Basic Marketing, 13th edition

For use with Shapiro, Wong, Perreault, and McCarthy texts.Copyright © 2002 McGraw-Hill Ryerson Limited.

Chapter 2: Strategic Market Planning and the Evaluation of Marketing Opportunities


A.The Management Job In Marketing

1. Marketing management process---is the process of (1) planning

marketing activities,(2)directing the implementation of the plans, and (3)controlling these plans.

2.See exhibit 2-1


The Marketing Management Process

2-2

Whole-CompanyStrategic

ManagementPlanning

Whole-CompanyStrategic

ManagementPlanning

MarketingPlanning

MarketingPlanning

Implement MarketingPlan(s) and Program

Implement MarketingPlan(s) and Program

Control MarketingPlan(s) and Program

Control MarketingPlan(s) and Program

Adjust Plansas Needed

Exhibit 2-1


Marketing managers should seek new opportunities

----- Marketing managers must seek attractive new opportunities, as customers’ needs change or as the organization’s ability to meet customers’ needs changes.

----- We should match resources to market opportunities.


Strategic management planning concerns the whole firm

Strategic (management) planning is the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities.

---- Strategic (management) planning is a top-management job that includes planning not only for marketing activities but also for production, research and development, and other functional area.


NOTE

** In this text we’ll focus on marketing strategic planning . It is not on whole—company planning

** We will use the term strategic planning and strategic market planning to mean the same thing.


B. WHAT IS STRATEGIC MARKET PLANNING

Strategic market planning means finding attractive opportunities and developing profitable marketing strategies.


What is a marketing strategy

Marketing strategy Specifies a target market and a related marketing mix.


(1) Target market—A fairly homogeneous group of customers to whom a company wishes to appeal.

(2)Marketing mix—The controllable variables that the company puts together to satisfy a target group. We also call it 4P’s


Marketing mix --- “4Ps ”

Product: everything the target group receives

Price: everything the target group gives up to receive it

Place: everything that is done to give the customer possession

Promotion: everything the customer hears about the other three Ps


C. Selecting A Marketing-Oriented Strategy Is Target Marketing

Target Marketing---A marketing mix is tailored to fit some specific target customers.


Mass Marketing---The typical production-oriented approach that aims at everyone vaguely with the same marketing mix.

----It assumes that everyone’s need are some.


NOTES

1) Mass marketing and mass marketers are different

2) Target marketing can still mean big markets and profits.

--Target marketing is not limited to small market segments—only to fairly homogeneous ones.


2-3

A Marketing Strategy

TheMarketing

Mix

TheMarketing

Mix

C

Exhibit 2-2


D. Developing Marketing Mixes For Target Markets

The four Ps make up a marketing mix

See exhibit 2-3 # Customer is not part of the

marketing mix


2-4

The Four Ps of the Marketing Mix

Product Place

Price Promotion

C

Exhibit 2-3


Let’s see the 4P’s

Product—The good or service for the target’s needs

The product area is concerned with developing the product for target market. This offering may involve a physical good, a service, or a blend both. Keep in mind that product is not limited to physical good


Place—Reaching the target

Place is concerned with all of the decisions involved in getting the right product to the target market’s place.

** channel of distribution---is any series of firm or individuals who participate in the flow of product from producer to final user or consumer.

See exhibit 2-5


Manufacturer or Producer

Consumer

Procter &Gamble

DelMonteNissanCIBC

Wholesaler

Wholesaler

Retailer

Wholesaler

RetailerRetailer

2-6

Four Examples of Basic Channels of Distribution for Consumer Products

Exhibit 2-5


Promotion---Telling and selling the customer

Promotion is concerned with telling the target market about the right product.

Promotion includes personal selling, mass selling( advertising and publicity), sales promotion.


Price--- making it right*Each of the four Ps

contribution to the wholeSee exhibit 2-4Strategy jobs must be done

together.


ProductPhysical GoodsServiceFeaturesQuality LevelAccessoriesInstallationInstructionsWarrantyProduct LinesPackagingBranding

PlaceObjectivesChannel TypeMarket ExposureKinds of

MiddlemanKinds and

Locations of Stores

How to Handle Transporting and Storing

Service LevelsRecruiting

MiddlemenManaging

Channels

PromotionObjectivesBlendSalespeople Kind Number Selection Training MotivationAdvertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares?Sales PromotionPublicity

PriceObjectivesFlexibilityLevel over

Product Life Cycle

Geographic Terms

DiscountsAllowances

2-5

Strategy Decision Areas Organized by the Four Ps

Exhibit 2-4


E. The Marketing Plan Is A Guide to Implementation and Control

Marketing plan fill out marketing strategy

Marketing plan—is written statement of a marketing strategy and the time-related detail for carrying out the strategy.


