This page has been robot translated, sorry for typos if any. Original content here.

Marketing Basics - Kotler Philip

Chapter 2. Marketing Management Process


After reading this chapter, you should be able to:

1. Talk about how businesses are finding new opportunities in the field of marketing.

2. Explain why enterprises are engaged in market segmentation.

3. Define the marketing mix and talk about its four main components: product, price, distribution methods and incentive methods.

4. Compare among themselves five approaches to the organization of the marketing department.

Takeoff of Miller Bruing Company

Until 1970, Miller Bruing Company from Milwaukee, which was not very proactive, ranked seventh among American brewers. Its market share was 4%, and sales were sluggish, while sales of competitors, Anheuser-Busch and Schlitz firms grew by 10% annually, doubling the growth rate for the industry as a whole. Just then the Philip Morris Corporation decided to enter the beer market, having become rich in the tobacco business. She bought the Miller company, reinforced her decrepit body with her marketing power, took a number of initiatives and in five years brought her to second place in the market. By 1981, Miller already held 22% of the beer market, not quite reaching the Anheuser-Bush company with its 29% and leaving Schlitz, the third largest company with its 8% market share, far behind. How did the Philip Morris Corporation accomplish this marketing miracle?

She, in fact, abandoned the traditional approaches to beer marketing, namely, the efforts to increase the economic efficiency of production and sales promotion with the help of prices. Philip Morris has resorted to classic consumer marketing techniques, which was first applied by the Procter & Gamble Concern and used by the corporation itself to gain second place in the tobacco industry and to market its most popular Marlboro cigarette in history. Such an approach requires studying the needs and requirements of customers, breaking down the market into segments, identifying the most promising of them, creating special products and special packaging for these segments, as well as high advertising and marketing costs for new products. “Before Miller, the brewers acted as if the beer market was completely homogeneous and could be satisfied with one product in one standard package,” said Robert S. Weinberg, one of the former managers of Anheuser-Bush, once.

The first step of Philip Morris Corporation was to reposition Miller’s only product, the High Life beer. Advertised as “champagne in the beer world,” High Life beer attracted mainly high-income women and consumers who were generally not very active beer buyers. The management of Philip Morris Corporation ordered a marketing research, which revealed that 80% of the beer consumed falls to only 30% of its lovers. The company studied the characteristics of consumers who buy a 6-seat package daily (their demographic and psychological profile, the range of their preferred media), and decided to give the High Life beer a more “masculine look”. The advertisements began to depict drillers drinking this beer after eliminating a large oil spill, and young people driving buggies with this beer on sand. The main advertising motive of the ads was expressed by the phrase: "If you have time, we will find the right beer." This campaign has been successful for seven years.

Then the company "Miller" began to develop new market segments. Was it noticed that, in the opinion of diet-conscious women and older people, a standard bottle with a capacity of 12 ounces (about 0.35 L)? single dose too large. The company put into circulation "baby bottles" with a capacity of 7 ounces (about 0.21 l), which gained immense popularity.

But was all this nothing compared to the launch of the low-calorie Light beer on the market in 1975? the most successful beer novelty in the United States since 1900. Other brands of low-calorie beer were not successful on the market, mainly because they were touted as diet drinks for diet-conscious consumers who drank little beer at all. As a result, these brands acquired the image of something "ladies'". Miller, on the other hand, positioned Light not as low-calorie beer, but as non-gravitational beer, as beer for "true" lovers. Advertising attracted famous sports figures who claimed that since Light contains one third less calories, they can drink more beer without feeling heavy. This advertising campaign has become one of the most popular and successful on television. Even the packaging of new beer appealed to the male taste and literally “gave away beer”.

Then Miller launched an attack on Mishlob, the most successful beer of the Anheuser-Bush company, releasing its own super premium beer, Lowenbroy, by agreement with one of the West German companies. Miller brews it in the United States, and the price of this beer is higher than the price of Michelob. The new variety was positioned as a drink for special moments with “good friends”, when the buyer simply had to “take Lowenbroi”, and achieved good success.

Due to the huge advertising costs, Miller’s unprecedented growth in market share was not accompanied by a corresponding increase in profits. But the Philip Morris Corporation believes that it has come to the beer market for a long time and may give up momentary income for the sake of gaining second place, which in the future will allow it to make big profits. Her clear goal? bypass the Anheuser-Bush company, which, without wasting time, debugs its own marketing management process to protect its leadership from the attacks of Miller 1.

By acquiring Miller Bruing Company, Philip Morris has transformed it from a sluggish manufacturing-oriented organization into a successful marketing-oriented company. This chapter provides an overview of how successful marketing adherents carry out their marketing activities.

Any company operates in a complex, volatile marketing environment. If she wants to survive, she needs to produce and offer something of value to a particular group of consumers. Through exchange, the company renews its income and resources necessary for continued existence.

The company must be sure that its goals and product range are constantly relevant for a particular market. Vigilant firms periodically review their target, strategic, and tactical attitudes. They rely on marketing as the main comprehensive means of monitoring the market and adapting to the changes taking place on it. Marketing? it’s not just advertising and sales staff activities. It is rather a comprehensive process of adapting to take advantage of the most profitable market opportunities that open up. We define the marketing management process as follows:

The marketing management process consists of: 1) analysis of market opportunities, 2) selection of target markets, 3) development of a marketing mix, 4) implementation of marketing activities.

All these stages are presented in Fig. 6 with the numbers of the corresponding chapters, in which each of them is considered in detail. This chapter also provides an overview.