1. Part 1 STRATEGIC MARKETING AND ITS ENVIRONMENT

2. 1: Customer-Driven Strategic Marketing
2: Planning, Implementing, and Evaluating Marketing Strategies
3:The Marketing Environment, Social Responsibility, and Ethics

3. Chapter 2 Planning, Implementing, and Evaluating Marketing Strategies
Professor Jason C. H. Chen, Ph.D.
School of Business Administration
Gonzaga University
Spokane, WA 99258

4. Objectives To understand the strategic planning process
To examine what is necessary to effectively manage the implementation of marketing strategies
To describe the major elements of strategic performance evaluation
To understand the development of a marketing plan
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5. Strategic Marketing Management
The process of planning, implementing, and evaluating the performance of marketing activities and strategies, both effectively and efficiently
Effectiveness is the degree to which long-term customer relationships help achieve an organizations objectives
Efficiency refers to minimizing the resources an organization uses to achieve a specific level of desired customer relationships
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6. Strategic Planning Process
Strategic planning is the process of establishing
an organizational mission and formulating goals,
corporate and marketing strategy and
marketing objectives
Should be guided by a market orientation:
to ensure that a concern for customer satisfaction is an integral part of the process and permeates the entire company
for the successful implementation of marketing strategies
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7. Figure 2.1 - Components of the Strategic Planning Process
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8. Components of the Strategic Planning Process
Long-term view, or vision, of what the organization wants to become
Mission statement
Determines the means for utilizing resources in the functional areas to achieve the organization’s goal
Corporate strategy
A division, product line, or other profit center within the parent company
Market: Group of individuals/organizations that have needs for a product class and have the ability, willingness, and authority to purchase it
Market share: Percentage of a market that actually buys a specific product from a particular company
Strategic business unit (SBU)

9. Planning is everything ... What are Two Major Outputs for an organization?
Vision
develop
Mission
Customers,
market,
competition
guide
Strategy
create
Vision statement: one that a company (or projects) would like to be
Mission statement: is about where and what they portray today
Knowledge ---> Intelligence ---> Wisdom
Attention economy:
Time and attention are the scarcest resource. The completion for available attention is heating up; investing it wisely became a competence of increasing value.
Only wisdom can guide effective decisions on how we invest our attention.
Experience economy:
Today’s customers are looking for more than products/services; they want to have a memorable experience of buying and using them for achieving their aspirations.
One of the largest buying powers in the US, “cultural creative” value transformation higher than other types of market offers.
Tactic
Products,
Services N

10. Organizational Mission Statements and Goals
Mission statement is a long-term view, or vision, of what the organization wants to become
The goals of any organization should derive from its mission statement
An organization’s mission statement should answer two questions:
Who are our customers?
What is our core competency?
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11. Figure 2.2 - Levels of Strategic Planning
Corporate
Business
Marketing

12. Corporate Strategies
Corporate strategy determines the means for utilizing resources in the functional areas of marketing, production, finance, research and development, and human resources to reach the organization’s goals
The broadest of the three levels of strategy (corporate, business unit, and marketing) and should be developed with the organization’s overall mission in mind
Addresses the two questions posed in the mission statement:
Who are our customers?
What is our core competency?
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13. Corporate Strategies
Corporate strategy planners are concerned with broad issues such as:
Corporate culture
Competition
Differentiation
Diversification
Interrelationships among business units
Environmental and social issues
Match the resources of the organization with the opportunities and threats in the environment
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14. Business-Unit Strategies
Business-unit strategy should be consistent with the corporate strategy
Strategic business unit (SBU) is a division, product line, or other profit center within the parent company
Each of these units sells a distinct set of products to an identifiable group of customers, and each competes with a well-defined set of competitors
The revenues, costs, investments, and strategic plans of each SBU can be separated from those of the parent company and evaluated
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15. Market Growth/Market Share Matrix
The market growth/market share matrix is a helpful business tool, based on the philosophy that a product’s market growth rate and its market share are important considerations in determining its market strategy
Developed by the Boston Consulting Group (BCG)
To develop it, all of a company’s SBUs and products are:
Integrated into a single matrix
Compared and evaluated to determine appropriate strategies
All the companies SBUs and products should be integrated into a single, overall matrix and evaluated to determine appropriate strategies for individual products and overall portfolio strategies
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16. Figure 2.3 - Growth Share Matrix Developed by the Boston Consulting Group
Often called “problem children,” have a small share of a growing market and require a large amount of cash to build market share
use more cash than they generate
Cash Required
Mercedes bicycles are a question mark relative to Mercedes’ automobile product.
Amazon’s Kindle
Generate more cash than is required (i.e., cash requirement is LOW) to maintain market share
Often found in established markets
Figure 2.3, which is based on work by the BCG, enables a strategic planner to classify a company’s products into four basic types:
Stars - products with a dominant share of the market and good prospects for growth. They use more cash than they generate in order to finance growth, add capacity, and increase market share. Example: Amazon’s Kindle.
-- They use more cash than they generate in order to finance growth, add capacity and increase market share.
Cash cows- have a dominant share of the market but low prospects for growth. They typically generate more cash than is required to maintain market share. Example: Procter & Gamble’s Bounty paper towels.
--Generate more cash than is required to maintain market share
Dogs- have a subordinate share of the market and low prospects for growth. Dogs are often found in established markets. Example: The cathode ray tube television would probably be considered a dog by a company like Panasonic, as most customers prefer flat screens.
Question marks- sometimes called “problem children,” have a small share of a growing market and require a large amount of cash to build market share. Example: Mercedes bicycles are a question mark relative to Mercedes’ automobile product.
The cathode ray tube television (Panasonic) as customers prefer flat screens
Procter & Gamble’s Bounty paper towels
Long-term health of an organization depends on having some products that generate cash and others that use cash to support growth
notes

