Contemporary Strategic Marketing

Chapter 7: Marketing Strategy Formulation

Tools for marketing strategy formulation

Market segmentation Targeting and positioning The product life cycle The Boston Consulting Group growth/share matrix PIMS (profit impact of marketing strategy) Porter’s generic competitive strategies Ansoff’s growth vector matrix Customer portfolio analysis

Market segmentation

Market segmentation

Segmentation in the newspaper industry

Figure 7.1: Target segment selection

Figure 7.2: Generic positioning map

Figure 7.3: The product life cycle

Figure 7.4: The BCG growth/share matrix

Relative market share

Profit Impact of Marketing Strategy (PIMS)

In the long run, the most important single factor affecting a business unit’s performance is the quality of its products and services, relative to those of competitors

Market share and profitability are strongly related High investment intensity acts as a powerful drag on profitability Many so-called ‘dog’ or ‘question mark’ businesses generate cash,

while many ‘cash cows’ are dry Vertical integration (that is, operating business units at consecutive

stages of the production process, such as an integrated circuit factory and a personal computer manufacturer) is a profitable strategy for some kinds of business, but not for others

Most of the strategic factors that boost return on investment (that is, profit measured as a percentage of capital employed) also contribute to long-term value.

Porter’s generic strategies

Basis for competitive advantage– Differentiation– Cost leadership

Applied across– An entire market – A sub-market or market segment (focus strategy)

Hence four possibilities– Differentiation, cost leadership, differentiation focus, cost

focus– Not doing any of the above = ‘stuck in the middle’

Figure 7.5 Ansoff growth vector matrix

Figure 7.6: Customer portfolio analysis

Contemporary Strategic Marketing

Chapter 8: Relationship marketing strategies

Chapter 8Learning Objectives

The distinction between discrete transactions and relational exchange

The nature of the relationship life cycle What is meant by relationship marketing Methods of implementing relationship marketing The application of relationship marketing in

consumer goods markets, consumer services markets and business-to-business markets

A range of criticisms that have been levelled at relationship marketing

The scope of relationship marketing

Figure 8.1: Business loyalty

The customer volume effect

Figure 8.2: The profit per customer effect

B2B buyer criteria for relational or transactional approach

Contemporary Strategic Marketing

Chapter 9: E-marketing strategies

Chapter 9Learning Objectives

The context in which e-marketing operates The relative advantages and disadvantages of using

different interactive tools The impact of information and communication

technologies (ICTs) upon the business-to-consumer (B2C) and business-to-business (B2B) marketing mixes

The qualities of an effective webpage The most appropriate business model for a

traditional retailer wishing to go online

E-marketing

Interactive tools provide marketers with a number of distinct advantages such as:

– Global reach. As the Net grows and grows it allows marketers to access marketspaces just about anywhere.

– Speed and flexibility. Although the Internet is not (yet) an instantaneous medium it provides the opportunity for buyers and sellers to interact swiftly, around the clock, 365 days a year.

– Low cost. After the initial costs required to put the necessary technology in place (computers, modems, software, training and so on), the actual cost of each virtual interaction is typically a fraction of what it would be in the physical world.

– Interactivity. By its very nature, the Net allows every user to engage in a two-way ‘multimedia’ exchange process.

Successful e-marketing

Some B2C e-marketing tools

E-consumer data

Some B2B e-marketing tools

E-business models

Bricks and mortar only (strictly conventional trading, nothing digital)

Bricks and some clicks (many online activities but no online transactions)

True bricks and clicks (complete range of commercial activities both offline and online)

Clicks only (trading is 100 per cent digital, no conventional or physical business)

Some e-marketing challenges

Limited consumer exposure and buying (the issue of limited access)

Skewed user demographics and psychographics (although this is changing rapidly)

Chaos and clutter Online security/trust Ethical concerns (privacy, disclosure and access

limitation issues, for example).

Contemporary Strategic Marketing

Chapter 10: Marketing strategy for services

Chapter 10Learning Objectives

How the nature of services affects how they are marketed

How to outline the extended marketing mix for services

What service quality is and how it is measured How to segment business and consumer markets for

service providers using customer-related and product-related approaches

The relative importance of customer acquisition and retention

Key questions for services strategy

1. What is the nature of the service act? 2. What type of relationship does the service

organisation have with its customers? 3. How much room is there for customisation and

judgement on the part of the service provider? 4. What is the nature of demand and supply for the

service? 5. How is the service to be delivered?

