Introduction to

Strategic Marketing
Management

Agenda

1. Marketing and its

Strategic Role
2. Competitive Advantage
and its sources
3. Processes of Strategic
Marketing Management

The Primary Purpose of

Marketing
Societal process by which individuals and
groups obtain what they need and want,
by creating, offering and freely
exchanging products and services of
value with others.

What Is Marketing
Marketing is the process of planning
and executing the conception,
pricing, promotion, and distribution
of ideas, goods and services to
create exchanges that satisfy
individual and organizational goals.

Corporate
Planning
Strategic Planning
Operational Planning
Marketing
Planning
Short Range or
Tactical
Planning
Long Range
Planning
Marketing Strategy
Adapted from Greenley
(1989)

Expanding Responsibilities
of Marketing Managers
They no longer function solely to direct
day-to-day operations. They must make
strategic decisions as well.
Expanded responsibilities include:
Charting the direction of the
organization
Contributing to decisions that will
create and sustain a competitive
advantage and affect long-term
organizational performance

The Marketing Manager Is the most

significant Functional contributor to the

strategic planning process, with leadership
roles in defining the business mission,
analysis of the environmental, competitive,
and business situations; developing
objectives, goals, and strategies; and
defining product, market distribution, and
quality plans to implement the business
strategies. This involvement extends to the
development of programs and operational
plans that are fully linked with the strategic
plan.

Processes in Strategic
Marketing Management
1. Defining the organizations
business, mission, and goals
2. Identifying and framing
organizational growth opportunities

3. Formulating product-market
strategies
4. Budgeting marketing, financial,
and production resources
5. Developing reformulation and
recovery strategies

Business Definition
By defining a business from a
customer or market perspective
an organization is appropriately
viewed as:
a customer satisfying endeavor

not
a goods-producing or service delivery
enterprise.
Products and services are transient, as is often
the technologies or means used to produce and
deliver them. Basic customer needs are more
enduring. (Encyclopedia Britannica)

What business are we in?

An organization should define a business
by: (Product-Market Scope)
The type of customers it is currently
serving
The particular needs of those customer
groups it is currently trying to satisfy
The means or technology by which the
organization is satisfying the customer
needs

Competitive Advantage
Hallmark of High Performance
Business

Sources of Competitive
Advantage
Core Competencies
Value Chain

COMPETITIVE
ADVANTAGE
Something of value that your firm
provides to the market in comparison
to the competitors which enables the
firm to substantially improve its
financial performance

VALUE
WILLINGNESS
TO PAY
PRICE

VALUE TO BUYERS

PROFIT MARGIN TO FIRM

COST

WILLINGNESS
TO SUPPLY

VALUE TO SUPPLIERS

The Value Chain

Infrastructure

g
ar
M

Human Resources
Research and Development (Innovation)

in

Support
Activities

The value chain provides a map of firms capabilities

and allows systematic search for core competencies

Materials Procurement
M
a
r
gi
n

Service

Marketing
& Sales

Outbound
Logistics

Operations

Inbound
Logistics

Primary Activities

Strategy and Coherence

Strategy
(Positioning)

Resources
and
Capabilities

Organization
Design

Tools for Building Competitive Advantage

Resources are inputs into a firms production
processes:
Tangible Resources
Intangible Resources
Financial resources
Technological resources
Physical resources
Innovative
resources
Human resources Reputation
Organizational resources

Capabilities are the capacity for a set of

resources to perform a task or activity in an
integrative manner
Organizational Design consists of the
organization structure, technology, policies
and procedures

CRITICAL FACTORS FOR COMPETITIVE

ADVANTAGE

ORGANIZATIONAL
DESIGN

VALUE

COMPETITIVE
ADVANTAGE

NON-SUBSTITUTABLE

RARENESS

INIMITABILITY

Core Competencies Require

VRIS-O
Value do a firms resources and capabilities

allow a firm to respond to its environment?

Rare how many rival firms already possess this
resource/capability?
Inimitable do firms face a cost disadvantage
in obtaining this resource/capability compared to
firms that already have it?
Non-substitutable are there strategic
alternatives?
Organization is the firm organized to exploit
the full potential of its resources/capabilities?

A Competitive Advantage enables a firm to:

Outperform competitors
Grow despite competitors

Competitive Advantage is
found in:
Products that are different than
competitors
Alternative distribution channels
Selective pricing and different cost
structures

A Competitive Advantage should be:

Sustainable
Unique
Market responsive
Superior

Imitation
Too often firms make the mistake of
imitating other firms resource
strengths and capabilities to develop
a competitive advantage

Disadvantages of Imitation
Firms trying to imitate another firms
core competence are at a cost
disadvantage relative to rivals due
to:
Unique Organizational Design
Human Capital
Cultural Differences

Building Blocks of Competitive

Advantage
Efficiency
Lower Costs
Innovation

Quality
Higher Prices
Customer
Responsiveness

Competitive Advantage via

Efficiency
Manufacturing
Economies of scale/Learning
curve; Reducing variability

Marketing

Building brand image / customer loyalty

Infrastructure

Multi-purpose
facilities/equipment/cutting-edge technology

Human Resources

Training/Developing
skills; team-work
Performance incentives

R&D

Manufacturing OR
Process innovation

Materials management
(Supply Chain)
JIT, Strategic Alliance, etc.

Competitive Advantage via

Quality
Manufacturing

Trace and eliminate defects

Input from employees

Marketing

Focus on customer
feedback for enhancing quality

Infrastructure

State-of-the-art

Human Resources
culture
R&D

Materials management
(supply Chain ).

Training/Developing
a quality-focused

Manufacturing
Process & product innovation

TQM, 6-Sigma etc.

Competitive Advantage via

Innovation
Manufacturing Flexible
Responsive
Marketing

Customer focus for product innovation

Infrastructure

Invest in R&D tools

Human Resources
Hire talented innovators
Incentives/opportunities for innovation
R&D

Focus on product innovation

Materials management Whatever complements R&D

Competitive Advantage via

Customer Responsiveness
Manufacturing
Marketing

Customization

Micro-marketing/Personalization

Infrastructure Suited to customer responsiveness

Information systems for feedback
Human Resources
Customer focused trainingEmployee
incentives/Job security
R&D Involving Customers in innovation process
(Customerization)
Materials management
systems

Build responsive logistics/delivery