Foundations of Strategic
Marketing Management
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INTRODUCTION
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PURPOSE OF MARKETING
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RESPONSIBILITIES OF
MARKETING MANAGERS
Direct day-to-day operations
Make strategic decisions
Chart the organizations direction
Create and sustain a competitive
advantage
Affect the organizations long-term
performance
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RESPONSIBILITIES OF CMOs
Define the business mission
Analyze environmental, competitive,
and business situations
Develop business objectives and goals
Define customer value propositions
and their marketing strategies
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STRATEGIC MARKETING
MANAGEMENT PROCESSES
Define business, mission, and goals
Identify/frame growth opportunities
Formulate product-market strategies
Budget resources
Develop reformulation and recovery
strategies
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DEFINING THE
ORGANIZATIONS
BUSINESS, MISSION,
AND GOALS
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BUSINESS DEFINITION
Outlines the scope of operations
Is neither obvious nor easy to define
An firm defines its business by:
The customers served and their needs
The means or technology used to satisfy needs
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BUSINESS MISSION
Consists of a written statement that:
Underscores the scope of an
organizations operations
Reflects managements vision of
the organization
Describes an organizations purpose
Crystallizes the organizations
long-term direction and character
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BUSINESS MISSION
Consists of a written statement that:
Helps identify and evaluate
product-market opportunities
Inspires employees
Provides direction for goal-setting
Applies to not-for-profit organizations
as well
2013 Pearson Education, Inc. publishing as Prentice Hall
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BUSINESS MISSION
American
Red Cross
XEROX
Do great work
Provide for
victims of
disaster
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Financial
Objectives
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Marketing
Objectives
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Financial
Objectives
Marketing
Objectives
Return on investment
Profit
Return on sales
Cash flow
Shareholder wealth
Market share
Customer satisfaction
Sales volume
Profit
Marketing productivity
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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.
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IDENTIFYING AND
FRAMING
ORGANIZATIONAL
GROWTH
OPPORTUNITIES
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Environmental
Opportunities
What do we do best?
Distinctive
Competencies
Success
Requirements
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WHAT DO WE DO BEST?
Distinctive Competency
Describes an organizations
unique strengths or qualities,
including skills, technologies,
or resources, that distinguish
it from other organizations.
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WHAT DO WE DO BEST?
Distinctive Competency
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WHAT DO WE DO BEST?
Success Requirements
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SWOT ANALYSIS
SWOT analysis is a formal framework
for identifying and framing organizational
growth opportunities.
- Type of Factor Organization
Favorable
Unfavorable
Internal
Capabilities
Strengths
Weaknesses
External
Environment
Opportunities
Threats
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SWOT ANALYSIS
Strengths
Weaknesses
Opportunities
Threats
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Strengths
Weaknesses
External
Factors
Management
Economic
Marketing
Competition
Manufacturing
Consumer
R&D
Technology
Finance
Legal/Regulatory
Offerings
Industry/Market
Structure
Opportunities
Threats
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SWOT ANALYSIS
Questions to ask after a SWOT
analysis:
Which strengths represent distinctive
competencies?
Which weaknesses disqualify the
organization from pursuing certain
opportunities?
Does a pattern emerge from the SWOT?
2013 Pearson Education, Inc. publishing as Prentice Hall
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FORMULATING
PRODUCT-MARKET
STRATEGIES
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PRODUCT-MARKET STRATEGY
A product-market strategy
involves selecting specific
markets and profitably
reaching them through an
integrated program called
a marketing mix.
2013 Pearson Education, Inc. publishing as Prentice Hall
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EXHIBIT 1.2:
PRODUCT-MARKET STRATEGIES
Markets
Existing
Existing
New
Market
Penetration
Market
Development
New Offering
Development
Diversification
Offerings
New
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PRODUCT-MARKET STRATEGIES
Market Penetration Strategy
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).
2013 Pearson Education, Inc. publishing as Prentice Hall
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PRODUCT-MARKET STRATEGIES
Market Penetration Strategy Involves
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PRODUCT-MARKET STRATEGIES
Market Penetration Strategy Considerations
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PRODUCT-MARKET STRATEGIES
Market Development Strategy
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).
