Strategic Marketing

Strategic Marketing

Learning Objectives

• Recognize the three strategic “C”.

• Understand the importance of Strategic Marketing

• Determine the characteristics of Strategic Marketing

• Visualize the future of Strategic Marketing

• Comprehend the process of Strategic Marketing

The Concept of Strategy

Evolution of Business Strategy– Long term Planning of the Firm

• Strategy is the determination of the basic, long term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary to carry out these goals (Chandler, 1962).

– Capability-Opportunity fit• Strategy is a mediating force between the

organization and its environment; there are consistent patterns of streams of organizational decisions to deal with the environment (Mintzberg, 1979)

The Concept of Strategy– Planning to gain Competitive Advantage

• The job of a strategist is to achieve superior performance, relative to competition, in the key factors for the success of business (Ohmae, 1982)

• Porter (1985) defines strategy as ‘a central vehicle for achieving competitive advantage’.

– Copability in a Turbulent Environment• Companies are facing unprecedented uncertainty

due to global competition, pathbreaking technology, shifting consumer tastes and ever-changing exchange rates.

• Shift from matching ability to coping ability in a turbulent environment.

The Concept of StrategyDifferent Approaches to Strategy Formulation

– Strategic hierarchy – Shotgun strategies vs rifle strategies – Street smart planning vs formal planning– Intuitive planning vs analytical planning– Generic strategies – Strategic intent – Strategic posture – Logical Incrementalism – Proactive strategies vs Creative Strategies – Random Walk– Strategy as a Revolution.

Strategic hierarchy

Mission

Objectives

Goals

SWOT Analysis

Strategy

Structure

Management Control and Information Systems

Shotgun strategies vs rifle strategies

• Define the target market, understand the needs and develop products according to tastes

• Develop good products as defined by technologists and make them available in the market.

Street smart planning vs formal planning

Intuitive planning vs analytical planning

II. High Intuition - basedStrategy (1,9)

IV. Compromise Strategy ( 5.5 )

I. Cessation of Any Type of Strategy (1,1)

III. High Logic -basedStrategy (9,1)

V. High Logic and High Intuition Strategy (9,9)

Logic

Intui ti on

9

1 9

Generic strategies• Overall cost leadership• Differentiation • Focus

Strategic intent• Setting-up ambitious goals (Hamel and

Prahalad 1989)

Strategic posture• Proactive strategy• Crisis management strategy• Reactive strategy

Logical Incrementalism– One step at a time processes

Proactive strategies vs Creative Strategies– Changing in accordance with the change anticipated– Creative approach enables the company engineer

changes to suit itself.

Random Walk– Steps taken in random directions without much

analysis or evaluation.

Strategy as a Revolution– The companies that overturn the industrial order.

Marketing ConceptUnderstand the needs and wants of people

and satisfy them

• Find wants and fill them

• Make what you can sell instead of trying to sell what you can make

• We have to stop marketing makeable products and learn to make marketable products

• Love the customer not the product

Shifts in Marketing Approach

Old Approach

Independent buyer – seller relationship

Transaction based relationship

Uniform products for segments

Top priority to comfort and convenience of seller

Monologue (communication through mass media)

Marketing activity to be carried out by marketing department

New Approach

Interdependent buyer-seller relationship

Mutually beneficial relationship

Customized products for individuals

Top priority to maximize the joy of procurement and use by buyer

Dialogue (face-to-face interaction with customer)

Marketing activity to be carried out by everyone in the organization.

Business Strategy vs Marketing Strategy

Strategic Linkages

Corporate strategy

StrategicMarketing

Marketing Management

Strategic Marketing vs Marketing Management

Item

Time frame

Scope

Decision –making process

Strategic Marketing

Long term

Product market decisions and competitive strategies

Bottom-up

Marketing Management

Short term

Marketing –mix decisions

Top-down

Item

Environment scan

Nature of plans

Strategic posture

Strategic approach

Strategic Marketing

Dynamic tracking on a continuous basis

Ever-evolving to accommodate new developments

Proactive

Creativity and originality

Marketing Management

Snapshot view at fixed at intervals

Fixed for the planning period

Reactive

Logical incrementalism

Strategic Marketing • Strategic marketing provides frameworks

and techniques for effective strategies– Environmental Analysis– Customer Analysis– Competitor Analysis– Company Analysis– Market Analysis– Marketing Mix Analysis– Strategy Formulation

External Analysis

External Analysis

Strategic Decisions

Where to compete

How to compete

Identification

Trends/future events

Threats/Opportunities

Strategic uncertainties

Analysis

Information-need areas

Scenario analysis

Strategic Uncertainties Strategic Decisions•Will a major firm enter?

