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MARKETING PLANNING &

STRATEGY
Rahul Gandhi
• Congress launched him as their marketing
weapon
• He has added a new constituency” the youth “
• Shows freshness , sincerity , positivity – all of
which is a rare combination amongst the
politicians
• Political scion gifted with a glorious smile
Virgin Mobile
• Decided to target youngistan – focused
exclusively on youth
• Focus on communication where the youth
“ gets around “ not necessarily rebels
..they find a way
• Introduced many first “ including ..get paid
to receive a call” -Cut clutter
• It has achieved a 92 % awareness , and
69 % consideration a year since its launch
Rakhi Sawant
• From an item girl she became the biggest
start for NDTV imagine
• As a brand she is brash , crude , willingly
flaunts her unsophistication
• Her appeal connected with the masses

Sun Tze on Strategy
• “Know your enemy, know yourself,
and your victory will not be
threatened. Know the terrain,
know the weather, and your
victory will be complete.”
Strategic Marketing Planning

…is the managerial process of


developing and maintaining a
strategic fit between the
organization's objectives and
resources and its changing market
opportunities.

Org Objectives Strategic Fit Resources

Changing Environment
Strategic Marketing

“Marketing Strategy is a series


of integrated actions leading
to a sustainable competitive
advantage.”
John Scully
Corporate Mission

• Broad purposes of the organization


• General criteria for assessing the long-term
organizational effectiveness
• Driven by heritage & environment
• Mission statements are increasingly being
developed at the SBU level as well
Examples of Corporate
Mission
SINGAPORE AIRLINES is engaged in air
transportation and related businesses. It
operates world-wide as the flag carrier of
the Republic of Singapore, aiming to
provide services of the highest quality at
reasonable prices for customers and a
profit for the company
Examples of Corporate Mission
(cont’d)
MARRIOTT’S Mission Statement:
We are committed to being the best
lodging and food service company in the
world, by treating employees in ways that
create extraordinary customer service and
shareholder value
Corporate Culture

• The most abstract level of managerial


thinking
• How do you define culture?
• What is the significance of culture to
an organization?
• How does marketing affect culture in
the organization?
Corporate Objectives & Goals

• An objective is a long-range purpose


– Not quantified and not limited to a time period
– E.g. increasing the return on shareholders’ equity
• A goal is a measurable objective of the
business
– Attainable at some specific future date through
planned actions
– E.g. 10% growth in the next two years

SMART
STRATEGIC MANAGEMENT

“Insights and hard work deliver results”


• What types of strategies are used by organizations?
• How are strategies formulated and implemented in
strategic management?
Business Strategy covers all basic goals and
objectives of the business
Investor’s
Relations

Marketing
Capital

Financial
Plan
Project Strategy Plan
Public Offering Management

Financial
Controlling
Business
Strategy
Management
Plan
Salesforce
Operations

HR, Training &


Recruiting Plan
Certificate

Sales
Infrastructure Program

Legal FDA
Regulations
Production &
Logistics
All stakeholders will benefit from the
business strategy approach
Project Management Plan
Business Strategy

Management Structuring business Team


Support operations
Potential Buyers
Communicating and Investors
Operational implementing
Business Plan Management orders

Agency 1

Interviewing and Briefing of Agency 2


Marketing Agencies Agency 3
Strategy Plan Revenue: Sales and
Distribution Salespeople
Customers
Re-sellers
Momentum develops the Marketing Strategy and
prepares the tactics to the market

Momentum

Artefill Marketing Dept. Agency


Management

Target Market Sales & Distribution

Positioning

Tactics
Marketing Promotion Policy

Strategy Communication
Market
Plan Product Mix
Branding

Objectives Pricing Policy


Marketing Planning is a step-by-step process
Market Research

Bus. Review

Competition An. Marketing Strategy Development

Target market
Definition

Positioning

Communication

Branding

Strategy

Tactics
The Role of Strategy

Corporate Strategy:
Mission & •Corporate Operatin
Objectives •Business g Plans
•Functional
Funnel
PURPOSE OF
STRATEGY
 To set the future direction for the organisation.

 To state how it is to create value to customers.

 To identify what product/s and in which markets


the firm will invest its resources.

 To describe how it is to perform better than


competition.
STRATEGY HELPS IN:
 Defining the scope of business.

 Finding ‘Strategic Fit’ between organisation and


its environment.

 Identifying a Sustainable Competitive Advantage


(SCA).

 Guiding the allocation of resources.


HIERARCHY OF STRATEGY

CORPORATE

SBUs

FUNCTIONAL AREAS
3 LEVELS OF STRATEGY
Corporate
The overall goals of the business; often expressed in financial
terms

Competitive/Business (SBU)
How to compete in individual product-markets and support the
corporate strategy

Functional
Functional strategies for the organisation’s functional areas in
support of SBUs and corporate strategies
What is a Strategic
Business Unit? (SBU)
• A set of products or product lines
– With clear independence from other
products or product lines
– for which a business or marketing strategy
should be designed
Types Of Strategies

• Strategy is a comprehensive plan for achieving competitive


advantage.
• Organizations use strategy at the corporate, business and functional
levels.
• Growth and diversification strategies focus on expansion.
• Restructuring and divestiture strategies focus on consolidation.
• Global strategies focus on international business initiatives.
• E-business strategies focus on using the Internet for business
transactions.
Types Of Strategies
• Strategy
– a comprehensive plan guiding resource allocation to
achieve long-term organization goals.
• Strategic Intent
– focuses organizational energies on achieving a
compelling goal.
• Competitive Advantage
– operating in successful ways that are difficult to
duplicate
Corporate Strategies
• Corporate Strategy
– Sets long-term direction for the total enterprise
• Business Strategy
– Identifies how a strategic business unit or division will
compete in its product or service domain
• Functional Strategy
– Guides activities within one specific area of
operations
Corporate Strategies
Growth And Diversification Strategies
• Growth Strategy
– Expansion through current operations
• Concentration
– Expansion within an existing business area
• Diversification
– Expansion occurs by entering new business areas
• Vertical Integration
– Expansion by acquiring existing suppliers or
distributors
Restructuring and Retrenchment
Strategies
• Retrenchment
– Changes operations to correct weaknesses
– Liquidation
• An extreme form of retrenchment wherein the business closes and
sells off its assets
• Restructuring
– Reduces the scale or mix of operations
• Downsizing
– Decreases the size of operations
• Divestiture
– Sells off part of the organization to focus on core
businesses
Global Strategies
• Globalization Strategy
– Adopts standardized products and advertising
for use worldwide
• Multidomestic Strategy
– Customizes advertising and products to best
fit local needs
• Transnational Strategy
– Seeks efficiencies of global operations with
attention to local markets
E-Business Strategies
• E-Business Strategies
– Focus on Using the Internet for Business
Transactions
• B2B Business Strategies
– use IT and Web portals to vertically link organizations
with members of their supply chains.
• B2C Business Strategies
– use IT and Web portals to vertically link organizations
with members of their customers.
Strategic Management

