1. Foundations of Strategic Marketing Management
Chapter 1
Foundations of Strategic Marketing Management

2. In this chapter, you will learn about…
Defining the Organization’s Business, Mission, and Goals
Business Definition
Business Mission
Business Goals
Identifying and Framing Organizational Growth Opportunities
Converting Environmental Opportunities into Organizational Opportunities
SWOT Analysis

3. In this chapter, you will learn about…
Formulating Product-Market Strategies
Market-Penetration Strategy
Market-Development Strategy
Product-Development Strategy
Diversification
Strategy Selection
The Marketing Mix
Budgeting Marketing, Financial, and Production Resources
Developing Reformulation and Recovery Strategies
Drafting a Marketing Plan
Marketing Ethics and Social Responsibility

4. The Primary Purpose of Marketing
To create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.

5. Expanding Responsibilities of Marketing Managers
They no longer function solely to direct day-to-day operations. They must make strategic decisions as well.
Expanded responsibilities include:
Charting the direction of the organization
Contributing to decisions that will create and sustain a competitive advantage and affect long-term organizational performance

6. Evolution of the Marketing Manager
From being only an implementer…. to being a maker of organization strategy.
This has prompted the emergence of
strategic marketing management as
a course of study and practice.

7. Processes in Strategic Marketing Management
Defining the organization’s business, mission, and goals
Identifying and framing organizational growth opportunities
Formulating product-market strategies
Budgeting marketing, financial, and production resources
Developing reformulation and recovery strategies

8. Organization’s Business, Mission, and Goals
Process One
Defining the
Organization’s Business, Mission, and Goals

9. Business Definition not
By defining a business from a customer or market perspective…
an organization is appropriately viewed as:
a customer - satisfying endeavor
not
a product-producing or service delivery enterprise.

10. “What business are we in?”
An organization should define a business by:
The type of customers it wishes to serve
The particular needs of those customer groups it wishes to satisfy
The means or technology by which the organization will satisfy the customer needs

11. Business Mission
Underscores the scope of an organization’s operations apparent in its business definition
Reflects management’s vision of what the organization seeks to do
Most statements describe:
the organization’s purpose
customers, products/services, markets, philosophy, and technology

12. Benefits of Mission Statements
Crystallizes management’s vision of the organization’s long-term direction and character
Provides guidance in identifying, pursuing, and evaluating market and product opportunities
Inspires and challenges employees to do those things that are valued by the organization and its customers
Provides direction for setting business goals or objectives

13. Business Goals
Goals or objectives convert the organization’s mission into tangible actions and results that are to be achieved, often within a specified time frame.
Three major categories of goals:
Production
Financial
Marketing

14. Production Goals
Apply to the use of manufacturing and service capacity and to product and service quality.
Financial Goals
Focus on return on investment, return on sales, profit, cash flow, and shareholder wealth.
Marketing Goals
market share
marketing productivity
sales volume
profit
customer satisfaction
customer value creation

15. Identifying and Framing Organizational Growth Opportunities
Process Two
Identifying and Framing Organizational Growth Opportunities

16. Converting Environmental Opportunities into Organizational Opportunities
What might we do?
Sources of environmental opportunity:
Unmet or changing customer needs
Unsatisfied buyer groups
New means or technology for delivering value to prospective buyers

17. Converting Environmental Opportunities into Organizational Opportunities
What do we do best?
Distinctive Competency describes an organization’s unique strengths or qualities including:
Skills
Technologies
Resources
…that distinguish it from other organizations.

18. Converting Environmental Opportunities into Organizational Opportunities
What must we do?
Success Requirements are basic tasks that an organization must perform in a market or industry to compete successfully.
If what must be done is inconsistent with what can be done to capitalize on an environmental opportunity, an organizational growth opportunity will fail to materialize.

