Class.3/1 – Strategic Planning and Marketing Process

Many companies operate without formal plans. In small companies, managers sometimes think that only large corporations need formal planning. In mature companies, many managers argue that they have done well without formal planning and that therefore it cannot be too important. They may resist taking the time to prepare a written plan.

Granted, planning is not much fun, and it takes time away from doing. Yet companies must plan. As someone said, "If you fail to plan, you are planning to fail." Formal planning can yield many benefits for all types of companies, large and small, new and mature.

The process of planning may be as important as the plans that emerge.  It forces the company to sharpen its objectives and policies, leads to better coordination of company efforts, and provides clearer performance standards for control.

Companies usually prepare annual plans, long-range plans, and strategic plans. The annual and long-range plans deal with the company's current businesses and how to keep them going. In contrast, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

We define strategic planning as the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities.

Strategic planning sets the stage for the rest of the planning in the firm. It relies on defining a clear company mission, setting supporting company objectives, designing a sound business portfolio, and coordinating functional strategies.

At the corporate level, the company defines :

1- its Vision & overall  mission. This mission then is turned into detailed supporting objectives that guide the whole company.

2- portfolio of businesses and products which is best for the company and how much support to give each one ( Current, future & expansion).

At The business level, In turn, each business and product unit must develop detailed marketing and other departmental plans that support the companywide plan. Thus, marketing planning occurs at the business unit, product, and market levels. It supports company strategic planning with more detailed planning for specific marketing opportunities.

1) Corporate Level Decisions

1- Defining the Company's Vision and Mission

Vision is simply the company’s long-term dream for which the company is running to reach. It could be changed from time to time. While Mission is the pathway leads to that dream

Why Mission? ..Because Any organization exists to accomplish something. At first, it has a clear purpose, but over time its purpose may become unclear as the organization grows, adds new products and markets, or faces new conditions in the environment. When management senses that the organization is drifting, it must renew its search for purpose. It is time to ask:

- What is our business?

- Who is the customer?

- What do consumers value?

- What should our business be?

These simple-sounding questions are among the most difficult the company will ever have to answer. Successful companies continuously raise these questions and answer them carefully and completely.

Company mission: 3M does more than just make adhesives, scientific equipment, health care, and communications products. It solves people's problems by putting innovation to work for them.

Many organizations develop formal mission statements that answer these questions. A mission statement is a statement of the organization's purpose—what it wants to accomplish in the larger environment. A clear mission statement acts as an "invisible hand" that guides people in the organization.

Traditionally companies have defined their businesses in product terms ("We manufacture furniture") or in technological terms ("We are a chemical-processing firm"). But mission statements should be market oriented. Products and technologies eventually become outdated, but basic market needs may last forever.

A market-oriented mission statement defines the business in terms of satisfying basic customer needs.

- For example, AT&T is in the communications business, not the telephone business.

- 3M does more than just make adhesives, scientific equipment, and health care products. It solves people's problems by putting innovation to work for them.

- Amazon.com's mission isn't simply to sell books, CDs, videos, toys, and consumer electronics. Instead, it wants to "transform Internet buying into the fastest, easiest, and most enjoyable shopping experience possible—to be the place where you can find and discover anything you want to buy online.

Management should avoid making its mission too narrow or too broad. ..for example, A pencil manufacturer that says it is in the communication equipment business is stating its mission too broadly.

Missions should be realistic. Missions should also be specific.

Many mission statements are written for public relations purposes and lack specific, workable guidelines. The statement "We want to become the leading company in this industry by producing the highest-quality products with the best service at the lowest prices" sounds good, but it is full of generalities and contradictions since it doesn’t determine the field at which those products will be offered.

Finally, mission statements should be motivating.

A company's mission should not be stated as making more sales or profits—profits are only a reward for undertaking a useful activity. A company's employees need to feel that their work is significant and that it contributes to people's lives.

Contrast the missions of IBM and Microsoft. When IBM sales were $50 billion, then-President John Akers said that IBM's mission was to become a $100 billion company by the end of the century. Meanwhile, Microsoft's long-term mission has been IAYF—"information at your fingertips"—to put information at the fingertips of every person. Microsoft's mission is much more motivating than is IBM's.

2- Designing the Business Portfolio

Guided by the company's mission statement and objectives, management now must plan its business portfolio—the collection of businesses and products that make up the company. The best business portfolio is the one that best fits the company's strengths and weaknesses to opportunities in the environment.

The company must:

 (2.1) analyze its current business portfolio and decide which businesses should receive more, less, or no investment; and

 (2.2) develop growth strategies for adding new products or businesses to the portfolio.

2.2 Analyzing the Current Business Portfolio

The major activity in strategic planning is business portfolio analysis, whereby management evaluates the businesses making up the company. The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones.

