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Developing Marketing Strategies and a Marketing Plan

McGraw-Hill/Irwin

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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 2 – Developing Marketing Strategies and a Marketing Plan

Define a marketing strategy.

Describe the elements of a marketing plan.

Analyze a marketing situation using SWOT analysis.

Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.

Outline the implementation of the marketing mix as a means to increase customer value.

Summarize portfolio analysis and its use to evaluate marketing performance.

Describe how firms grow their business.

Developing Marketing Strategies and a Marketing Plan

LO1

LO2

LO3

LO4

LO5

LO6

LO7

LEARNING OBJECTIVES

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These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

Sustainable Competitive Advantage

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This slide covers the four strategies to create and deliver value and a sustainable competitive advantage.

Ask students to think of companies who they are very loyal to in many categories (food, electronics, personal care)? Is it their product, location, operational, or customer excellence that draws the student’s loyalty?

Customer value

Customer excellence

Operational excellence

Product excellence

Locational excellence

CHECK YOURSELF

What are the various components of a marketing strategy?

List the four macro strategies that can help a firm develop a sustainable competitive advantage.

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1. Identifies a firm’s target market, related marketing mix — their four Ps — and the bases upon which the firm plans to build a sustainable competitive advantage.

2. Customer excellence, operational excellence, product excellence, locational excellence.

The Marketing Plan

Planning

Phase

Implementation

Phase

Control

Phase

Step 1: Business

mission & objectives

Step 2: Situation analysis

SWOT

Step 5: Evaluate performance

using marketing metrics

Step 3: Identify opportunities

Segmentation

Targeting

Positioning

Step 4: Implement marketing mix

Product

Price

Place

Promotion

Marketing

strategy

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Explain to students that the marketing plan should be a written plan yet many companies do not write it down.

Ask students why companies tend to not write down marketing plans. The most likely answer is that they don’t take the time or haven’t organized the strategy.

Three Phases of a Strategic Plan

Ryan McVay/Getty Images

Comstock Images/Almay

Getty Images/Digital Vision

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A poorly executed plan leads to failure, regardless of how good or solid the plan may be. The world is full of good plans poorly executed. When initially introduced, diapers designed differently for boys and girls bombed because the market was not ready for the product; through improved execution, the diaper manufacturer ultimately found success. However, even well-executed plans require monitoring and updating, because the needs of any market constantly change.

Planning

Implementing

Controlling

Step 1: Define the Business Mission

MADD mission statement:

MADD strives to stop drunk driving, support the victims of this violent crime and prevent underage drinking.

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Group activity: Students should develop a mission statement for their school. The resultant mission statement would offer a good way to assess and set student expectations.

Step 2: Conduct a Situation Analysis

Strengths

Strong brand

Strong celebrity endorsers

Innovative products

Strengths

Strong brand

Portfolio of brands

Strong global presence

Weakness

Overreliance on footwear

Weakness

Management of numerous brands

Opportunity

Emerging countries

Other fashion segments

Opportunity

Emerging countries

Threats

Cheaper imports

Imitation products

Retail becoming price competitive

Threats

Cheaper imports

Imitation products

Recessionary forces

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A SWOT analysis is comprehensive, in that it offers both an internal and an external assessment. The firm therefore must possess expertise in both what the firm can provide and what the market wants the firm to provide.

Students can take a few minutes and fill in a SWOT analysis for their in-class exercise of building a marketing plan for their college.

Step 3: Identifying and Evaluating Opportunities Using STP

Courtesy The Hertz Corporation

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After completing the situation audit, the next step is to identify and evaluate opportunities for increasing sales and profits using STP (segmentation, targeting, and positioning). With STP, the firm first divides the marketplace into subgroups or segments, determines which of those segments it should pursue or target, and finally

decides how it should position its products and services to best meet the needs of

those chosen targets.

Segmentation

Targeting

Positioning

Step 4: Implement Marketing Mix and Allocate Resources

Courtesy Bel Brands USA

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In all firms, resources are scarce and must be allocated so that they create the most value for the firm.

Ask Students to point out the elements of the marketing mix in this ad? They will certainly see the value creation in the product and the promotion which targets busy women.

Product

Value Creation

Price

Value Capture

Place

Value Delivery

Promotion Value Communication

Product and Value Creation

Successful products and services are those that customers perceive as valuable enough to buy.

Courtesy Amazon.com

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Because the key to the success of any marketing program is the creation of value, firms attempt to develop products and services that customers perceive as valuable enough to buy.

Price and Value Capture

Price must allow for customers to perceive good value for the product they receive.

Purestock/SuperStock

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These will be covered in the pricing chapters later in the book. It is worth spending some time on Value-based pricing. Show students two differently priced products from the same category and ask students which one they view as better value and why?

