Introduction to Marketing Strategy
What is STRATEGY?
A campaign to win in a competitive situation, taking into account your resources, your competition’s resources and the nature of the battlefield to obtain a sustainable competitive advantage.
What is Marketing Strategy?
It means deliberately choosing a different set of activities to deliver a unique mix of value to the target market.
Two components of marketing strategy– Target market selection (STP)– Selection of marketing mix variables
“if you don’t know where you are going, all roads will take you there!”
Strategy provides the directions!
The Essence of Strategy!
Choosing to perform activities differently than rivals do to create a sustainable competitive advantage!!
What does Southwest Airlines do?
Example: Southwest Airlines
If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.
Activity Map of Southwest
Low prices
Frequent Departures
Lean and
productive crew
Point-to-Point flights
Limited Passenger Amenities
High aircraft utilization
No meals
No assign. seats
No transfers
No connections
Standard fleets
Limited use of travel agents
Automatic Ticketing machines
High employee compensation Emply. Stock
ownership
Flexible Union contracts
15 min.turnaround
What is Strategy? A game plan to win in a competitive situation.
– Know yourself - your resources, your abilities, your strengths, your weaknesses
– Know your competition - how will they react to you, their strengths, weaknesses
– Identify a plan that leads to SUSTAINABLE COMPETITIVE ADVANTAGE.
– To win - look at both the big picture as well as execution details.
Marketing: A Brief History
Production Era (Ended in the 1920s)– Can we produce enough of the product
Sales Era (ended in the late 1940s)– Find a way to sell what we produce
Marketing Era (today, but ever changing)– What do customers want and how do we
provide it for them at a price to make a profit.
“The business enterprise has only two basic functions — marketing
and innovation.”Peter Drucker
Internal vs. Market OrientationInternal View External View
Persuade customer to buy what company produces Focus
Produce what customer wants to buy
Generic product, production process, and delivery system
Augmented product, customer benefits, and market segments
Lowest deliverable cost Competitive Advantage
Superior customer value
Volume, cost, profit margins Objectives
Profitable use of resources, market position, customer satisfaction, and loyalty
Short-term, reactiveTime
Horizon
Medium and long-run view of threats and
opportunities
What is marketing?
Gathering, monitoring, analyzing information– Environment– Customers– Competitors
Interacting with all areas of organization, sharing information Developing, implementing, and controlling strategic marketing
plan, based on information Creating satisfying exchanges
MarketingManager
Marketing& Sales
R & D
Other internal information
sources
Finance &Accounting
Production
Consultants& Advisors
Competition
Consumers
OtherOrganizations
OtherPublics
Suppliers
Retailers &Wholesalers
Marketing Role
What is Market Orientation?
Superior ability to understand, attract, and keep valuable customers.
Externally oriented culture
Capabilities in market sensing, market relating, and anticipatory strategic thinking
Adaptable and coherent organizational configuration of culture, capabilities, andprocesses
Elements of Market Orientation
SharedKnowledge
Base
Configuration
Focus on superior customer value
Coherence of structure & systems Adaptability
Cultureis
externallyoriented
CapabilitiesMarket sensingMarket relating
Strategic thinking
SuperiorAbility toUnderstand,Attract, andKeep ValuableCustomers
Customers Competitors
Channels Collaborators
Advantages of Market Orientation
Market Orientation
Market-Based Strategy
Customer Satisfaction & Retention
$ $
Why does market orientation lead to greater profits?
Cost and investment efficiency Employee satisfaction Price premium Revenue growth Competitive preemption
But…. Have to be truly market driven!!
Superior ability to understand markets Sense emerging opportunities Anticipate competitors’ moves Make fact-based decisions
Superior ability to attract and keep customers Deliver superior value Encourage loyalty Leverage market investments
Impediments to Being Market Driven
Being oblivious to market
Becoming compelled by the market
Feeling superior to the market
Market Driven CultureMarket-Driven Organization Self-Centered Organization
All decision start with the customer and opportunities for advantage
We’ll sell to whoever will buy
Quality is defined by customersQuality is conformance to internal standards
The best ideas come from living with customers
Customers don’t know what they want
Employees are customer advocatesCustomer relations are problems for the marketing dept
Customer loyalty is key to profitability
Customer data are a control mechanism and channels are conduits
Customer knowledge is a valuable asset and channels are value adding partners
New accounts (conquests) are what matters
Market Driven CultureMarket-Driven Organization Self-Centered Organization
No sacred cows—cannibalize yourself
Protect the existing revenue stream
Learn from mistakes Avoid mistakes
Market research is decision insurance
Market research is a justification tool
Paranoia about competitors is healthy
We can live with our competitors
The behavior of competitors can be anticipated and influenced
Competitors are unpredictable
We know more than the competitors
If competition does it, it must be good
Strategic AnalysisStrategic Analysis
The 5C framework
Customers What needs do we satisfy?
CompanyWhat special competence do we possess to meet those needs?
CompetitorsWho competes with us in meeting those needs?
Context What environmental factors limit us?
Collaborators Who should we enlist to help us?
The 5 C Strategic Analysis Framework
Schematic of the Marketing ProcessBased on Robert Dolan’s Note on Strategy, HBR Press
CollaboratorsCustomers ContextCompany Competitors
SegmentationTarget Mkt
SelectionPositioning
Product Place Promotion Price
Acquisition Retention
PROFITS