17. Growth Share Matrix
Stars are products with a dominant share of the market and good prospects for growth
They use more cash than they generate in order to finance growth, add capacity and increase market share.
Cash cows have a dominant share of the market but low prospects for growth
Generate more cash than is required to maintain market share
Dogs have a subordinate share of the market and low prospects for growth
Often found in established markets
Question marks have a small share of a growing market and generally require a large amount of cash to build market share
Mercedes bicycles are a question mark relative to Mercedes’ automobile product.
Long-term health of an organization depends on having some products that generate cash and others that use cash to support growth
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18. Assessing Organizational Resources and Opportunities
The strategic planning process begins with an analysis of the marketing environment, including a thorough analysis of the industry in which the company is operating or intends to sell its products
Any strategic planning effort must assess
organization’s available financial and human resources,
capabilities
Core competencies: Things a company does extremely well, giving it an advantage over competition
as well as how the level of these factors is likely to change in the future
Additional resources may be needed to achieve the organization’s goals and mission
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19. Assessing Organizational Resources and Opportunities
Market opportunity: Right combination of circumstances and timing that permits an organization to reach a particular target market
Strategic windows: Temporary periods of optimal fit between:
Key requirements of a market
Particular capabilities of a company competing in that market
Competitive advantage: Matching a core competency to opportunities available in the marketplace

20. What is the “Competitive Advantage”?
A competitive advantage is a benefit derived from something a company does or has that its customers want and its competitors cannot (or choose not to) match.
If a company can sustain its competitive advantage, the company will succeed in its industry – how?
Two types of people lead a company to succeed
Those know how to _________ the enterprise
Those know how to _________ their strategy onto the enterprise using IS/IT.
A CA is a benefit derived from something a company does or has that its customers want and its competitors cannot (or choose not to) match.
Your company’s CA gives your customers a reason to buy from you rather than from a competitor.
Consequently, companies continually seek to create and protect their own and to neutralize their competitors’ CA by improving their business practices.
The innovative use of IT is a common source of such improvements. Successful e-business do not adopt IT for its own sake. They do so because they see an opportunity to gain a CA.
innovate
execute

