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Marketing Management, 13th ed

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OVERVIEW
Strategic marketing management is concerned with how we will create value for the customer
Asks two main questions
What is the organizations main

activity at a particular time? Customer Value


What are its primary goals and how

will these be achieved? how will this value be delivered


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MARKETING AND CUSTOMER VALUE


The task of any business is to deliver customer value at a profit The traditional view of marketing is that the firm makes something and then sells it New belief: marketing begins with the planning

process.

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The Value Delivery Process:


(a) Traditional Physical Process Sequence
Make the Product Design Product Procure Make Price Sell Sell the Product Advertise/ Promotion Distribute Service

(b) Value Creation and Delivery Sequence


Choose the Value
Customer Segmentation Market Selection/ Focus Value Positioning Product Development

Provide the Value


Service Development Pricing Sourcing Making Distributing Servicing

Communicate the Value


Sales Force Sales Promotion Advertising

Strategic Marketing

Tactical Marketing

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Kumars Three Vs Approach to Marketing


Define the value segment

Define the value proposition

Define the value network

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What is the Value Chain?


Michael Porters Value Chain identifies nine strategically relevant activities that create value and costs (five primary and four support activities).
The value chain is a tool for identifying ways to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.

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Figure 2.2 Porters Value Chain

The firms task is to examine its costs and performance in each value-creating activity and to look for ways to improve performance.
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Core Business Processes


Market-sensing process New-offering realization process Customer acquisition process Customer relationship management process Fulfillment management process

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Characteristics of Core Competencies


A source of competitive advantage Applications in a wide variety of markets Difficult to imitate

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Examples of firms and some of their core products include:

3M - substrates, coatings, and adhesives Black & Decker - small electric motors Canon - laser printer subsystems Matsushita - VCR subsystems, compressors NEC - semiconductors Honda - gasoline powered engines
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Strategic Planning is the managerial process of creating and maintaining a fit between the organizations objectives and resources and the evolving market opportunities.
Also All

called Strategic Management Process organizations have this be Formal or Informal


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Can

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Figure 2.2 The Strategic Planning, Implementation, and Control Processes

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What is a Marketing Plan?


A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level.

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Levels of a Marketing Plan


Strategic
Target marketing decisions Value proposition Analysis of marketing opportunities

Tactical
Product features Promotion Merchandising Pricing Sales channels Service

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Corporate Headquarters Planning Activities Define the corporate mission Establish strategic business units (SBUs) Assign resources to each SBU Assess growth opportunities

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Good Mission Statements


Focus on limited number of goals Stress major policies and values

Define major competitive spheres


Take a long-term view Short, memorable, meaningful
http://www.missionstatements.com/fortune _500_mission_statements.html
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Motorola The purpose of Motorola is to honorably


serve the needs of the community by providing products and services of superior quality at a fair price to our customers; to do this so as to earn an adequate profit which is required for the total enterprise to grow; and by doing so, provide the opportunity for our employees and shareholders to achieve their personal objectives.
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eBay

We help people trade anything on earth. We will continue to enhance the online trading experiences of allcollectors, dealers, small businesses, unique item seekers, bargain hunters, opportunity sellers, and browsers.

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Microsoft
To help people and businesses throughout the world realize their full potential. This drives our business and guides our Corporate Citizenship work.

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Table 2.3
Product Orientation vs. Market Orientation Company
Missouri-Pacific Railroad Xerox Standard Oil Columbia Pictures

Product
We run a railroad We make copying equipment We sell gasoline We make movies

Market
We are a peopleand-goods mover We improve office productivity We supply energy We entertain people

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Characteristics of SBUs
It is a single business or collection of related businesses It has its own set of competitors It has a leader responsible for strategic planning and profitability

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The BCG Matrix


BCG Matrix i.e. Growth-Share Matrix, Boston Box, Boston Matrix, Boston Consulting Group analysis. Created by Bruce Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

Assigning Resources to SBUs


The Boston Consulting Group Approach
The market growth rate on the vertical axis indicates the annual growth rate of the market in which the business operates. Relative market share, which is measured on the horizontal axis, refers to the SBUs market share relative to that of its largest competitor in the segment.
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MARKET SHARE
Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARE


RMS = Business unit sales this year Leading rival sales this year

The higher your market share, the higher proportion of the market you control.

MARKET GROWTH RATE


Market growth is used as a measure of a markets attractiveness. MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.

The BCG Matrix


STARS :- High growth business competing in market where they are relatively strong compared with the competition. They have a high market shares and are the ideal businesses. CASH :- Low-growth business with a relatively high market shares. These businesses were stars but now have lost their attractiveness. QUESTION MARK :- Businesses with low market share but which may have a high growth rate. This suggests that they have potential but may require huge ever, a competing force extraordinary effort in order to grow point share. DOGS :- Businesses that have low relative share and low expected growth rate. Dogs may generate enough points to sustain but they are rarely, if ever, a competing force.

The BCG Matrix


Hold

Build Harvest Divest

The BCG Matrix


Nestle beverages Nestle breakfast cereals

iPod
baby food items i.e. nestle cerelace and other baby food products

Nestle pharmaceutical products

DVD players

The BCG Matrix OF COCACOLA IN INDIA

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Figure 2.3 The Strategic Planning Gap

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Ansoffs Product-Market Expansion Grid

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Existing

PRODUCTS

New

Existing

INCREASING RISK MARKET PENETRATION

PRODUCT DEVELOPMENT
INCREASING RISK

Sell more in existing Markets MARKETS MARKET EXTENSION

Sell new products in existing markets

DIVERSIFICATION

New

Achieve higher sales/market share of existing products in new markets

Sell new products in new markets (related diversification)

MARKET PENETRATION
This is the objective of higher market share in existing markets
E.g. in 2000, Mitsubishi announced a 10% reduction in prices in the UK in order to encourage purchases

MARKET EXTENSION
This is the strategy of selling an existing product to new markets. This could involve selling to an overseas market, or a new market segment
Nintendo are making hand held games consoles (e.g. DS) appeal to the adult/grey market by introducing games such as Brain Train

PRODUCT DEVELOPMENT
This involves introducing new product in existing markets
This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers

DIVERSIFICATION
Starbucks entered into grocery store aisles with Frappuccino bottled drinks, ice cream, and tea.

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Integrative Growth A businesss sales and profits can be increased through Backward integration (acquiring a supplier) Forward integration (acquiring a distributor) Horizontal integration (acquiring a competitor).
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Diversification Growth
This makes sense when good opportunities exist outside the present businesses. Three types of diversification are possible The company could seek new products that have technological or marketing synergies with existing product lines, even though the new products themselves may appeal to a different group of customers (concentric diversification strategy). Second, the company might search for new products that appeal to its current customers but are technologically unrelated to the current product line (horizontal diversification strategy). Finally, the company might seek new businesses that have no relationship to the companys current technology, products, or markets (conglomerate diversification strategy).

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Figure 2.5 The Business Unit Strategic Planning Process

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SWOT Analysis
Strengths Weaknesses Opportunities Threats
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Porters Generic Strategies


Overall Cost Leadership

Differentiation
Focus

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Marketing Plan Contents


Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

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Marketing Debate
What good is a mission statement?
Take a position: 1. Mission statements are critical to a successful marketing organization. or 2. Mission statements rarely provide useful marketing value.
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