Chapter 2: Developing Marketing Strategies and a Marketing Plan

Objectives:

• Define a marketing strategy,
• Describe elements of marketing plans,
• Analyze marketing situation using SWOT analysis,
• Define how segmentation and targeting occur,
• Outline implementation of marketing mix to increase customer value,
• Summarize portfolio analysis and its use to evaluate marketing performance,
• Describe how firms grow their business.

"A competitive advantage acts like a wall that the firm has built around its position in the market."

Market strategy: A firms target market, marketing mix, and method for obtaining a sustainable competitive advantage.

Sustainable Competitive Advantage: Something the firm can persistently do better than its competitors, therefor increasing their perceived value by the customers. 

Sustainable Competitive Advantage: Four Macro Strategies

1. Customer Excellence - Focus on retaining loyal customers and excellent customer service.
2. Operational Excellence - Achieved through efficient operations and excellent supply chain and human resources management. 
3. Product Excellence - Having products with high perceived value with effective branding and positioning.
4. Locational Excellence - Having a good physical location and internet presence. 

Marketing Plan: Written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four P's, action programs, and projected and pro forma ( and other financial) statements.

"A written marketing plan provides a reference point for evaluating whether the firm has met their objectives."

A Marketing Plan Five Steps:

• Planning Phase - The part of the strategic marketing planning process, when marketing executives in conjunction with other top managers:  
1. Define the mission or vision of business, 
2. Evaluate the situation by assessing how players, both in and outside of the organization affect the firms potential success. 
• Implementation Phase - Marketing managers identify and evaluate different opportunities by in engaging in:
1. Segmentation, Targeting, and Positioning (STP),
2. Then implementing the marketing mix (4 Ps).
• Control Phase - Entails evaluating the performance of the marketing strategy using marketing metrics and taking any necessary corrective actions. 

Planning Phase :                    Step 1 -> Business mission and objectives

                                               Step 2 -> Situation analysis and SWOT

Implementation Phase  :        Step 3 -> Identify Opportunities: Segmentation, Targeting, Positioning

                                               Step 4 -> Implement Marketing Mix ( 4 Ps)

Control Phase  :                     Step 5 -> Evaluate performance using Marketing Metrics

Mission Statement: A broad description of a firms objectives and the scope of activities it plans to undertake and attempts to answer two main questions: what type of business and actions needed to accomplish said goals. 

Situation Analysis: Second step in a marketing plan; uses SWOT [Internal: (Strengths, Weaknesses) , External: (Opportunities, Threats)].

STP - the process of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profit. 

"Firms use a variety of demographics - gender, age, income, interests - to identify who might want different products offered by the firm."

Market Segment: A group of consumers who respond similarly to a firms marketing strategies. (Have similar wants/needs and view product with equivalent value)

Market Segmentation: the process of dividing the market into groups of customers with different needs, wants, or characteristics - who therefore might appreciate the products or services geared for them. 

Target Marketing/Targeting: The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market. 

Market Positioning/ Positioning: Involves the process of defining marketing mix variables so that target consumers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products. 

"Firms typically are most successful when they focus on opportunities that build on their strengths relative to those of their competition."

Products: Anything that is of value to a customer and can be offered through a voluntary marketing exchange.

Metric: A measuring system that quantifies a trend, dynamic, or characteristic. 

"Understanding the causes of the performance, regardless of whether that performance exceeded, met, or fell below that firm's goals, enables firms to make appropriate adjustments."

"The metrics used to evaluate a firm vary depending on (1) the level of the organization at which the decision is made and (2) the resources the manager controls." 

Strategic Business Unit (SBU): A division of the firm itself that can be managed and operated somewhat independently  from other divisions and may have a different mission or objectives.

Product Line: Groups of associated items, such as those consumers use together of think of as part of a group of similar products.

Market Share: Percentage of a market accounted for by a specific entity.

Relative Market Share: A measure of the product's strengths in a particular market, defined as the sale of the focal product divided by the sales achieved by the largest firm in the market.

Market Growth Rate: The annual rate of growth of the specific market in which the product competes.

Stars: High growth markets and high market share - Heavy investments in promotion and production. as growth slows usually become cash cows.

Cash Cows:  Low growth products with high market share; enough investments have been made. Cash cows have extra resources that can be shared to resources like question marks.

Question Marks: High growth markets but low market share. Requires heavy managerial investments to become stars.

Dogs: Low growth markets and low market share. Should be phased out unless they compliment sales of another product.

Growth Strategies: 

Existing Customers:

• Market Penetration Strategy: A growth strategy that employs the existing marketing mix and focuses the firms efforts on existing customers. 
• Product Development Strategy: A growth strategy that offers a new product or service to a firms current target market.

New Customers:

• Market Development Strategy: A growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international. 
• Diversification strategy: A growth strategy whereby a firm introduces a new product or service to a new market segment that it does not currently serve. 

Relative Diversification: A strategy whereby the current target market and/or marketing mix shares something in common with new opportunity. 

Unrelated Diversification: A growth strategy whereby a new business lacks any common elements with the present business.

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