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.Wali Memon
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 competitiveWali Memon advantage and affect long-term organizational performance
Evolution of the Marketing Manager From being only an implementer…. to being a maker of organization strategy. This has prompted the emergence of strategic marketing management asWali Memon a course of study and practice.
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 resourcesWali Memon 5. Developing reformulation and recovery strategies
Process One Defining the Organization’s Business, Mission, and GoalsWali Memon
Business Definition By defining a business from a customer or market perspective… an organization is appropriately viewed as: a customer - satisfying endeavor not a product-producing or serviceWali Memon delivery enterprise.
“What business are we in?” 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 theWali Memon organization will satisfy the customer needs
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 Most statements describe: the organization’s purpose customers, products/services,Wali Memon markets, philosophy, and technology
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 customersWali Memon 4. Provides direction for setting business goals or objectives
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. MarketingWali Memon
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 profitWali Memon customer satisfaction customer value creation
Process Two Identifying and Framing Organizational Growth OpportunitiesWali Memon
Converting Environmental Opportunities into Organizational Opportunities What might we do? Sources of environmental opportunity: Unmet or changing customer needs Unsatisfied buyer groups New means or technology for deliveringWali Memon value to prospective buyers
Converting Environmental Opportunities into Organizational Opportunities What do we do best? Distinctive Competency describes an organization’s unique strengths or qualities including: Skills Technologies ResourcesWali Memon …that distinguish it from other organizations.
Converting Environmental Opportunities into Organizational Opportunities 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 organizationalWali Memon growth opportunity will fail to materialize.
SWOT Analysis A formal framework for identifying and framing organizational growth opportunities Strengths internal Weaknesses Opportunities external ThreatsWali Memon
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)Wali Memon
SWOT Analysis Strength What the organization is good at doing or a characteristic that gives it an important capability Weakness What an organization lacks or does poorly relative to competitors Opportunities Developments or conditions in the environment that have favorable implications for the organization Threats Pose dangers to the welfare ofWali Memon the organization
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?Wali Memon 3. Does a pattern emerge from the SWOT?
Process Three Formulating Product-Market StrategiesWali Memon
Product-Market Strategies Existing New products products Existing Market Product markets Penetration Development New Market Diversification markets DevelopmentWali Memon
Market Penetration Strategy 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 potentialWali Memon consumers
Market Development Strategy 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 outletsWali Memon Change in sales effort and advertising
Market Development in the International Arena Exporting Licensing Joint Venture Direct or Strategic Investment AllianceWali Memon
Product Development Strategy 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 differentWali Memon sizes, forms, flavors, etc.
Diversification Strategy 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 organizationWali Memon
Strategy Selection – Sample Decision Tree Action Response Outcome Aggressive Estimated profit of competition $2 millionMarket-penetrationstrategy Passive Estimated profit of competition $3 million Aggressive Estimated profit of competition $1 millionMarket-developmentstrategy Passive Estimated profit of Wali Memon competition $4 million
Process Four Budgeting Marketing, Financial, and Production ResourcesWali Memon
The Budget 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 orWali Memon objectives are attained.
Components of a Budget 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 cashWali Memon position
Process Five Developing Reformulation and Recovery StrategiesWali Memon
The Marketing Audit 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. Helps answer the questions: Are we doing the right things?Wali Memon Are we doing things right?
The Marketing Plan 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. Focus can be on a business, product, or brand Time Dimension can be short-run (typically one year) or long-run (multi-Wali Memon year)
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 valuesWali Memon