Chapter 1
Foundations of
Strategic Marketing
Management
1-2
In this chapter, you will
learn about…
1. Defining the Organization’s Business, Mission, and
Goals
Business Definition...
1-3
In this chapter, you will
learn about…
3. Formulating Product-Market Strategies
Market-Penetration Strategy
Market-Dev...
1-4
The Primary Purpose of
Marketing
To create long-term and mutually
beneficial exchange relationships
between an entity ...
1-5
Expanding Responsibilities
of Marketing Managers
Expanded responsibilities include:
Charting the direction of the
orga...
1-6
Evolution of the
Marketing Manager
This has prompted the emergence of
strategic marketing management as
a course of st...
1-7
Processes in Strategic
Marketing Management
1. Defining the organization’s business,
mission, and goals
2. Identifying...
1-8
Defining the
Organization’s Business,
Mission, and Goals
Process One
1-9
Business Definition
By defining a business from a
customer or market perspective…
an organization is appropriately
vie...
1-10
An organization should define a
business by:
The type of customers it wishes to
serve
The particular needs of those c...
1-11
Most statements describe:
the organization’s purpose
customers, products/services,
markets, philosophy, and technolog...
1-12
Benefits of Mission
Statements
1. Crystallizes management’s vision of the
organization’s long-term direction and
char...
1-13
Business Goals
Goals or objectives convert the organization’s
mission into tangible actions and results that
are to b...
1-14
Production Goals
Apply to the use of
manufacturing and service
capacity and to product
and service quality.
Financial...
1-15
Identifying and Framing
Organizational Growth
Opportunities
Process Two
1-16
Sources of environmental opportunity:
Unmet or changing customer needs
Unsatisfied buyer groups
New means or technolo...
1-17
What do we do best?
Distinctive Competency describes an
organization’s unique strengths or qualities
including:
Skill...
1-18
What must we do?
Success Requirements are basic tasks
that an organization must perform in a
market or industry to co...
1-19
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
internal
external
A formal framework for identifying and
fra...
1-20
SWOT Analysis
Framework for focusing attention on the
fact that an organizational growth
opportunity results from…
a ...
1-21
Pose dangers to the welfare of
the organization
Threats
Developments or conditions in
the environment that have
favor...
1-22
Questions to be asked once
SWOT has been identified
1. Which internal strengths represent
distinctive competencies? D...
1-23
Formulating
Product-Market Strategies
Process Three
1-24
DiversificationDiversificationMarket
Development
Market
Development
Market
Penetration
Market
Penetration
Product
Dev...
1-25
Seeking a larger market share in a market in
which organization already has an offering
This strategy involves:
Attem...
1-26
Introducing its existing offerings to markets
other than those that the organization is
currently serving.
Reaching n...
1-27
LicensingExporting
Joint Venture
or Strategic
Alliance
Direct
Investment
Market Development in
the International Arena
1-28
Creating new offerings for existing markets.
This approach may be taken for:
Product Innovation – develop totally new...
1-29
Development or acquisition of offerings
new to the organization and introducing
those offerings to publics not previo...
Market-penetration
strategy
Market-development
strategy
Estimated profit of
$1 million
Estimated profit of
$4 million
Acti...
1-31
The Marketing Mix
Customer
Channel
Strategy
Product
Strategy
Price
Strategy
Communications
Strategy
1-32
Budgeting Marketing,
Financial, and Production
Resources
Process Four
1-33
A formal, quantitative expression of an
organization’s planning and strategy
initiatives expressed in financial terms...
1-34
1. Operating Budget
Also referred to as a pro forma
Income Statement
Focuses on an organization’s income
statement
2....
1-35
Developing Reformulation
and Recovery Strategies
Process Five
1-36
Comprehensive, systematic, independent, and
periodic examination of a company’s marketing
environment, objectives, st...
1-37
Focus can be on a business, product, or
brand
Time Dimension can be short-run
(typically one year) or long-run (multi...
1-38
Marketing Ethics and
Social Responsibility
Marketing decisions reflect an
organization’s orientation toward the
publi...
