The Strategic Marketing Process

S itu a tio n a l A n a lys is

C o n tro l P h a se

R e su lts

Im p le m e n ta tion P ha se

M a rke tin g P lan

G o a l S e tt ing M a rke tin g P ro g ram

Four market-product strategies: Alternative ways to expand marketing opportunities, using Coca-Cola

Company products as examples

Market Penetration

Selling more Coca-Cola to Americans

Product Development

Selling a new product like PowerAde to Americans

Market Development

Selling Coca-Cola to the Chinese for the first time

Diversification

Selling a new product like movies and home videos to Europeans

Markets Present New

Present

A. Market Penetration

+: Know products & market segments well

-: Growth limited to this segment

B. Product Development

+: Can gain marketing economies of scale

-: Need new R&D and mfg., can cannibalize sales

New

C. Market Development

+: Can gain R&D and manufacturing economies

-: Need new sales training and distribution

D. Diversification +: Can mitigate swings

in core business by products in new markets

-: No economies of scale in R&D, mfg., or mktg

SWOTInternal Management Marketing Manufacturing Research & Dev. Finance Product Mix PersonnelExternal Economy Competition Consumer Trends Technology Industry/ Market Legal/Regulatory Channels

S W

O T

STRATEGIC PLANNING TOOLS(O’s &T’s)

High Low

High 1 2

Low 3 4Att

ractiveness

Success ProbabilityOpportunities:

a) How Attractive?

b) Do we have the right business strength?

High Low

High 1 2

Low 3 4Seriousness

ProbabilityThreats:

a) How serious?

b) How probable?

SWOT ANATOMYSelected Factors

A. Internal

1 Management Experienced No Depth

2 Marketing*Price*Product Quality; New Product Limited Product Line on

Development Process Regional Distribution*Place Good Retail Relationship Lack of Mass Media Channels*Promotion Effective Advertising Lack of Publicity*Salesforce Effective Limited Size

3 Manufacturing Excess Capacity High Costs

4 Research & Development Well Applied Basic

5 Finance Significant Cash Reserves, Relatively Low Price/Low Debt Effectiveness

6 Personnel Good Morale/Skilled Understaffed

7 Offerings High Quality Limited Line

SWOT ANATOMYSelected Factors

B. External

O T1 Economic Expansion; Low Inflation Adverse Currency Exchange

Optimism Rate

2 Competition Complacent; Few Full Line Entry of Low Cost CompetitorsCompetitors

3 Consumer Trends Brand Preference; Growing Growing Preference for PrivateDemand for High End of Brand LabelProduct Line

4 Technology Significant Development in Never Substitutes TechnologyComplementary ProductTechnology, More EffectiveDelivery Terms

5 Industry/Market Structure Exit Entry: New vs. EstablishedLow Debt Firms from Other Industries

6 Legal/Regulatory Patents Protects Entry; UnderstaffedGood Relations with Regulatory Agency; ForeignCountries Relaxing Restrictions

7 Channels Growth in Retail Outlets Increase in Bargain PowerDictation of Terms

Generic Marketing Strategies for Increasing a Firm’s Profits

GoalIncreaseProfits

DecreaseExpenses

IncreaseRevenues

Present Markets, present products(market penetration)

Present markets, new products(product development)

New markets, new products(diversification)

Scale or experience curve economies through larger unit volume

Non-scale economies

New markets, present products(market development)

Three Generic Growth Strategies• I. Intensive

– MP

– MD

– PD

• II. Integrative– Backward

– Forward

– Horizontal

• III. Diversification– Concentric

– Horizontal

– Conglomerate

GE MULTIFACTOR MATRIX• Market Attractiveness

• Market Size• Growth Rate• Profit Margins• Number of Competitors and Their Strength• Technological Conditions• Seasonality and Cyclicality

• Business Strength• Market Share• Marketing Enterprise• R&D Skills• Manufacturing Efficiency• Quality of Products• New Product Planning• Unit Costs

Profit Impact of Marketing Strategy (PIMS)

• DATA:– 3,000+ SBUs from 450+ member business firms

contributing 100+ data items – characteristics of market environment, competitor’s environment, strategies used by SBUs.

• Best Predictors of ROI and Cash Flow• Market Share

• Industry Growth Rate

• PLC Position

• Ratio of Marketing Expenses to Sales

• 1. Market Penetration

How? >Greater Usage

>Competitor’s Competition

>Noncustomers

Tactics?

>Lower Prices

>Expanded Distribution

>Greater Promotion

When Effective?

>Growth Market

• 2. Market Development

How? > New Locations

>New Channels

>New Customers

International Markets

>Exporting

>Licensing

>Joint Ventures

>Direct Investment

>Strategic Alliance

• 3. Product Development

How? >Product Innovation

(Augmentation)

>Product Line Extension

Success Factors

>Sufficient Market Size

>Firm’s Resources

>Cannabalism

>Competitive Response

>Significant Point Of

Difference

• 4. Diversification

Risky!!!

Failures:

> Anheuser-Busch

>Eagle Snacks

>Rohr and Grumman

>Coca Cola

>IBM

>Holiday Inn