M ch 2

LO2: Know what marketing strategy planning is - and why it is the focus of this book .WHAT IS A MARKETING STRATEGY? 1--specifies a target market and a related marketing mix. (two interrelated parts needed) --2-- a fairly 3 (similar) group of customers to whom a company wishes to appeal. --4--the 5 variables the company puts together to satisfy this target group. (Exhibit 2-2) "A Marketing Strategy" Target market in center w marketing mix surrounding it

1 MARKETING STRATEGY 2 TARGET MARKET 3 homogeneous 4 MARKETING MIX 5 controllable

LO4: Be familiar with the Four Ps in a marketing mix. DEVELOPING MAREKTING MIXES FOR TARGET MARKETS There are many marketing mix decisions (product having many features, internet friendly, packaging, brand, advertising, price- variables) The "Four Ps" make up a marketing mix (1 *4*) 2 is not part of the marketing mix (customer is target market) (Exhibit 2-4) "A Marketing Strategy—Showing the Four Ps of a Marketing Mix" -target market surrounded by 4 Ps- (Exhibit 2-5) "Strategy Decision Areas Organized by the Four Ps"

1 Product, place, promotion, price 2 Customer

LO6: Understand what customer lifetime value and customer equity are and why marketing strategy planners seek to increase them. RECOGNIZING CUSTOMER LIFETIME VALUE AND CUSTOMER EQUITY 1 increase lifetime customer value (molly first purchase, buying again, diff kond of product, her kids buying that brand=long term relationship) 2--the total stream of purchases that a customer could contribute to the company over the length of the relationship. How can we estimate customer lifetime value? (frims collect data to measure clv 3(3) RETENTION RATE--the percentage of customers 4 as compared to the total number of customers. (1k customers this year and 800 for next year= 1000/800 rr) ACQUISITION COST--the expense required to acquire a 5. (firm spending $x for advertising to attract customers $1000/100= $10 per customer) Marketing Analytics in Action: Customer Lifetime Value (avg profit margin per cust per yr (M) = $250 retention rate(R)= 60% acquisition cost (AC) $125 per customer CLV= M*[R/(Q=R]-AC 250*[0.6/(1-0.6)]- 125=$250 Customer equity considers the lifetime value of all current and future customers. (single customer value and take step further by considering all current and future customers) CUSTOMER EQUITY--the expected earnings stream (profitability) of a firm's 6(2) customers over some period of time. Customer equity focuses on the revenues and costs of acquiring, retaining, and enhancing customers. (1- acquiring new customers 2- retaining current customers 3- enhancing the customer value by increasing their purchases *may cost less to retain and acquire customer =may spend more on customer service * in future need to invest in customer retention) Different marketing strategies for 7(30 (aq: starter set of razer, retent: automatic refills every month, value: more products like soap, shave balm

1 Relationships 2 CUSTOMER LIFETIME VALUE (CLV) 3 - average profit margin (est purchase custer made over a period) - retention rate - acquisition cost 4 retained 5 new customer 6 current and prospective 7 acquiring, retaining, and enhancing.

LO1: Understand what a marketing manager does. THE MANAGEMENT JOB IN MARKETING xPROCESS--the process of (1) 2marketing activities, (2)directing the 3 of the plans, and (3) 4 these plans. (Exhibit 2-1) "The Marketing Management Process" (continuous) >Marketing planning< *set objectives *evaluate opportunities *create marketing strategies *Prepare marketing plans *develop marketing program v >Implement marketing plans and program< v Control marketing plans and program *Measure results *Evaluate progress (adjust plans if needed) (back to top) -- >5 strategic management planning< match resources to market 6 ---------------------- Strategic management planning concerns the whole firm (for all areas like finance, human resource, prod etc.) 7 PLANNING--the managerial process of developing and maintaining a match between an organization's resources and its market opportunities.

1 development of a marketing strategy. 2 planning 3 implementation 4 controlling 5 whole company 6 opportunities 7 STRATEGIC (MANAGEMENT)

1) Product - the 1(2) for the target's needs (making the right product (physical good, service, both) for target market 2) Place - reaching the target, (right product to right place, availability ) 3--any series of firms (or individuals) that participate in the flow of products from producer to final user or consumer. (Exhibit 2-6) "Four Examples of Basic Channels of Distribution for Consumer Products" (direct to final users or go to 4(2))

1 good or service 2 location 3 CHANNEL OF DISTRIBUTION 4 wholesalers and retailers

LO8: Know four broad types of marketing opportunities that help in identifying new strategies. TYPES OF OPPORTUNITIES TO PURSUE (should have framework for opps they may find) (Exhibit 2-10) "Four Basic Types of Opportunities" (pic) four broad possibilities: 1(4)*memorize pic* Market penetration MARKET PENETRATION--trying to 2 of a firm's present products in its present markets—probably through a more aggressive marketing mix. ( may also strengthen relationships to retain or gain customers) Market development (searching new use for a product) market DEVELOPMENT--trying to increase sales by selling 3products in 4 markets. Product development PRODUCT DEVELOPMENT--offering 5 products for 6 markets. Diversification DIVERSIFICATION--moving into 7 lines of business—perhaps entirely unfamiliar products, markets, or even levels in the production-marketing system. Which opportunities come first? (find opps to markets they already know. .some first think of greater penetration. others find market development profitable takes advantage of current strengths)

