Marketing the Basics
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MARKETING THE BASICS The marketing manager of tomorrow must think in international terms in order to keep up with increasingly unpredictable consumer behaviour. Competition in business today is fierce and you need to know how to capture and keep hold of your target audience. This book includes all the vital information you need to excel and covers: • The role of the manager • Marketing as a corporate function • How to analyse competitors • Market research • Models of consumer behaviour • Global marketing The book is ideal for any student or practitioner wanting to learn the fundamentals of marketing applied in a global context. Karl Moore is a Professor in Marketing Strategy at McGill University and an Associate Fellow at Templeton College, Oxford University. He was recently identified as being amongst a group of the “world’s greatest business thinkers” in Business Strategy Review (Winter 2005). Niketh Pareek is a journalist and management consultant. He specializes in developing business models, finance and marketing research. ALSO AVAILABLE FROM ROUTLEDGE INTERNET: THE BASICS JASON WHITTAKER MANAGEMENT: THE BASICS MORGEN WITZEL BUSINESS: THE KEY CONCEPTS MARK VERNON FIFTY KEY FIGURES IN MANAGEMENT MORGEN WITZEL THE ROUTLEDGE DICTIONARY OF BUSINESS MANAGEMENT DAVID STATT MARKETING THE BASICS Karl Moore and Niketh Pareek First published 2006 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2006 Karl Moore and Niketh Pareek This edition published in the Taylor & Francis e-Library, 2006. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photo- copying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been applied for ISBN10: 0-415-38080-4 (hbk) ISBN10: 0-415-38079-0 (pbk) ISBN10: 0-203-09956-7 (ebk) ISBN13: 978-0-415-38080-5 (hbk) ISBN13: 978-0-415-38079-9 (pbk) ISBN13: 978-0-203-09956-8 (ebk) CONTENTS List of Illustrations vii Introduction 1 1 What is Marketing Management? 8 What is Marketing Management? 8 What are the Responsibilities of a Marketing Manager? 16 Marketing Orientations 17 Conclusion 21 2 Marketing as a Corporate Function 24 The Strategic Plan 25 The Experiential Economy 33 Conclusion 35 3 Product and Placement 38 Customer Value Hierarchy Theory 38 The Product Mix 40 Product Level Strategies 42 The Supply Chain viewed as a Value Network 46 Marketing Channels 48 Building a Marketing Channel 52 4 Price 60 Declare the Marketing Objective 61 Determine Demand and Supply 65 Estimating Costs 68 Analysing competitors’ costs, prices and offers to position the product 72 vi Contents Selecting a price method 73 Selecting the price 79 5 Promotion 85 The Communication Process 85 Promotion Tools 95 6 People 106 Sales Force Management 107 The Selling Process 115 Direct Marketing 122 Support Staff 126 7 Segmentation, Targeting and Positioning 131 Market Segmentation 131 Targeting the Market 142 Positioning 144 Brands and experience 156 8 Market Research 161 Introduction to Consumer Behaviour 161 Models of Consumer Behaviour 163 Research Methodologies 169 Conclusion 179 9 Global Marketing 185 Introduction 184 Adopting the Marketing Program 192 Glossary 204 Index 215 LIST OF ILLUSTRATIONS FIGURES 2.1 Boston Consulting Group (BCG) Growth-Share Matrix 29 2.2 Product Life-cycle 32 3.1 Model of Customer Value Hierarchy 39 6.1 The Sales Force Management Model 108 7.1 Value Proposition Matrix 152 8.1 Stimulus-Response Model 162 9.1 How Much do You Adapt the Product to the Local Market? 192 9.2 Communications Adaptation Model 195 TABLES 3.1 Product-Mix Matrix of a Fictitious Beverage Company 40 5.1 Promotion Tool Kit 102 INTRODUCTION Karl Moore and Niketh Pareek In the global economy, markets are international; consequently the marketing manager of tomorrow must think in global or at least regional terms. Customers can switch suppliers at the click of a mouse; new technologies quickly render established firms obsolete; foreign competitors you never even knew existed ravage your national market share; and competition is mildly described as fierce. As globalization continues to foster closer social, economic and political ties, there is an increasing need for the new generation of marketing managers to think in an international and integrative perspective. If only our problems were only conceptual. Wanting more free time, and convenience, customers are more sophisticated, less brand loyal and price sensitive than in the past, rendering traditional marketing approaches less effective. We find in North America and Western Europe a bifurcation of consumer’s buying habits. It sounds rude, but what it means