• Strategy formulation begins with the organization’s


mission and objectives.
• SWOT analysis identifies strengths, weaknesses,
opportunities, and threats.
• Porter’s five forces model examines industry
attractiveness.
• Porter’s competitive strategies model examines business
or product strategies.
• Portfolio planning examines strategies across multiple
businesses or products.
• Strategic leadership activates organizations for strategy
implementation.
Strategic Management
• Strategic management
– the process of formulating and implementing
strategies.
• Strategy Formulation
– the process of creating strategies
• Strategy Implementation
– the process of putting strategies into action.
Strategic Management
Strategy Formulation
• Mission Statement
– The reason for the organizations existence in society
• Operating Objectives
– Specific results that organizations attempt to achieve

Common Operating Objectives of Organizations


•Profitability
•Market share
•High-quality workforce
•Cost efficiency
•Product and service quality
•Innovativeness
•Social responsibility
Market-oriented: Strategy based upon the needs & wants of the
marketplace

Establishes a End goal of strategy to make a profit in the for-


profitable market profit sector or to meet alternate metrics (NFP
position: sector)

Establishes a Marketing strategy not about one-off


sustainable market transactions. Aim is to find a place in the market
position:

Forces that Complex mix of ingredients that create the


determine industry marketing ‘whirlwind’
competition:
Continuously Find a spot where, if need be, the primary
creating & challenges can be tackled
developing CA:

Potential sources What value any organisation wants to create


that exist in a firm’s using its available marketing resources
value chain:
STRATEGIC PLANNING MODEL
THE INTER-RELATIONSHIP BETWEEN
MARKETING AND CORPORATE
STRATEGY
 INFORMS
 DIRECTS
 GUIDES
 CONTROLS

Corporate Strategy Marketing Strategy


• Specifying the • Identifying product market/s to
organisation’s mission compete in
• Allocating resources • Selecting market segments to
• Defining Organisational target
objectives • Developing the marketing mix
 ACHIEVES
 SUPPORTS
 OPERATIONALISE
OPERATIONAL vs STRATEGIC
MARKETING
Operational Marketing Strategic Marketing
• Action-oriented • Analysis-oriented
• Existing opportunities • New opportunities
• Non-product variables • Product market variables
• Stable environment • Dynamic environment
• Reactive behaviour • Proactive behaviour
• Day-to-day management • Longer range management
• Marketing department • Cross-functional
organisation
STRATEGIC MARKETING
MANAGEMENT PROCESS
SMM process aims to answer a complete
set of strategic questions:

Where are we now?


Where we want to go?
How might we get there?
How can we ensure arrival?
STRATEGIC MARKETING
MANAGEMENT PROCESS
STRATEGIC ANALYSIS

Strategic analysis is concerned with


understanding the strategic position of the
organisation in terms of its external
environment, internal resources &
competencies, and the expectations and
influence of stakeholders
WHERE ARE WE NOW?
Analysis of Current Situation
 What are the major trends and possible changes in the
marketing environment?

 Who are our competitors? How can we make


ourselves different from competition?

 Who are our target customers & what are their needs?

 What competitive advantages and core competences


do we have?
STRATEGIC CHOICE

Strategic choice involves understanding


the underlying bases guiding future
strategy, and generating strategic options
for evaluation and selecting from among
them

Johnson and Scholes (1999)


WHERE WE WANT TO GO?
Strategic Choice
A set of interrelated strategic decisions
about:

 Strategic direction (generic strategy)


 Product/s to offer
 Market/s to target
 Competitive stance to take
 Positioning strategy
STRATEGIC IMPLEMENTATION

Strategic implementation is concerned with


the translation of strategy into organisational
action through organisational structure &
design, resource planning and the
management of strategic change

Johnson and Scholes (1999)


HOW MIGHT WE GET THERE?
Plan Marketing Activities
 Design the Marketing Mix to support the chosen
strategy and achieve strategic objectives.

 Decide on tactics for positioning products in the


chosen markets.

 Define targets & time frame.

 Identify who will be responsible for different


tactics.
HOW CAN WE ENSURE ARRIVAL?
Measure, Evaluate & Control Activities
 Methods of control and evaluation.

 Not only at the end of the time frame but on a


regular basis.
 Ease of measurement depends on the types of
activities implemented.
 Measurement reveals effectiveness of evaluation
& helps decide if contingencies must be put in
action.
VALIDITY OF SMM MODEL?
 Rational, formalized, systematic

 Orderly thinking

 Deliberate, logical response to changes in the


environment
 ‘Top down’ approach

 Think THEN act & formulate THEN implement

 Identify actions which need to be undertaken


MARKETING ENVIRONMENT
4 Main Ways of Approaching Marketing Strategy

THINKING FIRST

SEEING FIRST COMPETITIVE


MARKETING
DOING FIRST STRATEGY

SIMPLE RULES
ENVIRONMENTAL ANALYSIS
 Environmental scanning is the process of gathering
information about the various forces in the environment.
It involves observation, perusal of secondary sources,
such as business, trade, government and general
interest publications and marketing research.

