Ategic Marketing Managem
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LECTURE
1
ategic Marketing Managem Slide 1-1
AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Define an organization’s business, mission, and goals. 2.Identify and frame organization growth opportunities. 3.Formulate product-market strategies. 4.Budget marketing, financial, and production resources. Slide 1-2
AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 5.Develop reformulation and recovery strategies. 6.Draft a marketing plan. 7.Emphasize marketing ethics and social responsibility.
Slide 1-3
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
INTRODUCTION
Slide 1-4
PURPOSE OF MARKETING
To create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.
Slide 1-5
RESPONSIBILITIES OF MARKETING MANAGERS Make day-to-day decisions. Chart the organization’s direction. Create and sustain a competitive advantage and affect the organization’s long-term performance.
Slide 1-6
RESULTS OF THE EVOLUTION OF THE MARKETING MANAGER Created the Chief Marketing Officer (CMO) position in many organizations. Increased popularity of strategic marketing management.
Slide 1-7
RESPONSIBILITIES OF CMOs Define the business mission. Analyze environmental, competitive, and business situations. Develop business objectives and goals. Define customer value propositions and their respective marketing strategies.
Slide 1-8
SKILL SET OF CMOs Interpret extensive market and operational information. Sense customer and competitor motivations. Frame strategic marketing initiatives in light of implementation considerations and financial targets/results.
Slide 1-9
STRATEGIC MARKETING MANAGEMENT PROCESSES Define an organization’s business, mission, and goals. Identify and frame organizational growth opportunities. Formulate product-market strategies. Budget marketing, financial, and production resources. Develop reformulation and recovery strategies. Slide 1-10
Lecture 01-2
• Prof. Dr. MAK Chishty
Slide 1-11
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
THE ORGANIZATION’S BUSINES AND GOALS
Slide 1-12
BUSINESS DEFINITION Answers the question, “What business are we in?” What business an organization is in is neither obvious nor easy. An organization defines its business by: •The type of customer served and the specific needs to be satisfied •The means or technology used to satisfy these customer needs Slide 1-13
BUSINESS DEFINITION Customer groups and needs are more enduring than the offerings and means or technologies to produce and deliver them. What business is the Encyclopedia Britannica in?
Slide 1-14
BUSINESS MISSION Consists of a written statement that: Underscores the scope of an organization’s operations apparent in its business definition. Reflects management’s vision of what the organization seeks to do. Describes an organization’s purpose regarding its customers, products/services, markets, philosophy, and technology. Crystallizes management’s vision of the organization’s long-term direction and character. Slide 1-15
BUSINESS MISSION Consists of a written statement that (continued): Provides guidance in identifying, pursuing, and evaluating market-product opportunities. Inspires and challenges employees to do what is valued by the organization and its customers. Provides direction for setting goals or objectives. Also applies to not-for-profit organizations.
Slide 1-16
BUSINESS MISSION
CANNON PHOTO COPIER “Our strategic intent is to help people find better ways to do great work— by constantly leading in document technologies, products, and services that improve our customers’ work processes and business results.” Slide 1-17
BUSINESS MISSION
EIDIH FOUNDATION “To improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies.”
Slide 1-18
BUSINESS GOALS OR OBJECTIVES Convert the organization’s mission into tangible actions and results that are to be achieved within a specified time frame. Are divided into three major categories: Production
Financial
Marketing
Slide 1-19
BUSINESS GOALS OR OBJECTIVES
Production
Financial
Marketing
•Manufacturing and service capacity •Product and service quality
•Return on investment •Return on sales •Shareholder wealth •Market share •Sales volume •Profit •Marketing productivity
•Profit •Cash flow
•Customer satisfaction •Customer value creation •Customer lifetime value Slide 1-20
BUSINESS GOALS OR OBJECTIVES
A situation analysis is an appraisal of operations to determine reasons for the gap between what was or is expected and what has happened or will happen. Slide 1-21
Lecture01-3 Prof.Dr. MAK Chishty
Slide 1-22
STRATEGIC MARKETING MANAGEMENT
AMING ORGANIZATIONAL GRO
Slide 1-23
CONVERTING ENVIRONMENTAL OPPORTUNITIES INTO ORGANIZATIONAL OPPORTUNITIES
Ask three questions: What might we do? What do we do best? What must we do?