For example, in recent years, Dial Corporation has strengthened its portfolio by selling off its less attractive businesses: bus line (Greyhound), knitting supplies, meatpacking, and computer leasing businesses. At the same time, it invested more heavily in its consumer products (Dial soap, Armour Star meats, Purex laundry products, and others) and services (Premier Cruise Lines, Dobbs airport services).

Management's first step is to identify the key businesses making up the company. These can be called the strategic business units. A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. An SBU can be a company division, a product line within a division, or sometimes a single product or brand.

The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment. So most standard portfolio-analysis methods evaluate SBUs on two important dimensions:

—the attractiveness of the SBU's market or industry ( Market growth rate)

- and the strength of the SBU's position in that market or industry ( relative market share) .

The best-known portfolio-planning method was developed by the Boston Consulting Group, a leading management consulting firm.

The Boston Consulting Group Approach

Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs according to the growth-share matrix shown in Figure 2.2. On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. By dividing the growth-share matrix as indicated, four types of SBUs can be distinguished:

Stars: Stars are high-growth, high-share businesses or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

Cash cows: Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment.

Question marks: Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.

Dogs: Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

Once it has classified its SBUs, the company must determine what role each will play in the future. One of four strategies can be pursued for each SBU. The company can invest more in the business unit in order to build its share. Or it can invest just enough to hold the SBU's share at the current level. It can harvest the SBU, milking its short-term cash flow regardless of the long-term effect. Finally, the company can divest the SBU by selling it or phasing it out and using the resources elsewhere.

As time passes, SBUs change their positions in the growth-share matrix. Each SBU has a life cycle. Many SBUs start out as question marks and move into the star category if they succeed. They later become cash cows as market growth falls, then finally die off or turn into dogs toward the end of their life cycle. The company needs to add new products and units continuously so that some of them will become stars and, eventually, cash cows that will help finance other SBUs.

2.2 Developing Growth Strategies in the Age of Connectedness

Companies need growth if they are to compete more effectively, satisfy their stakeholders, and attract top talent. "Growth is pure oxygen," states one executive. "It creates a vital, enthusiastic corporation where people see genuine opportunity. . . . In that way, growth is more than our single most important financial driver; it's an essential part of our corporate culture." At the same time, a firm must be careful not to make growth itself an objective. The company's objective must be "profitable growth."

One useful device for identifying growth opportunities is the product-market expansion grid, shown in Figure 2.4. We apply it here to Starbucks.

- First, Starbucks management might consider whether the company can achieve deeper market penetration —making more sales to current customers without changing its products. It might add new stores in current market areas to make it easier for more customers to visit. Improvements in advertising, prices, service, menu selection, or store design might encourage customers to stop by more often or to buy more during each visit. For example, Starbucks recently began adapting its menu to local tastes around the country.

Second, Starbucks management might consider possibilities for market development—identifying and developing new markets for its current products. For instance, managers could review new demographic markets—such as senior consumers or ethnic groups—to see if new groups could be encouraged to visit Starbucks coffee shops for the first time or to buy more from them. Managers also could review new geographical markets. Starbucks is now expanding swiftly into new U.S. markets, especially in the Southeast and Southwest. It is also developing its international markets, with stores popping up rapidly in Asia, Europe, and Australia.

Third, management could consider product development—offering modified or new products to current markets. For example, Starbucks is increasing its food offerings in an effort to bring customers into its stores during the lunch and dinner hours and to increase the amount of the average customer's sales ticket. The company is also partnering with other firms to sell coffee in supermarkets and to extend its brand to new products, such as coffee ice cream (with Breyer's) and bottled Frappuccino drinks (with PepsiCo).

Fourth, Starbucks might consider diversification. It could start up or buy businesses outside of its current products and markets. For example, Starbucks is testing two new restaurant concepts—Café Starbucks and Circadia—in an effort to offer new formats to related but new markets.

In a more extreme diversification, Starbucks might consider leveraging its strong brand name by making and marketing a line of branded casual clothing consistent with the "Starbucks experience." However, this would probably be unwise. Companies that diversify too broadly into unfamiliar products or industries can lose their market focus, something that some critics are already concerned about with Starbucks.

2) Business Level Decisions

1- Setting SBU Mission

Which is consistent with the company’s overall mission

2- SWOT Analysis

Discussed in the next article

3- Defining Goals & Objectives

using SMART criteria at which the objectives must be:

- Specific … well determined

- Measurable … with something can be measured ( like numbers, percentages …etc)

- Achievable ( or sometimes stands for ambitious or attainable) …. higher than what the company has now

- Realistic… matched with the company Resources &  capabilities

- Time Related … With a certain time frame ( start & end time)  

4- Marketing Planning

A detailed marketing plan is needed for each business, product, or brand. What does a marketing plan look like? Our discussion focuses on product or brand plans.

Table 2.2 outlines the major sections of a typical product or brand plan.

