PGEMP B47 MARKETING MANAGEMENT

B47 C2 (Core Marketing Management Course in PGEMP) November 2014 by Prof S K Palekar

Module 2 taken on 28th November  2014 ( 2 successive sessions of 70 minutes each)


How annual marketing plan is done in practice

STEP 1 : WORK STARTS AT TWO LEVELS IN THE ORGANIZATION: 

•  Top management creates its own “charter of possible issues” for which the organization needs to plan by asking internal heads of departments “what needs to be done in the plan period for your external stakeholders and internal stakeholders”. This is moderated by the top management group before passing it on to the market managers for incorporating in the plan.
• Simultaneously the market managers create their own “charter of possible issues” for which the top management needs to sanction release of resources (capex, opex, manpower).  This is generated by looking at 3 things (1) strategic thinking (MVC) (2) an analysis of what worked and what needs to be fixed and what needs to be dropped (3) complaints and suggestions from the customers, sales force and internal customers.

STEP 2 : THE TWO LEVELS MEET (FIGURE OF 8)

The purpose of this meeting is to create a realistic shortlist for the new year. The market managers will come to the meeting after examining the charter of top management from an external / market perspective to see if market conditions will permit what the top management wants. 

The top management will come to the meeting using internal / resource perspective to see  if they can release resources for what the market managers are proposing. 

This is an interactive and iterative meeting ending in both the top management and the market managers broadly agreeing on the agenda for the coming year in terms of 

• outcomes of marketing (sales, profit, market share, customer satisfaction, loyalty, complaints %, better support from collaborators)
• major changes in strategic design (MVC and Value Chain and different activities and doing activities differently)
• changes in deployment (Investment  what to downsize, what to scale up, what to jettison, what to invest in, what to fix, what to start) ( capex and organization and opex mix).     

During the class we focused only on the strategic thinking in red letters in the text above (MVC analysis)

Please click here to read the importance of defining the "Market".

Please click here to read how to actually write a marketing strategy.
 

Module 1 taken on 26th November  2014 ( 2 successive sessions of 70 minutes each)

Review of what we did in B47C1 

Is marketing a function or a department ? Every company needs to perform the basic marketing function. However, all these marketing functions are not necessarily always performed by the "designated" marketing department. In some companies some marketing functions are handled by CEO, Commercial Department, Sales Department and Service Department etc. But all are market-facing functions.

Definition of Marketing : There are two major parts (A) Marketing Strategy (B) Marketing Operations. I am giving below only the definition of Marketing Strategy (The thinking and planning part) and not of Marketing Operations (which are activities of new product development, pricing, selling, distribution, promotion, PR, advertising etc) involved in implementing the strategy. The operations will be covered in C3 and C4.

DEFINITION OF MARKETING STRATEGY : It performs the function of “focusing lens”  that helps bring together all internal functions, resources and activities of the whole company 

• to sharply focus on targeted opportunities and threats in the environment by installing and operating a “lookout” (“market sensing”) mechanism” which enables the organization to “see” the opportunities and threats in the external environment
• to achieve planned outcomes for all market-facing stakeholders of the company
• the company itself (outcome : sales, profits, market share)
• the customers (outcome : higher value than the asking price
• the collaborators (outcome : Return on Effort) 
• by formulating a marketing strategy plan for the company / division / product 
• by making a marketing strategy plan which spells out
• which issues to address during the plan period from all the issues
• what objectives / outcomes need to be achieved
• how to deploy internal resources and undertake cross-functional activities

Marketing is a lens for 

• taking photo of the outside world 
• focusing internal energies on the outside target.

Marketing output measurement : the company works for multiple stakeholders : Basic, impacting, faceless

1. Front-Facing : Company Shareholders : Profit
2. Front-Facing : Customer : Satisfaction
3. Front-Facing : Competitors : Market Share
4. Front-Facing : Collaborators : ROI
5. Front-Facing : PESTEL : Alignment
6. Back-Facing :  Vendors : ROI
7. Internal :  Employees : Progress
8. Internal :  Functions : Formal Expectations 

Marketing Process ( Input to Output ) : Designing (Discover, Diagnose, Design, Deploy, Deliver). The process remains the same but the inputs pertaining to each situation are different and therefore the "how to market" answer varies from situation to situation. More specifically it depends on the 5 Cs : who the customers are, who the competitors are, who the collaborators are, what situation the company is in. 

