Introduction to Marketing Strategy05.01.10

8/9/2019 Introduction to Marketing Strategy05.01.10

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Introduction

MARKETING STRATEGY


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FOCUS on MARKETING ORIENTATION


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Evolution of the Marketing Concept

ProductProductOrientationOrientation

SalesSalesOrientationOrientation

MarketingMarketingOrientationOrientation

Late 19th century: efficient production of goodsallowed firms to meet strong customer demand.

Mid-1920searly 1950s: weakened demandrequired that products would have to be sold.(personal selling, advertising, and distribution

was the focus)

Early 1950s2000s: adopting a customer focusmeans a commitment to researching andresponding to customer needs.


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Important Terms

Marketing The process of creating, distributing,

promoting,and pricing goods, services, and ideas to

facilitate satisfying exchange relationshipswith customersin a dynamic environment

Customers The purchasers of organizations products; the

focal point of all marketing activities

Target Market

A specific group of customers on whom anorganization focuses its marketing efforts


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Marketing ManagementMarketing Management

The process of planning, organizing,implementing, and controlling marketingactivities to facilitate exchanges effectively

and efficiently

Effectiveness The degree to which an exchange

helps an organization achieve its

objectivesEfficiency

The process of minimizing theresources an organization mustspend to achieve a specific levelof desired exchanges


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Marketing Management (contd)Planning

Assessing opportunities and resourcesDetermining marketing objectivesDeveloping a marketing strategy and plans for

implementation and controlHow, when and by whom are marketing activities

performed?

OrganizingDeveloping the internal structure of the

marketing unitFunctions, products, regions, customer types


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Marketing Management (contd)Implementation

Coordinating marketing activitiesMotivating marketing personnelDeveloping effective internal communications

within the unit

ControlEstablishing performance standards

Comparing actual performance to establishedstandardsReducing the difference between desired and

actual performance


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Important Terms

The Marketing MixFour marketing activitiesproduct, distribution,

promotion, and pricingthat a firm cancontrol to meet the needs of customerswithin its target market

ProductGoods, services, or ideas that satisfy customer

needs

Distribution The ready, convenient, and timely availabilityof products

Promotion

Activities that inform customers about theorganization and its products


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Important Terms

Pricing : Decisions and actions that establishpricing objectives and policies and set productprices

Exchange : The provision or transfer of goods,

services, or ideas in return for something of value

Customer Value : The ratio between thecustomers perceived benefits and the resourcesused to obtain those benefits.

Customer RetentionCustomer Retention: The overall objective of providing value to customers continuously andmore effectively than the competition, to havehighly satisfied customers.


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Important Terms

Relationship MarketingEstablishing long-term, mutually satisfying

buyer-seller relationships allowing forcooperation and mutual dependency

Customer Relationship Management (CRM)Using information about customers to create

marketing strategies that develop and sustaindesirable customer relationships


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Firms Marketing Efforts1. Product2. Promotion3. Price

4. Channels of distribution

Socio-cultural Environment1. Family2. Informal sources3. Other noncommercial

sources4. Social class5. Subculture and culture

Output

Process

Input

E x t e r n a l

I n f l u e nc e

C o n s u m e r

D e c i s i o n

M a k

i n g

P o s t -

D e c i s i o n

B e h a v i o r

Post-purchase

Evaluation

Purchase1. Trial2. Repeat purchase

NeedRecognition

Pre-purchaseSearch

Evaluation of Alternatives

Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

ONSUMER

DE

CISION

PROC

ES


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STRATEGY......

The word Strategy was initially introduced anddefined in the ancient military dictionaries

It comes from the Greek word strategos ,

strictly meaning a general in command of anarmy; it is formed from stratos , meaningarmy and ag , meaning to lead

First time in business literature by WilliamNewman (1951)


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THE CONCEPT OF STRATEGYGeneric

a plan of attack for winning a plan for beating the opposition

Organisational a plan for achieving organisational goals a plan for securing a competitive advantage in a

given market


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THE CONCEPT OF STRATEGY

The direction and scope of anorganisation over the long(er) term,

which ideally matches its resources toits changing environment and, inparticular its markets, customers orclients so as to meet stakeholder

expectations

Johnson & Scholes (1999)


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PURPOSE OF STRATEGY

To set the future direction for theorganisation.

To state how it is to create value tocustomers.

To identify what product/s and in whichmarkets the firm will invest its resources.

To describe how it is to perform better thancompetition.


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hierarchy of strategy


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What is sbu

An SBU is an operating unit focus that groupsa distinct set of products or services, whichare sold to a uniform set of customers,

facing a well-defined set of competitors.

the phrase "Strategic Business Unit" came intouse in the 1960s, largely as a result of

General Electric's many units.


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3 LEVELS OF STRATEGY Corporate

This describes a companys overall direction in termsof growth and the management of its various businessesto achieve a balanced portfolio of products and services.

Competitive/Business (SBU)

which emphasizes improvement of the competitiveposition of a corporations products or services in thespecific industry or market segment served by thatdivision.

