Marketing management introduction - unit i - EMBA - purbanchal university

Singa LamaFaculty: Kantipur Valley College, Purbanchal University

Chairman/CEO: ICER Multiversity

Principal: Golden Gate Eng. Sec. School

Master Trainer: QUEST – Nepal

Chief Trainer: SCHeME – Nepal

International Council of Education & Research

ICER MULTIVERSITY

EMBA, Sem. II, Purbanchal University (Nepal)

604:Marketing Management

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www.icernepal.blogspot.com | www.ggess.blogspot.com

Unit II: Strategic Analysis

1.Business Strategy and Sustainable Competitive Advantage

2.Strategic Business Unit3.Strategic Market Management

I. DevelopmentII. CharacteristicsIII.Trends and needsIV.Components of Strategic Market

ManagementV. Process of Strategic Market

Management

Syllabus

1. Business Strategy & Sustainable Competitive Advantage

• Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is “meeting needs profitably.” Whether the marketer is Procter & Gamble, which notices that people feel overweight and want tasty but less fatty food and invents Olestra; or CarMax, which notes that people want more certainty when they buy a used automobile and invents a new system for selling used cars; or IKEA, which notices that people want good furniture at a substantially lower price and creates knock-down furniture—all illustrate a drive to turn a private or social need into a profitable business opportunity through marketing.

Definition: Marketing


• AMERICAN MARKETING ASSOCIATION: Marketing (management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

Definition: Marketing

One of the key factors in Barack Obama’s victory in the 2008 U.S. presidential election was a well-

designed and well-executed marketing program


• A business strategy describes how a particular business intends to succeed in its chosen market place against its competitors. It therefore represents the best attempt that the management can make at defining and securing the future of that business. A business strategy should provide clear answers to the questions:– What is the scope of the business (or offering) to which this

strategy applies?– What are the current and future needs of customers and

potential customers of this business?– What are the distinctive capabilities or unique competence

that will give us competitive advantage in meeting these needs now and in the future?

– What in broad terms needs to be done to secure the future of our business?

Definition: Business Strategy


Six Tests of Business Strategy• It will be correctly scoped.• It will be appropriately documented.• It will address real customer needs.• It will exploit genuine competencies.• It will contribute to competitive advantage.• It will lay the ground for implementation.



• The best business strategies are those which use the capabilities of the firm to address customer needs in a way which leads to sustainable competitive advantage. In practice, business strategies may have to tolerate less lofty achievements than long-term sustainable advantage.

• The business strategy has to address the issue of competitive advantage realistically in the context of that business. This may require an admission that former competitive advantages are being eroded so that the strategy is as much defensive as offensive.

• As John Kay (1999) has pointed out, businesses, like people, have to go through good times and bad times. It is probably impossible to achieve competitive advantage permanently and the excellent corporation that can achieve a permanent and irreducible lead is a myth.

• The business strategy must describe what the basis of competition is, how this basis is changing, and how the strategies take advantage of these changes.



The 6 Keys To Real Sustainable Competitive AdvantageI. Real intellectual propertyII. A dynamic product line, rather than a single productIII. Dramatic cost improvement for causeIV. Proven team with inside relationshipsV. Lock on the market or customer baseVI. Strong focus and differentiation

Summary• Overall, a sustainable competitive advantage requires

value-creating products, processes, and services that cannot be matched by competitors now, and plan content to maintain that position as you scale. Of course all of this assumes you are in a big growing market, with adequate resources, marketing, and great people to deliver. No one said it would be easy!

Sustainable Competitive Advantage

2. Strategic Business Unit

• In business, a strategic business unit (SBU) is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity.

• An SBU may be a business unit within a larger corporation, or it may be a business unto itself. Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors which influence their performance. Managed as separate businesses, they are responsible to a parent corporation.

• Companies today often use the word segmentation or division when referring to SBUs or an aggregation of SBUs that share such commonalities.

Definition: SBU

2. Strategic Business UnitDefinition: SBU

Four Strategies1. Build: The objective here is to increase market share, even forgoing

short-term earnings to achieve this objective if necessary. Building is appropriate for question marks whose market shares must grow if they are to become stars.

2. Hold: The objective in a hold strategy is to preserve market share, an appropriate strategy for strong cash cows if they are to continue yielding a large positive cash flow.

3. Harvest: The objective here is to increase short-term cash flow regardless of long-term effect. Harvesting involves a decision to withdraw from a business by implementing a program of continuous cost retrenchment. The hope is to reduce costs faster than any potential drop in sales, thus boosting cash flow. This strategy is appropriate for weak cash cows whose future is dim and from which more cash flow is needed. Harvesting can also be used with question marks and dogs.

4. Divest: The objective is to sell or liquidate the business because the resources can be better used elsewhere. This is appropriate for dogs and question marks that are dragging down company profits.

