Hult | Pride | Ferrell
marketing 16e
Part 1
Marketing
Strategy and
Environment
1: Strategic Marketing Management
2: Developing and Implementing
Marketing Strategies
3: The Global Marketing Environment
© 2012 South-Western, a part of Cengage Learning
2-2
Learning Objectives

To describe the strategic planning process

To explain how organizational resources and
opportunities affect the planning process

To understand the role of the mission statement in
strategic planning

To examine corporate, business-unit and marketing
strategies

To understand the process of creating the marketing
plan

To describe the marketing implementation process
and the major approaches to marketing
implementation
© 2012 South-Western, a part of Cengage Learning
2-3
Strategic Planning
The process of establishing an organizational
mission and formulating goals, corporate
strategy, marketing objectives, marketing
strategy and a marketing plan
 Should be guided by a market orientation
© 2012 South-Western, a part of Cengage Learning
2-4
Components of Strategic Planning
© 2012 South-Western, a part of Cengage Learning
2-5
Firms You Should Know: IKEA
 Swedish furniture chain
•
•
World’s largest furniture retailer
Click on logo to access the website
 Named one of the top 100 most ethical
companies by Ethisphere magazine
 Donates to causes that build infrastructure
and help children in the developing world
 Invests in renewable energy and recycling
•
•
•
Aims to have 100% renewable energy sources
Recycling bins in stores
Only offers reusable bags; no plastic bags
© 2012 South-Western, a part of Cengage Learning
2-6
Marketing Strategy
A plan of action for identifying and analyzing a
target market and developing a marketing mix
to meet the needs of that market
© 2012 South-Western, a part of Cengage Learning
2-7
Effective Marketing Strategy
 Reflects overall direction of organization
 Coordinated with firm’s functional areas
 Contributes to achievement of:
 Marketing objectives
 Organizational goals
© 2012 South-Western, a part of Cengage Learning
2-8
Marketing Plan
A written document that specifies the activities
to be performed to implement and control the
organization’s marketing activities
Strengths
Weaknesses
Opportunities
Threats
© 2012 South-Western, a part of Cengage Learning
2-9
Assessing Organizational
Resources and Opportunities
Core
Competencies
Competitive
Advantage
Strategic
Windows
Market
Opportunities
The place where opportunities, core competencies, and strategic windows meet
© 2012 South-Western, a part of Cengage Learning
2-10
Discussion Question
 Stonyfield Farm
products do not
contain artificial
growth hormones or
other potentially
harmful ingredients –
does this represent a
competitive
advantage?
© 2012 South-Western, a part of Cengage Learning
2-11
Core Competencies
Things a firm does extremely well, which give
it an advantage over competition
 McDonald’s consistent fast food quality
 Starbuck’s gourmet coffee drinks
 BMW’s production of sporty, luxury
automobiles
 Apple’s trendy, desirable electronics devices
© 2012 South-Western, a part of Cengage Learning
2-12
Market Opportunity
A combination of circumstances and timing that
permits an organization to take action to reach a
particular target market
 Many tech companies see a market
opportunity in China and India
•
Large potential market of over 2 billion people
•
Growing wealth and middle class
© 2012 South-Western, a part of Cengage Learning
2-13
Strategic Window
A temporary period of optimal fit between the
key requirements of a market and the particular
capabilities of a firm competing in the market
© 2012 South-Western, a part of Cengage Learning
2-14
Discussion Question
 Was Southwest Airlines Bags Fly Free
marketing campaign an effective response to
competitors’ charging for checked baggage?
What marketing opportunity did Southwest
respond to?
© 2012 South-Western, a part of Cengage Learning
2-15
Competitive Advantage
The result of a company’s matching a core
competency (superior skill or resources) to
opportunities in the marketplace
 e.g. cheaper, more widely available, stronger
service support, higher quality
© 2012 South-Western, a part of Cengage Learning
2-16
Think About It
• Patagonia has built its reputation on being
environmentally friendly
•
Click here for an ad featuring Yvon Chouinard,
the owner of Patagonia
 Is being “green” a competitive advantage for
Patagonia?
© 2012 South-Western, a part of Cengage Learning
2-17
Who is Buying Green Products?
© 2012 South-Western, a part of Cengage Learning
2-18
The Four-Cell SWOT Matrix
© 2012 South-Western, a part of Cengage Learning
2-19
Establishing an Organizational
Mission and Goals
Mission
Statement
Marketing Goals
and Objectives
© 2012 South-Western, a part of Cengage Learning
Organizational
Goals and
Objectives
2-20
Mission Statement
 Mission Statement
•
A long-term vision of what the organization
wants to become

Who are our customers?