1 market penetration, market development, product development, and diversification. 2 increase sales 3 present 4 new 5 new or improved 6 present 7 totally different

LO5: Know the difference between a marketing strategy, a marketing plan, and a marketing program. THE MARKETING PLAN GUIDES IMPLEMENTATION AND CONTROL Marketing plan fills out marketing strategy (1 sets target market and marketing mix MARKETING 2--a written statement/ document of a marketing strategy and the time-related details for carrying out the strategy. (1) what marketing mix will be offered, to whom (that is, the target market), and for how long; (2) what company resources (shown as costs) will be needed at what rate (month by month perhaps); and (3) what results are expected (sales and profits perhaps monthly or quarterly, customer satisfaction levels, and the like). (also have some control procedures so you know when things are going wrong. ei comparing actual sales and expected) Implementation puts plans into operation ((what needs to be done? 3--putting marketing plans into operation 4--5 decisions to help implement strategies (Exhibit 2-7) "Relation of Strategy Policies to Operational Decisions for a Baby ShoeCompany"

1 marketing strategy 2 PLAN 3 IMPLEMENTATION 4 OPERATIONAL DECISIONs 5 short-run

"MARKETING STRATEGY PLANNING PROCESS HIGHLIGHTS OPPORTUNITIES Process narrows down from 8 to specific strategy (broad approach- customer needs, firms objective, resources, and competitors) Screening criteria make it clear why you select a strategy (more opps and strategy approach that firm can pursue. set 9(2) criteria) S.W.O.T. analysis highlights advantages and disadvantages S.W.O.T. ANALYSIS--identifies and lists the firm's 10(4) 11 helps pinpoint the target (despite differences, there can be subgroups) Customers want something different 12--the marketing mix is distinct from what is available from a competitor. What's Next? Offer More by Offering Less Narrowing down to a superior marketing mix (recognizable when there's a theme across the 4Ps )

8 broad opportunities 9 quantitative and qualitative 10 strengths, weaknesses,opportunities, and threats. 11 Segmentation 12 DIFFERENTIATION

LO7: Be familiar with the text's framework for marketing strategy planning. WHAT ARE ATTRACTIVE OPPORTUNITIES? (Effective marketing strategy planning matches opportunities to the firm's 1 (what it can do) and its 2 (what top management wants to do. what may be attractive to one may not be to the other). Breakthrough opportunities are best (hard bc there's imitators who want to share and hard to stay superior) 3 OPPORTUNITIES--opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time. Competitive advantage is needed—at least 4ADVANTAGE--a firm has a marketing mix that the target market sees better than a competitor's mix. Avoid 5 marketing with a logical process (may be too late to fix problem) (Exhibit 2-9) "Overview of Marketing Strategy Planning Process 6 market environment v 7( 3 Cs) (SWOT- strength, weakness, opportunities, threats), v segmentation and targeting -differentiation and positioning v target market and marking mix

1 resources 2 objectives 3 BREAKTHROUGH 4 COMPETITIVE 5 hit-or-miss 6 External 7 customers, company, competition

LO3: Understand target marketing. SELECTING A MARKET-ORIENTED STRATEGY IS TARGET MARKETING Target marketing is not mass marketing TARGET MARKETING--a marketing mix is tailored to fit 1 target customers. MASS MARKETING--the typical 2-oriented approach - vaguely aims at "everyone" with the same marketing mix. (Exhibit 2-3) "Production-Oriented and Marketing-Oriented Managers Have Different Views of the Market" *Production-oriented manager sees everyone as similar *Market-oriented sees everyone as diff Mass marketers may do target marketing (mass marketING= 3 mass marketERS= 4) Target marketing can mean big markets and profits (not small but homo. mass market can be large and fairly homo)

1 some specific 2 production 3 sell to everyone 4 aim large but defined target markets

LO9: Understand why strategies for opportunities in international markets should beconsidered. INTERNATIONAL OPPORTUNITIES SHOULD BE CONSIDERED The world is getting smaller (countries have reduced barriers like tax and imports increasing 1. advanced e-commerce transportation, communication= cheaper ) Develop a competitive advantage at home and 2 (Improve 3(2)) Get an early start in a new market (if struggling in home town, may succeed elsewhere) Find better trends in variables Weigh the risks of going abroad (don't know their culture, foreign regulations) #M4BW: International Markets can be Opportunities for Making the World Better