 Environmental analysis is the process of assessing


and interpreting the information gathered through
market intelligence and environmental scanning.
MACRO (REMOTE)
ENVIRONMENT:
PEST MODEL
PEST:
Political Factors,
Economic Factors,
Socio-cultural Factors,
Technological Factors

A framework that assists in analyzing the


external (remote) environment and identifying
the existing opportunities & threats
STRATEGIC FIT

‘Strategic Fit’ is the effective match and


management of the environmental
opportunities and threats while taking into
account the organisation strengths and
weaknesses
STRATEGIC FIT
Drawing upon the strategic analysis undertaken previously,
strategic managers have to:

Find ‘strategic fit’ between what the environment


wants and what the organisation has to offer, and
between what the organisation needs and what the
environment can provide

Identify and assess alternative ways in which their


organisation can use its specific strengths to
capitalise on opportunities and/or minimise threats,
and invest in available opportunities to overcome its
weaknesses
SWOT ANALYSIS
Integrates the internal and external environmental
analysis
 Not just a list of SWOT variables!

 SWOT/TOWS Matrix can be helpful

 SWOT/TOWS analysis is the alternative ways in


which an organisation can use its specific strengths
to capitalise on opportunities or to minimise threats
and invest in available opportunities to overcome
its weaknesses
SWOT (TOWS) MATRIX
STRATEGY FORMULATION

SWOT
• SWOT Analysis
Identifies Organization’s Strengths, Weaknesses, Opportunities, and Threats

Core Competency

A special strength that gives an organization a competitive advantage

STRATEGY FORMULATION

Porter’s Five Forces


STRATEGY FORMULATION

Porter’s Five Forces


• Porter’s Competitive Strategies
– Differentiation Strategy
• Offers products and services that are uniquely different from
the competition
– Focused Differentiation Strategy
• offers a unique product to a special market segment.
– Cost Leadership Strategy
• Seeks to operate at lower costs than competitors
– Focused Cost Leadership Strategy
• uses cost leadership and target needs of a special market.
STRATEGY FORMULATION

Porter’s Five Forces


COMPETITIVE ANALYSIS
STRATEGY FORMULATION

Boston Consulting Group (BCG)


BCG Matrix
• Analyzes business opportunities according to growth rate and market share

Ansoff’s Product-Market Grid
New products
Current products

Product
Mkt penetration development
Current
strategy strategy
Mkts

New Mkt Diversification


Mkts development strategy
strategy
A way to analyze a company's competitive position in comparison
to the offerings of competitors. As with Porter's Generic Strategies,
Bowman considers competitive advantage in relation to cost
advantage or differentiation advantage. There are six core strategic
options
STRATEGIC MANAGEMENT

Strategy Implementation
• Strategic Leadership
– the capability to inspire people to successfully
engage in a process of continuous change,
performance enhancement, and
implementation of organizational strategies.
Marketing at the SBU Level—
Strategic Marketing

• Strategic Marketing requires


– Detailed understanding of market needs, and
–well
Proactive use of competitive intelligence at the corporate as
as SBU’s levels
• Strategic Marketing
– Focuses on what the firm do best at the SBU level
–To secure and maintain a sustainable competitive advantage
Key Elements of Marketing Strategy
Formulation
• The strategic 3 Cs
–Customers, Competitors & the Corporation
• Environment analysis -- PEST
• Strategic Marketing Decisions
–Where to compete
–How to compete
–When to compete
A Viable Marketing
Strategy
• Must have a clearly defined market
• Must have a good match between
corporate strengths and market needs
• Must have significant positive
differentiation in the key success factors
of the business
WHERE WE WANT TO GO?
Strategic Decisions
 Strategic decisions at the corporate level
 Developing/re-stating mission statement
 Directional strategy
 Resource allocation
 Strategic decisions at the SBU level
 Choosing Generic Strategy:
Cost leadership strategy, Differentiation strategy, Focus
strategy: Cost focus & Differentiation focus
 Strategic decisions at the functional level
 Products to offer
 Market segments to target
 Market position tactics
DIRECTIONAL (Grand) STRATEGIES
• Growth Strategies • Stability Strategies
– Concentration – Pause/Proceed with caution
• Vertical Growth – No Change
• Horizontal Growth – Profit

– Diversification
• Concentric
• Retrenchment strategies
• Conglomerate
– Turnaround
– Captive Company
– Sell-Out/Divestment
– Bankruptcy/Liquidation
The Competitive Environment
Kinds of Markets

Competitor Analysis
Key
Concepts
in the Competitive Rivals
Competitive
Environment
Competitive Barriers

Information on Competitors
What is Competitive
Advantage?
• “Competitive advantage is a company’s
ability to perform in one or more ways
that competitors cannot or will not
match.” Philip Kotler
• “If you don’t have a competitive
advantage, don’t compete.” Jack
Welch, GE
Other Characteristics of
Competitive Advantage
• Substantiality
– Is it substantial enough to make a difference?
• Sustainability
– Can it be neutralized by competitors quickly?
• Ability to be leveraged into visible
business attributes that will influence
customers

(Source: Strategic Marketing Management, Aakers)


Seeking Competitive
Advantages
• Positions of advantage
– Superior customer value
– Lower relative total cost
• Performance advantages
– Customer satisfaction, Loyalty, Market Share, Profit
• Sources of advantages
– Superior skills & knowledge, Superior resources,
Superior business process
COMPETITIVE POSITION TACTICS
Marketing Strategy

Encirclement

Flanking Defense

Preemptive
Defense
Contraction
Frontal
Defender Defense
Attacker (bigger)
(smaller)
Attack
Position
Counteroffensive Defense
Guerilla Attack

Mobile Defense

Flank Attack

Bypass
CREATIVE THINKING
6 HATS

Information Emotions ,
Truth ,
seeking ? feelings
reality
Critical thinking
Optimistic
Forward looking
Overview Creative futuristic
Sequence of thinking
thinking
TRAFFIC LIGHTS

Stop, exit Look around go


Samsung
• Launched 225 products in 2009 against 2000 the
year before
• It is closing the gap effectively with technology
breakthrough / products customized to Indian
needs
• They made an exclusive 32” LED TV for Indian
customers as Indians have smaller rooms
• They target to lead in product innovation space &
be relevant to consumers
Aircel
• Till 2006 it was just in 2 circles with 2.2
million consumers
• Positioning was on non-voice uses –pay
bills/book tickets/network with friends
• Monthly susbscriber additions have
doubled from 600,000 6 months ago to 1.4
million
Gajni
Before 25 Decemberth

