing organisation’s value proposition is the set of benefit or values it promises to deliver to consumers to satisfy their needs. Coles promises “Qualityfood costs less at Coles”; whereas Woolworths says they are “The fresh food people”

A Simple Marketing System

Demand State Marketing Task Possible Actions

Negative demand disabuse demand changed attitudes?

No demand create demand? connect attributes & needs, AIOs

Latent demand develop demand develop product

Faltering demand revitalise demand “add blue beads..”

Irregular demand synchronise red spot specials’

Full demand maintain demand measure performance

Overfull demand reduce demand demarket

Unwholesome demand destroy demand “kissing a smoker is like licking the bottom of an ashtray”

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Main Actors and Forces in a Modern Marketing System

Evolution of Domains of Marketing

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Evolution of Marketing Philosophies

How Marketing Activities are Conducted: Five Concepts

1. The Production Concept: consumers will favour those products that are widely available and low in costs.

Example : Hong Kong based HNH International, marketing its Naxos Label low-cost classical music.

2. The Product Concept: Consumers will favour those products that are of high quality, performance or innovative features..

Example: Goldstar’s Chaos washing machine.

3. The Selling Concept: Consumers if left alone, will not buy enough of company’s products. Management emphasis must be on aggressive selling and promotion efforts.

Examples: Most Asian firms practice this

4. The Marketing Concept: the key to achieving organisational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.

Four main pillars of marketing concept are; target market, customer needs, coordinated marketing and profitability.

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MARK10125. The Societal Marketing Concept: The organization’s task is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being.

Three main pillars of societal marketing concept are: company profit, customer need and want satisfaction, and public interest

Marketing & Selling Concepts

The Societal Marketing Concept

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Step #3: Preparing an Integrated Marketing PlanThe figure below illustrates the extended marketing mix which blends the tools available to marketers to deliver the intended value to the customer.

Step #4: Building Customer RelationshipsCustomer relationship management [CRM] encompasses all facets of getting initial customers, keeping those customers and getting new customers.

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The Range of Marketing Relationships

The Changing Nature of Customer Relationships

Earn customer loyalty through special offerings and handling. Preferred customers must be served in a deeper, more lasting way; preferably connecting more directly. Direct marketing is more successful in increasing sales.

Customer managed relationship: Relationships in which customers empowered by technologies interact with companies and with each other to shape their relationships.

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Capturing Value From CustomersBuilding the Right Relationships with the Right Customers

Challenges and Changes

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Pulling it All Together

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Integration of Marketing with Other Business Functions

Perceived ‘Bad Aspects’ of Marketing• Wasteful• Propagation of materialism• High prices; High costs (Promotion, Distribution) • Excessive Markups; Deceptive Pricing• High-Pressure Selling• Shoddy and Unsafe Products; unnecessary products• Planned Obsolescence• Poor Service• Marketing orientation change from customer 's satisfaction to maximum sales and profit• Invasion of privacy of citizens

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Topic 2: Marketing Strategy and Environment

Lecture 2

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Part 1: Marketing StrategyStrategic Planning: A Task and a ProcessThe task of selecting an overall company strategy for long‐run survival and growth. The process of developing and maintaining a strategic fit between the organisation’s goals and capabilities and its changing marketing opportunities. Sets the stage for the rest of the planning in the firm such as annual plans and long‐range plans which deal with the company’s current businesses and how to keep them going. 

Strategies follow a hierarchy

• Corporate level• Strategic Business Unit  (SBU) Level• Functional Level of SBU (e.g. Marketing Strategy)

Define the Mission

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Defining a Market‐Oriented Mission

Setting ObjectivesThe company turns its mission into detailed supporting objectives for each level of management.

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The Business PortfolioThe collection of businesses and products that make up the company.

Designing the Business Portfolio

The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment. 

Business portfolio planning involves two steps. 

1. Analysing its current business portfolio and deciding  which businesses should receive more, less, or no investment. 

2. Shaping the future portfolio by developing strategies for growth and downsizing.

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The BCG Growth‐Market Strategy Matrix

Four possible strategies for each SBU:

1. The company can invest to build its share. 2. It can invest just enough to hold its share.3. It can milk its short‐term cash flow, or harvest.4. It can divest by selling it or phasing out.