Last time we referred to the following concepts

• Sequence ( Study, Think, Plan, Act, Get ) 
• Decisions based on marketing : objectives / activities / expenses / investments
• Customer Analysis : CPV,  3 Circles,  Kano Model, Customer Behavior Model
• Market Sensing : Market Research and PESTEL
• Marketing mix : 7 Ps

We considered the following cases the last time:

1. Wallace Fort Hotels : Costs by themselves do not indicate value : ( only the knowledge of customer needs create value)
2. Trident Float Glass : You will know only when you open the bonnet ( underneath you will see 5Cs)

Assignments given the last time 

1. How the Marketing function is organised in your company? What factors in the context led to this Marketing Organisation? Do you think the existing Organisation Structure is suitable to take on future changes in the Context?
2. Take any two cross functional decisions taken by your company in 13-14 and explain the roots you find in  5Cs connected to it.

B47 C1 (Core Marketing Management Course in PGEMP) August 2014 by Prof S K Palekar

Module 1 taken on 20^th August 20, 2014 ( 2 successive sessions of 70 minutes each)

LEARNING OBJECTIVES

1. Marketing is a “5D” “process of design” to achieve two opposite objectives (1) Returns to customer (satisfaction) (2) Returns to the company (Profits). 
2. This process starts with knowing what creates value for customers and what does not. Then it goes on to formulation of strategy to help the CEO plan costs and activities. This results into the actual business activities of acquiring customers and fulfilling them happening according to the strategy which ultimately leads to returns for both the customer and the company. 
3. The company creates value for the customer through its "Product", In reality the "Product" offered by a company is not only the "physical product" but the entire bundle of "valued benefits" that are created by the company's planned “Marketing Mix” according to the formulated strategy (7 Ps). The customer for whom the value, thus created, makes is sufficient to pay the asking price of the company, is willing to pay it. 
4. But it should be noted that the "Price", from the customer perspective, is not only the money that he pays but the whole “Price Mix” of his scarce resources (the money, the risk involved, the time he spends and the inconvenience he incurs)   

Introduction To Marketing

How Marketing Helps Company Make  Money

1. Since marketing is essentially a process of “designing”, no two marketing solutions can be similar because the circumstances are different. 
2. Each marketing effort is “designed” using he “5D” Process (Discover, Diagnose, Design, Deploy and Deliver) based on situation assessment.
3. What does marketing “deliver” ? Both “Profit” and “Customer Satisfaction” at the same time and on a long term and sustainable basis. This means that the marketer must know
• what costs will create, what extent of value, for what kind of customer
• If pricing will be profitable,  and will attract enough customers
• If competition will retaliate and will succeed in their efforts to fight

Definitions

• Profit / Unit when the company sells = Company Surplus
  = ( Unit Price - Unit Cost ).  The company sells because Profit is +ve
• Customer Satisfaction from buying = Customer Surplus
  = ( Unit Value - Unit Price ). The customer buys because Satisfaction is +ve

Value is subjective. The value may not only differ from customer to customer but from time to time and from application to application. Only a customer can tell you how much value he attributes to your offer. To find out customer value, you must put yourselves into the shoes of the customer.

Cost is objective and does not change (much). Your cost accountant can tell you how much costs you to produce and sell a given product.   

The process of  delivering the twin objective of profit and customer satisfaction depends on the marketers understanding the needs, perception and behavior of customers, competitors and collaborators. 

1. PRE-STRATEGY STAGE : Starts with “Situation Assessment” ( 5Cs : Company, Customer, Competitor, Collaborator, Context)
2. STRATEGY FORMULATION STAGE : which customers to target, what to offer to them and how to connect with them
3. STRATEGY EXECUTION STAGE : consisting of activities leading to acquiring customers and then fulfilling them

Is strategy important or its execution? 
More than 95% expenditure of a company happens for undertaking visible activities at the “Strategy Execution Stage” but, unless these activities are based  on sound strategies and pre-strategy stage; the expenditure may not result into profits and customer satisfaction. Thus, the pre-strategy and strategy formulation stage are important. Not undertaking these steps can result into poor marketing because just undertaking any marketing activity anyhow does not produce good marketing results!.

In contacts 1 and contact 2 we are going to study mainly the strategy part – situation assessment and strategy formulation. In contacts 3 and 4 we are going to study the execution part.

Let us now study the “marketing output” : “satisfaction for the customer” and “profit for the company”.

