Slide 9-1 © 2013 Pearson Education, Inc. publishing as Prentice Hall CHAPTER 9 Marketing Strategy Reformulation: The Control Process

Slide 9-2© 2013 Pearson Education, Inc. publishing as Prentice Hall 1.Define the concept of strategic control. 3.Explain each element of operations control. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 2.Describe the nature and sources of strategic change. 4.Discuss the nature of marketing costs analysis and the issues involved.

Slide 9-3© 2013 Pearson Education, Inc. publishing as Prentice Hall 6.Discuss sales and marketing channels analyses and their impact on the firm. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 5.Describe offering mix analysis and its two interrelated tasks. 7.Explain three considerations involved in strategic and operations control.

2 -4 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Marketing Control Set marketing goals Measures performance Evaluates causes of differences Take corrective actions

2 -5 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Measuring and Managing Return on Marketing Investment Return on marketing investment (marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment.

2 -6 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Return on Marketing Investment

Slide 9-7© 2013 Pearson Education, Inc. publishing as Prentice Hall THE MARKETING STRATEGY CONTROL PROCESS The marketing control process serves as the mechanism for achieving:  Strategic adaptation to environmental change  Operational adaptation to productivity needs Operations Control Strategic Control “Doing the right things” “Doing things right”

Slide 9-8© 2013 Pearson Education, Inc. publishing as Prentice Hall THE MARKETING STRATEGY CONTROL PROCESS  Assesses the direction of the organization as evidenced by its: Implicit or explicit goals and strategies Capacity to perform in the context of changing environments and competitive actions Strategic Control  Defines the fit between an organization’s capabilities and objectives and environmental threats and opportunities

Slide 9-9© 2013 Pearson Education, Inc. publishing as Prentice Hall THE MARKETING STRATEGY CONTROL PROCESS  Assesses how well the firm performs marketing activities as it seeks to achieve planned outcomes  Assumes that: Operations Control The direction of the firm is correct Only the organization’s ability to perform specific tasks needs to be improved

Slide 9-10© 2013 Pearson Education, Inc. publishing as Prentice Hall STRATEGIC CHANGE CHAPTER 9: MARKETING STRATEGY REFORMULATION—THE CONTROL PROCESS

Slide 9-11© 2013 Pearson Education, Inc. publishing as Prentice Hall  Is the change in the environment that will affect the long-run well-being of the organization  Represents opportunities or threats to an organization, depending on its competitive posture STRATEGIC CHANGE  Example: The aging of the U.S. population

Slide 9-12© 2013 Pearson Education, Inc. publishing as Prentice Hall OPTIONS FOR DEALING WITH STRATEGIC CHANGE  Allocate the resources necessary to alter the firm’s technical and marketing capabilities to fit its market-success requirements  Shift emphasis to product markets where the match between success requirements and the firm’s distinctive competency is clear  Cut back efforts in those product markets where the firm has been outflanked  Leave the industry totally

Slide 9-13© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL CHAPTER 9: MARKETING STRATEGY REFORMULATION—THE CONTROL PROCESS

Slide 9-14© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL  The goal of operations control is to improve the productivity of marketing efforts  Ways to identify and allocate costs are: Sales Analysis Customer Profitability Analysis Marketing-Cost Analysis Product-Service Mix Analysis Marketing Channel Analysis

Slide 9-15© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL Marketing-Cost Analysis Its purpose is to:  Trace, assign, or allocate costs to a specified marketing activity or segment  Accurately display the financial contribution of activities or entities to the organization

Slide 9-16© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL Product-Service Mix Analysis This analysis involves two interrelated tasks:  Assess the performance of offerings in relevant markets:  Appraise the financial worth of offerings via: Sales Volume AnalysisMarket Share Analysis Contribution Margin Approach

Slide 9-17© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL Sales Analysis Its purpose is to direct attention to both the: Behavioral Aspect of Sales Consists of sales effort and allocation of selling time Cost Aspect of Sales Consists of expenses from the performance and administration of the sales function

Slide 9-18© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL Customer Profitability Analysis A profitable customer is a person, household, or company that, over time, yields a revenue stream that exceeds, by an acceptable amount, the organization’s cost of attracting, selling, and servicing that customer.

Slide 9-19© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL Is calculated as follows: Customer Acquisition Costs Customer Retention Costs =– Customer Profitability Customer Gross Margin + () Customer Profitability Analysis

Slide 9-20© 2013 Pearson Education, Inc. publishing as Prentice Hall OPERATIONS CONTROL  Drop them to eliminate their costs entirely  Reduce the cost of serving them to make them more profitable  Charge them higher prices/fees to increase profits Customer Profitability Analysis  When this is done for each customer, it is possible to classify customers into different profit tiers

Slide 9-21© 2013 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.