How to compete in individual product-markets andsupport the corporate strategy

Functional Functional strategies for the organisations functional

areas in support of SBUs and corporate strategies


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Marketing strategy

In the early 1980s, marketing strategy wasdefined as an indication of how eachelement of the marketing mix will be used toachieve the marketing objectives.

The broad conception of how product, price,promotion and distribution are to function ina coordinated way to overcome resistance to

meet marketing goals


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THE INTER-RELATIONSHIP BETWEENMARKETING AND CORPORATE STRATEGY

INFORMS DIRECTS GUIDES CONTROLS

ACHIEVES SUPPORTS

Corporate Strategy Specifying the

organisations mission Allocating resources Defining Organisational

objectives

Marketing Strategy Identifying product market/s to

compete in Selecting market segments to

target Developing the marketing mix


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Marketing strategy development..

The development of marketing strategy canbe seen at three main levels.

First, the core strategy of the company isselected and the marketing objectives andthe broad focus for achieving them areidentified.

Second, market segments and targets betterthan the competition is identified.


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Third level, a marketing department capableof putting the strategy into practice must becreated.

The marketing department, at this stage isresponsible for developing the marketingmix programs that can convey both thepositioning and the products/services to the

target market.


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Marketing strategy development toBritish Airways (BA)

First level, the companys core strategy andmarketing objectives have been set to ensure thatBA is the customers first choice through thedelivery of an unbeatable travel experience.

Second level, BA has elected to provide overallsuperior service and good value for money in everymarket segment in which it competes.

At third level, BAs marketing program includingadvertising, pricing, distribution and customerservices have been designed to support its

product/services.


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Marketing Strategy Orientation

Should the development of marketing strategybe oriented by

Consideration of customers or

Consideration of competitors


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Does organisation having amarket orientation make

sense? What are theadvantages?


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Advantages

Promotes listening to the customer

Happier customers more likely to be retainedeasily good for long term profitability

More customer and competitive information islikely to be obtained and used good forprofitability

More likely to identify changes in market andcompetitive conditions avoid beingblindsided

Helps employees focus on profit, not salesvolume


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WORK OUT ?

State your career strategy and your

stakeholders


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Organization stakeholders

SHARE HOLDERS

EMPLOYEE

CUSTOMERS

SUPPLIERS &

DISTRIBUTORS


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WEBSTERS MARKETING PRINCIPLES

that serve to guide marketing thought and action inmarketing strategy development

Principle 1: Focus on customers

Principles 2: only compete in markets where you can

establish a competitive advantage

Principle 3: customers do not buy products

Principle 4: Marketing is too important to leave to the

marketing department

Principle 5: Markets are heterogeneous

Principle 6: Markets and customers are constantlychanging


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Recent developments affecting thestrategic role of marketing

Globalization

Increased Importance of Service

Information Technology

Relationships across functions and firms


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Corporate growth strategies

Market penetrationstrategies

Product developmentstrategies

Market developmentstrategies

Diversificationstrategies

Current Products New products

C u r r e n t M a r k e t s

N e w M a r k e t s


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DISCUSSION QUESTION

Which should come first thecustomer need or the productidea?


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Planning framework for strategy making process


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4 main ways of approaching marketing strategy byDouglas west & John ford


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Thinking First

Analysing a strategicmarketing problem &developing the solution(the strategy) through acarefully thought-outprocess

It can help to see the big

picture occasionallythroughout the process. Itcan involve some inspiration& insight, but largely theprocess is one of painstakingly doing your

homework


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Seeing First

Importance of seeing the overalldecision is sometimes greater than

thinking about it

Seeing first is basically insight andInsight often only comes after a periodof preparation, illumination &verification.


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Doing First

(1) do something,(2) make sense of it

(3) repeat the successful parts & discard the rest.

Many companies have successfully diversified their businessesby a process of figuring out what worked & what did not


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Simple Rules

How-to rules keeping managers organised enough to be able to seize opportunities

Boundary rules help managers to pick the best opportunitiesbased geography, customers or technology

Priority rules are about allocating resources amongst competing opportunities

Timing rules relate to the rhythm of key strategic processes

Exit rules are about pulling out from past opportunities


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What is competitive marketing strategy

A market-oriented strategy that establishes aprofitable & sustainable market position for thefirm against all forces that determine industrycompetition by continuously creating &

developing a competitive advantage from thepotential sources that exist in a firms valuechain.

Some advantages are sustainable over a longperiod of time while others can be duplicated bycompetitors almost immediately. Establishing acompetitive advantage means that a firm builds awall around its position in the competitive market.


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Key issue

What must marketing managers understandto engage in effective marketing practice?


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The Company : resources, capabilities, andstrategies The environmental c ontext : broad trends

Current and potential Customers : needs, wants,characteristics

Competitors : strengths, weaknesses, competitivetrends

In other words, the 4 Cs

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Introduction to Marketing Strategy05.01.10

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