Role of Strategic Marketing Management: Slide 1-1 © 2010 Pearson Education, Inc. Publishing As Prentice Hall

ROLE OF STRATEGIC
MARKETING
MANAGEMENT
2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-1

PURPOSE OF MARKETING
To create long-term and

mutually beneficial
exchange relationships
between an entity and the
publics (individuals and
organizations) with which it
interacts.
RESPONSIBILITIES OF MARKETING
MANAGERS
Direct day-to-day operations

Make strategic decisions
Chart the organizations direction
Create and sustain a competitive
advantage
Affect the organizations long-
term performance
RESULTS OF THE EVOLUTION OF THE
MARKETING MANAGER
Created the Chief Marketing

Officer (CMO) position
Increased popularity of strategic

marketing management
Half of Fortune 1000 have CMOs

RESPONSIBILITIES OF CMOs
Define the business mission
Analyze environmental, competitive,

and business situations
Develop business objectives and goals
Define customer value propositions

and their marketing strategies

SKILL SET OF CMOs
Analytic abilities
Intuitive sense
Creativity

STRATEGIC MARKETING
MANAGEMENT PROCESSES
Define business, mission, and goals
Identify/frame growth opportunities
Formulate product-market strategies
Budget resources
Develop reformulation and recovery

strategies
DEFINING THE
ORGANIZATIONS
BUSINESS, MISSION,
AND GOALS

BUSINESS DEFINITION
Outlines the scope of operations
Is neither obvious nor easy to define
An firm defines its business by:

The customers served and their needs
The means or technology used to satisfy needs

BUSINESS MISSION
Consists of a written statement that:

Underscores the scope of an
organizations operations
Reflects managements vision of
the organization
Describes an organizations
purpose
Crystallizes the organizations
long-term direction and character
BUSINESS MISSION
Consists of a written statement that:

Helps identify and evaluate
product-market opportunities
Inspires employees
Provides direction for goal-setting
Applies to not-for-profit organizations
as well
BUSINESS GOALS OR OBJECTIVES
Convert the mission into tangible

actions and results to be achieved
by a specified time frame
Are divided into three categories:
Production Financial Marketing

Objectives Objectives Objectives

Production Manufacturing and service capacity

Objectives Product and service quality
Return on investment Profit

Financial
Return on sales Cash flow
Objectives
Shareholder wealth
Market share Customer satisfaction

Marketing Sales volume Customer value creation
Objectives Profit Customer lifetime value
Marketing productivity
A situation analysis is an
appraisal of operations to
determine reasons for the
gap between what was or
is expected and what has
happened or will happen.
IDENTIFYING AND
FRAMING
ORGANIZATIONAL
GROWTH
OPPORTUNITIES
CONVERTING ENVIRONMENTAL OPPORTUNITIES
INTO ORGANIZATIONAL OPPORTUNITIES
Ask three questions:

Environmental
What might we do? Opportunities
Distinctive
What do we do best? Competencies
Success
What must we do? Requirements

WHAT MIGHT WE DO?
Environmental Opportunities
Unmet or changing consumer needs
Unsatisfied buyer groups
New means or technologies for

delivering value to prospective buyers

WHAT DO WE DO BEST?
Distinctive Competency
Describes an organizations
unique strengths or qualities,
including skills, technologies,
or resources, that distinguish
it from other organizations.
WHAT DO WE DO BEST?
Distinctive Competency
Two criteria must be satisfied:
Competitors cannot imitate it
Provide customers with superior value

WHAT DO WE DO BEST?
Success Requirements
Basic tasks that an

organization must perform
in a market or industry to
compete successfully.

SWOT ANALYSIS
SWOT analysis is a formal framework

for identifying and framing organizational
growth opportunities.
- Type of Factor -
Organization Favorable Unfavorable
Internal
Strengths Weaknesses
Capabilities
External
Opportunities Threats
Environment

SWOT ANALYSIS
What the organization is good at

Strengths doing or some characteristic that
gives it an important capability
What an organization lacks or

Weaknesses does poorly relative to other
organizations
Developments or conditions in the

Opportunities environment that have favorable
implications for the organization
Pose dangers to the welfare of the

Threats
organization
EXHIBIT 1.1: SAMPLE SWOT ANALYSIS
FRAMEWORK
Internal External
Strengths Weaknesses Opportunities Threats
Factors Factors
Management Economic
Marketing Competition
Manufacturing Consumer
R&D Technology
Finance Legal/Regulatory
Offerings Industry/Market
Structure

SWOT ANALYSIS
Questions to ask after a SWOT

analysis:
Which strengths represent distinctive
competencies?
Which weaknesses disqualify the

organization from pursuing certain
opportunities?
Does a pattern emerge from the SWOT?

