Marketing strategy final exam revision
M
arketing strategy
Chapter 1 – 2
Market-Oriented Perspectives Underlie Successful
Corporate, Business, and Marketing Strategies
A strategy
− Is a fundamental pattern of present and planned objectives, resource deployments, and interactions of an
organization with markets, competitors, and other environmental factors.
The hierarchy of strategy
➢ Three major levels of strategy
Corporate strategy
Business level strategy
managers must coordinate the activities of multiple business units.
− How a business unit competes within its industry is the critical focus of this
strategy.
− A major issue in a business strategy is that of sustainable competitive
advantage.
Marketing strategy
The primary focus is to effectively allocate and coordinate marketing resources
and activities to accomplish the firm’s objectives within a specific product market.
Corporate strategy
− Is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals,
produces the principal policies, and plans for achieving those goals, and defines the range of business the
company is to pursue.
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Marketing strategy final exam revision
Components of strategy
− The scope of an organization refers to the breadth of its strategic domain—the number
and types of industries, product lines, and market segments it competes in or plans to
enter.
Scope
➢ Decisions about an organization’s strategic scope should reflect management’s view of the
firm’s purpose or mission.
➢ This common thread among its various activities and product markets defines the essential
nature of what its business is and what it should be.
− Strategies also should detail desired levels of accomplishment on one or more
dimensions of performance—such as volume growth, profit contribution, or return on
investment—over specified time periods for each of those businesses and productmarkets and for the organization as a whole.
Goals
Resources
deployment
Identification of
sustainable
competitive
advantage
Synergy
− Every organization has limited financial and human resources. Formulating a strategy
also involves deciding how those resources are to be obtained and allocated across
businesses, product-markets, and functional departments and activities within each
business or product-market.
− . One important part of any strategy is a specification of how the organization will
compete in each business and product market within its domain.
➢ How can it position itself to develop and sustain a differential advantage over current and
potential competitors? To answer such questions, managers must examine the market
opportunities in each business and product market and the company’s distinctive
competencies or strengths relative to its competitors.
− Synergy exists when the firm’s businesses, product-markets, resource deployments,
and competencies complement and reinforce one another.
➢ Synergy enables the total performance of the related businesses to be greater than it would
otherwise be: The whole becomes greater than the sum of its parts.
Components of strategy
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Scope
Goals and objectives
Resource deployment
Identification of sustainable competitive
advantage
Synergy
Components of cooperate strategy
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Overall scope and mission of the organization
Company goals and objectives
Source of competitive advantage
Development strategy for future growth
Allocation of corporate resources across firm’s
various businesses
Sources of synergy
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Marketing strategy final exam revision
1. Strategy
❖ Market-Oriented Management
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Follows a business philosophy commonly called Marketing concept.
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Consistent focus by personnel in all departments and at all levels
Adopts a variety of organizational procedures and structures:
− To improve the responsiveness of decision making
❖ Factors that Mediate Marketing’s Strategic Role
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Competitive factors affect a firm’s market orientation.
Influence of different development stages across industries and global markets.
Strategic inertia
❖ Differences between Production-Oriented and Market-Oriented Organizations
Business
activity
Product orientation
Marketing orientation
Product
offering
Companies sell what it can make
Companies make what it can sell
Product line
Narrow
Abroad
Price
Based on production and distribution costs
Based on perceived benefits provided
Research
Focus on product improvement and cost
cutting in the production process
Focus on identifying new opportunities and
applying new technology to satisfy customer
needs
Packaging
Protection for the product; minimize costs
Designed for customer convenience; a
promotional tool
Credit
A necessary evil; minimize bad debt losses
A customer service: a tool to attract
customers
Promotion
Emphasis on product features, quality, and
price
Emphasis on product benefits and ability to
satisfy customers’ needs or solve problems
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Marketing strategy final exam revision
❖ Formulating and implementing marketing strategy
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Decision making focus.
Analysis of the four “Cs”
Consumer wants and needs, Cost, Convenience, and Communication
Integrating marketing strategy with the firm’s other strategies and resources
Market opportunity analysis
Understanding market opportunities
Measure market opportunities
Market segmentation, targeting and positioning decisions.
Formulating strategies for specific market situations
Implementation and control of the marketing strategy
Marketing plan
− is a written document detailing the current situation with respect to customers, competitors, and the
external environment.
Contents of marketing plan
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Executive summary
Current situation and trends
Performance review
Key issues
Objectives
Marketing strategy
Action plans
Projected profit-and-loss statement
Controls
Contingency plans
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Marketing strategy final exam revision
2. Corporate Strategy
❖ Corporate Scope—Defining the Firm’s Mission
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Clearly stated mission can help instill:
• A shared sense of direction
• Relevance
• Achievement among employees
• Positive image of the firm
❖ Characteristics of Effective Corporate Mission Statements
Functional
Physical
Based on
Based on customer needs
Based on existing products or technology
Broad
Transportation business
Railroad business
Specific
Long-distance transportation for largevolume producers of low-value, lowdensity products
Long-haul, coal carrying railroad
❖ Social Values and Ethical Principles
Ethics
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Is concerned with the development of moral standards by which actions and situations can
be judged.