Slide 1-24
WHAT MIGHT WE DO? Sources of environmental opportunities: Unmet or changing consumer needs. Unsatisfied buyer groups. New means or technologies for delivering value to prospective buyers.
Slide 1-25
WHAT DO WE DO BEST?
A distinctive competency describes an organization’s unique strengths or qualities, including skills, technologies, or resources that distinguish it from other organizations. Slide 1-26
WHAT DO WE DO BEST? Two criteria must be satisfied for a distinctive competency: Competitors cannot replicate the skill easily or without a sizeable investment in time, effort, and money. It should make a significant contribution to the benefits customers perceive, thereby providing them with superior value. Slide 1-27
GILLETTE: WHAT ARE ITS DISTINCTIVE COMPETENCIES?
Slide 1-28
WHAT MUST WE DO?
Success requirements are basic tasks that an organization must perform in a market or industry to compete successfully.
Slide 1-29
T0WS ANALYSIS TOWS analysis is a formal framework for identifying and framing organizational growth opportunities. Organization
- Type of Factor Favorable Unfavorable
Internal Capabilities
Strengths
Weaknesses
External Environment
Opportunities
Threats Slide 1-30
TOWS ANALYSIS
Threats
Pose dangers to the welfare of the organization
Opportunities
Developments or conditions in the environment that have favorable implications for the organization.
Weaknesses
Strengths
What an organization lacks or does poorly relative to other organization What the organization is good at doing or some characteristic that gives it an important capability. Slide 1-31
SAMPLE TOWS ANALYSIS FRAMEWORK Internal Factors
Strengths
Weaknesses
External Factors
§Management
§Economic
§Marketing
§Competition
§Manufacturing
§Consumer
§R&D
§Technology
§Finance
§Legal/Regulatory
§Offerings
§Industry/Market Structure
Opportunities
Threats
Slide 1-32
TOWS ANALYSIS Questions to ask after a TOWS analysis: Which strengths represent distinctive competencies? Do they compare favorably with what are believed to be market or industry success requirements? Which weaknesses disqualify the organization from pursuing certain opportunities? Does a pattern emerge from the SWOT analysis? Slide 1-33
LECTURE 01-3 Prof. Dr. MAK Chishty
Slide 1-34
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
FORMULATING RODUCT-MARKET STRATEGIE
Slide 1-35
PRODUCT-MARKET STRATEGY
A product-market strategy involves selecting specific markets and profitably reaching them through an integrated program called a marketing mix. Slide 1-36
PRODUCT-MARKET STRATEGIES Market s Existing Existing
Offerin gs
Market Penetration
New
Market Development
Diversificatio New New Offering Development n
Slide 1-37
PRODUCT-MARKET STRATEGIES
A market-penetration strategy dictates that an organization seeks to gain greater dominance in a market in which it already has an offering (existing offerings existing markets). Slide 1-38
MARKET-PENETRATION STRATEGY This strategy involves: Increasing present buyers’ usage or consumption rates of the offering. Attracting buyers of competing offerings. Stimulating product trial among potential customers.
Slide 1-39
MARKET-PENETRATION STRATEGY Factors to consider when adopting this strategy: Examine market growth. Assess competitive reaction. Analyze the capacity of the market to increase usage or consumption rates and the availability of new buyers. Slide 1-40
PRODUCT-MARKET STRATEGIES
A market-development strategy dictates that an organization introduce its existing offerings to markets other than those it is currently serving (existing offerings new markets). Slide 1-41
MARKET-DEVELOPMENT STRATEGY This strategy involves: Adjusting the marketing mix, such as: •Modifying the basic product offering •Using different distribution outlets •Changing the sales effort or advertising
Analyzing competitors’ strengths, weaknesses, and potential for retaliation. Slide 1-42
MARKET-DEVELOPMENT STRATEGY This strategy involves (continued): Identifying the number, motivation, and buying patterns of new buyers. Determining the organization’s ability to adapt to new markets to evaluate success.