FORMULATING
PRODUCT-MARKET
STRATEGIES

PRODUCT-MARKET STRATEGY
A product-market strategy
involves selecting specific
markets and profitably
reaching them through an
integrated program called
a marketing mix.
EXHIBIT 1.2: PRODUCT-MARKET
STRATEGIES
Markets
Existing New
Market Market
Existing
Penetration Development
Offerings
New Offering
New Diversification
Development

PRODUCT-MARKET STRATEGIES
Market Penetration Strategy
A market-penetration strategy
dictates that an organization seeks
to gain greater dominance in a
market in which it already has an
offering (existing offerings
existing markets).
Market Penetration Strategy Involves
Increasing present buyers usage or

consumption rates of the offering
Attracting buyers of competing
offerings
Stimulating product trial among
potential customers
Market Penetration Strategy Considerations
Examine market growth
Assess competitive reaction
Analyze the capacity of the market to

increase usage or consumption rates
and the availability of new buyers

Market Development Strategy
A market-development strategy
dictates that an organization
introduce its existing offerings to
markets other than those it is
currently serving (existing offerings
new markets).
Market Development Strategy Involves
Adjusting the marketing mix, such as:

Modifying the basic product offering
Using different distribution outlets
Changing the sales effort or advertising
Analyzing competitors strengths,

weaknesses, and potential for retaliation
Market Development Strategy Involves
Identifying the number, motivation, and

buying patterns of new buyers
Determining the organizations ability to

adapt to new markets to evaluate success

Market Development Strategy International Forms
Exporting Licensing
Joint Venture/ Direct

Strategic Alliance Investment

Exporting
Involves marketing the same offering in

another country through sales offices or
intermediaries
Is a popular option for entering foreign

markets because it:
Easy to initiate
Requires minimal capital investment

Licensing
Is a contract where a firm (licensee) is given

the rights to patents, trademarks, etc. by the
owner (licensor) in turn for a royalty or fee
Is a low-risk, quick, and capital-free entry

into a foreign market
Limits the control of the licensor over

production and marketing by the licensee
Joint Venture/Strategic Alliance
Creates a new entity in the host country from an

investment by both a foreign and a local company
Allows the two firms share ownership, control, and
profits of the entity
Is popular because one firm may not have the
required resources to enter a market
Ensures against trade barriers
May cause disagreements between the partners
regarding how the new entity should be run
Direct Investment
Involves investing in a manufacturing and/or

assembly facility in a foreign market
Is the most risky and requires the most

commitment
Brings the firm closer to its customers
May be the most profitable market-entry option
Often follows the other three options
New Offering Development Strategy
A product- (new offering-)

development strategy dictates
that an organization create new
offerings existing markets.

New Offering Development Strategy Involves
Product
Developing totally new offerings
Innovation
Enhancing the value to

Product customers of existing offerings
Augmentation through bundling or improving
functional performance
Product Adding different features, sizes,

Line Extension etc. to broaden the existing line
New Offering Development Strategy Factors
The market size and volume needed for profitability

The magnitude and timing of competitors
responses
The impact of the new product on the sales of

existing offerings (cannibalism)
The capacity of the organization to deliver the

offerings to the market(s)
The presence of significant points of difference
Cannibalism
Occurs when sales of a new offering come

at the expense of sales of existing offerings
the firm already markets
Is common in product development
programs
Key issue: Does the new offering detract
from the overall profitability of the firms
total offering mix
Diversification Strategy
A diversification strategy involves

the development or acquisition of
offerings new to the organization
and the introduction of those
offerings to publics not previously
served by the organization
(new offerings new markets).
Diversification Strategy Considerations
Many firms have adopted this strategy to

take advantage of growth opportunities
Is very risky because both the offerings and

markets served are new to the organization
Can be successful if the organization

applies its distinctive competencies to
reaching new markets with new offerings
Strategies are evaluated based on:

The organizations business definition,
mission, and capabilities
Market capacity and behavior
Environmental forces
Competitive activities
Strategy analysis depends on:

Availability and evaluation of relevant
market information
Data collected should include :

Market size
Consumer buying behavior and requirements
STRATEGY SELECTION
Strategies are chosen based on:

Costs and benefits of a strategy
Probabilities of success for a strategy
Competitive structure, market

dynamics, and opportunity costs
The offering itself

EXHIBIT 1.3: DECISION-TREE FORMAT
Action Response Outcome
R1 O1
A1
R2 O2
R1 O3
A2
R2 O4
EXHIBIT 1.4: SAMPLE DECISION-TREE
Action Response Outcome
Aggressive Estimated profit

