Strategic
Marketing
Vytautas Magnus University
Assoc. Prof. Nina Klebanskaja
nina@evf.vdu.lt
Course based on: J.J.Lambin. Market-Driven
Management. Macmillan Business. 2000.
Evaluation of marketing function:
from product orientation to market
driven management
Marketing Definitions (AMA)*
1935
Marketing is the
performance
of business
activities that
direct the flow of
goods and
services from
producers to
customers
1985
2004
2007
Marketing is the
process of
planning and
executing the
conception, pricing
promotion and
distribution of
ideas, goods, and
services to create
exchanges that
satisfy individual
and organizational
objectives.
Marketing is an
organizational
function and a set
of processes for
creating,
communicating,
and delivering
value to customers
and for managing
customer
relationships in
ways that benefit
the organization
and its
stakeholders.
Marketing is the
activity, set of
institutions, and
processes for
creating,
communicating,
delivering, and
exchanging
offerings that have
value for
customers, clients,
partners, and
society at large.
*AMA – American Marketing Association
Marketingo mantra: CCDVTP*
(by Ph.Kotler)





C - create (product management)
C – communicate (brand management) –
DV - deliver value (customer management)
T – target market
P – profit - pelningai
http://www.youtube.com/watch?v=bilOOPuAvTY&feature=related
Marketing
megatrends
http://www.imediaconnection.com/content/24911.asp
I. Mass collaboration is powering the
new economy


It's no secret among iMedia readers that "usergenerated content" was a sucker punch to the
jaw of the marketing world over the past several
years.
A fundamental shift has occurred in which
brands have become a conversation -- and
audiences have just as much of a say in the
shape of that dialogue as marketing directors
and agency copywriters.
II. Constant connectivity in
an on-demand world

We are wired. Almost every minute of every
day, it seems we are connected. Emailing,
surfing, Twittering, streaming, gaming,
texting, Facebooking, downloading, chatting
- will it ever end?
III. Globalization. Making the world
smaller place

Globalization is an unstoppable force
reshaping our society. The world's
economies are inextricably linked.
Technology has made geography irrelevant.
Businesses around the world are doing
business with one another and will
continue to do so. This is big. This is mega
big Gl
IV. Pervasive distrust in big
corporations


People do not trust in big corporations.
Corporate social responsibility is one of the
important issue.
V.A global sense of urgency to fix the
problems of a modern world


Being green is a minimum standard.
But being green is symptomatic of another
megatrend that is influencing the world on
a massive scale - a global sense of urgency.
Marketing Evolution:
the changing role of
customer
Prahalad and Rawaswamy (2000)

Customers are stepping out of their
traditional roles to become cocreators
as well as consumers of value
Customer as a passive audience
Persuading
predetermined groups
of buyers
Time frame
1970, early 1980s
Transacting with
individual buyers
Late 1980s and
early 1990s
Customers as
active players
Lifetime bonds
with individual
customers
1990s
Customer as
cocreators of value
Beyond 2000
Nature of
business
exchange and
role of
customers
Customers are seen as passive buyers with a predetermined role of
consumption
Customers are the
part of the
enhanced network;
they cocreate and
extract business
value
Managerial
mind-set
The customer is an
average statistic;
groups of buyers.
The customer is an
individual statistic
in a transaction
The customer is a
person; cultivate
tryst and
relationship
The customer is
not only an
individual but also
part of an
emergent social
and cultural fabric
Company
interaction with
customers, and
development of
product and
services
Traditional market
research; product and
services created
without much
feedback
Shift from selling
to helping
customer via help
desks, call centers,
etc.; Identify
problems from
customers,
feedback
Providing for
customers through
observation of
users; identify
solutions from lead
users.
Customers are
codevelopers of
personalized
experience.
Purpose and
flow of
communication
One way
communication
Database
marketing’ two-way
communication
Relationship
marketing; twoway
communication
and access.
Active dialog with
customers;
multilevel access
and
communication
P.Doyle. Marketing in the
new millenium
Marketing mistakes


Marketers have generally made the mistake
of seeing the subject as a functional
discipline rather than an integrative
business process.
Marketing directors have sought to make
marketing decisions rather than share
responsibility for satisfying customers with
cross-functional teams.
Steps of strategic and operational
marketing
Situation
analysis
Environment
- Consumers
- Markets
- Competitors
- Distributors
Opportunities
and
threat
Strength and
weaknesses
Segmentation
Targeting
Positioning
Segmentation- Market
Competitive
criteria
attractiveness advantages
and
competitiveness Goals and
analysis
strategies
Marketing
mix
4P
- Product
- Price
- Marketing
communication
- Distribution ….
Contrasting operational and strategic
marketing
OPERATIONAL
MARKETING







