2 Marketing Strategy

ROAD MAP: Previewing the Concepts Companywide strategic planning: Four steps. business portfolios and growth strategies. How marketing works with its partners to create and deliver customer value: Customer Relationships. Marketing strategy and mix: Forces that influence it. Marketing management functions: Elements of a marketing plan. Professor Takada

ROAD MAP: Companywide strategic planning: Marketing strategy and mix: Four steps. business portfolios and growth strategies. How marketing works with its partners to create and deliver customer value: Customer Relationships. Marketing strategy and mix: Forces that influence it. Marketing management functions: Elements of a marketing plan. Professor Takada

Strategic Planning Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities. Professor Takada

Step 1 The Mission Statement A statement of the organization’s purpose What it wants to accomplish in the larger environment Should be market oriented and defined in terms of customer needs. What is our Business? Who is the Customer? What do Consumers Value? What Should our Business Be? Professor Takada

Mission Statements Should: Be Realistic Be Specific Fit the Market Environment Be Based on Distinctive Competencies Be Motivating Professor Takada 2-11

Good Mission Statements Focus on limited number of goals Stress major policies and values Define major competitive spheres Professor Takada

GE’s breakthroughs in the process of desalination crosses multiple competitive spheres By 2015, two-thirds of the world will be water-stressed. Desalination plants like this one help to relieve water shortages. Professor Takada

“The purpose of Motorola is to honorably serve the needs of the community by providing products and services of superior quality at a fair price to our customers; to do this so as to earn an adequate profit which is required for the total enterprise to grow; and by doing so, provide the opportunity for our employees and shareholders to achieve their personal objectives.” Professor Takada

Product Orientation vs. Market Orientation Company Product Market Missouri-Pacific Railroad We run a railroad We are a people-and-goods mover Xerox We make copying equipment We improve office productivity Standard Oil We sell gasoline We supply energy Columbia Pictures We make movies We entertain people Professor Takada

Step 2 Setting Company Objectives and Goals Company’s Mission -> Objectives Business Objectives Marketing Objectives: Marketing Strategies and Programs Professor Takada

Step 3 Business Portfolio Collection of businesses and products that make up the company. The company must: analyze its current business portfolio: Strategic Business Units (SBUs), decide which SBUs should receive more, less, or no investment, develop growth strategies for growth or downsizing. Professor Takada

Characteristics of SBUs It is a single business or collection of related businesses It has its own set of competitors It has a leader responsible for Strategic planning Profitability Efficiency Professor Takada

Analyzing Current SBU’s: BCG Growth-Share Matrix Relative Market Share High Low ? Stars High growth & share May need heavy investment to grow Eventually, growth will slow Question Marks Low share SBUs in high growth markets Require cash to hold market share Build into Stars or phase out Market Growth Rate Low High Cash Cows Low growth, high share Established, successful SBU’s Produce cash Dogs Low growth & share Generate cash to sustain self Do not promise to be cash sources Professor Takada

Problems With Matrix Approaches Can be Difficult, Time Consuming, Costly to Implement Difficult to Define SBUs & Measure Market Share/Growth Focus on Current Businesses, Not Future Planning Problems With Matrix Approaches Can Place too Much Emphasis on Growth Can Lead to Poorly Planned Diversification Professor Takada

Ansoff’s Product-Market Expansion Grid Professor Takada

Growth at Starbucks To maintain its phenomenal growth in an increasingly over-caffeinated marketplace, Starbucks has brewed up an ambitious, multi-pronged growth strategy. Professor Takada

Starbucks Product/Market Expansion Grid Market Penetration: make more sales to current customers without changing products. How? Add new stores in current market areas; improve advertising, prices, menu, service. Market Development: identify and develop new markets for current products. How? Review new demographic (seniors/ethnic consumers) or geographic (Asian, European, Australian, & South American) markets. Product Development: offering modified or new products to current markets. How? Add food offerings, sell coffee in supermarkets, co-brand products. Diversification: start up or buy businesses outside current products and markets. How? Making and selling CDs, testing restaurant concepts, or branding casual clothing. Professor Takada