• First Look:
Ghajini's marketing started way back from March 20
• when he came out on the premier of RACE with his new
BALD look.
• It actually gave the perfect sneak peek at the two looks
of Aamir in the movie.
• Notice the jacket and rolled up half sleeves?
• Did anyone say Sanjay Singhania?
• And then
– in November, this photo shot across leading dailies
and Aamir without even showing his face and his 8
packs instantly became the talk of the town.
• The 8 pack promotion:
October 2007 and remember SRK and the ho-hallah
around his 6 pack abs.
• It was only around that time that Aamir silently started
working on his own, and just to make it better, he added
a pair and made it eight!
• The fact that the man now had a 8 pack and a fantastic
body, he decided to show the world how he got it!
• Up came the videos with 'Making of Aamir's 8 pack' on
all news and entertainment channels.
• Videos similar to this you tube got thousands of visits!
He even went a step ahead and called a press conference
to introduce his trainer and explain his diet chart!
– Television appearances
With the TV channels filled with Ghajini promos,
Aamir went into overdrive with his interviews, which
came in by the day on every news and entertainment
channel. Not to forget the guest appearances on
reality shows, which is now a sort of a norm.
– Offline Promos at Theaters

– 'Theater personnels with Ghajini hair cut' act that he did on the
release on Rab neBana di Jodi.Simply Fantastic. Imagine going
to a cinema hall to watch RNBDJ and you watch all these Aamir
Khan look alikes and his life size cut outs. You almost wish that
you had come to watch Ghajini!
Co branding
• Tata Sky started running Ghajini “specials” complete
with behind-the-scenes stories of the upcoming
film. Samsung launched special Ghajini edition mobile
phones of L700 and M200 models. These handsets have
preloaded with Ghajini ringtones, pictures and songs.
Tata Indicom started with a outbound dialer service with
Khan's pre-recorded voice.
Co branding
• Van Heusen launched Ghajini's apparels in their stores
all across India and is backing it with in-store campaigns
and giant posters of Khan dressed in formal attire.
Van Heusen also organized a fashion show wherein
models along with Aamir sported the Ghajini look.Add a
little big of jig and a bit of Guzarish and he had all the TV
channels beaming again!
Viral SMS campaign

• Remember the chain SMS which threatened to reveal


what could possibly be the climax of the film? For those
who were not on the mailing list, here it goes...“Someone
killed Aamir’s girlfriend and he lost his memory. Then he
tries to find out the killer. Suspense… Aamir himself is
the killer. Now enjoy Ghajini!”

• I bet this one was proposed by someone at Tata


Indicom!!!
Digital Promotion
• With so much happening offline, something had to be done online
to.
• And Ghajini makers had that well covered.

• Websites like www.rememberghajini.com, www.findghajini.com and


www.wallofsuspects.com were built to drive curiousity levels around
the movie and provide a movie like experience on the Internet.
Add to that a 3D PC game and a number of mobile games and
applications, and you have the digital space busy.
Not to forget that he has his own popular blog, which was a
constant source of dope for all those waiting for Ghajini to release.
Final Week Controversy
• Just to cap it all, we had this 'Ghajini Release
Stayed' court notices which threatened to stop
the release of the immensely anticipated film a
day before 25th December. Naturally, this
became breaking news with minute to minute
tracking on the latest updates. And after much
drama, when the permission was granted, it was
like a whole nation had taken a sigh of relief and
they could all breath again!
10 month Campaign, where we saw Aamir from
8 pack fighting machine to
turning in to a barber
on the streets of Delhi, is a
real case study in motion picture marketing.
• To hear from the horse's mouth :

With Ghajini we've opened with the


highest number of screens ever. So the
marketing needed to have depth and
width, so we needed to be very aggressive
with the marketing of the film.
After 25th December:

• 100% opening day collections with over 1500


prints
• Over 90 crore business by the end of first
Sunday
• Expected 120 crore by end of first week
• Best Ever Opening
• Top film of 2008 already
The end result
• It raked in Rs 90 crores in the ist weekend of its
release
• Marketing cost was Rs 7.5 crore and the global
box office off-take Rs 260 crore
• They honestly told the consumers
– what to expect through a major use of IMC – Aamir’s
physical appearance , the haircut , the in cinema
visibility ; ushers having a similar haircut
– The audience was prepared for what they were going
to see
The Marketing Concept
Customer
Customer Total
Total Company
Company
Satisfaction
Satisfaction Effort
Effort

The
Marketing
Concept

Profit
Profit
Utility and Marketing
From Production
Time
Time
Form
Form

Utility
Utility
Value
Value that
that comes
comes Place
Place
from
from satisfying
satisfying
human
human needs
needs

Task
Task
Possession
Possession

From Marketing
Customer Value

Costs Benefits
• One customer’s views may vary from another
customer’s view, so firm may not be able to satisfy
everybody
• Customer value concept takes the customer’s point
of view, but customers may not explicitly weigh
costs and benefits
The Marketing Management
Process
Whole-Company
Whole-Company
Strategic
Strategic
Management
Management
Planning
Planning

Adjust Plans Marketing


As Needed Marketing
Planning
Planning

Control
ControlMarketing
Marketing Implement
Implement Marketing
Marketing
Plan(s)
Plan(s)and
andProgram
Program Plan(s)
Plan(s)and
andProgram
Program
The Four Ps of the Marketing Mix

Product Place

C
Price Promotion
Strategy Decision Areas
Product Place Promotion Price
Physical Goods Objectives Objectives Objectives
Service Channel Type Blend Flexibility
Features Market Exposure Salespeople Level over PLC
Quality Level Kinds of Kind Geographic
Accessories Middleman Number Terms
Installation Kinds and Selection Discounts
Instructions Locations of Training Allowances
Warranty Stores Motivation
Product Lines How to Handle Advertising
Packaging Transporting Targets
Branding and Storing Kinds of Ads
Service Levels Media Type
Recruiting Copy Thrust
Middlemen Who Prepares?
Managing Sales Promotion
Channels Publicity
Marketing Strategy Planning Process

