Session 1 Fundamentals of Marketing Management

Question 1

What is Marketing and Marketing Management?

Answer 1

Marketing is about identifying and meeting human and social needs.

Marketing Management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

Question 2

What are the five basic markets in the Marketing Exchange?

Answer 2

(1) Government Markets, (2) Resource Markets, (3) Consumer Markets, (4) Intermediary Markets, (5) Manufacturer Markets

Question 3

What is a market?

Answer 3

A Market was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who negotiate transactions that involve a particular product or product class.

Question 4

What does the Marketing Exchange describe?

Answer 4

In the Illustration, a box at the center labeled Government Markets is connected to four boxes on four sides via arrows.

The box at the top is labeled Resource Markets.
The box on the right is labeled Consumer Markets.
The box at the bottom is labeled intermediary Markets.
The box on the left is labeled Manufacturer Markets.

The clockwise flow from the top is as follows: Money from Resource Markets -> moves to Consumer Markets -> moves to Intermediary Markets -> moves to Manufacturer Markets -> goes back to Resource Markets.

Question 5

What are the four major market forces?

Answer 5

Technology - Globalization - Physical Environment - Social Responsibility

Question 6

What are the three market outcomes?

Answer 6

New consumer capabilities
New company capabilities
New competitive environment

Question 7

What are the four fundamental pillars of holistic marketing?

Answer 7

Relationship marketing, integrated marketing, internal marketing, performance marketing

Question 8

What is the concept of holistic marketing?

Answer 8

There are four broad components characterizing holistic marketing: relationship; integrated; internal and performance marketing.

Increasingly, a key goal of marketing is to develop deep, enduring relationships with people and organizations that directly or indirectly affect the success of the firm´s marketing activities.

Marketers must create prosperity among all these constituents and balance the returns to all key stakeholders. To develop strong relationships with them requires understanding their capabilities and resources, needs, goals and desires.

Question 9

What is relationship marketing?

Answer 9

Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business

Four key constituents for relationship marketing are customers, employees, marketing partners (channels, suppliers, dealers, agencies) and members of the financial community (Shareholders, investors).

The ultimate outcome of relationship marketing is a unique company asset called marketing network, consisting of the company and its supporting stakeholders with whom it has built mutually profitable business relationships.

The operating principle is simple: Build an effective network of relationships with key stakeholders, and profits will follow.

Question 10

What is integrated marketing?

Answer 10

Integrated marketing devises marketing activities and programs that create, communicate, and deliver value such that “the whole is greater than the sum of its parts”.

This requires that marketers design and implement each marketing activity with all other activities in mind.

Question 11

What is performance marketing?

Answer 11

Performance marketing is about financial stability, environmental and social impact. Therefore, performance Marketing requires understanding of the financial and nonfinancial returns to business and society from marketing activities and programs. (Example Ben and Jerry)

Question 12

What is internal Marketing?

Answer 12

Internal Marketing is the task of hiring, training, motivating employees who want to serve customers well.

Question 13

Which marketing philosophies are there?

Answer 13

1) The production philosophy (production + product philosophy)
2) The selling philosophy
3) The marketing philosophy
4) The market value philosophy

Question 14

What is the production philosophy?

Answer 14

The production philosophy comprises the production and product concept.

The production concept is one of the oldest concepts in business. It holds that consumers prefer products that are widely available and inexpensive.

The product concept proposes that consumers favor products offering the highest quality, the best performance, or innovative features.

Question 15

What is the selling philosophy?

Answer 15

The selling philosophy holds that consumers and businesses, if left alone, will not buy enough of the organization´s products.

Question 16

what is the marketing philosophy?

Answer 16

the marketing philosophy emerged in the mid 1950s as a customer-centered, sense-and-respond philosophy. -> The job of marketing is not to find the right customers for your products but to develop the right products for your customers.

Question 17

what is the market value philosophy?

Answer 17

the market value concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their interdependence.

The value-based view of marketing acknowledges that everything matters in marketing - and that a broad, integrated perspective is often necessary.

Question 18

How does the strategic planning process look like?