21. Competitive Advantage
Competitive advantage is the result of a company matching a core competency to opportunities it has discovered in the marketplace
Tesco, a large-scale grocery chain from the United Kingdom, entered the western U.S. market with its Fresh & Easy Neighborhood Markets
The company seeks competitive advantage by offering cheap, healthy food options such as 98-cent produce packages and cheap cuts of meat
The store seeks to source produce and meats locally as much as possible, offer organic and hormone-free foods, and use less energy than typical grocery stores
A strategic window focuses attention on the fact that there are only limited periods during which the “Fit” between the key requirements of a market and the particular competencies of a firm competing in the market is at an optimum.
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22. Competitive Advantage
Core Competencies
Competitive Advantage
Strategic Windows
Market Opportunities
The place where opportunities, core competencies, and strategic windows meet
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23. SWOT Analysis
SWOT analysis is a tool marketers use to assess an organization’s strengths, weaknesses, opportunities, and threats
Strengths and Weaknesses are internal factors that can influence an organization’s ability to satisfy its target market
Opportunities and Threats exist independently of the company and therefore represent issues to be considered by all organizations, even those that do not compete with the company
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24. Figure 2.4 - The Four-Cell SWOT Matrix
Which two elements are related to “Internal” organization?
Which two elements are related to “External” environment?
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25. SWOT Analysis
Strengths refer to competitive advantages or core competencies that give the company an advantage in meeting the needs of its target market
Weaknesses refer to any limitations a company faces in developing or implementing a marketing strategy
Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted on properly
Threats refer to conditions or barriers that may prevent the company from reaching its objectives
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26. First-Mover Advantage
First-mover advantage is the ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace
Build a company’s reputation as a pioneer and market leader
Market is free of competition
Helps establish brand loyalty for the company due to its customer’s costs to switch to competing products later on
Company can protect its trade secrets or technology through patents
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27. Keen’s Six-Stage Competitive Advantage Model
Stimulus for action
First major move
Customer acceptance
Competitor catch-up moves
First-mover expansion moves
A well-known competitive advantage model suggests a six-stage sequence for tracking the life cycle of a technical innovation.
A problem or opportunity that might be addressed by an innovative application of technology is identified.
An organization (or multiple competitors) makes a first move by creating and implementing an appropriate solution, a significant investment that carries considerable risk – may create substantial profits and opportunities
customer acceptance, determines the investment’s success or failure.
4-a) if customers like the innovation, the first mover gains a CA and its competitors launch catch-up moves.
4-b) 1st mover expansion moves attempt to extend or sustain the CA - moves in a PERPETUAL cycle
5) NO one enjoys a CA, but not having the (outdated) innovation puts a company at a competitive DISADVANTAGE.
There are many potential risks that a firm faces when attempting to use IT to outpace their competition.
Awakening a sleeping giant – a large competitor with deeper pockets may be nudged into implementing IS with even better features
Demonstrating bad timing – sometimes customers are not ready to use the technology designed to gain strategic advantage
Implementing IS poorly – information systems that fail because they are poorly implemented
Failing to deliver what users want – systems that don’t meet the firm’s target market likely to fail
Web-based alternative removes advantages – consider risk of losing any advantage obtained by an information resource that later becomes available as a service on the web
Running afoul of the law – Using IS strategically may promote litigation
Commoditization N

28. When to Perform Activities
First Movers
Advantages
Build brand recognition
Control scarce resources
Establish networks
Early Economies-of-Scale
Disadvantages
Newer technology
Higher development costs
Reverse engineering by competitors

29. First-Mover Risks Risks of being the first to enter a market:
High cost associated with creating a new product from scratch
Market research, product development, production, and marketing or buyer education costs
Early sales growth may not be as high as the company predicted if it makes mistakes with regard to the product or its marketing
Risk that the product will fail due to market uncertainty, or that the product might not meet consumers’ expectations or needs
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30. Late-Mover Advantage
Late-mover advantage is the ability of later market entrants to achieve long-term competitive advantages by not being the first to offer a certain product in a marketplace
Learn from first mover’s mistakes and thus create an updated/improved product design and marketing strategy
______ initial costs since first mover has developed an infrastructure and educated buyers about the product
More data availability and certainty about the success of the market for the product
Lower
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31. Late-Mover Risks Disadvantages of being a late mover:
First mover may have:
Patents on its technology
Trade secrets that prevent the late mover from:
Reverse engineering its product
Producing a product that is too similar
Difficult to gain market _______
Customers who have already purchased the first mover’s product may believe that switching to the late mover’s product is too expensive or time-consuming for them
Face strong competition and have more disadvantages
Timing of entry to the market is crucial and can determine the amount of late-mover advantage that is actually possible
share

32. Marketing Objective
States what is to be accomplished through marketing activities
Given in terms of:
Product introduction
Product improvement or innovation
Sales volume
Profitability and market share
Pricing, distribution, and advertising
Employee training activities

33. Marketing Objective Be based on a careful study of the SWOT analysis
Be expressed in clear, simple terms
Be measurable
Have specific time frame
Be achievable and use company resources effectively
Contribute to the overall corporate strategy

34. Marketing Strategies/Decisions
Select a
Target Market
Develop a
Marketing Mix
Target market: a defined group of consumers or organizations with whom a firm wants to create marketing exchanges.
-- segmentation, positioning etc.
A marketing mix is the overall marketing offer to appeal to the target market.
-- 4P’s
To Satisfy
Market Needs

