1. Developing Marketing Strategies and a Marketing Plan
Chapter 2
Developing Marketing Strategies and a Marketing Plan
Chapter 2 will focus on how to develop marketing strategies and a marketing plan.

2. Chapter 2: Developing Marketing Strategies and a Marketing Plan
LEARNING OBJECTIVES
LO1 Define a marketing strategy LO2 Describe the elements of a marketing plan LO3 Analyze a marketing situation using a SWOT analysis LO4 Explain how a firm chooses what consumer group(s) to pursue with its marketing efforts LO5 Outline the implementation of the marketing mix as a means to increase customer value LO6 Describe how firms grow their businesses
These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

3. The goal is clear: Win! Nike vs. adidas
LO1, LO2
Nike vs. adidas
Competition spans product lines, target markets, marketing approaches
Strategies and plans must be precise
Is this a turf war?
Per chapter introduction: the case study focuses on key competitors Nike vs. adidas and how they will each ensure their survival and success.
Nike focuses on using celebrities to appeal to their valuable customers and they have branched out into other related sectors and purchase of other companies such as Umbro.
adidas focuses on international sponsorship such as the Olympics and World Cup; it too uses young, rising athletic stars to profile their brand worldwide.
Each primary target is different but more and more, target markets are overlapping with a resulting ‘turf war’.
Ask students: which brand do they prefer? Why? Who do they think will come out on top and why?

4. What is a marketing strategy?
LO1
What is a marketing strategy?
Marketing strategy identifies:
a firm’s target market (s)
a related marketing mix –the four P’s and
the bases upon which the firm plans to build a sustainable competitive advantage
A marketing strategy that is clear and well-defined is critical to the success of any firm.
Without being able to identify the key target market(s), and how the marketing mix – the 4 P’s – will interact – the firm will not have the foundation or the base upon which to build their sustainable competitive advantage.
Sustainable competitive advantage: something the firm can persistently do better than its competitors that is not easily copied and thus can be maintained over a long period of time.
Ask students: what do they think the sustainable competitive advantage is of each of Nike and adidas and why? Will this be enough to ensure their success in the future?
See next slide for discussion on sustainable competitive advantage
Leads to sustainable competitive advantage!

5. Sustainable Competitive Advantage
LO1
Sustainable Competitive Advantage
Just do it!
Strong brand
Technology
Strong customer base
Loyal customers
Discussion Question
Why have these factors been the keys to Nike’s sustainable advantage? Are there other factors to consider?
Ask students: do you think these advantages will be enough to allow Nike to remain a leader or will other competitors such adidas (or others?) erode their market share? What else can Nike do?
Ask students: What can a firm do to compete against a well-established market leader? When competing with an entrenched competitor, firms must be creative to meet the needs and wants of their customers. Nike consistently does just that and continually builds sustainable competitive advantages.
Ask students: name some other companies that you feel have strong competitive advantages? Why are they successful?

6. Test Your Knowledge What is sustainable competitive advantage?
LO1
Test Your Knowledge
What is sustainable competitive advantage?
A) A broad description of the firms objectives and scope of its activities.
B) Tool used to evaluate marketing performance.
C) Something the firm can consistently do better than its competitors.
D) Written document that discusses competitor strengths and weaknesses, and the firms advantages over them.
Answer: C; see page 29

7. Developing Customer Value
- This slide provides a basis for a briefer discussion of macro strategies or to introduce the following, more in-depth discussion.
- Review: What is a sustainable competitive advantage? Something the firm can persistently do better than its competitors that is not easily copied and thus can be maintained over a long period of time.
- It covers the four strategies to create and deliver value and a sustainable competitive advantage.
Ask students: think of companies who they are very loyal to in many categories (food, electronics, personal care)? Is it their product, location, operational, or customer excellence that draws the student’s loyalty? Which one do they think is the most important?
Macro Strategies for Developing Customer Value

8. Customer Excellence Retain loyal customers
Provide excellent customer service
Loyal customers enable a firm to introduce new products and change price points without the risk of losing them. This is a good place to talk about loyalty programs.
Ask students if they belong to any (or if their parents do). Most frequented programs would include airlines, hotels and video stores. Then ask them how the program affects their patronage. You can also ask if they are loyal to any products. This would lead to a discussion about what it means to be loyal—customers are committed to buying from a particular firm.
Customer service: by offering excellent customer service, a firm can build a sustainable competitive advantage; however, consistently offering excellent service can be challenging and may not be enough over the long run.
Ask students which firms they feel offer excellent customer service and why? They may mention Apple, Starbucks.

