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STRATEGIC MARKETING PLANNING

Chapt. 2: Developing Marketing

Strategies and Plans

Chapt. 12: Addressing Competition

and Driving Growth

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Figure 2.1, p. 38

SBU

Marketing

4-3

SBU

The Marketing Plan

Growth/Exit

Strategies

Competitive

Strategies

Chapter 18

Define the firm’s territories:

Technologies & products

Core competencies

Vertical network

Geographical scope

(Market Segments)

Implementation

& Control

4-4

A year later: Despite Fox News and parts of social media predicting the Swoosh’s downfall, the company claimed $163 million in earned media, a $6 billion brand value increase, and a 31% boost in sales.

Nike ad featuring Kapernick

A Nike story

The story highlights how Nike has created huge engagement with its customers through its media omnipresence, but ALSO that a brand has to be more than a product. As one ad agency executive put it “brands have to have a purpose and soul”

Colin Kaepernick and Eric Reid of the San Francisco 49ers kneel in protest during the national anthem prior to playing the LA Rams at Levi's Stadium, Sept. 12, 2016

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But what does the Nike story have to do with Strategic Planning ?

It highlights the importance of company “Mission” !

“brands have to have

a purpose and soul”

Company Purpose

Product vs. Market Oriented Missions

Company	Product Definition	Market Definition
AMTRAK	We run a railroad	We are in the transportation business
XEROX	We make copying equipment	We improve office productivity
TEXACO	We sell gasoline	We are in the energy business
Columbia Pictures	We make movies	We market entertainment
Encyclopedia Britanica	We sell encyclopedia books	We are an Information business

Marketing

Myopia?

The Impact of “Mission”

“A computer in every home” “We help solve business problems”

The Strategic Business Portfolio

The text has cut back on coverage of Portfolio based planning.

Should you know more?

The BCG Model

Strategic Business

Units (SBUs)

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RESOURCE ALLOCATION: BCG

Stars

Cash Cows

Q Marks

Dogs

RESOURCES

Grow/

Maintain Share

Market development

Segmentation

Brand advertising

Sales promotions

Grow

Product development

Product advertising

Distribution

Harvest

Prepare to

Divest

Maintain Share

Defensive advertising

Price promotions

Harvest

Prune product line

Reduce marketing budgets

What is the problem with portfolio models?

Next generation theories shifted focus to Competitive Advantage

Internal resource allocation leads to lack of long term commitment to SBUs.

Alternative “external” resource allocation argument—Oliver Williamson, superior allocative efficiency due to impacted knowledge. Counterargument, corporate raiders and spinoffs.

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SBU

The Marketing Plan

Strategic Business

Unit Level

SBU Strategy (Chapt. 12)

- Competitive Strategy.

Porter

Leader, Challenger, Follower, Nicher

MARKETING Strategy

- PLC and the Marketing Mix (Chapt. 12)

- Growth Strategies (Chapt. 2)

Marketing Plan

STRENGHTS

WEAKNESSES

OPPORTUNITIES

THREATS

SWOT

Competitive Strategy

Porter’s Model 1980

Bargaining

power of

suppliers

Bargaining

power of

customers

Threat of

substitute

products

Threat

of new

entrants

Intensity

of competitive

rivalry

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Uniqueness Perceived

by the Customer

High Value

Position

Industry

wide

Particular

Niche

DIFFERENTIATION

COST LEADERSHIP

F O C U S

Brand Image

Technology

Service

Distribution

People

Porter’s Strategies

Why are Cost Leadership and Differentiation Incompatible?

Standardization

Volume

Invest in Production Tech

Bureaucratic Organization

Variety

Segmentation

Invest in Marketing & R&D

Decentralized Creative Organization

CORE COMPETENCE Prahalad & Hamel 1990

CK Prahalad and Gary Hammel

CORE COMPETENCIES

Core

Competence

Production

Technology

Marketing

Research

Development

Personnel

Knowledge

Skills

Relevance to Consumers & Competitive Advantage

Difficulty of Imitation

Breadth of Application

Relevance Today of Porter, Prahalad & Hamel concepts?

Partnering (outsourcing)

CAD

CAM

Flexible

Manufacturing !

This sued to be what a manufacturing plant looked like not too long ago.

Today CLICK it looks like this. Computer aided design and manufacturing have change the face and economics of manufacturing. CLICK

PARTNERING

Hon Hai Foxconn:

Revenue $5.33 tril in 2019.

Mfg plants mostly in China but many low cost countries.

RESHORING

Outsourcing by 2005.

Hon Hai FoxConn is the largest contract manufacturer. Family owned. Flextronics started in the contract manufacturing of consumer electronics has branched out into a number of industries (including the automobile industry) and critical services (e.g., design engineering, global procurement).

It has manufacturing plants in all the major low cost producing countries of the world, such as Brazil, China, Hungary, India, Malaysia, Mexico, Poland, and the Ukraine. Jabil, is third, continues to be focused on the global electronics industry.