35. Marketing Strategy
A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market
Required for an organization to achieve its marketing objectives
Marketing Strategy
Creating a Marketing Mix
Selecting a Target Market
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36. Target Market Selection
Provides a foundation on which the company can develop its marketing mix
Marketing information focuses on the chosen target customers
Marketers determine whether selected target market aligns with the company’s overall mission and objectives
Selecting an appropriate target market may be the most important decision a company makes in the strategic planning process
Identification and analysis of a target market provide a foundation on which a company can develop a marketing mix
Marketers should also assess whether the company has the resources to develop the right marketing mix to meet the needs of a particular target market
If time is allowed, we will use a data mining tool to learn a “Target Market” application.

37. Creating the Marketing Mix
Decisions made in creating a marketing mix are only as good as the organization’s understanding of its target market
Requires:
In-depth research into the characteristics of the target market (e.g., Demographic information)
Analysis of customer needs, preferences, and behaviors with respect to product design, pricing, distribution, and promotion
All marketing mix decisions should be (characteristics):
Consistent with the business-unit and corporate strategies
Flexible to permit the organization to alter the marketing mix in response to changes in market conditions, competition, and customer needs
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38. Sustainable Competitive Advantage
At the marketing mix level, a company can detail how it will achieve a competitive advantage
A sustainable competitive advantage is
Cannot be copied by the competitors in the foreseeable future
Requires flexibility in the marketing mix
For example, Walmart maintains a sustainable competitive advantage in groceries over supermarkets because of its highly efficient and low-cost distribution system
How can an organization make its competitive advantage sustainable over time?
Learning organization with capacity – Life long learning
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39. Sustainable Competitive Advantages
Any sustainable competitive advantages?
How can an organization sustain its competitive advantage?
Firms may create/improve their competitive advantages only if they:
have ________ to learn
capacity
learning to learn and learning to change (life-long learning environment)

40. Managing Marketing Implementation
Marketing implementation is the process of putting marketing strategies into action.
Effectiveness depends on:
Well-organized marketing department
Motivating marketing personnel
Communicating within the marketing unit
Coordinating marketing activities
Establishing a timetable for implementation

41. Organizing the Marketing Unit
Determine whether operations should be centralized or decentralized
Centralized organizations:
Authority is concentrated at the top level
Very little delegation to lower levels
Decentralized organizations:
Decision making authority is delegated as far down the chain of command as possible
Align marketing activities with the overall strategic marketing

42. Motivating Marketing Personnel
Linking pay with performance
Informing workers how their performances affects their:
Department and corporate results
Own compensation
Providing appropriate and competitive compensation
Implementing a flexible benefits program
Adopting a participative management approach
Nonfinancial rewards
Prestige or recognition; Job autonomy
Skill variety; Task significance
Increased feedback; More relaxed dress code

43. Communication within the Marketing Unit
One of the most important types of communication in marketing is communication that flows upward from the frontline of the marketing unit to higher-level marketing managers
Communication is facilitated by an:
Effective training program where employees can learn, ask questions, and become accountable for marketing performance
Information system within the marketing unit and with other departments in the organization
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44. Coordinating Marketing Activities
Marketing managers must work with other departments to ensure marketing activities mesh with other functions of the firm
Must coordinate the activities of marketing staff within the firm and integrate those activities with the marketing efforts of external organizations
Marketing managers can improve coordination by making each employee aware of how his or her job relates to others and how his or her actions contribute to the achievement of marketing objectives
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45. Establishing a Timetable for Implementation
Establishing an implementation timetable involves several steps:
Identifying the activities to be performed
Determining the time required to complete each activity
Separating the activities to be performed in sequence from those to be performed simultaneously
Organizing the activities in the proper order
Assigning responsibility for completing each activity to one or more employees, teams, or managers
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46. Strategic Performance Evaluation
Performance standard: Expected level of performance against which actual performance can be compare
___________ performance standards
Establishing
Sales analysis: Uses sales figures to evaluate a firm’s current performance
Marketing cost analysis: Breaks down and classifies costs to determine which are associated with specific marketing efforts
___________ actual performance
Measuring
__________ actual performance with established standards
Comparing
__________ the marketing strategy if needed
Modifying