Characteristics of services

Intangibility Inseparability Variability Perishability Non-ownership

Seven Ps for services marketing

Product Price Promotion PlacePhysical evidencePeopleProcess

Five service quality gaps

Gap 1: the gap between customers’ expected service and management beliefs about consumer expectations (‘not knowing what customers expect’)

Gap 2: between management beliefs about consumer expectations and translation of perceptions into service quality expectations (‘not selecting the right service designs and standards’)

Gap 3: between translation of perceptions into service quality specifications and service delivery, including pre- and post-service contacts (‘not delivering to service standards’)

Gap 4: between service delivery and external communications to customers (‘not matching performance to promises’)

Gap 5: between perceived service and expected service (‘the customer gap’).

Five dimensions of SERVQUAL

1. Tangibles (the appearance of physical components of the service)

2. Reliability (how dependable and accurate the performance of the service is)

3. Responsiveness (how prompt and helpful the service provider is)

4. Assurance (how competent, courteous and credible the service provider is)

5. Empathy (the ease of access, level of communication and customer understanding offered).

SERVQUAL sample questions

Segmenting service markets

Figure 10.3: Yield management

Figure 10.4: Relationship pyramid for a major charity

Contemporary Strategic Marketing

Chapter 11: International marketing strategy

Chapter 11Learning Objectives

Reasons why companies seek opportunities in international markets

Ways in which companies approach strategic marketing at the international level

How and why companies choose particular markets abroad to invest in

The risk factors involved with international marketing and how to assess them

The additional complexity and challenges that international markets pose for companies

World trade growth

Exporters & importers

Going international

The reactive approach and the proactive approach

Which markets to enter– Where your customers are– Where your competitors are– Lead market for innovation/R&D– Government incentives– Foreign buyer requests

Risk analysis in international markets

Political risks Economic, commercial and infrastructural

risks Demand-level risks Distributor/partner risks

Political risks

Degree of protection for foreign assets such as patents (intellectual property)

Strength, efficiency and integrity of the judicial system Corruption and bribery Industrial policy and government interference in the economy

(for example price controls) Potential for expropriation or nationalisation of foreign assets Barriers to trade – non-tariff barriers (quotas, embargoes,

delays, local content laws, import restrictions, exchange controls)

Political instability – internal or regional

Distributor/partner risks

Due diligence– Due diligence is a legal term that means that before

entering into any form of buyer/seller, producer/manufacturer contract, each party should have a full understanding of the obligations of the partner, such as their outstanding debts, pending and potential lawsuits, supplier arrangements, long-term customer agreements, employment contracts, distribution agreements, compensation arrangements and so on.

Contemporary Strategic Marketing

Chapter 12: Analysing strategic marketing case studies

Chapter 12Learning Objectives

The role of case studies in studying strategic marketing

The importance of clear problem identification to successful case analysis

A series of steps that can be adopted to make case analysis effective

How to prepare successful oral presentations and written reports on case studies.

Students taking strategic marketing courses believe that case studies …

Illustrate how marketing strategy works in the real world

Are a good way to practise using analytical tools Are a useful way to discuss business problems in

class Are helpful in understanding complex problems Help to develop team-working skills, where a team-

based approach to case study analysis is used

Case study analysis

Case studies are descriptions of business situations that require the student to identify a business problem, usually with the aim of conducting relevant analysis and suggesting a solution

The underlying problem in the case studies will not be defined; it is up to you to identify the problem

Just as in real life, you should expect the information to be incomplete in some areas, irrelevant in others, and perhaps excessive in still other areas

Learning from case studies

What can we learn from this case study? What generalisations emerge from the case

that can be carried forward to other cases? Was the approach we adopted to this case

productive? Could it have been improved? What marketing concepts and techniques

helped us to understand and analyse this case?

Case study analysis process

Understanding the situation & diagnosing the problem

Who is the decision-maker? What are the key facts? What are the symptoms? What is the underlying problem that is

causing the symptoms? What solutions come to mind? What are the case questions?

Generating solutions and predicting outcomes

Tools for strategic marketing analysis– PEST, 5-forces, SWOT, Customer value analysis

Gap analysis, etc. Tools for marketing strategy formulation

– Segmentation, positioning, BCG analysis, customer portfolio analysis etc.

Brainstorming– Postpone judgement, freewheel, hitchhike,

quantity breeds quality

Evaluate alternatives

To what extent will this alternative enable the firm to meet its goals?

What are the direct and indirect costs of this alternative?

How quickly will this solution take effect? How likely is it that this solution will work? How acceptable is the solution to the various

stakeholders identified in the case study?

Presenting your results

1. Your recommended decision must be presented clearly and succinctly.

2. The logic by which you arrived at your recommendation must be made clear.

3. The recommendation should be supported by facts developed from the case.

– You must do more than simply list the case study facts after each element of the problem. The data must be intelligently manipulated. Calculations, tables, graphs and diagrams should be used to bring out the significance of the facts.