Section	Purpose
Executive summary	Presents a brief summary of the main goals and recommendations of the plan for management review, helping top management to find the plan's major points quickly. A table of contents should follow the executive summary.
Current marketing situation	Describes the target market and company's position in it, including information about the market, product performance, competition, and distribution. This section includes: A market description that defines the market and major segments, then reviews customer needs and factors in the marketing environment that may affect customer purchasing. A product review that shows sales, prices, and gross margins of the major products in the product line. A review of competition, which identifies major competitors and assesses their market positions and strategies for product quality, pricing, distribution, and promotion. A review of distribution, which evaluates recent sales trends and other developments in major distribution channels.
Threats and opportunity analysis	Assesses major threats and opportunities that the product might face, helping management to anticipate important positive or negative developments that might have an impact on the firm and its strategies.
Objectives and issues	States the marketing objectives that the company would like to attain during the plan's term and discusses key issues that will affect their attainment. For example, if the goal is to achieve a 15 percent market share, this section looks at how this goal might be achieved.
Marketing strategy	Outlines the broad marketing logic by which the business unit hopes to achieve its marketing objectives and the specifics of target markets, positioning, and marketing expenditure levels. It outlines specific strategies for each marketing mix element and explains how each responds to the threats, opportunities, and critical issues spelled out earlier in the plan.
Action programs	Spells out how marketing strategies will be turned into specific action programs that answer the following questions: What will be done? When will it be done? Who is responsible for doing it? How much will it cost?
Budgets	Details a supporting marketing budget that is essentially a projected profit-and-loss statement. It shows expected revenues (forecasted number of units sold and the average net price) and expected costs (of production, distribution, and marketing). The difference is the projected profit. Once approved by higher management, the budget becomes the basis for materials buying, production scheduling, personnel planning, and marketing operations.
Controls	Outlines the control that will be used to monitor progress and allow higher management to review implementation results and spot products that are not meeting their goals.

5- implementation & control

Class/2.2 case studies (1st Quiz)

Kindly read the following cases and answer the attached questions

Marketing Applications

1. Companies can apply the marketing concept on their Web sites by including features that are important to customers and prospects. At the least, Web users want to know about product benefits and where they can buy products. However, sites that give users something beyond product descriptions create additional customer value and build long-term relationships. Many sites target specific customer segments by focusing on language, age, gender, or technical understanding. Finally, an important sign of customer orientation is having an e-mail address that is easy to remember, use, and communicate to the consumer.

Evaluate the  Macintosh website based on its apparent attention to the marketing concept.

1. What is the most important customer benefit stressed at this site?
2. What new products did you find? Which one(s) did you find most interesting?
3. To what extent does this site apply the marketing concept? Explain.
4. Should anything be added to the site? Explain.
5. How does Apple attempt to build relationships with Web site visitors? What "connections" is Apple attempting to make?

1. Few companies do as much to apply the societal marketing concept as Ben& Jerry's Ice cream . The company's two founders have made a strong and sincere commitment to a wide range of ecological and social causes. In addition, the company often takes a light-hearted approach to what others perceive to be serious business matters, such as the annual shareholder's meeting. At Ben & Jerry's, this meeting might well take the form of large picnic or rock concert at which the annual report is sung to the tune of a popular song rather than just being read in a boring way.

1. Visit the Ben & Jerry's Web site. What impresses you most? What marketing efforts are evident?
2. What social and ecological causes does the company support?
3. What values are communicated by the company? Do these values appear to help or hinder its marketing efforts? Its profitability?
4. How does the company attempt to build relationships or "connections" with its customers
5. If you were a competitor seeking to expand market share, what vulnerabilities do you see in Ben & Jerry's that could be exploited? Write a brief plan for doing this.

Class/2.1 Marketing core concepts

 

What does the term marketing mean? Many people think of marketing only as selling and advertising. It is no wonder—every day we are bombarded with television commercials, newspaper ads, direct-mail campaigns, and sales calls. However, selling and advertising are only the tip of the marketing iceberg. Although they are important, they are only two of many marketing functions and are often not the most important ones.

Today, marketing must be understood not in the old sense of making a sale—"telling and selling"—but in the new sense of satisfying customer needs.

Selling occurs only after a product is produced. By contrast, marketing starts long before a company has a product.

Marketing is the homework that managers undertake to assess needs, measure their extent and intensity, and determine whether a profitable opportunity exists.

Marketing continues throughout the product's life, trying to find new customers and keep current customers by improving product appeal and performance, learning from product sales results, and managing repeat performance. If the marketer does a good job of understanding consumer needs, develops products that provide superior value, and prices, distributes, and promotes them effectively, these products will sell very easily.

We define marketing as a social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Figure 1.1 shows that these core marketing concepts are linked, with each concept building on the one before it.

Needs, Wants, and Demands

Human needs are states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. These needs were NOT invented by marketers; they are a basic part of the human makeup.

Wants are the form human needs take as they are shaped by culture and individual personality. An American needs food but wants a hamburger, French fries, and a soft drink. A person in Mauritius needs food but wants a mango, rice, lentils, and beans. Wants are shaped by one's society and are described in terms of objects that will satisfy needs.

