MARKETING MANAGEMENT Types of Demand

Chapter 1: Defining marketing for 21st Century Negative – consumer’s dislike a product and may
pay to avoid, such as with dental work
MARKETING
Nonexistent – consumers are unaware of or
DEMAND (JOBS)
uninterested in the product or service
REVENUE (PROFITS, GIVING)
Latent – There is no product on the market that
- Marketing creates demand for a product, which can satisfy consumer needs
in turn drives revenue.
Declining – Consumers purchase a product less
- Greater demand creates the need for
and less frequently, or not at all. For example, the
companies to hire new workers, while revenue
sale of albums (vinyl and CD’s) are declining
(top line) contributes to a company’s bottom
significantly.
line (profits), which allow the company to be
more fully engaged in socially responsible Irregular – A products demand varies by time,
activities. such as on a seasonal basis.

Marketing – is the activity, set of institutions, and Full – Consumers are buying all the products that
processes for creating, communicating, delivering, enter into the market.
and exchanging offers that have value for
Overfull – There are more buyers than product
customer, clients, partners and society at large
available.
Marketing Management – the art and science of
Unwholesome – Consumers are attracted to
choosing target markets and getting, keeping, and
products that have undesireable social
growing customers through creating, delivering,
consequences, such as cigarettes or gambling.
and communicating superior customer value.
Markets
What is marketed
- Economist describe a market as a collection of
Services
buyers and sellers who transact over a
Goods particular product or product class.
- There are five basic markets –
Person
o Manufacturer,
Places o resource (financial, labor, raw
materials)
Experience – a trip to Disney world, fantasy camp, o intermediary (wholesalers, resellers,
a cruise etc.)
Events – trade shows, the Olympics, Super Bowl, o consumer
etc. o government.
Properties – includes real estate as well as stocks
and bonds Simple marketing system
Industry – a collection of sellers
Organizations – use marketing to connect with Market – a collection of buyers
people

Information – marketed by university, textbook Markets

publishers, newspaper, etc.
Marketplace – physical locations (such as retail
Ideas – friends don’t let friends drive drunk store)
Who markets?
Marketspace – digital location (online retailer)
Marketers – are individuals, group, association
that seek a response Metamarkets – The cluster of complementary
products and services related in consumers mind,
Prospect - such as attention, a purchase,
but spread across diverse set of industries.
donation, vote, etc., from another party
 Five distinct Marketing concepts
Core marketing concepts
Production - Under a production philosophy the
1. Needs, Wants, and Demands company will seek to mass produce products and
2. Target Markets, Positioning, and to distribute them on a wide scale. The belief is that
Segmentation consumers prefer products that are widely
3. Offerings and Brands available and inexpensive.
4. Value and Satisfaction
Product - proposes that consumers prefer
products that have higher quality, performance, or
Core Marketing Concepts are more innovative. Often, managers focus too
much on the product (a better mousetrap) but this
1. Marketing Channels does not always equal success.
2. Competition
3. Marketing Environment Selling - argues that members of a market will not
4. Supply Chain purchase enough product on their own so
companies use the “hard-sell” to increase demand.
Typically used with unsought goods such as
The New Marketing Realities insurance or cemetery plots, or when companies
face overcapacity.
- Information Technology
- Globalization Marketing - first emerged in the 1950’s and
- Increased Competition focuses more on the customer with a “sense-and-
- Consumer Information respond” attitude. Companies that have embraced
- Communicate w/Customer the marketing concept have been shown to
- Collect Information achieve superior performance than competitors.
- Differentiate Goods
Holistic – everything matters

- Major societal forces, such as information Holistic marketing dimensions

technologies, globalization, increased
competition, and a more informed consumer Internal marketing
have altered the marketplace has changed
significantly. While these have created - Marketing department
challenges, organizations have responded with - senior management
new capabilities - other departments

Integrated marketing
Who is responsible for marketing
- Product and services
Chief Marketing Officer (CMO) - Communications
- Channels
- CMOs must have strong quantitative skills, to
accompany their qualitative skills. Must be Performance marketing
entrepreneurial as well as a team player.
However, the CMO nor the marketing - Sales revenue
department can be solely responsible for - Brand & customer equity
marketing. It must be undertaken by the entire - Ethics environment
organization. - Legal
- David Packard of Hewlett-Packard is quoted as - Community
saying: “Marketing is far to important to be left
to the marketing department.” Relationship marketing
- Customers The Four Ps of Marketing Mix
- Channel
- Partners Product

