Basics of Marketing - Kotler Philip

Chapter 2. The process of marketing management


After reading this chapter, you should be able to:

1. Tell about how companies are looking for new opportunities in the field of marketing.

2. Explain why enterprises are engaged in segmenting markets.

3. Define the complex of marketing and tell about its four main components: goods, price, methods of distribution and methods of stimulation.

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

The take-off of the company "Miller Brewing Company"

Until 1970, the Miller Brewing Company of Milwaukee, which had no initiative, ranked seventh among American brewers. Its market share was 4%, and sales were sluggish, while the sales of competitors, the firms Anheuser-Busch and Schlitz, grew by 10% annually, double the growth rate for the industry as a whole. Just then the corporation "Philip Morris" decided to enter the beer market, got rich on the tobacco business. She bought the firm Miller, reinforced her decrepit body with her marketing power, took a number of initiatives and for five years brought her to the second place in the market. By 1981, Miller had already held 22% of the beer market, slightly short of Anheuser-Busch with its 29% and leaving behind the third-largest Schlitz firm with its 8% market share. How did "Philip Morris" Corporation manage to accomplish this marketing miracle?

It, in fact, abandoned the traditional approaches to marketing beer, namely from the use of efforts to increase the economic efficiency of production and promote sales through prices. "Philip Morris" resorted to the classic methods of consumer marketing, which was first used by the "Procter and Gamble" and used by the corporation itself to win its second place in the tobacco industry and organize the sale of the most popular cigarettes in the history of Marlboro. This 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 large expenditures on advertising and promotion of new products. "Before the 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 leaders of Anheuser-Bush.

The first step of Philip Morris Corporation was the repositioning of the only product of the company "Miller" - the beer "High Life". Advertising as "champagne beer world", the beer "High Life" attracted mainly women and consumers with high incomes, which in general were not too active buyers of beer. Management of the corporation "Philip Morris" ordered a marketing research, which revealed that 80% of consumed beer accounted for only 30% of its fans. The firm has studied the characteristics of consumers who buy 6-seat packages daily (their demographic and psychological profile, the range of media preferred by them), and decided to give the beer "High Life" a more "courageous image." The ads began to portray the drillers who drink this beer after the elimination of a major oil spill, and young people chasing this buggy beer on the sand. The main advertising motive of the ads was expressed by the phrase: "If you have time, we will have a suitable beer". This campaign was a success for seven years.

Then the company "Miller" began to develop new segments of the market for itself. It was observed that, in the opinion of diet-minded women and the elderly, a standard 12 ounce bottle (about 0.35 liters)? Too large single dose. The firm introduced a 7-ounce bottle of milk (about 0.21 liters), which gained immense popularity.

But all this was nothing in comparison with the release of the low-calorie Beer "Light" to 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 advertised as diet drinks for diet-conscious consumers who at all drank a little beer. As a result, these brands acquired the image of something "ladies". "Miller" also positioned "Light" not as a low-calorie beer, but as a beer that does not give gravity, like beer for "genuine" lovers. Advertising attracted famous sports figures who stated that since "Light" contains one-third less calories, they can drink more beer without feeling a sense of heaviness. This advertising campaign has become one of the most popular and successful on television. Even the packaging of the new beer appealed to the male taste and literally "gave away beer."

Then Miller launched an attack on Mishloob, the most successful beer of the firm Anheuser-Bush, releasing its own super premium beer, Lovenbroi, in agreement with one of the West German firms. Miller cooks it in the United States, and the price of this beer is higher than the price of Mishlob. The new brand was positioned as a drink for special moments with "good friends", when the buyer simply "takes" Lovenbroi "", and achieved good success.

Because of the huge spending on advertising, the unprecedented growth of market share in the company "Miller" was not accompanied by a corresponding increase in profits. But the corporation "Philip Morris" believes that she came to the beer market for a long time and can forgo immediate profits for the sake of winning the second place, which in the future will allow her to make a big profit. Her obvious goal? To bypass the firm Anheuser-Bush, which, without wasting time, is debugging its own marketing management process to protect its leadership from the encroachments of Miller.

Acquiring the firm "Miller Brewing Company", the concern "Philip Morris" turned it from a clumsy organization, oriented to production, into a successful company that focuses on marketing. This chapter provides an overview of how successful marketing adherents pursue 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 value to a particular group of consumers. Through the exchange, the company resumes its revenues and the resources necessary to continue its existence.

The company must be sure that its goals and product range constantly remain relevant for a particular market. Vigilant firms periodically review their target, strategic and tactical installations. They rely on marketing as the main complex means of observing the market and adapting to the changes taking place on it. Marketing? It is not just advertising and the activities of the staff of sellers. It is rather a comprehensive process of adaptation to the use of the most profitable of the emerging market opportunities. We define the marketing management process as follows:

The process of marketing management consists of: 1) analyzing market opportunities, 2) selecting target markets, 3) developing a marketing mix, 4) implementing marketing activities.

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