9. Operational Excellence
LO1
Operational Excellence
Efficient operations
Excellent supply chain management
Strong supplier relationships
- The text highlights how firms can use the various elements of the marketing mix to achieve a competitive advantage.
- In recent years, firms such as Netflix have achieved competitive advantage by utilizing operational excellence.
Operational excellence is achieved through efficient operations, excellent supply chain management and strong relationships with suppliers.
Firms strive to get their customers the merchandise they want, when they want it, in the required quantities and at a lower delivered cost than that of their competitors.
Doing so, ensures good value to their customers, profitability for themselves and satisfying their customers needs.
Efficient operations also allow firms to provide their customers with lower-priced merchandise.
The supply chain for Netflix represents a remarkable innovation (streaming services). Customers can receive videos instantly using their tablet, TV or computer.
Netflix

10. Effective branding and positioning
LO1
Product Excellence
High perceived value +
Effective branding and positioning
- Building a strong brand and unique positioning in the marketplace can be a strong deterrent to other competitors that look to enter the market. Each brand in this slide employs a unique positioning. Abercrombie and Fitch and Virgin Records both are designed to appeal to a young adults and college students. These stores use cutting edge images and unique promotions to appeal to this difficult demographic. Both feature quality goods and are considered trendy by consumers.
Ask students how these are examples of product excellence. Students might say it’s because of the high quality. Point out the fact that expensive should NOT be confused with the fact that the products have a clear and distinctive brand image and are clearly positioned.

11. Locational Excellence
The three most important things in retailing are location, location, location.
A competitive advantage based on location is sustainable because it is not easily duplicated.
Tim Hortons and Starbucks have developed a strong competitive advantage with their location selection. This makes it very difficult for competitors to enter the market and to find good locations.
Photo by Tim Boyle/Getty Images

12. Multiple Sources of Advantage
LO1
Multiple Sources of Advantage
Multiple approaches: Customer value Customer service Customer relations Great prices!
Often a single strategy is not enough to build a competitive sustainable advantage.
Firms often require multiple approaches to build a wall around their position.
WestJet is a great example of success using multiple approaches.
Good service = Good value

13. Test Your Knowledge Customer excellence focuses on?
LO1
Test Your Knowledge
Customer excellence focuses on?
A) having products with high perceived value and effective branding and positioning.
B) retaining loyal customers and providing excellent customer service.
C) having a good physical location and Internet presence.
D) efficient operations and excellent supply chain and human resource management.
Answer: B; see page 29-31

14. Developing a Marketing Plan
A marketing plan is a written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy in terms of the 4 P’s, action programs, and projected income or other financial statements.
There are three phases of a strategic plan: planning, implementation, control. Instructors should make the point that the steps involved in strategic planning are not likely to be sequential, since, planning entails an iterative process and is affected by market shifts, new research findings, and/or the introduction of new products. Thus, rarely will the process follow the identified steps neatly.
A poorly executed plan leads to failure, regardless of how good or solid the plan is. The world is full of good plans poorly executed. When initially introduced, diapers designed differently for boy and girls bombed because the market was not ready for the product; through improved execution, the diaper manufacturer ultimately found success. However, even well-executed plans require monitoring and updating, because the needs of any market constantly change.
Explain to students that the marketing plan should be a written plan yet many companies do not write it down. Ask students why companies tend to not write down marketing plans. The most likely answer is that they don’t take the time or haven’t organized the strategy.

15. Step 1: Define the Business Mission & Objectives
LO2
Step 1: Define the Business Mission & Objectives
Defining the Mission
Tim Hortons states: Our guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships. Our vision is to be the quality leader in everything we do.
- Mission statement: a broad description of a firm’s objectives and the scope of activities it plans to undertake; it attempts to answer two main questions: What type of business is it? And What does it need to do to accomplish its goals and objectives?
Group activity: Students should develop a mission statement for their school. The resultant mission statement would offer a good way to assess and set student expectations.
Photo by Tim Boyle/Getty Images

16. Another example: non-profit
LO2
The Heart and Stroke Foundation mission: is to improve the health of Canadians by preventing and reducing disability and death from heart disease and stroke through research, health promotion, and advocacy.
Example: The Heart and Stroke Foundation (non-profit). Notice how The Heart and Stroke Foundation works to translate its Mission Statement into action through its promotion efforts.
- Non-profit organizations will specify non-monetary objectives as seen in the above.
Photo by Heart and Stroke Foundation website

17. Step 2: Conduct a Situation Analysis (using SWOT)
LO3
Step 2: Conduct a Situation Analysis (using SWOT)
After developing its mission, a firm must next perform a situation analysis, using a SWOT analysis that assesses both the internal environment with regard to its strengths and weaknesses (internal analysis) and the external environment in terms of its opportunities and threats (external analysis).
A SWOT analysis is comprehensive, in that it offers both an internal and an external assessment. The firm therefore must possess expertise in both what the firm can provide and what the market wants the firm to provide.
The table is an example of elements considered in a SWOT analysis. This is not an exhaustive list.
Group exercise: ask students to choose a well-known company and perform a SWOT analysis. .

