Facets of Strategic Marketing


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Marketing represents the boundary between the marketplace and the company, and knowledge of current & emerging happenings in the marketplace is extremely important in any strategic planning exercise.

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Facets of Strategic Marketing

  1. 1. Concept of Strategic Marketing
  2. 2. STRATEGIC MARKETING “Strategic Marketing is merely a civilized form of warfare in which most battles are won with words, ideas and disciplined thinking” -----Albert W. Emery-----
  3. 3. Concept of Strategic Marketing The strategic role of marketing is Quite different from Marketing Management, which deals with: Developing Implementing Directing Programmes To achieve DESIGNATED DESTINATIONS
  4. 4. MARKETING ROLE IN THE ORGANIZATION Organizational Level Role of Marketing Formal Name Corporate Provide customer & competitive perspective for corporate strategic planning Corporate Marketing Business Unit Assist in the development of strategic perspective of business unit to direct its future course Strategic Marketing Product/market Formulate and implement marketing programs Marketing Management The above table shows the role that the marketing function plays at different levels in the organization. At Corporate level: Marketing inputs like Competitive analysis, market dynamics, environmental skills) are essential for formulating a Corporate Strategic Plan.
  5. 5. Marketing represents the boundary between the marketplace and the company, and knowledge of current & emerging happenings in the marketplace is extremely important in any strategic planning exercise. MARKET PLACE COMPANY MARKETING Strategic Planning
  6. 6. On the other hand Marketing Management deals with the formulation and implementation of marketing programs to support the perspective of strategic marketing referring to marketing strategy of a product/market MARKETING STRATEGY IS DEVELOPED AT BUSINESS UNIT LEVEL
  7. 7. Marketing Strategy Triangle Po En litic vi al/ ro Le nm g en al t l ca gi t lo en no m ch ron Te vi En CUSTOMER MARKETING STRATEGY COMPETITION t al ci en So onm r vi En En Eco vi no ro m n m ic en t CORPORATION
  8. 8. In the Business environment Marketing Strategy interplays with three(3)forces also known as strategic three Cs: Customer Competition Corporation Marketing Strategies focus on the ways in which the corporation can differentiate itself effectively from its Competitors ,Preserving their distinctive strengths to deliver better value to its customer.
  9. 9. THE STRATEGIC Cs All the three Cs i.e. customer, corporation and competition –are living dynamic creatures with their own objectives to pursue. If ,what the customer wants does not match with the needs of the corporation than it does not last for long term. Positive matching of the needs and objectives of customer & corporation is required for a long lasting good relationship. In other words the matching of needs between Customer and the Corporation must not only be positive ,it must be better or stronger than the match between the customer and the competitor.
  10. 10. When the Corporation’s approach to the customer is identical to that of competition ,the customer cannot differentiate between them. This results in “PRICE WAR” that may satisfy the customers but not the corporation. MARKETING STRATEGY In these terms of three Cs can be defined as an attempt by a CORPORATION to differentiate itself POSITIVELY from its competitors ,using relative corporate strengths to better satisfy customer needs in given environment setting.
  11. 11. Based on the dimensions of the three Cs, formation of marketing strategies requires the following three decisions: 1. Where to Compete? (for example : competing across the entire market or in one or more segments.) 2. How to Compete ? (for example: introducing a new product to meet a customer need or establishing a new position for an existing product.) 3. When to Compete? (For example: First in the market to enter or waiting until the primary demand is fulfilled) Example is Gillette Company for the introduction of its new shaving product MACH -3 in April 1998
  12. 12. MARKET (where to compete) MEANS (how to compete) TIMING (when to compete) Gillette decided to introduce MACH 3 throughout the U.S. on the same day. Gillette decided to offer MACH 3 as a premium product with 35% high price as compared to its other product. Gillette reasoned “People never remember what they used to pay, but they want to feel they are getting value for money.” Gillette decided to introduce new product before the retirement of its CEO ,Mr.Al Zein.As much of the Gillitte’s recent success was attributed to Mr.Zein so the company wanted MACH 3 to be adequately setteled in a dominant position before his retirement.