Relationship marketing - Product variety, quality, design, features,

brand name, packaging, sizes, services,
Building long-term relationship warranties, returns

- Relationship marketing seeks to build mutually Price

beneficial, long-term relationship with key
constituents in order to earn and retain their - List prices, discounts, allowances, payment
business. period, credit terms
- The four key constituents are: customers,
employees, partners, and member of the Promotion
financial community.
- Attracting a new customer can cost five times - Sales promotion, advertising, sales force,
as much as retaining existing customers so public relations, direct marketing
building long-term relationships makes
financial sense for the company. Place

Marketing networks - Channels, coverage, assortments, locations,

inventory, transport
- consist of the company and its supporting
stakeholders who have built a mutually Marketing management task
profitable business relationship.
1. Developing market strategies and plans
Integrated marketing 2. Capturing marketing insights
3. Connecting with customers
- create, communicate, and deliver customer 4. Building strong brands
value 5. Shaping market offerings
- all activities should take into consideration all 6. Delivering value
other marketing activities 7. Communicating value
8. Creating long-term growth
Internal marketing 9. Marketing Management Tasks

- is the task of hiring, training, and motivating Chapter 2: Developing Marketing strategies
able employees to serve customers well. You and plan
can’t promise excellent services it you can’t
deliver excellent services. Value Delivery Approach

Performance Marketing Choosing – marketers do their homework to

segment the market, select the appropriate target,
- social responsibilities and develop the offering value proposition
- financial accountability
- Marketers must understand both the financial Providing – entails specific product features,
and nonfinancial returns to a business and prices, and distribution
society from marketing programs and
activities. Financial accountability involves the Communicate – accomplished through the use of
justification of marketing expenditures in terms sales of force, the internet, the advertising, and
of financial returns other communication methods to announce and
- They also must think about the ethical, promote the product
environmental, legal and social aspects of
their activities Value Chain
- Michael Porter Value Delivery – How a company uses its
- A company is a collection of activities that are capabilities and infrastructure to deliver the new
performed to design, produce, market, deliver, value offering more efficiently.
and support its products.
- It identifies nine – five primary (Inbound Strategic planning
logistics, Operations, Outbound Logistic,
Marketing and Service) and 4 support 1. managing a company’s business as a
(Procurement, Human Resource investment portfolio
Management, Technological, and 2. assessing each business’s strength by
Infrastructure)– activities that create value considering the market’s growth rate and the
and cost in a business. company’s position and fit in the market
3. establishing a strategy
Core Business Process
Strategic Planning, Implementation, and
- A firms success depends in part on how well Control Process
each department performs its role. However,
firms must also coordinate departmental Planning (Corporate, division, business, product)
activities to conduct
Implementing (organizing, implementing)
Market-sensing – Activities involved in gathering
and acting upon information about the market. Controlling (measuring result, diagnosing result,
taking corrective action)
New-offering realization – Research,
development, and launch of new high-quality
Marketing Plan
product offerings quickly and within budgets.
Customer acquisition – All the activities in - used to direct and coordinate the marketing
defining target markets and prospecting for new effort and is created at the strategic and tactical
customers. level
Customer-relationship management – Activities
involved in in building deeper understanding, Levels of Marketing Plan
relationships, and offerings to individual
customers. Strategic
Fulfillment management process – The
- Begins with analysis of market opportunities
activities that related to receiving and approving
- Target marketing decisions
orders, shipping the goods on time, and collecting
- Firms value proposition
payments.

Tactical
Core Competencies

- Product features
- Firms must focus on what they do well, things
- Promotion
that are the essence of the business.
- Merchandising
1. Contributed to perceived customer benefits - Pricing
2. Useful in a wide variety of market - Sales
3. Difficult to imitate - Channels
- Service
Holistic market
Corporate Strategic Planning
Value Exploration – How the firm identifies new
value opportunities. 1. Define corporate mission
2. Establish SBU’s
Value Creation – How efficiently a company
3. Assign resources to SBU’s
creates more promising new value offerings
4. Asses growth opportunities
Defining Corporate mission - New business
- Downsizes
- Answering Pete Ducker’s classic question - Elimination of older business
- Who is the customer The Strategic-Planning Gap
- What is the value of the customer
- The lowest curve projects expected sales over
- What will our business be
the next five years from the company’s current
- What should our business be
business portfolio. The top curve is the desired
- What is our business
sales over this period. As the company wishes
to grow faster than its current businesses will
Mission statement
allow, the company must seek new
1. Focus on a limited number of goals opportunities.