Narrowing down to focused strategy with screening criteria


Customers
Segmentation Product Place
S. & Targeting
W. Target
Company O. Market
T. Differentiation
& Positioning Price Promo

Competitors

External Market Environment


SWOT Analysis

Strengths Opportunities

Internal Strategy External


Factors Planning Factors

Weaknesses Threats
STP

Segmentation Targeting Positioning Perceptual Mapping


Steps in Market Segmentation,
Targeting, and Positioning
Market Market Market
Segmentation Targeting Positioning
1. Identify 3. Evaluate 5. Identify
segmentation attractiveness possible
positioning
variables and of each concepts for
segment the segment each target
market segment
4. Select the
2. Develop target 6. Select,
profiles of segment(s) develop, and
communicate
resulting the chosen
segments positioning
concept
Basic Market-Preference
Patterns
(a) Homogeneous (b) Diffused (c) Clustered
preferences preferences preferences
Creaminess

Creaminess

Creaminess
Sweetness Sweetness Sweetness
Market Aggregation – The
Strategy of Mass Marketing
• Advantages & Disadvantages

• Product Differentiation
Step 1. Market Segmentation
Levels of Market Segmentation
Mass
Mass Marketing
Marketing
Same
Same product
product to
to all
all consumers
consumers
(no
(no segmentation)
segmentation)
Segment
Segment Marketing
Marketing
Different
Different products
products to to one
one or or more
more segments
segments
(some
(some segmentation)
segmentation)
Niche
Niche Marketing
Marketing
Different
Different products
products to to subgroups
subgroups within
within segments
segments
(more
(more segmentation)
segmentation)
Micromarketing
Micromarketing
Products
Products toto suit
suit the
the tastes
tastes of
of individuals
individuals and
and locations
locations
(complete
(complete segmentation)
segmentation)
Local Marketing Individual Marketing
Tailoring brands/ promotions Tailoring products/ programs
to local customer groups to individual customers
Steps in the Market
Segmentation Process

• Determine Market Boundaries


• Decide Which Segmentation Variables to
Use
• Collect and Analyze Segmentation Data
• Develop a Profile of Each Segment
• Target Segments to be Served
• Design a Marketing Plan
Bases for Segmenting
Consumer Markets
Geographic
Region, City or Metro
Size, Density, Climate Demographic
Age, Gender, Family size
and Fife cycle, Race,
Occupation, or Income ...

Psychographic
Lifestyle or Personality

Behavioral
Occasions, Benefits,
Uses, or Attitudes
Step 1. Market Segmentation
Bases for Segmenting Business
Markets
Personal
Demographics
Characteristics

Bases
Bases
for
for Segmenting
Segmenting
Situational Business
Business Operating
Factors Markets
Markets Characteristics

Purchasing
Approaches
Effective Segmentation
• Size, purchasing power,
Measurable
Measurable profiles of segments can
be measured.

• Segments must be large or


Substantial
Substantial profitable enough to serve.

• Segments can be
Accessible
Accessible effectively reached and
served.

• Segments must respond


differently to
Differential
Differential different marketing mix
elements & actions.

• Must be able to attract and


Actionable
Actionable serve
the segments.
Descriptive Bases
• Age

• Gender
• Income
• Occupation
• Education
• Family Size or Family Life Cycle
• Religion or Nationality
Geographic Bases
• Region

• Density
• Climate
• Population
Behavioral Bases
• User Status & Brand Loyalty

• Personality/Lifestyle
• Social Class
• Occasion
• Readiness to Buy
• Benefits Sought
• Usage Rate
Step 2. Market Targeting
Evaluating Market Segments
Segment Size and Growth
Analyze sales, growth rates and expected
profitability
Segment Structural
for various Attractiveness
segments.
Consider effects of: Competitors, Availability of
Substitute Products and, the Power of Buyers &
Suppliers.
Company Objectives and Resources
Company skills & resources relative to the segment(s).
Look for Competitive Advantages.
Five Patterns of Target Market
Selection
Single-segment Selective Product
concentration specialization specialization
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1
P2 P2 P2
P3 P3 P3
Market Full market
specialization coverage
M1 M2 M3 M1 M2 M3
P1 P1
P = Product
M = Market P2 P2
P3 P3
Step 2. Market Targeting
Market Coverage Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix
A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing Segment
Marketing Segment22
Mix
Mix
Segment
Segment33
C. Concentrated Marketing
Step 2. Market Targeting
Choosing a Market-Coverage
Company Strategy
Resources

Product
Variability

Product’s Life-Cycle
Stage

Market
Variability

Competitors’
Marketing Strategies
Positioning is the act
of designing the
company’s offering
and image to occupy a
distinctive place in
the the target
market’s mind. P 298
The BCG Competitive
Advantage Matrix
Number of Approaches
to Achieve Advantage
Few Many
Advantage

Large
Size of the

Volume Specialized

Small Stalemated Fragmented


Product Differentiation

Conform-
Fea- Perfor-
Form Quality ance
tures mance
Quality

Dura- Relia- Repair-


Style Design
bility bility ability
Services Differentiation

Ordering
Ordering Customer
Customer
Installation
Installation

Miscellaneous
Ease
Ease Consulting
Consulting

Services
Customer Maintenance
Customer Maintenance
Delivery
Delivery Training
Training &&Repair
Repair
Differentiation

• Personnel
• Channel
Image Differentiation

Media Atmosphere

Symbols

Events
Important
Important

Profitable
Profitable Distinctive
Distinctive
Differences Worth
Establishing
Affordable
Affordable Superior
Superior

Preemptive
Preemptive
Perceptual Map
Live shows 1.0
Easy to reach Little waiting
Good food 0.8
Fantasy Educational,
0.6 animals
Exercise Marineland
0.4
Fun rides Knott’s of the
Berry Japanese Pacific
0.2 Deer Park
Disneyland Farm

-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
-0.2
Magic Lion
Mountain -0.4 Country
Busch Safari
-0.6 Gardens
-0.8 Economical
Positioning Strategies
• Product Attributes

