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Direct Marketing Strategy Hierarchy

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“A major change that is reshaping the face of selling is the growth of direct marketing. This session explores the major changes that are taking place, the key tools that can be used and how the direct marketing process can be effectively managed. It begins by explaining the meaning of direct marketing before discussing the use of database marketing. The management of direct marketing activities will then be explored, including setting objectives, targeting, achieving customer retention and creating action plans”.

ACCMAN

Importance of this course

Direct Marketing Contemporary Direct Marketing

04/15/23

The Strategy Hierarchy

• A strategy is a plan designed to accomplish a mission.

• A mission is a set of objectives.

• Once the mission’s objectives are set, strategy can be created.

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Company Mission Statements

IBM will be driven by these values:• Dedication to every client’s success• Innovation that matters, for our company and for the worldCoca-Cola• To refresh the world ..in body, mind, and spiritDell• Delivering the best customer experience in markets we serveACCMAN• To train future global business leaders with cutting edge

management skills.Chick- Fil -A• Be American’s best quick-service restaurant

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Strategy Hierarchy

• A firm’s corporate strategy encompasses its plan and goals for the entire organization.

• Once the company’s strategy is formulated, it is then communicated to various business units- marketing, sales, manufacturing, and so forth- who create their own plans to support the corporate strategy.

The flow of the strategy from the organization level to the unit level is called the strategy hierarchy.

CORPORATE STRATEGY

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Strategy Hierarchy

An abbreviated exampleof how a firm’s strategymight be different atdifferent levels of theorganization.

CORPORATESTRATEGY

“To be a leader inwomometer technology”

MARKETINGSTRATEGY

“To sell womometer to space engineersand to hydraulic engineers at a premium price”

DIRECT MARKETINGSTRATEGY

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Strategy Hierarchy

• Note that firm’s marketing plan is likely to precede its sales plan. This order does not imply that sales executives do not participate in the process until after the firm’s marketing plan is done.

• Rather, marketing and sales work together to create an overall marketing strategy.

• Then the sales executives must create the action plans specifically for salespeople to carry out the strategy.

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Strategy Hierarchy

At the marketing level, planners have to answer the

following four questions:

1. What markets do we serve with what products?

2. What type of relationship do we form and with whom?

3. What level of investment will be required, and how will we locate and allocate the needed resources?

4. What are the detailed objectives and action plan?

MARKETING STRATEGY

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Strategy Hierarchy

1. What markets do we serve with what products?

MARKETING STRATEGY

CURRENT MARKET NEW MARKET

Market PenetrationHP creates “full linecontracts” to encouragecustomers to buy all HP products

MARKETS

PRODUCTS

CURRENT

NEW

Product DevelopmentDell adds consumerelectronics such ascameras

DiversificationCarlson Marketing expands fromselling promotional trips topromotional products, suchas cups and caps

Market DevelopmentIntel sells computer chipsfor use in John Deeretractors

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Strategy Hierarchy

2. What type of relationship do we form and with whom?

• Companies do not operate in a vacuum- they have suppliers, customers and competitors who operate in a network: touch one and like, ripples in a pond, others are affected.

• Customer Life Time Value concept (Sum of all of the purchases made over a customer’s lifetime, is worth a significant amount)

• Customer Relationship Management

MARKETING STRATEGY

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Strategy Hierarchy

3. What level of investment will be required, and how will we locate and allocate the needed resources?

• This includes money but also human & social capital.• Human capital refers to the people that make up an

organization.• Social capital, or the ties that the firm has with others,

can also be drawn upon as a resource. At its simplest, social capital is who owes you a favor or who can be asked a favor.

MARKETING STRATEGY

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Strategy Hierarchy

3. What level of investment will be required, and how will we locate and allocate the needed resources?

An historic example dating from early eighties concerns Chrysler. At one point, the firm was within days of declaring

bankruptcy when David, the CEO of Xerox Corporation, called Lee Iacocca, the CEO of Chrysler. Kearns asked

Iacocca how many cars needed to be sold for the company to stay afloat.

Chrysler, after all, was a good Xerox customer. Iacocca told him, and David responded by placing an order for that

many. The social capital between the two firms saved Chrysler and put both of them to solid footing.

MARKETING STRATEGYSOCIAL CAPITAL

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Strategy Hierarchy

4. What are the detailed objectives and action plan?

One set of criteria for establishing objectives is the SMART format.

For example, an objective to simply ‘increase market share’ is not specific enough. As a manager, you need to ask yourself, by how much do we need to increase market share? If the objective is to increase customer loyalty, you need a way to measure customer loyalty, perhaps by recording the number of repeat customers make. If the objective is to double market share, you need to ask yourself whether such an ambitious goal is achievable or even realistic. Finally, the objective need to be time-based. When will it be met? In the next month, year, or decade?

MARKETING STRATEGY

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Strategy Hierarchy

An abbreviated exampleof how a firm’s strategymight be different atdifferent levels of theorganization.

CORPORATESTRATEGY

“To be a leader inwomometer technology”

MARKETINGSTRATEGY

“To sell womometer to space engineersand to hydraulic engineers at a premium price”

Direct MarketingSTRATEGY

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Strategy Hierarchy

• Objectives of Direct Marketing (DM)• Reasons for the Growth of Direct Marketing• DM Vs Direct Selling• DM Vs Database Marketing• Media Decisions• Direct Marketing Process• Managing DM Campaign

Direct Marketing STRATEGY

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