Introduction To Marketing

Introduction to Marketing
Lecturer: Prof. Dr. Alessandro Monti

Email: a.monti@cbs.de
08.09.2015 1
Agenda
1. Marketing Definition and Process

2. Marketing in Context of Corporate Strategies
3. Internal Analysis and Marketing Environment (Micro)
4. Marketing Environment (Macro)
5. Consumer Buying Behaviour I
6. Consumer Buying Behaviour II
7. Market Segmentation
8. Strategic Brand Management
9. Marketing Instruments (Product)
10. Marketing Instruments (Price)
11. Marketing Instruments (Promotion)
12. Marketing Instruments (Place/Distribution)
13. Marketing and Sustainability + Case
14. Exam Preparation
08.09.2015 2
Model of the Marketing Process:
How to satisfy customers profitably
Step 2
08.09.2015 3
Strategy Definition
• A strategy is a plan of action designed to achieve a

specific goal.
08.09.2015 4
Marketing Strategy: Definition
Marketing Strategy
• The marketing logic by which the

company hopes to create customer
value and achieve profitable
customer relationships.
08.09.2015 5
Designing a Customer-Driven Marketing
Strategy
Designing a winning marketing strategy requires

answers to the following two questions:
1. What customers will we serve
(What’s our target market)?
2. How can we serve these
customers best
(What’s our value
proposition)?
08.09.2015 6
Marketing Strategy: Basic „Logic“
Customer/
Market Company
Requirements Strengths
(Environmental (Internal Analysis)
Analysis)
08.09.2015 7
Marketing in context of company
strategies
• On the one hand Marketing follows decisions made

on the corporate level.
• On the other hand Marketing plays a key role in
strategic planning:
– Marketing provides a guiding (market-oriented) philosophy
for the company which focuses on building and
maintaining long-term customer relationships.
08.09.2015 8
Corporate Level Step 1:
Defining the Company Mission
Mission Statement
• A statement of the organization’s

purpose what it wants to
accomplish in the larger
environment.
„Its reason for existence.“
08.09.2015 9
Components of a Mission Statement
Questions a good mission statement should answer:

– What is our business?
– Who is our customer?
– What do consumers value?
(Most important to address)
> Mission statements should be

market-oriented,
not product-oriented.
08.09.2015 10
Examples of Mission Statements
Product-Oriented: Market-Oriented:
• We give people the power to
• We are an online social share and make the world more
network. open and connected.
• We bring inspiration and
• We sell athletic shoes and innovation to every athlete in
apparel. the world. (if you have a body,
you are an athlete.)
• To organize the world´s
• To be the world´s best search
information and make it
engine!
universally accessible and
useful.
08.09.2015 11
Assignment:
Evaluate the following mission statement of the

fictional organic supermarket “Ada´s” against the
criteria previously discussed:
“We sell organic food.”
Rewrite the mission statement!
08.09.2015 12
Assignment:
Evaluate the following mission statement of the

fictional organic supermarket “Ada´s” against the
criteria previously discussed:
• We enable every consumer

to make the world a better place by
supporting organic farming.
• We bring back the good feeling

of eating healthy and sincere food.
08.09.2015 13
Another one…
Product-Oriented:
„We sell locking systems“
08.09.2015 14
Another one…
Product-Oriented:
„We sell locking systems“
Market-Oriented:
„We make the world a safer place“
08.09.2015 15
Setting Company Objectives and Goals
The (long term) mission should be translated into

supporting objectives and goals for the current
period.
For example:
• Reduce rate of customer complaints by xy%
• Increase customer loyalty by xy%
• Increase market share by xy %
• Decrease costs by xy%
• …etc.
08.09.2015 16
Strategic Business Unit:
Definition
Strategic Business Unit (SBU)
• A profit center which focuses on market

offering and market segment. SBUs
typically have a discrete marketing plan,
analysis of competition, and marketing
campaign, even though they may be part
of a larger business entity.
08.09.2015 18
Designing the Business Portfolio
The company must:

– Analyze its current business portfolio and decide
which SBU´s should receive more, less, or no
investment (resource allocation).
– Develop strategies for growth and downsizing that
will shape the future business portfolio (growth
strategies).
Future
Current
08.09.2015 19
Current Business Portfolio Analysis:
The BCG Growth-Share Matrix
Attractiveness
Strength
08.09.2015 21
Example GM
GM´s automotive business portfolio includes:

• Chevrolet
(Low price segment)
• Opel/Holden/Vauxhall/Buick
(Middle price segment)
• GMC
(SUV´s only USA)
• Cadillac/Corvette
(High price segment)
• (Hummer/Saturn/Pontiac/Oldsmobile)
08.09.2015 22
Example: Hummer
08.09.2015 23
The BCG Growth-Share Matrix
Strategies for categories of the BCG Matrix:

