MKT1 - Slide 1 to 241 Chapter 1: Introduction to Strategic Marketing Management Market1 – Page 1

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Chapter 1: Introduction to Strategic Marketing Management

Market1 – Page 1Market1 – Page 1

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What is Marketing?What is Marketing?

Marketing is a societal process by Marketing is a societal process by which individuals and groups which individuals and groups obtain what they need and want obtain what they need and want through creating, offering, and through creating, offering, and freely exchanging products and freely exchanging products and services of value with others. services of value with others.

- Philip Kotler - Philip Kotler


Simple Marketing SystemSimple Marketing System

Industry(a collection

of sellers)

Market(a collection

of Buyers)

Goods/services

Money

Communication

Information


Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that offer the most quality, performance,

or innovative features

Consumers will buy products only ifthe company aggressively

promotes/sells these products

Focuses on needs/ wants of target markets & delivering value

better than competitors

Company Orientations Company Orientations Towards the MarketplaceTowards the Marketplace


Marketing ConceptMarketing Concept

►Need to Focus on Marketing ConceptNeed to Focus on Marketing Concept

Focuses on needs/ wants of target markets & delivering value better than competitors


Evolving Views of Evolving Views of Marketing’s RoleMarketing’s Role

a. Marketing as anequal function

FinanceProduction

Marketing Humanresources

b. Marketing as a moreimportant function

Finance

Humanresources

Marketing

Production


Evolving Views of Evolving Views of Marketing’s RoleMarketing’s Role

e. The customer as the controllingfunction and marketing as the

integrative function

Customer

Marketing

Production

Hum

an

resources

Finance


Overlap Between Strategic Overlap Between Strategic Planning & MarketingPlanning & Marketing

►There is some overlap between the There is some overlap between the two, in terms what you are going to two, in terms what you are going to learn learn

►We will emphasise marketing concepts We will emphasise marketing concepts and approach here rather than and approach here rather than strategic conceptsstrategic concepts

►However, there will be some inevitable However, there will be some inevitable overlap here and thereoverlap here and there



Marketing PlanMarketing Plan

► This is a document that puts together the This is a document that puts together the process that the organisation will undergo in process that the organisation will undergo in order to achieve its marketing objectivesorder to achieve its marketing objectives

► It spells out the following activities that It spells out the following activities that marketing managers need to do:marketing managers need to do: Set marketing objectivesSet marketing objectives Evaluate opportunitiesEvaluate opportunities Create marketing strategiesCreate marketing strategies Prepare marketing programmesPrepare marketing programmes Specify expected resultsSpecify expected results


The Marketing Plan – Possible The Marketing Plan – Possible OutlineOutline

Executive Summary & Table of Contents

Current Marketing Situation

Opportunity & Issue Analysis

Objectives

Marketing Strategy

Action Programs

Projected Profit-and-loss

Controls


The Goal of Strategic Marketing The Goal of Strategic Marketing ManagementManagement

►To select reality-based desired To select reality-based desired accomplishments (e.g., goals & accomplishments (e.g., goals & objectives)objectives)

►To effectively develop or alter business To effectively develop or alter business strategiesstrategies

►To set priorities for operational changeTo set priorities for operational change►To improve the organisation’s To improve the organisation’s

performanceperformance


Strategic Marketing Strategic Marketing Management ModelManagement Model

►The above, discussed in this chapter, The above, discussed in this chapter, is divided as follows:is divided as follows: External/self analysisExternal/self analysis Strategic postureStrategic posture Market planningMarket planning


External AnalysisExternal Analysis

►This comprise:This comprise: Customer analysis (segmentation, Customer analysis (segmentation,

motivations & unmet needs)motivations & unmet needs) Competitor analysis (their performance, Competitor analysis (their performance,

image, culture, strengths/weaknesses)image, culture, strengths/weaknesses) Industry analysis (major market trends, Industry analysis (major market trends,

key success factors, opportunities/threats, key success factors, opportunities/threats, analysis of competitive/change forces)analysis of competitive/change forces)


Competitor Forces AnalysisCompetitor Forces Analysis


Self-AnalysisSelf-Analysis

►Strengths & Weaknesses Strengths & Weaknesses ►Together Opportunities & Threats Together Opportunities & Threats

identified in the external identified in the external environmental analysis, can do a environmental analysis, can do a SWOT analysis SWOT analysis


Strategic PostureStrategic Posture

►Based on the SWOT, the organisation Based on the SWOT, the organisation can decide how it will achieve its long can decide how it will achieve its long term mission/goalsterm mission/goals

►Basically zero in on the strengths to Basically zero in on the strengths to take on opportunities, and take on opportunities, and downplaying the weaknesses, downplaying the weaknesses, especially in respect to threats.especially in respect to threats.