• Benefits, Problem Solutions & Basic Needs


• Price & Quality
• Specific Use
• Against Other Products
• Product User
• Against a Competitor
Push-Pull Strategies
Producer’s Promotion Blend
Personal Selling, Sales Promotion, Advertising, Publicity

Promotion to
Channel Members
Wholesaler Wholesaler
Promotion Promotion
Business Customers

Push Push

Final Customers
Promotion to

Promotion to
Retailer
Promotion
Push

Business Final
Customer Consumer
Pull Pull
A Model of Buyer Behavior
Marketing Mixes All Other Stimuli

Psychological Social Purchase


Variables Influence Situation
Motivation Family Purchase Reason
Perception Social Class Time
Learning Reference Groups Surroundings
Attitude Culture
Personality/Lifestyle

Person
Making
Decision
Problem-Solving Process

5-5 Person Does or Does Not Purchase (Response)


The PSSP Hierarchy of Needs

Personal
Needs

Social Needs

Safety Needs

Physiological Needs

5-6
The Consumer Problem Solving Process
Marketing mixes All other stimuli

Psychological Purchase
Social Influences Situation
Variables
Person making
decision
Need-want Awareness

Routinized Response
Information Search
Feedback of
information
Set Criteria as attitudes

Decide on Solution

Postpone Purchase Product


Decision Postpurchase
Evaluation
5-13
Levels of Problem Solving
Low involvement High involvement
Frequently purchased Infrequently purchased
Inexpensive Expensive
Little risk High risk
Little information needed Much information desired

Routinized Limited Extensive


Response Problem Problem
Behavior Solving Solving

Low Involvement High Involvement

Involvement Continuum
Brand identity
Brand
equity
Brand
relationship
spectrum
Unique characteristics of services
Key Factors That Influence Price Setting
Pricing
objectives
Price of other
Price flexibility
products in the line

Discounts and
Demand allowances
Price
settin
g
Cost Legal
environment

Geographic
Competition
pricing terms
Markup chain
in channels

17-
Strategic Pricing Options

Reverse
Cost-Plus
Variations POS
in Value

Price Successful Competitor


Sensitivity Pricing Reaction

Customer
Emotion
Costs
Individual?
Bundled?
Pricing Objectives
Target
Return
Profit
Oriented Maximize
Profits

Dollar or Unit
Sales Growth
Pricing Sales
Objectives Oriented Growth in
Market Share

Meeting
Competition
Status Quo
Oriented Nonprice
Competition
Strategy Planning for Price
Target
Market

Product Place Promotion Price

Pricing
objectives

Geographic
Discounts and
Price levels term —
Price allowances—
over product who pays
flexibility to whom and
life cycle transportation
when
and how
Distribution Options*

Direct Intermediary
Salesforce
•Internet •Franchise
•Telephone •Own •Wholesaler
•Mail •Another firm’s •Agent/Merchant
•Catalogue •Contract •Distributor
•Own channel •Partner

*More limited for services


The Transporting Function

Truck
Rail
Modes
of
Transportation

Air
Pipeline

Water
Types of Retailers
Expanded
Specialty shops and
assortment department stores
and service

Expanded
assortment Supermarkets, discount
houses, mass-merchandisers,
Single- and/or reduced supercenters
Conven- and margins/service
tional limited-
offerings line
Added Telephone/mail order,
stores
convenience vending machines,
higher margins door-to-door, convenience
less assortment stores, electronic shopping

Expanded
assortment Internet
reduced margins
more information
Types of Wholesalers
Does wholesaler own
the products?
Yes (merchant wholesaler) No (agent middleman)

How many functions


does the wholesaler
provide? Agent middlemen
Some
functions

Limited-function
merchant
All the functions Wholesalers

Service
merchant
wholesalers
Four Examples of Basic Channels of
Distribution for Consumer Products
Manufacturer or producer

Del Procter &


Citibank Nissan
Monte Gamble

Wholesaler Wholesaler

Wholesaler

Retailer Retailer Retailer

Consumer
l e rs C om p et e
H ow R et a i

1) Identifying a Target Market

2) Selecting a Product Strategy

3) Selecting a Customer Service Strategy

4) Selecting a Pricing Strategy

5) Choosing a Location

6) Building a Promotional Strategy

7) Creating a Store Atmosphere


Price and Distribution Strategies

Market Leader
•Distribution in place Market Challenger
•Price main weapon •Focus on flanks
•Premium price •Direct or indirect attack
•Variety of options

Market Niche
Market Follower •Stay with markets
•‘Cloning’ •Add niches
•Set lower prices •Premium price
•Selective distribution
Marketing Information Systems
Informatio Questions Decisio
n and n Result
Sources Answers Maker s

New Information
Marketing
Market
Models
Research Answers
Studies
?
Inputs Marketing
Internal Decision
Data Databases Support Manager Outcomes
Sources System Decisions
(DSS)

External
Data Information
Sources Technology
Specialists

Feedback
Product
Development
• Overestimation of Market Size
• Product Design Problems
• Product Incorrectly Positioned, Priced or Advertised
• Costs of Product Development
• Competitive Actions

• To create successful new products, the company


must:
– understand it’s customers, markets and
competitors
– develop products that deliver superior value to
customers.

PRODUCT DEVELOPMENT
New Product Development
Process

• Idea Generation and Screening


• Concept Development and Testing
• Marketing Strategy
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
Systematic Search for New Product
Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
• Process to spot good ideas and drop poor ones
• Criteria
– Market Size
– Product Price
– Development Time & Costs
– Manufacturing Costs
– Rate of Return
Marketing Research Process
Early
Identification
of
Solution

Getting
Defining Analyzing Inter- Solving
Problem-
the the preting the
Specific
Problem Situation Data Problem
Data

Feedback to Previous Steps


Sources of Data

Inside Company
Secondary
Data
Sources
Outside Company
All
Data
Sources
Observation
Primary
Data
Sources
Questioning
1.
1. Develop
DevelopProduct
ProductIdeas
Ideasinto
into
Alternative
Alternative
Product
ProductConcepts
Concepts

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups
of
ofTarget
TargetCustomers
Customers

3.
3. Choose
Choosethe
theBest
BestOne
One
Marketing Strategy Statement Formulation