  13. 13. This strategy resulted in • In just 7 months there was reasonable Increase in Sales up to 28% in the US Market. • The company still has to introduce the product in Europe where it has 71% of market share and also to the developing countries like India where they have 69% of the market.
  14. 14. Importance of Strategic Marketing In this section we will study the Importance,Characterstics,origin,and future of Strategic Marketing. Marketing plays an vital role in the strategic management process of a firm. It has been noticed that many strategic planning fails due to lack in marketing support.
  15. 15. Characteristics of Strategic marketing Strategic Marketing holds different perspective from those of marketing management. The main characteristics of marketing strategy is described under: 1. Emphasis on Long term Implications: A strategic marketing is a commitment, not an act. Strategic marketing decisions usually are farreaching implications. For example: A strategic marketing decision would not be a matter of simply providing an immediate delivery to a favorite customer but of offering 24-hour delivery service to all customers.
  16. 16. Example: In year 1980 the Goodyear Tyre company made strategic decision to continue its focus towards tyre business. At a time when other members of the industry were de-emphasizing tires, Goodyear opted for opposite routes. This decision had wide ranging implications for the company over the years. Looking back, Goodyear strategy worked and in 1990s also it continues to be a globally dominant force in the TYRE INDUSTRY. This is Strategic planning on the basis of long term implications
  17. 17. The long term orientation of strategic marketing requires great concern for the market environment/conditions.In other words ,in the short run, one may assume that the environment will remain stable ,but this assumption is not at all likely in the long run. Proper monitoring of the environment requires strategic intelligence inputs. Strategic intelligence differs from traditional marketing research in requiring much deeper probing. For example: S ply knowing that com im petitor has cost advantage is not enough, S trategically one has to find that how m uch flexibility the com petitor has in further reducing price.
  18. 18. 2.Corporate Inputs : Strategic Marketing decisions require inputs from three(3) corporate level aspects: Corporate Inputs Corporate Culture Corporate Publics Corporate Resources
  19. 19. Corporate Culture refers to the Style ,traits, customs and rituals of the top management, that over the time period have come to be accepted as basics to the corporation. Corporate Publics refers to the various stakeholders with an interest in organization. Customers, employees, vendors, govt. & societies typically constitute an organization’s stakeholders. Corporate Resources this includes the Human, Financial, Physical, and Technological assets of a company.
  20. 20. Corporate inputs set a degree of freedom a marketing strategist has in deciding which market to enter ,which business to divest, which business to invest in etc… The use of corporate-wide inputs in formulating marketing strategy also helps to maximize overall benefits of the organization.
  21. 21. 3.Changing Roles For Different Products/Markets. Strategic Marketing Starts from the premise that different products have varying roles in the company. It has also been noticed that all the products exert effort to maximize profitability. For example in PLC MATURITY PHASE GROWTH PHASE DECLINE PHASE Some products may be in growth phase or maturity phase or in introduction phase. Each position in the life cycle requires different strategy and affords different expectations. Products in growth stage need extra investment, in maturity phase it generate cash surplus INTRODUCTION PHASE PRODUCT LIFE CYCLE
  22. 22. The lead in this regard was provided by Boston Consulting Group and developed a matrix called as Portfolio Matrix in which Products are positioned on a two-dimensional matrix of market share and growth rate, both are measured on a continuous scale from high to low. a) b) The Portfolio Matrix has two properties: It ranks diverse businesses according to uniform criteria It provides a tool to balance a company's resources by showing which business are likely to be resource providers and which are resource users. The practice of strategic marketing seeks: 1. To examine each product/market before determining its actual role. 2. Different products/markets synergistically related to maximize total marketing effort. 3. Each Product/market is paired with a manager who has the proper background and experience to direct it.
  23. 23. 4.Organizational Level : Strategic Marketing is conducted primarily at major business unit level in the organization. Examples: At GE, major appliances are organized into separate business units for which strategy is separately formulated. At Gillette Company for Duracell Batteries is developed at the batteries business unit level.
  24. 24. 5.Relationship to Finance: Marketing and finance deptt. in any organization is always maintaining a close relationship. The reason is that strategic marketing decisions are closely related to the finance function.