Hence: StrategiesHence: Strategies

►Based on Porter’s and Aaker’s work:Based on Porter’s and Aaker’s work: Price advantage (cost leadership)Price advantage (cost leadership) Quality/features advantage (broad Quality/features advantage (broad

differentiation)differentiation) Marker focused advantage (focused low Marker focused advantage (focused low

cost & focused differentiation)cost & focused differentiation) TQM advantage (value-driven strategy TQM advantage (value-driven strategy

based on continual innovation in price, based on continual innovation in price, product & process) product & process)


Competitor Role StrategyCompetitor Role Strategy

► After organisation has decided on primary After organisation has decided on primary competitive strategy, it must position itself competitive strategy, it must position itself by choosing a competitive role strategy:by choosing a competitive role strategy: Leader: largest market share/initiator (e.g., Leader: largest market share/initiator (e.g.,

McDonalds)McDonalds) Follower: adopter of successful strategies (A&W Follower: adopter of successful strategies (A&W

Restaurant)Restaurant) Challenger: An innovator who challenges the Challenger: An innovator who challenges the

normnorm Loner: Feels in the gap in the market place Loner: Feels in the gap in the market place

(“mom & pop” stores)(“mom & pop” stores)

► Don’t try all!Don’t try all!


Strategic InitiativesStrategic Initiatives

►Next step in developing effective Next step in developing effective posture, priority strategic initiatives:posture, priority strategic initiatives: Grow: e.g., Subway sandwichesGrow: e.g., Subway sandwiches Maintain/defend: Mc Donald has been Maintain/defend: Mc Donald has been

doing thisdoing this Reposition: maintain size, but change key Reposition: maintain size, but change key

elements, e.g., IBM)elements, e.g., IBM) Retrench: Spin-off some businesses, e.g., Retrench: Spin-off some businesses, e.g.,

Nabisco spun off cigarette manufacturingNabisco spun off cigarette manufacturing ExitExit


Vertical Coordination Vertical Coordination StrategiesStrategies

Selling (distribution of) product thru:Selling (distribution of) product thru: ContractsContracts Relation-based alliance: loose, n Relation-based alliance: loose, n

contracts, but understanding – no contracts, but understanding – no separate companyseparate company

Equity-base alliance – may be a separate Equity-base alliance – may be a separate companycompany

Vertically integratedVertically integrated


Need to keep in mind…Need to keep in mind…

►Three critical marketing concepts:Three critical marketing concepts: TLC: Thinking like customers – see things TLC: Thinking like customers – see things

from customer viewpointfrom customer viewpoint CMSQ: Critical marketing strategy CMSQ: Critical marketing strategy

question – why should customers question – why should customers purchase our products over competitors?purchase our products over competitors?

STP: Segment, target & positionSTP: Segment, target & position


Segment, Target & PositionSegment, Target & Position

► STP strategies should complement STP strategies should complement organisation’s overall generic strategy, organisation’s overall generic strategy, competitive role strategy, strategic initiative competitive role strategy, strategic initiative & vertical coordination strategy:& vertical coordination strategy: Market segmentation – every market made up of Market segmentation – every market made up of

distinguishable segments with different needs, distinguishable segments with different needs, buying styles, responsesbuying styles, responses

Target market selection – selecting market Target market selection – selecting market segments which you want to servesegments which you want to serve

Positioning – choosing the 4 Ps for that Positioning – choosing the 4 Ps for that segment(s) segment(s)


Strategic MarketingStrategic Marketing► Company Orientations Towards the MarketplaceCompany Orientations Towards the Marketplace

► Marketing ConceptMarketing Concept

► Evolving Views of Marketing’s RoleEvolving Views of Marketing’s Role

► Evolving Views of Marketing’s RoleEvolving Views of Marketing’s Role

► Overlap Between Strategic Planning & MarketingOverlap Between Strategic Planning & Marketing

► Marketing PlanMarketing Plan

► The Marketing Plan – Possible OutlineThe Marketing Plan – Possible Outline

► The Goal of Strategic Marketing ManagementThe Goal of Strategic Marketing Management

► Strategic Marketing Management ModelStrategic Marketing Management Model

► External AnalysisExternal Analysis

► Competitor Forces AnalysisCompetitor Forces Analysis

► Self-AnalysisSelf-Analysis

► Strategic PostureStrategic Posture

► Hence: StrategiesHence: Strategies

► Competitor Role StrategyCompetitor Role Strategy

► Strategic InitiativesStrategic Initiatives

► Vertical Coordination StrategiesVertical Coordination Strategies

► Need to keep in mind…Need to keep in mind…

► Segment, Target & PositionSegment, Target & Position

Documents

MKT1 - Slide 1 to 241 Chapter 1: Introduction to Strategic Marketing Management Market1 – Page 1