Answer 18

Corporate planning -> Business Unit planning -> Offering planning

Corporate Headquarters is responsible for designing a corporate strategic plan to guide the whole enterprise. It makes decisions on the amount of resources to allocate to each business unit, as well as on which businesses to start or eliminate.

Each business unit develops a plan to carry that business unit into a profitable future.

Finally, each market offering involves a marketing plan for achieving its objectives. Companies undertake four planning activities:
1) defining the corporate mission
2) building a corporate culture
3) establishing strategic business units
4) assigning resources to each strategic business unit

Question 19

What is a mission?

Answer 19

A mission is a clear, concise, and enduring statement of the reasons for an organization´s existence. Often referred to as its core purpose, a company´s mission is a long-term goals that provides company employees and management with a shared sense of purpose, direction and opportunity.

Question 20

How can one define a mission?

Answer 20

To define its mission, a company should address Peter Drucker´s classic questions:
- What is our business?
- Who is the customer?
- What is of value to the customer?
- What will our business be?
- What should our business be?

These simple-sounding questions are among the most difficult a company will ever face. Successful companies continuously ask and answer them.

Question 21

What characteristics do good mission statements have?

Answer 21

1) They focus on a limited number of specific goals.
2) They stress the company´s major policies and values.
3) They define the major markets that the company aims to serve.
4) They take a long-term view -> The corporate mission defines the ultimate strategic goal of the company; it should be changed only when it ceases to be relevant.
5) They are as short, memorable, and meaningful as possible -> Three-to-four-word mantras are enough.

Question 22

What is a corporate culture?

Answer 22

Corporate culture can be defined as “the shared experiences, stories, beliefs, and norms that characterize an organization.”

Creating a viable corporate culture is often the key to market success (example southwest airlines)

Question 23

What is a strategic business unit?

Answer 23

A strategic business unit (SBU) has three characteristics:
1) It is a single business, or a collection of related businesses, that can exist separately from the rest of the company.
2) It has its own set of competitors.
3) It has a manager responsible for strategic planning and profit performance, who controls most of the factors affecting profit.

Strategic business units make up a company´s portfolio.

Question 24

What is a company´s portfolio?

Answer 24

Strategic business units make up a company´s portfolio. Based on the diversity of the individual strategic business units within the portfolio, these units can be defined as a specialized or diversified.

-> A specialized portfolio involves SBUs with fairly narrow assortments consisting of one or a few product lines

-> A diversified portfolio involves SBUs with broad assortments containing multiple product lines. The primary rationale for a diversified business mix is to take advantage of growth opportunities in areas which the company has no presence.

Question 25

What is portfolio management?

Answer 25

Portfolio Management focuses on two types of factors:
1) Opportunities presented by a particular industry or market.
2) The company´s resources (strategic assets, market share, competencies) which determine its ability to take advantage of the identified opportunities (size, growth, profitability)

Question 26

How do you create value for target customers, collaborators, and company stakeholders?

Answer 26

In order to create value for target customers, collaborators, and company stakeholders, it is necessary for a company to clearly identify the target market in which it will compete and to design an offering that will deliver a meaningful set of benefits to target customers -> These activities encompass the two key components of a company´s business model: strategy and tactics

Question 27

What are the key components of a company´s business model?

Answer 27

A carefully chosen target market and a well-crafted value proposition provide the foundation of the company´s business model and serve as the guiding principles for determining the tactical decisions that define the company´s offering.

Strategy involves choosing a well-defined market in which the company will compete and determine the value it intends to create in this market.

Tactics, also called marketing mix, make the company´s strategy come alive: They define the key aspects of the offering developed to create value in a given market. Tactics shape everything from the offering´s benefits and costs to the means by which target customers learn about the offering

Question 28

What is market offering?

Answer 28

The market offering is the actual good that the company deploys in order to fulfill a particular customer need.

Question 29

What are marketing tactics?

Answer 29

Marketing tactics can be regarded as a process of designing, communicating, and delivering customer value.

Question 30

What is the 3V market value principle?

Answer 30

The market value principle optimizes customer, collaborator, and company value and is the basis of market success.

Failure to create superior value for any of the three market entities inevitably leads to an unsustainable business model and dooms the business venture.