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Chapter 01.ppt marketing mgt

  1. 1. Chapter 1 Foundations of Strategic Marketing Management
  2. 2. 1-2 In this chapter, you will learn about… 1. Defining the Organization’s Business, Mission, and Goals Business Definition Business Mission Business Goals 1. Identifying and Framing Organizational Growth Opportunities Converting Environmental Opportunities into Organizational Opportunities SWOT Analysis
  3. 3. 1-3 In this chapter, you will learn about… 3. Formulating Product-Market Strategies Market-Penetration Strategy Market-Development Strategy Product-Development Strategy Diversification Strategy Selection The Marketing Mix 3. Budgeting Marketing, Financial, and Production Resources 5. Developing Reformulation and Recovery Strategies 6. Drafting a Marketing Plan 7. Marketing Ethics and Social Responsibility
  4. 4. 1-4 The Primary Purpose of Marketing To create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.
  5. 5. 1-5 Expanding Responsibilities of Marketing Managers 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 They no longer function solely to direct day-to-day operations. They must make strategic decisions as well.
  6. 6. 1-6 Evolution of the Marketing Manager This has prompted the emergence of strategic marketing management as a course of study and practice. From being only an implementer…. to being a maker of organization strategy.
  7. 7. 1-7 Processes in Strategic Marketing Management 1. Defining the organization’s 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
  8. 8. 1-8 Defining the Organization’s Business, Mission, and Goals Process One
  9. 9. 1-9 Business Definition By defining a business from a customer or market perspective… an organization is appropriately viewed as: a customer - satisfying endeavor a product-producing or service delivery enterprise. not
  10. 10. 1-10 An organization should define a business by: The type of customers it wishes to serve The particular needs of those customer groups it wishes to satisfy The means or technology by which the organization will satisfy the customer needs “What business are we in?”
  11. 11. 1-11 Most statements describe: the organization’s purpose customers, products/services, markets, philosophy, and technology Business Mission Underscores the scope of an organization’s operations apparent in its business definition Reflects management’s vision of what the organization seeks to do
  12. 12. 1-12 Benefits of Mission Statements 1. Crystallizes management’s vision of the organization’s long-term direction and character 2. Provides guidance in identifying, pursuing, and evaluating market and product opportunities 3. Inspires and challenges employees to do those things that are valued by the organization and its customers 4. Provides direction for setting business goals or objectives
  13. 13. 1-13 Business Goals Goals or objectives convert the organization’s mission into tangible actions and results that are to be achieved, often within a specified time frame. Three major categories of goals: 1. Production 2. Financial 3. Marketing
  14. 14. 1-14 Production Goals Apply to the use of manufacturing and service capacity and to product and service quality. Financial Goals Focus on return on investment, return on sales, profit, cash flow, and shareholder wealth. Marketing Goals market share marketing productivity sales volume profit customer satisfaction customer value creation
  15. 15. 1-15 Identifying and Framing Organizational Growth Opportunities Process Two
  16. 16. 1-16 Sources of environmental opportunity: Unmet or changing customer needs Unsatisfied buyer groups New means or technology for delivering value to prospective buyers What might we do? Converting Environmental Opportunities into Organizational Opportunities
  17. 17. 1-17 What do we do best? Distinctive Competency describes an organization’s unique strengths or qualities including: Skills Technologies Resources …that distinguish it from other organizations. Converting Environmental Opportunities into Organizational Opportunities
  18. 18. 1-18 What must we do? Success Requirements are basic tasks that an organization must perform in a market or industry to compete successfully. If what must be done is inconsistent with what can be done to capitalize on an environmental opportunity, an organizational growth opportunity will fail to materialize. Converting Environmental Opportunities into Organizational Opportunities
  19. 19. 1-19 SWOT Analysis Strengths Weaknesses Opportunities Threats internal external A formal framework for identifying and framing organizational growth opportunities
  20. 20. 1-20 SWOT Analysis Framework for focusing attention on the fact that an organizational growth opportunity results from… a good fit between an organization’s INTERNAL CAPABILITIES (Strengths & Weaknesses) and its EXTERNAL ENVIRONMENT (Opportunities & Threats)
  21. 21. 1-21 Pose dangers to the welfare of the organization Threats Developments or conditions in the environment that have favorable implications for the organization Opportunities What an organization lacks or does poorly relative to competitors Weakness What the organization is good at doing or a characteristic that gives it an important capability Strength SWOT Analysis
  22. 22. 1-22 Questions to be asked once SWOT has been identified 1. Which internal strengths represent distinctive competencies? Do these strengths compare favorably with what are believed to be market or industry success requirements? 2. Which internal weaknesses disqualify the organization from pursuing certain opportunities? 3. Does a pattern emerge from the SWOT?