  25. 25. Origin of Strategic Marketing Strategic marketing originated in the year 1970s to counter the difficult situations and the managers were forced to develop strategic plans for more centralize control of resources. In brief, while marketing initially got lost in the emphasis on strategic planning ,currently the role of marketing is better understood and has emerged in the form of strategic marketing.
  26. 26. Strategic Marketing & Marketing Management Point of Difference Strategic Marketing Marketing Management Time Frame Long Range, i.e. decisions have long term implications Day to day ,i.e. decisions have relevance in a given financial year Orientation inductive & intuitive or spontaneous deductive & analytical Primarily bottom-up Mainly top-down Ongoing to seek new opportunities Ad-hoc search for new opportunity Decision Process Opportunity Search Nature of Job High level of creativity & originality Mission Deals with what business to emphasize or highlight Requires maturity, experience ,control orientation Deals with running a delineated (well defined)business
  27. 27. Strategic marketing Implementation 1. Failings in Strategic marketing: The following common problem associated with marketing strategy formulation and implementation: a. Too much emphasis on “where” to compete and not enough on “how” to compete. Eg: Mc Donalds view QSC&V is how to compete strategy. Q=Quality food products, S=Friendly Service, C=Cleanliness, V=Menu that provides Value a. Too Little focus on uniqueness and adaptability in strategy: Most Mkt. Stg lacks uniqueness. But today easy access to information often leads companies to follow identical strategies.
  28. 28. c. Inadequate emphasis on “when” to compete: Because of the heavy emphasis on where to compete and how to compete ,many Mkt. Stg’s give inadequate attention on “WHEN” to compete. Any move in the market place should be adequately TIMED. Timing has also strategy implementations significance .It serve as a guide for different managers in the firm to schedule their activities to meet the timing requirement. Decision on timing should be guided by the following factors: 1. Market Knowledge: Adequate information is required of the market. 2. Competition: Major & Minor competition is to be identified & accordingly it should be worked out. 3. Company Readiness: For variety of reasons the company may not be ready to compete. These reasons could be lack of financial resource, labour problems etc.
  29. 29. 2. Addressing the problems of Strategic Marketing: Having the ability to do all the right things ,any numbers of pitfalls may spoil the best strategic planning, to counter this the following concerns should be addressed: 1. Develop attainable goals & objectives. 2. Involve key operational personnel. 3. Avoid becoming so engrossed in the current problems that strategic marketing is neglected an thus become discredited in the eyes of others. 4. Don’t keep marketing strategies separated from rest of the management process. 5. Avoid formally marketing strategy formulation that restrains flexibility and inhibits creativity.
  30. 30. Strategic Analysis Under the topic of Strategic Analysis we will Study: 1.Corporate Appraisal 2.Understanding Competition 3.Strategic Marketing Process
  31. 31. Strategic Analysis 1-Corporate Appraisal In broader terms Corporate Appraisal refers to an examination of the entire organization from different angles. It is a measurement of readiness of the internal culture of the corporation to interact with the external environment. Marketing strategies are made in business unit level so the role of corporate wide strategy has its own importance while framing marketing strategies.
  33. 33. 1.CORPORATE PUBLICS • • 1. 2. 3. 4. 5. 6. 7. 8. Business exists for people, the first consideration in strategic process is to recognize the individuals and groups who have an interest in the fate of corporation and the extent and nature of their expectations. Meaning of Corporate Public: the following groups generally constitute the corporate publicOwners Employees Customers Suppliers Banks Government Community in which the company is doing business Society at large
  34. 34. • All the eight groups must be well served for the healthy growth of the organization. • The expectations of different publics provide the corporation with a focus for working out its objectives and goals. However a company cannot satisfy the expectations of all the stake holders for two reasons i.e. limited resources and conflict among the stake holders. • The corporate response to the stakeholders expectations emerges in the form of its objectives and goals ,which in turn determine corporate strategy.
  35. 35. 2.VALUE ORIENTATION OF TOP MANAGEMENT The ideologies and philosophies of top management as a team and of the CEO as the leader of the team have profound effect on managerial policy and strategic development process. The organization in the process of strategy formulation must study the values of their executives/ staff members.
