01 MM21c4

© Noel Capon, 2016. All rights reserved.
PRESENTATION 1 OF 26 / 1
CHAPTER 1
Introduction to
Managing Marketing
OPENING CASE: STARBUCKS
What Does Marketing Mean Today?
© Noel Capon, 2016. All rights reserved. PRESENTATION 1 OF 26 / 2
• Marketing’s critical role in today’s business environment

is to maximize shareholder value.
• Success in today’s marketing requires the firm to deliver

customer value.
• Marketing as a philosophy provides guidance on how the

firm should focus on attracting, retaining, and growing
customers.
The Fundamental Business Model
Shareholder Value
Organizational Survival and Growth
Current and Potential Profits

Competitor
s
Attract, Retain, and Grow Customers
Competitor
s
Customer Value
Company
Marketing as a Philosophy
Internal Firm Orientation

Marketing is the guiding force
for the entire organization
External Firm Orientation
Internal and External Orientations

Internal External
Orientation Orientation
• Operations • Customers
• Sales • Competitors
• Finance • Intermediaries
• Technology • Suppliers
• Environmental
forces
External Orientation
Internal External
Orientation Orientation
• Do you treat customers as assets?

• Are you responsive to customer requests?
• Are you clearly focused on beating competitors?
• How quickly do you react to environmental changes?
• How well do your functions and business units work
together to deliver customer value?
External Orientation Philosophy
The externally oriented firm:

• Welcomes change
• Internalizes marketing as a philosophy
• Strives to reduce inter-functional boundaries
Lower prices
Reduce unit costs Volume increases

Six Marketing Imperatives
1. Determine and recommend

which markets to address
2. Identify & target market
segments
Six Marketing 3. Set strategic direction and
Imperatives positioning
4. Design market offer
5. Secure functional support
6. Monitor & control
Imperative 1: Determine and Recommend
Which Markets to Address
Investment Choices
• Where shall we invest?
• current businesses/markets
• new businesses/markets
• How much/when shall we invest?
• From which businesses/markets shall we:
• disinvest?
• withdraw?
• Roles for marketing
• Identify opportunities
• advise on proposed strategic actions
Imperative 2: Identify and Target Market Segments
Target market segment
Two very different marketing tasks

• Creative and analytic
• Decision focused
Imperative 3: Set Strategic Direction and Positioning
• Set performance objectives (Financial, Process, Learning, Customer)
• Craft the positioning statement
• Address markets in different development stages
• Make critical branding decisions
• Do we have a profitable business model?

Imperative 3: Set Strategic Direction and Positioning
Illustration: The Classic Life Cycle

Imperative 4: Design the Market Offer
• Execute the value proposition
• Design the marketing mix

• Product
• Promotion
• Distribution
• Price
• Variations by market segment
• Implications for other functions

Imperative 5: Secure Support from Other Functions
• Support for design – designing an offer that meets customer needs
• Support for implementation – getting buy-in from within the

company, or ‘internal marketing’
• Organizational devices – where the firm will place its resources to

execute the market offer
Imperative 6: Monitor and Control
• Are we achieving market/financial performance objectives?
• Are functional areas implementing the market offer?
• Are our objectives, strategies, and implementation plans in harmony

with the environment?
The Core Marketing Challenge
Get the Fundamentals Right

• Marketing as a philosophy
• Six marketing imperatives
• Four marketing principles

Four Core Marketing Principles
1. Selectivity and Concentration

Four Core 2. Customer Value
Marketing Principles 3. Differential Advantage
4. Integration
Principle 1: Selectivity and Concentration
• Selectivity
• Concentration
• Concentrate resources towards those targets
Principle 2: Customer Value
The firm must focus on providing value to customers

• Customers do not want your products!
• Customer value should drive product and investment decisions.
• Market and financial performance relates directly to delivering customer
value.
Principle 3: Differential Advantage
Differential advantage is a net benefit or cluster of benefits (value

proposition), offered to a sizable group of customers, which they value
and are willing to pay for, but cannot get, or believe they cannot get,
elsewhere.
Principle 3: Differential Advantage
Differential Advantage:
• Emphasizes competition: customer value is not enough.
• Some advantages are better than others.
• All differential advantages eventually erode – renewing differential
advantage is crucial.
• The firm must be willing to cannibalize its differential advantage.
• A difference is not a differential advantage.
Principle 4: Integration
• The firm must carefully integrate all elements in design and

execution of the market offer.
• Integration in two areas:
• At the firm – functional areas/business units
• At the customer – marketing mix
• Integration requires:
• Agreement on priorities: functions/management levels/business units
• Cooperative working relationships among those designing and implementing the
market offer
• A shared value of serving customers – firm-wide external orientation

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© Noel Capon, 2016. All rights reserved.

• Marketing’s critical role in today’s business environment

• Success in today’s marketing requires the firm to deliver

• Marketing as a philosophy provides guidance on how the

Organizational Survival and Growth

Current and Potential Profits

Internal Firm Orientation

Internal and External Orientations

• Do you treat customers as assets?

The externally oriented firm:

Reduce unit costs Volume increases

1. Determine and recommend

Target market segment

Two very different marketing tasks

• Set performance objectives (Financial, Process, Learning, Customer)

• Craft the positioning statement

• Address markets in different development stages

• Make critical branding decisions

• Do we have a profitable business model?

Illustration: The Classic Life Cycle

• Execute the value proposition

• Design the marketing mix

• Variations by market segment

• Implications for other functions

• Support for design – designing an offer that meets customer needs

• Support for implementation – getting buy-in from within the

• Organizational devices – where the firm will place its resources to

• Are we achieving market/financial performance objectives?

• Are functional areas implementing the market offer?

• Are our objectives, strategies, and implementation plans in harmony

Get the Fundamentals Right

• Six marketing imperatives

• Four marketing principles

1. Selectivity and Concentration

The firm must focus on providing value to customers

Differential advantage is a net benefit or cluster of benefits (value

• The firm must carefully integrate all elements in design and

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