Unit 1: Introduction and Review of Marketing Principles

UNIT 1: INTRODUCTION AND REVIEW

Marketing is the activity, set od institutions, and processes for creating, communicating,
delivering and exchanging offers that have value for costumers, clients, partners and society at
large.

Marketing management is the art and science of choosing target markets and getting, keeping
and growing customers through creating, delivering and communicating superior customers
value.

WHAT IS MARKETED?

Persons, services, goods/services (objects like TV), places, experiences, events, properties,
organizations, information, ideas ...

TYPES OF DEMAND:

• Negative demand: consumers dislike the product and may even pay to avoid it.
• Non-existent demand: consumers may be unaware of or uninterested in the product.
• Latent demand: consumers may share a strong need that cannot be satisfied by an existing
  product.
• Declining demand: consumers begin to buy the product less frequently or not at all.
• Irregular demand: consumer purchases vary on a seasonal, monthly, weekly, daily, or even
  hourly basis.
• Full demand: consumers are adequately buying all products put into the marketplace.
• Unwholesome demand: consumers may be attracted to products that have undesirable
  social consequences.

KEY CUSTOMER MARKETS:

• Global Markets.
• Consumer Market.
• Business Market.
• Government Market.

CORE MARKETING CONCEPTS:

• Needs, wants and demands.
• Target markets, positioning and segmentation.
• Offerings and brands.
• Value and satisfaction.

MARKETING CHANNELS:

To reach a target market, the marketer uses three kinds of marketing channels.

• Communication channels: these, firms communicate through the look of their retail stores
  and web sites and other media.
• Distribution channels: to display, sell, or deliver the physical product or service(s) to the
  buyer or user. These channels may be direct via the internet, mail, or mobile phone or
  telephone, or indirect with distributors, wholesalers, retailers, and agents as intermediaries.
• Service channels: that include warehouses, transportation companies, banks, and
  insurance companies.

MARKETING ENVIRONMENT:

• Task environment: producing, offering, promoting and distributing.
• Broad environment: economic, social-cultural, natural and technological.
• Competition.

HOLISTIC MARKETING DIMENSIONS:

• Relationship Marketing: attracting a new customer can cost five times as much as relating
  existing customers so building long-term relationships makes financial sense for the
  company.
• Integrated Marketing: holds that all activities undertaken by the company should create,
  communicate, and deliver value. Further, all new activities should take into consideration all
  other marketing activities.
• Internal Marketing: is the task of hiring, training, and motivating able employees to serve
  customers well. You can't promise excellent service if you can't deliver excellent service.
• Performance Marketing: marketers must understand both the financial and nonfinancial
  returns to a business and society from marketing programs and activities. Financial
  accountability involves the justification of marketing expenditures in terms of financial
  returns.

THE FOUR P'S OF THE MARKETING MIX:

• Product.
• Price.
• Promotion.
• Place.

MARKETING MANAGEMENT TASKS:

• Developing market strategies and plans.
• Capturing marketing insights.
• Connecting with costumers.
• Building strong brands.
• Shaping market offerings.
• Delivering value.
• Communicating value.
• Creating long-term growth.

MARKETING PROCESS:

In exchange,
capturing
value from
clients

Value creation for customers and establish relationships with them

To understand
the needs and
wants of the
customers

Designing a
marketing
strategy
focused on
the customer

Elaborating an
integrated
marketing
program
delivering
superior value

Establishing
sustainable
relationships
for the
satifaction of
the customers

Capturing
value from
customers to
obtain assets
from them

......

MARKETING SEGMENTATION:

Define the major steps in designing a customer-driven marketing strategy. Explain some of the
segments in their overall market (hotel market or restaurant market), one of these markets that
they targeted, and how they differentiated themselves from their competitors to position
themselves in the market.

UNIT 2: THE ROLE OF MARKETING IN STRATEGIC PLANNING

1. STRATEGIC PLANNING

The major challenge facing today's hospitality companies is knowing how to build and maintain
healthy businesses in the face of a rapidly changing marketplace and environment.

A model pointed to four factors:

A) Stakeholders

A dynamic relationship connects the stakeholder groups. Critical and sometimes overlooked
stakeholder group: owners of hotels managed by a hotel management company.

Many hotel owners are actually investors and do not wish to manage a property actively, so they
contract with an experienced hotel management company.

B) Processes

Company work is traditionally carried on by departments. Companies are focusing their
attention on the need to manage processes even more than departments. They need teams that
manage core business processes.

C) Resources

• Personal resources
• Material resources
• Machinery
• Information

Smart companies are identifying their core competences and using them as the basis for their
strategic planning.

