Chapter 1: Introduction to Strategic Marketing Management

1. Market1 – Page 1 Chapter 1: Introduction to Strategic Marketing Management MKT1 - Slide 1 to 24

2. MKT1 - Slide 1 to 24 What is Marketing? Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. - Philip Kotler

3. MKT1 - Slide 1 to 24 Simple Marketing System Communication Industry (a collection of sellers) Market (a collection of Buyers) Information Goods/services Money

4. MKT1 - Slide 1 to 24 Company Orientations Towards the Marketplace Consumers prefer products that are widely available and inexpensive Production Concept • Consumers favor products that • offer the most quality, performance, • or innovative features Product Concept Consumers will buy products only if the company aggressively promotes/sells these products Selling Concept Focuses on needs/ wants of target markets & delivering value better than competitors Marketing Concept

5. MKT1 - Slide 1 to 24 Marketing Concept Need to Focus on Marketing Concept Focuses on needs/ wants of target markets & delivering value better than competitors

6. MKT1 - Slide 1 to 24 Evolving Views of Marketing’s Role Finance Production Production Finance Human resources Human resources Marketing Marketing a. Marketing as an equal function b. Marketing as a more important function

7. MKT1 - Slide 1 to 24 Evolving Views of Marketing’s Role Production Marketing Customer Human resources Finance e. The customer as the controlling function and marketing as the integrative function

8. MKT1 - Slide 1 to 24 Overlap Between Strategic Planning & Marketing There is some overlap between the two, in terms what you are going to learn We will emphasise marketing concepts and approach here rather than strategic concepts However, there will be some inevitable overlap here and there

9. MKT1 - Slide 1 to 24

10. MKT1 - Slide 1 to 24 Marketing Plan This is a document that puts together the process that the organisation will undergo in order to achieve its marketing objectives It spells out the following activities that marketing managers need to do: Set marketing objectives Evaluate opportunities Create marketing strategies Prepare marketing programmes Specify expected results

11. MKT1 - Slide 1 to 24 The Marketing Plan – Possible Outline Executive Summary & Table of Contents Current Marketing Situation Opportunity & Issue Analysis Objectives Marketing Strategy Action Programs Projected Profit-and-loss Controls

12. MKT1 - Slide 1 to 24 The Goal of Strategic Marketing Management To select reality-based desired accomplishments (e.g., goals & objectives) To effectively develop or alter business strategies To set priorities for operational change To improve the organisation’s performance

13. MKT1 - Slide 1 to 24 Strategic Marketing Management Model The above, discussed in this chapter, is divided as follows: External/self analysis Strategic posture Market planning

14. MKT1 - Slide 1 to 24 External Analysis This comprise: Customer analysis (segmentation, motivations & unmet needs) Competitor analysis (their performance, image, culture, strengths/weaknesses) Industry analysis (major market trends, key success factors, opportunities/threats, analysis of competitive/change forces)

15. Competitor Forces Analysis MKT1 - Slide 1 to 24

16. MKT1 - Slide 1 to 24 Self-Analysis Strengths & Weaknesses Together Opportunities & Threats identified in the external environmental analysis, can do a SWOT analysis

17. MKT1 - Slide 1 to 24 Strategic Posture Based on the SWOT, the organisation can decide how it will achieve its long term mission/goals Basically zero in on the strengths to take on opportunities, and downplaying the weaknesses, especially in respect to threats.

18. MKT1 - Slide 1 to 24 Hence: Strategies Based on Porter’s and Aaker’s work: Price advantage (cost leadership) Quality/features advantage (broad differentiation) Marker focused advantage (focused low cost & focused differentiation) TQM advantage (value-driven strategy based on continual innovation in price, product & process)

19. MKT1 - Slide 1 to 24 Competitor Role Strategy After organisation has decided on primary competitive strategy, it must position itself by choosing a competitive role strategy: Leader: largest market share/initiator (e.g., McDonalds) Follower: adopter of successful strategies (A&W Restaurant) Challenger: An innovator who challenges the norm Loner: Feels in the gap in the market place (“mom & pop” stores) Don’t try all!

20. MKT1 - Slide 1 to 24 Strategic Initiatives Next step in developing effective posture, priority strategic initiatives: Grow: e.g., Subway sandwiches Maintain/defend: Mc Donald has been doing this Reposition: maintain size, but change key elements, e.g., IBM) Retrench: Spin-off some businesses, e.g., Nabisco spun off cigarette manufacturing Exit

21. MKT1 - Slide 1 to 24 Vertical Coordination Strategies Selling (distribution of) product thru: Contracts Relation-based alliance: loose, n contracts, but understanding – no separate company Equity-base alliance – may be a separate company Vertically integrated

22. MKT1 - Slide 1 to 24 Need to keep in mind… Three critical marketing concepts: TLC: Thinking like customers – see things from customer viewpoint CMSQ: Critical marketing strategy question – why should customers purchase our products over competitors? STP: Segment, target & position

23. MKT1 - Slide 1 to 24 Segment, Target & Position STP strategies should complement organisation’s overall generic strategy, competitive role strategy, strategic initiative & vertical coordination strategy: Market segmentation – every market made up of distinguishable segments with different needs, buying styles, responses Target market selection – selecting market segments which you want to serve Positioning – choosing the 4 Ps for that segment(s)

24. MKT1 - Slide 1 to 24 Strategic Marketing • Company Orientations Towards the Marketplace • Marketing Concept • Evolving Views of Marketing’s Role • Evolving Views of Marketing’s Role • Overlap Between Strategic Planning & Marketing • Marketing Plan • The Marketing Plan – Possible Outline • The Goal of Strategic Marketing Management • Strategic Marketing Management Model • External Analysis • Competitor Forces Analysis • Self-Analysis • Strategic Posture • Hence: Strategies • Competitor Role Strategy • Strategic Initiatives • Vertical Coordination Strategies • Need to keep in mind… • Segment, Target & Position