People have almost unlimited wants but limited resources. Thus, they want to choose products that provide the most value and satisfaction for their money.

When backed by buying power, wants become demands. Consumers view products as bundles of benefits and choose products that give them the best bundle for their money. A Honda Civic means basic transportation, affordable price, and fuel economy; a Lexus means comfort, luxury, and status. Given their wants and resources, people demand products with the benefits that add up to the most satisfaction.

Products and Services

People satisfy their needs and wants with products and services. A product is anything that can be offered to a market to satisfy a need or want. The concept of product is not limited to physical objects—anything capable of satisfying a need can be called a product. In addition to tangible goods, products include services, which are activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, tax preparation, and home repair services.

More broadly defined, products also include other entities such as service, experiences, properties, persons, places, organizations, information, and ideas.

Many sellers make the mistake of paying more attention to the specific products they offer than to the benefits produced by these products. They see themselves as selling a product rather than providing a solution to a need. A manufacturer of drill bits may think that the customer needs a drill bit, but what the customer really needs is a hole. These sellers may suffer from "marketing myopia"… ( please read the next article about Marketing Myopia,I have another point of view-Amira)—they are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs. They forget that a product is only a tool to solve a consumer problem. These sellers will have trouble if a new product comes along that serves the customer's need better or less expensively. The customer with the same need will want the new product.

Value, Satisfaction, and Quality

Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many products and services? Consumers make buying choices based on their perceptions of the value that various products and services deliver.

Customer value is the difference between the benefits the customer gains from owning and using a product and the costs of obtaining the product. For example, FedEx customers gain a number of benefits. The most obvious are fast and reliable package delivery. However, when using FedEx, customers also may receive some status and image values. Using FedEx usually makes both the package sender and the receiver feel more important. When deciding whether to send a package via FedEx, customers will weigh these and other values against the money, effort, and psychic costs of using the service. Moreover, they will compare the value of using FedEx against the value of using other shippers—UPS, Airborne, the U.S. Postal Service—and select the one that gives them the greatest delivered value.

Customers often do not judge product values and costs accurately or objectively. They act on perceived value. For example, does FedEx really provide faster, more reliable delivery? If so, is this better service worth the higher prices FedEx charges? The U.S. Postal Service argues that its express service is comparable, and its prices are much lower. However, judging by market share, most consumers perceive otherwise. FedEx dominates with more than a 45 percent share of the U.S. express-delivery market, compared with the U.S. Postal Service's 8 percent. The Postal Service's challenge is to change these customer value perceptions.

Customer satisfaction depends on a product's perceived performance in delivering value relative to a buyer's expectations. If the product's performance falls short of the customer's expectations, the buyer is dissatisfied. If performance matches expectations, the buyer is satisfied. If performance exceeds expectations, the buyer is delighted.

Outstanding marketing companies go out of their way to keep their customers satisfied. Satisfied customers make repeat purchases, and they tell others about their good experiences with the product. The key is to match customer expectations with company performance. Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise.

Customer satisfaction is closely linked to quality. In recent years, many companies have adopted total quality management (TQM) programs, designed to constantly improve the quality of their products, services, and marketing processes. Quality has a direct impact on product performance and hence on customer satisfaction.

In the narrowest sense, quality can be defined as "freedom from defects." But most customer-centered companies go beyond this narrow definition of quality. Instead, they define quality in terms of customer satisfaction. For example, the vice president of quality at Motorola, a company that pioneered total quality efforts in the United States, says that "Quality has to do something for the customer. . . . Our definition of a defect is 'if the customer doesn't like it, it's a defect.' " Similarly, the American Society for Quality Control defines quality as the totality of features and characteristics of a product or service that bear on its ability to satisfy customer needs. These customer-focused definitions suggest that a company has achieved total quality only when its products or services meet or exceed customer expectations. Thus, the fundamental aim of today's total quality movement has become total customer satisfaction. Quality begins with customer needs and ends with customer satisfaction.

Exchange and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. Exchange is only one of many ways that people can obtain a desired object. For example, hungry people could find food by hunting, fishing, or gathering fruit. They could beg for food or take food from someone else. Or they could offer money, another good, or a service in return for food.

As a means of satisfying needs, exchange has much in its favor. People do not have to prey on others or depend on donations, nor must they possess the skills to produce every necessity for themselves. They can concentrate on making things that they are good at making and trade them for needed items made by others. Thus, exchange allows a society to produce much more than it would with any alternative system.

In the broadest sense, the marketer tries to bring about a response to some offer. The response may be more than simply buying or trading goods and services. A political candidate, for instance, wants votes and a social action group wants idea acceptance. Marketing consists of actions taken to obtain a desired response from a target audience toward some product, service, idea, or other object.