Marketing’s Role in Strategic Planning Provide a Guiding Philosophy Provide Inputs to Strategic Planners Design Strategies to Reach Objectives Professor Takada

The Business Unit Strategic Planning Process Professor Takada

SWOT Analysis Strengths Weaknesses Opportunities Threats Professor Takada

Market Opportunity Analysis (MOA) Can the benefits involved in the opportunity be articulated convincingly to a defined target market? Can the target market be located and reached with cost-effective media and trade channels? Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits? Professor Takada

Market Opportunity Analysis (MOA)_2 Can the company deliver the benefits better than any actual or potential competitors? Will the financial rate of return meet or exceed the company’s required threshold for investment? Professor Takada

FedEx FedEx added Sunday deliveries based on customer requests and market demand Professor Takada

Opportunity Matrix Professor Takada

Threat Matrix Professor Takada

Porter’s Generic Strategies Overall Cost Leadership Differentiation Focus Professor Takada

The Star Alliance Professor Takada

Categories of Marketing Alliances Product or Service Alliances Promotional Alliances Logistics Alliances Pricing Collaborations Professor Takada

Feedback and Control Professor Takada

Value Delivery Network Company’s Value Chain Distributors Suppliers Customers Professor Takada

The Value Chain Wal-Mart’s ability to offer the right products at low prices depends on the contributions from people in all of the company’s departments—marketing, purchasing, information systems, and operations. Professor Takada

The Value Delivery Process Professor Takada

Nike Creates Value Professor Takada

Improving Value Delivery the Japanese Way 0 customer feedback time 0 product improvement time 0 setup time purchasing time 0 defects Professor Takada

3 V’s Approach to Marketing Define the value segment Define the value proposition Define the value network Professor Takada

Porter’s Value Chain Professor Takada

Benchmarks Organizational costs and performance measures Competitor Professor Takada

Core Business Processes Market sensing Customer relationship management New offering realization Fulfillment management Customer acquisition Professor Takada

Wal-Mart’s stock replenishment process is legendary Professor Takada

Characteristics of Core Competencies A source of competitive advantage Applications in a wide variety of markets Difficult to imitate Professor Takada

Netflix’s Distinctive Capabilities Professor Takada

Challenges Facing CMO’s Doing more with less Driving new business development Becoming a full business partner Professor Takada

ROAD MAP: Marketing strategy and mix: Marketing management functions: Companywide strategic planning: Four steps. business portfolios and growth strategies. How marketing works with its partners to create and deliver customer value: Customer Relationships. Marketing strategy and mix: Forces that influence it. Marketing management functions: Elements of a marketing plan. Professor Takada

Managing Marketing Strategy and Marketing Mix Professor Takada

Market Segmentation The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. Professor Takada

Target Marketing Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Target segments that can sustain profitability. Professor Takada

Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Process begins with differentiating the company’s marketing offer so it gives consumers more value. Professor Takada

The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Consists of the 4 P’s Product Price Place Promotion Professor Takada

The 4 P’s of the Marketing Mix Professor Takada

The 4 P’s & 4 C’s of the Marketing Mix 4 P’s - Seller’s View Product Price Place Promotion 4 C’s - Buyer’s View Customer Solution Customer Cost Convenience Communication Professor Takada

Managing the Marketing Effort Professor Takada

Major Sections of Product/Brand Plan Executive Summary Current Marketing Situation Analysis of Threats and Opportunities Objectives for the Brand Marketing Strategy Action Programs Marketing Budget Controls Professor Takada

Evaluating a Marketing Plan Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete? Professor Takada

Marketing Department Organization Functional Organization Market or Customer Organization Geographic Organization Product Management Organization Combination of Two or More Professor Takada

Marketing Control Process Professor Takada

Rest Stop: Reviewing the Concepts Explain companywide strategic planning and its four steps. Discuss how to design business portfolios and develop strategies growth and downsizing. Assess marketing’s role in strategic planning and explain how marketers partner with others inside and outside the firm to build profitable customer relationships. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it. List the marketing management functions, including the elements of a marketing plan. Professor Takada