1. Marketing Management Dawn Iacobucci
© 2010 South-Western, a part of Cengage Learning

2. Marketing Strategy
Chapter 14

3. Marketing Strategy
Marketing strategy is the link between corporate goals and operational tactics
Specifies a target market and a related marketing mix
There are two primary considerations in marketing strategy—Strategic Fit
Where are we?
Where do we want to go?

4. Elements of a Firm’s Marketing Program
Multimedia Lecture Support Package to Accompany Basic Marketing
Lecture Script 2-4

5. Competitive Advantage
Competitive advantage: the firm has a marketing mix that the target market sees as better than a competitor's mix

6. Marketing Strategies GE’s Strategic Planning Grid
Boston Consulting Group
Ansoffs Product-Market Expansion Grid
Porter Generic Strategies
Treacy and Wiersema
Positioning Matrix
Un-segmented/Segmented Marketing Strategy
Product Orientation vs. Market Orientation
Strategies to Increase Profitability
Basic Strategies

7. GE’s Strategic Planning Grid
A way of organizing business judgments about existing and/or proposed product-market plans—Strategic Fit
Business Strengths Dimension
Company size, market share
Profit margins
Technology position
Limiting factors (personnel, capital needed, etc.)
Industry Attractiveness Dimension
Size of market and growth trends
Competitive situation
Social impact
Industry profitability

8. Planning Grids Help Evaluate Portfolio Opportunities
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Industry Attractiveness
High
Medium
Low
High
Summary Overview
Graphical planning grids help managers summarize the interaction of several key factors identified by the company to be important to successful business ventures.
Key Issues
General Electric strategic planning grid: positions opportunities according to industry attractiveness and business strength.
Industry attractiveness--characteristics such as size, growth, and competitive structure.
Discussion Question: What characteristics of an industry would be attractive?
Business strength--resources of the organization like people skills, technological position, growth, market share or profitability, among others.
Using industry attractiveness and business strength, a manager can show where any opportunity appears on this grid.
Opportunities occupying the green area of this matrix are growth opportunities and should be pursued. Such opportunities occur in more attractive industries and better fit with the company’s strengths.
Opportunities falling in the red area are ones that the firm should avoid. Such opportunities are perhaps in low growth industries and do not play to the company’s strengths.
In the middle, the yellow areas are borderline opportunities that the firm needs to analyze more fully in order to determine if they are worthwhile. A company may be able to develop a marketing strategy that offsets the lack of strength or low attractiveness in an industry.
Business Strength
Medium
No Growth
Low
Borderline
Growth
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Lecture Script 3-8

9. Portfolio Assessment Tool
Boston Consulting Group matrix (another extension of strategic fit)
Brands or products are classified according to whether each has a:
strong or weak market share &
slow or growing market
Dog: low share, low growth
Star: high share, high growth
Cash cow: high share, low growth
Question mark: low share, high growth

10. BCG Matrix

11. BCG Portfolio Analysis
Stars: optimize or hold
Dogs: minimize or divest
Cash cows: milk
Question marks: unknown
New technologies, uncertain markets, etc.
If stars and cash cows are sufficiently profitable, companies can carry dogs and question marks

12. Discussion Questions Using the BCG Matrix
Where would you likely categorize the market leader in the typewriter market?
10 years ago, where would you have likely categorized a small player in the cell phone business?
Where would you categorize the market leader in cell phones today?

13. Ansoff’s Product-Market Expansion Grid

14. Examples of Different Types of Opportunities
Market Penetration
Arm & Hammer promotes new uses of its baking soda
Market Development
Marriott Hotels target families for weekend get-aways to rent rooms filled by business travelers during the week
Product Development
Microsoft develops a new version of its Windows operating system to appeal to the people who bought an earlier version but now want more features
Diversification
RJR, the cigarette producer, adds baked goods to its product line to appeal to new customers

15. Porter’s Generic Strategies
Overall Cost Leadership—lowest
production and distribution costs to be
able to price lower than competitors and
to obtain larger market share.
Differentiation—uniquely achieving
superior performance in an important
customer benefit area.
Focus—on one or more narrow market
segments

16. Porter Cost leadership—We’re efficient Differentiation—We’re unique
Producing goods and services (Wal-mart)
Differentiation—We’re unique
Distinguish one’s products as unique (Apple)
Focused—We do one thing very well
Narrower (Café Du Monde makes beignet

17. Treacy and Wiersema Operational Excellence—We’re smooth and reliable
DHL, FedEx, UPS
Product Leadership—We’re excellent and special
Dupont chemical solutions, HP printers
Customer Intimacy—We know our customers very well
Amazon.com, Netflix.com