18. Step 3: Identify and Evaluate Opportunities by using STP
LO4
Step 3: Identify and Evaluate Opportunities by using STP
Segmentation
Targeting
Positioning
After completing the situation analysis, the next step is to identify and evaluate opportunities for increasing sales and profits using STP (segmentation, targeting, and positioning).
With STP, the firm first divides the marketplace into subgroups or segments, determines which of those segments it should pursue or target, and finally decides how it should position its products and services to best meet the needs of those chosen targets.
The following slide shows an example of Hertz (car rental) market segmentation.

19. An example: Hertz Market Segmentation
LO4
An example: Hertz Market Segmentation
As you can see from the table, Hertz has divided its target market into 5 different segments – from singles to commercial customers.
Hertz realizes that its primary appeal for the SUV/Minivan collection centers on young families, so the bulk of its marketing efforts for this business is directed toward that group.
Firms may also segment their customers based on benefits sought or geographic factors. This will be discussed later in Chapter 6.

20. LO4
Test Your Knowledge
Which of the following refers to a group of consumers who respond similarly to a firm’s marketing efforts?
A) Market segment
B) Target market
C) Targeting
D) Positioning
Answer: A; see page 38

21. Step 4: Implement Marketing Mix and Allocate Resources
- After companies have finished their segmentation, targeting and positioning efforts, they need to set the marketing objectives for their product or brand and develop the marketing mix.
This slide introduces a series of slides which develop the 4Ps in detail. The lecture can address all 4Ps from this slide if desired.

22. Product and Value Creation
LO5
Product and Value Creation
Product is the first of the 4 P’s – Product
Because the key to the success of any marketing program is the creation of value, firms attempt to develop products and services that customers perceive as valuable enough to buy.
Ask students: What value proposition does Dyson offer? Do you believe it is a good value (despite typically being more expensive) compared with other similar products on the market?
Answer: these sculpturally beautiful appliances are perceived by consumers to be a valuable alternative to products that haven’t significantly changed since the early 1900’s.
Discussion Question
How does Dyson deliver value based upon the products it creates?

23. Price and Value for Money
LO5
Price and Value for Money
Exchange: product = money
Customer perception of value
Price is only a part of value!
The second element of the marketing mix is price – the second P
Marketers should base price on the value that the customer perceives.
These concepts will be covered fully in Ch. 11 Pricing. It is worth spending some time on Value-based pricing. Show students two differently priced products from the same category and ask students which one they view as better value and why?
For example, an Apple iPod vs. an Microsoft Zune player. Or alternatively Aquafina vs. Perrier. Also explain that in this course, more discussion of value will be done throughout the semester.

24. Place and Value Delivery
LO5
Place and Value Delivery
Product must be readily accessible
When and where the customer wants it
Why is this retailer growing?
The third element of the marketing mix is Place - the third P
A firm must be able to make the product or service readily accessible when and where the customer wants it.
Consider the example of Lee Valley Tools. They have integrated its stores and catalogue operations with its online presence and used place to create value in its delivery process.
Getting the product to consumers at the exact moment they desire it is difficult. Firms therefore are experimenting with different forms of distribution, such as vending machines for cell phones, to offer consumers 24/7 access to products.
As another example, Staples has incorporated web kiosks in their stores to access Staples.com. Thus, consumers are able to buy products that are out of stock in-store.
Ask students if they are familiar with Sephora, if they like it, and why? Most likely they will be very fond of this retailer. They offer an incredible assortment of skin and beauty products in a well organized, well lighted, exciting retail environment. Customers have a vast assortment of choice.
Chapters 12 and 13 will provide more in-depth analysis on place or distribution.

25. Promotion and Value Communication
LO5
Promotion and Value Communication
Television
Radio
Magazines
Sales force
New Media
The fourth P of the marketing mix is promotion – the fourth P
Marketers communicate the value of their offering, or the value proposition, to their customers through a variety of media, including TV, radio, magazines.
Consumers enter into an exchange only if they know that the firm’s product or service appears in the marketplace. This is why promotion is so important. Consumers won’t buy a product or service if they don’t know about it!