Slide 1-43
MARKET-DEVELOPMENT STRATEGY Internationally, this strategy has four forms:
Exporting
Licensing
Joint Venture/ Strategic Alliance
Direct Investment
Slide 1-44
MARKET-DEVELOPMENT STRATEGY Exporting
Involves marketing the same offering in another country through sales offices or intermediaries.
Licensing
Is a contract where one firm (licensee) is given the rights to patents, trademarks, etc. by the owner (licensor) in turn for a royalty or fee.
Joint Venture/ Strategic Alliance
Involves investment by both a foreign firm and a local company to create a new entity in the host country. The two forms share ownership, control, and profits of the entity.
Direct Investment
Involves investing in a manufacturing and/or assembly facility in a foreign market. Is the most risky and requires the most commitment. Slide 1-45
PRODUCT-MARKET STRATEGIES
A product- (new offering-) development strategy dictates that an organization create new offerings existing markets.
Slide 1-46
PRODUCT-DEVELOPMENT STRATEGY This strategy involves: Product Innovation
Developing totally new offerings.
Product Augmentation
Enhancing the value to customers of existing offerings.
Product Line Extension
Adding different features, sizes, etc. to broaden the existing line. Slide 1-47
PRODUCT-DEVELOPMENT STRATEGY Factors to consider when adopting this strategy: The market size and volume needed for profitability. The magnitude and timing of competitors’ responses. The impact of the new product on the sales of existing offerings (cannibalization). The capacity of the organization to deliver the offerings to the market(s). Slide 1-48
PRODUCT-MARKET STRATEGIES
A diversification strategy involves the development or acquisition of offerings new to the organization and the introduction of those offerings to publics not previously served by the organization (new offerings new markets). Slide 1-49
DIVERSIFICATION STRATEGY Considerations regarding this strategy: Many firms have adopted this strategy to take advantage of growth opportunities. Is very risky because both the offerings and pubic/market are new to the organization. Can be successful if the organization applies its distinctive competencies to reaching new markets with new offerings. Slide 1-50
STRATEGY SELECTION Product-market strategies are evaluated based on: The organization’s business definition, mission, and capabilities. Market capacity and behavior. Environmental forces. Competitive activities. Slide 1-51
STRATEGY SELECTION Product-market strategies are chosen based on: Costs and benefits of a strategy. Probabilities of success for a strategy. Analysis of competitive structure, market dynamics, and opportunity costs. The product itself. Slide 1-52
DECISION-TREE FORMAT Action
A1
A2
Response
Outcome
R1
O1
R2
O2
R1
O3
R2
O4 Slide 1-53
SAMPLE DECISION-TREE Action Marketpenetration strategy
Marketdevelopment strategy
Response
Outcome
Aggressive competition
Estimated profit of Rs.32 million
Passive competition
Estimated profit of Rs.53 million
Aggressive competition
Estimated profit of Rs.41 million
Passive competition
Estimated profit of Rs.64 million
Slide 1-54
THE MARKETING MIX Communicatio n Aggressive competition Strategy
Product Strategy
Customer
Aggressive competition
Channel Strategy
Passive competition
Price Strategy Slide 1-55
THE MARKETING MIX Product Strategy Communication Strategy
Channel Strategy
Price Strategy
Kind of product, service, or idea offered.
How the product, service, or Estimated idea will beprofit communicated to buyers. Informs assures of$3and million buyers that the offering will meet their needs. Method for distributing the product or service to Aggressive buyers. Satisfies buyers’ shopping patterns and competition purchase requirements. Provides information and offering availability. Estimated profit of $4 million Amount buyers will pay for the offering. Represents the value or benefits provided. Slide 1-56
FORMULATING THE MARKETING MIX Depends on the success requirements of the market. Delivers customer value in marketspace, Estimated profit million the new interactive capabilities ofof$3 the Internet. Aggressive competition
Must be consistent with both the needs of the markets and the organization’s Estimated profit of $4 million capacity. Is as much art and science. Slide 1-57
LECTURE01-4 Prof. Dr. MAK Chishty
Slide 1-58
STRATEGIC MARKETING MANAGEMENT
ETING, FINANCIAL, AND PRODU
Slide 1-59
BUDGETING
A budget is a formal, quantitative expression of an organization’s planning and strategy initiatives expressed in financial terms.
