Documente Academic
Documente Profesional
Documente Cultură
Presented by
Ian Rheeder
Chartered Marketer (SA)
“There is only one purpose for an organisation, that is to obtain and retain a
customer.” (Drucker)
Principles of Marketing 2
Exercises: Day 1, 2 & 3
Exercise & Page Type of Exercise
1: start of notes Pre-evaluation; go over the 30 Mark Test
2. p.30 Key Success Factors & Key Issues
3. p.31 - 32 Your Company SWOT
4. p.39 Positioning ‘gap’ exercise
Intro 5. p.41 Strat-map #1: Segmentation
to the 6. p.42 Strat-map #2: Market Analysis, Strat-map #3 at end
Ps 7. p.48 Strategy Homework for day one
8. p.56, 59 Research Problem, Hypothesis, Sample, Type of Questions
9. p.61 Personality Styles, fill in questionnaire
10. p.71 Consumer Values for Tag watch
11. p.81 Segmentation, Targeting
12. p.82 Positioning, Carling Black Label
The exchange between parties must be so mutually satisfying, that the product
should almost sell itself.
Principles of Marketing 3
Outcome of programme
Learners will be able to do the following:
1. Grasp the Marketing Strategy concept and apply the guidelines to writing a
Strategic Marketing Plan
2. Define Marketing
3. Explain what marketing concepts and objectives are, and analyse their
impact on the business
4. Explain the importance of the marketing research ‘tool’
5. Explain consumer behaviour & different personality styles
6. Explain guidelines for segmenting consumer markets
7. Apply guidelines for identifying attractive market segments to target
8. Explain positioning and discovering positioning gaps
9. Product: Explain new product development, branding advantages, and the
product life cycle (PLC)
10. Price: Explain factors to consider when setting price
11. Place: Explain the distribution of a product, and the importance of
marketing channels
12. Promotion: Discuss Integrated Marketing Communications (IMC)
13. Explain Personal Selling
14. Discuss the advantages & disadvantages of Advertising
15. Explain PR, Sponsorship, Direct Marketing, Sales Promotion
Principles of Marketing 4
1. Marketing Plan Structure (p.5-48)
1. Executive Summary (2 pages)
Introduction, Goals/Milestones to be achieved,
Key Issues aggravating the objectives, Core Strategies
Market Niche (key market drivers/success factors), Key Competitor Sales
Product, Price, Place & Promotion strategy overview
Financial Outlook. I.e. 2006 Budget/Plan
Principles of Marketing 5
The Six Steps to Plan a Marketing Strategy
(Note: This is done after the Environmental Analysis (PESTIE and Micro) has been done.)
Target
Segment/s
Principles of Marketing 6
Introduction to Marketing Principles
As marketing is an organic subject, it just keeps changing. Marketing is also
an art and a science, requiring right (art) and left-brain (logical) disciplines.
However, too many marketers try and hide behind the fact that it is all ‘arty’,
when in fact, marketing should be able to quantify the ROMI (return on
marketing investment), albeit calculating the ROMI of a creative/arty
advertising campaign. Marketing is also such a broad subject, it would take at
least a lifetime to master, which is why one tends to specialise in a particular
field that hopefully matches our particular temperament, personality style or
aptitude. Imagine the following ‘marketing’ fields and realise how broad the
subject is: Strategist, researcher, statistician, sales manager, marketing or
brand manager, salesperson, public relations, sponsorship, advertising (radio,
TV, print, Internet or below-the-line), creative director, direct marketing, sales
promotion, e-commerce expert, distribution and product development.
The layman usually thinks that marketing is purely ‘advertising’, when in fact
marketing is an extremely broader matter, comprising of the four basic “Ps”,
namely Product, Price, Placement (distribution) and Promotion.
The IMC concept recognises the added value of a synergistic ‘media plan’
which will ‘advertise’ your product or service with maximum impact and
clarity. Advocates of IMC therefore argue that it is one of the easiest ways for
a company to maximise its promotional ROI. ‘Adverting’ only form part of the
IMC Concept in your promotional mix, and can basically be split into print,
radio, Internet, outdoor and TV.
