© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1

Marketing Strategy © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Marketing Framework 3

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Marketing Goals Profit = Sales Revenue – Costs Sales Revenue = Sales Volume  Price Costs = Variable Costs + Fixed Costs Thus, Profit = (Sales Volume  Price) – (Variable Costs (Unit Cost x Sales Volume) + Fixed Costs) Growing profit is the ultimate marketing goal 4

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Increasing Profitability To increase profitability, companies can 1. Increase sales volume 2. Change prices 3. Decrease variable or fixed costs 5

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Profitability: Growing Sales To grow sales volume, companies can Grow the overall market or grow the company’s market share “Up-sell” current customers to more expensive offerings Get customers to buy more frequently Steal customers from competitors Pursue another segment 6

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Profitability: Growing Sales To grow sales volume, companies can, (cont.) Create new products Reduce brand switching by enhancing brand Adding value through a loyalty program Raising switching costs so leaving brand is unattractive 7

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Profitability: Changing Prices To change prices, companies can Cut prices Raise prices 8

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Profitability: Decreasing Variable Costs To decrease variable costs, companies can Find less expensive suppliers, outsource, become a niche player, etc. To decrease fixed costs, companies can Spend less on R&D and/or advertising, milk the brand, etc. 9

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Ansoff’s Growth Matrix Market penetration: current products, current markets Market development: current products, new markets Product development: new products, current markets Diversification: New products, new markets 10

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. BCG Matrix Classify according to market share and market growth Stars: optimize or hold Dogs: minimize or divest Cash cows: milk Question marks: invest or divest 11

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. General Electric Model The General Electric Model Measures market attractiveness and business strength Weights: how important dimension is Rating: how the company is doing 12

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Porter’s Strategies Porter’s strategies Companies can dominate in 1 of 3 ways 1. Cost leadership 2. Differentiation 3. Focused 13

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Tracy and Wiserna’s Strategies 1.Operational excellence: deliver products smoothly, reliably 2.Product leadership: excellent quality; innovation 3.Customer intimacy: knowledge of customer needs 14

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. SWOT Understand company’s identity/strengths/weaknesses in marketplace Consider opportunities and threats in marketplace 15

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Do Something Differently Let’s make more money Let’s delight our customers Let’s reposition our brand Goals beyond marketing Charitable or community contributions Boosting stability of local employment Demonstrating leadership in environmentally friendly business practices, etc. 16

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Marketing Metrics 17

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16. Managerial Recap Before making strategy changes, conduct a self-assessment Use dashboard indicators There are many ways to increase profitability There are goals beyond profitability 18