Slide 1-60
BUDGETING A master budget consists of: Operating Budget
Focuses on the income statement. Also referred to as a pro forma income statement or profit plan.
Financial Budget
Focuses on the effect the operating budget has on the organization’s cash position.
Special Budgets
Focuses on developing advertising, sales, and other budgets that support the master budget. Slide 1-61
LECTURE01-5 Prof.Dr. MAK Chishty
Slide 1-62
STRATEGIC MARKETING MANAGEMENT
EFORMULATION AND RECOVER
Slide 1-63
MARKETING AUDIT A marketing audit is a comprehensive, systematic, and periodic examination of a firm’s or business unit’s marketing environment, objectives, strategies, and activities to determine problem areas and opportunities and recommend a plan of action to improve the firm’s marketing performance. Slide 1-64
MARKETING AUDIT Addresses the following questions: Strategic
Operational
Are we doing the right things? Are we doing things right?
Slide 1-65
REFORMULATION AND RECOVERY STRATEGIES Have the following purposes: Forces marketing managers to ask “What if…?” questions. Allows for contingency plans, preplanning of reformulation and recovery strategies that lead to faster reaction time in implementing remedial action.
Slide 1-66
LECTURE01-6 Prof Dr. MAK Chishty
Slide 1-67
STRATEGIC MARKETING MANAGEMENT
DRAFTING A MARKETING PLAN
Slide 1-68
MARKETING PLAN
A marketing plan is a formal, written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specific future time period. Slide 1-69
MARKETING PLAN Consists of: Business Plan
Marketing Plan
Product Plan
Each has these time dimensions: Short-term
Focuses on a 1-year period.
Long-term
Focuses on a 3- to 5-year period. Slide 1-70
STRATEGIC MARKETING MANAGEMENT
NG ETHICS AND SOCIAL RESPO
Slide 1-71
ETHICS AND SOCIAL RESPONSIBILITY Most marketing decisions involve some degree of moral judgment. Marketers should take actions that are legal, ethical, and socially responsible.
Slide 1-72
1
ategic Marketing Managem Slide 1-1
AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Define an organization’s business, mission, and goals. 2.Identify and frame organization growth opportunities. 3.Formulate product-market strategies. 4.Budget marketing, financial, and production resources. Slide 1-2
AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 5.Develop reformulation and recovery strategies. 6.Draft a marketing plan. 7.Emphasize marketing ethics and social responsibility.
Slide 1-3
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
INTRODUCTION
Slide 1-4
PURPOSE OF MARKETING
To create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.
Slide 1-5
RESPONSIBILITIES OF MARKETING MANAGERS Make day-to-day decisions. Chart the organization’s direction. Create and sustain a competitive advantage and affect the organization’s long-term performance.
Slide 1-6
RESULTS OF THE EVOLUTION OF THE MARKETING MANAGER Created the Chief Marketing Officer (CMO) position in many organizations. Increased popularity of strategic marketing management.
Slide 1-7
RESPONSIBILITIES OF CMOs Define the business mission. Analyze environmental, competitive, and business situations. Develop business objectives and goals. Define customer value propositions and their respective marketing strategies.
Slide 1-8
SKILL SET OF CMOs Interpret extensive market and operational information. Sense customer and competitor motivations. Frame strategic marketing initiatives in light of implementation considerations and financial targets/results.
Slide 1-9
STRATEGIC MARKETING MANAGEMENT PROCESSES Define an organization’s business, mission, and goals. Identify and frame organizational growth opportunities. Formulate product-market strategies. Budget marketing, financial, and production resources. Develop reformulation and recovery strategies. Slide 1-10
Lecture 01-2
• Prof. Dr. MAK Chishty
Slide 1-11
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
THE ORGANIZATION’S BUSINES AND GOALS
Slide 1-12
BUSINESS DEFINITION Answers the question, “What business are we in?” What business an organization is in is neither obvious nor easy. An organization defines its business by: •The type of customer served and the specific needs to be satisfied •The means or technology used to satisfy these customer needs Slide 1-13
BUSINESS DEFINITION Customer groups and needs are more enduring than the offerings and means or technologies to produce and deliver them. What business is the Encyclopedia Britannica in?
