Introduction to Strategic Marketing Management

Agenda Marketing and its Strategic RoleCompetitive Advantage and its sourcesProcesses of Strategic Marketing Management

The Primary Purpose of MarketingSocietal process by which individuals and groups obtain what they need and want, by creating, offering and freely exchanging products and services of value with others.

What Is MarketingMarketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals.

Corporate PlanningStrategic PlanningOperational PlanningMarketing PlanningShort Range or Tactical PlanningLong Range PlanningMarketing Strategy Adapted from Greenley (1989)

Expanding Responsibilities of Marketing ManagersExpanded responsibilities include:Charting the direction of the organizationContributing to decisions that will create and sustain a competitive advantage and affect long-term organizational performanceThey no longer function solely to direct day-to-day operations. They must make strategic decisions as well.

The Marketing Manager Is the most significant Functional contributor to the strategic planning process, with leadership roles in defining the business mission, analysis of the environmental, competitive, and business situations; developing objectives, goals, and strategies; and defining product, market distribution, and quality plans to implement the business strategies. This involvement extends to the development of programs and operational plans that are fully linked with the strategic plan.

Processes in Strategic Marketing ManagementDefining the organizations business, mission, and goalsIdentifying and framing organizational growth opportunitiesFormulating product-market strategiesBudgeting marketing, financial, and production resourcesDeveloping reformulation and recovery strategies

Business DefinitionBy defining a business from a customer or market perspective an organization is appropriately viewed as:a customer satisfying endeavora goods-producing or service delivery enterprise.notProducts and services are transient, as is often the technologies or means used to produce and deliver them. Basic customer needs are more enduring. (Encyclopedia Britannica)

An organization should define a business by: (Product-Market Scope)

The type of customers it is currently servingThe particular needs of those customer groups it is currently trying to satisfyThe means or technology by which the organization is satisfying the customer needsWhat business are we in?

Competitive AdvantageHallmark of High Performance BusinessSources of Competitive AdvantageCore CompetenciesValue Chain

COMPETITIVE ADVANTAGESomething of value that your firm provides to the market in comparison to the competitors which enables the firm to substantially improve its financial performance

VALUEWILLINGNESS TO PAYWILLINGNESS TO SUPPLYPRICECOSTVALUE TO BUYERSPROFIT MARGIN TO FIRMVALUE TO SUPPLIERS

The Value ChainThe value chain provides a map of firms capabilities and allows systematic search for core competencies

Strategy and Coherence

Tools for Building Competitive AdvantageResources are inputs into a firms production processes:Tangible ResourcesIntangible Resources Financial resourcesTechnological resources Physical resourcesInnovative resources Human resourcesReputation Organizational resources

Capabilities are the capacity for a set of resources to perform a task or activity in an integrative mannerOrganizational Design consists of the organization structure, technology, policies and procedures

CRITICAL FACTORS FOR COMPETITIVE ADVANTAGECOMPETITIVE ADVANTAGEVALUERARENESSINIMITABILITYORGANIZATIONAL DESIGNNON-SUBSTITUTABLE

Core Competencies Require VRIS-OValue do a firms resources and capabilities allow a firm to respond to its environment?Rare how many rival firms already possess this resource/capability?Inimitable do firms face a cost disadvantage in obtaining this resource/capability compared to firms that already have it? Non-substitutable are there strategic alternatives?Organization is the firm organized to exploit the full potential of its resources/capabilities?

A Competitive Advantage enables a firm to:Outperform competitorsGrow despite competitors

Competitive Advantage is found in:Products that are different than competitorsAlternative distribution channelsSelective pricing and different cost structures

A Competitive Advantage should be:SustainableUniqueMarket responsiveSuperior

ImitationToo often firms make the mistake of imitating other firms resource strengths and capabilities to develop a competitive advantage

Disadvantages of ImitationFirms trying to imitate another firms core competence are at a cost disadvantage relative to rivals due to: Unique Organizational DesignHuman CapitalCultural Differences

Building Blocks of Competitive Advantage Efficiency Innovation Quality CustomerResponsiveness Lower Costs Higher Prices

Competitive Advantage via EfficiencyManufacturingEconomies of scale/Learning curve; Reducing variability

MarketingBuilding brand image / customer loyalty

InfrastructureMulti-purpose facilities/equipment/cutting-edge technology

Human ResourcesTraining/Developing skills; team-workPerformance incentives

R&DManufacturing OR Process innovation

Materials management (Supply Chain)JIT, Strategic Alliance, etc.

Competitive Advantage via QualityManufacturingTrace and eliminate defects Input from employees

MarketingFocus on customerfeedback for enhancing quality

InfrastructureState-of-the-art

Human ResourcesTraining/Developing a quality-focused culture

R&DManufacturingProcess & product innovation

Materials management(supply Chain ).TQM, 6-Sigma etc.

Competitive Advantage via InnovationManufacturingFlexibleResponsive

MarketingCustomer focus for product innovation

InfrastructureInvest in R&D tools

Human ResourcesHire talented innovatorsIncentives/opportunities for innovation

R&DFocus on product innovation

Materials managementWhatever complements R&D

Competitive Advantage via Customer ResponsivenessManufacturingCustomization

MarketingMicro-marketing/Personalization

InfrastructureSuited to customer responsivenessInformation systems for feedback

Human ResourcesCustomer focused trainingEmployee incentives/Job security

R&DInvolving Customers in innovation process (Customerization)

Materials managementBuild responsive logistics/delivery systems

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