3. Strategic Market ManagementDefinition

Strategic Market Management is:

3. Strategic Market Managementa) Development

1. The Production Concept: One of the oldest concepts in business. It holds that consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries such as China, where the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic appliances giant Haier take advantage of the country’s huge and inexpensive labor pool to dominate the market. Marketers also use the production concept when they want to expand the market.

2. The Product Concept: proposes that consumers favor products offering the most quality, performance, or innovative features. However, managers are sometimes caught in a love affair with their products. They might commit the “better-mousetrap” fallacy, believing a better product will by itself lead people to beat a path to their door. A new or improved product will not necessarily be successful unless it’s priced, distributed, advertised, and sold properly.


3.The Selling Concept: holds that consumers and businesses, if left alone, won’t buy enough of the organization’s products. It is practiced most aggressively with unsought goods—goods buyers don’t normally think of buying such as insurance and cemetery plots—and when firms with overcapacity aim to sell what they make, rather than make what the market wants. Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not only won’t return or bad-mouth it or complain to consumer organizations but might even buy it again.

4.The Marketing Concept: emerged in the mid-1950s41 as a customer-centered, sense-and-respond philosophy. The job is to find not the right customers for your products, but the right products for your customers. Dell doesn’t prepare a perfect computer for its target market. Rather, it provides product platforms on which each person customizes the features he or she desires in the computer. The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your target markets.


3.The Selling Concept: holds that consumers and businesses, if left alone, won’t buy enough of the organization’s products. It is practiced most aggressively with unsought goods—goods buyers don’t normally think of buying such as insurance and cemetery plots—and when firms with overcapacity aim to sell what they make, rather than make what the market wants. Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not only won’t return or bad-mouth it or complain to consumer organizations but might even buy it again.

4.The Marketing Concept: emerged in the mid-1950s41 as a customer-centered, sense-and-respond philosophy. The job is to find not the right customers for your products, but the right products for your customers. Dell doesn’t prepare a perfect computer for its target market. Rather, it provides product platforms on which each person customizes the features he or she desires in the computer. The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your target markets.


5. The Holistic Marketing Concept: Without question, the trends and forces that have defined the first decade of the 21st century are leading business firms to a new set of beliefs and practices. “Marketing Memo: Marketing Right and Wrong” suggests where companies go wrong—and how they can get it right—in their marketing.The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing acknowledges that everything matters in marketing—and that a broad, integrated perspective is often necessary.

3. Strategic Market Managementb) Characteristics

Strategic Market Management is:

3. Strategic Market Managementc) Trends

1. Value-based planning:• combines mktg planning ideas & financial planning

techniques > to assess how SBU’s contribute to company stock

• value = financial return of strategic activity > cost of resources allocated to that activity

2. Value-driven strategies:• incorporates ethics, integrity, employee health & safety,

environmental safeguards with common corporate values such as growth, profitability, customer service, & quality

• socially responsible & support sustainable development

3. Strategic Market Managementd) Needs

3. Strategic Market Managemente) Components of Strategic Market Management

1. Analysis of Current Situation2. Opportunity Assessment3. Target Markets4. Goals5. Strategies6. Implementation Time Line7. Marketing Budget

3. Strategic Market ManagementProcess of Strategic Marketing Management

1. Planning: The first step is to perform a thorough SWOT analysis. The results from this analysis should directly help in the formation of a firm's strategy which will aim to minimize threats while maximizing on opportunities as well as reveal new product and market opportunitiesThe second step in the planning phase takes a market-product approach and involves goal and objective setting (Kerin-Hartley-Rudelius, 2007). This begins with understanding the consumer's wants and needs and involves conducting market research. From a strategic marketing perspective it is important to identify critical issues and attitudes related to the product amongst other thingsThe third and final phase of planning would be to decide on the marketing process. In this step the marketing mix will also have to be set. This step involves deciding on strategies the product, price, place and promotion (4 p's). The end result of the planning phase is to set measurable and attainable goals which can be measured in the control phase.


2. Implementation: The next step would be the implementation phase in which all the planning begins to turn into action. Here the firm obtains resources and designs the market organization which is then put into action. Schedules are developed and the marketing programs are executed (strategy and tactics). The product or service will now be available to the public, at the places and prices decided upon in the planning stage. The implementation phase also requires close monitoring to make sure necessary changes occur if internal or external contingencies are affected (McFarland, 2001).

3. Control: The control phase involves comparing results against the goals and benchmarks set in the planning phase. This is where the organization evaluates its process, outcomes and consumer satisfaction (McFarland, 2001). This will allow the firm to view the planning gap to see where the results deviated from the plan. The organization can then act on the data to exploit positive deviations while correcting the negative. This analysis and is necessary for a firm to ensure that their marketing plan is moving in the directions set out in the planning phase and critical for success in measuring whether objectives were met.