26. Step 5: Evaluate Performance by Using Marketing Metrics
LO5
Step 5: Evaluate Performance by Using Marketing Metrics
The final step in the planning process includes evaluating the results of the strategy and implementation program by using marketing metrics.
Metrics are a measuring system that quantifies a trend, dynamic, or characteristic.
Firms must determine:
Who is accountable for performance (business unit, managers)
Use performance metrics and objectives (compare sales, profits over time)
Use financial performance metrics (revenue, sales, profits)
Use social responsibility performance metrics (impact to environment etc.)
Portfolio Analysis: Firms cannot simply remain content with a strategy for too long. Over time, all strategies must be revised to adjust to new markets, new competitors, and new technologies. The firm must recognize not only its failures, but also its successes to ensure continued success. Scarce resources must be allocated so that they create the most value for the firm. The Boston Consulting Group Matrix is a tool some companies use to help them do this. See visual in slide.
Stars occur in high growth markets and are high market share products, for example the iPod Nano.
Cash cows are in low growth markets but have high market shares, for example Microsoft’s Office suite of software.
Question marks appear in high growth markets but have relatively low market shares, for example Toshiba’s High Definition TV versus Sony’s Blu-Ray. Blu-Ray appears to have won the battle and is moving over to becoming a Star.
Dogs are in low growth markets and have relatively low market shares.
Group exercise: have students visit the P&G website (hyperlink in slide) and ask students to recognize stars, cash cows and question marks (newer products). You won’t find any dogs at the P&G website.
P&G Website

27. LO5
Test Your Knowledge
One of the keys in place and value delivery is to provide the consumer _______________.
A) a wide product selection
B) merchandise they want at the time they want it
C) a variety of media communication methods
D) accessible management personnel to handle complaints
Answer: B; see page 41

28. LO6
Growth Strategies
The growth strategies model is crucial for students to understand. Please spend a fair amount of time on this concept. Students tend to find this somewhat confusing.
Fundamentally, all growth strategies involve one or a combination of the four factors pictured in this slide. Each can be used to achieve different objectives.
A series of slides follows that can be used to expand on these strategies if desired.

29. LO6
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
Answer: D; see page 49

30. In what way is a sale a market penetration strategy?
LO6
Market Penetration
Existing marketing mix
Existing customers
Discussion Question
In what way is a sale a market penetration strategy?
The market penetration strategy employs the existing marketing mix and focuses the firm’s efforts on existing customers.
Sales encourage current users to consume more of the current product mix, but they also bring new customers to the business. Many strategies can be used to get current consumers to consume more of your product.
Group activity: Ask students to brainstorm ways in which firms can get current consumers to consume more. Example solutions might include coupons, loyalty cards, or serving size changes.

31. Market Development Strategy
Existing marketing offering
New market segments (domestic, international) not currently being served
The market development strategy uses the existing marketing offering to reach new market segments (domestic or international) not currently being served by the firms.
This might include targeting growing ethnic groups in the U.S. or global expansion, which is a popular way for many firms to improve their profitability.
Ask international students: if you have them in your class, what types of products and brands are entering their markets?
Global expansion is a popular way for many firms to improve their profitability.

32. Product Development New product/service Current target market LO6
A product development strategy requires that the firm understands its current consumers’ needs/wants well enough to identify other products/services that would be attractive to them.
Example cited in textbook: MTV; network constantly develops new pilots and show concepts to increase the amount of time viewers can spend watching MTV.
Ask students for examples of products that are targeted to them by companies who already have their business. They will no doubt mention many food products including drinks, candy and fast food.

33. Diversification New product/service
LO6
Diversification
New product/service
New market segment not currently being served
A diversification strategy introduces a new product or service to a market segment that currently is not served.
Diversification opportunities may be either related or unrelated.
In a related diversification opportunity, the current target market and/or marketing mix shares something in common with the new opportunity. In other words, the firm might be able to purchase from existing vendors, use the same distribution and/or management information system, or advertise in the same newspapers to target markets that are similar to their current consumers.
In contrast, in an unrelated diversification, the new business lacks any common elements with the present business.

34. LO6
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
Answer: A; see page 51

35. Entrepreneurial Marketing 2.1 Beauty Experience in a Box
LO1
Entrepreneurial Marketing Beauty Experience in a Box
BeautyGram – a beautifully packaged alternative to sending flowers or a gift basket
Choose from 6 themes or design your own beauty products
Delivered or shipped
Appeared on Dragon’s Den
Instructors: if you have time in class to discuss an entrepreneurial marketing situation. BeautyGram as profiled in the chapter on page 30.
A very innovative concept and great alternative to sending flowers or traditional gift baskets.
Launched in Fall 2011, currently sales have tripled and she ships all around the world.
Currently no copycat competitors have entered the market.
Ask students which growth strategy is being employed here? Answer - Product Development: new product/service but to an existing target market (those currently being serviced by flowers or gift baskets.)
Ask students: do they feel this is a sustainable concept? Why or why not?