slides of strategic marketing
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chapter 1 slides of Strategic marketingTRANSCRIPT
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CHAPTER 1 Foundations of Strategic Marketing Management
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1. Define an organization’s business, mission, and goals.
2. Identify and frame organization growth opportunities.
3. Formulate product-market strategies.
4. Budget marketing, financial, and production resources.
AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:
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5. Develop reformulation and recovery strategies.
6. Draft a marketing plan.
7. Emphasize marketing ethics and social responsibility.
AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:
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INTRODUCTION
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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To create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.
PURPOSE OF MARKETING
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RESPONSIBILITIES OF MARKETING MANAGERS
Direct day-to-day operations
Make strategic decisions
Create and sustain a competitive advantage
Affect the organization’s long-term performance
Chart the organization’s direction
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RESULTS OF THE EVOLUTION OF THE MARKETING MANAGER
Created the Chief Marketing Officer (CMO) position
Increased popularity of strategic marketing management
Half of Fortune 1000 have CMOs
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Analyze environmental, competitive, and business situations
Develop business objectives and goals
Define customer value propositions and their marketing strategies
RESPONSIBILITIES OF CMOs
Define the business mission
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Analytic abilities
Intuitive sense
Creativity
SKILL SET OF CMOs
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Define business, mission, and goals
Identify/frame growth opportunities
Formulate product-market strategies
Budget resources
Develop reformulation and recovery strategies
STRATEGIC MARKETING MANAGEMENT PROCESSES
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DEFINING THE ORGANIZATION’S
BUSINESS, MISSION,AND GOALS
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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An firm defines its business by:
• The customers served and their needs
• The means or technology used to satisfy needs
BUSINESS DEFINITION
Is neither obvious nor easy to define
Outlines the scope of operations
What “business” is the Encyclopedia Britannica in?
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Underscores the scope of an organization’s operations
Reflects management’s vision ofthe organization
Describes an organization’s purpose
Crystallizes the organization’slong-term direction and character
BUSINESS MISSION
Consists of a written statement that:
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Helps identify and evaluateproduct-market opportunities
Inspires employees
Provides direction for goal-setting
Applies to not-for-profit organizations as well
BUSINESS MISSION
Consists of a written statement that:
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BUSINESS MISSION
XEROXAmericanRed Cross
“Do great work” “Provide for victims of disaster”
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ProductionObjectives
Convert the mission into tangible actions and results to be achieved by a specified time frame
Are divided into three categories:
FinancialObjectives
MarketingObjectives
BUSINESS GOALS OR OBJECTIVES
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BUSINESS GOALS OR OBJECTIVES
• Manufacturing and service capacity
• Product and service quality
ProductionObjectives
• Return on investment
• Return on sales
• Shareholder wealth
• Profit
• Cash flowFinancial
Objectives
• Market share
• Sales volume
• Marketing productivity
• Customer satisfaction
• Customer value creation
• Profit • Customer lifetime value
MarketingObjectives
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A situation analysis is an appraisal of operations to determine reasons for thegap between what was oris expected and what has happened or will happen.
BUSINESS GOALS OR OBJECTIVES
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IDENTIFYING AND FRAMING
ORGANIZATIONAL GROWTH
OPPORTUNITIES
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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CONVERTING ENVIRONMENTAL OPPORTUNITIES INTO ORGANIZATIONAL OPPORTUNITIES
What might we do?
Ask three questions:
What do we do best?
What must we do?
EnvironmentalOpportunities
DistinctiveCompetencies
SuccessRequirements
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Unmet or changing consumer needs
Unsatisfied buyer groups
New means or technologies for delivering value to prospective buyers
WHAT MIGHT WE DO?
Environmental Opportunities
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Describes an organization’s unique strengths or qualities, including skills, technologies, or resources, that distinguish it from other organizations.
WHAT DO WE DO BEST?
Distinctive Competency
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Two criteria must be satisfied:
Competitors cannot imitate it
Provide customers with superior value
WHAT DO WE DO BEST?
Distinctive Competency
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Basic tasks that an organization must perform in a market or industry to compete successfully.
WHAT DO WE DO BEST?
Success Requirements
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SWOT analysis is a formal frameworkfor identifying and framing organizational growth opportunities.