  23. 23. 1-23 Formulating Product-Market Strategies Process Three
  24. 24. 1-24 DiversificationDiversificationMarket Development Market Development Market Penetration Market Penetration Product Development Product Development Existing products New products Existing markets New markets Product-Market Strategies
  25. 25. 1-25 Seeking a larger market share in a market in which organization already has an offering This strategy involves: Attempts to increase present buyer’s usage or consumption rates of the offering Attracting buyers of competing offerings Stimulating product trial among potential consumers Market Penetration Strategy
  26. 26. 1-26 Introducing its existing offerings to markets other than those that the organization is currently serving. Reaching new markets requires: Carefully considering competitor strengths and weaknesses and competitor retaliation potential Modification of the basic offering Different distribution outlets Change in sales effort and advertising Market Development Strategy
  27. 27. 1-27 LicensingExporting Joint Venture or Strategic Alliance Direct Investment Market Development in the International Arena
  28. 28. 1-28 Creating new offerings for existing markets. This approach may be taken for: Product Innovation – develop totally new offerings Product Augmentation – enhance the value to customers of existing offerings Product line extension – broaden the existing line of offerings by adding different sizes, forms, flavors, etc. Product Development Strategy
  29. 29. 1-29 Development or acquisition of offerings new to the organization and introducing those offerings to publics not previously served by the organization. Growing trend in recent years High-risk strategy because both the offering and market served are new to the organization Diversification Strategy
  30. 30. Market-penetration strategy Market-development strategy Estimated profit of $1 million Estimated profit of $4 million Action Response Outcome Aggressive competition Passive competition Aggressive competition Passive competition Strategy Selection – Sample Decision Tree Estimated profit of $2 million Estimated profit of $3 million
  31. 31. 1-31 The Marketing Mix Customer Channel Strategy Product Strategy Price Strategy Communications Strategy
  32. 32. 1-32 Budgeting Marketing, Financial, and Production Resources Process Four
  33. 33. 1-33 A formal, quantitative expression of an organization’s planning and strategy initiatives expressed in financial terms A well-prepared budget meshes and balances an organization’s Financial, Production, and Marketing Resources so that overall organizational goals or objectives are attained. The Budget
  34. 34. 1-34 1. Operating Budget Also referred to as a pro forma Income Statement Focuses on an organization’s income statement 2. Financial Budget Focuses on the effect that the operating budget and other initiatives will have on the organization’s cash position Components of a Budget
  35. 35. 1-35 Developing Reformulation and Recovery Strategies Process Five
  36. 36. 1-36 Comprehensive, systematic, independent, and periodic examination of a company’s marketing environment, objectives, strategies, and activities to recommend a plan of action to improve the company’s marketing performance. The Marketing Audit Helps answer the questions: Are we doing the right things? Are we doing things right?
  37. 37. 1-37 Focus can be on a business, product, or brand Time Dimension can be short-run (typically one year) or long-run (multi- year) A formal written document that describes the context and scope of an organization’s marketing effort to achieve defined goals or objectives within a specified future time period. The Marketing Plan
  38. 38. 1-38 Marketing Ethics and Social Responsibility Marketing decisions reflect an organization’s orientation toward the publics with which it interacts The marketplace is populated by individuals with diverse value systems Their actions will be judged publicly by others with different values
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