Slide 1-14
BUSINESS MISSION Consists of a written statement that: Underscores the scope of an organization’s operations apparent in its business definition. Reflects management’s vision of what the organization seeks to do. Describes an organization’s purpose regarding its customers, products/services, markets, philosophy, and technology. Crystallizes management’s vision of the organization’s long-term direction and character. Slide 1-15
BUSINESS MISSION Consists of a written statement that (continued): Provides guidance in identifying, pursuing, and evaluating market-product opportunities. Inspires and challenges employees to do what is valued by the organization and its customers. Provides direction for setting goals or objectives. Also applies to not-for-profit organizations.
Slide 1-16
BUSINESS MISSION
CANNON PHOTO COPIER “Our strategic intent is to help people find better ways to do great work— by constantly leading in document technologies, products, and services that improve our customers’ work processes and business results.” Slide 1-17
BUSINESS MISSION
EIDIH FOUNDATION “To improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies.”
Slide 1-18
BUSINESS GOALS OR OBJECTIVES Convert the organization’s mission into tangible actions and results that are to be achieved within a specified time frame. Are divided into three major categories: Production
Financial
Marketing
Slide 1-19
BUSINESS GOALS OR OBJECTIVES
Production
Financial
Marketing
•Manufacturing and service capacity •Product and service quality
•Return on investment •Return on sales •Shareholder wealth •Market share •Sales volume •Profit •Marketing productivity
•Profit •Cash flow
•Customer satisfaction •Customer value creation •Customer lifetime value Slide 1-20
BUSINESS GOALS OR OBJECTIVES
A situation analysis is an appraisal of operations to determine reasons for the gap between what was or is expected and what has happened or will happen. Slide 1-21
Lecture01-3 Prof.Dr. MAK Chishty
Slide 1-22
STRATEGIC MARKETING MANAGEMENT
AMING ORGANIZATIONAL GRO
Slide 1-23
CONVERTING ENVIRONMENTAL OPPORTUNITIES INTO ORGANIZATIONAL OPPORTUNITIES
Ask three questions: What might we do? What do we do best? What must we do?
Slide 1-24
WHAT MIGHT WE DO? Sources of environmental opportunities: Unmet or changing consumer needs. Unsatisfied buyer groups. New means or technologies for delivering value to prospective buyers.
Slide 1-25
WHAT DO WE DO BEST?
A distinctive competency describes an organization’s unique strengths or qualities, including skills, technologies, or resources that distinguish it from other organizations. Slide 1-26
WHAT DO WE DO BEST? Two criteria must be satisfied for a distinctive competency: Competitors cannot replicate the skill easily or without a sizeable investment in time, effort, and money. It should make a significant contribution to the benefits customers perceive, thereby providing them with superior value. Slide 1-27
GILLETTE: WHAT ARE ITS DISTINCTIVE COMPETENCIES?
Slide 1-28
WHAT MUST WE DO?
Success requirements are basic tasks that an organization must perform in a market or industry to compete successfully.
Slide 1-29
T0WS ANALYSIS TOWS analysis is a formal framework for identifying and framing organizational growth opportunities. Organization
- Type of Factor Favorable Unfavorable
Internal Capabilities
Strengths
Weaknesses
External Environment
Opportunities
Threats Slide 1-30
TOWS ANALYSIS
Threats
Pose dangers to the welfare of the organization
Opportunities
Developments or conditions in the environment that have favorable implications for the organization.
