Ch 2: Developing Marketing Strategies & a Marketing Plan

Conduct Situation Analysis

Analyze marketing situation using SWOT analyses

Assess opportunities & uncertainties w/CDSTEP

CDSTEP: -Cultural -Demographic -Social -Technological -Economic -Political

Learning Objective 3

Conduct a Situation Analysis

Learning Objective 7: Describe how firms grow business

Growth Strategies: 1 - Market penetration 2 - Market development 3 - Product development 4 - Diversification

ID & evaluate opportunities using STP: Segmentation, Targeting, Positioning

How a firm chooses which consumer groups to pursue w/marketing efforts

Implement Marketing Mix and Allocate Resources

Outline implementation of marketing mix as means to increase customer value

Price & Value Capture

Price must allow for customers to perceive good value for the product they receive

Learning Objective 4: Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.

STP Process: Segmentation Targeting Positioning

SWOT

Strength, Weakness, Opportunities, Threats

Market Segmentation

The process of dividing the market into groups of customers with different needs, wants, or characteristics—who therefore might appreciate products or services geared especially for them.

Strategic Business Unit (SBU)

a division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives

operational excellence

achieved through efficient operations and excellent supply chain and human resource management

Question Marks (upper right quadrant)

appear in high growth markets but have relatively low market shares - require significant resources to maintain & increase - decide whether to infuse w/resources generated by cash cows or to phase out

Place & Value Delivery

firm must be able to make the product or service readily accessible when and where the customer wants it

Product & Value Creation Products

firms develop products that customers perceive as valuable enough to buy

Diversification Strategy

introduces a new product or service to a market segment that currently is not served

Market Positioning

involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

Portfolio Analaysis

management evaluates firm's various products & allocates resources according to which are expected to be most profitable

Product Development Strategy

offers a new product or service to a firm's current target market

Market Share

percentage of a market accounted for by a specific entity

Relative Market Share

provides managers with a product's relative strength, compared with that of the largest firm in the industry

Learning Objective 2: Describe marketing plan elements

- Analysis of current marketing situation, objectives, strategy for 4 Ps, appropriate financial statement - Represents 3-phase process: planning, implementation, control - Planning phase: define mission & vision & assess current situation - Implementation: specifies how to implement mission & vision - Control: evaluate performance

Performance objectives, Marketing analytics, Metrics

- compare performance over time or to competing firms using financial metrics: sales & profits - view products/services as portfolio: profits from some are used to fuel growth for others

Strategic planning is not sequential

-The planning process in the "marketing plan" diagram suggests that managers follow a set sequence when they make strategic decisions. -But actual planning processes can move back and fourth among these steps. EX: a situation analysis may uncover a logical alternative that might not be included in the mission statement, meaning the mission statement would need to be revised. The development of the implementation plan also might reveal that insufficient resources have been allocated to a particular product for it to achieve its objective so in that case the firm would need to either change the objective or increase the resources; alternatively, the marketer might consider not investing in the product at all.

Financial Performance Metrics

-some commonly used metrics to assess performance include revenues, or sales, and profits. -An attempt to maximize one metric may lower another. -Managers must therefore understand how their actions affect multiple performance metrics. -can also use relative metrics

5 steps of marketing plan

1 - Planning Phase: define mission & objectives 2 - Planning Phase: Conduct situation analysis (SWOT) 3 - Implementation Phase: ID & evaluate opportunities 4 - Implementation Phase: Implement marketing mix 5 - Control Phase: Evaluate performance using marketing metrics

4 macro or overarching strategies

1 - customer excellence: customer loyalty/customer service 2 - operational excellence: efficient operations & supply chain & HR management 3 - product excellence: high perceived value & effective branding & positioning 4 - locational excellence: good physical & internet presence

Marketing strategy

1 - firm's target market 2 -related marketing mix (4 Ps) 3 - bases on which firm plans to build sustainable competitive advantage

Evaluation metrics depend on:

1 - organizational level at which the decision is made 2 - resources the manager controls

STP: Segmentation, Targeting, Positioning

1 -divide marketplace into subgroups 2 - determine which subgroup to pursue 3 - decide how to position products & services to meet needs of chosen target

Ch 2 Learning Objectives

1- Define a marketing strategy 2- Describe elements of marketing plan 3- Analyze marketing situation using SWOT analyses 4- Describe how a firm chooses which consumer groups to pursue w/marketing efforts 5- Outline implementation of marketing mix as means to increase customer value 6- Summarize portfolio analysis and its use to evaluate marketing performance 7- Describe how firms grow business

Growth Strategies

1- Market penetration 2 - Market development 3 - Product development 4 - Diversification

Mission statement

A broad description of a firm's objectives and the scope of activities it plans to undertake; attempts to answer two main questions: What type of business is it? What does it need to do to accomplish its goals and objectives?