Strengths WeaknessesInternal
Capabilities
OpportunitiesExternal
EnvironmentThreats
Organization Favorable Unfavorable
- Type of Factor -
SWOT ANALYSIS
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Strengths
Weaknesses
Opportunities
Threats
What the organization is good at doing or some characteristic that gives it an important capability
What an organization lacks ordoes poorly relative to other organizations
Developments or conditions in the environment that have favorable implications for the organization
Pose dangers to the welfare of the organization
SWOT ANALYSIS
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EXHIBIT 1.1: SAMPLE SWOT ANALYSIS FRAMEWORK
Strengths WeaknessesInternalFactors
OpportunitiesExternalFactors
Threats
Management
Marketing
Manufacturing
R&D
Finance
Offerings
Economic
Competition
Consumer
Technology
Legal/Regulatory
Industry/MarketStructure
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Which strengths represent distinctive competencies?
Does a pattern emerge from the SWOT?
Which weaknesses disqualify the organization from pursuing certain opportunities?
Questions to ask after a SWOT analysis:
SWOT ANALYSIS
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FORMULATINGPRODUCT-MARKET
STRATEGIES
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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A product-market strategy involves selecting specific markets and profitably reaching them through an integrated program calleda marketing mix.
PRODUCT-MARKET STRATEGY
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EXHIBIT 1.2: PRODUCT-MARKET STRATEGIES
MarketDevelopment
New Offering Development
MarketPenetration
Diversification
NewExisting
Existing
New
Markets
Offerings
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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).
PRODUCT-MARKET STRATEGIES
Market Penetration Strategy
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Increasing present buyers’ usage or consumption rates of the offering
Attracting buyers of competing offerings
Stimulating product trial among potential customers
PRODUCT-MARKET STRATEGIES
Market Penetration Strategy Involves
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Examine market growth
Assess competitive reaction
Analyze the capacity of the market to increase usage or consumption rates and the availability of new buyers
PRODUCT-MARKET STRATEGIES
Market Penetration Strategy Considerations
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A market-development strategydictates that an organization introduce its existing offerings to markets other than those it is currently serving (existing offerings → new markets).
PRODUCT-MARKET STRATEGIES
Market Development Strategy
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Adjusting the marketing mix, such as:
Analyzing competitors’ strengths, weaknesses, and potential for retaliation
• Modifying the basic product offering
• Using different distribution outlets
• Changing the sales effort or advertising
PRODUCT-MARKET STRATEGIES
Market Development Strategy Involves
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Identifying the number, motivation, and buying patterns of new buyers
Determining the organization’s ability to adapt to new markets to evaluate success
PRODUCT-MARKET STRATEGIES
Market Development Strategy Involves
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Licensing
Joint Venture/Strategic Alliance
Exporting
DirectInvestment
PRODUCT-MARKET STRATEGIES
Market Development Strategy International Forms
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PRODUCT-MARKET STRATEGIES
Exporting
Involves marketing the same offering in another country through sales offices or intermediaries
Is a popular option for entering foreign markets because it:
• Easy to initiate
• Requires minimal capital investment
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PRODUCT-MARKET STRATEGIES
Licensing
Is a contract where a firm (licensee) is given the rights to patents, trademarks, etc. by the owner (licensor) in turn for a royalty or fee
Is a low-risk, quick, and capital-free entry into a foreign market
Limits the control of the licensor over production and marketing by the licensee
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PRODUCT-MARKET STRATEGIES
Joint Venture/Strategic Alliance
Creates a new entity in the host country from an investment by both a foreign and a local company
Allows the two firms share ownership, control, and profits of the entity
Is popular because one firm may not have the required resources to enter a market
Ensures against trade barriers
May cause disagreements between the partners regarding how the new entity should be run
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PRODUCT-MARKET STRATEGIES
Direct Investment
Involves investing in a manufacturing and/or assembly facility in a foreign market
Is the most risky and requires the most commitment
Brings the firm closer to its customers
May be the most profitable market-entry option
Often follows the other three options
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A product- (new offering-) development strategy dictatesthat an organization create new offerings → existing markets.
PRODUCT-MARKET STRATEGIES
New Offering Development Strategy
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PRODUCT-MARKET STRATEGIES
Enhancing the value to customers of existing offerings through bundling or improving functional performance
ProductAugmentation
Developing totally new offeringsProduct
Innovation
Adding different features, sizes, etc. to broaden the existing line
ProductLine Extension
New Offering Development Strategy Involves
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The market size and volume needed for profitability
The magnitude and timing of competitors’ responses
The impact of the new product on the sales of existing offerings (cannibalism)
The capacity of the organization to deliver the offerings to the market(s)
PRODUCT-MARKET STRATEGIES
New Offering Development Strategy Factors
The presence of significant points of difference
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Occurs when sales of a new offering come at the expense of sales of existing offerings the firm already markets
PRODUCT-MARKET STRATEGIES
Cannibalism
Is common in product development programs
Key issue: Does the new offering detract from the overall profitability of the firm’s total offering mix
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A diversification strategy involves the development or acquisition of offerings new to the organization and the introduction of those offerings to publics not previously served by the organization(new offerings → new markets).
