Marketing process and concepts

Laurence COGAN
Autumn 2009 – ESC 2nd Year
 Sessions’ Organization: Syllabus

• Session 1: Introduction to marketing

• Session 2: Product policy (1)
• Session 3: Product policy (2)
• Session 4: Pricing Policy
• Session 5: Promotion policy
• Session 6: Communication policy
• Session 7: Case study Babolat

⇒ Final exam
 Sessions’ Organization
• 7 sessions
• 4 marks
- One oral presentation
- A written report (25% of the mark)
- Case study (25% of the mark)
- A final exam (50% of the final mark)

Session 2: each group presents the brand of their choice (5 minutes)

Session 4: 2 groups present the product policy (15 minutes)
Session 5: 2 groups present the pricing policy (15 minutes)
Session 6: 2 groups present the distribution policy (15 minutes)
Session 7: Case study Babolat (each group responds to one question)
 Final Report
Ethnic & minority groups’ products

• Ethnic products: ‘ brand’s product or service targeting an ethnic group’.

• Exotic/foreign products

• Organic products

• Can also include minority groups’ products:

– Disabled people
– Children
– Teenagers
– Seniors…
 Types of ethnic/exotic products

• Food
• Clothes
• Accessories & jewels
• Cosmetics
• Hair products
• Furniture
• Decor
• Others…
 Lecture Outline

 Evolution of marketing concept

 Core concepts of marketing
 Marketing tools

 Marketing environment
 Discussion

• According to you, what were the key

marketing innovations of the last 30
years ?
How can we define marketing?
 Exercise
Definition of marketing?

• You’re attending a business diner and the subject of

the discussion is about the new marketing
management policies

⇒How would you define marketing?

 Marketing & Sales Concepts

Starting
point Focus Means Ends

Existing Selling & Profits through

Company promoting Sales volume
products

The selling concept

Customer Integrated Profits through

Market needs marketing Customer satisfaction

The marketing concept

 Definition

• American Marketing Association (AMA)

«Marketing is the process of planning and executing

the conception, pricing, promotion, and distribution of
goods, ideas, and services to create exchanges that
satisfy individual and organizational goals.»
 History of Marketing Thought

First
Bartering 1800
Début 1900
Marketing
College courses
is not economics
In distribution

1930
1960
First marketing
Marketing
theories
research
1970
1980 à 1990
Becomes a major
Business fonction Focus on customer
& external environnement

Michael R. Czinkota and Masaaki Kotabe, Marketing Management, 2nd Edition

 Production Marketing Strategies
Main issues

• Products are costly

• Demand is bigger than supply’s
potential
Ford T

Price : $ 825 on 1st October 1908

Productivity in 1908 : 12H et 8 minutes to assemble a Ford T
Productivity in 1980: 2 H et 35 minutes

Slogan : My customer can choose the colour of his car… as long as it’s black!
 Lecture Outline

 Evolution of marketing concept

 Core concepts of marketing
 Marketing tools

 Marketing environment
 Core Marketing
Concepts
Needs,
Needs,wants
wants&&demands
demands

Products,
Products,services
services
Markets
Markets &&experiences
experiences

Exchange,
Exchange,transactions Value,
transactions Value,satisfaction
satisfaction
&&relationships
relationships &&quality
quality

Source: Principles of Marketing. by Kotler, Armstrong, Saunders and Wong

 Needs, wants & demands

Demands
Needs backed up by
purchasing power & resources

Desires
Desire for a particular product used to satisfy a need and
influenced by culture, society & personality

Needs
Difference between a consumer’s actual
state & desired state:

• psychological needs
• physiological needs
 Maslow’s Hierarchy of Needs

Mobile phones Drugs

Show that you’re successful

Self-actualization
New molecules
Ex: DHEA, Viagra
Esteem
Ex: for young people

Love/Belonging
Be reachable everywhere Vaccines, vitamins,
Safety Sleeping pills

Physiological Ex: diabetic

 What can you satisfy customers’
demands & needs?

• Products – Anything that can be offered to a market to satisfy a need or a

want

ex. People, places, organizations

• Services – Activities or benefits offered for sale, that are essentially intangible
and don’t result in the owing of anything

ex. Banks, airflights, hair cuts, hotels.

