ASPECTS OF MARKETING MANAGEMENT

ASPECTS OF MARKETING MANAGEMENT

NOTES: Lectures, Seminars and Text

Week 1

Lecture 1: Tate Case Study (See Module Handbook for Notes)

Seminar 1: See Module Handbook for Introduction

Text: Chapters 1 and 2

I.            Chapter 1:

a.       Point of Departure

i. Yoram Wind and Thomas S. Robertson said ,marketing has reached a point of discontinuity in its development as a discipline from an emphasis upon marketing management to a broadened perspective concerned with marketing strategy

ii. marketing mix is tactical response to prevailing conditions in the markets in which one is competing.

iii. Tactical is only short term for local conditions and circumstances

iv. Long term must be strategic.

b.      The Strategic Perspective in Marketing

i. Marketing concept does not change management but focus

ii. Winds and Robertsons 7 limitations to marketing;

seeing brand as unit of analysis

interdisciplinary isolation of marketing

Marketing Mid Life Crisis mckinsey and co

failure to examine synergy in the design of the marketing program

marketings short run orientation

lack of rigorous competitive analysis

lack of international integration

lack of an integrated strategic framework

iii. Difference between Strategic and Tactical

importance: strategic > tactical

level at which conducted: strategic = upper management

Time: strategic > tactical

Regularity: strategy = continuous; tactics periodic

Nature of Problem: strategic = unstructured + unique + considerable risk + uncertainty. Tactical = structured + repetitive + risks easier to assess.

Info needed: strategy (external) > tactical (internal)

Detail: strategy = broad; tactics = specific

ease of evaluation: strategic more difficult.

iv. Strategic decisions at corporate level are concerned with acquisition, investments and diversification.

v. At Business level (SBU) strategic decisions focus on how to compete in an industry pr product market.

c.       Marketing Organization and Management

i. The role of marketing in the corporation changed in the 70s and 80s from the manipulation of the marketing mix to a role involving the entire org.

ii. Marketing has become concerned with Intra-organizational relationships and inter-organizational alliances, and the management of critical boundary spanning environmental interfaces.

iii. Marketing has morphed from being equated with sales to being integrated with the other business functions.

iv. Marketing orientation: assumes the dominance of the marketing function in managing the organizations interfaces with its markets.

v. Market Orientation: original conceptualization of the role of marketing as the need to focus all of the organizations efforts on the needs of customers and markets.

vi. Four Levels of Marketing Strategy:

Functional- Performing Marketing Subsystems such as advertising, research, sales and operations

Business- Marketing Dept. Integration of marketing sub-functions

Corporate- Dicisional Marketing. Centralization/Decentralization decision making .

Enterprise-strategic alliances. external relationships.

d.      Needs:

i. The basic need to be satisfied is a formal description and analysis of both the strategic and managerial aspects of marketing.

ii.

Not very important

There has been a radical change in the past decade

iii. The adoption of marketing orientation is well advanced and no longer confined to the fast moving consumer goods companies where it originated

iv. The body of knowledge based upon experience has now become so extensive that it makes sense to try and distil and codify it so that it can be communicated formally through books and other media.

e.       Analogy and Metaphor

i. Everett Rogers proposed that the speed which people will be willing to modify their current behavior and adapt to change is the function of:

relative advantage- reflects the scale and nature of the additional benefits which will arise from the changed behavior

complexity- represents the degree of difficulty perceived in adoption.

compatibility- how similar or different is to the establishes way of doing things

communicability- the degree of ease or difficulty experienced in explaining the innovation

trial ability- measures the ability of the potential user to experience the innovation without final commitment to it.

ii. First 4 are perceptual and depend on knowledge, attitudes and experience of the decision maker.

f.        Practice of Marketing

i. Jerry Wind identified key issues concerning the practice og marketing

Is marketing and its focus on meeting and anticipation customer needs widely accepted as a key business philosophy

Are the business and corporate strategies focused on creating value to all stakeholders

Do the objectives include customer satisfaction and creation of value

Is the marketing function integrated with the other functions of the business.

Are the key marketing positions market segment managers

Are products viewed as part of integrated product or service offering.

is the strategy global

utilization of market research

use of I.T.

