2
Foundations of Marketing -- BSAD 231
An Overview of the Twenty
"Thinking and Acting Like a Marketer" Modules
This Foundations of Marketing course 'textbook' contains 20 modules and about 135 pages. These 20 modules introduce: the process of marketing management and planning; the process of being analytical; the tools of marketing numeracy … the ability to "crunch the numbers"; and,
the process of communicating effectively … particularly via case analyses, memos and reports.
The modules hang together as follows:
Module 1 Module 2 Module 3
Introducing Marketing Marketing Planning Researching Your
and the Marketer and Analysis Marketplace
Module 4
Conducting a Size Up
(Analysis ® Challenges)
Module 5 Module 6 Module 7 Module 8
Sizing Up Sizing Up Sizing Up Portfolio
The the the Analysis
Organization Marketplace Broader
Environment
Module 9
Crafting Marketing Strategy
(Challenges ® Thrusts)
Module 10 Module 11 Module 12 Module 13 Module 14
Selecting Developing the Developing Developing Developing
Target Markets Product:Service Pricing Place/Distribution Promotional
And Market Strategy Strategy Strategy Strategy
Positioning
Module 15 Module 16 Module 17
Product:Market Marketing & Marketing
Growth Matrix the Internet Internationally
Module 18 Module 19 Module 20
On Being Keeping Score Communicating
Analytical - Using Financial Your Ideas
Constructing Data Effectively
an Argument
The twenty modules introduce about 100 core concepts, 20 planning and communication processes and 15 analytical and mathematical tools of marketing. These concepts, processes and tools of marketing are generic. That is, they are as applicable to Highliner brand fish sticks as they are to clothing, automobiles, filing cabinets, computers, vacation destinations, political candidates, causes and issues.
Most first courses in marketing are heavy on concepts and theory. They employ principles of marketing textbooks that tend to be long and seem to believe that “if 10 new concepts is good, 20 is better”. On the other hand, these textbooks tend to be loaded with contemporary examples, well organized, well written and well illustrated so they have much to offer for introductory courses taught in the traditional way.
This course is different. It emphasizes “how to” process learning over “what is” content learning. It provides many opportunities to develop:
• Your analytical abilities These include finding and using evidence to draw conclusions -- to construct an argument and persuade others of the soundness of your reasoning, and to make tentative recommendations based on the accumulated evidence and conclusions.
• Your marketing numeracy This includes finding, “crunching” and using numbers and basic mathematical tools to help make decisions, and
• Your communications skills These include writing memos and reports and making presentations – as appropriate.
This course introduces terminology, concepts and theory only to the extent that a smart marketer requires them. Note though: a solid grasp of these core concepts is critical to being an effective marketer. Thus, we expect you to work as hard at building your conceptual knowledge as your applied skills and abilities.
Figure 1 presents an overview of the complete Thinking and Acting Like a Marketer process. It integrates the marketing management process with the process of ‘being analytical’. In effect, Figure 1 depicts the BSAD 231 course. But, don’t throw it out when the course is over because it depicts marketing reality as well. You’ll be able to use the framework in Figure 1 throughout the rest of your studies here … any beyond.
Figure 2 on pages four and five identifies the core concepts, processes and analytical tools of marketing employed in this course. For your convenience they have been grouped. Look them over carefully. They are your keys to success. All concepts and tools are defined or otherwise elaborated in the modules that follow so don't panic if the list appears a bit daunting.
The 20 modules in this short book are supplemented by the companion Cases and Exercises in Marketing. Together they provide all the material necessary for you to be thinking – and acting – like a marketer by the end of the course.
Figure 2: Core Concepts, Processes and Analytical Tools of Marketing
2
Core Marketing Concepts: Marketing
Exchange
Transaction
Product
Market
WIIFM
Customer oriented
Market driven
Marketing concept
Customer service
Customer satisfaction
Customer value
Relationship marketing
The marketing mix (the 4Ps)
Planning Concepts:
Marketing planning
Analysis
The marketplace
The broader environment
Challenges
Thrusts
A.C.T.