 Reliable equipment
Reasonable price
On time delivery
Financing possiblities

Renault
Attentive after sales service
Customer
company
trucks

Profitable price
On time payment
 Needs or recognition of a
problem?

Desired state
A Need appears :
No more bread…
Television doesn’t work…
An opportunity arises :
The flat is too small…
ADSL allows you…
Friends use make-up…
With red fruit…
Why pay more…
The real luxury…

Actual state

Source : Solomon, 1996

 Differences between Products &
Benefits
PRODUCTS BENEFITS

• Physical attributes • What customer wants

• Example: 2 mm drill • Example: a 2mm hole

“Customers don’t buy products,

They seek to acquire benefits”
Michael R. Czinkota and Masaaki Kotabe, Marketing Management, 2nd Edition
 What is marketing ?

 Delivery of customer satisfaction at a

profit

 Managing profitable customer

relationships

 Attracting new customers

 Retaining actual customers

 Marketing doesn’t amount to « sales » or «

advertising »
 What is a market?

Economic definition Marketing definition

Place where buyers and sellers Potential & actual customers
meet to exchange their products of a product
 Definition of a Market

A market can be defined according to a product or

a product line range in given time at a given place.

A market is made of all actors

influencing consumption patterns.
 Why people buy products?

• Three basic reasons

– To satisfy needs

– To solve problems

– To make themselves feel good

 Lecture Outline

 Evolution of marketing concept

 Core concepts of marketing
 Marketing tools

 Marketing environment
Difference in terms of marketing strategy?
In terms of Mix?
 Strategic Marketing
General Procedure
Segmentation Competitors’
Analysis

Resources & Capabilities

Choice of Choice of
Target market A difference

Chosen position

Implementation of
Marketing mix

Perceived position

Source : Marion et al, 2003

 Segmentation Targeting Positioning

What is market segmentation ?

Dividing a market into different customers groups :

Each group is composed of The groups have to be as

buyers with very similar distinctive as possible and
needs, characteristics or might require separate
behaviour products or mixes

In using pertinent
segmentation criteria
 Shampoo Market

• Segmentation according to the demand

- according to the socio-demographic criteria (age, sexe, gender,
profession, social class…)
- According to the type of hair (fine, greasy…)
- Purchase location (hairdresser’s, supermarkets…)

• Segmentation by benefit required (volume, antidandruffs, aging hair…)

⇒ Helps to describe the customers (qualitatively & quantitatively)

⇒ ex: women aged 50 years + and buying their shampoo at the

hairdresser’s
Segmentation Targeting Positioning
What is market targeting ?

Choose one or several segment(s)

According to
According to its
its According to
According to the
the
potential :: firm’sstrenghts.
firm’s strenghts.
potential
Volume Resources,
Resources,
Volume Capabilities ::
Value Capabilities
Value Patent
Growth Patent
Growth Technology
Technology
Revenue
Revenue Brand
Brand
…… Know-how
Know-how
…
…
 Target Market – Choice of products
Attractiveness-strenghts Matrix

Ex. : Mobile Phones

Segment’s attractiveness

Professionnals

Young People

Show-offs

Firm’s strenghts
Source : Marion et al, 2003
 Segmentation Targeting Positioning

Market Positioning

‘ Arranging for a product, a service, a company, an

institution or even an individual, a distinctive and desirable
place relative to competing products in the mind of the
target markets. Positioning is not what you do to a product.
Positioning is what you do in the mind of the prospect. What
matters is how potential buyers see the product. ‘

Source : Ries & Trout, 1981

 Positioning : 2 examples

‘Actimel is a new way for the whole family to start

their morning which helps to reinforce the body’s
natural defense mechanisms’

‘Pouss’Mousse is a new line of modern soaps

which allows to clean one’s hands in an amusing way
for the entire family’
 Implementation of target positioning
The marketing mix

Product

Price 5€ 20 €

Place Supermarkets Drugstores

Promotion
Ikea desired positioning

⇒Vision: a good product range of designed home

furnishing products sold at Ikea stores only at a
reasonable price.

