marketing strategy - introduction

NANDA KISHORE SETHURAMANITM NOVEMBER 2011

Introduction to Marketing Strategy

PRODUCT LIFE CYCLE

Product Life Cycle

REV

6

Summar

y of

Summar

y of

Objectives for the dayToday, we may examine the following

questions: How is strategic planning carried out at the corporate

and division levels? How is planning carried out at the business unit level? What are the major steps in the marketing process? How is planning carried out at the product level? What does a marketing plan include? Segmenting / Targeting / Positioning

MARKET-ORIENTED PERSPECTIVES UNDERLIE SUCCESSFUL

CORPORATE, BUSINESS, AND MARKETING STRATEGIES

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1. Companies often talk about their

strategies. What does strategy mean?

A fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.

Discussion Question

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ScopeGoals and objectivesResource deploymentsIdentification of sustainable

competitive advantageSynergy

Components of Strategy

Strategic Planning with a Marketing Focus

Strategic marketing planTactical marketing planMarketing plan

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2. What do marketers mean when they say their firms are market oriented?

Discussion Questions

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3. Does having a market orientation make sense? What are the advantages and drawbacks?


Corporate and Division Strategic Planning

All corporate headquarters undertake four planning activities Defining the Corporate Mission Establishing Strategic Business Units (SBUs) Assigning resources to each SBU Planning new businesses, downsizing, or terminating

older businesses

Defining the Corporate Mission

Mission statements define which competitive scopes the company will operate in Industry scope Products and applications scope Competence scope Market-segment scope Vertical scope Geographical scope

Establishing Strategic Business Units(SBUs)

Three characteristics of SBUs Single business or collection of related businesses that can be

planned for separately Has its own set of competitors Has a manager who is responsible for strategic planning and profit

The Growth-Share Matrix Relative market share

Four Cells Question Marks Stars Cash Cows Dogs

SBU Strategies SBU Lifecycle

Resource Planning for SBUs

SBU Plan Integrative Growth Diversification Growth Downsizing Older Businesses

Business Mission SWOT Analysis

External Environment Analysis (Opportunity and Threat Analysis) Marketing Opportunity

• Buying opportunity more convenient or efficient• Meet the need for more information and advice• Customize an offering that was previously only available in

standard form

Strategic Planning for Business Units

Marketing Opportunity Analysis (MOA) Can the benefits be articulated to a target market? Can the target market be reached with cost effective

media and trade channels? Does the company have the critical capabilities to

deliver the customer benefits? Can the company deliver these benefits better than

any actual or potential competitors? Will the rate of return meet the required threshold of

investment?

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4. What must marketing managers understand to engage in effective marketing practice?


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5. Which should come first – the customer need or the product idea?


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6. Why do some firms lack orientation towards the market?


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7. What sort of decisions must marketing managers make to effectively serve customer needs?


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8. So, if one were to plan the various things to be done to market a new product, what are the basic elements that such a plan would consist of?


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9. Are planned results always delivered in most organizations? What else might you want to include?


The Marketing Process

Steps in the Planning Process The marketing process

Analyzing Market Opportunities Developing Marketing Strategies Planning Marketing Programs Managing the Marketing Effort

Annual-plan controlProfitability controlStrategic control

The Marketing Process

Classic Model.Is it valid anymore?

Changing times Proliferation of new

models of distribution World is flat

Factors Influencing Company Marketing Strategy

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Contents of a Marketing Plan

Executive summaryCurrent situation and trendsPerformance review (for an existing good or service

only)Key issuesObjectivesMarketing strategyAction plansProjected profit-and-loss statementControlsContingency plans

CORPORATE STRATEGY DECISIONS

AND THEIR MARKETING IMPLICATIONS

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1. In defining their strategies, should companies pursue broadly or narrowly defined missions?

2. What are the advantages of each approach?


Characteristics of Effective Corporate Mission Statements

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Broad SpecificFunctionalBased on customer needs

Transportation business

Long-distance transportation for large-volume producers of low-value, low-density products

PhysicalBased on existing products or technology

Railroad business Long-haul, coal carrying railroad

Source: Reprinted with permission from p. 43 of Strategy Formulation: Analytical Concepts, by C. W. Hofer and D. Schendel. Copyright © by West Publishing Company. All rights reserved.

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Ansoff Matrix

Igor Ansoff says there are four strategies for growing a business.

Let’s consider their merits and drawbacks.

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Market penetration strategiesMarket penetration strategies• Increase market share• Increase product usage

Increase frequency of useIncrease quantity usedNew applications

Product development Product development strategiesstrategies

• Product improvements• Product-line extensions• New products for same

market

Market development Market development strategiesstrategies

• Expand markets for existing productsGeographic expansionTarget new segments

Diversification strategiesDiversification strategies• Vertical integration

Forward/backward integration• Diversification into related bus

(concentric diversification)• Diversification into unrelated

businesses (conglomerate diversification)

Current products New products

Cur

rent

mar

kets

New

mar

kets

Alternative Corporate Growth Strategies

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High

Low

Stars

Dogs

Question marks

10 0.1Relative market share

Marketgrowthrate(inconstantdollars)

10%

1

Source: Adapted from Barry Hedley, “Strategy and the Business Portfolio,” Long Range Planning 10 (February 1977).

