1. Strategy in Marketing Professor Lawrence Feick University of Pittsburgh

2. Outline What is marketing strategy? Framework for marketing strategy External analysis: environmental scanning Internal analysis: core skills of the firm SWOT: matching the external and internal Portfolio models

3. Marketing strategy Answers basic questions: –to whom will we sell? –what will we sell, how will we sell it? Focus on: –target market selection –marketing mix design

4. Marketing strategy formulation External analysis (looking outside the firm) –environmental scanning –environmental management –identifying opportunities and threats Internal analysis (looking inside the firm) –mission and objectives –key skills, resources of the firm –identifying strengths and weaknesses

5. External analysis: The key environments Socio-cultural environment Economic environment Technological environment Political-legal environment Competitive environment

6. External analysis: The socio-cultural environment Demographics –age, education, marital status, race, etc. Culture –US culture, subcultures, foreign cultures –pop culture, style, fashion, conventional wisdom –ideas, movements, causes How is this environment changing?

7. Life expectancy at birth by sex, US by year

8. Racial (ethnic) characteristics of the US, percentages by year

9. Source: US INS Percent distribution of origin of US naturalized citizens by year

10. External analysis: The economic environment GDP and business cycles Personal income Inflation Unemployment

11. External analysis: The technological environment Creation of substitutes for the product category (e.g., marketing myopia examples) Changes in the product or product usage Changes in the production, service, or support process Changes in distribution channels Changes in promotion, media

12. External analysis: The political-legal environment Government laws and regulations –Maintaining a competitive market –Protecting consumers Industry self-regulation Litigation

13. External analysis: The competitive environment Who is our competitor? –brand-level competition –product category-level competition –want-level competition Open markets and increased competition –global connections –emphasis on exports –virtual marketing

14. External analysis: recap Socio-culturalEnvironment EconomicEnvironment TechnologicalEnvironment CompetitiveEnvironmentPolitical-legalEnvironment Firms,Consumers,Competitors, and Products

15. External analysis: recap Five external environments change continually Changes create opportunities and challenges in new and existing markets Marketers’ key jobs: –environmental scanning, forecasting, adaptation –environmental management (if possible)

16. Internal analysis Motivation: how does the firm choose from among all of the opportunities in the environment? Examples –Microsoft –Federal Express

17. Internal analysis: Mission The self-defined description of the business the firm is in; why the firm exists Usually includes mention of –customer groups served –customer needs met –technology employed Constrains marketing strategy choices

18. Mission statement example Intel: Do a great job for our customers, employees, and stockholders by being the preeminent building block supplier to the computing industry.

19. Internal analysis: Organizational objectives Define sought after benchmarks Usually specific about time and quantity Often involve sales, profits, numbers of customers, customer satisfaction, etc. or hoped for changes in these Constrains marketing strategy choices

20. Internal analysis: Strengths and weaknesses Assessment of skills, resources, competencies of the firm What do we do exceptionally well, what not so well? What assets (e.g., patents, image, brands, people) do we have that give us an advantage? How do we compare to competition on these?

21. SWOT Combining the results of internal analysis (SW) with external (OT) Build on strengths to take advantage of environmental changes Manage weakness that are made greater by environmental changes

22. Recap: marketing strategy Outcome of SWOT analysis: –a focus on who: which target markets? –a focus on how: what marketing mix will move them? Key to success: consistency –with the target market and mix –among elements of the mix

23. Aside: Portfolio models Purpose: assess each of the firms businesses using internal and external criteria Two examples: –Boston Consulting Group Growth/Share Matrix –GE Business Screen

24. BCG Growth/Share Matrix High Relative Share 1.0 Low Relative Share 10% Fast Growth Slow Growth

25. BCG Growth/Share Matrix High Relative Share 1.0 Low Relative Share 10% Fast Growth Slow Growth A B C

26. GE Business Screen StrongAverageWeak Business Strength High Medium Low Industry Attractiveness Green Yellow Red

27. Portfolio models: Summary Assumptions Uses Limitations