Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
CORPORATE, BUSINESS AND
MARKETING STRATEGY

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 Corporate, Business and
Marketing Strategy (4)
* The marketing strategy process
* Markets, segments and customer value
* Markets and competitive space
* Strategic market segmentation
* Strategic customer relationship management
* Capabilities for continuous learning about
markets

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Corporate, Business and Marketing
Strategy (5)
* Designing market-driven strategies
* Market targeting and strategic positioning
* Strategic relationships
* Innovation and new product strategy
* Market-driven program development
* Strategic brand management
* Value chain strategy
* Pricing strategy
* Promotion strategy

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Corporate, Business and Marketing
Strategy (6)
* Implementing and managing market-
driven strategy
* Designing market-driven organizations
* Marketing strategy implementation and
control

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 MARKETING STRATEGY PROCESS
Markets,
Segments
And Value
Implementing
and Managing Designing
Market-Driven Market-Driven
Strategy Strategies

Market-Driven
Program
Development

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 Challenges in the modern
environment

* Escalating globalization
* Technology diversity and uncertainty
* The Web 2.0
* Ethical behavior and corporate social
responsiveness

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 Strategic Marketing Planning

* Developing the strategic plan for each

business
* Preparing the marketing plan
* Planning relationships and frequency
* Planning considerations
* Responsibility for preparing plans
* Planning unit
* Preparing the marketing plan

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 MARKETING PLAN
OUTLINE
I. Strategic Situation Summary

Summarize the key points from your situation analysis (market analysis, segments,
industry/competition) in order to recount the major events and provide information to better
understand thestrategies outlined in the marketing plan.

II. Market-Targets and Objectives

The market target may be defined demographically (key characteristics only),

geographically, or in social/economic terms. Each market target should have needs and
wants that differ to some degree from other targets. These differences may be with
respect to types of products purchased, use situation, frequency of purchase, and other
variations that indicate a need to alter the positioning strategy to fit the needs and wants of
each target. An objective is a quantified goal identifying what is expected when. It specifies
the end results expected. The objectives should be written for each target market.
Objectives should also be included for the following program components: (1) product,
(2) price, (3) distribution, (4) promotion (salesforce, advertising, sales promotion, and
public relations), and (5) technical services.

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 MARKETING PLAN
OUTLINE

III. Positioning Statements

Write statements that describe how you want each market

target to perceive each product relative to competition. State the
core concept used to position the product (brand) in the eyes and
mind of the targeted buyer. The positioning statement should
describe: (1) What criteria or benefits the customer considers when
buying a product along with the level of importance, (2) What we
offer that differentiates our product from competition, and (3) The
limitations of competitive products.

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 IV. Market Mix Strategy for
Each Market Target
A. Product Strategy
Identify how each product fits the market target. Other issues that may be addressed would
be new product suggestions, adjustments in the mix of existing products, and product
deletion candidates.
B. Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified
along with a cost/benefit analysis if applicable. Identify what role you want price to play, i.e.,
increase share, maintenance, etc.
C. Distribution Strategy
Describe specific distribution strategies for each market target. Issues to be addressed are
intensity of distribution (market coverage), how distribution will be accomplished, and
assistance provided to distributors. The role of the sales force in distribution strategy should
also be considered.
D. Promotion Strategy
Promotion strategy is used to initiate and maintain a flow of communication between the
company and the market target. To assist in developing the communications program, the
attributes or benefits of our product should be identified for each market target. How our
product differs from competition (competitive advantage) should be listed. The sales force’s
responsibilities in fulfilling the market plan must be integrated into the promotion strategy.
Strategies should be listed for (1) personal selling, (2) advertising, (3) sales promotion, and
(4) public relations.
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 E. Marketing Research
Describe the market research problem and the kind of
information needed. Include a statement which addresses
why this information is needed. The specific market
research strategies can be written once the above two
steps have been followed.
V. Coordination with Other Business Functions
Indicate other departments/functions that have
responsibilities for implementing the marketing plan.
VI. Sales Forecasts and Budgets

VII. Contingency Plans

Indicate how your plans should be modified if events
should occur that are different from those assumed
in the plan.