Marketers need to build long-term relationships with valued customers, distributors, dealers, and suppliers. They want to build strong economic and social connections by promising and consistently delivering high-quality products, good service, and fair prices. Increasingly, marketing is shifting from trying to maximize the profit on each individual transaction to building mutually beneficial relationships with consumers and other parties. In fact, ultimately, a company wants to build a unique company asset called a marketing network. A marketing network consists of the company and all its supporting stakeholders: customers, employees, suppliers, distributors, retailers, ad agencies, and others with whom it has built mutually profitable business relationships. Increasingly, competition is not between companies but rather between whole networks, with the prize going to the company that has built the better network. The operating principle is simple: Build a good network of relationships with key stakeholders and profits will follow.

Markets

A market is the set of actual and potential buyers of a product. These buyers share a particular need or want that can be satisfied through exchanges and relationships.

Thus, the size of a market depends on the number of people who exhibit the need, have resources to engage in exchange, and are willing to offer these resources in exchange for what they want.

Producers go to resource markets (raw material markets, labor markets, money markets), buy resources, turn them into goods and services, and sell them to intermediaries, who sell them to consumers. The consumers sell their labor, for which they receive income to pay for the goods and services that they buy. The government is another market that plays several roles. It buys goods from resource, producer, and intermediary markets; it pays them; it taxes these markets (including consumer markets); and it returns needed public services. Thus, each nation's economy and the whole world economy consist of complex, interacting sets of markets that are linked through exchange processes.

Demand Management

Some people think of marketing management as finding enough customers for the company's current output but this view is too limited. The organization has a desired level of demand for its products. At any point in time, there may be no demand, adequate demand, irregular demand, or too much demand, and marketing management must find ways to deal with these different demand states. Marketing management is concerned not only with finding and increasing demand but also with changing or even reducing it.

For example, the Golden Gate Bridge sometimes carries an unsafe level of traffic, and Yosemite National Park is badly overcrowded in the summer. Power companies sometimes have trouble meeting demand during peak usage periods. In these and other cases of excess demand, demarketing may be required to reduce demand temporarily or permanently. The aim of demarketing is not to destroy demand but only to reduce or shift it. Thus, marketing management seeks to affect the level, timing, and nature of demand in a way that helps the organization achieve its objectives. Simply put, marketing management is demand management.

Building Profitable Customer Relationships

Managing demand means managing customers. A company's demand comes from two groups: new customers and repeat customers. Traditionally, marketers have focused on attracting new customers and creating transactions with them. In today's marketing environment, however, changing demographic, economic, and competitive factors mean that there are fewer new customers to go around. The costs of attracting new customers are rising. Thus, although finding new customers remains very important, the emphasis is shifting toward retaining profitable customers and building lasting relationships with them.

Companies have also discovered that losing a customer means losing not just a single sale but also a lifetime's worth of purchases and referrals. For example, the customer lifetime value of a Taco Bell customer exceeds $12,000. For Lexus, one satisfied customer is worth $600,000 in lifetime purchases. Thus, working to keep profitable customers makes good economic sense. The key to customer retention is superior customer value and satisfaction. With this in mind, many companies are going to extremes to keep their customers satisfied.

Marketing Challenges in the New "Connected" Millennium

As the world spins into the first decade of the twenty-first century, dramatic changes are occurring in the marketing arena. Richard Love of Hewlett-Packard observes, "The pace of change is so rapid that the ability to change has now become a competitive advantage." Yogi Berra, the legendary New York Yankees catcher, summed it up more simply when he said, "The future ain't what it used to be." Technological advances, rapid globalization, and continuing social and economic shifts—all are causing profound changes in the marketplace. As the marketplace changes, so must those who serve it.

The major marketing developments today can be summed up in a single theme: connectedness. Now, more than ever before, we are all connected to each other and to things near and far in the world around us. Moreover, we are connecting in new and different ways. Where it once took weeks or months to travel across the United States, we can now travel around the globe in only hours or days. Where it once took days or even weeks to receive news about important world events, we now see them as they are occurring through live satellite broadcasts. Where it once took days or weeks to correspond with others in distant places, they are now only moments away by phone or the Internet.

Through electronic commerce, customers can design, order, and pay for products and services without ever leaving home. Then, through the marvels of express delivery, they can receive their purchases in less than 24 hours.

From virtual reality displays that test new products to online virtual stores that sell them, the boom in computer, information, telecommunication, and transportation technology is affecting every aspect of marketing. Consider the rapidly changing face of personal selling. Many companies now equip their salespeople with the latest sales automation tools, including the capacity to develop individualized multimedia presentations and to develop customized market offerings and contracts. Many buyers now prefer to meet salespeople on their computer screens rather than in the office. An increasing amount of personal selling is occurring through videoconferences or live Internet presentations, where buyers and sellers can interact across great distances without the time, costs, or delays of travel.