is that well off people are buying not only at their traditional upscale department stores but are also buying “cheap and cheerful” at Wal-Mart and other stores of that ilk. This is new. What is also new is that lower income people are doing the same: buying the bulk of their shopping list at inex- pensive outlets but also spoiling themselves by buying at upscale stores and at spas. We are not sure they can really afford this, 2 INTRODUCTION witness the rising burden of consumer debt in North America, but people today work longer and harder than ever, what’s wrong with a little fun to break the routine? This behaviour means that consumers are harder to predict, they don’t necessarily follow the more entrenched patterns of the past. New forms of marketing such as buzz and experiential marketing have gained wide accept- ance, and are for certain product launches, expected. The dominance of the old-line television networks is diminished in the 500- channel universe. TIVO and other personal recording devices subtly shift power to the consumer as they, in effect, become their own network chief. The emergence of massive online gaming worlds is transforming software companies into market research laboratories. New strategies offer new choices, but which to choose? How are these methods and indeed success measured? How does marketing strategy fit with the overall corporate strategy? The difficulties of marketing in the 21st century are real and tangible. To encourage an international and integrative perspective, the marketing manager of tomorrow must start thinking in such dynamic terms at the onset of their education. Existing textbooks impart a sense of marketing’s role in the firm. Where they too often fail is promoting a sense of internationalism and opportunism. By opportunism, we don’t mean it in the self-serving sense of the word. Opportunism means recognizing and understanding how new trends are creating new opportunities. We feel they fail because textbooks are written specifically for a particular geographic region and restrict themselves to traditional “Old Economy” examples. Localizing the content traps the reader into thinking locally and acting globally, not the other way round. And telling old war stories prepares the troops for the old battles. We’ve been living in a new world order for over 15 years now. Many clever marketers are beginning to use new tools like buzz and experiential marketing successfully but don’t fully understand. We are still mucking about learning about them! But clearly these new basics will continue to grow in importance. We think it is important for you to be aware of these different approaches. That is why this book will take a more international and opportunistic approach to explaining the basics of marketing to our readers. We not only cover the basics but also introduce you to the “new” INTRODUCTION 3 basics. We also try to tell a number of real life marketing stories based on our own experience as professional marketers. ABOUT THE BOOK At the end of every chapter we have included a brief summary, a set of critical questions, and glossary so that the reader can review the key concepts easily. Each chapter is also divided into headings which are labelled making the task of outlining much easier. In addition, we have taken great care in avoiding falling into the jargon trap that unfortunately is all too prevalent in business. Based on the feedback we’ve received from academics and practitioners, they’ve all felt the book succeeded in being comprehensively informative and easy to read. We’re confident you will too. BRIEF OUTLINE OF THE BOOK Chapter one, “What is Marketing Management?”, provides a general overview of marketing. Terms will be defined, the basics are explained and an explanation is provided for why companies become customer oriented. Chapter two, “Marketing as a Corporate Function”introduces a basic framework of how marketing fits in an organization and the planning and analysis process managers must undertake in order to implement programs that aim to achieve the organization’s goals. Special attention will be made towards explaining competitive advantage, core competencies, product and business cycles. The chapter concludes with a discussion of brands and the experiential economy. Protecting brands is causing marketers to adapt their behaviour from regimented practices to those of buzz marketing, where results are much more difficult to measure and predict. Chapters three through six constitute the heart of the book. In these chapters readers will learn the tools marketers use to influ- ence the revenue of a product.