1. Marketing Strategy Reformulation:
Chapter 9
Marketing Strategy Reformulation:
The Control Process

2. In this chapter, you will learn about…
Strategic Change
Sources of Strategic Change
Strategic Change: Threat or Opportunity?
Operations Control
Nature of Marketing Cost Analysis
Product-Service Mix Control
Sales Control
Marketing Channel Control

3. In this chapter, you will learn about…
Considerations in Marketing Control
Problems versus Symptoms
Effectiveness versus Efficiency
Data versus Information

4. Components of Marketing Control
Strategic Control
Doing things right
Doing the right things
Operations Control

5. Remedial Actions under..
Improving effectiveness in seeking opportunities and mitigating threats in the environment
Strategic
Control
Operations
Control
Focus on heightening the marketing effort or identifying ways to improve efficiency

6. Strategic Change Change in the environment that
will affect the long-run well-being
of the organization

7. Sources of Strategic Change
Market Evolution
(Calcium)
Technological Innovation
(DVDs)
Market
Redefinition
(Electronic
banking)
Change in
Marketing
Channels
(Internet)

8. Dealing with Strategic Change
Attempt to marshal the resources necessary to alter its technical and marketing capabilities to fit market-success requirements.
Shift emphasis to product markets where match between success requirements and the firm’s distinctive competency is clear.
Leave the industry.

9. Goal of Operations Control
To Improve the Productivity of Marketing Efforts

10. Purpose of Marketing-Cost Analysis
To trace, assign, or allocate costs to a specified marketing activity or entity in a manner that accurately displays the financial contribution of activities or entities to the organization. It is based on the principle that certain costs are directly or indirectly assignable to every market segment.

11. Marketing Segment Variables for Cost Analysis
Channels
Elements of
Product-Service
Offering
Sales Divisions,
District, or
Territories
Type or Size
of Customers

12. Issues in Cost Allocation
How should costs be allocated to separate market segments?
What costs should be allocated?
Should all costs be allocated to market segments?

13. Product-Service Mix Control
Assessing the performance of the offerings
Sales (Kodak vs. Fuji)
Market Share (Goodyear)
Appraising financial worth of product-service offerings
Assign costs to offerings (red-eye flight)
Contribution-margin approach (gas station)

14. Sales-function Administration
Sales Control
Sales Control
Behavioral Aspects
Sales Effort
Allocation of
Selling-Time
Cost Aspects
Performance
Expenses
Sales-function Administration

15. Measures to Assess Sales Performance
Sales Revenue
Gross Profit
Penetration of
Accounts in
Sales Territory
Sales Call
Frequency
Selling and Sales
Administration Expenses

16. Example of Disaggregating Service Station Costs for Product-Service Mix Control ($’000)
Department
Total
Gasoline
General Merchandise
Automobile Service
Sales
$4000
$2000
$1700
$300
COGS and Variable Expenses
$3000
$1600
$1220
$180
Contribution Margin
$1000
$400
$480
$120
Fixed Expenses
$900
$500
$310
$90
Net Income
$100
($100)
$170
$30

17. Performance Summary for Two Sales Reps
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Account Category
Potential Accts in Sales Dt.
Active Accts.
Sales Volume
Gross Profit
Total Calls
Selling Expenses
Sales Admin. A 80 60
$48000
$14000
195
$18400 B 40
$44000
$15400
200
$17900 C 10
$25000
$12250 50
$11250 D 20 6
$33000
$16500 42
$9000
Totals
116
$150000
$58550
487
$56550
$10000

18. Selected Operating Indices of Sales Performance
Account Category
Sales Volume / Active Account
(Col 3 Col 4)
Gross Profit / Active Account
(Col 4 Col 2)
Selling Expenses / Active Account
(Col 6 Col 2)
Contribution to Sales Admin. (Gross Profit – Selling Expenses) A
$800
$240
$307
-$67 B
$1100
$385
$448
-$63 C
$2500
$1225
$1125
$100 D
$5500
$2750
$1500
$1250

19. Selected Operating Indices of Sales Performance
Account Category
Account Penetration
(Col 2 Col 3)
Call Frequency / Active Account
(Col 5Col 2)
Selling Expenses per Call
(Col 6 Col 5)
Gross Profit % / Active Account (Col 4 Col 3) A
75%
3.25
$94.36
30% B
67%
5.00
$89.50
35% C
25%
$225.00
49% D
7.00
$214.29
50%

20. Marketing Channel Control
Assess Environmental and
Organizational Factors
Evaluate Profitability of
Marketing Channels

21. Types of Costs in Marketing Channel Control
Include sales expenses and advertising allowances
Order-
Getting
Cost
Include packaging and delivery costs, warehousing costs, and billing costs
Order-
Servicing
Cost

22. Home Improvement Stores
Disaggregated Costs of Furniture Improvement Products for Marketing Channel Control ($’000)
Marketing Channel
Total
Furniture Stores
Hardware Stores
Home Improvement Stores
Sales
$12000
$5000
$2000
COGS
$8000
$3500
$3100
$1400
Gross Margin
$4000
$1500
$1900
$600
Expenses
Selling
$1000
$617
$216
$167
Advertising
$750
$450
$150
Pkg & Delivery
$800
$370
$300
$130
Warehousing
$400
$200
$50
Billing
$250
Total Expenses
$3550
$1937
$1066
$547
Net Income (Loss)
($437)
$834
$53

23. Considerations in Marketing Control
Problems
versus
Symptoms
Data
versus
Information
Effectiveness
versus
Efficiency