Companies of all types are now attempting to snare new customers on the Web. Many traditional "brick-and-mortar" companies have now ventured online in an effort to snare new customers and build stronger customer relationships. For example:

• Car makers such as Toyota use the Internet to develop relationships with owners as well as to sell cars. Its site offers product information, dealer services and locations, leasing information, and much more. For example, visitors to the site can view any of seven lifestyle magazines—alt.Terrain, A Man's Life, Women's Web Weekly, Sportzine, Living Arts, Living Home, and Car Culture—designed to appeal to Toyota's well-educated, above-average-income target audience.
• Sports fans can cozy up with Nike by logging onto Nike.com, where they can check out the latest Nike products, explore the company's history, or download their favorite athlete's stats. Through its Web page, in addition to its mass-media presence, Nike relates with customers in a more personal, one-to-one way.

The Internet has also spawned an entirely new breed of companies—the so-called "dot coms"—which operate only online. For example:

Fast-growing eToys is quickly becoming an indispensable ally to time-starved parents looking for a fast and convenient way to buy toys for their children. The three-year-old Web-only retailer pioneered in selling everything from teddy bears to Barbies online. Now the site offers more than 100,000 toys, books, software, videos, and other kid items. Twenty-four hours a day, seven days a week, shoppers can click onto eToys, search for a specific item or browse one of several categories, drop their selections into a virtual shopping cart, pay for them with a credit card, and have them delivered within a day or two by express shipping. The eToys Web site also offers recommendations by age groups, a gift registry, a bestsellers list, and features on the latest children's products. Is the site successful? After only three years, eToys has won some 600,000 customers and almost $30 million of their purchases. "There is tremendous competition," says eToys CEO Toby Lenk. "The difference is we are just kids and we are just the Web."

Thus, changes in connecting technologies are providing exciting new opportunities for marketers. We now look at the ways these changes are affecting how companies connect with their customers, marketing partners, and the world around us

Connections with Customers

The most profound new developments in marketing involve the ways in which today's companies are connecting with their customers. Yesterday's companies focused on mass marketing to all comers at arm's length. Today's companies are selecting their customers more carefully and building more lasting and direct relationships with these carefully targeted customers.

Connecting for a Customer's Lifetime

At the same time that companies are being more selective about which customers they choose to serve, they are serving those they choose in a deeper, more lasting way. In the past, many companies have focused on finding new customers for their products and closing sales with them. In recent years, this focus has shifted toward keeping current customers and building lasting relationships based on superior customer satisfaction and value. Increasingly, the goal is shifting from making a profit on each sale to making long-term profits by managing the lifetime value of a customer.

For example, Amazon.com

began as an online bookseller, but now offers music, videos, gifts, toys, consumer electronics, home improvement items, and even an online auction as well, increasing per-customer sales. In addition, based on each customer's purchase history, the company recommends related books, CDs, or videos that might be of interest. In this way, Amazon.com captures a greater share of each customer's leisure and entertainment budget.

Connecting Directly

Today, beyond connecting more deeply, many companies are also taking advantage of new technologies that let them connect more directly with their customers. In fact, direct marketing is booming. Virtually all products are now available without going to a store—by telephone, mail-order catalogs, kiosks, and electronic commerce.

Some companies sell only via direct channels—firms such as Dell Computer , Lands' End, 1-800-Flowers, and Amazon.com,

 

 

 

 

to name only a few. Other companies use direct connections as a supplement to their other communications and distribution channels. For example, Procter & Gamble sells Pampers disposable diapers through retailers, supported by millions of dollars of mass-media advertising. However, P&G uses its Web site to build relationships with young parents by providing information and advice on everything from diapering to baby care and child development. Similarly, you can't buy crayons from the Crayola Web site. However, you can find out how to remove crayon marks from your prize carpeting or freshly painted walls.

Connections with Marketing Partners

In these ever more connected times, major changes are occurring in how marketers connect with others inside and outside the company to jointly bring greater value to customers.

Companies need to give careful thought to finding partners who might complement their strengths and offset their weaknesses. Well-managed alliances can have a huge impact on sales and profits.

Connections with Our Values and Social Responsibilities

Marketers are reexamining their connections with social values and responsibilities and with the very Earth that sustains us.

As the worldwide consumerism and environmentalism movements mature, today's marketers are being called upon to take greater responsibility for the social and environmental impact of their actions.

Corporate ethics and social responsibility have become hot topics in almost every business arena, from the corporate boardroom to the business school classroom.

And few companies can ignore the renewed and very demanding environmental movement.

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“Principles of Marketing”- Kotler&Armstrong-Chapter.1

Class/1.1 What is Marketing?..…

Marketing, more than any other business function, deals with customers. Understanding, creating, communicating, and delivering customer value and satisfaction are at the very heart of modern marketing thinking and practice.

Perhaps the simplest definition is this one:

Marketing is the delivery of customer satisfaction at a profit.

The twofold goal of marketing is to :

1- attract new customers by promising superior value

2- keep current customers by delivering satisfaction.

Wal-Mart has become the world's largest retailer by delivering on its promise, "Always low prices—always."

