Chapter 1 Foundations of Strategic Marketing Management

1-*The Primary Purpose of MarketingTo create long-term and mutually beneficial exchange relationships between an entity and the publics (individuals and organizations) with which it interacts.

1-*Expanding Responsibilities of Marketing ManagersExpanded responsibilities include:Charting the direction of the organizationContributing to decisions that will create and sustain a competitive advantage and affect long-term organizational performanceThey no longer function solely to direct day-to-day operations. They must make strategic decisions as well.

1-*Evolution of the Marketing ManagerThis has prompted the emergence ofstrategic marketing management as a course of study and practice.From being only an implementer. to being a maker of organization strategy.

1-*Processes in Strategic Marketing ManagementDefining the organizations business, mission, and goalsIdentifying and framing organizational growth opportunitiesFormulating product-market strategiesBudgeting marketing, financial, and production resourcesDeveloping reformulation and recovery strategies

1-*Defining the Organizations Business, Mission, and GoalsProcess One

1-*Business DefinitionBy defining a business from a customer or market perspective

an organization is appropriately viewed as:a customer - satisfying endeavora product-producing or service delivery enterprise.not

1-*An organization should define a business by:

The type of customers it wishes to serveThe particular needs of those customer groups it wishes to satisfyThe means or technology by which the organization will satisfy the customer needsWhat business are we in?

1-* Most statements describe:

the organizations purposecustomers, products/services, markets, philosophy, and technologyBusiness MissionUnderscores the scope of an organizations operations apparent in its business definitionReflects managements vision of what the organization seeks to do

1-*Benefits of Mission StatementsCrystallizes managements vision of the organizations long-term direction and characterProvides guidance in identifying, pursuing, and evaluating market and product opportunitiesInspires and challenges employees to do those things that are valued by the organization and its customersProvides direction for setting business goals or objectives

1-*Business GoalsGoals or objectives convert the organizations mission into tangible actions and results that are to be achieved, often within a specified time frame.Three major categories of goals:ProductionFinancialMarketing

1-*Production GoalsApply to the use of manufacturing and service capacity and to product and service quality.

Financial GoalsFocus on return on investment, return on sales, profit, cash flow, and shareholder wealth.

Marketing Goalsmarket sharemarketing productivitysales volumeprofitcustomer satisfactioncustomer value creation

1-*Identifying and Framing Organizational Growth OpportunitiesProcess Two

1-*Sources of environmental opportunity:

Unmet or changing customer needsUnsatisfied buyer groupsNew means or technology for delivering value to prospective buyersWhat might we do?Converting Environmental Opportunities into Organizational Opportunities

1-*What do we do best?Distinctive Competency describes an organizations unique strengths or qualities including: Skills Technologies Resourcesthat distinguish it from other organizations.Converting Environmental Opportunities into Organizational Opportunities

1-*What must we do?Success Requirements are basic tasks that an organization must perform in a market or industry to compete successfully.

If what must be done is inconsistent with what can be done to capitalize on an environmental opportunity, an organizational growth opportunity will fail to materialize.

Converting Environmental Opportunities into Organizational Opportunities

1-*SWOT AnalysisA formal framework for identifying and framing organizational growth opportunities

1-*SWOT AnalysisFramework for focusing attention on the fact that an organizational growth opportunity results froma good fit between an organizations INTERNAL CAPABILITIES(Strengths & Weaknesses)andits EXTERNAL ENVIRONMENT (Opportunities & Threats)

1-*SWOT Analysis

1-*Questions to be asked once SWOT has been identifiedWhich internal strengths represent distinctive competencies? Do these strengths compare favorably with what are believed to be market or industry success requirements?Which internal weaknesses disqualify the organization from pursuing certain opportunities?Does a pattern emerge from the SWOT?

1-*Formulating Product-Market StrategiesProcess Three

1-*DiversificationMarketDevelopmentMarketPenetrationProductDevelopmentExistingproductsNewproductsExistingmarketsNewmarketsProduct-Market Strategies

1-*Seeking a larger market share in a market in which organization already has an offeringThis strategy involves:Attempts to increase present buyers usage or consumption rates of the offeringAttracting buyers of competing offeringsStimulating product trial among potential consumersMarket Penetration Strategy

1-*Introducing its existing offerings to markets other than those that the organization is currently serving.Reaching new markets requires:Carefully considering competitor strengths and weaknesses and competitor retaliation potentialModification of the basic offeringDifferent distribution outletsChange in sales effort and advertisingMarket Development Strategy

1-*LicensingExportingJoint Venture or Strategic AllianceDirect InvestmentMarket Development in the International Arena

1-*Creating new offerings for existing markets.This approach may be taken for:Product Innovation develop totally new offeringsProduct Augmentation enhance the value to customers of existing offeringsProduct line extension broaden the existing line of offerings by adding different sizes, forms, flavors, etc.Product Development Strategy

1-*Development or acquisition of offerings new to the organization and introducing those offerings to publics not previously served by the organization.Growing trend in recent yearsHigh-risk strategy because both the offering and market served are new to the organizationDiversification Strategy

1-*The Marketing MixCustomer

1-*Budgeting Marketing, Financial, and Production ResourcesProcess Four

1-*A formal, quantitative expression of an organizations planning and strategy initiatives expressed in financial terms

A well-prepared budget meshes and balances an organizations Financial, Production, and Marketing Resourcesso that overall organizational goals or objectives are attained.The Budget

1-*Operating Budget Also referred to as a pro forma Income StatementFocuses on an organizations income statementFinancial BudgetFocuses on the effect that the operating budget and other initiatives will have on the organizations cash positionComponents of a Budget

1-*Developing Reformulation and Recovery StrategiesProcess Five

1-*Comprehensive, systematic, independent, and periodic examination of a companys marketing environment, objectives, strategies, and activities to recommend a plan of action to improve the companys marketing performance.The Marketing AuditHelps answer the questions:Are we doing the right things?Are we doing things right?

1-*Focus can be on a business, product, or brandTime Dimension can be short-run (typically one year) or long-run (multi-year)A formal written document that describes the context and scope of an organizations marketing effort to achieve defined goals or objectives within a specified future time period.The Marketing Plan

1-*Marketing Ethics and Social ResponsibilityMarketing decisions reflect an organizations orientation toward the publics with which it interactsThe marketplace is populated by individuals with diverse value systemsTheir actions will be judged publicly by others with different values

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