2. Stress major policies and values

Intensive Growth
3. Define major competitive spheres - looks for opportunities within current
4. Take a long-term view businesses. The product-market expansion
grid looks at growth possibilities from the
5. Short, memorable, meaningful perspective of current and new products and
Vague mission statement markets.
Market Penetration – gaining market share with
- To build total brand value by innovating to
current products and current customers. The
deliver customer value and customer
company can achieve growth by having current
leadership faster, better, and more completely
customers purchase more, attract competitors
than our competition
customers, or bring non-buyers into the market.
Strategic business units (SBU’s) Market Development – Finding new markets for
1. It is a single business, or a collection of related existing products. The firm can find new buyer
businesses, that plan separately from the rest groups (business customers rather than
of the company consumers), new distribution channels (online), or
2. It has its own set of competitors expand distribution to other regions or countries.
3. It has a manager responsible for strategic
Product Development – Develop new products to
planning and profit performance.
the current market. As the firm already has a
Defining Strategic business units
relationship with current customers, they can
- Companies often define themselves in terms of
develop new products to meet other, related needs
the products it produces. This view often limits
of it’s customers.
a company. A market definition on the other
Diversification – Developing new products for
hand describes the business as a customer-
new markets.
satisfying process
- Can be defined by
Integrative growth
o Customer needs
- A business can achieve growth through
o Customer groups
backward (buy supplier), forward (buy
o Technology
wholesaler), or horizontal (competitor)
Assigning Resources
integration.
- Portfolio-planning models such as the
GE/McKinsey Matrix and the BCG Matrix were Diversification growth
used in the past to assist managers in making - Firms can often discover opportunities outside
resource allocation decisions. But they have its present business. However, the new
been replaced with newer models that consider industry should be highly attractive (grow
shareholder value analysis. potential) and the company should have (or
- The newer models consider growth from global acquire) the right capabilities to succeed.
expansion, repositioning, retargeting, and
Corporate culture
strategic outsourcing.
Assessing Growth opportunities
- Corporate culture is defined as “the shared gaining as much insight about the segment as
experiences, stories, beliefs, and norms that possible, and then pursue either a cost
characterize an organization.” leadership or differentiation strategy.
Marketing Innovation - Strategic Alliances can be used to compliment
or leverage current capabilities and resources
- Identify and encourage new ideas to the benefit of both parties. Alliances fall into
- Scenario analysis four categories:
- Companies looking for innovative marketing o Product or service alliance.
ideas should look to three underrepresented o Promotional alliances
employee groups such as: employees with
youthful or diverse perspectives, employees o Logistic alliances
far away from corporate headquarters, and o Pricing collaborations.
employees new to the industry. Program Formulation and Implementing
- Scenario analysis looks at future possibilities
- Great strategies can lead to failure unless they
by asking “What if…” questions about
are implemented properly. Proper formulation
customers, competitors, markets.
ensures that all the pieces fit together.
SWOT Analysis
- firms must also examine the cost of the
- Strategic planning requires managers to
marketing programs to ensure that the
understand the external and internal
expense is justified
environments. A SWOT analysis allows for
these environments to be monitored. Feedback and Control
- Business units must monitor key macro-
- strong leadership
environment forces as well as micro-
- Changes in the market are inevitable.
environment factors. Monitoring the external
Companies must be aware of pending changes
environment can allow firms to identify growth
and also have the will to change course.
opportunities and potential threats to its
existing businesses. Product Planning
- To take advantage of opportunities the firm
must be aware of its own internal strengths and
weaknesses.
Goal Formulation
- Goals are objectives that are specific with
respect to magnitude and time. Managing
these objectives effectively requires these four
criteria to be met.
- Ranked, consistent, Quantified, Realistic
Strategic Formulation
Porter’s Generic Strategies At the product level, planning centers around the
- Cost Leadership, where they are seeking to marketing plan, which can be based on each
achieve the lowest production and distribution product, channel, or customer group. The five
costs to underprice competitors and gain major sections of a marketing plan are presented
market share here.
Chapter 3: Collecting Information and
- Differentiation strategy, where they focus on Forecasting Demand
achieving better performance on a important Collecting information
customer benefit (such as quality or speed); or - Marketers are in position to collect information
third from customers, competitors, and other
