CHAPTER ONE: MARKETING STRATEGY - · PDF fileGillette Company Very simple design for decades ... the product or service life cycle. Business Strategy Military-like: Strategy for controlling

CHAPTER ONE: MARKETING STRATEGYIntroduction to Marketing | Professor McGill

Introduction: The shift from ‘Production Orientation’ to ‘Market Orientation’

Production Orientation

• Until the early 1950’s

• Based on the belief that consumers will buy products that are inexpensive and readily available

• Mind set of the mass production, industrial age

• Simple: Make things and push them out into the market No market research or any

thought as to what the consumer actually wants

First Signs of the ‘Shift’

Alfred Sloan, CEO of General Motors in a 1933 letter to stockholders, called for:

• An ‘Operating philosophy’ that extends through all phases of the business

• Serve the customers how they want to be served!

Marketing Orientation

• A company must understand what the consumer wants, needs and values

• Company must then organize itself to produce and deliver the products and services that the customer’s truly value

Increased competition and market saturation change way of thinking.

Examples of Transitions

Gillette Company Very simple design for decades with little concern over what the consumer wanted.

Ford Motor Company Henry Ford said "They can have any color they want, as long as it's black."

Real World: Ambush Marketing and Product Placement

Ambush Marketing

Product Placement

What are other examples of product placement?

Chapter One: Marketing Strategy

What Chapter One Covers

• Basics of business strategy

• Aligning marketing strategy with business strategy

• How market strategy changes in the phases of the product or service life cycle

Business Strategy

Military-like: Strategy for controlling and utilizing resources

• Human • Physical • Financial capital

Strategy is a plan that aims to give an enterprise a competitive

advantage over rivals.

A satisfied customer is the best business strategy of all.

Business Strategy

Aligning Marketing Strategy with Business Strategy

Synergy: Business and Marketing

• Competitive threats

• Profitable opportunities

• Areas of market growth, maturity, decline

• Latent and explicit customer needs

• Ideas for distribution and pricing

Most important question: “Why should customers buy our product or service and not those of the competitor?”

Marketing Strategy

• The target market

• How the product or service will be positioned to appeal to the market

• How the product will be branded

• The target market size

• The primary benefit as seen by the customers

• An estimate of sales, market share, and profits that the product could generate now and in the future

Product Life CyclesUseful tool for anticipating future challenges

Product Life Cycles: Four Phases

1. Introduction Phase

2. Growth Phase

3. Maturity Phase

4. Decline Phase

What does the book mean when it says that the computer has

become a “commodity product?

Typical Product Life Cycle

Introduction Phase

• Pioneers try to draw attention to “The Next Big Thing”

• Revenues “eaten up” by development, manufacturing and marketing costs.

Growth Phase

• Net income shoots up, ending start-up losses

• Many immediately invest profits into more development. ‘Bottom line’ sees little change

Growth Phase: Key Goals

• Switch from creating product awareness to brand building

• This is because others are jumping on the bandwagon

• Therefore you need to differentiate yourself

• A good idea is to extend the product

!The marketing challenges in the

mature phase include:

• Protecting market share through intense promotion

• Reducing manufacturing cost to allay price pressure

• Eliminate weakness in the product

• Leverage success of current brands with brand extensions (features and innovations)

Maturity Phase

• Flattening of the market • Decreased profit margin • ‘Punching match’ between entrenched

competitors • Product changes become incremental,

not groundbreaking

Decline Phase

Technical obsolescence Changing buying behavior Poor marketing innovation

Solutions • Promote new uses for old

products • Find new markets • Back to the drawing board!

Read Chapter Two And study for the Quiz!

Finished for this week!