47. Market Share Analysis
Lets a company compare its marketing strategy with competitors’ strategies
Primary reason is to estimate whether the sales changes have resulted from:
Firm’s marketing strategy
Uncontrollable environmental forces

48. Establishing Performance Standards
Performance standard is an expected level of performance against which actual performance can be compared
For example, a 20% reduction in customer complaints, a monthly sales quota of $150,000, or a 10% increase per month in new-customer accounts
Performance standards are derived from marketing objectives that are set while developing marketing strategies
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49. Measuring/Analyzing Actual Performance
Sales analysis uses sales figures to evaluate a firm’s current performance
Most common method of evaluation because sales data partially reflect the target market’s reactions to a marketing mix and often are readily available
Current sales data must be compared with forecasted sales, industry sales, specific competitor’s sales, or the costs incurred to achieve the sales volume
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50. Measuring/Analyzing Actual Performance
Marketing cost analysis breaks down and classifies costs to determine which are associated with specific marketing efforts
One way to analyze costs is by comparing a company’s costs with industry averages
When looking at industry averages, a company should take into account its own unique situation
Company’s costs can differ from the industry average for several reasons, including its own marketing objectives, cost structure, geographic location, types of customers, and scale of operations
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51. When actual performance _______ performance standards
Comparing Actual Performance with Performance Standards and Making Changes If Needed
When actual performance _______ performance standards
Marketing strategy deemed effective
Gain an understanding of why the strategy is effective
When actual performance ______ to meet performance standards
Determine why a marketing strategy was less effective
Determine whether the marketing objective is realistic
exceeds
fails

52. Marketing Plan
A written document that specifies the activities to be performed, to implement and control an organization’s marketing strategies
Provides a uniform marketing ______ for the firm
Delineates marketing responsibilities and tasks
Outlines _________ and presents _________
Specifies resource allocation
Helps evaluate the ___________ of marketing strategy
Aligns with corporate and business-unit strategies
Should be accessible to and shared with all key employees
Should reflect the company’s culture and be representative of all functional specialists in the firm
vision
schedules
objectives
performance

53. Video Case 2.1 (p.51)
HOW White Rock ADDS MARKETING SPARKLE

54. VIDEO CASE 2: HOW White Rock ADDS MARKETING SPARKLE Summary
This case describes the marketing strategies that White Rock used to revitalize its brand and grow in a highly competitive beverage industry. Although White Rock sparkling water was once popular, by the end of the 20th century, the company’s growth had stagnated. To bring its brand back from the brink, White Rock changed several elements of its marketing mix.
The company’s branding focuses on its rich history as well as the nutritional benefits of its products. White Rock introduced new packaging by changing its containers and is diversifying its product mix by acquiring other brands with high growth potential. The company also uses a hybrid distribution system and quality customer service to differentiate its brands from competitors. With this new marketing mix, White Rock plans to expand its market and increase sales.

55. 1. How would you describe White Rock’s strengths, weaknesses, opportunities, and threats?
Students may want to answer this question in a SWOT matrix (see Figure 2.4). Some answers may include:
Strengths—strong brand history, customer loyalty, products target health-food consumers, quality customer service, hybrid distribution system
Weaknesses—stagnant growth for White Rock brand, consumers are less familiar with the brands compared to competitors’ brands
Opportunities—health-food consumption is increasing, consumers want all-natural and organic products, consumers want alternatives to soft drinks
Threats—competitors have more capital, at their disposal, to compete; consumer demand for sparkling water is low, other environmental forces

56. 2. What do you think White Rock should do to gain competitive advantage?
Students may suggest that White Rock should expand its target market to include groups outside of the niche health food industry, embark on new marketing initiatives to make the White Rock brand more well-known, or form partnerships with restaurants or cafes to sell the product at their locations and promote its premium quality.

57. 3. What elements of the marketing mix could White Rock change to improve its marketing strategy?
Technically, White Rock could change all elements of the marketing mix. Some are harder to change than others, however.
The hardest to change would be __________ methods, as they involve transportation and location considerations.
_______ would be the easiest to change. Increasing the price for its products could promote its “premium brand” image, while lowering the price could attract more customers.
distribution
Pricing

58. 3. (cont.)
Increasing __________ would be the best way to spread awareness of the White Rock product, through advertising, by forming partnerships, or by engaging in greater customer relationship marketing.
White Rock could also change its _______ , either by adapting its current products, adopting different types of product packaging, or acquiring new brands. Changing any of these elements will likely affect the marketing strategy significantly.
promotion
products