Part
Part One
One -- Overall:
Overall:
Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales
Sales &
& Profit
Profit Goals
Goals
Market
Market Share
Share
Part
Part Two
Two -- Short-Term:
Short-Term:
Product’s
Product’s Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three -- Long-Term:
Long-Term:
Sales
Sales &
& Profit
Profit Goals
Goals
Marketing
Marketing Mix
Mix Strategy
Strategy
Business
Business Analysis
Analysis

Review
Review of
of Product
Product Sales,
Sales, Costs,
Costs,
and
and Profits
Profits Projections
Projections to
to See
See ifif
They
They Meet
Meet Company
Company Objectives
Objectives

IfIf No,
No, Eliminate
Eliminate
Product
Product Concept
Concept

IfIf Yes,
Yes, Move
Move to
to
Product
Product Development
Development
Standard
Standard Controlled
Test Controlled
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign AAfew
fewstores
storesthat
thathave
have
in
in a small numberof
a small number of agreed
agreedto
tocarry
carrynew
new
representative cities.
representative cities. products
productsfor
foraafee.
fee.

Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping environment
shopping environment
to
toaasample
sampleofof
consumers.
consumers.
The Adoption Curve
Early Early Late Laggards/
Innovators
Adopters Majority Majority Nonadopters
(3-5%)
(10-15%) (34%) (34%) (5-16%)
90
Percent Adoption

50

20

5
0

Time
The Adoption Curve

• Innovators:
– First to Adopt, Eager to Try
– Young, Well-Educated, Mobile
– Seek Info from non-salesperson Sources
• Early Adopters
– Opinion Leaders
– Greater Contact with Salespeople
– Word-of-Mouth
The Adoption Curve

• Early Majority:
– Avoid Risk, Try Only if Others Have Usually
are Not Opinion Leaders
• Late Majority:
– Cautious About New Ideas, Older and More
Set in Their Ways
– More Subject to Peer Pressure
The Adoption Curve

• Laggards:
– Suspicious of New Ideas
– Do Things the Way that They Have Always
Been Done
The Product Life Cycle
Market Market Market Sales
Introduction Growth Maturity Decline

Total Industry
Sales

Total Industry
Profit
Tim
e
Defining “Product”
Target Market

Product Place Promotion Price

Product
Brand Package Warranty
Idea

Physical
good/service Type of Brand:
Features Individual or Protection,
Quality level family Promotion, None, full, or
Accessories Manufacturer or or both limited
Installation dealer
Instructions
Product line
Strategy Planning for Advertising
Target Market

Product Place Promotion Price

Personal Mass Sales


Selling Selling Promotion

Advertising Publicity

Target Kind of Who will do


Media types Copy thrust the work?
audience advertising
Basic Promotion Methods
Target
Market

Product Place Promotion Price

Personal Mass Sales


Selling Selling Promotion

Advertising Publicity
MARCOMS Strategic Process
PESTLE
PESTLE
AUDIT
Competitors
Competitors
SWOT
SWOT

Strategic
Strategic Intent/Objectives
STRATEGY Intent/Objectives

Segment/Target
Segment/Target
Position
Position

Proposition
Proposition Media
Media Classes
Classes
Creative
Creative Execution
Execution Media
Media Execution
Execution
Pre-Test
Pre-Test
Post-Test
Post-Test
OPERATIONS Contingency
Contingency
International
International
Brand Wheel
Features Preference, but
Benefits not loyalty

Values Relationship &


loyalty
Personality

Key Core of the


Reward claim
The Task

Isolate, in a simple statement why the


advertising will have worked:
•Increase sales
•Generate leads
•Increase/maintain share
•Stop decline
•Justify price
•Announce/Launch
•Corporate reputation
Expand the Problem to a Higher
Level

• Product Definition:
– Make the central benefit salient (again?)
• Performance Superiority:
– Solve a problem or better fulfill a desire
• Emotional:
– Help brand matter to the consumer
• Cultural Identification:
– Make the brand part of consumer’s world
• Paradigm Shift:
– Alter the consumer’s definition of
category
Types of MARCOMS Objectives

• “Exposure message to ...”


• “Create 40% awareness amongst...”
• “Create attitude/opinion that...”
• “Increase preference amongst...”
• “Encourage trial amongst...”
• “Re-enforce loyalty amongst..”
Exposure

• The desired level of frequency (OTS =


Opportunity to See) and coverage to achieve the
advertising objectives
• Most agencies seek an average of 2-3 OTS’s
amongst the target market in order to give
advertising a chance to work
Describe Who We’re Talking To

• A person, not a
“target”
• Beyond reports - talk
to customers
• Paint a personal
picture
• What’s really
important to them?
Sources of a Proposition
• product characteristics
• user characteristics
• ways of using the product
• how product is made
• surprising points about the product
• price characteristics
• image characteristics
• satisfying psychological/physiological needs
• product heritage
• disadvantages of non-use
• direct comparisons with rivals
• product comparisons
• newsworthiness
• generic benefits
What Proposition Will Do This?

• Specific core benefit brand delivers


• Key emotion, reason or blend
• Keep it singular
A good proposition

• Gives creatives an ‘angle’ or way in


• Forces a strategic choice
• Is single-minded not all encompassing
• Is based on a truth (Rational or Emotional)
• Is original, or expressed in an original way
• Is liberating not limiting
• Isn’t an end-line
MARCOMS Overview
MEDIUM DEFINITION HORIZON FORM SCOPE

ADVERTISING A paid for communication by an identified Mainly long-term TV, press, posters, radio, web, Awareness, attitudes
sponsor with the aim of informing and cinema, digital, SMS.
influencing one or more people.
DIRECT The recording, analysis and tracking of Short and long-term Direct mail, DRTV & radio, Mainly retention but also
MARKETING customers’ direct responses in order to telemarketing, press, inserts, acquisition
develop loyalty. leaflets, web, digital, SMS.
PR The formulation, execution and sustained Short and long-term Community relations/CSR, Credibility, visibility and
effort to establish and maintain corporate advertising, crisis reputation
goodwill and mutual understanding and management, events, internal
reciprocal goodwill between an communications, investor
organisation and its stakeholders. relations, media relations, public
affairs, lobbying, sponsorship,
web, digital.
SALES An incentive for the customer, sales force Mainly short-term Consumer: Coupons, contests, Consumer: Trial, re-trial,
PROMOTIONS or distributor to make an immediate trial, mail-in offers/refunds, group extended trial, build
purchase. promotions, self-liquidations, in- database
store promotions, point-of-sale, Trade: Gain a listing,
web, digital, SMS. increase distribution,
Trade: Dealer merchandise; increase inventory, improve
contests’ advertising, allowance, shelving space/position
trade allowance/ staff incentive,
web.
Media Scheduling