Principles of Marketing 7
Marketing today; 4P now 7P Mix: (7Ps expanded on p.46)
Because we live in such a hyper-competitive world, marketing has become
very refined! Marketers are commanding huge salaries today because they
are very often the difference between placing the Company on the race-
podium or just being an ‘also-ran’ in your industry.
If you are in the manufacturing, trading or service sector, all business have a
‘service’ side to them. Marketers have therefore created additional Ps; People
(your staff), Processes and Physical Facilities/Evidence.
The next 100 pages will logically and systematically cover the cornerstones of
Marketing Strategy, and Marketing Principles. Marketers need to achieve 3
objectives: meet Customer’s needs (customer-centric orientation),
implement strategies (achieve company goals) and make enough profit.
Principles of Marketing 8
2. The Marketing Manager as a Strategist
There is no doubt that the Marketer should also be a Strategic Marketing
Manager. My personal definition of Marketing Management is “research your
target market, then give them what they want, at a profit.” This sounds
simple, but most marketing consultants will tell you that few companies do
this. To do this properly one needs to wear both sales & marketing caps,
requiring research skills to depth-probe Product, Price, Distribution and
Promotional issues.
It’s important to embrace the sales department. Sales is actually part of the
marketing “P”, Promotion. Thus personal selling, or any form of selling, falls
under Marketing. This is perhaps why it is also widely accepted that the sales
function is part of, and should report to the marketing function. Whichever way
you look at it, marketing and sales overlap heavily and should strategise
together as a closely intertwined team. If the Sales Team is the “sharp tip of
the pencil”, then marketing is the next most important part of the writing
instrument.
Sales and Marketing Overlap under the “P” called Promotion (see page 46)
The basic 4Ps of product Marketing is shown below. Note, if one is in the
service industry, we have 3 more Ps. (People, Processes, Physical Facilities)
Principles of Marketing 9
Core Purpose: Centre of Strategy
(This article may save your career and your company.)
Principles of Marketing 10
What the Workshop must cover
A featured Harvard Business School article suggested that just two things
make managers brilliant; focus and energy. One could obviously add many
other attributes to the list, however this is what separated the ‘busy’ looking
space-cadet with the best there was. Focused energy leads to focussed
activities. However companies are not run with personalised agendas, but
should be shared by everyone in the organisation, and then translated into
action through a strategic plan for each individual.
Principles of Marketing 11
9002 standards.” This company was focussing all their attention on quality,
when in fact our research showed that their quality was already too high!
They were ironically planning their activities to go out of business. What
their clients wanted was increased responsiveness and on-time-delivery.
Their new Core Purpose read “To maximise our customers profitability by
delivering value-for-money widgets on time, every time.” This new Core
Purpose completely changed the BHAGS, activities of the company and the
performance appraisal system for most staff. Employees in this company
now know exactly what their Core Purpose is because it’s in their letter of
appointment, performance appraisal and makes up 25% of their annual
bonus if their ‘core purpose’ activities are achieved.
If you ask the layman what McDonald’s Core Purpose is, they
simultaneously shout out burgers! Some deeper thinkers then shout out toys
or property rental. Thank goodness they’re not marketing McDonald’s!
McDonald’s Core Purpose is not burgers (now you know why their burgers
aren’t the best), or toys or property rental, but Consistent Convenience for
the Customer! Imagine the difference in focussed goals they set for each
individual as apposed to toys, burgers and property rental! Find your
company’s Customer Centric Core Purpose by group consensus, and then
make sure all the bosses and troops are committed to driving it.
The article was written by Ian Rheeder to assist Marketing Managers grasp
the bigger picture of their responsibility towards Strategy. The secondary
aim was to gently persuade executives to embrace Marketing Strategy, and
of course to find a Customer Centric Core Purpose to drive Strategic
Activities. (Published in Journal of Marketing SA, Aug 2005)
Principles of Marketing 12
Definitions
Marketing Management is:
The management of the Innovation and Imitation Processes,
that firms use to Identify and Increase Customer Satisfaction,
and Reduce Costs,
Faster than their rivals. (Prof R. Abratt, 2003)
Principles of Marketing 13
Marketing Strategy
Why do Marketing & Sales Managers need to be Strategists?