Innovative practices

formation of strategic alliances

message effectiveness

II.         Chapter II

a.       Competition

b.      What is Marketing

i. Maximizing satisfaction arising from the consumption or utilization of scarce resources

ii. To do this we must ask producers and sellers establish a relationship with customers

iii. Marketing is the distinguishing unique function of the business

iv. Marketing Management- understanding customer needs better so that it can manipulate the elements of the marketing mix more effectively and so bend demand to the availably supply

v. Relationship Marketing- built upon the creation and maintenance of mutually satisfying exchange relationships. (Doing things for cutomers)

c.       Marketing as a Synthetic Discipline

i. Mass production and mass distribution has resulted in a physical and psychological separation between producer and consumer to the point that under the marketing management model of exchange producers became preoccupied as to how they could shape consumer demand through the manipulation of the marketing mix rather than letting this demand shape their production decisions.

d.      What is Strategy:

i. Porter:

According to Porter, managements quest for productivity, quality and speed through such tools as tqm and benchmarking has distracted management from the importance of strategic thinking.

Operational Effectiviness- performing similar activities better than rivals. Efficient, To better utilize inputs. Etc

a.       According to Porter, pursuit of operational effectiveness is seductive because it is concrete and actionable

Strategic Positioning- performing different activities from rivals or performing in different ways.

emergent strategy- practitioners of emergent strategy are easily diverted from their chosen course of action by events as they unfold (porter rejects this idea)

2 alternate views of strategy

a.       Implicit Strategy (attributes)

i. One ideal competitive advantage in the industry

ii. Benchmarking of all activities in achieving best practice

iii. Aggressive outsourcing and partnering to gain efficiencies

iv. Advantages rest on success factors, critical resources and core competencies

v. Flexibility and rapid responses to all competitive and market changes

ii. Strategy is necessary but not sufficient condition for competitive success

Essence of Strategy is in the activities.

Fit (to sustain competitive advantage)

a.       Consistency

b.      Reinforcements

c.       Optimization

iii. It is because of the existence of or potential to develop different customer responses through different activities.

iv. Strategy is making trade-offs in competing when something is incompatible

v. Synergy

e.       Market Structure , conduct and performance

i. Scherer

market system operates through producer and consumer responding to the price signals

this results in the interplay of supply and demand in more or less freely operating markets

a chain of events is created in which these forces result in the evolution of a particular market structure, the nature of which has signifigant effects upon the conduct of suppliers and their consequent performance

ii. most analysis are concerned only with firms which are competing directly with one another in the contect of other suppliers producing similar end-use goods or services.

f.        Competition and Marketing Strategy

i. Industry- a group of firms producing products that are close substitutes for each other

ii. the nature of competition is to ensure that the marginal rate of return on capital will be the same everywhere. Thus the forces of competition work to ensure that capital will flow from less efficient firms in an industry to more efficient firms and from less efficient industries to more efficient industries.

iii. 5 forces governing competition

threat of new entrant (barriers)

a.       economies of scale

b.      product differentiation

c.       capital requirements

d.      switching costs

e.       access to distribution channels

f.        cost disadvantages independent of sca;e

g.      government policy

threat of substitution- change is inevitable

Power of Supplier is strong

a.       if is dominated by a few companies and is more concentrated than the industry it sells to

b.      if it is not obliged to contend with other substitutes for sale to the industry

c.       if the industry is not an important customer of the supplier group

d.      if the supplier product is an important input to the buyers business

e.       the supplier products are differentiated or has built up switching costs

f.        if th supplier poses a credible threat of forward integration

the bargaining power of customers strong when:

a.       the buyer is concentrated or purchases large volumes relative to sales

b.      the products it purchases represent a significant fraction of the buyers costs or purchases

c.       the products it purchases are undifferentiated and standard

d.      few switching costs

e.       looking for cost reductions

f.        threat of backward integration

g.      product being bought is unimportant

h.      buyer is fully informed

rivalry between current competitors strong when:

a.       there are numerous or equally balanced competitors

b.      there is slow industry growth

c.       high fixed or storage costs

d.      lack of differentiation or switching costs

e.       capacity augmented in large increments

f.        diverse competitors

g.      high strategic stakes

h.      high exit barriers

g.      International Competition

i. Innovations

ii. Efficiency

iii. New markets

iv. Porter: successful companies tend to develop a bias for predictability and stability; they work on defending what they have. Change is tempered by fear that there is mouch more to lose. Tend to filter out new ideas waning from the norm.

h.      Diamond of National Advantage (Porter)

i. How do they overcome this?

ii. Answer: examine what porter terms: The Diamond of National Advantage

Factor Condition (of production)

a.       Factor endowment is incomplete (depende more on utilization than the mere existence

b.      Most important factors are those that involve sustained and heavy investment

Demand Conditions

a.       Nature of domestic demand shapes the way companies interpret and respond to customer needs