For example, an Apple i-Pod vs. an Microsoft Zune player. Or alternatively Aquafina vs. Perrier. Also explain that in this course, more discussion of value will be done throughout the semester.

Place and Value Delivery

The product must be readily accessible

Why is this retailer growing?

Courtesy Sephora USA, Inc..

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Getting the product to consumers at the exact moment they desire it is difficult. Firms therefore are experimenting with different forms of distribution, such as vending machines for cell phones, to offer consumers 24/7 access to products. Staples has incorporated web kiosks in their stores to access Staples.com. Thus, consumers are able to buy products that are out of stock in-store. Ask students if they are familiar with Sephora, if they like it, and why? Most likely they will be very fond of this retailer. They offer an incredible assortment in a well organized, well lighted, exciting retail environment.

Promotion and Value Communication

Television

Radio

Magazines

Sales force

New Media

©Lars A Niki

McGraw-Hill Companies, Inc./ Gary He, photographer

The McGraw-Hill Companies, Inc./ John Flournoy, photographer

Courtesy Pizza Hut.

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Consumers enter into an exchange only if they know that the firm’s product or service appears in the marketplace. This is why promotion is so important. They won’t buy if they don’t know about it.

Step 5: Evaluate Performance and Make Adjustments

P&G Website

HIGH

Relative market share

LOW

HIGH

Market growth rate

LOW

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Firms cannot simply remain content with a strategy for too long. Over time, all strategies must be revised to adjust to new markets, new competitors, and new technologies. The firm must recognize not only its failures, but also its successes to ensure continued success. The full description of the Boston Consulting Group Matrix is found in the Appendix to Chapter One. In general it is an example of portfolio analysis. Visit the P&G website and ask students to recognize stars, cash cows and question marks (newer products). You won’t find any dogs at the P&G website.

CHECK YOURSELF

What are the five steps in creating a marketing plan?

What tool helps a marketer conduct a situation analysis?

What is STP?

What do the four quadrants of the portfolio analysis represent?

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Business mission and objectives, situation analysis and SWOT, identify opportunities, implement marketing mix, evaluate performance using marketing metrics.

SWOT analysis (strengths, weaknesses, opportunities, threats)

Segmentation, Targeting, Positioning

Stars, Cash Cows, Question Marks, Dogs

Growth Strategies

Current

New

PRODUCTS AND SERVICES

Current

New

MARKETS

Market Penetration

Diversification

Product Development

Market Development

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The growth strategies model is crucial for students to understand. Fundamentally, all strategies involve one or a combination of the four factors pictured in this slide. Each can be used to achieve different objectives.

CHECK YOURSELF

What are the four growth strategies?

What type of strategy is growing the business from existing customers?

Which strategy is the riskiest?

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Market penetration, market development, product development, diversification

Product development and market penetration

Diversification

Customer excellence is achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service.

Glossary

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Customer excellence is achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service.

A diversification strategy introduces a new product or service to a market segment that currently is not served.

Glossary

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A diversification strategy introduces a new product or service to a market segment that currently is not served.

Locational excellence occurs by having a good physical location and Internet presence.

Glossary

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Locational excellence occurs by having a good physical location and Internet presence.

A market development strategy employs the existing marketing offering to reach new market segments, whether domestic or international.

Glossary

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A market development strategy employs the existing marketing offering to reach new market segments, whether domestic or international.

A market penetration strategy employs the existing marketing mix and focuses the firm’s efforts on existing customers.

Glossary

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A market penetration strategy employs the existing marketing mix and focuses the firm’s efforts on existing customers.

A marketing plan is a written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or pro-forma income (and other financial) statements.

Glossary

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A mission statement is a broad description of a firm’s objectives and the scope of activities it plans to undertake.

Glossary

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A mission statement is a broad description of a firm’s objectives and the scope of activities it plans to undertake.

Operational excellence is achieved through efficient operations and excellent supply chain and human resource management.

Glossary

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Operational excellence is achieved through efficient operations and excellent supply chain and human resource management.

A product development strategy offers a new product or service to a firm’s current target market.

Glossary

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A product development strategy offers a new product or service to a firm’s current target market.

Product excellence occurs by having products with high perceived value and effective branding and positioning.

Glossary

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Product excellence occurs by having products with high perceived value and effective branding and positioning.

A situation analysis uses a SWOT analysis that assesses both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats.

Glossary

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STP stands for segmentation, targeting, and positioning, and is used to identify and evaluate opportunities for increasing sales and profits.

Glossary

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STP stands for segmentation, targeting, and positioning, and is used to identify and evaluate opportunities for increasing sales and profits.

A sustainable competitive advantage is an advantage over the competition that is not easily copied, and thus can be maintained over a long period of time.

Glossary

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A sustainable competitive advantage is an advantage over the competition that is not easily copied, and thus can be maintained over a long period of time.