  36. 36. 3. CORPORATE RESOURCES • The resources of a firm are its distinctive capabilities and strengths. • Resources must measured with reference to competition. • Resources are financial strength, HR ,raw material reserve , engineering & production, overall mgt., and marketing strength. • The marketing strategist not only consider the marketing resources but also the financial strength of the organization.
  37. 37. 4. PAST PERFORMANCE OF BUSINESS UNITS • It serves as an important input in formulation corporate-wide strategy. • It helps the assessment of the current situation and possible developments in future. • Example : the profit of SBU is declining over the past 5 years , an 1. PRINCIPLE MEASURES OF PERFORMANCE: Effectiveness: is measured in terms of market share or sales growth 2. Efficiency: It is outcome of business programs in relation to the resources employed in implementing them. 3. Adaptability: It is the business success in responding over time to changing conditions & opportunities in the environment. appraisal of current performance as satisfactory cannot be justified assuming the trend continues.
  38. 38. Strategic Analysis 2-UNDERSTANDING COMPETITION
  39. 39. Meaning of Competition • Competition is a contest between individuals, corporate, groups, nations, etc. for territory, a niche, or allocation of resources. It arises whenever two or more parties strive for a goal which cannot be shared. • Business Strategies are Competitively oriented.
  40. 40. Natural & Strategic Competition • Natural Competition: It refers to the Darvin’s Theory of “Survival of the Fittest”. Applied to the business world , no two firms doing business across the board the same way in the same market can coexist forever. To survive each firm must have something unique or superior, this is natural competition. • Strategic Competition: Deployment of resources based on a high degree of insight into the systematic cause and effect in the business ecological system. It tries to leave nothing to chance.
  41. 41. Theory of Competition Economic Theory of Competition There are various models of competition and the most important model is PERFECT COMPETITION, which is based on the fact that ,when a large number of buyers & sellers in a market are dealing homogeneous products, there is a complete freedom to enter or exit the market and everyone has complete and accurate knowledge about each other. PRODUCTS BUYERS HOMOGENEOUS PERFECT COMPETITION MARKET Freedom to Enter or Exit from the market SELLERS
  42. 42. • The essence of industrial organization (IO) perspective is that a firms position in the marketplace depends critically on the characteristics of the industry environment in which it competes. • The industry environment consist of Structure, conduct and performance. Structure Economical & Technical 1. Concentration in Industry (number & size distribution of Firms) 2. Barriers to entry in the industry 3. Product differentiation among the offerings of different firms that make up the industry
  43. 43. • Conduct is basically the Strategy, refers to firms behavior in matters like pricing, advertising & distribution. • Performance includes social performance measured in terms of Profitability, technical efficiency (cost minimization)& innovativeness.
  44. 44. Classifying Competitors Different Industries position themselves to serve various customer demands as:1. Existing Demand 2. Latent Demand 3. Incipient Demand
  45. 45. DEMAND EXISTING DEMAND When a product is bought to satisfy a recognized need. Eg. Titan Watch to determine time. LATENT DEMAND Refers to a situation where a particular need has been recognized, but no products have yet been offered to satisfy the need. Eg. ATM’s In running Trains INCIPIENT DEMAND It occurs when certain trends lead to the emergence of a need of which the customer is not yet aware. Eg. Anti Ageing Cosmetics Products
  46. 46. COMPETITIVE INTELLIGENCE • Competitive Intelligence is publicly available information on competitors, that serve as an important input in formulating marketing strategy. • It includes information beyond industry statistics and trade gossip. It involves close information of competitors to learn what they do best and why & where they are weak.
  47. 47. Types of Competitive Intelligence Competitive Intelligence is of three(3)types: 1. Defensive Intelligence 2. Passive Intelligence 3. Offensive Intelligence
  48. 48. Defensive Intelligence: Information is gathered to avoid being caught offbalance and also about the structural function and to monitor the move of the relevant firms business Passive Intelligence: Is Ad-hoc Information gathered for specific decision COMPETITIVE INTELLIGENCE Offensive Intelligence: Information is gathered to identify new opportunities.
