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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
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
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
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.
slide6
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
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
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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Should specify the time frame for their completion.
  • Usually related to sales revenues, market share, profitability, or cash flow
examples of objectives
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
Strategic Alternatives
  • Three basic strategic directions:
    • Growth (sales or market share)
    • Profitability
    • Cash flow
growth strategies
Growth Strategies
  • Market development strategies
    • Attract non-users
    • Enter new markets
attracting non users
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
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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Market penetration strategies
    • Increase purchase rate of existing customers
    • Attract competitors’ customers
increasing purchase rate
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
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
profitability strategies
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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Decrease costs/increase efficiencies
  • Increase price
  • Decrease product offerings/emphasize selling of most profitable products
cash flow strategies
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
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
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
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
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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