The ellipse at the top reads company value, on the left customer value and on the right collaborator value. The intersecting point of the three ellipses is labeled OVP = Optimal Value Proposition.

Question 31

What is the seven tactics marketing?

Answer 31

Managers have the seven tactics marketing at their disposal to develop an offering that creates market value: product, service, brand, price, incentives, communication, and distribution.

Also called the marketing mix, these seven attributes represent the combination of activities required to transform the market offering´s strategy into reality.

Question 32

What is the market value map?

Answer 32

The ultimate purpose of the value map is to facilitate the development of a viable business model that can enable the company to achieve market success.

The market value map can be thought of as a visual representation of the key components of a company´s business model and the ways in which they are related to one another. -> There are three boxes:

1) One is labeled Target Market (Strategy):
- Customers: What customer needs does the company fulfill?
- Collaborators: What other entities will work with the company to fulfill the identified customer need?
- Company: What are the company´s resources that will enable it to fulfill the identified customer need?
- Competition: What other offerings aim to fulfill the same need of the same target customers?
- Content: What are the sociocultural, technological, physical aspects of the environment?

2) One is labeled Value Proposition (Strategy):
- Customer Value: What value does the offering create for target customers?
- Collaborator Value: What value does the offering create for the company´s collaborators?
- Company Value: What value does the offering create for the company?

3) One is labeled Market Offering (Tactics):
- Product: What are the key features of the company´s product?
- Service: What are the key features of the company´s service?
- Brand: What are the key features of the offering´s brand?
- Price: What is the offering´s price?
- Incentives: What incentives does the offering provide?
- Communication: How will target customers and collaborators become aware of the company´s offering?
- Distribution: How will the offering be delivered to target customers and collaborators?

Question 33

What is the action plan?

Answer 33

The action plan articulates the company´s goal and delineates a course of action to reach this goal. Further, it is the backbone of marketing planning.

Question 34

How is an action plan developed?

Answer 34

Five key activities guide the development of an action plan. These activities include: setting a goal, developing a strategy, designing the tactics, defining an implementation plan, and identifying a set of control metrics to measure the success of the proposed action.

Question 35

What is the G-STIC approach?

Answer 35

Five key activities guide the development of an action plan. These activities include setting a goal, developing a strategy, designing the tactics, defining an implementation plan, and identifying a set of control metrics to measure the success of the proposed action.

The G-STIC (Goal- Strategy- Tactics- Implementation- Control) framework comprises these five activities and acts as a lynchpin of marketing planning and analysis.

Question 36

What are the individual components of the G-STIC approach to marketing planning?

Answer 36

Goals, Strategy, Tactics, Implementation, Control

-The goals describes the company´s ultimate criterion for success; it specifies the end result that the company wants to achieve.

• The strategy provides the basis for the company´s business model by delineating the company´s target market and describing the offering´s value proposition in this market.
• Tactics carry out the strategy by defining the key attributes of the company´s offering.
• Implementation consists of the processes involved in readying the company´s offering for sale.
• Control measures the success of the company´s activities over time by monitoring the company´s performance and the changes in the market environment in which the company operates.

Question 37

What is a marketing audit?

Answer 37

A marketing audit is an examination of the marketing aspect of an offering or a company´s marketing department. It is intended to identify overlooked opportunities and problems areas and to recommend a plan of action to improve the company´s performance.

An effective marketing audit should be comprehensive, systematic, unbiased, and periodic.

Question 38

What is the difference between marketing audit and marketing plan?

Answer 38

The key difference between marketing audit and the marketing plan is that the marketing plan faces forward toward the future and plots a course of action that the company should undertake.

The marketing audit consolidates the company´s past, present, and future by examining the company´s current and past performance to determine the right course to ensure its future.

Question 39

What are reasons to update a company´s marketing plan?

Answer 39

A common reason for updating a company´s marketing plan is in response to changes in the target market.

1) Changes in the demographic, buying power, needs and preferences of target customers.
2) Competitive Environment; competitor, price cuts, aggressive advertising campaign
3) Collaborators; increased target margins
4) Within the company; loss of strategic assets and competencies
5) In marketing context; economic recession, new regulations, new technology