Marketing Strategy

The Internal & External Environment

Planning Marketing• Once a firm’s strategic plans are in place, more detailed plans need to

be developed.– Marketing plays a key role in strategic planning:

• Provides a guiding philosophy called the Marketing Concept• Provides input to firm’s strategic planners.• Marketing designs strategies for reaching each unit’s objectives.

• But, we must realize that marketing is just one element of a firm’s strategy.

• Thus we need to understand how marketing strategy integrates with firm strategy– This often requires a sound handle on financial knowledge – Can you handle a P&L

• Can you explain how your strategies build toward the firm’s outcomes

Managing Marketing Strategy and the Marketing Mix

Marketing In A Nutshell

Today’s Topic

• To some extent a review of strategic marketing process

• However, a much greater emphasis and attention paid to inside and outside – Our guiding theme: Internal and externalOur guiding theme: Internal and external

At it most simplest form, marketing strategy consists of four steps

APIC• Analysis

• Planning

• Implementation

• Control and evaluation and correction

The Analysis Step

• Goal: – Understand internal and external environment

• What do we face inside and outside the company

• How do they interact?

– What do we know? • This is why marketing research is so valuable

• If we understand our foundation of marketing research, it can only aid in our assessment

• Most common method to that summarizes our perspective is the SWOT analysis

A Company Has Two Key Marketing Environments

1. Micro-environment: – Actors close to the

company

2. Macro-environment• Larger societal forces

SWOT Analysis ExampleStrengths

– What do we do well – What’s the value of our capability

Weaknesses– What don’t we do well– Is it critical that we don’t have it– Does our competitor have it…yet– Can we overcome or neutralize? –

Opportunities– Relevant factors in the external

environment– Can they be exploited (time frame)

Threats– What conditions threaten the firm – Can we avoid or neutralize

How do we know what to examine in a SWOT

(micro) Examples of Internal • Assets and resources

– Human: Expertise, experience, training, skills knowledge, marketing prowess

– Firm: Control, culture, how we coordinate, our espirit de corps

– Relationship: Our relationships with our vendors, customers, others

– Physical: Property, equipment, proximity, geography, access

Is it a strength or weakness? • Is it valuable:

– Does it improve efficiency or effectiveness

• Is it rare?– Does the industry or a group

share in it?

• Can it be imitated– Is it difficult to imitate

• Substitutability– Can it be duplicated?

• Exploitable– Can you engage its full potential?

How do we know what to examine in a SWOT (macro)

• Key Demographic Trends

– World population growth

• Now 6.2 billion

• Projected to reach 7.9 billion by 2025

• The Economic Environment

– Affects consumer purchasing power and spending patterns.

– U.S. consumers now spend carefully and desire greater value.

• Key Technological Trends – Technological

environment: Characterized by rapid change.

– New technologies create new opportunities and markets & make old technologies obsolete.

– U.S. leads the world in research and development spending.

How do we know what to examine in a SWOT (macro)

The Natural Environment

• Concern for the natural environment has grown steadily, increasing the importance of these trends:

– Shortage of raw materials– Increased pollution– Increased governmental

intervention

The Political Environment• Includes laws, governmental agencies, and pressure groups that impact organizations and individuals.

How do we know what to examine in a SWOT (macro)

• The Cultural Environment– Is composed of institutions and other forces that

affect a society’s basic values, perceptions, preferences, and behaviors.

• Core beliefs are persistent– Passed from parents to

children; reinforced by society

– Shape attitudes and behavior

• Secondary cultural values change and shift more easily

• Society’s cultural values are expressed through people’s views of:

– Themselves– Others– Organizations– Society– Nature– The Universe

But What Do We Do With The SWOT?

• Internal: – Analyze the organization’s internal environment,

identifying its strengths and weaknesses.

• External: – Analyze organization’s external environment its

opportunities and threats.

• Interaction– Where is our value

• Strengths with opportunities– Where our we susceptible

• Weaknesses with threats– How shall we proceed

• Strengths with threats• Weaknesses with opportunities

Planning

• Planning may include both understanding where we stand with our current business & how we might grow additional business

How Do We Assess A SBU?