The world has become hyper-competitive! Ford only offered cars in black,
however when General Motors offered more colours, Ford lost a huge slice of
‘his’ pie. Running a business is a war zone. The Sales & Marketing
department needs intelligence to modify its strategies, or the enemy wins.
Companies go out of business every minute of the day because their go-to-
market strategies are flawed, or at least the implementation of the strategy is
flawed.
Price
sensitive Distributors/Agents New Technology
world looking speeding up
Sa
keeps changing
M n
1. Product
al ar
ar
is
An ese
Warranty,
g
3. Place
Customer
2. Price Suppliers
Objectives Objectives
Location Centric Discounts Production
Storage
Public Transport •Manufacturers
Payment Terms
Sister
Credit
nt
Agents Ad Agency
ju tro
Distributors
ke p
C
4. Promotion
st l
ar Im
IMC Objectives,
/m Pl
Micro Direct
‘M ts.
Training, Motivation,
ep
Internal Direct
su s
lD
Micro Direct
re
Al
MACRO/PESTI
New investors in
Legal Bill
Competitors Africa are not
WTO African
Diag 1: The Micro & Macro Marketing Environment (Adapted from P Kotler)
Principles of Marketing 14
Understanding the Strategy Planning Process
Using the above and below diagrams (Diag. 1 & 2), strategic planning
becomes less complicated. One must also warn that a too simplistic
approach to strategy has caused major business disasters! Strategy is a
broad subject, requiring lengthy planning sessions to scan many possible
alternatives. Authors of The Balanced Score Card, Kaplan & Norton warns,
“Many companies continue to use management processes – top down,
financially driven – that were designed to run yesterday’s organizations.”
The Planning Process is more important than the Plan
The key in planning is NOT the plan. Plans outdate fast, and are also worth
very little if management and staff do not collectively buy-in. A manager can
write the best customer oriented plan, but may fail dismally if the plan was
not also co-written by colleagues. (Read article on Core Purpose, page 8-
10). This is because the plan needs to be well implemented, not just written.
The solution is to have dedicated Strategic Planning meetings, to review and
address strategic issues.
Principles of Marketing 15
Strategic Thrust Options for Sustainable Competitive Advantage (SCA)
One Sustainable Competitive Advantage (SCA) is to be different from your
competitors by developing a hard to copy, and relevant Unique Selling
Proposition (USP). The Japanese were the first marketers to perfect low cost
production while simultaneously differentiating the product through innovation,
imitation and quality. Up until then, it was considered impossible to make the
best camera with relatively low input costs. In today’s hyper-competitive
market environment this is becoming necessary for survival; i.e. to combine
more than one ‘thrust’, however, depending on the relative competitive
environment, you may just be lucky and get away with “only producing it in
black”. (Chose your ‘overall generic marketing strategies’; i.e.: cost leadership)
Focus
Low Cost (niche segments)
(Input costs)
Strategic Pre-emption
Thrust (First to do…)
Synergy
Differentiation (Join forces)
(Safest car)
Highlight Your Choice
Principles of Marketing 16
Macro: P.E.S.T.I.E Environment
Enter ‘PESTIE’ Centre Stage!
Is the Uncontrollable Variable completely out of our control? This is a
very topical discussion in SA with the pressing issues created by
globalisation.
Points two and three above need no introduction in their ability to change
marketing’s destiny, however, the traditionally less obtrusive ‘uncontrollable’
PESTI Factors seemed to have recently dominated the marketing force field.
In fact, this is what is really creating our recent hyper-competitive
environment, where consumers and retailers are demanding sobering price-
performance-ratios from manufacturers.
Principles of Marketing 17
PESTIE Political (and Legal) Factors
Political decisions create havoc with businesses barriers-to-entry and the
power of consumers. Consider these ‘uncontrollable’ variables and how they
impact on your ‘controllable’ four Ps and ability to create a sustainable
competitive advantage:
1. How will the WTO deregulation on 1st January 2005 affect your marketing
mix?