19. SWOT Analysis Strengths Weaknesses internal Opportunities Threats
A formal framework for identifying and framing organizational growth opportunities
Strengths
Weaknesses
Opportunities
Threats
internal
external

20. (Strengths & Weaknesses)
SWOT Analysis
Framework for focusing attention on the fact that an organizational growth opportunity results from…
a good fit between an organization’s INTERNAL CAPABILITIES
(Strengths & Weaknesses)
and
its EXTERNAL ENVIRONMENT (Opportunities & Threats)

21. SWOT Analysis
What the organization is good at doing or a characteristic that gives it an important capability
Strength
What an organization lacks or does poorly relative to competitors
Weakness
Developments or conditions in the environment that have favorable implications for the organization
Opportunities
Pose dangers to the welfare of the organization
Threats

22. Questions to be asked once SWOT has been identified
Which internal strengths represent distinctive competencies? Do these strengths compare favorably with what are believed to be market or industry success requirements?
Which internal weaknesses disqualify the organization from pursuing certain opportunities?
Does a pattern emerge from the SWOT?

23. Product-Market Strategies
Process Three
Formulating
Product-Market Strategies

24. Product-Market Strategies
Existing
products
New
products
Market
Penetration
Product
Development
Existing
markets
Market
Development
Diversification
New
markets

25. Market Penetration Strategy
Seeking a larger market share in a market in which organization already has an offering
This strategy involves:
Attempts to increase present buyer’s usage or consumption rates of the offering
Attracting buyers of competing offerings
Stimulating product trial among potential consumers

26. Market Development Strategy
Introducing its existing offerings to markets other than those that the organization is currently serving.
Reaching new markets requires:
Carefully considering competitor strengths and weaknesses and competitor retaliation potential
Modification of the basic offering
Different distribution outlets
Change in sales effort and advertising

27. Market Development in the International Arena
Exporting
Licensing
Joint Venture or Strategic Alliance
Direct Investment

28. Product Development Strategy
Creating new offerings for existing markets.
This approach may be taken for:
Product Innovation – develop totally new offerings
Product Augmentation – enhance the value to customers of existing offerings
Product line extension – broaden the existing line of offerings by adding different sizes, forms, flavors, etc.

29. Diversification Strategy
Development or acquisition of offerings new to the organization and introducing those offerings to publics not previously served by the organization.
Growing trend in recent years
High-risk strategy because both the offering and market served are new to the organization

30. Strategy Selection – Sample Decision Tree
Action
Response
Outcome
Aggressive
competition
Passive
Estimated profit of
$2 million
$3 million
Market-penetration
strategy
Aggressive
competition
Passive
Estimated profit of
$1 million
$4 million
Market-development
strategy

31. Communications Strategy
The Marketing Mix
Product
Strategy
Communications Strategy
Price
Strategy
Customer
Channel
Strategy

32. Budgeting Marketing, Financial, and Production Resources
Process Four
Budgeting Marketing, Financial, and Production Resources

33. The Budget
A formal, quantitative expression of an organization’s planning and strategy initiatives expressed in financial terms
A well-prepared budget meshes and balances an organization’s
Financial,
Production, and
Marketing Resources
so that overall organizational goals or objectives are attained.

34. Components of a Budget Operating Budget Financial Budget
Also referred to as a pro forma Income Statement
Focuses on an organization’s income statement
Financial Budget
Focuses on the effect that the operating budget and other initiatives will have on the organization’s cash position

35. Developing Reformulation and Recovery Strategies
Process Five
Developing Reformulation and Recovery Strategies

36. The Marketing Audit Helps answer the questions:
Comprehensive, systematic, independent, and periodic examination of a company’s marketing environment, objectives, strategies, and activities to recommend a plan of action to improve the company’s marketing performance.
Helps answer the questions:
Are we doing the right things?
Are we doing things right?

37. The Marketing Plan
A formal written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specified future time period.
Focus can be on a business, product, or brand
Time Dimension can be short-run (typically one year) or long-run (multi-year)

38. Marketing Ethics and Social Responsibility
Marketing decisions reflect an organization’s orientation toward the publics with which it interacts
The marketplace is populated by individuals with diverse value systems
Their actions will be judged publicly by others with different values