STRATEGIC MARKETING PROBLEMS BY KERIN AND PETERSON

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STRATEGIC MARKETING PROBLEMS BY KERIN AND PETERSON (12TH ED.)
LECTURE NOTES
Presented by: Teoman Duman
Chapter 1. Foundations of Strategic Marketing Management

Importance of marketing

Marketing is a managerial function. Today, marketing managers are active in shaping the future of many
companies.


Strategic marketing processes – Strategic marketing consists of five complex and interrelated processes:

Defining the organization’s business, mission and goals

Identifying and framing organizational growth opportunities

Formulating product-market strategies

Budgeting marketing, financial, and production resources

Developing reformulation and recovery strategies
Defining the organization’s business, mission and goals

Business definition – an organization should define a business by;

the type of customers it wished to serve

the particular needs of those customer groups it wishes to satisfy

the means or technology by which the organization will satisfy these customer needs.

Products and services are transient while needs are enduring.

The experience of Encyclopaedia Britannica is a case in point. The company is not in the book business but in
the information business.

Business mission

A mission underscores the scope of an organization’s operations apparent in its business definition and reflects
management’s vision of what the organization seeks to do.

Most mission statements describe an organization’s purpose with reference to its customers, producrs or
services, markets, philosophy and technology.

Business goals

Goals or objectives convert the organization’s mission into tangible actions and results that are to be achieved,
often within a specific time frame.

Goals or objectives divide into three major categories:

Production goals (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)
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
Marketing goals (emphasize market share, marketing productivity, sales volume, profit, customer
satisfaction, customer value creation and customer lifetime value)

Identifying and framing organizational growth opportunities

Three questions help marketing managers decide whether certain environmental opportunities represent viable
organizational growth opportunities



What might we do? Relates to environmental opportunity (e.g. unmet needs)

What do we do best? Relates to distinctive competency (e.g. strengths)

What must we do? Relates to success requirements (e.g. distribution and inventory control)
SWOT analysis – Exhibit 1.1.
Formulating product-market strategies

Exhibit 1.2. Product Market Strategies

Market penetration strategy dictates that an organization seeks to gain greater dominance in a market in which
it already has an offering (e.g. increasing buyers’ usage or consumption rates).

Market development strategy dictates that an organization introduce its existing offerings to markets other
than those it is currently serving (e.g. serving to other geographical areas).

Product development strategy dictates that the organization create new offerings for existing markets (e.g.
Apple’s İpod).

Diversification involves the development or acquisition of offerings new to the organization and its markets
(e.g. Coca Cola’s entertainment investments).


Budgeting marketing, financial, and production resources


Manager’s use decision tree approach to identify possible actions and outcomes.
An organization’s master budget consists of two parts :

An operating budget (focuses on income statement)

A financial budget (focuses on capital expenditures)
Developing reformulation and recovery strategies
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Marketing audit is a periodic examination of marketing performance
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Contingency plans – based on what if questions and recovery strategies
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