Market- competition of $2 million
penetration
Passive Estimated profit
strategy competition of $3 million
Aggressive Estimated profit

Market- competition of $1 million
development
strategy Passive Estimated profit
competition of $4 million

THE MARKETING MIX
Communication
Aggressive
Strategy
competition
Product Channel
Customer
Strategy Aggressive Strategy
competition
Passive
competition
Price
Strategy
CUSTOMER VALUE PROPOSITION
A cluster of Aggressive
benefits that an
competition
organization promises
customers to satisfy their
needs. Aggressive
competition
Passive
competition
Wal-Mart Michelin

FORMULATING THE MARKETING MIX
Depends on the success

requirements of the market
Estimated profit
Must be consistent with: of$3 million
The needs ofAggressive

the markets served
competition
The organizations capacity
Estimated profit
The marketing mix activities of $4 million

IMPLEMENTING THE MARKETING MIX
Is an art and a science
Requires an understanding of:

Estimated profit
of$3 million
Markets
Aggressive
Organizational capacity
competition
Estimated profit
Marketing mix activities of $4 million
Competitor reactions
BUDGETING
MARKETING, FINANCIAL,
AND PRODUCTION
RESOURCES

BUDGETING
A budget is a formal,
quantitative expression of
an organizations planning
and strategy initiatives
expressed in financial
terms.
DEVELOPING
REFORMULATION AND
RECOVERY STRATEGIES

MARKETING AUDIT
A marketing audit is a comprehensive,

systematic, and periodic examination of
a firms or business units marketing
environment, objectives, strategies, and
activities to determine problem areas and
opportunities and recommend a plan of
action to improve the firms marketing
performance.

MARKETING AUDIT
Addresses the following questions:
Strategic Are we doing the right things?
Operational Are we doing things right?

REFORMULATION AND RECOVERY
STRATEGIES
Have the following purposes:

Forces marketing managers to ask
What if? questions
Allows for contingency plans,

preplanning of reformulation and
recovery strategies that lead to
faster reaction time in implementing
remedial action
DRAFTING A
MARKETING PLAN

MARKETING PLAN
A marketing plan is a formal,

written document that describes
the context and scope of an
organizations marketing effort
to achieve defined goals or
objectives within a specific
future time period.
MARKETING PLAN
Consists of:
Business Marketing Product
Plan Plan Plan
Each has these time dimensions:
Short-term Focus: 1-year period
Long-term Focus: 3- to 5-year period

MARKETING ETHICS AND
SOCIAL RESPONSIBILITY

ETHICS AND SOCIAL RESPONSIBILITY
Most marketing decisions involve

some degree of moral judgment
Marketers should take actions that
are legal, ethical, and socially
responsible

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Role of Strategic Marketing Management: Slide 1-1 © 2010 Pearson Education, Inc. Publishing As Prentice Hall

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ROLE OF STRATEGIC

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-1

To create long-term and

Direct day-to-day operations

Created the Chief Marketing

Increased popularity of strategic

Half of Fortune 1000 have CMOs

Define the business mission

Analyze environmental, competitive,

Develop business objectives and goals

Define customer value propositions

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-5

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-6

Define business, mission, and goals

Identify/frame growth opportunities

Formulate product-market strategies

Develop reformulation and recovery

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-8

Outlines the scope of operations

Is neither obvious nor easy to define

An firm defines its business by:

The means or technology used to satisfy needs

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-9

Consists of a written statement that:

Consists of a written statement that:

Convert the mission into tangible

Are divided into three categories:

Production Financial Marketing

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-12

Production Manufacturing and service capacity

Return on investment Profit

Market share Customer satisfaction

Ask three questions:

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-16

Unmet or changing consumer needs

Unsatisfied buyer groups

New means or technologies for

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-17

Two criteria must be satisfied:

Competitors cannot imitate it

Provide customers with superior value

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-19

Basic tasks that an

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-20

SWOT analysis is a formal framework

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-21

What the organization is good at

What an organization lacks or

Developments or conditions in the

Pose dangers to the welfare of the

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-23

Questions to ask after a SWOT

Which weaknesses disqualify the

Does a pattern emerge from the SWOT?

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-25

2010 Pearson Education, Inc. publishing as Prentice Hall Slide 1-27

Market Penetration Strategy

Market Penetration Strategy Involves

Increasing present buyers usage or

Market Penetration Strategy Considerations

Examine market growth

Assess competitive reaction

Analyze the capacity of the market to