Implementation puts plans into operation

Implementation—putting marketing plans into operation.

Operational decisions—short-run decisions to help implement strategies.

Control is analyzing and correcting what you’ve done


Several plan make a whole marketing program

Marketing program Blends all of the firm’s marketing plans into one big plan.


Elements of a Firm’s Marketing Program

A Firm’sMarketingProgram

TargetMarket

MarketingMix

MarketingStrategy

Time-RelatedDetails and Control

Procedures

MarketingPlan

OtherMarketing

Plans

+

+

+

=

=

=

2-7

Exhibit 2-7


Marketing Manager’s Framework

C

Product Place

Price Promotion

Cultural and social environment

Resource and objectives of firm

Competitive environment

Economic and technological environment

Political and legal


YOUR HOMEWORK

READ THE CASE OF PAGE 43,

--- Strategic marketing planning --- The watch industry .

Question :

What do you think form the case?


Distribution of Different Firms Based on Marketing Performance

2-8

2% 2%14% 14%Total

FailurePoor Fair Good Exceptional

(Well belowaverage)

(Belowaverage)

(Well aboveaverage)

(Aboveaverage)

68%(AverageMarketingProgram)

Death-wishmarketing

Best-practicesmarketing

Exhibit 2-9


G. What are attractive opportunities?

1. Breakthrough opportunities are best

Opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time.

It’s hard to continue providing superior value to target customers if competitors can easily copy your marketing mix.


2. Competitive advantage is needed--- At least

A firm has a marketing mix that target market see as better then a competitor’s mix.

There are three basic types of advantage: lower cost, higher quality, and customer focus.


MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

Present Products New Products

Four Basic Types of Opportunities

Present Markets

New Markets

2-9

Types of Opportunities

Exhibit 2-10


H. Types of opportunities to pursue

1. Market penetration

----Trying to increase sales of a firm’s present products in its present markets, probably through a more aggressive marketing mix.


22. Market development---Trying to increase sales by selling

present products in new market.

Firms try advertising in different media to reach new target customers. Or they may add channels of distribution or new store in new area.

Example: McDonald’s, KFC


3. Product development ----means offering new or improved

products for present markets.

By identifying the present market’s needs, a firm may see way to add or modify product features, create several quality levels ,or add more types or size to better satisfy customers.

For example: Microsoft


1. Diversification ---Means moving into totally

different lines of business—perhaps entirely unfamiliar products, market, or even levels in the production-marketing system.


I. HOW TO EVALUATE OPPORTUNITIES

Developing and applying screening criteria

Criteria

Quantitative

Qualitative

----Sales, profit, ROI ( return on investment )

----Some kind of statement


Sales and Cost Curves ofTwo Strategies

Do

llars Total cost

Years

Sales

0 1 2 3 4 5

Product A

In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to abandon this product as too costly.

2-10


Use Panning Grids To Evaluate A Opportunities

We use General Electric (G E) method to evaluate a portfolio of opportunities

BUSINESS STENGTHS---- size, growth, share, position, profitability

margins, technology position, image, pollution ,strength/weakness .

INDUSTRY ATTRACTIVENESS ----size, market growth, price, market diversity,

competitive structure, industry profitability, technical role, environment factors.


2-11

Bu

sin

ess

Str

eng

th

Industry AttractivenessH

igh

Med

ium

Lo

w

High Medium Low

No Growth

Borderline

Growth

Evaluating Opportunities

Exhibit 2-13


Multi-product firms have a difficult strategic planning job

----Multi-product firms use Strategic business unit

-----An organizational unit that focuses its efforts on some product-market and is treated as a separate profit central.

Portfolio management

---An approach, It Treats alternative product, division, or strategic business unit as though they are share investments to be bought and sold using financial criteria.


Better

Tre

nds?

Smal

ler W

orld C

ompetitive

Advantage

Early Start

2-12

Considering International Opportunities


Insensitive Sensitive

Basiccommodity-typeconsumerproducts

Industrialproducts

Consumerproducts thatare linked to

culturalvariables

2-13

Continuum of Environmental Sensitivity

Exhibit 2-14


QUIZ

List the four types of marketing opportunities and define each type:

ABCD

Business

Basic Marketing, 13th edition