• Is more proactive than the law.
− Important to craft mission statements specifying explicit social values, goals, and programs.
❖ Examples of ethics
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Honesty.
Integrity.
Promise-Keeping & Trustworthiness.
Loyalty.
Fairness.
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Concern For Others.
Respect For Others.
Law Abiding.
Commitment To Excellence
Accountability.
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Marketing strategy final exam revision
❖ The Marketing Implications of Ethical Standards
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Unethical practices can:
− Damage the trust between a firm and its suppliers or customers.
− Disrupt the development of long-term exchange relationships.
− Result in the likely loss of sales and profits over time
Corporate Objectives
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Components of an objective:
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A performance dimension.
A measure or index for evaluating progress.
A target or hurdle level to be achieved.
A time frame within which the target is to be accomplished.
Specific, Measurable, Attainable, Relevant, and Time-bound
❖ The Marketing Implications of Corporate Objectives
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Managers can reconcile conflicting goals by:
Prioritizing them
Stating one of them as a constraint or hurdle
Consistent customer-focused objectives are:
Satisfaction
Retention
Loyalty
Enhancing Shareholder Value
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Management’s primary objective:
Capital investments.
Acquisitions
Business strategies
Many firms set explicit objectives targeted to increase shareholder value.
Objectives are sometimes expressed in terms of market value added (MVA)
Market value added (MVA)
− is the amount of wealth that a company can create for its stakeholders since its foundation.
− In simple terms, it's the difference between the current market value of the company's stock and the
initial capital that was invested in the company by both bondholders and stockholders.
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Marketing strategy final exam revision
Corporate Growth Strategies
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Firms can head in two major directions for future growth:
− Expansion of its current businesses and activities
− Diversification into new businesses
❖ Alternative Corporate Growth Strategies
Current
market
Current products
New products
Market penetration strategies
Product development strategies
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Increase market share.
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Product improvements
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Increase product usage:
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Product-line extensions
− Increase frequency of use
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New products for same market
− Increase quantity used.
− New applications
New market
Market development strategies
Diversification strategies
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Expand markets for existing
products.
− Geographic expansion
− Target new segments
Vertical integration
− Forward/backward integration
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Diversification into related businesses
− (Concentric diversification)
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Diversification into unrelated
businesses
− (Conglomerate diversification)
Allocating Corporate Resources
• Two sets of analytical tools are used:
− Portfolio models
− Value-based planning
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Marketing strategy final exam revision
❖ Portfolio models
• The Boston Consulting Group’s (BCG) Growth-Share Matrix
• Resource Allocation and Strategy Implications
Question mark
Stars
Cash cows
Dogs
Business in high growth industries with low relative market share
Leader in a high growth industry
Businesses with a high relative share of low growth markets
Low share businesses in low growth markets
High
Market growth rate
Stars
Question mark
Cash cows
Dog
Low
Relative market share
❖ Why is the BCG model useful?
− It analyzes the impact of investing resources in different businesses on the corporation’s future
earnings and cash flows.
− It gives a company a quick glance on where their business units fall in an industry in terms of
market share and market growth. This in turn can help generate competitive strategies to improve
or maintain a position in the market.
The Industry Attractiveness- Business Position Matrix
Factors to assess competitive position.
Factors to assess industry attractiveness
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Relative share
Customer loyalty
Margins
Distribution
Technology
Marketing skills
Patents
Size
Growth
Competitive intensity
Price levels
Profitability
Technological sophistication
Government regulations
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Marketing strategy final exam revision
❖ The Industry Attractiveness- Business Position Matrix
Industry attractiveness
Business
competitive
positions
High
Medium
Low
High
1
1
2
Medium
1
2
3
Low
2
3
3
1 Invest/grow.
2 Selective investment/ maintain position.
3 Harvest/divest.
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Invest – grow.
“High – High” “High – Medium” “Medium – High”
Industry attractiveness high – business competitive position high
Industry attractiveness medium – business competitive position high
Industry attractiveness high – business competitive position medium
 Selective investment/ maintain position.
 “Medium – Medium” “Low – High” “High – Low”
− Industry attractiveness medium – business competitive position medium
− Industry attractiveness low – business competitive position high
− Industry attractiveness high – business competitive position low
 Harvest/divest.
 “Low – Low” “Low – Medium” “Medium- Low”
− Industry attractiveness low – business competitive position low
− Industry attractiveness low – business competitive position medium
− Industry attractiveness medium – business competitive position low
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Marketing strategy final exam revision
Sources of Synergy
− Knowledge-Based Synergies
− Corporate Identity
− Corporate Brand
❖ Corporate Branding Strategy
• A firm might pursue one of three options concerning the corporate brand:
− Might serve as the brand name of all or most of the firm’s products in markets around the
world.
− Dual branding strategy where each offering carries both a corporate identifier and an
individual product brand.
− Each product offering might be given a unique brand and identity.
• A second potential source of corporate synergy is inherent in sharing operational
resources.
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