Principles of Marketing ch 2

Strategic Marketing Management
What is the organization’s main activity?
How will it reach its goals?
Answer to strategic marketing management questions:
-Strategic business units
-Maketing plan
-Strategic alternatives
Strategic Planning
the managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities
Goal of strategic planning:
long- term profitability and growth
Strategic Business Units (SBU’s)
-a distinct mission and specific target market
-control over its resources
-its own competitors
-plans independent of other SBU’s
Ansoff’s Opportunity Mix
Market penetration
Market Development
Product Development
Diversification
Market Penetration
Increase market share among existing customers
Market Development
attract new customers to existing products
Product Development
create new products for present markets
Diversification
introduce new products into new markets
Portfolio Matrix
a tool for allocating resources among products or strategic business units on the basis of relative market share
Portfolio Market Strategies
Build SBU’s with star potential
Hold successful Cash Cows
Harvest all SBU’s except stars
Divest problem children and dogs
General Electric Model
Business Position (horizontal axis)
Market Attractiveness (vertical axis)
Business Position
how well positioned the organization is to take advantage of market opportunities
(low- medium- high)
Market Attractiveness
measures the attractiveness of a market
(low- medium- high)
The Importance of Strategic Marketing
What–> strategic planning
Why–> long term profitability and growth
How–> write a marketing plan
What is a Marketing Plan
Planning, marketing planning, marketing plan
Planning
the process of anticipating future events and determining strategies to achieve organizational objectives in the future
Marketing Planning
designing activities relating to marketing objectives and the changing of marketing environment
Marketing Plan
a written document that acts a a guidebook of marketing activities for the marketing
Marketing Plan Elements
Business Mission–> Objectives–> situation or SWOT analysis–> Marketing Strategy (target marketing strategy & marketing mix)–> implementation evaluation control
Mission Statement
Answers the question, “What business are we in, and where are we going?”
Focuses on the market rather than the good or service
Strategic Business Units may also have a mission statement
Business Mission Statement
too narrow—> marketing myopia
too broad—> no direction
just right—> focus on marketing served and benefits customers seek
SWOT Analysis
Things the company does well
Things the company does not do well
conditions in the external environment that favor strengths
Conditions in the external environment that do not relate to existing strengths or favor areas oaf current weakness
Internal of SWOT analysis
things the company does well & things the company does not do well
External of SWOT analysis
conditions in the external environment that favor strengths & conditions in the external environment that do not relate to existing strengths or favor areas of current weakness
Components of a Situation Analysis (Internal)
production costs
marketing skills
financial resources
company or brand image
employee capabilities
technology
Components of a Situation Analysis (External)
social
demographic
economic
technological
political/ legal
competitive
Environmental Scanning
the collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan
Competitive Advantage
the set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition
Types of competitive advantage
cost, product/ service differentiation, niche strategies
Cost Competitive Advantage
being the low- cost competitor in an industry while maintaining satisfactory profit margins
Cost Competitive Advantage Aspects
obtain inexpensive raw materials
create efficient plant operations
design products for ease of manufacturer
control overhead costs
avoid marginal customers
Sources of Cost Reduction
experience curves
efficient labor
no- frills production
government subsidies
product design
reengineering
production innovations
new service delivery methods
Product/ Service Differentiation
the provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s
Examples of Product/ Service Differentiators
Brand names
Strong dealer network
Product
Image
Service
Niche Competitive Advantage
the advantage achieved when a firm seeks to target and effectively serve a small segment of the market
Niche Competitive Advantage Aspects
used by small companies with limited resources
may be used in a limited geographic market
product line may be focused on a specific product category
Building Sustainable Competitive Advantage
Sustainable competitive advantage is an advantage that cannot be copied by the competition
A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals
Sources of Sustainable Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Customer Service
Promotion
Marketing Objective
a statement of what is to be accomplished through marketing activities
Marketing Objectives
Realistic- Attainable
Measurable
Time specific
Compared to a benchmark
Criteria for Good Market Objectives
1. communicate marketing management philosophy
2. provide management
3. motivate employees
4. force executives to think clearly
5. form a basis for control
Marketing Strategy
the activities of selecting and describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets
Target Market Strategy
segment the market based on groups with similar characteristics
analyze the market based on attractiveness of market segments
select one or more target markets
Target Market Strategies
1. Appeal to the entire market with one marketing mix
2. Concentrate on one marketing segment
3. Appeal to multiple markets with multiple marketing mixes
The Marketing Mix is…
a unique blend of product, place, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market
Products can be…
tangible goods
services
places
ideas
Place
-product availability where and when customers want them
-all activités from raw materials to finished products
-ensure products arrive in usable condition at designated place when needed
Promotion
role is to bring about exchanges with target markets by:
informing, educating, persuading, reminding
Price
what the buyer must give up to obtain a product
the most flexible of the “4 P’s”– quickest to change
competitive weapon
price x units sold= total revenue
Following Up on the Marketing Plan
Implementation
Evaluation & Control
Marketing Audit (comprehensive, systematic, independent, periodic)
Post Audit Tasks
1. Profile and make recommendations about weaknesses and inhibiting factors as well as strengths and new opportunities
2. Ensure that the role of the audit has been clearly communicated
3. Make someone accountable for implementing recommendations
Techniques for Effective Strategic Planning
Continual attention, creativity, management commitment—> effective strategic planning