MARKETING STRATEGY

O.C. FERRELL MICHAEL D. HARTLINE

Strategic Marketing Planning

The Strategic Planning Process

Marketing Plan
a written document that provides the blueprint or outline of the organizations marketing activities, including the implementation, evaluation, and control of those activities.

2-2

Discussion Question
What role, if any, should customers play in the strategic planning process? Should they have a voice in developing the organizational mission, marketing goals, or the marketing strategy?

2-3

Exhibit 2.1

2-4

Organizational Mission vs. Organizational Vision (1 of 2)

Elements of the Mission Statement
Five basic questions to be answered:
Who are we? Who are our customers? What is our operating philosophy? What are our core competencies or competitive advantages? What are our concerns and interests related to our employees, our community, society in general and our environment?
2-5

Organizational Mission vs. Organizational Vision (2 of 2)

Mission Width and Stability
Width: Too broad or too narrow? Stability: Frequency of modifications

Customer-Focused Mission Statements

Ben and Jerrys 3-part Mission Statement
Product Mission Economic Mission Social Mission

Tylenol
2-6

Marketing Strategy in Action

As this 1946 ad demonstrates, railways were once a prominent way to travel across the country. How did narrow mission statements lead to missed opportunities for the railroad industry?
2-7

Ben & Jerrys 3 Part Mission

2-8

Corporate or Business-Unit Strategy

Business-Unit Strategy:
The central means for:
Utilizing and integrating the organizations resources Carrying out the organizations mission Achieving the organizations desired goals and objectives

Associated with developing a competitive advantage Determines the nature and future direction of each business unit Essentially the same as corporate strategy in small businesses
2-9

Functional Goals and Objectives

All business functions must support the organizations mission and goals. Functional objectives should be expressed in clear, simple terms. All functional objectives should be reconsidered for each planning period.
2-10

Functional Strategy
Functional strategies are designed to integrate efforts focused on achieving the areas stated objectives. The strategy must:
(1) Fit the needs and purposes of the functional area (2) Be realistic with the organizations resources and environment (3) Be consistent with the organizations mission goals, and objectives.

The effects of each functional strategy must be evaluated.

2-11

Implementation
Involves activities that execute the functional strategy. Functional plans have two target markets:
(1) External market (2) Internal market

A company must rely on its internal market for a functional strategy to be implemented successfully. 2-12

Discussion Question
Defend or contradict this statement: Developing marketing strategy is more important than implementing marketing strategy because if the strategy is flawed, it doesnt matter how well it is implemented.

2-13

Evaluation and Control

Designed to keep activities on target with goals and objectives Coordination among functional areas is a critical issue
Open lines of communication is the key

Evaluation and control is both an ending and beginning:

Occurs after a strategy has been implemented Serves as the beginning point for planning in the next cycle
2-14

The Marketing Plan

Detailed formulation of the actions needed to carry out the marketing program An action document:
The handbook for marketing implementation, evaluation and control

Not the same as a business plan Requires a great deal of information from many different sources 2-15

Marketing Plan Structure (1 of 5)

Should be well organized A good marketing plan outline is:
Comprehensive Flexible Consistent Logical

2-16

Marketing Plan Structure

2-17

Marketing Plan Structure (2 of 5)

I. Executive Summary
Synopsis of the overall marketing plan Introduces major aspects of the marketing plan

II. Situation Analysis

Summarizes information about 3 key environments: Internal environment Customer environment Firms external environment
2-18

Marketing Plan Structure (3 of 5)

III. SWOT Analysis
Strengths Weaknesses Opportunities Threats Analysis of the SWOT matrix Establishing a strategic focus

2-19

Marketing Plan Structure (4 of 5)

IV. Marketing Goals and Objectives:
Formal statements of desired and expected outcomes of the marketing plan Goals:
Broad, simple statements of what is to be accomplished

Objectives
More specific and essential to planning

V. Marketing Strategy:
Primary target market and marketing mix Secondary target market and marketing mix
2-20

Marketing Plan Structure (5 of 5)

VI. Marketing Implementation
1. What specific marketing activities will be undertaken? 2. How will these activities be performed? 3. When will these activities be performed? 4. Who is responsible for the completion of these activities? 5. How will the completion of planned activities be monitored? 6. How much will these activities cost?

VII. Evaluation and Control

Formal marketing control Informal marketing control Financial assessments
2-21

Using the Marketing Plan Structure

Tips for using the marketing plan framework to develop a marketing plan:
Plan ahead Revise, revise, revise Be creative Use common sense and judgment Think ahead to implementation Update regularly Communicate with others

2-22

Purposes and Significance of the Marketing Plan

A good marketing plan will:
(1) Explain both the present and future situations of the organization (2) Specify the outcomes that are expected (3) Describe the specific actions that are to take place (4) Identify the resources that will be needed (5) Permit the monitoring of each action and its results

Communicating the strategy to top executives is paramount.

