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SMAI 2013 - Principles of Marketing Management
1. Marketing Management
If you keep doing what you’ve always done,
you’ll only get what you’ve always gotten
(or maybe less).
2. What is “MBA Marketing?”Section and Chapter
Headings of Marketing Management Text (Kotler/Keller)
1.
Understanding Marketing Management
1.
2.
2.
Capturing Marketing Insights
1.
2.
3.
Defining marketing for the 21st Century
Developing marketing strategy and plans
Gathering information and scanning environment
Conducting market research, forecasting demand
Connecting with Customers
1.
2.
3.
4.
Creating customer value, satisfaction, loyalty
Analyzing consumer markets
Analyzing business markets
Identifying marketing segments and targets
3. 4.
Building Strong Brands
1.
2.
3.
4.
Shaping the Marketing Offerings
1.
2.
3.
4.
Creating brand equity
Crafting the brand positioning
Dealing with competition
Setting product strategy
Designing and managing services
Developing pricing strategies and programs
Delivering Value
1.
2.
Designing and managing value networks, channels
Managing retailing, wholesaling, logistics
4. 7. Communicating Value
1.
2.
3.
Designing and managing integrated marketing
communications
Managing mass communications: Advertising,
sales promotions, events, and public relations
Managing personal communications: Direct
marketing and personal selling
8. Creating Successful Long-Term Growth
1.
2.
3.
Introducing new market offerings
Tapping into global markets
Managing a holistic marketing organization
5. 30-Minute Marketing Management
Selected Concepts
Adjusting to market and customer dynamics
Goals
ROI
Relative value
Primary/Category vs Secondary/Share Demand
Differentiation
The Marketing Mix Framework
Case
6. Managing Means Adjusting to the
Market to Ensure there are Customers
Demographics
+ Economics
+ Social Forces
+ Government
Policy
MARKETING:
What we design in order
to attract/retain customers
comprising the market
THE MARKET
Unmanageable
Manageable
7. Key Marketing Goals Connoted by
“School Advancement”
1.
Recruiting
2.
Retaining
3.
Reputation
4.
Relationships
5.
Revenues
Aka The Path to Sustainability!
8. R(eturn) O(n) I(nvestment):
Challenges to Answering “the ROI Question”
Lack Evidence-Based Practices
The Alaska Pipeline Dilemma
Some Returns are Qualitative
How much is one more denied application worth? Diversity? How does
one measure the value of “loyalty”? How do we know if a parent
satisfaction survey will improves retention?
Common Problem: Sub-optimal allocations due to mis-framing
“If we pay $125,000 for a branding initiative, how many new students/gifts will it
produce?”
VERSUS
“Given a $125,000 budget, what allocation across multiple strategies will yield more
students/gifts?”
9. Customers’ Assessment of
Relative Value Drives Demand
Value =
Perceived Benefits
Perceived Costs
•The
higher the perceived value, the higher the
probability of purchase.
•If
benefits do not keep up with costs, value erodes.
For further discussion see readings for draft of JTW’s chapter in NAIS
book entitled “Affordability and Demand”
10. Lower Perceived Benefits Higher
Competitive Perceived Value Space
C
D
Be
tte
r
RE
LA
TI
VE
B
X
i
qu
E
en
al
v
e
lu
a
tV
Which letters correspond
to the following:
•
•
W
or
se
F
Urban public?
•
E
VA
LU
E
Suburban public?
Selective magnet?
•Leading
•
independent?
2nd tier independent?
Must have huge
endowment? ;-)
•
A
Low
Perceived Cost
High
•
What is area ‘X’?
11. Primary vs Secondary Demand
Primary Demand:
1.
•
•
Admissions: Will the child attend any private school?
(NOTE: Parent is primary decision-maker)
Fundraising: Will I make a donation for any purpose this
year?
Secondary Demand:
1.
Admissions: Among the choices of private schools,
which one will the child attend? (NOTE: Student and
parent choose)
•
Fundraising: I’ll make donation, but to what purpose?
Focus on growing share, not creating primary demand. e.g. Not
“why a boys school” but rather “why our boys school”
•
12. Concept of Distinction:
What is an independent school?
Shared characteristics/benefits distinguish IS
as a category from other education options:
Students are selected, and can be de-selected
Expensive
Shared values, such as college prep
Teaching/education is better
Classes are smaller
Safe
Independent
NOTE: NAIS has completed
surveys and focus groups
about perceived benefits of
independent schools and
which ones differentiate the
category from public and
religious.