Learning Objective 1: Define marketing strategy

A marketing strategy identifies (1) a firm's target markets(s), (2) a related marketing mix (four Ps), and (3) the bases on which the firm plans to build a sustainable competitive advantage. Firms use four macro strategies to build their sustainable competitive advantage. 1- Customer excellence focuses on retaining loyal customers and excellent customer service. 2- Operational excellence is achieved through efficient operations and excellent supply chain and human resource management. 3- Product excellence entails having products with high-perceived value and effective branding and positioning. 4- Locational excellence entails having a good physical location and Internet presence.

Marketing Plan

A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected or pro forma income (and other financial) statements.

Boston Consulting Group (BCG) Matrix

Classify products into 2 x 2 matrix - circles represent brands, sizes are direct proportion to annual sales. - horizontal axis is relative market share - vertical axis is market growth rate - each quadrant is named based on resource generation

Learning Objective 1

Define a marketing strategy

Learning Objective 2

Describe elements of marketing plan

Learning Objective 4

Describe how a firm chooses which consumer groups to pursue w/marketing efforts

Learning Objective 7

Describe how firms grow their business

Dogs (lower right quadrant)

Low-growth market products w/ low market shares - should be phased out unless they are needed to complement or boost sales of another product or for competition

Promotion and Value Communication

Marketers communicate a value proposition: the unique value that product/service provides to customers & how it's better & different from competitors

Learning Objective 5: Outline the implementation of the marketing mix as a means to increase customer value

Marketing mix = 4Ps. Each P contributes to customer value.

Stars (upper left quadrant)

Occur in high-growth markets and are high market share products - require heavy resource investment - as market growth slows, they go from being heavy resource users to heavy generators of resources - become cash cows

Learning Objective 5

Outline implementation of the marketing mix as a means to increase customer value

Learning Objective 6: Summarize portfolio analysis and its use to evaluate marketing performance.

Portfolio analysis evaluates products & allocates resources toward those w/highest expectations - Popular tool is Boston Consulting Group matrix

Control phase

Step 5 5 - Control Phase: Evaluate performance using marketing metrics. Take any needed corrective action

Planning phase

Steps 1 & 2: 1 - define mission & objectives 2 - Planning Phase: Conduct situation analysis (SWOT)

Implementation phase

Steps 3 & 4 3 - Implementation Phase: ID & evaluate opportunities. Using STP: segmentation, targeting, positioning 4 - Implementation Phase: Implement marketing mix. Using 4Ps: Product, price, place, promotion

Learning Objective 3: Analyze marketing situation using SWOT

Strengths Weaknesses Opportunities Threats

Learning Objective 6

Summarize portfolio analysis & its use to evaluate marketing performance

Evaluate performance using marketing metrics

understanding causes of performance enables firms to make appropriate adjustments

Product Line

a group of products that consumers may use together or perceive as similar in some way

Unrelated Diversification

a growth strategy whereby a new business lacks any common elements with the present business

Related Diversification

a growth strategy whereby the current target market and/or marketing mix shares something in common with the new opportunity

Metrics

a measuring system that quantifies a trend, dynamic, or characteristic

customer excellence

achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service

Sustainable competitive advantage

advantage over the competition that is not easily copied and can be maintained over a long period of time

Market Penetration Strategy

employs the existing marketing mix and focuses the firm's efforts on existing customers

Market Development Strategy

employs the existing marketing offering to reach new market segments, whether domestic or international

Target Marketing

evaluating each market segment's attractiveness and deciding which to pursue

locational excellence

having a good physical location and internet presence

product excellence

having products with high perceived value and effective branding and positioning

Cash cows (lower left quadrant)

low-growth markets but high market share products - already received heavy investments so they have excess resources that can be spun off to those products that need it - example: excess resources generated here can fund products in question mark quadrant

Performance evaluations

pinpoint problem areas

Market Growth Rate

the annual rate of growth of the specific market in which the product competes

Integrated Marketing Communications

use a variety of communications (ads / in-person sales / promotions / public relations / direct marketing / online / social media) in combination to provide clarity, consistency, & maximum communicative impact