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 Chapter 3

Markets and
Competitive
Space

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
MARKETS AND COMPETITIVE SPACE
 Markets and Strategies
 Defining and Analyzing Product-Markets
 Describing and Analyzing End-Users
 Analyzing Competition
 Market Size Estimation
 Developing a Strategic Vision about the
Future

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 MARKETS AND STRATEGIES
The Challenges ―
Markets are increasingly complex, turbulent, and interrelated.
Importance of a broad view of the market.
Essential to develop a vision about how the market is likely to
change in the future.

Continuous Monitoring is Necessary to:

Find promising opportunities
Identify shifts in value requirements
Understand competitors’ positioning
Guide targeting and positioning
decisions

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OPPORTUNITIES OUTSIDE THE COMPETITIVE BOX

The Competitive Box

New Types of Traditional New

Competition Competitors Business
Models

New New
Customers Conventional Value Customers
Propositions

Existing Customer
Base

New Customer
Base(s)

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 AN ARRAY OF CHALLENGES
Disruptive Innovation

Fast Changing Commoditization

Markets Drivers of Changes Threats
in Markets

Creating New Market Space

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 Markets Impact Strategies
* Market changes often require altering
strategies
* Forces of change create both market
opportunities and threats
* Inherent danger in faulty market sensing

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 DEFINING AND ANALYZING PRODUCT-MARKETS
Determine the Boundaries and
Structure of the Product-Market

Form the
Product-Market

Describe and

Analyze End-
Analyze
Users Competition

Forecast
Market Size and
Rate of Change
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 Matching Needs with Product Benefits
* A product – market matches people with
needs to the product benefits that satisfy
those needs

“A product – market is the set of products

judged to be substitutes within those usage
situations in which similar patterns of
benefits are sought by groups of
customers.”*
*Srivastava, et al. (1984) Journal of Marketing, Spring, 32.
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 INNOVATION FEATURE
Progressive Insurance:
Customer Needs at the Center of Strategy
* In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion
to $9.5 billion, and ranks high in the Business Week Top 50 U.S. companies for
shareholder value creation.
* The company invents new ways of providing services to save customers time,
money and irritation, while often lowering costs at the same time.
* Loss adjusters are sent to the road accidents rather than working at head office,
and they have the power to write checks on the spot.
* Progressive reduced the time needed to see a damaged automobile from seven
days to nine hours.
* Policy holders’ cars are repaired quicker, and the focus on this central customer
need has won much automobile insurance business for Progressive.
* These initiatives also enable Progressive to reduce its own costs – the cost of
storing a damaged automobile for a day is $28, about the same as the profit from a
six-month policy.

Source: Adapted from Mitchell, Adrian (2004)”Heart of the Matter,” The Marketer, June 12, 14.
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 Product – Market Boundaries and Structure
* Determining Product-Market Structure

1. Start with the generic need satisfied by

the product category of interest to
management
2. Identify the product categories (types) that
can satisfy the generic need
3. Form the specific product – markets within
the generic product – market
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Illustrative Fast-Food Product-Market Structure

SUPER MICROWAVE
MARKETS OVENS
FAST-FOOD
MARKET

CONVENIENCE TRADITIONAL
STORES RESTAURANTS

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 Extent of Market Complexity
* Three characteristics of markets:

* 1. Functions or uses of the product

* 2. The enabling technology of the product

* 3. Customer segments in the product-

market

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 Illustrative Product – Market Structure
Food and beverages
for breakfast meal •Generic Product
Class

Cereals •Product Type

Ready to eat •Variant A

Regular
Natural •Variant B
Nutritional Pre-sweetened

Life Product 19 Special K •Brands

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DEFINING AND ANALYZING MARKETS
Define Product-Market Boundaries and Structures