But these do not distinguish ISs from one another
13. Strongly favor IS
Favor IS
Not Distinctive
Favor Public
Important features
believed more true
of Public
80%
Important features
believed more true
of ISs
High quality
teachers
70%
0
Challenge
students
Keeping students
mo tivated and
enthusiastic
P revent drug
/alco ho l use
0
0
Suppo rt climate
that say it is OK to
study and excel
M aintaining
discipline
0
60%
0
0
Preparing
academically
fo r co llege
0
0
0
(% of 9 or 10)
0
50%
A dequate to o ls fo r
learning (co mputers)
Preparing
students fo r life
and a career
Teach values
and manners
Importance
NAIS has done
public opinion polls
(this from 2000, a
replication a couple
years ago), and focus
groups with high
income families,
both focused on
perceptions of ISs
0
Graduating wellro unded students
0
A ttending to the needs
o f learning disables
Enco uraging
parents to
participate
0
Keeping class
size small
0
0
Creative and
respo nsive to change
Individualized
attentio n to students
0
Offering students
o ppo rtunities
to be leaders
40%
Enco uraging mo ral,
spiritual develo pment
Range o f cultures, races/
inco me gro ups
0
0
0
Pro grams in music
and the arts
Helping students
mature so cially
0
0
Having students
invo lved in co mmunity
service activities
30%
0
0
Being visible in
the co mmunity
0
Invo lving students in
athletics and spo rts
Less Important
features believed
more true of ISs
M aintaining bo nds
with it graduates
20%
0
7:1
6:1
5:1
4:1
3:1
2:1
1:1
2:1
3:1
4:1
Less Important
features believed
more true of
Public
14. The Marketing Mix:
The Tools Used to Design Value
Demand is
determined by
how the offer
to the market
is designed;
how the offer
is perceived
from the
customer
perspective is
one definition
of brand.
Promotion
People
The 5Ps…imo THE
The 5Ps…imo THE
most important of
most important takeThe 4Ps (+1) takeaway from the
away from the
The MarketingitMix
Institute because it is
Institute because is
the foundation of
the foundation of
strategic marketing
strategic marketing
planning
planning
16. Imagine you are to design a fine
restaurant …..
What features or characteristics:
*
Do customers expect?
*
Would undermine the offering, or brand?
17. Overview of the
Marketing Mix Elements
Product/Program
Pricing
Place/Channels/Access
Promotion
People
The Red Room Paradox,
and Organizational Silos,
are Two Barriers to Good
Marketing
18. Product/Program
= the “bundle of benefits”
Special challenge of being a service e.g.
Intangibility
Maintaining quality and consistency of people
Importance of Differentiation
e.g recent trends toward “centers”, brand-think
Some benefits differ by segment, or change over time
e.g. the nature vs rigor as example of mass communication
problem; why major donor asks are customized
19. Price
Monetary and Non-Monetary Costs
Monetary e.g.,
$$$ cost
Opportunities foregone
Interest
College 529 savings
Non-Monetary e.g.,
Energy
Inconvenience (e.g. lack
of transparency on cost)
Time
Retirement
Waiting
Other purchases
Distance
Psychic risk
Worry
Embarrassment
Fear
Fairness (e.g. to sibling)
20. Even the Simplest Notion of ‘Price’
is Complex in School Context
A K-12’s Situation in Mid-August:
Tuition is $20,000
14 openings: 2 in 11th, 5 in 10th, 7 in 9th
No more applicants likely to appear
Financial aid budget of $300K is committed
2 good applicants to the 9th, the 10th
and the 11th grades each
qualify for $10,000 in FA
Superior ASSIST scholar for 11th grade (1 year only) is
available, requires a full scholarship
What would your school do?
21. A College’s Strategy for Shaping Perception
Using Price and Promotion: What is the
Parent/Student Perception of these Offers as
Would Be Presented in Letter of Admission?
College A’s Offer
$30,000 Tuition
$7,500 need-based grant
College B’s Offer
$30,000 Tuition
$2,500 need-based grant
$5,000 merit scholarship
1.
How do the parents’ net costs, and the school’s net revenue,
of the two offers compare?
2.
Which one do parents talk about at the cocktail party?