FedEx dominates the U.S. small-package freight industry by consistently making good on its promise of fast, reliable small-package delivery.

Coca-Cola, long the world's leading soft drink, delivers on the simple but enduring promise, "Always Coca-Cola"—always thirst-quenching,

always good with food, always cool, always a part of your life.

These and other highly successful companies know that if they take care of their customers, market share and profits will follow.

You already know a lot about marketing—it's all around you. You see the results of marketing in the abundance of products in your nearby shopping mall.

You see marketing in the advertisements that fill your TV, spice up your magazines, stuff your mailbox, or enliven your Internet pages. At home, at school, where you work, and where you play, you are exposed to marketing in almost everything you do. Yet, there is much more to marketing than meets the consumer's casual eye. Behind it all is a massive network of people and activities competing for your attention and purchasing dollars.

Evolution of Companies orientation toward Marketing

There are five alternative concepts under which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.

The Production Concept

The production concept holds that consumers will favor products that are available and highly affordable.

Therefore, management should focus on production and distribution efficiency.

Although this concept is the oldest one but still a useful philosophy in two types of situations:

1. When the demand for a product exceeds the supply. Here, management should look for ways to increase production
2. When the product's cost is too high and improved productivity is needed to bring it down.

The Product Concept

The product concept, holds that consumers will favor products that offer the most in quality, performance, and innovative features.

Thus, an organization should devote energy to making continuous product improvements.

The product concept also can lead to marketing myopia.

For instance, railroad management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and automobiles. Many colleges have assumed that high school graduates want a liberal arts education and thus have overlooked the increasing challenge of vocational schools.

The Selling Concept

Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization's products unless it undertakes a large-scale selling and promotion effort.

Most firms practice the selling concept when Their aim is to sell what they make rather than make what the market wants.

Such marketing carries high risks. It focuses on creating sales transactions rather than on building long-term, profitable relationships with customers.

it leads to win-lose situation NOT Win-win situation.

because the customers will never forget their disappointment and will never buy that product again later.

Most studies show that dissatisfied customers do not buy again. Worse yet, whereas the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others about his or her bad experiences.

The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

The marketing concept has been stated in colorful ways, such as "We make it happen for you" (Marriott); "To fly, to serve" (British Airways); "We're not satisfied until you are" (GE); and "Let us exceed your expectations" (Celebrity Cruise Lines).

The selling concept and the marketing concept are sometimes confused. Figure 1.4 compares the two concepts. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company's existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses primarily on customer conquest—getting short-term sales with little concern about who buys or why.

In contrast, the marketing concept takes an outside-in perspective. As Herb Kelleher, Southwest Airlines's colorful CEO, puts it, "We don't have a Marketing Department; we have a Customer Department." The marketing concept starts with a well-defined market, focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating long-term customer relationships based on customer value and satisfaction. Thus, under the marketing concept, customer focus and value are the paths to sales and profits. In the words of one Ford executive, "If we're not customer driven, our cars won't be either."

Many successful and well-known companies have adopted the marketing concept. Procter & Gamble, Disney, Wal-Mart, Marriott, Nordstrom, Dell Computer, and Southwest Airlines follow it faithfully.

The goal is to build customer satisfaction into the very fabric of the firm. L.L. Bean, the highly successful catalog retailer, was founded on the marketing concept. In 1912, in his first circulars, L.L. Bean included the following notice:

Notice

I do not consider a sale complete until goods are worn out and the customer is still satisfied. We will thank anyone to return goods that are not perfectly satisfactory.

Should the person reading this notice know of anyone who is not satisfied with our goods, I will consider it a favor to be notified.

Above all things we wish to avoid having a dissatisfied customer.

The marketing concept: L.L. Bean and its reps dedicate themselves to delivering the promise first spelled out in a 1916 L.L. Bean circular and still practiced today.

Today, L.L. Bean dedicates itself to giving "perfect satisfaction in every way." To inspire its employees to practice the marketing concept, L.L. Bean has for decades displayed posters around its offices that proclaim the following:

What is a customer? A customer is the most important person ever in this company—in person or by mail. A customer is not dependent on us, we are dependent on him. A customer is not an interruption of our work, he is the purpose of it. We are not doing a favor by serving him, he is doing us a favor by giving us the opportunity to do so. A customer is not someone to argue or match wits with—nobody ever won an argument with a customer. A customer is a person who brings us his wants—it is our job to handle them profitably to him and to ourselves.

In contrast, many companies claim to practice the marketing concept but do not. They have the forms of marketing, such as a marketing vice president, product managers, marketing plans, and marketing research, but this does not mean that they are market-focused and customer-driven companies.

The Societal Marketing Concept

The societal marketing concept holds that the organization should deliver superior value to customers in a way that maintains or improves the consumer's and the society's well being.

The societal marketing concept is the newest of the five marketing management philosophies.

The societal marketing concept questions whether the pure marketing concept is adequate in an age of environmental problems, resource shortages, rapid population growth, worldwide economic problems, and neglected social services.