1 trade 2 abroad 3 economies of scale, competitive advantage

Price—making it right (must consider competitions and cost of whole marketing mix. estimate customers reaction to prices, know how to markups, discounts etc) The Four Ps deliver value (customer value ^ when cust think 14. 4ps used to cust value to target market. ) Each of the Four Ps contributes to the whole (decisions about 4ps should be made at 15 time- none is more important) Strategy jobs must be done together (selecting target market and developing a marketing mix are 16. STRATEGIES must be evaluated again by the company's 17, not alternative target markets or marketing mixes.) Ethical Dilemma Understanding target markets leads to good strategies (working at nike and parents wanting fashionable and functional baby shoes. were willing to pay premium price)

14 benefit>cost 15 same 16 interrelated 17 objective

3) Promotion—5(2) the customer (telling target in channel of distribution about right product. selling, mass selling, sales promotion. 6 SELLING--involves direct spoken communication between sellers and potential customers. 7--a personal communication between a seller and a customer who wants the seller to resolve a problem with a purchase. 8 SELLING--communicating with large numbers of customers at the same time. ADVERTISING--any 9 form of 10 presentation of ideas, goods, or services by an identified sponsor. (advertiser pays media source) PUBLICITY--any 11 form of nonpersonal presentation of ideas, goods, or services. 12--promotional activities—other than advertising, publicity, and personal selling—that stimulate interest, trial, or purchase by final customers or others in the channel. (13. samples. signs, contest, events)

5 telling and selling 6 PERSONAL 7 CUSTOMER SERVICE 8 MASS 9 paid 10 nonpersonal 11 unpaid 12 SALES PROMOTION 13 coupons

Analytical tools provide control (control provides feedback so managers can change their strategy for the better) Marketing analytics—measure, manage, and analyze marketing performance (marketing metrcs is used to perform marketing analytics. if cust purchase online, behavior can be tracked and used for marketing analytics) MARKETING 6--the practice of measuring, managing, and analyzing marketing performance to maximize its efficiency and effectiveness. Several plans make a whole marketing program (have multiple marketing 7) MARKETING 8--blends all of the firm's marketing plans into one "big" plan. (Exhibit 2-8) "Elements of a Firm's Marketing Program" target market + marketing mix= marketing strategy + tine related details and control procedures= marketing plan+ other marketing plans=a firms marketing program

6 ANALYTICS 7 strategy 8 PROGRAM

Which of the following statements about customer service are correct? (Check all that apply.) Multiple select question. Customer service is not necessary to create repeat business. Customer service is primarily used to encourage customers to try a new product. Customer service is a form of promotion. Customer service is important for getting customers to buy again. Customer service deals with resolving problems after the sale.

Customer service is a form of promotion. Customer service is important for getting customers to buy again. Customer service deals with resolving problems after the sale.

Which of the following are examples of "product" strategy decisions? Discounts Installation Branding Instructions Packaging

Installation Branding Instructions Packaging

Which two of the following describe a marketing program? It implements several marketing strategies at once. It is primarily concerned with the costs associated with a product. It includes multiple marketing plans but only one target market. It includes more than one marketing strategy.

It implements several marketing strategies at once. It includes more than one marketing strategy.

Which of the following are true of market segmentation? Managers use segmentation to help them figure out which groups of customers to serve. A major reason for market segmentation is to help a manager truly understand customers. Segmentation organizes competitors into groups based on their similarities. Market segmentation usually occurs after the firm develops a marketing mix.

Managers use segmentation to help them figure out which groups of customers to serve. A major reason for market segmentation is to help a manager truly understand customers.

Which of the following statements about mass selling is true? Personal selling is one form of mass selling. Mass selling can involve media that includes magazines and the Internet. Mass selling includes direct spoken communication between buyers and sellers. Advertising is one form of mass selling. Publicity is one form of mass selling.

Mass selling can involve media that includes magazines and the Internet. Advertising is one form of mass selling. Publicity is one form of mass selling.

Which of the following are part of the "marketing mix"? (Check all that apply.) Customer Product Target market Promotion

Product Promotion

Which of the following could be "breakthrough opportunities" for a candy company? A new size of packaging for various candy bars Marketing research on consumer preferences for chocolate versus vanilla The opportunity to purchase a well-known and respected brand name A patented formula that customers love and competitors could not copy

The opportunity to purchase a well-known and respected brand name A patented formula that customers love and competitors could not copy

Specifying a target market and the corresponding marketing mix are the two elements that comprise the development of whole company marketing. development of a marketing strategy. discovery of an organizational match. discovery of customer needs.

development of a marketing strategy.

The broad possibilities available in the market strategy planning process include market development, market penetration, product development, and diversification. differentiation. a SWOT analysis. implementation.

diversification

An organization's ______ combines multiple marketing plans into a single, large plan. Multiple choice question. marketing mix product placement plan marketing program promotional strategy

makreting program

Customers can perceive differences based on only major differences in all of the 4Ps. only one important element of the marketing mix. on at least two distinct differences in the 4 Ps. similarities of the products.

only one important element of the marketing mix.