PRODUCT-MARKET STRATEGIES
Diversification Strategy
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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
PRODUCT-MARKET STRATEGIES
Diversification Strategy Considerations
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Strategies are evaluated based on:
The organization’s business definition, mission, and capabilities
Market capacity and behavior
Environmental forces
Competitive activities
PRODUCT-MARKET STRATEGIES
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Strategy analysis depends on:
Availability and evaluation of relevant market information
Data collected should include :
PRODUCT-MARKET STRATEGIES
• Market size
• Consumer buying behavior and requirements
• Environmental forces
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Costs and benefits of a strategy
Competitive structure, market dynamics, and opportunity costs
Probabilities of success for a strategy
The offering itself
STRATEGY SELECTION
Strategies are chosen based on:
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EXHIBIT 1.3: DECISION-TREE FORMAT
Action Response Outcome
A2
A1
R1
R2
R1
R2
O1
O2
O3
O4
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Estimated profit of $1 million
Estimated profit of $4 million
Action Response Outcome
Estimated profit of $2 million
Estimated profit of $3 million
Market-development
strategy
Aggressive competition
Passivecompetition
Aggressive competition
Passivecompetition
Market-penetration
strategy
EXHIBIT 1.4: SAMPLE DECISION-TREE
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Aggressive competition
Passivecompetition
Aggressive competition
PriceStrategy
Communication Strategy
ProductStrategy
ChannelStrategy
Customer
THE MARKETING MIX
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Aggressive competition
Passivecompetition
Aggressive competition
CUSTOMER VALUE PROPOSITION
A cluster of benefits that an organization promises customers to satisfy their needs.
Wal-Mart Michelin
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Estimated profit of $4 million
Estimated profit of$3 million
Aggressive competition
Depends on the success requirements of the market
Must be consistent with:
FORMULATING THE MARKETING MIX
• The needs of the markets served
• The organization’s capacity
• The marketing mix activities
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Estimated profit of $4 million
Estimated profit of$3 million
Aggressive competition
Requires an understanding of:
Is an art and a science
IMPLEMENTING THE MARKETING MIX
• Markets
• Environmental forces
• Organizational capacity
• Marketing mix activities
• Competitor reactions
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BUDGETING MARKETING, FINANCIAL, AND
PRODUCTION RESOURCES
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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A budget is a formal, quantitative expression of an organization’s planning and strategy initiatives expressed in financial terms.
BUDGETING
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A master budget consists of:
Focuses on the income statement.Also referred to as a pro forma income statement or profit plan.
Focuses on the effect the operating budget has on the organization’s cash position.
BUDGETING
OperatingBudget
FinancialBudget
SpecialBudgets
Focuses on developing advertising,sales, and other budgets that support the master budget.
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DEVELOPING REFORMULATION AND
RECOVERY STRATEGIES
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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A marketing audit is a comprehensive, systematic, and periodic examination of a firm’s or business unit’s marketing environment, objectives, strategies, and activities to determine problem areas and opportunities and recommend a plan of action to improve the firm’s marketing performance.
MARKETING AUDIT
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Addresses the following questions:
MARKETING AUDIT
Are we doing the right things?Strategic
Are we doing things right?Operational
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Have the following purposes:
Forces marketing managers to ask“What if…?” questions
Allows for contingency plans, preplanning of reformulation and recovery strategies that lead tofaster reaction time in implementing remedial action
REFORMULATION AND RECOVERY STRATEGIES
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DRAFTING AMARKETING PLAN
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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A marketing plan is a formal, written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specific future time period.
MARKETING PLAN
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Consists of:
Each has these time dimensions:
Focus: 1-year period
Focus: 3- to 5-year period
MARKETING PLAN
ProductPlan
BusinessPlan
MarketingPlan
Short-term
Long-term
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MARKETING ETHICS AND SOCIAL RESPONSIBILITY
CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT
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Most marketing decisions involve some degree of moral judgment
Marketers should take actions that are legal, ethical, and socially responsible
ETHICS AND SOCIAL RESPONSIBILITY
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