22. Place
Channels, Convenience, Access/Policies
Admissions Referral Channels
Summer, gifted
programs
Teachers
Feeder
school
Education
consultant
Alumni
referral
Parent
Coaches
Website
On campus
events
Directory
Information
Website
sources
Website
ADMISSION
OFFICE
News
23. Other Place Factors
Strategic design, or merely “cuz we’ve always done it that way”?
Location
Transportation
Method of inquiry
Method of application
Letters of recommend
Testing
Interview scheduling
Phone access
Policies (sibling, legacy,
financial, etc.)
Paperwork requirements
Selectivity criteria
On-line classes
School calendar
Strategy Examples:
1)
Burroughs School: adds bus route to distant hi-income area
2)
Stuart Hall: Decides to not limit test requirements to SSAT
3)
Westover: Encourages on web post-deadline applications
4)
Cheshire: Shifted to on-line giving/auctions to allow participation of int’l fams
24. People
The job comprises more than expertly running the cash register
Selection (skills, style, accents)
Training, indoctrination
Service expectations
Rewards, motivation
Development
Leadership
Engaged, informed
25. Promotion
Strategy categories comprising promotion
Advertising (e.g. direct mail
Sales Promotions (e.g. merit program)
Events (e.g. reunions, fairs)
Web-based (e.g. adwords, social media)
Print (e.g. brochures)
Publicity, Media Relations
“P”=Communications will be
addressed tomorrow
27. Sample of Questions the Exercise Provokes
No Magic Bullet? OMG! Now what!
With so many possibilities, how does one decide which are best?
Since the school has so little bandwidth, do you increase
bandwidth, or reduce the plan to the bandwidth?
How does one ensure that choices are consistent and synergetic?
Since actions require more than one person, how does one ensure
all are on same page?
How does one get continuity of progress and accountability?
28. End of the Principles of the Business
Discipline of Marketing
Recommended Books:
Marketing Management, Kotler and Keller
Long the leading business
school text, the one the marketing champions on your board used in grad school.
THE book for getting the principles down, but will require the non-professional to
translate to the business of schools.
Strategic Marketing Management for Educational Institutions,
Kotler and Keller Done in 1995, it is a bit dated, but still good for seeing
marketing translated to education
NAIS Handbook on Marketing Independent Schools New marketing
book edited by Kathy, lead chapter by Jeff.
Competing for Students, Money, and Reputation, CASE, Larry
Lauer CASE offers several college-focused books on marketing-related topics.
In the college world the term ‘advancement’ is often used instead of marketing to
label an integrated marketing model.
29. So the “answer” for this particular school…..
1.
Focus on building MS enrollment, LS will
follow
2.
Make more acceptable to broader Jewish
market
30. Example of How the Marketing Mix
Framework Surfaced Strategies for
Inclusion in the “Blueprint”
31. Program/Product
Make a jewel of the middle school
Build on technology strength
Prof develop re brain research (Dweck’s mindset)
Create distinct MS space
Feature MS leadership
Align more with independent schools
Development “ask” for laptops
Offer choices to appeal to “less Jewish”
Hebrew or Spanish
Spring trip: Israel or DC
32. Pricing
Transition to market-appropriate tuition
Uncouple from other campus’ rate
Set relative to overlap competitors
Graduate rate by grade
Adopt SSS and adhere to recommendations
But net tuition revenue mentality (e.g. revenue reporting)
Customize annual giving for this campus
33. Promotion/Communications
Message behind the markets
Split website of the two campuses
Separate middle and lower school
Raise visibility among high income, Jewish-
affiliated fams (eg direct mail)
Feed parents and parents of alumni with news
of progress
Distance identity/signage from JCC
34. Talk about high school and college successes
Develop 2 year communications plan
Clarify distinctions
Create new materials
Revise the website
Boost staffing 2 days/week
35. Place/Process/Accessibility
Test bus service to XXXX
Reduce barriers to application
Accept public school test scores
On-line application
Shift to opt-out re-enrollment contract
Form committee to explore new location
36. People
Create speaker series for 2011-12 (3x year)
Adjust to “more American” school culture
Adopt NAIS governance principles
Give assistant head higher profile
Engage faculty on goals and roles
37. After 2 Years….
193 enrolled compared to 169 last year
(+15%)
57% of new students are FP, compared to 42%
of all students
Tuition revenue: up 13%
Average tuition per student: up $733
Initial year 12 new students joined MS (never
happened before…all chose Spanish!)