First we will study “satisfaction for the customer”. The key concept is “Value” : just because you incur cost (materials, process, selling, advertising) does not mean you are creating value for the customer. For creating value you must understand which costs create value for the customer and which do not. Good marketers have a better knowledge of the customer and hence can decide which costs will create value for the customer and which will not. In this context “Kano’s model” and “3 circles model” came useful.

The economists think that the customers buy products in exchange for the price they pay but the marketers understand the full scope of what a product is and what a price is

Product (the bundle of benefits that create value for the customer and are important for the customer to have) can be described more accurately in terms of “Marketing Mix”. A template for expressing such marketing mix is called “7 Ps” ( Product, Place, Price, Promotion, People, Process and Proof).  ( Please see "Checklist for what to write in a marketing plan" in your handbook) We took the examples of a man in a small UP town wanting a steel roofing sheet and also the example of HUL purchase dept  buying laminate for pouching its products. An important lesson was that the customers do not look for benefits arising only out of  the product but they expect benefits to come from each and every element of the Marketing Mix. Also check out a handout of slides given through your handbook titled "Creating a marketing plan" by American Marketing Association.  

Price (the bundle of scarce resources that the customer is willing to exchange for the benefit of buying the product) is not only the monetary value paid but also other scarce resources the customer has : time, risk taking ability and the social cost.

A “product” is only a cost unless you find a customer who sees enough value in it so that he can pay for it. 

How does the marketing contribute to making the company profitable?

• By increasing sales quantity
  How ? Reaching more, Convincing more, Making Value more competitive, 
• By increasing the price
  How ? Creating more value  
• By reducing the cost of making and selling
  How ? By reducing costs which do not create commensurate value

Marketing can increase the profit by

• making the product available to more customers
• realizing highest possible price by understanding how much value it creates
• making the product more salable compared to competition
• reaching more customers more efficiently and more effectively
• communicating the value of the product well to the potential customers
• avoiding various wastes in marketing
• reducing waste of reaching wrong people 
• reducing waste of keeping inventories in the wrong place
• reducing waste of using ineffective messages
• reducing waste of giving features which the customer do not value

To do all of this, an important resource for a marketing company is the knowledge of the customer. That is why the pre-strategy stage of “Situation Assessment” is fundamental. Your marketing plan cannot be better than the foundation of customer knowledge on which it is built.

Assignment : Explain how the marketing function is organized in your company? What factors led to your company organizing the function the way it did? Do you think the existing organization structure is suitable to take on the challenges of future for your company? In this connection you may like to refer to a handout given through your handbook titled "The difference between marketing and sales functions - or are they departments?"
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Module 2 taken on 24^th August 2014 ( 2 successive sessions of 70 minutes each)

LEARNING OBJECTIVES

1. Most business problems are like seeing a red light on "financial dashboard" (like what was depicted by Trident Float Glass) but you will not know what you need to do unless you "open the engine". In marketing when you open the engine, you see the "5Cs". 
2. The most basic and obvious two Cs are : Company and the Customer. When you consider the Customer you need to think of the options open to the customer : that means you also need to think of the Competitors also. Just as you consider your competitors are your "enemies" ; you must simultaneously think of your "friends" too : your collaborators. These 4 Cs have a face and a name and you can identify them but there is one more C : Context. The context is everywhere and does not reside in any specific party. The context is analyzed as PESTEL : Political, Economic, Social, Technological, Ecological and Legal.
3.  

TRIDENT FLOAT GLASS CASE

We discussed the Trident Float Glass Case in the class. How good is Trident's Marketing - let us apply basic two criteria - are profits increasing ? are customers more satisfied ? On Profit margins we know that the margins are shrinking. The Customer satisfaction also may not be going up because the relative value is not going up because relative price is in fact decreasing. Since the capacity is constant, the problem can only be with customer mix, geography mix or channel mix ( means the share of company pie of profitable customers , profitable geographies or profitable channels is decreasing). The consultant should therefore be mainly looking for this data. The main point to be noted from the case is that a mere "financial dashboard" will not tell you what exactly needs to be fixed. In order to understand to discover and diagnose that, you need to understand how to do "5Cs" analysis. 

We saw some examples of "business situations” given by the class and how one can understand them better when you use the "5Cs" framework for analysis. 

