MARKETING 673 Spring Semester, 1999 Module 1

OUTLINE n Marketing Strategy: An Overview n Developing Marketing Strategy n Competitive Advantage

STRATEGY n What is “strategy”? -...the fundamental means or scheme for reaching objectives.

MARKETING STRATEGY n What is “marketing strategy”? -...the selection of target markets and the creation and maintenance of an appropriate marketing mix.

DEVELOPING A MARKETING STRATEGY n SWOT Analysis n Mission Statement / Goals and Objectives n Marketing Strategy

SWOT n Strengths n Weaknesses n Opportunities n Threats n Also called a “Situational Analysis”

STRENGTHS AND WEAKNESSES n Strengths and Weaknesses focus on the internal (corporate) environment n Strengths: Competitive advantages that a company can exert in the marketplace (Text, pg. 154) n Weaknesses: Constraints that hinder movements in certain directions (Text, pg. 154)

STRENGTHS AND WEAKNESSES n Sample Attributes to be Examined: -Organizational Structure -Managerial Expertise -Training Programs -Cash Flow -Distribution Networks -See Exhibit 7.1 (page 156)

OPPORTUNITIES AND THREATS n Opportunities and Threats are derived from an analysis of the environment external to the firm -Competitive Environment -Macro Environment

COMPETITIVE ENVIRONMENT n The competitive environment consists of an analysis of major competitors, their plans, products, and suppliers as well as an analysis of the industry structure.

COMPETITIVE ENVIRONMENT--Major Competitors n Competitor’s Objectives n Competitor’s Strategy n Competitor’s Success to Date n Competitor’s Strengths/Weaknesses n Competitor’s Future Behavior

COMPETITIVE ENVIRONMENT--Industry Structure n Industry structure concerns a review of the dynamics within a particular industry.

MACRO ENVIRONMENT n The macro environment concerns all other factors over which the marketer has no or little control -Physical -Political/Legal -Technological -Sociocultural -Demographic/Economic

PHYSICAL ENVIRONMENT n Special conditions can create opportunities n Depletion/degradation of resources also creates opportunity

POLITICAL/LEGAL ENVIRONMENT n Includes all factors controlled by public authorities n Vary from country to country n Most important question is POLITICAL STABILITY when marketing abroad

POLITICAL/LEGAL ENVIRONMENT n Political risk to foreign firms - Confiscation - Domestication - Import Restrictions - Taxes - Price Controls

POLITICAL/LEGAL ENVIRONMENT n Governments encourage foreign investment through: - tax concessions - relaxation of tariffs - streamlining policies and procedures - government deregulation

TECHNOLOGICAL ENVIRONMENT n Impact on: - New product development - Existing industries - Other marketing operations such as communications, distribution, and marketing research

SOCIOCULTURAL ENVIRONMENT n...represents the values, attitudes, and general behavior of individuals in a given society n slow to change n Changes in individual values and shifts in family structure have impacted US markets

DEMOGRAPHIC/ECONOMIC ENVIRONMENT n In uncertain times, variables most likely to impact marketing strategies are: - population demographics - rate of economic growth - interest rates and currency exchange rates

TODAY’S MARKETING ENVIRONMENT

n Mass markets to market segments n Changing demographics n Internationalization of marketing n Expanding role of government n Increasing pace of change n Focus on the environment n Focus on the customer n The internet!!

DEVELOPING A MARKETING STRATEGY n SWOT Analysis n Mission Statement / Goals and Objectives n Marketing Strategy

MISSION STATEMENT n Mission Statement (Text, Page 177) -“The conception of the organization’s raison d’être, or what it should work toward, in light of long range opportunity”

FROM THE INTERNET n Mission Statements = Profits

GOALS AND OBJECTIVES n Goals:long-range purpose that is not necessarily quantified or limited to a time period n Objectives: flow from goals, they are measurable and deemed to be attainable at some future date through planned actions

SLU’s MISSION, GOALS AND OBJECTIVES n Mission: Inst-Research/Planning/vision.htm n Goals and Objectives: Inst-Research/Planning/goals.htm

DEVELOPING A MARKETING STRATEGY n SWOT Analysis n Mission Statement / Goals and Objectives n Marketing Strategy

THE MARKETING PLAN n Your marketing strategy!! n …a written document containing the guidelines for the business unit’s marketing programs and allocations over the planning period.

THE MARKETING PLAN n ACTIVITIES: It outlines tasks and timing of activities n PEOPLE: It informs participants of their role and function n RESOURCES: It specifies how resources are to be allocated

A MARKETING PLAN WILL... n act as a road map n help in the prediction of problems, opportunities, and threats n assist in helping to obtain resources for implementation n stimulate thinking and better use of resources

TYPES OF MARKETING PLANS n New Product Plans n Annual Marketing Plans (for existing products)

THE MARKETING PLAN n Title Page and Table of Contents n Executive Summary n Situational Analysis n Target Market(s) n Goals/Objectives n Marketing Strategy n Implementation and Control n Summary/Conclusion n Appendices

The key to a successful strategy….. COMPETITIVE ADVANTAGE

n “Superior or favorable difference from competitors along some dimension important to the market” (Zikmund & d’Amico, 1997) n...a firm has a marketing mix that the target market sees as better than a competitor’s mix n Without competitive advantage(s), you do not succeed!

CHARACTERISTICS n They must be real n They must be important to the client n They must be specific n They must be promotable

ELEMENTS OF COMPETITIVE ADVANTAGE

SOURCES OF ADVANTAGE n Skills - people, operational capabilities n Resources - strong distribution networks, marketing power n Controls - feedback mechanisms

POSITIONAL ADVANTAGES n Positioning: “placing a brand in that part of the market where it will receive a favorable reception compared to competing products” (Text, page 345) n Low Cost n Superior Customer Value

PERFORMANCE OUTCOMES n Satisfaction n Loyalty n Market Share n Profitability

ASSESSING COMPETITIVE ADVANTAGE n Portfolio Analysis - BCG Matrix - GE / Industry Attractiveness-Business Position Matrix

PORTFOLIO ANALYSIS n It combines the assessment of business position and market attractiveness. n It enables managers to classify and review current and prospective SBU’s

THE BCG MATRIX n Growth n Market Share

BCG MATRIX n Growth is used because it is an approximation of the PLC n Market Share is the ratio of the firm’s market share to the market share of its largest competitor

BCG MATRIX n Stars - Hi Growth/Hi Market Share n Cash Cows - Lo Growth/Hi Market Share n Dogs - Lo Growth/Lo Market Share n Question Marks / Problem Children - Hi Growth/Lo Market Share

STRATEGIC IMPLICATIONS n Divest dogs or pursue a “focus” segmentation policy n Use cash from cash cows to fund other operations n Manage stars to maintain market share n Try to move “Question Marks” to “Stars”

INDUSTRY ATTRACTIVENESS MATRIX n Market Attractiveness n Business Position

STRATEGIC IMPLICATIONS n Invest / Grow n Selective Investment n Harvest / Divest

FROM YOUR TEXT... n Chapter One (Pages 1-18) n Chapter Two (Pages 21-40) n Chapter Six (Pages ) n Chapter Ten (Pages )