understand the principles of strategic marketing management objective 1.3 understand corporate...
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Understand the principles of strategicmarketing management
Objective 1.3Understand Corporate strategyEvaluate the links between strategic
marketing and corporate strategy
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Systematic process of envisioning a desired future,
and translating this vision into broadly defined
goals or objectives and a sequence of steps to
achieve them. In contrast to long-term planning
(which begins with the current status and lays
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Set of decisions and actions used to implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals
Responsibility = top managers & chief executive
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Managers ask such questions as... What changes and trends are
occurring? Who are our customers? What products or services should we
offer? How can we offer these products or
services most efficiently?
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General plan of major action to achieve long-term goals
Falls into three general categories1. Growth2. Stability3. Retrenchment
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A separate grand strategy can be defined for global operations
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Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions- Internal growth = can include development
of new or changed products- External growth = typically involves
diversification – businesses related to current product lines or into new areas
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Stability, sometimes called a pause strategy, means that the organization wants
› to remain the same size or
› to grow slowly and in a controlled fashion
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Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses
Liquidation = selling off a business nit for the cash value of the assets, thus terminating its existence
Divestiture = involves selling off of businesses that no longer seem central to the corporation
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Is there a link to marketing?
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Need for National Responsiveness HighLow
Low
High Transnational Strategy• Seeks to balance global
efficiencies and local responsiveness
• Combines standardization and customization for product/advertising strategies
Globalization Strategy
• Treats world as a single global market
• Standardizes global products/advertising strategies
Multi-domestic Strategy• Handles markets
independently for each country
• Adapts product/advertising to local tastes and needs
Nee
d f
or
Glo
bal
In
teg
rati
on
ExportStrategy
•Domestically focused
•Exports a few domestically produced products to selected countries
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Globalization = product design and advertising strategies are standardized around the world
Multi-domestic = adapt product and promotion for each country
Transnational = combine global coordination with flexibility to meet specific needs in various countries
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The plan of action that prescribes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, that help the organization attain its goals
Strategies focus on:● Core competencies● Developing synergy● Creating value for customers
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Corporate-Level Strategy: What business are we in?
Corporation
Business-Level Strategy: How do we compete?
Textiles Unit Chemicals Unit Auto Parts Unit
Functional-Level Strategy: How do we support the business-level strategy?
Finance R&D Manufacturing Marketing
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Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control systems
SWOT
Formulate Strategy – Corporate, Business, Functional
Define new Mission Goals, Grand Strategy
Identify Strategic Factors – Strengths, Weaknesses
Identify Strategic Factors – Opportunities, Threats
Scan Internal Environment – Core Competence, Synergy, Value Creation
Evaluate Current Mission, Goals, Strategies
Scan External Environment – National, Global
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Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan
Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes
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Experiential Exercise: Developing Strategy for a Small Business
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Sources: Based on Howard H. Stevenson, “ Defining Corporate Strengths and Weaknesses,” Sloan Management Review 17 (spring 1976), 51-68; and M.L.Kastens, Long-Range Planning for Your Business (New York: American Management Association, 1976).
Management and Organization
Management qualityStaff quality
Degree of centralization
Organization charts
Planning, information, control systems
Finance
Profit margin
Debt-equity ratio
Inventory ratio
Return on investment
Credit rating
Marketing
Distribution channels
Market share
Advertising efficiency
Customer satisfaction
Product quality
Service reputation
Sales force turnover Production
Plant location Machinery obsolescence
Purchasing system
Quality control
Productivity/efficiency
Human Resources
Employee experience, education
Union status
Turnover, absenteeism
Work satisfaction
Grievances
Research and Development
Basic applied research
Laboratory capabilities
Research programs
New-product innovations
Technology innovations
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Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage
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BCG Matrix
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Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).
•Internet reduces barriers to entry
•Internet expands market size, but creates new substitution threats
•Internet tends to increase the bargaining power of suppliers
•Internet shifts greater power to end consumers
Internet blurs differences among competitors in an industry
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
Potential New Entrants
Rivalry among
Competitors
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Differentiation = attempt to distinguish products or services from that of competitors
Cost leadership = aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors
Focus = concentrates on a specific regional market or buyer group
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Organizational Combination
Strategic Alliances
Preferred Supplier Arrangements
Strategic Business Partnering
Mergers
Acquisitions
Low High
Joint Ventures
Degree of Collaboration
De g
ree
of C
oll a
bor a
ti on
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Leadership Structural design Information and control systems Human resources
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Can you see a link to customers or marketing?
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Environment
Organization
Strategy Performance
Leadership Persuasion Motivation Culture/values
Structural Design Organization Chart Teams CentralizationDecentralization, Facilities, task design
Human Resources Recruitment/selection Transfers/promotions Training Layoffs/recalls
Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115, Used with permission.
Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures
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The strategic marketing process is the approach whereby an organization allocates its marketing mix resources to reach its target markets
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The application, tracking and review of a company's marketing resources and activities.
The scope of a business' marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.
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Can we achieve corporate objectives without a marketing plan?
Can a successful marketing plan be develop without proper strategic marketing process?
Can a proper strategic marketing plan be carried out without an effective development of corporate strategy?
Can an effective corporate strategy be developed without carrying out a proper strategic management process?
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