Problems
Opportunities
Marketing objectives
Marketing resources
Marketing strategy
Marketing tactics
End-user groups
Target markets
Competitive advantage
Portfolio analysis
Market positioning
Market penetration strategy
Market development strategy
New product development strategy
Diversification strategy
Analytical Concepts:
Size-up
Situation analysis
SWOT analysis
Information
Evidence
Facts
Opinions
Calculations
Percentage comparisons
Weighted average
Frequency distribution
Percentage change
Percentage point change
Reasonable reasoning
If… then… reasoning
Sensitivity analysis
Conclusion
Recommendation
Implications of implementation
Marketing Research Concepts:
Marketing information system
Marketing intelligence gathering
Internal records and results
Research objectives
Syndicated services
Secondary data
Syndicated research services
Single source research suppliers
Primary data
Observation research
Exploratory research
Conclusive research
Focus group research
Depth interview research
Case study research
Survey research
Controlled experiment research
Population
Sample
Representativeness
Generalizability
Database marketing
Datamining
Product Strategy Concepts:
Goods
Services
Rented-goods services
Owned-goods services
Non-goods (personal) services
Perishability, intangibility, inseparability, variability
Not-for-profit organizations,
places, people, causes, issues
Product item, line, category, mix
The new product development process
Product life cycle
Promotional Strategy Concepts:
Advertising
Sales promotional activities
Public relations
Personal selling
Integrated marketing communications (IMC)
Hierarchy of communication effects
Pricing Strategy Concepts:
Retail selling price
Wholesale selling price
Manufacturer's selling price
Trade margins
Markup
Contribution
Break even point
Price discounts
Price allowances
Place Strategy Concepts:
Place strategy
Physical distribution strategy
Channel management strategy
Middlemen
Wholesaling middlemen
Distributor, broker, agent
Retailing middlemen
Dealer, reseller
Communication Concepts:
Consideration
Control
Coherence
Clarity
Conciseness
Correctness
Internet Marketing Concepts:
Intranet
e-tailer
online marketing
online merchant
delivery specialist
banner ads
button ads
~ Continued on next page ~
The Ability to Undertake the Processes of:
Marketing planning
Being customer oriented and market driven
Identifying marketing challenges
Setting marketing objectives
Conducting a size up or situation analysis
Conducting a marketing research project
Segmenting a market
Selecting one or more target markets
Conducting a company analysis
Conducting a buyer analysis
Conducting a market analysis
Conducting a competitor analysis
Conducting an environmental analysis
Pricing a product
Using the Internet to market a product
Writing a memo
Writing a report
Constructing tables and exhibits
Running effective group meetings
Presenting your ideas in class (as appropriate)
Making a formal presentation (as appropriate)
The Ability to Employ these Analytical Tools Correctly:
Using percentages to compare numbers
Breaking aggregate results down "per" and "by"
Calculating and using weighted
averages
Creating indexes (indices)
Calculating break even point
Calculating payout on new product
Calculating and using markups
Conducting vertical analyses of income statements
Conducting horizontal analyses of data over time
Using sensitivity analysis
Using frequency distributions
Using "if…then…" reasoning
Visioning or visualizing a marketplace
Calculating share of market
Distinguishing between percentage and percentage point chang
2
Foundations of Marketing -- BSAD 231
Module 1: Introducing Marketing and the Marketer
Module 1, Introducing Marketing and the Marketer, contains three sections. The first section offers a managerial perspective on marketing and introduces several core concepts of marketing. The second section provides a brief overview how marketers think and act. It introduces being customer oriented and market driven, being an enthusiastic champion, being analytical and being able to reason reasonably to extend a marketing analysis when important factual evidence is lacking. Most of the BSAD 231 course is built around developing your knowledge and skills in these areas. The third section presents a short quiz to help you determine if you possess the characteristics of a successful marketer.
1.1 Marketing: Core Perspectives and Concepts
In these modules we regard marketing as a set of activities designed to:
• provide solutions to people’s consumption problems,
• satisfy their needs and wants, and
• deliver bundles of benefits.
Phrased another way, marketing is all about understanding and facilitating the exchange process whereby products [tangible goods, intangible services, not-for-profit groups, other organizations, people, places, causes, ideas] are acquired [consumed, used, attained, attended to, understood] by markets [customers, consumers, buyers, resellers, clients, users, participants, members, fans, the audience].
In other words, a product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. A market is a person -- or an organization -- with needs or wants to be satisfied and, in the context of commercial transactions, with money to spend and a willingness to spend it. The act of exchange is referred to as a transaction. A transaction is the tangible manifestation of the exchange process. As you can see, there are many different types of products and many different types of markets. The scope of marketing is far broader than toothpaste, beer and corn flakes … and, far broader than buying goods and services for oneself or one’s family.