Weaknesses
Strengths
What an organization lacks or does poorly relative to other organization What the organization is good at doing or some characteristic that gives it an important capability. Slide 1-31
SAMPLE TOWS ANALYSIS FRAMEWORK Internal Factors
Strengths
Weaknesses
External Factors
§Management
§Economic
§Marketing
§Competition
§Manufacturing
§Consumer
§R&D
§Technology
§Finance
§Legal/Regulatory
§Offerings
§Industry/Market Structure
Opportunities
Threats
Slide 1-32
TOWS ANALYSIS Questions to ask after a TOWS analysis: Which strengths represent distinctive competencies? Do they compare favorably with what are believed to be market or industry success requirements? Which weaknesses disqualify the organization from pursuing certain opportunities? Does a pattern emerge from the SWOT analysis? Slide 1-33
LECTURE 01-3 Prof. Dr. MAK Chishty
Slide 1-34
FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
FORMULATING RODUCT-MARKET STRATEGIE
Slide 1-35
PRODUCT-MARKET STRATEGY
A product-market strategy involves selecting specific markets and profitably reaching them through an integrated program called a marketing mix. Slide 1-36
PRODUCT-MARKET STRATEGIES Market s Existing Existing
Offerin gs
Market Penetration
New
Market Development
Diversificatio New New Offering Development n
Slide 1-37
PRODUCT-MARKET STRATEGIES
A market-penetration strategy dictates that an organization seeks to gain greater dominance in a market in which it already has an offering (existing offerings existing markets). Slide 1-38
MARKET-PENETRATION STRATEGY This strategy involves: Increasing present buyers’ usage or consumption rates of the offering. Attracting buyers of competing offerings. Stimulating product trial among potential customers.
Slide 1-39
MARKET-PENETRATION STRATEGY Factors to consider when adopting this strategy: Examine market growth. Assess competitive reaction. Analyze the capacity of the market to increase usage or consumption rates and the availability of new buyers. Slide 1-40
PRODUCT-MARKET STRATEGIES
A market-development strategy dictates that an organization introduce its existing offerings to markets other than those it is currently serving (existing offerings new markets). Slide 1-41
MARKET-DEVELOPMENT STRATEGY This strategy involves: Adjusting the marketing mix, such as: •Modifying the basic product offering •Using different distribution outlets •Changing the sales effort or advertising
Analyzing competitors’ strengths, weaknesses, and potential for retaliation. Slide 1-42
MARKET-DEVELOPMENT STRATEGY This strategy involves (continued): Identifying the number, motivation, and buying patterns of new buyers. Determining the organization’s ability to adapt to new markets to evaluate success.
Slide 1-43
MARKET-DEVELOPMENT STRATEGY Internationally, this strategy has four forms:
Exporting
Licensing
Joint Venture/ Strategic Alliance
Direct Investment
Slide 1-44
MARKET-DEVELOPMENT STRATEGY Exporting
Involves marketing the same offering in another country through sales offices or intermediaries.
Licensing
Is a contract where one firm (licensee) is given the rights to patents, trademarks, etc. by the owner (licensor) in turn for a royalty or fee.
Joint Venture/ Strategic Alliance
Involves investment by both a foreign firm and a local company to create a new entity in the host country. The two forms share ownership, control, and profits of the entity.
Direct Investment
Involves investing in a manufacturing and/or assembly facility in a foreign market. Is the most risky and requires the most commitment. Slide 1-45
PRODUCT-MARKET STRATEGIES
A product- (new offering-) development strategy dictates that an organization create new offerings existing markets.
Slide 1-46
PRODUCT-DEVELOPMENT STRATEGY This strategy involves: Product Innovation
Developing totally new offerings.
Product Augmentation
Enhancing the value to customers of existing offerings.
