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Formulating Strategic Marketing Programs What are the Benefits of Strategy? Components of Strategy Statement of goals & objectives Establish general direction of strategy Selection of strategic alternative(s) Selection of customer targets Choice of competitor targets Positioning

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Components of Strategy

Statement of goals & objectives

Establish general

direction of strategy

Selection of strategic alternative(s)

Selection of customer targets

Choice of competitor targets

Positioning

Statement of core strategy

Description of supporting marketing mix

Implement

strategy

Description of supporting functional programs


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Marketing goals & objectives are tied to:

  • Organizational mission

    • What is the organization’s reason for being?

    • What does the firm stand for?

    • What is the basic operating philosophy?


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Marketing Goals

  • Desired general accomplishments stated in vague terms.

  • Indicate the direction the firm is attempting to move and the set of priorities it will use in evaluating alternatives and making decisions.


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  • Should be attainable and realistic.

  • Should be internally consistent.

  • Should be comprehensive and help to clarify the roles of all parties in the organization.

  • Should involve some degree of uncertainty.


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Goals vs. Tactics

  • To have the largest, best-trained sales force in the industry.

    • Hiring 100 new salespeople.

  • Having the best recognized company in the industry.

    • Doubling the advertising budget.


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Marketing Objectives

  • Provide specific and quantitative benchmarks that can be used to gauge progress toward the achievement of the marketing goals for which they are developed.

  • Should be attainable with a reasonable degree of effort.


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Examples of Objectives

  • The marketing department will be responsible for having 40% of customers listing this financial institution as their primary financial institution within one year.

  • The sales department will increase sales 18% during the next 2 years.


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Strategic Alternatives

  • Three basic strategic directions:

    • Growth (sales or market share)

    • Profitability

    • Cash flow


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Growth Strategies

  • Market development strategies

    • Attract non-users

    • Enter new markets


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Attracting non-users

  • Increase willingness to buy

    • Demonstrate benefits of product form

    • Develop new product forms with desired benefits

  • Increasing ability to buy

    • Offer lower prices or credit

    • Provide greater availability


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Enter new markets

  • Broaden distribution

    • Move into new geographic markets

    • Add channels of distribution

  • Product-line extension

    • Vertical product line extension

    • Horizontal product line extension

  • Expansion through acquisition or diversification


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Increasing purchase rate

  • Broaden usage

    • Provide examples of additional uses of product

  • Increase consumption levels

    • Lower prices, special-volume packaging

    • Improve buyers’ perceptions of product benefits

  • Increase rate of replacement

    • Improve benefits, e.g., convenience, lower operating costs, that encourage early replacement


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Attracting competitors’ customers

  • Head-to-head competition

    • Superior marketing effort

      • Quality, selection, availability, brand name recognition

    • Price-cost leadership

      • Offer comparable quality at lower price


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  • Differentiation

    • adding a set of meaningful and valued differences to distinguish the firm’s offering from competitors’ offerings

    • Criteria:

      • important □preemptive

      • distinctive □affordable

      • superior □profitable



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Profitability Strategies

  • Maintain satisfaction

    • Consistent, high quality

    • Effective customer complaint system

  • Build strong customer relationships

    • Encourage repeat business through formal relationships

    • Target best customers

  • Develop complementary products

    • Increase dependence on firm


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Cash Flow Strategies

  • Harvest market position

    • Systematically increase profit margin by reducing marketing expenses to capitalize on ST performance opportunities; may sometimes be able to increase price, also

  • Divest market position

    • Sell firm

    • Close down operation and sell assets



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Introduction Stage

  • Objective: Create awareness and product trial

    Market development

    Product—offer a basic product

    Price—charge cost-plus

    Distribution—selective

    Communications—target advertising to early adopters and dealers to increase awareness; heavy sales promotion to stimulate trial


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Growth Stage

  • Objective: Maximize market share

    Market penetration

    Product—product extensions, warranties

    Price—decrease prices to penetrate

    Distribution—intensive

    Communications—target advertising to mass market to increase awareness; reduce sales promotions


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Maturity Stage

  • Objective: Maximize profit while defending market share

    Product—diversify products and brands

    Price—match or best competitors’ prices

    Distribution—more intensive

    Communications—use advertising to stress brand differences and benefits; increase sales promotions to encourage brand switching


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Decline Stage

  • Objective: Reduce expenditure and milk the brand; focus on cash flow

    Product—phase out weak models

    Price—cut price

    Distribution—selective; phase out unprofitable outlets

    Communications—reduce and target hard-core loyals; reduce sales promotions to minimal levels


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