1. Reach
2. Creative Scope
3. Media History
4. Location
5. Distribution Channels
6. Budget
Budgeting

1. JUDGEMENTAL METHODS
• Arbitrary
• Affordable
2. OBJECTIVE and TASK
3. MEASUREMENT
• ROI
• Incremental
•Quantitative Models
4. PERCENTAGE OF SALES
• % Last Year’s Sales
• % Anticipated Sales
• Unit Sales
5. SHARE OF VOICE
• Competitive Absolute
• Competitive Relative
Marketing Audit

“Marketing audit is a comprehensive,


systematic, independent, and periodic
examination of a company’s—or business
unit’s—marketing environment, objectives,
strategies, and activities with a view to
determining problem areas and
opportunities and recommending a plan of
action to improve the company’s marketing
performance” Philip Kotler
Characteristics of Marketing
Audit
• Comprehensive
– Must cover all marketing areas
• Systematic
– Sequential diagnostic steps
• Independent
– Internal & external auditors
• Periodic
– Performed at regular intervals
Marketing Audit Procedure

• Marketing environment audit


• Marketing strategy audit
• Marketing organization audit
• Marketing system audit
• Marketing productivity audit
• Marketing function audit
• Marketing excellence review
• Ethical and social responsibility review
Basic Steps in Control

1. Set standards of performance (these are


typically in the form of goals or
objectives)
2. Evaluate the reality of what occurs
against these steps
3. Take corrective or reinforcing action
where required
Steps in the Control Process
Possible Outcome 1:
Corrective
15% market share Action

1. Set Standards
2. Evaluate
e.g. Marketing Standards
Objective is to 3. Take Action
Against
attain 25% Reality
market share

Possible Outcome 2: Reinforcing


Action
35% market share
Nature of Control
• Annual Plan control looks at the objectives set in the annual
marketing plan, evaluates these against the actual results achieved,
and takes corrective or reinforcing action when necessary
• Financial or Expense control considers the financial parameters and
objectives set by a firm in its annual marketing plan, and the
corrective or reinforcing actions needed to attain these
• The purpose of strategic control is to ensure that the organization is
maximizing the opportunities that exist in its business environment.
Strategic control often takes the form of a marketing audit
Marketing Strategy Formulation-
Implementation Grid
Figure 13.2: The Marketing Strategy
Formulation-Implementation Grid

Adequate

Trouble Success

Strategy
Formulation

Failure Rescue
or Ruin
Poor

Poor Strategy Adequate


Implementation
Barriers

The marketing strategy is implicit, not explicit, and people


cannot implement what they don’t know
The marketing strategy is developed in isolation – and people
cannot implement what they do not understand

Not everyone is a good strategic marketing thinker

The marketing strategy is developed by an external consultant

The marketing strategy has unanticipated consequences

(Robert, 1991)
Process Model
Figure 13.3: A Process Model of Competitive
Advantage (Day and Wensley, 1988)

Outcomes

Sources Sources • Customer


satisfaction
• Superior Skills • Superior Skills
• Customer
• Superior • Superior Loyalty
Resources Resources
• Market Share
• ROI

Reinvestment
Loop in the Model
• “Hard” – expressed in numbers that can easily be calculated,
compared and tracked
• However they are historical – a good way of tracking the past, but a
rather inadequate indication of the future
• They are not good diagnostics of strategic health
• By comparison measures of customer satisfaction and loyalty are
“soft,” and impression based but they are about the future
• The astute firm will reinvest the financial outcomes of competitive
advantage in the sources of competitive advantage itself, namely
superior skills and/or superior resources
• This activity closes the loop in the model, and suggests that
managing for competitive advantage is indeed a process that is
continually renewed, revived and refreshed
Customer Equity
• The outcomes of ROI and Market Share are hard but
historical
• The outcomes of Customer Satisfaction and Customer
Loyalty are future-oriented but soft
• The ideal marketing control variable would be a single
outcome that is both hard (a number that can be
expressed financially) and future (customer) oriented
• Customer Lifetime Value (CLTV), which in turn leads to
Customer Equity, is that single appropriate outcome
Customer Lifetime Value

Figure 13.4: A Simple Spreadsheet for the Calculation of CLTV

YEAR YEAR YEAR YEAR YEAR


Revenue 1 2 3 4 5
Customers 1000 400 180 90 50
Retention Rate 40.00% 45.00% 50.00% 55.00% 60.00%
Ave Ann Sales 150 150 150 150 150
Total Revenue 150000 60000 27000 13500 7425
Costs
Cost% 50.00% 50.00% 50.00% 50.00% 50.00%
Total Costs 75000 30000 13500 6750 3713
Profits
Gross Profit 75000 30000 13500 6750 3713
Discount Rate 1.00 1.20 1.44 1.73 2.07
NPV Profit 75000.00 25000.00 9375.00 3906.25 1790.36
Cum NPV Profit 75000 100000 109375 113281 115072
CLTV 75.00 100.00 109.38 113.28 115.07
Increasing CLTV

• Increasing retention rate, or increasing


customer life (i.e. the number of years a
customer can remain a customer)
• Increasing Sales to a Customer, either by
increasing the firm’s share of the
customer’s purchases, or by increasing
the customer’s referral rate
• Cutting the Costs of serving a customer
Corporate Culture

• The Clan culture, which emphasises


teamwork and cooperation
• The Adhocracy culture, which
emphasizes entrepreneurship and
creativity
• The Hierarchy culture, which emphasizes
order, regulations and rules
• The Market culture, which emphasizes
competitiveness and goal achievement
(Deshpande, Farley and Webster, 1993)