– Stars
Invest and build its share!
– Cash Cows
Invest just enough to hold share and keep on
milking!
– Question Marks
Depends on your resources and evaluation…
– Dogs
Divest or sell and use resources elsewhere.
08.09.2015 24
Future Business Portfolio Analysis
When the current Business Portfolio is analysed then

the next question has to be answered how can we
grow further….?
08.09.2015 25
Future Business Portfolio Analysis:
The Product/Market Expansion Grid
08.09.2015 26
Future Business Portfolio Analysis:
The Product/Market Expansion Grid
Market Penetration
– Increasing sales of current products to current market segments
without changing the product
Market Development
– Identifying and developing new market segments for current
company products
Product Development
– Offering modified or new products to current market segments
Diversification
– Starting up or acquiring businesses outside the company’s
current products and markets
08.09.2015 27
Short Assignment
Discuss with your mate to the left the German beer market and
analyse the applied growth strategies. What kind of growth
strategies can you identify? Is there something you would
recommend to them?
Use the Product/Market Expansion Grid as a strategic concept
and give examples!
08.09.2015 28
Strategies for Growth:
08.09.2015 29
Strategies for Growth:
08.09.2015 30
Strategies for Growth
08.09.2015 31
Strategies for Growth
08.09.2015 33
Step 3
08.09.2015 34
Step 3: Constructing an integrated
Marketing Plan and Program - The 4 P´s
The 4 Marketing Mix Instruments:

• Product
• Price
• Place (Distribution)
• Promotion
> The firm must blend each marketing mix instrument
into a comprehensive integrated marketing program.
08.09.2015 35
Integrated Marketing:
Negative Example - Nike
08.09.2015 36
Step 4
08.09.2015 37
Step 4:
Build Profitable Customer Relationships
• The overall process of building and maintaining

profitable customer relationships is called Customer
Relationship Management.
• To build profitable relationships and to create
customer delight the following two concepts are
important:
– Customer Perceived Value
– Customer Satisfaction
08.09.2015 38
Customer Perceived Value:
Definition
Customer Perceived Value
• The customer’s evaluation of the

difference between all of the
benefits and all of the costs of a
marketing offer relative to those of
competing offers.
08.09.2015 39
Example
Value = Benefits - Costs
08.09.2015 40
Customer Perceived Value:
Value = Benefits - Costs
Customer Perceived Value
Total Total
Benefits Costs
Monetary Time
Functional Symbolic Costs Costs
Benefits Benefits
Energy Psychic
Costs Costs
08.09.2015 41
Customer Satisfaction (1/2): Definition
Customer Satisfaction
• The extent to which the product’s

perceived performance matches
a buyer’s expectations.
08.09.2015 42
Customer Satisfaction (2/2):
Dependency between expectations and performance
• If performance is lower than expectations,

satisfaction is low.
• If performance is higher than expectations,
satisfaction is high.
Why is consumer satisfaction of major importance..?:

• Customer satisfaction often leads to consumer loyalty.
• Loyalty transforms into increased sales and profits.
08.09.2015 43
Changing Nature of Relationships
• Customer perceived value

and customer satisfaction
are increasingly influenced
by social communication.
• Therefore the perceived quality of the relationship is

more and more managed by customers.
08.09.2015 44
Customer-Managed Relationships:
Definition
Customer-Managed Relationships
• Marketing relationships in which

customers, empowered by digital
technologies, interact with companies
and with each other to shape their
relationships with brands.
08.09.2015 45
Changing Nature of Relationships:
Marketing Insights
Firms have to react to the new ways of communication by

actively participating in the communication network!
08.09.2015 46
Step 5
08.09.2015 47
Step 5: Capture Value, but…
• Not every satisfied customer is profitable.

• Create a balance between the value of a customer
and the cost of achieving satisfaction.
• This might result in getting rid of some customers…
08.09.2015 48
Customer Lifetime Value:
Definition
Customer Lifetime Value
• Customer Lifetime Value: The value of

the entire stream of purchases that the
customer would make over a lifetime of
patronage.
08.09.2015 49
Goal: Maximize Customer Equity!
Customer Equity
• The total combined customer lifetime values

of all the company´s customers.
08.09.2015 50
Question: Customer Equity
• How would you evaluate Cadillac´s customer equity when you see this
picture?
• What would you do as a marketing manager?
08.09.2015 51
Example Cadillac
To increase customer equity, Cadillac needs to make the Caddy cool again by
targeting a younger generation of customers.
08.09.2015 52
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Lecturer: Prof. Dr. Alessandro Monti

1. Marketing Definition and Process

• A strategy is a plan of action designed to achieve a

• The marketing logic by which the

Designing a winning marketing strategy requires

• On the one hand Marketing follows decisions made

• A statement of the organization’s

„Its reason for existence.“

Questions a good mission statement should answer:

> Mission statements should be

Evaluate the following mission statement of the

“We sell organic food.”

Rewrite the mission statement!

Evaluate the following mission statement of the

• We enable every consumer

• We bring back the good feeling

The (long term) mission should be translated into

Strategic Business Unit (SBU)

• A profit center which focuses on market

The company must:

GM´s automotive business portfolio includes:

Strategies for categories of the BCG Matrix:

When the current Business Portfolio is analysed then

The 4 Marketing Mix Instruments:

• The overall process of building and maintaining

Customer Perceived Value

• The customer’s evaluation of the

Customer Perceived Value

• The extent to which the product’s

• If performance is lower than expectations,

Why is consumer satisfaction of major importance..?:

• Customer perceived value

• Therefore the perceived quality of the relationship is

• Marketing relationships in which

Firms have to react to the new ways of communication by

• Not every satisfied customer is profitable.

Customer Lifetime Value

• Customer Lifetime Value: The value of

• The total combined customer lifetime values

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