  50. 50. 1. RECOGNIZE KEY COMPETITORS IN MARKET SEGMENTS IN WHICH THE COMPANY IS ACTIVE • Here attempt is to be made to recognize all important competitors in each segment. • If the number of competitors is excessive then it is sufficient to limit consideration to three.
  51. 51. 2. ANALYZE THE PERFORMANCE RECORD OF EACH COMPETITIOR • The performance is measured by number of criteria. As far as marketing is concerned sales growth, market share and profitability are important measures of success. • Thus review of each competitors sales growth, market share & profitability is desirable.
  52. 52. 3. STUDY HOW EACH COMPETITOR APPEARS TO BE WITH ITS PERFORMANCE. • First refer to the competitors objectives for the product. • If the result are in concert with the expectations of the firm’s management , stakeholders, the competitor will be satisfied. • If it is not so then the competitor is most likely to come out with a new strategy.
  53. 53. 4. PROBE EACH COMPETITOR’S MARKETING STARTEGY • The strategy of each competitor can be probe from game plans (different moves in the area of product, price, promotion & distribution). • For example: An competitor in the appliance business who spend heavily on advertisement and sell products mainly through discount stores. • In other words the competitor is trying to reach to the customer who want to buy a reputed brand at discounted rates and thus creating its large sales base.
  54. 54. 5. ANALYZE CURRENT & FUTURE RESOURCES & COMPETENCIES OF EACH COMPETITOR • A checklist is prepared in which the competitors resources and competencies are designated like: Facilities & equipment, Personal Skills, Organization Capabilities & Management Capabilities. • Each area is then be examined with reference to different functional areas like: Finance, R&D, Operations and Marketing. • Strength and weakness is also identified by the output.
  55. 55. 6. PREDICT MARKETING STRATEGY OF EACH COMPETITOR • The above analysis provides the information and on the basis of this we can do predictions of the future marketing strategy of each competitor.
  56. 56. 7. ACCESS THE IMPACT OF STRATEGY ON THE COMPANY’S PRODUCT /MARKET • This is done by the senior marketing personnel using competitive environment and personal experiences on the job as a basis. • Thereafter, agreement of the larger group of executives can be obtained on the impact analysis performed previously.
  57. 57. Strategic Analysis 3.Strategic Marketing Process
  58. 58. Strategic Marketing Process Process whereby an organization allocates it marketing mix resources to reach its target markets. 1. Planning- (i) Situational analysis, (ii) Marketing objectives, (iii)Target Market, (iv) Product Positioning, (v)Marketing Mix Programme 2. Implementation 3. Evaluation
  59. 59. 1.Planning Phase (i)Situation Analysis • This is a complete analysis of the firm’s situation which assesses internal strengths and weaknesses and external threats and opportunities (SWOT) • Internal analysis (controllable factors) – assess the firm itself to identify strengths and weaknesses • External analysis (uncontrollable factors) – assess the firm’s external environment to identify opportunities and threats
  60. 60. Ben & Jerry’s: a SWOT analysis to get it growing again
  61. 61. Planning Phase (ii)Marketing Objectives • Specific levels of performance desired for a product or product line to be achieved by a given date(Stated in terms of market share, sales, profit) • Marketing Objectives should be measureable, attainable, specific, and also consistent with organizational objectives
  62. 62. Planning Phase (iii) Target Market • One or more specific groups of potential consumers toward which an organization directs its marketing program. • Market segmentation is used to identify target markets.
  63. 63. Planning Phase: (iv) Product Positioning • The process where marketers try to create a product image or identity in the minds of their target market relative to the competitive products.
  64. 64. Planning Phase: (v) Marketing Mix Program • Product – goods, service, or idea to satisfy the consumer’s needs. • Price – what is exchanged for the product. • Promotion – means of communication between the seller and buyer. • Place – means of getting the product to the consumer Marketing mix decisions are based on the needs of the target market and the positioning strategy.
  65. 65. Elements of the marketing mix that comprise a cohesive marketing program Slide 2-40
  66. 66. 2. Implementation Phase • Process of putting the marketing plan into action. • Involves great attention to detail.
  67. 67. 3.Evaluation • Involves measuring the results of the actions from the implementation phase and comparing them with goals set in the planning phase. – sales analysis – market share analysis