It asks if the firm that senses, serves, and satisfies individual wants is always doing what's best for consumers and society in the long run.

According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare.

Consider the fast-food industry. Most people see today's giant fast-food chains as offering tasty and convenient food at reasonable prices. Critics point out that hamburgers, fried chicken, French fries, and most other foods sold by fast-food restaurants are high in fat and salt.

The products are wrapped in convenient packaging, but this leads to waste and pollution. Thus, in satisfying consumer wants, the highly successful fast-food chains may be harming consumer health and causing environmental problems.

Such concerns and conflicts led to the societal marketing concept. As Figure 1.5 shows, the societal marketing concept calls on marketers to balance three considerations in setting their marketing policies: company profits, consumer wants, and society's interests. Originally, most companies based their marketing decisions largely on short-run company profit. Eventually, they began to recognize the long-run importance of satisfying consumer wants, and the marketing concept emerged. Now many companies are beginning to think of society's interests when making their marketing decisions.

One such company is Johnson & Johnson, rated each year in a Fortune magazine poll as one of America's most admired companies, especially for its community and environmental responsibility. Johnson & Johnson's concern for societal interests is summarized in a company document called "Our Credo," which stresses honesty, integrity, and putting people before profits.

Under this credo, Johnson & Johnson would rather take a big loss than ship a bad batch of one of its products. The company supports many community and employee programs that benefit its consumers and workers and the environment. Johnson & Johnson's chief executive puts it this way: "If we keep trying to do what's right, at the end of the day we believe the marketplace will reward us."

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Reference: "Principles of Marketing" - Kotler & Armstrong-chapter.1

Marketing Myopia

Written By Dr. Naveel

In 1960, a landmark paper called “Marketing Myopia” was published in the Harvard Business Review. It challenged the way businesses look at themselves and raised the question, “What business are we really in?” For example, should a railroad company focus exclusively on railroad production or is transportation the bigger opportunity?

Should an oil company be focused exclusively on oil, or is energy the more appropriate focus?

Put another way, is the company focusing on what it is (product focus) or the solutions it provides (customer focus)?

In the SEO ( search engine optimization) industry, we come across many clients that engage in what I like to call keyword myopia — when a company focuses on what they offer instead of what the consumer is searching for.

Take, for example, the Wachovia Vehicle Loan webpage. From an internal perspective, this webpage probably makes perfect sense to Wachovia. They offer loans for any type of vehicle: cars, boats, motorcycles, etc.

Therefore, they think the webpage should focus on “vehicle loans” because it encompasses loans for many types of transportation.

This is clearly communicated to both search engines and customers with prominent placement of “vehicle loans” language throughout the webpage.

But are “vehicle loans” what consumers are searching for?

A Google Trends analysis illustrates that this isn’t necessarily the case.

It’s a safe bet that most people are not going to leave a car dealership thinking, “Wow, that vehicle I test-drove today was great! I better start searching for a vehicle loan.” Instead, they’re probably searching for their needs using their own language: “auto loan,” “car loan,” “boat loan,” and so on.

So where does Wachovia rank for auto loan, car loan, boat loan and motorcycle loan searches?

Wachovia is not in the top 100 search results of any major search engine for these terms. Clearly, they are missing an opportunity for search engine traffic by focusing on what they offer instead of what their prospective customer is searching for.

In sum, keep keyword myopia at bay by..

 focusing on the bigger picture –by optimizing your website with the consumer in mind, you create a broader opportunity to capture your target audience.

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Amira’s Comment :

This article written by Dr.Naveel on his website (www.searchviews.com) explained the origin of that term (Marketing Myopia ) , using very famous medical terminology (Myopia )which is (Nearsightedness) as Those with myopia see near objects clearly but far away objects appear blurred.

Thus, after working in Marketing field for years I can say that Marketing Myopia is not just to look at the bigger picture of customers needs BUT it also imply that you have to look at the wider picture of the whole Market focusing on what your Competitor offers

 

It’s my own theory but it works.. doesn’t it ???!!

Marketing is a Marriage

Marketing is a marriage .. where you have to know not only how to attract, how to satisfy But the most important thing is to know how to keep YOUR SPOUSE ..= your Customer.

And always remember … “Customer Is Our Business”

After Watching that video try to apply the basic principles of Marketing you studied

Ansoff’s Matrix … Growth Strategy

MKT-Teacher/MKT-lessons

This well known marketing tool was first published in the Harvard Business Review (1957) in an article called 'Strategies for Diversification'.

It is used by marketers who have objectives for growth.

Ansoff's matrix offers strategic choices to achieve the objectives. There are four main categories for selection.

Ansoff's Product/Market Matrix

Market Penetration

Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Market Development

Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Product Development

This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.

Diversification

This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have no previous industry nor market experience. For example a soup manufacturer invests in the rail business.

Ansoff's matrix is one of the most well know frameworks for deciding upon strategies for growth.