What is our core competency?
 Corporate Identity
• Should support all corporate activities
• Unique Symbols
• Personalities
• Philosophies
© 2012 South-Western, a part of Cengage Learning
2-21
Think About It
 Read Starbucks’ and Whole Food’s mission
statements by clicking on the links
• Which do you think is the stronger of the two?
• Why?
 Starbucks has a mission
statement that addresses all
its stakeholders
 Whole Foods has built its
reputation on providing organic
and sustainable gourmet foods
© 2012 South-Western, a part of Cengage Learning
2-22
Marketing Objective
 A statement of what is to be accomplished
through marketing activities
 Should:
 Be based on a study of the SWOT analysis
 Be stated in clear, simple terms
 Be accurately measurable
 Specify a time frame for accomplishment
 Be consistent with business-unit and corporate
strategy
© 2012 South-Western, a part of Cengage Learning
2-23
Developing Corporate, Business-Unit
and Marketing Strategies
Business Unit Strategies
© 2012 South-Western, a part of Cengage Learning
2-24
Levels of Strategic Planning
© 2012 South-Western, a part of Cengage Learning
2-25
Corporate Strategy
A strategy that determines the means for
utilizing resources in the various functional
areas to reach the organization’s goals
© 2012 South-Western, a part of Cengage Learning
2-26
Business-Unit Strategy
Strategic Business Units (SBUs)
 A division, product line, or other profit center
within a parent company
Market
 A group of individuals and/or organizations that
have needs for products and the ability,
willingness and authority to buy
Market Share
 The percentage of a market that actually buys a
specific product from a specific company
© 2012 South-Western, a part of Cengage Learning
2-27
Growth Share Matrix
© 2012 South-Western, a part of Cengage Learning
2-28
BCG Product Classifications
Stars
 Dominant market share & good growth prospects
Cash Cows

Dominant market share & low growth prospects
Dogs

Low market share & low growth prospects
Question Marks

Small market share of a growing market &
require significant cash to build market
© 2012 South-Western, a part of Cengage Learning
2-29
Marketing Strategy
Marketing
Strategy
Target Market
Selection
© 2012 South-Western, a part of Cengage Learning
Creating a
Marketing Mix
2-30
Marketing Strategy
 Components of marketing strategy
 Target Market Selection
 Creating the Marketing Mix
 Sustainable Competitive Advantage
• An advantage not readily copied by competitors
• e.g. Walmart’s buying power as the world’s
largest retailer
© 2012 South-Western, a part of Cengage Learning
2-31
Target Market Selection
 Selecting an appropriate target market may
be the most important decision a company
has to make in the strategic planning process
•
Define the target market
•
Develop an appropriate marketing mix
© 2012 South-Western, a part of Cengage Learning
2-32
Discussion Question
 Piperlime is a shoes and
accessories store owned
by The Gap Co.
 For those of you who
have shopped there, who
is the target market for
Piperlime handbags?
© 2012 South-Western, a part of Cengage Learning
2-33
Think About It
Click here to watch a Crocs ad
 What is Crocs’ target market in this ad?
•
Why do you think this company selected
this particular target market?
© 2012 South-Western, a part of Cengage Learning
2-34
Creating the Marketing Mix
 All marketing mix decisions should be
consistent with the business unit and
corporate strategies
 Target market selection is the basis for
creating a marketing mix
 Sustainable Competitive Advantage
• An advantage that the competition cannot easily
copy in the foreseeable future
© 2012 South-Western, a part of Cengage Learning
2-35
Think About It
 Click here to watch the FedEx “castaway”
commercial
•
How does FedEx demonstrate its commitment to
serving its customers?
 Do you think FedEx has a sustainable
competitive advantage?
© 2012 South-Western, a part of Cengage Learning
2-36
Marketing Planning
The systematic process of:
 Assessing marketing opportunities and
resources
 Determining objectives
 Defining strategies
 Establishing guidelines for implementation
and control of the marketing program
© 2012 South-Western, a part of Cengage Learning
2-37
Components of the Marketing Plan
© 2012 South-Western, a part of Cengage Learning
2-38
Marketing Implementation
Marketing
Implementation
Intended Strategy
© 2012 South-Western, a part of Cengage Learning
Realized Strategy
2-39
Marketing Implementation
The process of putting marketing strategies into
action
 Intended Strategy: The strategy the
organization decides on during the planning
phase and wants to use
 Realized Strategy: The strategy that actually
takes place
Intended
Strategy
© 2012 South-Western, a part of Cengage Learning
Implementation
Realized
Strategy
2-40
Customer Relationship Management
(CRM)
Strives to build satisfying exchange
relationships between buyers and sellers
 Involves gathering useful data at customercontact points and analyzing it to better
understand customers’ needs, desires and
habits
 Requires a shift in thinking away from share
of market to share of customer
© 2012 South-Western, a part of Cengage Learning
2-41
Improving CRM
 Technology has helped marketers build
better databases and improve CRM
 Customer Lifetime Value (CLV)
• A measure of a customer’s worth to a firm
• May include an individual’s purchases and his or
her word-of-mouth communication about
products
© 2012 South-Western, a part of Cengage Learning
2-42
Internal Marketing
 External Customers: The individuals who
patronize a business
• The familiar definition of “customers”
 Internal Customers: The company’s
employees
 For implementation to succeed, the needs of
both groups of customers must be met
 Internal Marketing: Coordinates internal
exchanges to achieve success
•
A company uses internal marketing to attract,
motivate and retain qualified internal customers
© 2012 South-Western, a part of Cengage Learning
2-43
Total Quality Management
A philosophy that commitment to quality in all
organizational areas will promote a culture that
meets customers’ perceptions of quality
 Quality is free, but not having quality can be
very expensive
 Benchmarking: Comparing the quality of the
organization’s goods, services, or processes with
high-performing competitors
 Empowerment: Gives employees the authority
and responsibility to make marketing decisions
without the approval of their supervisors
© 2012 South-Western, a part of Cengage Learning
2-44
Marketing Activities
Organizing Marketing Activities
Organizing
by
Functions
Organizing
by
Regions
© 2012 South-Western, a part of Cengage Learning
Organizing
by
Products
Organizing
by
Types of
Customers
2-45
Degree of Centralization
Centralized Organizations
 Authority is concentrated at the top level
 Very little delegation to lower levels
Decentralized Organizations
 Decision making authority is delegated as far
down the chain of command as possible
© 2012 South-Western, a part of Cengage Learning
2-46
Discussion Question
 The U.S. Army is a highly centralized
organization
 Very little decision-making authority by
lower levels
 Can you think of other highly centralized
organizations?
© 2012 South-Western, a part of Cengage Learning
2-47
Organizing
By Functions
 By general marketing functions
•
Marketing research, product development, distribution,
sales, advertising and customer relations