Action-oriented
Existing opportunities
Non product/market
variables
Stable environment
Short term management
Reactive behaviour
Marketing department
STRATEGIC
MARKETING
• Analysis-oriented
• New opportunities
• New products and new
markets
• Dynamic environment
• Longer planning horizon
• Pro-active behaviour
• Cross- functional
organisation
Marketing in practice
Passive marketing
(Product orientation)
Operational marketing
(Sale orientation)
Strategic marketing
(Marketing orientation)
Market driven management
(Market orientation)
Passive marketing
(reasons)
• Supply is scare. Demand is higher than
supply.
• Needs are known and stable.
• Technological innovation proceeds at a
slow pace.
• Markets are stable.
Passive marketing
(implementation)
• The firm is "product-oriented" and has an
"inside-in" perspective.
• Marketing research scale and frequency
are low.
• Promotional budget is limited.
• Firm capacity to predict the market
changes is week
Passive marketing: product
orientation
• The main attitudes
Demand exceeds supply.
Needs are well known and defined.
The technological environment is stable.
The priority is to build the production capacity.
Markets are well known and exports easy
• Limitations of this approach
The risk of product myopia is high.
The firm's behaviour is reactive and not proactive.
Operational marketing:implications
•
•
•
•
•
The firm is sales-oriented and has an "insideout" perspective.
Selective and exclusive distribution systems are
created.
Creation of a strong brand image through mass
media advertising.
"Pull" strategies tend to replace traditional
"push" strategies.
Development of powerful multinational (or
multi-domestic) organisations.
Operational marketing: the sales
concept
 Implicit assumptions
 The market can absorb anything if enough pressure is
applied.
 Commercial aggressiveness through mass media
advertising and hard selling is the key success factor.
 Limitations of this culture
 Risk of manipulative or wild marketing practices.
 To mould demand to the requirements of supply rather
than adapt supply to the expectations of demand.
Strategic marketing: reasons




Saturation of the core market in a growing
number of sectors.
Shortening of the product life cycle (PLC) due to
the acceleration of technological progress.
Coming of age of mass marketing techniques.
Internationalisation of the European and of the
world economy.
Strategic marketing: implications





The firm is ”customer-oriented" and has now an "outsidein" perspective.
Market segmentation is actively used to guide the product
policy - main tool.
The interface "R&D-Marketing-Production" is in charge of
new product development. Marketing people need R&D.
Brand management is responsible for strategic marketing
- it is new function - brand management function.
Permanent marketing information systems are developed
-acceleration of change.
Strategic marketing: the marketing
concept

Implicit assumption.



Satisfying customer's needs is the best way for
achieving the firm's growth and profit objectives.
The emphasis is placed on the customer.
Limitations of this culture


Satisfaction of short term needs may be in conflict
with long term well-being. Individual customer's needs
are not always compatible with societal common good.
Risk of market myopia if too much emphasis is placed
on expressed needs.
Implementing Strategic marketing (I)
1. What business are we in ?
(reference market definition)
2. What is the diversity of needs in each
segment ?
(macro and micro segmentation)
3. How attractive are the different segments ?
(business opportunity analysis)
4. What value proposition is sustainable in
each segment ?
(competitiveness analysis)
Implementing strategic marketing (II)
5. What are the priority segment(s) we want to
be in ?
(market coverage decision)
6. How do we want to compete in the target
segment(s) ?
(market positioning decision)
7. Which marketing programme is consistent
with our value proposition ?
(operational marketing plan)
The coming of age of traditional
marketing
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Increased professionalism of customer buying behaviour.
Customers are well educated in economics. Diversify
behaviour according the consumption situation. The
same person buy very expensive products and cheep
products.
Proliferation of weakly differentiated brands targeted to
specific segments.
Decrease in brand loyalty.
Weakening of television advertising communication
effectiveness. “Yes, I remember” - only few %
Escalade in self-defeating promotions. Every day low price
(EDLP), no promotion
Diversification of retail outlets.
Market-driven management: reasons
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Changing socio-demographic structure.
Slowing down of economic growth in Western Europe.
Acceleration and generalisation of technological progress.
Power of the consumerism movement.
Rise of the environmentalist movement and of green
marketing.
Growing power of mass merchandisers.
Development of electronic commerce and e-business
Globalisation of the European and of the World economy.
Rise of the "accountable" marketing concept.
Levels of Market Orientation
Consumers Competitors
(k)
(c)
K -
K
K
K
K
K
K
K
C
C
C
C
-
-
D
D
D
D
P
P
P
P
√
√
√
√
√
√
√
√
√
√
√
√
(d)
Stebėtojai
(p)
√
√
√
√
√
√
√
√
Organization of a Market-Oriented Firm
CEO
Operations
Category
team
Customer
team
HR
IT
Operational
Marketing
MARKET
Team
process
Finance