2-23

Organizational Aspects of the Marketing Plan

Top managers ask two questions:
(1) Will the marketing plan achieve the desired goals and objectives? (2) Are there alternative uses of resources that would better meet objectives?

The marketing plan is most often prepared by the Marketing Director or VP of Marketing The final approval lies with the President, Chairman or CEO
2-24

Major Problems in Developing and Implementing the Marketing Plan

2-25

Strategic Planning in the Market-Oriented Organization

A Market-Oriented Organization:
Shifts its focus:
From products to the requirements of market segments From transactions to relationships From competition to collaboration

Puts customers needs and wants first Focuses on long-term, value-added relationships Instills a corporate culture that puts customers at the top of the organizational hierarchy Cooperates with suppliers and competitors to serve customers better 2-26

Traditional Organizations

CEO
Competition

CEO Middle Managers Frontline Employees

Middle Managers Frontline Employees

Customers
Exhibit 2.5 Part One 2-27

Market-Oriented Organizations
Customers

Frontline Employees Middle Managers CEO

Cooperation

Frontline Employees Middle Managers CEO

Exhibit 2.5 Part Two

2-28

Discussion Question
In many organizations marketing is not given a place of importance in the organizational hierarchy. Why do you think this happens? What other business functions get more importance? Why?

2-29

Corporate Strategy

Components and Issues

Strategy Component Key Issues Scope, Mission & Intent What Business, What customer
needs & What purpose?

Objectives

Source of Competitive Advantage Developmental Strategy Desired level of growth-HOW? Resource Allocation Sources of Synergy
Tangible & Intangible

What performance dimensions, What is the target level of performance & What Time Frame? Human, technical or other resources

Financial resource allocation-SBU

Corporate ScopeDefining the firms MISSION

PepsiCo
marketing superior quality food and beverage products for the households and consumers dining out

Acquisitions and Divestments

 Between 1970s and 1990s, PepsiCo expanded via acquisition of businesses outside of its core focus of packaged food and beverage brands; however it exited these non-core business lines largely in 1997, selling some, and spinning off others into a new company named Tricon Global Restaurants, which later became known as Yum! Brands, Inc.. PepsiCo also previously owned several other brands that it later sold, in order to allow it to return focus to its primary snack food and beverage lines, according to investment analysts reporting on the divestments in 1997.Brands formerly owned by PepsiCo include: Pizza Hut,Taco Bell, KFC, Hot 'n Now, East Side Mario's, D'Angelo Sandwich Shops, Chevys Fresh Mex, California Pizza Kitchen, Stolichnaya (via licensed agreement), Wilson Sporting Goods and North American Van Lines. The divestments concluding in 2007 were followed by multiple large-scale acquisitions, as PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of foods and beverages. PepsiCo purchased the orange juice company Tropicana Products in 1998, and merged with Quaker Oats Company in 2001, adding with it the Gatorade sports drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, among others. In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisition was completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, Pepsi Beverages Company. Also in late 2010, the company made its largest international acquisition when it purchased a majority stake in Wimm-Bill-Dann Foods a Russian food company which produces milk, yogurt, fruit juices and dairy products

The structure of PepsiCo's global operations has shifted multiple times in its history as a result of international expansion, and as of 2010 it is separated into four main divisions: PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle East and Africa. In response to changing Global competitive environment, PepsiCo narrowed its scope to focus primarily to packaged foods (particularly salty snacks) and beverages distributed through supermarket and convenience store channels.

Largest PepsiCo Brands based on 2009 retail sales) Brand

Mountain Dew Lay's potato chips Gatorade Diet Pepsi Tropicana beverages 7UP (outside U.S.) Doritos tortilla chips Lipton teas (PepsiCo/Unilever partnership) Quaker foods and snacks Cheetos Mirinda Ruffles potato chips Aquafina bottled water Pepsi Max Tostitos tortilla chips Sierra Mist Fritos corn chips Walkers potato crisps

Market Influences on Corporate Mission

PepsiCos new Mission reflects the firms packaged goods marketing, sales and distribution competencies. Also the synergies can be realized across snack foods and beverages within supermarket channels via shared logistics, joint displays and sales promotions, cross couponing et al

Corporate Objectives
Performance Criteria
Growth Competitive Strength Innovativeness Profitability Contribution to Owners, Employees, Customers and Society

Possible Measures

Gaining a Competitive Advantage

Alternate Corporate
Market Penetration strategies Increase market share Increase product usage Increase frequency of use Increase quantity used New applications Market Development strategies Expand markets for existing products Geographic expansion Target new segments

Growth Strategies
Product Development strategies Product improvements Product-line extensions New products for the same markets

Diversification strategies Vertical Integration (forward & backward) Concentric Conglomerate

Allocating Corporate Resources

Portfolio Model

Sources of Synergy
 Knowledge based-Canon  Corporate Identity as a Source of Synergy  Synergy from Shared Resources-Frito-Lay