McGraw-Hill/Irwin Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Marketing Dhruv Grewal Michael Levy Chapter 2 Developing Marketing Strategies

2-2 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Disney Goes Digital Global positioning satellites Smart sensors Wireless technology Mobile devices Pal Mickey

2-3 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Strategic Marketing Planning Process Steps in developing the strategic marketing plan

2-4 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Three Phases of a Strategic Plan Planning Implementing Controlling

2-5 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step One: Defining the Mission and/or Vision 1. Defining the Mission and/or Vision MADD mission statement:mission statement MADD strives to stop drunk driving, support the victims of this violent crime and prevent underage drinking.

2-6 MADD Promotion

2-7 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sustainable Competitive Advantage Discussion question What do you think are the keys to McDonald’s sustainable advantage?sustainable advantage

2-8 Test Your Knowledge What is sustainable competitive advantage? A)A broad description of the firms objectives and scope of it’s activities. B)Tool used to evaluate marketing performance. C)Something the firm can consistently do better than it’s competitors. D)Written document that discusses competitor strengths and weaknesses, and the firms advantages over them.

2-9 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sustainable Competitive Advantage What can a firm to do compete against a well- established market leader?

2-10 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: Apple ComputersApple Computers Challenge Answer Results Competing against a well- established market leader. Produce high-quality, low cost, easy to use products that incorporate high technology for the individual. We are proving that high technology does not have to be intimidating for noncomputer experts. 54% increase in sales, over 2 million computers sold. 50,000 MacIntosh computers sold in the first 100 days after launch.

2-11 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step Two: Conduct a Situation Analysis Using SWOT 2. Situation Analysis

2-12 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step Three: Identifying and Evaluating Opportunities Using STP Segmentation Targeting Positioning

2-13 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Disney: Segmentation, Targeting, Positioning Families w/younger kids Singles and Couples Adults, families w/older kids Magic Kingdom Pleasure Island Epcot

2-14 Test Your Knowledge Which of the following refers to a group that responds similarly to a firm’s marketing efforts? A)Segmentation B)Following the leader C)Targeting D)Positioning

2-15 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step Four: Implement Marketing Mix and Allocate Resources 4. Implementing Marketing Mix and Resources

2-16 Product and Value Creation Discussion question How does satellite radio deliver value?

2-17 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Price and Value Capture Customer perception of value. Price is only a part of value.

2-18 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Pricing Strategies Cost-Based Pricing Competitor-Based Pricing Value-Based Pricing

2-19 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Implementing Pricing Strategies The Internet has had a dramatic impact on pricing strategies.

2-20 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Place and Value Delivery Must be readily accessible Examples: – Staples integrated Internet – Vodaphone’s new “Quickphone” vending machines

2-21 Test Your Knowledge One of the keys in place and value delivery is to provide the consumer _______________. A)a wide product selection B)more than one channel of distribution C)a variety of media communication methods D)accessible management personnel to handle complaints

2-22 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Promotion and Value Communication Television Radio Magazines Sales force New Media

2-23 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Allocating Resources

2-24 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Step Five: Evaluate Performance and Make Adjustments 5. Evaluate Performance

2-25 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Strategic Planning is Not Sequential X X X X

2-26 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Topic Two: Growth Strategies

2-27 Test Your Knowledge Which of the following is NOT considered a marketing growth strategy? A)Market penetration B)Diversification C)Product development D)Sequential planning

2-28 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Penetration Existing marketing mix Existing customers Discussion question In what way is a sale a market penetration strategy?market penetration strategy

2-29 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Development Strategy What can a company do to continue to grow in a difficult retail environment?

2-30 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Case in Point: Dunkin DonutsDunkin Donuts Challenge Answer Results To continue to grow in a difficult retail environment. Continue an aggressive global expansion strategy combined with an expanding multi-channel strategy. 4,400 US outlets, 1,700 non US in 29 countries including: Philippines, Indonesia, South Korea, and Thailand as well as in the EU. Revenue worldwide of $3.6 Billion

2-31 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Development New product or service Current target market A good example is the Healthy Choice line.Healthy Choice What examples of product development can you identify?

2-32 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Ethical Dilemma 2.1:Microsoft’s Marketing Penetration and Product Development Strategies When is a firm too big and too powerful?

2-33 Diversification © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin New product or service New market segment Related Existing vendors Same distribution system Same management information system Same advertising venue Unrelated – no common elements with the present business

2-34 Test Your Knowledge A diversification strategy introduces a new product or service to a market segment that _______________. A)is currently not served B)includes many ethnicities C)already exists D)does not traditionally respond to mixed media

2-35 Entrepreneurial Marketing 2.1: FedEX Kinkos FedEX Kinkos New service/new market Current service/current market New service/current market Current service/new market

2-36 Topic Three: Macro Strategies © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

2-37 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Customer Excellence Retaining loyalty with excellent customer service.

2-38 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Operational Excellence Efficient operations Excellent supply chain management

2-39 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Product Excellence Achieving effective branding and positioning Discussion question How are these two firms positioned in the market place?

2-40 Focused on service Three tiers of service Even the lowest offers increased service Adding Value 2.1: Customer Service at Virgin Atlantic

2-41 Competitor-based pricing: When a firm prices below, at, or above its competitors’ offerings. Cost-based pricing: When a firm determines the costs of producing or providing its product and then adds a fixed amount above that total to arrive at the selling price. Market penetration strategy: Employs the existing marketing mix and focuses the firm’s efforts on existing customers. Market segmentation: The process of dividing the market into groups of customers with different needs, wants, or characteristics—who therefore might appreciate products or services geared especially for them. Mission statement: a broad description of a firm’s objectives and the scope of activities it plans to undertake. Positioning: When the firm decides which segments to pursue, it must determine how it wants to be positioned within those segments so that target customers have a clear, distinctive, desirable understanding of the product in comparison with competing products. Sustainable competitive advantage: Something the firm can persistently do better than its competitors. Targeting: After a firm has identified the various market segments it might pursue, it evaluates each segment’s attractiveness and decides which to pursue. Value-based pricing: When the firm first determines the perceived value of the product from the customer’s point of view and then prices accordingly. Chapter 2 Glossary