Identify and Describe End-Users

Analyze Industry and Value Added Chain

Evaluate Key Competitors

Forecast Market Size

and Growth Trends
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 Identifying and
Describing Buyers

DESCRIBING
Building How
AND Buyers
Customer
Profiles ANALYZING Make
END-USERS Choices

Environmental
Influences
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 Identifying and Describing End-Users
* Illustrative buyer characteristics in consumer
markets:
 Family size, age, income, geographical
location, sex, and occupation
* Illustrative factors in organizational markets:
 Type of industry
 Company size
 Location
 Type of products
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 How Buyers Make Choices
 BUYING DECISION PROCESS:

1. Problem recognition

2. Information search

3. Alternative evaluation

4. Purchase decision

5. Post-purchase behavior
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 Environmental Influences

* External factors influencing buyers’

needs and wants:
 Government, social change, economic
shifts, technology etc.
* These factors are often non-controllable
but can have a major impact on
purchasing decisions

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 Building Customer Profiles
* Start with generic product – market

* Move next to product- type and variant

profiles >> increasingly more
specific

* Customer profiles guide decision

making (e.g. targeting, positioning,
market segmentation etc.)

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 ANALYZING COMPETITION
1. Define the Competitive
Arena for the Generic,
Specific, and Variant
Product Markets

PRODUCT- 2. Identify
4. Identify MARKET
and and
STRUCTURE Describe
Evaluate
AND Key
Potential
MARKET Competitors
Competitors
SEGMENTS

3. Evaluate
Key
Competitors
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 Examples of Levels of Competition
Baseball
cards

Bottle Video
Fast water Games
Food Regular
colas Diet lemon Ice
Beer limes Cream
Diet-Rite
Cola
Fruit
flavored Diet
Diet Pepsi
colas Coke Wine
Product from
competition: Lemon
Product category diet colas limes
Juices competition:
soft drinks
Coffee
Generic competition:
beverages
Budget competition:
food & entertainment

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 Industry Analysis
* Industry size, growth, and composition
* Typical marketing practices
* Industry changes that are anticipated (e.g.
consolidation trends)
* Industry strengths and weaknesses
* Strategic alliances among competitors

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 Defining Industry Structure & Characteristics
SUPPLIERS
Industry Form
Industry PRODUCERS
Environment
Competitive WHOLESALERS/
Forces DISTRIBUTORS
Value
Added
RETAILERS/DEALERS
Chain

CONSUMER/
ORGANIZATIONAL END
USERS
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 Competitive Forces
1. Rivalry among existing firms.

2. Threat of new entrants.

3. Threat of substitute products.

4. Bargaining power of suppliers.

5. Bargaining power of buyers.

Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

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 Key Competitor Analysis
* Business scope and objectives
* Management experience, capabilities, and
weaknesses
* Market position and trends
* Market target(s) and customer base
* Marketing program positioning strategy
* Financial, technical, and operating capabilities
* Key competitive advantages (e.g., access to
resources, patents)

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 Extent of
Market Coverage

Competitor
Current Customer
Capabilities Evaluation Satisfaction

Past
Performance

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 MARKET SIZE ESTIMATION
Product-Market Forecast Market Potential
Relationships Estimate
(area denotes sales in $’s)

Unrealized
Potential

Company Industry
Sales Sales
Forecast Forecast
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Product-Market Forecast Relationships for Industrial Painting
Units

Sales (in 1000s

of units)
900
800
Market
700 Potential
600 Sales Forecast

500
400
300
200 Company XYZ
Sales Forecast
100
0
2003 2004 2005 2006 2007 2008 2009 2010
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 DEVELOPING A STRATEGIC VISION ABOUT THE FUTURE

 Industry Boundaries Blurring and Evolving

 Competitive Structure and Players Changing

 Value Migration Paths

 Product Versus Business Design

Competition

 Firms are Collaborating to Influence Industry

Standards
Source: C. K. Prahalad, Journal of Marketing, Aug. 1995, vi.
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