Related and Supported Industries

a.       Mostly supply side

Firm Strategy and Supporting Industries

a.       Will anyone recognize an opportunity when it arises

i.        The role of government and chance

i. Porter believes that government can help and hurt an industry through its policies

ii. Policies in which porter argues are vital to nations seeking comp. adv. (Japan example)

focus on specialized factor creation

non0intervention in factor and currency markets

enforcement of strict prodct, safety and environmental standards

restriction of direct co-operation among industry rivals

promotion of goals that lead to sustained investment

deregulation of competition and the enforcement of strong domestic anti-trust policies

rejection of managed trade (negotiation between markets)

j.        Clusters

i. Occur as a consequence of both vertical relationships with suppliers and customers and also a result of horizontal relationships based upon shared technology and common customers.

k.      Creation of Competitive advantage

i. Innovation

ii. Entire value system

iii. Sustained only through relentless improvements

iv. Requires continued investment over time

v. A global approach is required

l.        Marketing and Competitive Success

i. Why did the US have a decline in competitiveness in Int. Markets in the 1980s? (Abernathy and Hayes)

over-emphasis upon a financial/sales orientation:

emphasis on short-range profit at the expense of growth and longer-range profits

efficiency may out-rank effectiveness as a management criterion

pricing, cost, credit, service and other policies may be based on false economy influences and lack of market place realism.

the business focus is not on the customer and market but on internal considerations and numbers

ii. Peters an Watermans keys (analysis of other writers) (they conform with a formulae of success by:

asserting the superiority of American management and systems

stressing entrepreneurial values and the money-making ethic which was challenged in the 60s and 70s

basing upon the analysis of the practice and procedure of firms who people who are leaders in their field

reducing the ingredients of success to simple catechisms or formulae

emphasizing the essential catalyst and hero of the piece is the manager himself

iii. Baker and Hart (analysis of other writers) (relationship between marketing and competitive performance)

(analysis of other writers)

a.       marketing orientation enhances success

b.      many authors focus on the trappings and not the substance

c.       empirical work

d.      empirical studies

e.       they widen the gulf between theory and practice

f.        written in different countries and times

g.      focus too much on the successful large companies and not the small

environmental , strategic, marketing, organizational and managerial are generally invoked in seeking to explain business performance

unsuccessful companies deserve more credit than they are actually giventhey had survived

m.    Competition for the future

i. challenges- inconstant environment

ii. Return on Investment is seen as a performance indicator

Numerator (net income)

Denominator (investments, net assets or capital employed)

Most companies will try to cut the denominator (1980s)

iii. Hammel and Prahlahad (Creatiing Future means)

Changing the basis of competition

Redrawing boundries between industries

Creating new industries

Pathbreaking is more rewarding than benchmarking

Must understand how competition is diferetnt for future

Requires a process for finding and gaining insight into tomorrow

Must have an ability to energise the company top to bottom for a journey to the future

Having the capacity to outrun competitors and get to th future first without taking undue risks

Three stages to getting to future

a.       Must establish intellectual leadership and foresight into industry trends and developments.

i. possible futures are envisaged and attempts are made to steer reality towards one of the possible outcomes

ii. involves identification of desired futures and then works back to the present to establish what needs to be done to secure that desired future

iii. Speed up process of getting to the newly desired position before the competition

b.      Active competition to secure their market position and increase market share

c.       Core competencies

i. a bundle of skills and technologies that enables a company to provide a particular benefit to customers

ii. rather than a single skill or technology

d.      Believe customers are lacking in foresight

e.       Company must inform customers

f.        Strategic Architecture

i. a high level blue-print for the development of new functionalities, the acquisition of new competencies or the migration of existing competencies and the reconfiguring of the interface with the customers

ii. identifies what we must be doing right now to intercept the future

iii. link between today and tomorrow, short term and long term

iv. opportunity approach

g.      Strategic Intent- the distilled essence of a firms strategic architecture which conveys both a sense of direction and a sense of discovery (intrinsic to the resources based biew)

n.      Knowledge and the Learning Org.

i. Knowledge that will determine competitive performance and the organization with the greatest capacity to learn will dominate its chosen sphere of activity

ii. Knowledge is the only resource that increases with use

iii. Explicit Knowledge- can be communicated

iv. Tacit knowledge- resides in the skills and practices not in communication

v. 4 Dimensions of Knowledge

content- relevancy and avoid info overload

culture-

a.       principal determinant of success.

b.      Also most neglected

process (5 step process)

a.       define knowledge objectives, organizational core knowledge and future knowledge needs

b.      identify available knowledge

c.       save knowledge

d.      disseminate knowledge

e.       use knowledge

infrastructure- must be adapted to companys needs

vi. Knowledge Management includes:

map knowledge management with business strategy and support it clearly with the technology strategy

develop process for continuously linking major decisions with knowledge management system

get senior management commitment

build intelligence system

establish legal and ethical guidelines

remember the soft skills.

get hrm dept. involved.

develop and use performance metrics to evaluate results.