Strategy in Marketing

Professor Lawrence Feick

University of Pittsburgh

Outline

• What is marketing strategy?

• Framework for marketing strategy

• External analysis: environmental scanning

• Internal analysis: core skills of the firm

• SWOT: matching the external and internal

• Portfolio models

Marketing strategy

• Answers basic questions:– to whom will we sell?– what will we sell, how will we sell it?

• Focus on:– target market selection– marketing mix design

Marketing strategy formulation

• External analysis (looking outside the firm)– environmental scanning– environmental management– identifying opportunities and threats

• Internal analysis (looking inside the firm)– mission and objectives– key skills, resources of the firm– identifying strengths and weaknesses

External analysis:The key environments

• Socio-cultural environment

• Economic environment

• Technological environment

• Political-legal environment

• Competitive environment

External analysis:The socio-cultural environment

• Demographics– age, education, marital status, race, etc.

• Culture– US culture, subcultures, foreign cultures– pop culture, style, fashion, conventional

wisdom– ideas, movements, causes

• How is this environment changing?

Life expectancy at birth by sex, US by year

Year Men Women

1900 48 50

1925 55 58

1950 65 72

1975 68 75

2000 72 79

Racial (ethnic) characteristics of the US, percentages by year Ethnicity 1990 2005

White (Eur) 76 68

Black (AA) 12 13

Hispanic 9 14

Asian 3 5

Source: US INS

Percent distribution of origin of US naturalized citizens by yearOrigin 1961-70 1991-94

Europe 62 12

N. America 21 27

Asia 13 49

S. America 2 8

Other 2 4

External analysis:The economic environment

• GDP and business cycles

• Personal income

• Inflation

• Unemployment

External analysis:The technological environment

• Creation of substitutes for the product category (e.g., marketing myopia examples)

• Changes in the product or product usage

• Changes in the production, service, or support process

• Changes in distribution channels

• Changes in promotion, media

External analysis:The political-legal environment

• Government laws and regulations– Maintaining a competitive market– Protecting consumers

• Industry self-regulation

• Litigation

External analysis:The competitive environment

• Who is our competitor?– brand-level competition– product category-level competition– want-level competition

• Open markets and increased competition– global connections– emphasis on exports– virtual marketing

External analysis: recap

Socio-culturalSocio-culturalEnvironmentEnvironment

Economic Economic EnvironmentEnvironment

TechnologicalTechnologicalEnvironmentEnvironment

CompetitiveCompetitiveEnvironmentEnvironment

Political-legalPolitical-legalEnvironmentEnvironment

Firms, Firms, Consumers,Consumers,Competitors,Competitors,and Productsand Products

External analysis: recap

• Five external environments change continually

• Changes create opportunities and challenges in new and existing markets

• Marketers’ key jobs:– environmental scanning, forecasting, adaptation– environmental management (if possible)

Internal analysis

• Motivation: how does the firm choose from among all of the opportunities in the environment?

• Examples– Microsoft – Federal Express

Internal analysis:Mission

• The self-defined description of the business the firm is in; why the firm exists

• Usually includes mention of – customer groups served– customer needs met– technology employed

• Constrains marketing strategy choices

Mission statement example

• Intel: Do a great job for our customers, employees, and stockholders by being the preeminent building block supplier to the computing industry.

Internal analysis:Organizational objectives

• Define sought after benchmarks

• Usually specific about time and quantity

• Often involve sales, profits, numbers of customers, customer satisfaction, etc. or hoped for changes in these

• Constrains marketing strategy choices

Internal analysis:Strengths and weaknesses

• Assessment of skills, resources, competencies of the firm

• What do we do exceptionally well, what not so well?

• What assets (e.g., patents, image, brands, people) do we have that give us an advantage?

• How do we compare to competition on these?

SWOT

• Combining the results of internal analysis (SW) with external (OT)

• Build on strengths to take advantage of environmental changes

• Manage weakness that are made greater by environmental changes

Recap: marketing strategy

• Outcome of SWOT analysis:– a focus on who: which target markets?– a focus on how: what marketing mix will move

them?

• Key to success: consistency – with the target market and mix– among elements of the mix

Aside: Portfolio models

• Purpose: assess each of the firms businesses using internal and external criteria

• Two examples: – Boston Consulting Group Growth/Share Matrix– GE Business Screen

BCG Growth/Share Matrix

High Relative Share 1.0 Low Relative Share

10%

Fast Growth

Slow Growth

BCG Growth/Share Matrix

High Relative Share 1.0 Low Relative Share

10%

Fast Growth

Slow Growth

AABB

CC

GE Business Screen

Strong Average Weak

Business Strength

High

Medium

Low

Indu

stry

Att

r act

iven

ess Green

Yellow

Red

Portfolio models: Summary

• Assumptions

• Uses

• Limitations