Lbs Marketing

Session 1

Reading – Framework for marketing strategy formation

Drucker – The purpose of business is to create a customer. Levitt – The purpose of business is to create and keep a customer.

The marketing process has six main steps :

1. marketing strategy formation: sets the overall long term goals of the marketing process. Which consumer to serve, which need to serve, how to create value for customers.
2. marketing planning: depending on the industry, time horizon of marketing planning can vary ( technology _ very quick)
3. programming allocating and budgeting: set near term objectives ( typically a year)
4. analysis and research
5. implementation
6. monitoring and auditing

marketing strategy formation

process of selecting which customers I want to serve, decide on competitive point of differentiation, and developing a plan to do this.

The basic framework to do it is the 5C: consumers, competitors, collaborators, company, Context → after having analyzed the 5C, the company should decide on the aspirations ( Segmenting – targeting and positioning decision) and the action plan (4P – product, promotion, place, price).

Customer → what are the attributes that the client values? What are their conscious and unconscious needs? How do they buy? Is word of mouth important? It is important to analyze also the decision-making unit, and understand whether decision maker is the same as the final user. In most of B2C purchases DMU and customer are the same (unless purchases for kids, etc), but in B2B decision maker is more complex and usually involves 6 roles (initiator – who recognizes need for something and stimulate research for a product, gatekeeper – problem or product experts and decide who enter the DMU, decider – who makes the final choice, influencer – have input in final decision , purchaser – consummate the transaction and user – uses products at last). Once worked out compo ents of the DMU, one need to understand whether there will be information search and how it will be conducted, and what criteria will be used in the decision, etc.

Company → assessing strengths and weaknesses of the company . and assessing core competencies- Core competency should make a significant impact to the creation of customer value and should be difficult to imitate.

Collaborators → upstream (suppliers, financial partners) and downstream (distributors, online and offline)

Competitors → important because clients will only buy your products if you create more value for a lower price with respect to competitors. Understand competitors → who are they ? how many? Are they generalists or niche players?do they offer the same product / service?

One can understand from analysis of consumewrs or from interviews to clients

Context → context shapes heavily the capacity of the firm to capture and create value. E.g. an understanding / anticipating of cultural trends is behind a lot of successful product / services.

After analyzing the 5 C, one should decide the aspiration and the action plan.

Aspiration: segmenting targeting positioning. Segmentation can happen by a range of variables: demographic, geographic, psychographic, benefit sought, usage rate (heavy user, light user). Positioning is: deciding which segment to go after and how to go after it. A meaningful targeting necessarily entail also excluding some of the segments.

Action plan : 4P, product, place, promotion, price.

Product: centerpiece of the marketing mix → what kind of features should our product have? Once launched, one should decide how to manage its life cycle , repositioning or marketing mix changes. Majority of companies have a product line rather than a single product → new products  can be new version of an old product, a company’s entry into a product category that already exists, a variation on an old product’s theme (cannibalization is the problem here).

Promotion: see reading on marketing comms. How do we communicate our value to the client in a way that reaches them effectively and efficiently? One should think about the 6 M: mission, market, message, media, money, measurement. Communication can be mass targeted or personalized, one-way or two-ways. Customer promotion (free samples, coupons) or trade promotion ( incentives to retailers). Push strategy ( inducing a retailer to push for marketization of that product) or pull strategy ( induce existence of demand for a certain product).

Place: not necessarily a physical place, but more in general the choice of the distribution channels, which can be different from different part of the value chain ( or multichannel approach).

Price: very important to get it right, because it should reflect the value in the eyes of the consumer / the consumer’s willingness to pay (and not cost of firm), which is very difficult to assess ( except auctions, but restricted to very few cases). A firm should try to customize price depending on the varying willingness to pay of the same customer at different times / different customer segments. A firm should also analyze the price sensitivity of clients in order to adjust prices in the future.

Reading – Customer Management

A firm need to manage its customer satisfaction. It is not necessarily true that satisfying customers the most in any case is the way to go, because some customers might be more costly to satisfy than the value they bring to the firm. One should not try to satisfy customers / increase market share at all cost if he/she is not able to do so profitably.

Customer value is twofold → ability to satisfy the client and deliver value to him/her. Ability of the client to bring value ( profit) to the firm.