Permitted 6th grade to split to 2 smaller sections
38. Extra Slides
Initial several are included to demonstrate that in Marketing,
quality service is designed and intentional. As In Search of
Excellence will show.
Also included are a couple slides about discounting and net
tuition revenue.
Follow-up with Jeff, if interested.
39. Key Dimensions Underlying Strong
Service Relationships
Tangibles: Appearance of facilities, equipment,
personnel
Reliability: Perform service right the first time,
consistently, fairly
Responsiveness: Willingness to help customer and
to provide service
Competence: Knowledge and skill of employees
Adapted from Berry,
Parasuraman, and
Zeithaml
40. Trustworthiness: Credibility, honesty, safety
Empathy: Caring; individualized attention
Courtesy: Friendliness in contacts
Communication: Keeping customers informed in
language they understand; listening to what they say
41. 6 Questions for Managing Quality
1.
Do we strive to present a realistic picture of our
service to customers?
e.g. in college counseling?
1.
Is performing the service right the first time a top
priority?
e.g. missing teacher comments
1.
Do we communicate effectively with customers?
e.g “I only hear from them when they want money”
42. 4.
Do we create opportunities to surprise?
e.g. return call instantly; call on first day of
school
5.
Do staff regard service problems as
opportunities to impress customers?
- building equity in advance
6.
Do we evaluate and continuously improve
performance against customers’
expectations?
- where is this a topic of discussion?
43. Rise in Discounting Strategies
Merit Awards, Discounts, Fire Sales…
Net Tuition Revenue Management
Shift in focus from allocating a fixed FA budget, to
maximizing revenue per spot
In traditional model, once FA budget was expended, no
more aid was awarded, even if a space was available
Bump in current family need shrunk budget for prospects
The thinking of NTR is essentially: If I have a space, rather
than leave it empty, by offering a few thousand dollars can
I attract a family that will pay the balance of the tuition,
thus “netting” this additional revenue?
44. Some Principles of NTR and
Discounting
It is for the selective, not common situation
Be sure you study where it ends-- there is
considerable risk of eroding your, and the market’s,
pricing (imagine a website where parents are posting their deals! Or you
are auctioning spots on e-Bay)
It is preferable to use only in your school’s latest
grades (so you carry the discount for as few grades as possible)
It is better if you can erect fences so few current
families qualify (e.g. left-handed, red-haired students)
BEWARE: In marketing, discounting is the last
thing one does…it is cocaine.
45. Selected Pricing Issues
Lack of transparency
“We offer lots of financial aid” but in reality
“We don’t meet full need” plus
“We won’t tell you the cost until after you’ve
incurred huge non-monetary costs.”
In one school’s study of
inquiries not applying we
found that about half
those reporting incomes
$75-$100K did not think
they would qualify for
aid.
The more one pays, the more one expects
Commodities (undifferentiated services) cannot command
high prices
High price as cue to quality dilemma
For every $1 increase in
tuition, family must earn
$3.44 to remain full-pay
– NAIS/SSS
Tuition level trades off against quality of students
46. Other pricing issues given the current
economic environment….
The
faster tuition is raised at rates higher than
family income growth, the sooner the full-pay
market will shrink to near-zero.
Reality/feeling of less being less well-off increases
perceived costs
Younger families particularly affected?
Parents assess multi-year and multiply by number
of children, whereas schools think year-at-a-time
for a single child: The risk of tuition increases in
the future is part of the buying calculus
47. A College’s Strategy for Shaping Perception
Using Price: What is the Parent/Student
Perception of these Offers as Would Be
Presented in Letter of Admission?
College A’s Offer
$30,000 Tuition
$7,500 need-based grant
College B’s Offer
$30,000 Tuition
$2,500 need-based grant
$5,000 merit scholarship
1.
How do the parents’ net costs, and the school’s net revenue,
of the two offers compare?
2.
Which one do parents talk about at the cocktail party?
48. Differentiation: Position Guides Strategies
Points-of-difference (+PODs) enhance one IS’s relative value
Product/Objective Reality
Market’s Perception Relative to Alternatives
+ Point of
Difference
Strength
Point of
Parity
Shout it!
Reveal it!
(e.g. college stats; lower cost;
innovative)
(e.g. global/international,
transportation avail)
- Point of
Difference
Fix the
perception
(e.g. college counseling,
complex admissions process)
Weakness
Unmet
expectations
(e.g. technology)
Be thankful Fix the
(e.g. teacher experience)
program
(e.g. sciences; sibling policy)