The relationships among marketing, the exchange process, products and markets look something like:
Marketing
↓ ↓ ↓ ↓ ↓
The Exchange Process
Market(s) Product(s)
(Transactions)
Marketing may also be regarded from an academic perspective as an applied social science. The marketing discipline – the formal study of marketing activities, the exchange process and consumption – is about 100 years old. Thousands of researchers around the globe – both academics and practitioners – devote their careers to understanding, describing, classifying, explaining and predicting marketing activities and their impacts on consumption. The marketing discipline supports dozens of respected academic journals and hundreds of professional and trade magazines and web sites. This course does not take an academic, social science perspective on
marketing but it is important to realize such a perspective exists because the results of this on-going “basic research” influences much “practical application”.
Taking the definition of a market a step further, we may classify these persons and organizations into various end-user groups or segments of the overall market. Smart marketers always determine whether or not an adequate market exists for their products within various, broadly-defined end-user groups. In fact, a smart marketer's most basic examination of market segmentation usually starts with some analysis of sales, or potential sales, in each broadly defined end-user market. Here is one common way marketers classify potential end-user groups:
• The consumer market, also referred to as the retail market or the household market … families buying for their own consumption,
• The institutional market including hospitals, schools, restaurants, prisons, day care centers, universities,
• The industrial market including harvesters of natural resources, processors and manufacturers,
• The commercial market including business services, retailers and wholesalers,
• The not-for-profit or non-governmental organizations (NGOs) market,
• The government market including federal, provincial and municipal departments and agencies,
• The agricultural market … agribusiness markets, and
• The export market or, international market.
Often a marketer's first cut at segmenting the total market into one or more similar groups of potential customers is taken by asking questions about the needs, wants, problems and relative sizes of these eight end-user groups. Module 4 introduces several more specific bases for segmenting markets into two or more meaningful groups.
In the early days of marketing the focus was on production and selling. The goal was profit through volume. In the second half of the twentieth century, for many organizations, the focus has shifted from production and selling toward customers and the marketplace. The goal has shifted to profit through customer satisfaction. Now it's customer patronage over production and marketing over selling.
This approach or philosophy is called the marketing concept. Organizations that have adopted the marketing concept see creating customers as more important than creating products and see marketing as the central integrating business function. Everything the organization does requires addressing the question, "How will this affect the customer and the satisfaction of her needs and wants?"
Here are a baker's dozen factors controlled by the marketer that may affect customer satisfaction:
• Friendly employees • Service quality
• Knowledgeable employees • Overall good value
• Helpful employees • Quick service
• Courteous employees • Returns policies
• Billing accuracy • Hours of operation
• Billing clarity • Ease of obtaining information
• Billing timeliness
Are you able to identify another five factors?
As you can imagine, it is not easy to get everyone in the organization thinking and acting like marketers and being customer oriented and market driven. At a marketing workshop for bankers some years ago, one customer service representative (teller) commented,
"If I wasn't interrupted by customers all day long, I could get
my job done a lot better."
This is merely one example of the mindset that has yet to discover the wisdom of the marketing concept. This mindset is not exclusive to front line employees. It is equally prevalent among owners, presidents and top management. No doubt you have your own favourite examples of such thoughtless, product-centered attitudes and behaviour.
Organizations that have embraced the marketing concept as a philosophy of doing business also have led the way in implementing customer service programs, adding value to their products and attempting to establish long-term relationships with their customers.
Some organizations have a passion for customer service. They aren't satisfied until the customer is. They understand "word-of'-mouth" advertising and the importance of a positive reputation. They do everything possible to avoid screw-ups. They invest heavily in employee training and systems to ensure "the right products arrive at the right place at the right time". They dismiss bullies who demonstrate insensitivity toward customers. As evidence of this trend, you have probably seen hundreds of advertisements that stressed customer service as a means of differentiating one company over another.
Organizations with a passion for customer service are constantly on the lookout for ways to add value to their products. They understand consumers assess the extent to which various competing products will satisfy their particular set of needs, the cost of obtaining each product, and thus the perceived value each offers relative to the others. Putting perceived value in pricing terms: "The worth of a thing … is what it will bring". That is, the perceived value of a product from the customer's point of view is at least as important -- if not moreso -- than its cost in determining the product's price. Organizations that aggressively seek ways to add value to their products stand the best chance of increasing relative perceived value.