18. Positioning Matrix
High Quality, high price, selective promotion, exclusive distribution
4Seasons, Porsche, BMW
Low quality, low price, broad promotion, mass distribution
Wal-Mart, Movies, Gap
If veer from either, have a good reason

19. EXTENSIVE DISTRIBUTION ALL POTENTIAL USERS OF A WRITING INSTRUMENT
UNSEGMENTED MARKET STRATEGY WITH A SINGLE MARKETING MIX COMMUNITY WRITING COMPANY
MARKETING MIX
TARGET MARKET
LEAD PENCIL
79 CENTS
TELEVISION
EXTENSIVE DISTRIBUTION
ALL POTENTIAL USERS OF A WRITING INSTRUMENT

20. SEGMENTED MARKETING STRATEGY WITH MULTIPLE MARKETING MIXES
TARGET MARKETS
FELT-TIP PEN
$1.00
CAMPUS NEWSPARER
VENDING MACHINES
SEGMENT A
(STUDENTS)
49 CENTS
PERSONAL SELLING
DIRECT FROM FACTORY
SEGMENT B
(PROFESSORS)
GOLD INK PEN
$50.00
MAGAZINES
DEPARTMENT STORES
SEGMENT C
(EXECUTIVES)

21. A SEGMENTED MARKETING STRATEGY WITH SINGLE MARKETING MIX
TARGET MARKET
SEGMENT A
(PROFESSORS)
FELT-TIP PEN
$1.00
CAMPUS NEWSPARER
VENDING MACHINES
(STUDENTS)
SEGMENT C
(EXECUTIVES)

22. Product Orientation vs. Market Orientation
Company
Product
Market
Missouri-Pacific Railroad
We run a railroad
We are a people-and-goods mover
Xerox
We make copying equipment
We improve office productivity
Standard Oil
We sell gasoline
We supply energy
Columbia Pictures
We make movies
We entertain people
2-22

23. Marketing Metrics Profitability Sales Share Average prices
Levels of awareness
Penetration in trial
Customer satisfaction
Employee satisfaction, etc.

24. How to Increase Profitability

25. Grow Profit By Increase Volume
Grow the market
Grow market share
Up-selling (more expensive offerings) to current customers
Getting current customers to buy more frequently

26. Grow Profit By Increase Volume (continued)
Stealing customers from our competitors
Finding another segment
Create new products for current/new customers
Reduce brand switching of our current customers by enhancing brand equity:
Raise our customer satisfaction
Adding value through a loyalty program
Raise switching cost

27. Grow Profit By Changing Price
Cutting prices to increase volume
Raise prices to get greater margins
Enhance perceived benefits to customer to make them less price-sensitive
Shift our target segment to more upscale buyers

28. Grow Profit By Decease Variable or Fixed Costs
Decrease Variable Costs
Try to find less expensive but quality suppliers.
Outsource parts of our business that appear to be expensive for us
Decrease Fixed Costs
Spend less on R & D.
Spend less on Advertising
Milk the Brand

29. Basic Strategies Do nothing Do nothing differently Take action
Let the brand sink or swim on its own
Do nothing differently
Maintain business as usual
Take action
Do something different
Marketers have control over STP and 4Ps

30. Dashboard Indicator of a company’s success
Some measures will confirm advantages over competitors
Others can serve as a diagnostic in identifying problems

31. Discussion Question
What story does the dashboard tell?

32. Study Question 1
Apple’s iPod brand has a relatively large share in a growing market, and thus is best classified as a
a. cash cow.
b. star.
c. question mark.
d. dog. B

33. Study Question 2
Innovative Manufacturing Co. is a consumer products company that produces dozens of items ranging from toys to electronics. The company holds many trademarks and patents for the new products it has developed over the years. In the company’s experience, the least likely reason for a new product’s failure would be related to which of the following?
a. product is just too new to the customer
b. customers don’t have a frame of reference with which to compare these products
c. the product is over-priced
d. customers do not know how to think about the product, what to look for, what attributes are considered good C

34. Study Question 3
Which of the following is a dimension on which a company’s performance can be measured?
a. sales
b. market share
c. profit margins
d. all are indicators for measurement D

35. Study Question 4
Bill advises Mary that there are essentially three strategies to achieving goals. Assuming Bill is correct, how would he describe these three strategies?
a. do nothing; do nothing different from status quo; do something different
b. segment, target, position
c. customer satisfaction, customer loyalty, customer retention
d. be the leader, be a quick follower, be a follower A

36. Marketing strategy ultimately is the link between
Study Question 5
Marketing strategy ultimately is the link between
a. corporate goals and operational tactics.
b. leaders and followers.
c. offensive and defensive identities.
d. stars and dogs. A