D) Organization

Consists of its structure, polices, and culture. Companies must work hard to align their
organization's structure, policies, and culture t the changing requirements of business strategy.

2. CORPORATE STRATEGIC PLANNING: DEFINING MARKETING'S ROLE

2.1. The steps in strategic planning

Business unit,
product, and
market level

Corporate level

---

Defining the
company
mission

Setting
company
objectives
and goals

Designing
the business
portfolio

Planning
marketing
and other
functional
strategies

• Each company must find the game plan for long-run growth.
• Given its specific situation, opportunities, objectives and resources.
• Focus of strategic planning: developing and maintaining a strategic fit between the
  organization's goals and capabilities and its changing marketing opportunities.

2.2. Defining the corporate mission

Why does the company exist?

• A night's lodging
• A day of adventure
• Entertainment for the family

1 st clear -> over time > mission may become unclear if the company grows.

What to do? Ask simple questions:

• What is our business?
• Who is the customer?
• What do customers value?

What should a mission statement be like?

• Realistic
• Base its mission on its
• Distinctive competencies
• Motivating
• Guided by a vision

MISSION:

• A mission defines your purpose.
• To help every customer have a positive memorable experience.

VISION:

• A vision extends your mission to an ideal future state.
• To have a positive impact on the lives of our customers and our team.

VALUES:

• To be open, honest and fair ... whatever we do, we do it right, and we do it together.

2.3. Setting company objectives and goals

The company needs to turn its mission into clear objectives for every level of management:

• Build profitable customer relationships.
• Providing genuine care and comfort.
• Understanding what guests want.
• Observing how they act and use the room.
• Profits can be increased by increasing sales or reducing costs.

2.4. Designing the business portfolio

Most companies operate several businesses. However, they often fail to define them carefully.
Companies should define their business in terms of customer needs, not products.

Companies should identify its strategic business units. Characteristics:

• It is a single business that can be planned for separately from the rest of the company.
• It has its own set of competitors.
• It has a manager who is responsible for strategic planning and profit performance and who
  controls most of the factors.

3. THE ANSOFF MATRIX

The Ansoff product-market expansion grid is a tool used by firms to analyze and plan their
strategies for growth.

The matrix shows four strategies that can be used to help a firm grow and also analyzes the risk
associated with each strategy. It is useful in helping managers visualize and identify market
opportunities.

Existing
products

New
products

Existing
markets

1. Market
penetration

3. Product
development

New
markets

2. Market
development

4. Diversification

3.1. Market Penetration

Market penetration is about selling more of the company's existing products to existing markets.
To penetrate and grow the customer base in the existing market, a company may cut prices,
improve its distribution network, invest more in marketing and increase existing production
capacity. For example, Coca-Cola.

3.2. Product Development

Product development is about developing and selling new products to existing markets.
Companies could for example make some modifications in the existing products to give
increased value to the customers for their purchase or develop and launch new products
alongside a company's existing product offering. For example, Apple launching iPhone every few
years.

3.3. Market Development

Market development is about selling more of the company's existing products to new markets.
This strategy is about reaching new customer segments or expanding internationally by targeting
new geographic areas. For example, IKEA.

3.4. Diversification

Diversification strategies are about entering new markets with new products that are either
related or completely unrelated to a company's existing offering. For example, Samsung.

Diversification in turn can be classified into three types of diversification strategies.

• Concentric / horizontal diversification (or related diversification) is about entering a new
  market with a new product that is somewhat related to a company's existing product
  offering.
• Conglomerate diversification (or unrelated diversification) on the other hand is about
  entering a new market with a new product that is completely unrelated to a company's
  existing offering.
• Vertical diversification (or vertical integration) means moving backward or forward in the
  value chain by taking control over activities that used to be outsourced to third parties like
  suppliers.

4. MARKETING STRATEGY AND MARKETING MIX

4.1. Marketing Strategy

For creating customer value, the company decides:

• Which customers it will serve (segmentation and targeting).
• And how (differentiation and positioning).

To succeed in today's competitive marketplace, companies need to be customer centered. They
must win customers from competitors and then keep and grow them by delivering greater value.

Before it can satisfy customers, a company must first understand their needs and wants.

A) Market Segmentation

Process of dividing a market into distinct groups of buyers who have different needs,
characteristics, or behavior and who might require separate products or marketing programs.

Companies must put efforts on meeting the needs of individual market segments.

B) Market Targeting

Involves evaluating each market segment's attractiveness and selecting one or more segments
to enter. A company should target segments in which it can profitably generate the greatest
customer value.

C) Market Differentiation / Market Positioning

Product's position > is the place the product occupies, relative to competitors' product, in
consumers' minds.