2013 Pearson Education, Inc. publishing as Prentice Hall
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PRODUCT-MARKET STRATEGIES
Market Development Strategy Involves
Adjusting the marketing mix, such as:
Modifying the basic product offering
Using different distribution outlets
Changing the sales effort or advertising
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PRODUCT-MARKET STRATEGIES
Market Development Strategy Involves
Identifying the number, motivation, and
buying patterns of new buyers
Determining the organizations ability to
adapt to new markets to evaluate success
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PRODUCT-MARKET STRATEGIES
Market Development Strategy International Forms
Exporting
Licensing
Joint Venture/
Strategic Alliance
Direct
Investment
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PRODUCT-MARKET STRATEGIES
Exporting
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PRODUCT-MARKET STRATEGIES
Licensing
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PRODUCT-MARKET STRATEGIES
Joint Venture/Strategic Alliance
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PRODUCT-MARKET STRATEGIES
Direct Investment
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PRODUCT-MARKET STRATEGIES
New Offering Development Strategy
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PRODUCT-MARKET STRATEGIES
New Offering Development Strategy Involves
Product
Innovation
Product
Augmentation
Product
Line Extension
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PRODUCT-MARKET STRATEGIES
New Offering Development Strategy Factors
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PRODUCT-MARKET STRATEGIES
Cannibalism
Occurs when sales of a new offering come
at the expense of sales of existing offerings
the firm already markets
Is common in product development
programs
Key issue: Does the new offering detract
from the overall profitability of the firms
total offering mix
2013 Pearson Education, Inc. publishing as Prentice Hall
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PRODUCT-MARKET STRATEGIES
Diversification Strategy
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PRODUCT-MARKET STRATEGIES
Diversification Strategy Considerations
Many firms have adopted this strategy to
take advantage of growth opportunities
Is very risky because both the offerings and
markets served are new to the organization
Can be successful if the organization
applies its distinctive competencies to
reaching new markets with new offerings
2013 Pearson Education, Inc. publishing as Prentice Hall
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PRODUCT-MARKET STRATEGIES
Strategies are evaluated based on:
The organizations business definition,
mission, and capabilities
Market capacity and behavior
Environmental forces
Competitive activities
2013 Pearson Education, Inc. publishing as Prentice Hall
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PRODUCT-MARKET STRATEGIES
Strategy analysis depends on:
Availability and evaluation of relevant
market information
Data collected should include :
Market size
Consumer buying behavior and requirements
Environmental forces
2013 Pearson Education, Inc. publishing as Prentice Hall
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STRATEGY SELECTION
Strategies are chosen based on:
Costs and benefits of a strategy
Probabilities of success for a strategy
Competitive structure, market
dynamics, and opportunity costs
The offering itself
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A1
A2
Response
Outcome
R1
O1
R2
O2
R1
O3
R2
O4
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Marketdevelopment
strategy
Response
Outcome
Aggressive
competition
Estimated profit
of $2 million
Passive
competition
Estimated profit
of $3 million
Aggressive
competition
Estimated profit
of $1 million
Passive
competition
Estimated profit
of $4 million
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Product
Strategy
Customer
Aggressive
competition
Channel
Strategy
Passive
competition
Price
Strategy
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A cluster of Aggressive
benefits that an
competition
organization promises
customers to satisfy their
Aggressive
needs.
competition
Wal-Mart
Passive
competition
Michelin
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Estimated profit
of$3 million
Estimated profit
of $4 million
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Markets
Environmental forces
Organizational
Aggressive
competition
capacity
Estimated profit
of $4 million
Competitor reactions
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BUDGETING MARKETING,
FINANCIAL, AND
PRODUCTION
RESOURCES
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BUDGETING
A budget is a formal,
quantitative expression of
an organizations planning
and strategy initiatives
expressed in financial
terms.
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BUDGETING
A master budget consists of:
Operating
Budget
Financial
Budget
Special
Budgets
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DEVELOPING
REFORMULATION AND
RECOVERY STRATEGIES
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MARKETING AUDIT
A marketing audit is a comprehensive,
systematic, and periodic examination of
a firms or business units marketing
environment, objectives, strategies, and
activities to determine problem areas and
opportunities and recommend a plan of
action to improve the firms marketing
performance.
2013 Pearson Education, Inc. publishing as Prentice Hall
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MARKETING AUDIT
Operational
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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
2013 Pearson Education, Inc. publishing as Prentice Hall
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DRAFTING A
MARKETING PLAN
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MARKETING PLAN
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MARKETING PLAN
Consists of:
Business
Plan
Marketing
Plan
Product
Plan
Long-term
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