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
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?
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.
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.
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.
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.
Should specify the time frame for their completion. • Usually related to sales revenues, market share, profitability, or cash flow
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.
Strategic Alternatives • Three basic strategic directions: • Growth (sales or market share) • Profitability • Cash flow
Growth Strategies • Market development strategies • Attract non-users • Enter new markets
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
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
Market penetration strategies • Increase purchase rate of existing customers • Attract competitors’ customers
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
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
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
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
Decrease costs/increase efficiencies • Increase price • Decrease product offerings/emphasize selling of most profitable products
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
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
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
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
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