BUAD 307—MARKETING FUNDAMENTALS

MARKETING OVERVIEW
AND STRATEGY
 OVERVIEW AND STRATEGY
BUAD 307 Perner 2
Learning Objectives

• Understanding
– The scope and basic objectives of
the marketing function
– Customer value
– The contrasting perspectives of
the “Marketing Concept” and the
“Selling Concept.”
• Appreciating the need of
firms for unique and specific
strategies based on
tradeoffs and, unique
strengths, and market
conditions
OVERVIEW AND STRATEGY
BUAD 307 Perner 3
2007 American Marketing Association
(AMA) Definition

Marketing: “The (1) activity, (2)

set of institutions, and (3)
processes for (4) creating, (5)
capturing, (6) communicating, (7)
delivering, (8) and exchanging (9)
offerings that have (10) value for
(11) customers, (12) clients, (13) no t
n
io the
partners, and (14) society at i t
ef i n f or
large.” (Numbering added.) D de d !
nee exam
OVERVIEW AND STRATEGY
BUAD 307 Perner 4
 ACTIVITY INSTITUTIONS PROCESSES

MARKETING

CREATION COMMUNICATION DELIVERY EXCHANGE

CUSTOMERS

VALUE CLIENTS
OFFERINGS

PARTNERS

OVERVIEW AND STRATEGY

BUAD 307 5
SOCIETY
Perner
Value
BENEFITS RECEIVED
VALUE 
COST
• Benefits—examples • Costs—examples
– Convenience – Money
• In delivery – Time
• In usage – Risk
– Reliability
– Durability
– Performance
– Style/aesthetics
– Prestige
– Service component

OVERVIEW AND STRATEGY

BUAD 307 Perner 6
Customer Value, Part I
• Value is the ratio of the
benefits received (usually
goods or services) to what is
given up (usually money)
• For a transaction to take
place, the benefits received
must usually be greater than
the sacrifice
• Note that a high price product
may be a good value to the
customer even if a high price
is paid if the perceived
benefits received are higher

OVERVIEW AND STRATEGY

BUAD 307 Perner 7
Customer Value, Part II
• A low priced product may not
represent value to a customer if
the benefits received are
perceived to be low, too.
• Different customer segments will
have different value perceptions
• A product which is adapted to
the needs of a particular
segment can be very valuable to
that segment even if the overall
“quality” is not seen as superior
by most other consumers
• Cost may be in terms of money
or other sacrifice

OVERVIEW AND STRATEGY

BUAD 307 Perner 8
Value: Implications

• A low quality, low price

product represents poor
value for many customers
• A very high benefit
product at a high price
can represent value for
some segments
• Customer segments differ
in what they find valuable

OVERVIEW AND STRATEGY

BUAD 307 Perner 9
Steps Toward Value Orientation

• Information sharing within the firm

• Balance of cost and benefits (for the
target segment—different balances for
different types of customers)
• Relationships with customers (as
opposed to “one shot” transactions)

OVERVIEW AND STRATEGY

BUAD 307 Perner 10
STRATEGY
• Strategy
• Target markets
• Related marketing mix: Product, distribution,
promotion, and price
• Counterintuitive realities
• Marketing, strategy, and the organization
• Strengths, Weaknesses, Opportunities, and
Threats (SWOT) Analysis

OVERVIEW AND STRATEGY

BUAD 307 Perner 11
Learning Objectives
• Appreciate
– The scope of
strategic decisions
– Tradeoffs that firms
must make in their
decisions
– Cumulative and “spill-
over” effects of
strategic decisions
and the need for
consistency
– The need for industry
balance and firm unit
cash flow balance

OVERVIEW AND STRATEGY

BUAD 307 Perner 12
 Strategy
• Plan
– To achieve desired
objectives (e.g., profit,
market share)
– Based on available
resources (e.g.,
financial, patents,
trademarks, people,
brand name/image ,
distribution channels)
– Subject to choices made
(e.g., willingness to take
risk, short run vs. long
run goals)

OVERVIEW AND STRATEGY

BUAD 307 Perner 13
 MARKETING STRATEGY

COMMON
SENSE ENVIRONMENT

PRIORITIES/
COUNTER-
INTUITIVE STRATEGY OPPORTUNITY
COSTS
REALITIES

EXPERIMENTATION/ RESOURCES
EXPRIENCE

OVERVIEW AND STRATEGY

BUAD 307 Perner 14
Counterintuitive Realities
• A firm’s product should not necessarily
appeal to the majority of customers—it is
usually better to serve one segment well.
• Large segments may not be attractive to
serve—those attract a great deal of
competition
• It is usually not a good idea to closely
imitate successful competitors
• If a competitor lowers its price and takes
market share away from you, the best
response may be to raise your price

OVERVIEW AND STRATEGY

BUAD 307 Perner 15
Marketing Strategy: Sequence
BUSINESS
MISSION
STATEMENT

OBJECTIVES

PRODUCT
SITUATION/
SWOT
ANALYSIS DISTRIBUTION
Adapted from
text, p. 16. MARKETING PROMOTION
STRATEGY

PRICE
IMPLEMENTATION
EVALUATION
CONTROL
OVERVIEW AND STRATEGY
BUAD 307 Perner 16
REMINDER

• It is tempting to try to
enlarge market share
by reaching out to new
targets but
– Compromises in product
design, distribution, and
positioning will tend to
make the brand less
attractive to the core
segment
– This will likely lead to
increased competitive
intensity

OVERVIEW AND STRATEGY

BUAD 307 Perner 17
 Market Balance

• Different firms A WELL BALANCED

should attempt GADGET INDUSTRY
to offer different
forms of value, EASYTECH, LTD.
appealing to EASE OF
different USE
customer
segments— TROJAN CREATIONS, BRUIN PRIDE, INC.

otherwise, INC. LOW

PERFORMANCE PRICE
competition is
likely to
degenerate into MICROGEEKS, LTD. PATIENCE-IS-STUPID,
SMALL INC.
price SPEED
SIZE
competition
OVERVIEW AND STRATEGY
BUAD 307 Perner 18
 Examples of Objectives

• Profit level • Brand name

• Profit growth recognition
• Brand name
• Total unit recognition by product
sales category
• Growth in unit • Product availability
sales – Availability across
• Growth in retailers and other
dollar sales distributors
• Total dollar – Store placement
sales • Percentage of products
• Brand sold at full price
perception by • Percentage of revenue
customers from new products
– Value • Affordability of product
– Quality • Elimination of unsafe
– Innovativenes product ingredients
s
– Reliability

OVERVIEW AND STRATEGY

BUAD 307 Perner 19
Strengths, Weaknesses, Opportunities, and
Threats (SWOT) Analysis

STRENGTHS

WEAKNESSES STRATEGY

OPPORTUNITIES

THREATS

OVERVIEW AND STRATEGY

BUAD 307 Perner 20
SWOT--Microsoft

• Strengths • Weaknesses
– New Products – Zune
• Windows 7— – Bing (search engine)
powerful; opportunity
to sell upgrades
• Opportunities
• Office 2010 – Bing (search engine)
applications – Windows 7 64 bits
– Technology – Gaming
– Market share • Threats
– Barriers to entry – Economic fluctuations
– Brand name – Apple
– Cash • Image
• Design

OVERVIEW AND STRATEGY

BUAD 307 Perner 21