- businesses can take a Focus approach where external factors/group that can help to identify
they concentrate on a narrow market segment, market changes.
Marketing Information System - refers to those elements closest to the
- A marketing information system consists of company, customers, competitors, suppliers,
people, equipment, and procedures to gather, etc.
sort, analyze, evaluate, and distribute - macroenvrionment refers to those elements
information that is needed, timely and that can impact a company, but cannot be
accurate. controlled. These include things such as the
- People, equipment, procedure economy, culture, demographics, politics,
- Internal records, insight, marketing research technology, and the natural environment.
Internal records Needs and trends
- The order-to-payment cycle entails the FAD - Unpredictable, short-lived, and without
process that orders go through once they are social, economic, and political significance. Fads
received by the company. Includes invoices are measured in months, rather than years.
and shipping documents. Customers prefer Trends - offer a view of the future due to their
firms that can get orders processed quickly and momentum and durability
accurately. Megatrend - changes that are slow to form but
- Sales information systems provide once established last for 7 – 10 years (or more).
managers with up-to-date information on the Major Environmental Factors
current sales of individual products. - Demographics
- Databases store and organize information - Technological
that can be retrieved based on a number of - Economic
criteria such as purchase history, product - Natural
preferences, and can even contain - Sociocultural
demographic and psychographic information - Political-legal
on customers. Demographic environment
Marketing intelligence - Worldwide population growth
- system is a set of procedures and sources that - Population age mix
managers use to obtain everyday information - Ethnic and other markets
about developments in the marketing - Educational Groups
environment. - Household patterns
- This information can come from reading books Economic Environment
and trade journals; talking to customers, - Purchasing power: is the amount of
distributors, suppliers, etc.; monitoring social goods/services one unit of currency will
media; and talking to other managers in the purchase. Purchasing power is determined by
company. income, prices, savings, credit availability, and
Improving marketing intelligence debt.
- Companies can improve marketing intelligence Sociocultural
through the methods listed on the slide as well - The influence that both society and culture
as through channel members, government have views of individual
data sources, and the purchase of information - Subculture is a group that shares culture
through secondary data sources. different from the larger culture that they
Marketing Intelligence & the internet belong
Independent online forum Natural Environment
Distributor or sales agents feedback sites - Companies must be cognizant of the effects of
Customer review and expert opinion their business on the environment and how
Customer complain sites regulations can influence its competitive
Using marketing intelligence position. Changes in regulations can also
- Should be gathered and shared with decision provide opportunities for companies, but these
maker quickly in order to effectively use the opportunities may only be recognized if the
information company includes this aspect into their
Analyzing the macroenvironment strategic planning.
Technological Environment
- Accelerated pace of change
- Unlimited opportunities Market demand functions
- R&D spending
Political-legal Environment
- Law
- Government agencies
- Special Interest Group
Forecasting and Demand Measurement
- Market size, growth. Profit potential
- Understanding a market potential involves not fixed as it can change based on a number
more than just research and analysis. of variables. If firms in an industry increase
Market types marketing expenditures, reduce (or raise)
- Potential market prices, then demand can increase (or fall). The
- Available market financial environment (shown in figure b) also
- Target market influences overall market demand.
- Penetrated market
Nine types of Demand measurement Estimating current demand

- Total market potential is the maximum sales

available to all firms in an industry during a
given period, under a given level of industry
marketing effort, and environmental conditions.
Area market potential is the sales potential for
- Companies can prepare as many as 90 a specific territory.
different types of demand estimates, for six - Market-buildup Method looks to identify all
different product levels, five space levels, and potential buyers in a market and estimating
three time periods. Each of these serves a their potential purchases.
different purpose. Short-run can for ordering Estimating future demand
raw materials, plan production, or borrow - Sales force opinions
cash. - Buyer’s intention
Demand measurement - Forecasting
Market demand - Past sales analysis
- total volume that would be bought by a defined - Expert opinions
customer group, in a defined geographical
area, in a defined time period, in a defined
marketing environment, under a defined
marketing program.
Company demand
- (Expected market share) is the company’s
estimated share of market demand at
alternative levels of company marketing efforts
in a given time period.