2. How has the Government interfered with the R/US$ exchange rate?
3. What is the Government’s position on the recent flood of cheap Chinese
imports and legislation on unfair dumping?
4. How has the Government’s stance on minimum wages impacted on your
price competitiveness?
5. What alternative strategies do you have in place if our Free Trade
Agreement with the USA is withdrawn?
DESTROY Or SUPPORT!
Principles of Marketing 18
PESTIE Economic Factors
1. How does the ‘changing economic dragon’ i.e. international interest rates,
inflation and exchange rates affect your Pricing and Distribution?
2. Are you going to climb on the export ‘learning curve’ or stay in the dark
forever?
3. The strong rand has decimated local production; will you exploit export
markets in Africa as a stopgap, or go global? Are you going to hang on to
your international market and nurture it until our currency depreciates?
4. What are your alternative strategies if the rand strengthened below
R5/US$?
How does high unemployment and recent GDP per capita impact on your
“mix”?
Principles of Marketing 19
PESTIE Sociocultural Factors
Social and cultural influences vary from country to country. Consider the
following demographic and lifestyle factors in SA:
1. How are the Baby-boomers (age 55-65), Generation X (age 25-34) and the
Millennial Generation (younger than 14 years old) changing their lifestyles?
Does your traditional psychographic segmentation still apply?
2. What are South African’s attitudes and buyer behaviour to foreign
products?
3. Tension between the ‘have’ and ‘have-nots’ is growing. In 2003 there were
more Black millionaires in SA than any other segment. Are you targeting
the right race groups in your advertising? Do they still live in the same
suburbs?
Principles of Marketing 20
PESTIE Conclusion
The uncontrollable PESTIE Factors, in spite of the acronym ‘pest’, can in fact
bolster and propel your company when exploited. Spend time and money
doing this! Sales Managers need to continuously research the shifting macro
environment and actually become excited about the eminent prospect of
implementing alternative strategies. Yes, you can tame the uncontrollable
variable by choosing innovative strategies that will change the rules of the
game for your competitors, or you may want to be really proactive and attempt
to influence the environment yourself. Silently recite your new mantra – ‘I love
change and the possibilities it brings’.
“Nobody plans to fail; they just fail to plan the planning process.”
Principles of Marketing 21
Market Planning: Write the Plan
Because market orientation is an organisation-wide prescription, it is
necessary that the whole company is organised and coordinated to serve the
customer. (Leyland Pitt 1998)
Hierarchy of Objectives
Company
Objectives
IMC
Promotion
Objectives
Principles of Marketing 22
Selling in the Marketing Mix
Marketing
Mix
4-8Ps
Promotion Place
Products Prices Distribution
IMC
Channels
Advertising PR Sales
“pull” Personal Selling
Sponsorship Promotion
Non-personal “push”
Rifle Approach
Planning Motivating
Budgeting Compensating
Recruiting Territories Sales
Training Evaluating Management
Although Selling falls under Promotion it does not mean that the Sales
Manager should ignore Product, Price and Place! Sales Managers must
become professionals, and become involved in Product, Price and Placement
(Distribution) decisions. Not all companies have Marketing Managers, and
therefore in their absence, the Sales Manager must take full responsibility for
these P disciplines.
Principles of Marketing 23
Setting Marketing Objectives
Qualitative and quantitative elements of objectives explain and contribute to
each other. Qualitative a statement in words. Quantitative the words in
numbers.
Examples:
Qualitative Quantitative
Growth, Introduce x, Maintain Sales, Market share, Profit, Growth %,
market share, Hold Strategy, Expenses,
Build/Invest, Harvest, Divest
(get rid of), Become market
leader, Profit
SALES MARKET SHARE
(MILLIONS)
Year 1 Launch 5 new products R2.0 45%
Qualitative and quantitative objectives are used to check each other for
consistency and objectivity.
Principles of Marketing 24