Each SBU has a life cycle; SBUs change their positions in the growth‐share matrix with the passage of time.

Matrix approaches … 

• can be difficult, time consuming, and costly to implement. • generally focus on classifying current businesses and do not provide advice for future planning. 

Many companies have dropped matrix methods in favour of customised approaches better suited to their specific situations.

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Develop Growth (Downsizing) Strategies

Marketing has the main responsibility for achieving profitable growth for the company.

Product Market Expansion Grid:

Planning MarketingPartnering To Build Customer Relationships

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MARK1012Marketing plays a key role in the company’s strategic planning

• by providing a guiding philosophy - the marketing concept;• by providing inputs to strategic planners; and• by designing strategies for reaching the unit’s objectives.

In addition to customer relationship management, marketers must also practice partner relationship management with

• other company departments to develop an effective value chain;• others in the Marketing System to improve the performance of the customer value delivery

network.

Guided by the strategy, the company develops: 

• Customer driven marketing strategies (segmentation, target marketing, positioning, differentiation etc.)

• Integrated marketing mix—product, price, placement logistics, people, process, physical evidence and promotion.

Marketing Strategy and the Marketing Mix

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Managing the Marketing Effort

Managing the marketing effort requires four marketing management functions namely:

1. analysis2. planning3. implementation4. control

Marketing Analysis is performed to understand the markets and marketing environment the company faces.  

SWOT analysis is used to evaluate the company’s:

• strengths (S)• weaknesses  (W)• opportunities (O)• threats  (T)

• Strengths include capabilities, resources, and positive situational factors. 

• Weaknesses include negative internal factors and negative situational factors. 

• Opportunities are favourable external factors. • Threats are unfavourable external factors.

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Contents of Marketing Plan

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Implementing The Marketing Plan

Marketing implementation is the process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives. It involves day‐to‐day, month‐to‐month activities that effectively put the marketing plan to work.

Marketing planning addresses the: what and why of marketing activities; implementation addresses the who, where, when and how.

Marketing Organisation for Implementation

Marketing Departments must be designed so it can carry out the strategies/plans that are developed.

• Small companies: one person may perform all the marketing functions.• Large companies: there is a Chief Marketing Officer (CMO), assisted by many specialists to deal

with marketing

Marketing departments can be arranged as a:

• functional organisation in which different activities are headed by a functional specialist, such as sales, advertising, etc

• geographic organisation if a company sells nationally or globally• product management organisation if the company has many different products or brands• market or customer management organisation, in companies that sell one product to different

kind of markets/customers• combination of all these forms if the company is very large.

Controlling and Evaluating Performance

Marketing control is the process of measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that marketing objectives are attained.

• Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary.

• Strategic control is checking that the company’s basic strategies are well matched to its opportunities.

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The Relationship Between Analysis, Planning, Implementation and Control

Measuring and Managing Return on Marketing InvestmentMarketing managers must ensure that their marketing dollars are being well spent. 

Return on marketing investment (or marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities. Marketing ROI may be measured in terms of brand awareness, sales, or market share. 

Many companies are developing marketing dashboards - sets of marketing performance measures in a single display used to monitor strategic marketing performance using customer‐centred measures of marketing impact, such as customer acquisition, customer retention, and customer lifetime value. 

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Strategic Planning SummaryPlanning can help making sense of changing environment

• Most organisations operate according to formal plans• Managers are often too busy and have no time for planning

Organisations failing to plan are planning to failThe need for flexibility has led to a resurgence in the process of scenario planning.

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Terms of Use

Some information contained within this document is copyrighted and remains in the sole ownership of the copyright holder.

Intellectual resources remain in the ownership of either the original publication source, or in the ownership of the cited lecturer.

This document is purely academic and provides a basic understanding of the MARK1012 (Marketing Fundamentals) course as of the University of New South Wales. It holds no guarantee as to the correctness of the information it contains and it’s relevance to the course.

This document printed on the 16th of June 2014, and all efforts were made to ensure the information it contains was up to date at the time of printing.

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