Works well for centralized organizations
Can cause communication problems in decentralized
organizations
By Products
 Businesses that produce diverse products sometimes
organize their marketing units according to product
groups
•

Flexibility to develop different marketing mixes for
different products
Can be expensive
© 2012 South-Western, a part of Cengage Learning
2-48
Organizing (continued)
By Regions:

Good for large companies that market products over
a broad area

Managers of marketing functions for each region
report to their regional marketing manager; all the
regional marketing managers report directly to the
executive marketing manager
By Types of Customers:

Good for a company with diverse customer groups
who have differing needs
© 2012 South-Western, a part of Cengage Learning
2-49
The Marketing Control Process
Establishing performance standards, evaluating actual
performance by comparing it with standards and
reducing the differences between desired and actual
performance
© 2012 South-Western, a part of Cengage Learning
2-50
Performance Standards
 An expected level of performance against
which actual performance can be compared
 Managers must know what employees are
doing to evaluate performance well
 When corrective actions are needed,
managers can

Improve actual performance

Reduce or change the performance standard
© 2012 South-Western, a part of Cengage Learning
2-51
Problems in Controlling
Marketing Activities
 The information required to control marketing
activities is unavailable or expensive
 The time lag between marketing activities and
results limits a marketing manager’s ability to
measure their effectiveness
 Because marketing and other business activities
overlap, marketing managers cannot determine
the precise costs of marketing activities
 It may be very hard to develop exact
performance standards for marketing personnel
© 2012 South-Western, a part of Cengage Learning
2-52
Important Terms
Strategic planning
Sustainable competitive advantage
Marketing strategy
Marketing planning
Marketing plan
Marketing implementation
Core competencies
Intended strategy
Market opportunity
Realized strategy
Strategic windows
External customers
Competitive advantage
Internal customers
SWOT analysis
Internal marketing
Mission statement
Total quality management (TQM)
Marketing objective
Benchmarking
Corporate strategy
Empowerment
Strategic business unit (SBU)
Centralized organization
Market
Decentralized organization
Market share
Marketing control process
Market growth/market share matrix
Performance standard
© 2012 South-Western, a part of Cengage Learning
2-53