5

6

9

87Cash cows

4

10 13

12

3

11 12

The BCG Growth Share Matrix

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Gro

wth

rate

(cas

h us

e)

High

Low

Stars

Cash cows Dogs

Questionmarks

High LowRelative market share

Desired direction of business development

CashFlows

Cash Flows Across Businesses in the BCG Portfolio Model

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Bus

ines

s’s

com

petit

ive

posi

tion

High

Low

Medium

Industry attractivenessHigh Medium Low

1 1 2

1 2 3

2 3 3

1 Invest/grow2 Selective investment/ maintain position3 Harvest/divest

The GE Nine-Cell Matrix

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Creatingshareholder

value

Shareholder return• Dividends• Capital gains

Corporateobjective

Sales growth• Operating profit margin

• Income tax rate

Discount rate Debt

Operating

Cash flowfrom

operations

Investment Financing

• Working capital investment

• Fixed capital investment

• Cost of capital

• Value growth duration

Valuationcomponents

Valuedrivers

Managementdecisions

Source: Reprinted with permission of The Free Press, A Division of Macmillan, Inc., from Crating Shareholder Value by Alfred Rappaport. Copyright © 1986 by Alfred Rappaport.

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Factors Affecting the Creation of Shareholder Value

Marketing Strategy

Should cover the following points.PositioningProduct ManagementPricingDistributionMarketing CommunicationsMarketing Research

Segmentation, Targeting & Positioning

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Segmentation, Targeting, Positioning

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Learning Goals

1. Learn the three steps of target marketing, market segmentation, target marketing, and market positioning

2. Understand the major bases for segmenting consumer and business marketing strategy

3. Know how companies identify attractive market segments and choose target marketing strategy

4. Realize how companies position their products for maximum competitive advantage in the marketplace

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• Sells multiple brands within the same product category for a variety of products

• Brands feature a different mix of benefits and appeal to different segments

• Has also identified different niches within certain segments

• Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs

Case Study - Procter & Gamble

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Market Segmentation Identify bases for segmenting the market Develop segment profiles

Target Marketing Develop measure of segment attractiveness Select target segments

Market Positioning Develop positioning for target segments Develop a marketing mix for each segment

Steps in market segmentation, targeting and positioning

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Segmentation

In other words…

A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. it is distinct from other segments

(heterogeneity across segments) it is homogeneous within the segment

(exhibits common attributes) it responds similarly to a market

stimuli it can be reached by a market

intervention

Increase marketing efficiency by focusing marketing efforts to a particular group

Maximize scarce marketing resources

Find a market with limited competition

Select the most profitable segment

Purpose

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Linking Market Need to a Marketing Program

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Segmentation Bases

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Geographic Segmentation

BlankBlank56

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Demographic Segmentation

1945 1965 1976 1994

Baby Boomers

Generation X

Generation Y

Mature Market

Demographics - Marketing across Generations

Mature MarketMature Market

Generation XGeneration X

Generation YGeneration Y

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Behavioral Segmentation

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Psychographic Segmentation

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Segmenting International Markets

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Dell, across the globe

Requirements for Effective Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments must be effectively reached and served.

• Segments must be large or profitable enough to serve.

Measurable

Accessible

Substantial

Differential

Actionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

Market Segmentation Process

1. Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics.

2. Verify the market segments size if adequate enough to support the organization's product.

3. Develop a marketing strategy to target this market.

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Target Market

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Evaluating Segment Attractiveness

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Let’s sell to segments with big eyes and lips

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Factors driving a Target Marketing Strategy

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Selling Ice Cream to EskimosSelling Ice Cream to Eskimos

http://images.google.com/imgres?imgurl=http://www.cepolina.com/freephoto/f/other.people/boy.child.Indian.happy.jpg&imgrefurl=http://www.cepolina.com/freephoto/vb/boy.child.Indian.happy-people.htm&usg=__StO73Ft2AqxJM7aQQ0QuDjohBeE=&h=450&w=600&sz=38&hl=en&start=2&tbnid=PMVjsKacUDqo0M:&tbnh=101&tbnw=135&prev=/images?q=indian+boy&gbv=2&hl=en

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Broad

Target Marketing Strategies

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Target Marketing

Socially Responsible Targeting Some segments, especially children, are at special risk Many potential abuses on the Internet, including

fraud Internet shoppers Controversy occurs when the methods used are

questionable

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Positioning

Positioning: The place the product occupies in consumers’

minds relative to competing products. Typically defined by consumers on the basis of

important attributes. Involves implanting the brand’s unique benefits

and differentiation in the customer’s mind. Positioning maps that plot perceptions of brands

are commonly used.

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Identifying possible competitive advantages

Choosing the right competitive advantage

Choosing a positioning strategy

Differentiation can be based on Products Services Channels People Image

Topics Topics

Choosing a Positioning Strategy

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• How many differences to promote? Unique selling proposition Several benefits

• Which differences to promote? Criteria include: Important Distinctive Superior Communicable Preemptive Affordable Profitable

Topics Topics Identifying possible

competitive advantages




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• Value propositions represent the full positioning of the brand

• Possible value propositions: More for More More for the Same More for Less The Same for Less Less for Much Less

Topics Topics Identifying possible

competitive advantages




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Positioning statements summarize the company or brand positioning EXAMPLE: To (target segment and need) our (brand)

is (concept) that (point-of-difference)

Developing a Positioning Statement

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Companies must be certain to DELIVER their value propositions.

Positions must be monitored and adapted over time.

Communicating the Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

Market Segmentation Process

END OF DAY 1