Product Line Extension
Adding different features, sizes, etc. to broaden the existing line. Slide 1-47
PRODUCT-DEVELOPMENT STRATEGY Factors to consider when adopting this strategy: The market size and volume needed for profitability. The magnitude and timing of competitors’ responses. The impact of the new product on the sales of existing offerings (cannibalization). The capacity of the organization to deliver the offerings to the market(s). Slide 1-48
PRODUCT-MARKET STRATEGIES
A diversification strategy involves the development or acquisition of offerings new to the organization and the introduction of those offerings to publics not previously served by the organization (new offerings new markets). Slide 1-49
DIVERSIFICATION STRATEGY Considerations regarding this strategy: Many firms have adopted this strategy to take advantage of growth opportunities. Is very risky because both the offerings and pubic/market are new to the organization. Can be successful if the organization applies its distinctive competencies to reaching new markets with new offerings. Slide 1-50
STRATEGY SELECTION Product-market strategies are evaluated based on: The organization’s business definition, mission, and capabilities. Market capacity and behavior. Environmental forces. Competitive activities. Slide 1-51
STRATEGY SELECTION Product-market strategies are chosen based on: Costs and benefits of a strategy. Probabilities of success for a strategy. Analysis of competitive structure, market dynamics, and opportunity costs. The product itself. Slide 1-52
DECISION-TREE FORMAT Action
A1
A2
Response
Outcome
R1
O1
R2
O2
R1
O3
R2
O4 Slide 1-53
SAMPLE DECISION-TREE Action Marketpenetration strategy
Marketdevelopment strategy
Response
Outcome
Aggressive competition
Estimated profit of Rs.32 million
Passive competition
Estimated profit of Rs.53 million
Aggressive competition
Estimated profit of Rs.41 million
Passive competition
Estimated profit of Rs.64 million
Slide 1-54
THE MARKETING MIX Communicatio n Aggressive competition Strategy
Product Strategy
Customer
Aggressive competition
Channel Strategy
Passive competition
Price Strategy Slide 1-55
THE MARKETING MIX Product Strategy Communication Strategy
Channel Strategy
Price Strategy
Kind of product, service, or idea offered.
How the product, service, or Estimated idea will beprofit communicated to buyers. Informs assures of$3and million buyers that the offering will meet their needs. Method for distributing the product or service to Aggressive buyers. Satisfies buyers’ shopping patterns and competition purchase requirements. Provides information and offering availability. Estimated profit of $4 million Amount buyers will pay for the offering. Represents the value or benefits provided. Slide 1-56
FORMULATING THE MARKETING MIX Depends on the success requirements of the market. Delivers customer value in marketspace, Estimated profit million the new interactive capabilities ofof$3 the Internet. Aggressive competition
Must be consistent with both the needs of the markets and the organization’s Estimated profit of $4 million capacity. Is as much art and science. Slide 1-57
LECTURE01-4 Prof. Dr. MAK Chishty
Slide 1-58
STRATEGIC MARKETING MANAGEMENT
ETING, FINANCIAL, AND PRODU
Slide 1-59
BUDGETING
A budget is a formal, quantitative expression of an organization’s planning and strategy initiatives expressed in financial terms.
Slide 1-60
BUDGETING A master budget consists of: Operating Budget
Focuses on the income statement. Also referred to as a pro forma income statement or profit plan.
Financial Budget
Focuses on the effect the operating budget has on the organization’s cash position.
Special Budgets
Focuses on developing advertising, sales, and other budgets that support the master budget. Slide 1-61
LECTURE01-5 Prof.Dr. MAK Chishty
Slide 1-62
STRATEGIC MARKETING MANAGEMENT
EFORMULATION AND RECOVER
Slide 1-63
MARKETING AUDIT A marketing audit is a comprehensive, systematic, and periodic examination of a firm’s or business unit’s marketing environment, objectives, strategies, and activities to determine problem areas and opportunities and recommend a plan of action to improve the firm’s marketing performance. Slide 1-64
MARKETING AUDIT Addresses the following questions: Strategic
Operational
Are we doing the right things? Are we doing things right?
Slide 1-65
REFORMULATION AND RECOVERY STRATEGIES Have the following purposes: Forces marketing managers to ask “What if…?” questions. Allows for contingency plans, preplanning of reformulation and recovery strategies that lead to faster reaction time in implementing remedial action.
Slide 1-66
LECTURE01-6 Prof Dr. MAK Chishty
Slide 1-67
STRATEGIC MARKETING MANAGEMENT
DRAFTING A MARKETING PLAN
Slide 1-68
MARKETING PLAN
A marketing plan is a formal, written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specific future time period. Slide 1-69
MARKETING PLAN Consists of: Business Plan
Marketing Plan
Product Plan
Each has these time dimensions: Short-term
Focuses on a 1-year period.
Long-term
Focuses on a 3- to 5-year period. Slide 1-70
STRATEGIC MARKETING MANAGEMENT
NG ETHICS AND SOCIAL RESPO
Slide 1-71
ETHICS AND SOCIAL RESPONSIBILITY Most marketing decisions involve some degree of moral judgment. Marketers should take actions that are legal, ethical, and socially responsible.
Slide 1-72
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