"5 Cs" Analysis

Refer to a handout given through your handbook titled "5Cs format helps you understand the marketing forces for a given product in a given market"

The 4Cs who have a face/name
Main Layer : Company and Customer. 
Next Layer : competitors (enemies) and collaborators (friends)

For these 4 Cs we need to analyze

• Needs and Wants, what triggers and circumstances drive them to act 
• Psychology : Perceptions, Values and Pre-dispositions
• Behaviors :  what are their habits and compulsions and criteria 

The 5th C is context : it is not a "party" and does not have name/face
These are PESTEL factors : Political, Economic, Social, Technological, Ecological, Legal.

The analysis is to take each factor and - within the plan time frame - ask questions like

• will it increase / decrease the number of buyers for us ? competitors?
• will it increase / decrease the propensity to pay for our customers? competitors'?
• will it increase / decrease the interest of collaborators ?
• will it increase / decrease the company costs ?

Analysis of Customers

Concept of DMU : This is a very important part of the analysis. How do you define your customer? Is it a "person" or a "family" or a "housing society" or a "company"?  In low prices consumer products there is generally only one customer per purchase : example : purchase of a soft drink. But for complex and expensive B2B purchases there are many customers and play different roles : user, buyer, approver, initiator, etc. For example, when a company buys an effluent water treatment plant ; there are many who impact the decision making process : the maintenance department, the legal department, the plant manager, the chief financial officer, the users, the franchisee who will provide after-sales service to the client, the local factory inspector's opinion, reference checks with other nearby factories etc. Such a collection of people who are involved in impacting revenues over the entire product life cycle ( initiating, creating RFQ, seeking quotations, evaluating quotations, making internal case, placing order, arranging finance and delivery, commissioning, training, maintaining, using, upgrading, reconditioning, replacing, disposal, repairs ) form what is called as DMU (Decision Making Unit) of the customer. For low priced B2C products the DMU may consist only of 1 person but for a product like an air force deciding on a fighter jet, the air force which buys it may have a DMU involving dozens of people.

Concept of proximity : Some B2B companies have only a few and large customers and, for such customers, it is possible to engage with them very closely and deeply on a customized basis and you can have an almost endoscopic view of the customer. On the other hand for may B2C companies they have millions of customers, and for such customers, it is possible to engage them only through a telescopic view through standard products. How your customers wish to be engaged with the marketers is an important part of the analysis. Some customers would like to be deeply engaged through a key account management concept based on buying of enterprise capabilities. Some customers would like to be engaged through a solution selling mode. Other customers would like to be engaged only transactionally.

It is necessary to study how the needs and wants, psychology and behavior changes from customer to customer so that the company can decide which is the most attractive market for it which depends on the market characteristics and the company characteristics. An attractive market is the one which is (1) most attractive (2) your company's capabilities can make a difference to the chosen market. The attractiveness of the market depends on size, growth rate, access, competitiveness and margins.




Refer to a handout given through your handbook titled 
"Quantitative Research" and 
"Market Research" and 
"How to become a Market Expert"

Marketing MIS : 3 Ways of Getting Information in Marketing (1) Readily available internal company information (2)  Readily obtainable external marketing intelligence (3) Specially commissioned Market research projects. Many decisions would need all 3 types of data . Take up the articles (1) “5Cs format helps you understand the marketing forces for a given product in a given market” (2) Impact on buyer behavior of (1) Cultural / Social influences (2) Social status (3) Decision-making process (4) adopting new products (5) response to various stimuli (3) “Market Research”

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1)      B47C1 : 2 MODULES

2)      Module 1

a)      Learning Objectives

i)        Introduction to Marketing

ii)      Basic Process : starting in 5Cs and ending in Profits and Satisfaction

iii)    How this universal process is organized in various companies

b)      Case : Wallace Fort Hotels is used to introduce marketing

c)      Assignments

d)     How is the marketing function organized in your company? What factors led to this way of organizing ? Is it suitable to take on the challenges of the future?

e)      Any major cross functional initiative taken by the company : how PESTEL played a role

3)      B47C2 Assignments

a)      Do a 5C analysis for ​a major product of ​your company.​

b)      For the same product that you chose for the previous assignment, indicate how many different types of buyer personas exist ? Select any one of these personas and indicate what is the buying journey of that persona for the chosen product ? What are the gaps in the buying journey that your existing connection strategy is not effectively addressing?

c)      Describe your marketing strategy for ​the same product you had chosen for the earlier two assignments and describe what is your marketing strategy.