MARK 1012: LECTURE 2 – Marketing Strategy and Marketing EnvironmentLearning Objectives:

Introduce you to marketing process

Marketing process is about: • Analysing market opportunities• Selecting target markets• Develop marketing mix (produce, price, promotion, placement) for selected markets• Use STRATEGY and TACTICS [managing marketing efforts]

Strategy: explicit statement of firm’s vision of its future, objectives and purpose, providing long term direction for decisions, includes corporate policies, resource allocations, customer markets and competitive environment, essentially being how to compete for the future.

Tactics: serve as guidelines for implementing the intent of strategic plan, basis for day-to-day operating decisions, having a shorter-term planning horizon than STRATEGIC PLANNING

Discuss strategic planning

Strategic planning: process of developing and maintaining a strategic fit between the organisation’s goals and capabilities in the light of changing marketing opportunities. It relies on developing a clear:

• Company mission• Objectives• Sound business portfolio• Coordinated functional strategies

Summary of SP: planning helps to make sense of changing environment (orgs operate according to formal plans and managers are too busy for planning) and the need for flexibility has led to the resurgence of scenario planning.

The strategies following a HIERARCHY:

Introduce marketing plans and explain how to develop it

Marketing plan: vary considerably among companies and the plan is variously called a ‘business plan’ and an ‘operating plan.’ The plan focuses on customer acquisition, retention and the

resources required (needed to implement specific marketing functions – selling, advertising, sales promotion and market research). Most cover only one year, and their length (pages wise vary).

• Shortcomings of the plan are due to lack of realism, insufficient market and competitive analysis and a short-run focus.

Business plan: incorporate the plans of all functions [production, R&D, finance, HR, IT and marketing].

EVALUATION of the marketing plan:

Objectives needs to relate directly to

1. Company’s strategic initiatives

2. What you learned in situational analysis

3. Capacity of current marketing mix to handle

4. Business’ strength and the opportunities available

5. Business’ weaknesses and the threats that endanger it

6. Objectives need to be clear, measurable statements of what is to be achieved

7. Objectives, strategies and tactics need to relate to each other

8. Each strategy contain cost/benefit evaluation

9. Every person is involved in implementation, including marketing planning process

10.Clearly visible on your desk (?)

11.Business vision is a ‘shared vision’?

IMPLEMENTATION of the marketing plan: • Process that turns marketing strategies and plans into marketing actions in order to

accomplish strategic marketing objectives. • Involve day-to-day, month-to-month activities which effectively put marketing plan to work. • Addresses the who, where, when and how as oppose to what and why of marketing activities

Poor implementation: • Isolated planning • Tradeoffs between long and short term objectives• Natural resistance to change• Lack of financial and marketing integration• Overemphasis on the document

CONTROLLING AND EVALUATING performance:

Marketing control: process of measuring and evaluating the results of marketing strategies and plans, taking corrective actions to ensure objectives are attained.

Operating control: checking ongoing performance against the annual plan and taking corrective action when necessary

Strategic control: checking that the company’s basic strategies are well matched to its opportunities

List and explain the broad concept of the organisation’s micro and macro environment

Micro-environment: forces close to the org which affect its ability to serve customers (the org, channel firms – resellers, retailers, customer markets, competitors and publics)

Marketing MGMT is responsible for attracting and building relationships with customers by creating value and satisfaction. Success in this depends on the following actors in the org’s micro-environment:

1. MARKETING ORG

Senior management sets the org’s missions, objectives, strategies and policies and they must approve plan before implementation – whilst also influencing marketing managers. Marketing plans also take into consideration the top management, finance, R&D, purchasing manufacturing and accounting sectors of org.

2. SUPPLIERS – marketing managers need to be aware of supply availability, supply shortages/delays, labour strikes, price trends of supplies (which may collectively damage customer satisfaction). The change in supply costs also harms org’s sales.

3. MARKETING INTERMEDIARIES – link the firm with its customers, helping the org to promote, sell and distribute its goods to final buyers.

Resellers – help org find customers or make sales to them

Physical distribution firms – help org stock and move goods from their points of origin to their destinations

Marketing services agencies – such as marketing research companies, advertising agencies, media firms, export consulting agencies and marketing consulting firms that help org target and promote its products to the right markets

Financial intermediaries – banks, credit org, insurance org and other businesses that help finance transactions or sure against risk associated with buying and selling of goods.

4. CUSTOMERS – consumer markets, business markets, reseller markets, government markets and international markets

5. COMPETITIORS – org must provide greater customer value and satisfaction than its competitors, no single competitive marketing strategy is best for all org and each marketer should consider its own size and industry position compared with those of competitors.

6. PUBLICS – any group that has actual or potential interest, or impact on an org’s ability to achieve objectives.

Macro-environment: larger societal forces that affect org’s whole micro-environment (demographic forces, economic forces, natural forces, technological forces, political forces)

Outline the key changes occurring in the organisation’s macro environment

1. DEMOGRAPHIC environment: • Growing ethnic diversity, age structure,

education, geographic shifts and changing family structure.

2. ECONOMIC forces: economic developments, changes in income (inflation), change in consumer spending patten (discretionary spending)

3. TECHNOLOGICAL forces: fast pace of change, high R&D budget, concentration on minor improvements, increased regulation

4. NATURAL forces: shortage of raw materials, increased cost of energy, increased pollution, resource preservation by the government

5. POLITICAL & LEGAL reasons: regulating business, changing in government agency enforcement, increased emphasis on ethnics globalisation and trade agreements

6. CULTURAL environment: made up of institutions and other forces that affect society’s basic values, perceptions, preferences and behaviours.

• People grow up in society which shapes their basic beliefs and values and help them develop a world view that defines their relationships to themselves and others.

• Things which affect marketing decisions are core and secondary beliefs, sub-cultures and shifts in secondary cultural values.