⇒Desired market positioning: « IKEA offer

a
wide range of well designed, functional
home furnishing products at prices so low
that as many people as possible
(especially young people) will be able to
afford them. »
 Marketing Mix
Positioning at IKEA

• Product : an extensive & coherent product range. Flat-pack

furniture, functional and appealing, good quality and
reasonably priced (« democratic design »)

• Price: excellent value for money

• Distribution: IKEA stores are located at the outskirts of

towns (first Show rooms)

• Communication: catalogue (main marketing tool)+

advertising campaigns (billboards) + TV ad
 Marketing-Mix

Communication Mix
Product Mix Physical distribution
Advertising
Supplies
Product line range Price Mix Sales catalog
Inventory
Design concept Field sales force
Storage
Color appeal Price structure Telephone sales
Transportation
Style Payment terms Public relations
Warehousing
Package Costs Direct mail
Distribution channels
Brand name Sales promotion
Retailers
Service function Premiums & discounts
Distributors
Warranties Merchandising
Wholesalers
Research
Export/import
Electronic interaction
 Nespresso brand positioning

Leader in the capsule coffee market, Nespresso intends to

redefine the way coffee is drunk at home, as well as in
offices, restaurants and cafés. The idea is to give the
consumers the opportunity to drink an excellent coffee.
 Nespresso: What else?

• Product policy
- Selection of the best coffee beans
- Technological innovation to allow a high quality blend
- Accessories & peripheric services
- Strong design

• Pricing policy
- Coffee marchine from € 179 to €1,749, & capsules at 33c

• Distribution: exclusive

• Communication
- A prestigious ambassador
- Club Nespresso
 Marketing strategy
& environment

Laurence Cogan
 Situation Analysis &
Strategic Choices
External analysis
opportunities, threats, trends
uncertainties & strategic choices

- Opportunities
- Threats
Identification
Of Selection
Strategic of the best
options strategy
Internal analysis
strenghts, weaknesses, problems
constraints & strategic options

- Strenghts
- Weaknesses
 Marketing Diagnostic Procedure

MACRO

EXTERNAL MICRO INTERNAL

Goals MIX Variables

O T S W
MARKET DIAG. INT. DIAG.

DIAGNOSTIC
 Organization’s environments
General Specific environment
Global Environment Environment Microenvironment

Deregulation

Technological
Natural
Political Publics Current
competitors
Suppliers
Organization Buyers
Legal Intermediaries Potential
Economic
competitors

Demographic Sociocultural

Privatisation

The environment is made of actors and forces affecting the management’s capacity
to develop and maintain a competitive advantage and successful relationships with
its customers.
 Company’s specific
environment
Competitors
Competitors
Suppliers
Suppliers
Intermediaries

Intermediaries

Intermediaries
Competitors
Competitors Customers
Competitors
Competitors
Markets

Intermediaries
Suppliers Suppliers
Competitors
Competitors

The micro-environnement (specific environment)

Forces that affect directly the decisions and actions of a company
Source: Marketing: An Introduction, by Kotler & Armstrong
 Marketing’s Micro-environnement

 Customers – Those who purchase a company’s goods or services

 Competitors – Those who serve the target market with similar products or
services against whom a company must gain a competitive advantage

 Suppliers – Those who provide the resources necessary to produce goods

and services – an important link in the “value delivery system”

 Intermediaries – Help the company promote, sell, distribute goods to the final
buyers (marketing & financial)

 Publics – Any group that perceives itself having an interest in a company’s

ability to achieve its objectives

Source: Marketing: An Introduction, by Kotler & Armstrong

 Company’s general environment

Demographic
Demographic

Cultural
Cultural Economic
Economic

Political
Political Natural
Natural
Technological
Technological

The Macro-environnement (general environnement)

Forces that affect directly the microenvironnement and indirectly the
decisions and actions of a company
Source: Marketing: An Introduction, by Kotler & Armstrong
 Contents of a Marketing Plan
Executive Summary
Quick review of plan for quick management review

Current Marketing Situation

Audit of market, product, competition & distribution

SWOT Analysis
Key strenghts, weaknesses, opportunities & threats

Objectives and Issues

Objectives in terms of sales, market share and profits

Marketing Strategy
Broad approach to achieve the plan’s objectives

Action Programs
What will be done, by whom, when it will be done and how much it will cost

Budgets
Profit & loss statement that forecast the financial outcomes of the plan

Controls
How the program of the plan will be monitored?
Laurence COGAN ESC Dijon
Questions???