Coalition for a Prosperous America (CPA) Reshoring Index shows a first time uptick in domestic manufacturing in 2019. Import penetration in manufactures fell from 31.2 percent in 2018 to 30.6 percent in 2019. That is a small % change but a large $ change (42.6 bil) considering that in 2019 the US consumed manufactured goods worth a total of $7.1 trillion.

The Current Paradigm: Closed Innovation System

Research

Development

New Products

& Services

Current

Market

Internal

Science

and

Technology

Resources

Henry Chesbrough

Licence, spin out, divest

Our current market

Our new market

Other firm´s market

Open Innovation Paradigm

External technology insourcing

Internal technology base

External technology base

Internal/external joint ventures

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Competitive Strategies for

Market Leaders

Market Challengers

Market Followers

Market Nichers

Market Leaders

Develop deep pockets in core competency—Marketing, R&D, Production, Human capital

Thwart access to resources via vertical integration

Thwart access to distribution

Defense of market share by aggressive counteroffensives

Grow the total market

Market Challengers

* Technology innovator

* Improve around leader technologies

* Attack leader by growing through flank markets, niches and regional markets

* Attack sluggish defender with product

modifications supported by heavy

promotional campaign

Blue Ocean Strategy v. Red

Red Bull grabbed 44% of the energy drink market with unconventional and aggressive advertising

Market Followers:

* Avoid technology innovation, follow by

copying & developing “value” alternatives

* Target segments ignored by major

competitors

* Invest in “efficiency” technology

* Target discount retail chains and reseller

private label brands.

* Target sub-segments with very specialized

or custom needs (often high end)

* Build strong personalized relationships

Market Nichers

DuckDuckGo Logo PNG

DuckDuck’s 12 bil searches per year to Google’s 2 tril

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STRATEGIC PLANNING

CORPORATE STRATEGY

- Company Wide Vision, Direction

- Managing the Business Portfolio

BUSINESS UNIT (SBU) STRATEGY

- Competitive Strategy

MARKETING STRATEGY

- Marketing Strategy and the

Marketing Mix

Chapt 2 again reviews the basic ideas in marketing strategy—segmentation, differentiation, positioning and the marketing mix. But we will study these in detail in subsequent chapters so I am leaving it to you to read here. Instaed I am going to focus on two other key aspects of marketing strategy, the PLC and the Growth strategy.

Product Life Cycles

Marketing Strategy

Growth Strategy

The Product Life Cycle

Time

Product

Development

Introduction

Profits

Sales

Growth

Maturity

Decline

Losses/

Investments ($)

Sales and

Profits ($)

Segments

Products

Pricing

Distribution

Promotion

PLCs: Growth Gap Analysis

Year 1 2 3 4 5 6

Growth

Gap

Revenues

Growth/Revenue Gap

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Figure 2.2 p. 42

Growth Strategy: Ansoff’s Growth Matrix

4. Diversification

2. Market

development

New

markets

1. Market

penetration

Existing

markets

Existing

products

3. Product

development

New

products

Price,

Heavy Promos,

Advertising,

Distribution

Develop

Technology

New Features

Versioning

Unrelated

Diversification

Acquisitions &

Mergers

Geographic

New Uses

New Channels

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Market Development

New Uses

2000 Uses !

* Remove crayon from walls, blue ink from jeans, tea stains from a kitchen counter

* Remove adhesive price tags from cases, old duct tape, oil stain from driveway,

stickers and stuck dead insects from car

* Clean off chewing gum stuck to your shoes, hair, or carpet.

* Remove glue from hands, stuck rings on fingers, (wash your hands afterwards.

* Remove candle-wax or glue from carpet

* Clean tooth paste stains and bathroom tiles of mascara, nail polish, paint.

* Great slug, snail, wasp, spider, etc. repellent;

* Spray on trees to prevent beavers from chewing on them

Snake charmer (A bus driver in Asia used WD-40 to remove a python coiled

around the undercarriage).

The Marketing Planning Process

Analyze the Marketing Environment

Analyze Competitors and

Company Strengths & Weaknesses

Strategic Market

Planning

Analyze Customers and Segments

Develop products that better meet Needs.

Target Segments with unmet Needs or weak Competitors.

Design integrated Marketing Mix, 4Ps.

New Shoes simulation

Implementation/Roll-out, Budget

New Shoes Simulation

Control

Performance Metrics Marketing ROI

Plan Evaluation

Corrective Action

Results in a

Marketing Plan

illustrated in

Pegasus p. 61-65

Performance Metrics Marketing ROI

Standard Measures

of Performance

Brand awareness

Sales growth

Market share

Social media responses

Newer Measures Customer

Value & Relationships

(Figure 2.8)

Satisfaction. Net Promoter Score

(10-9) – (6-0)

Engagement

Loyalty, Retention

Customer Lifetime Value

Brand Equity

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