• We can use a planning tool– Market share/ market

growth matrix

– Classifies firm’s products (two metrics)

• Industry growth rates (How fast is the industry we are in growing)

• Market share relative to competition (How well are we doing)

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So How Does This Work?•Step 1:

•Analyze the current business portfolio

•Step 2: Shape the future business portfolio

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Strategic Planning

• Our next step in designing our business portfolio:

– NEW STUFF/NEW BUSINESS• Developing strategies for growth by identifying, evaluating, and selecting

promising new market opportunities.• Developing strategies for downsizing the business portfolio.

• Tool: Product/market expansion grid– However, the key is to understand in this exercise is that this matrix

relies on your assumptions • Who are your customers• What category to you compete in…What’s your space• What do you assume your customers do with your product

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Product/Market Expansion Product/Market Expansion GridGrid

Strategic Planning

Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities

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Once we decide where we stand and how we might grow we can get into the more tactical areas of planning

Market Segmentation• The process of dividing a market

into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products or marketing programs.

• The question is are you dividing them up arbitrarily to meet your firm’s needs or actually meeting their needs?

Targeting: • Evaluating each market segment’s

attractiveness and selecting one or more segments to enter.

• Feasibility: – Can you, will they, does it have

critical mass, is it profitable

Market Positioning– Clear, distinctive, desirable.

believable– Consumer real estate– Differentiation that returns its

investment – Do they care?– Are you just talking to yourself?

Planning to Implementation: The Marketing Mix

• The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.

However…The Four P’s Taked A Rather Internal View

Our Goal Is To Take A Internal & External View

• Seller’s View– A product: mixture of goods and services

the company offers.

– Price: What consumer must pay for the product.

– Place: How company makes the product available to customers.

– Promotion: set of activities that the company uses to communicate the value of their product to the marketplace and to persuade consumers to buy it.

• Customer’s View

• From this perspective, the four Ps become the four Cs:

– Product becomes Customer solution.

– Price becomes Customer cost.

– Place becomes Convenience.

– Promotion becomes Communication.

• Marketing implementation turns plans into actions. It involves the activities that make the plans work.

• Implementation requires the company to blend its people, organizational structure, decision and reward systems, and company culture in a way that supports its strategies.

• Good implementation is a challenge.

• Marketing departments must be properly organized to ensure timely implementation.

Marketing Management: Implementation

Marketing Control Process

• We often take a reactive stance to evaluation

– We do it when things go bad– Or we do it when we have to write

another marketing plan

• But evaluation and correction and even correction should be monitored

• Operating control checks ongoing performance of marketing programs against annual plan.

– If necessary, corrective action is taken.– The purpose is to ensure that the

company sales, profits, and other goals are being met.

• Strategic control looks at whether the company’s basic strategies are matched to its opportunities.

Strategic MarketingAnalysis Planning Implementation Control

SWOT

Internal (SW)

External (OT)

Segmentation

Targeting

Positioning

Turns plans into actions

Marketing activities are evaluated and corrected as part of control process.

Operating control checks ongoing performance of marketing programs against annual plan.

Analysis feeds the development of strategic plans.

4 P’s

The set of controllable, The set of controllable, tactical marketing tools tactical marketing tools that the firm blends that the firm blends to produce the to produce the response it wants in response it wants in the target market.the target market.

Strategic control looks at whether the company’s basic strategies are matched to its opportunities

Marketing audit

Integrate the the value delivery chain throughout the process: Internal components; External components

A Final CaveatHowever, between us…marketing continues to change and so will our strategies

– The following key themes are emerging, have emerged, or always been around and we’re finally paying attention to them

– Consumers playing a greater role and having a greater say

• Co-creation: Products, ads, buzz campaigns, TiVo

– Marketing metrics • Google and ads when you want them

– The way you define your market defines you

• Welch’s book: Market definition so share doesn’t exceed 10%

– Understanding the supply chain is increasingly important

• The value of a network

– A re-definition of a market• Is it a forum?

– The value of design and experience• Panera, Jones Soda, Pottery painting

– Customer management vs. retention• Tesco and CVS loyalty card

– Outsourcing, free agents and the need to “have” employees or offices

• Best Buy