Will a cream-based dessert product be accepted?•Will technology be replaced?•Will computer-based operations be feasible with current technology?•How sensitive is the market to price? • what will be the future demand? -----Performance improvements?

------Competitive technological development?

-----Financial capacity of health care industry?

•Investment in a product market•Investment in a cream-based product•Investment in a technology•Investment in a new system

•A strategy of maintaining price parity

Customer Analysis Segmentation

• Who are the biggest customers? The most profitable? Do the customers fall into any logical groups based on needs, motivations or characteristics?

• How could the market be segmented into groups that would require a unique business strategy?

Customer Analysis

Customer Motivations

• What elements of the product/service do customers value most?

• What are the customers’ objectives? What are they really buying?

• How do segments differ in their motivation priorities?

• What changes are occurring in customer motivation? In customer priorities?

Customer AnalysisUnmet Needs• Why are some customers dissatisfied?

Why are some changing bands or suppliers?

• What are the severity and incidence of customers problems?

• What are unmet needs that customers can identify? Are there some of which consumers are unaware?

• Do these unmet needs represent leverage points for competitors?

Competitor AnalysisWho are the competitors• Against whom do we usually compete? Who are

our most intense competitors? Less intense but still serious competitors? Makers of substitute products?

• Can these competitors be grouped into strategic groups on the basis of their assets, competencies and/or strategies?

• Who are the potential competitive entrants? What are their barriers to entry? Is there anything that can be done to discourage them?

Competitor AnalysisEvaluating the Competitors• What are their objectives and strategies? Their

level of commitment? Their exit barriers?• What is their cost structure? Do they have a cost

advantage or disadvantage? • What is their image and positioning strategy? • What are the most successful/unsuccessful

competitors? Why?

Competitor Analysis• What are the strengths and weaknesses of

each competitor or strategic group?• What leverage points (our strategic

weaknesses or customer problems or unmet needs) could competitors exploit to enter the market or become more serious competitors?

• Evaluate the competitors with respect to their assets and competencies. Generate a competitor strength grid.

Concept of strategic marketing• Within a given environment, marketing

strategy deals essentially with the interplay of three forces known as the strategic three Cs: the consumer, the competition, and the corporation.

• Marketing strategies focus on ways in which the corporation can differentiate itself effectively from its competitors, capitalizing on its distinctive strengths to deliver better value to its customers.

Characteristics of Marketing Strategy

• a clear market definition;

• a good match between corporate

strengths and the needs of the market;

• and superior performance, relative to the

competition.

Importance of Strategic Marketing

• Marketing plays a vital role in the strategic management process of the firm.

• The experience of companies well versed in strategic planning indicates that failure in marketing can block the way to goals established by strategic planning.

Characteristics of Strategic Marketing

• Emphasis on Long-Term Implications.

– Strategic marketing is a commitment, not an act.

• Varying Roles for different products /Markets.

– Strategic marketing starts from the premise that different products have varying roles in the company.

• Organizational Level.

– Strategic marketing is conducted primarily at the business unit level in the organization.

Characteristics of Strategic Marketing

• Corporate Inputs:– Corporate culture ~ refers to the style, whims,

traits, taboos, customs, and rituals of top management.

– Corporate publics ~ are the various stakeholders with governments and society constitute and organization’s stakeholders.

– Corporate resources ~ include the human, financial, physical, and technological assets/experience of the company.

Characteristics of Strategic Marketing

• Relationship to Finance.– Strategic marketing decision making is closely

related to the finance function.– Its very important of maintaining a close

relationship between marketing and finance, and, with other functional areas of a business.

– In recent years, frameworks have been developed that make it convenient to simultaneously relate marketing to finance in making strategic decisions.

Future of Strategic Marketing

• The battle for marketing share is intensifying in many industries as a result of declining growth rates.

• Deregulation in many industries is mandating a move to strategic marketing.

• Many companies in hitherto nonmarketing-oriented industries are attempting to gain market share through strategic marketing.

Future of Strategic Marketing

• Shifts in the channel structure of many industries have posed new problems.

• More and more countries around the world are developing the capacity to compete aggressively in world markets.

• The fragmentation of markets - the result of higher per capita incomes and more sophisticated consumers.

Future of Strategic Marketing

• In planning an early entry in the marketplace, strategic marketing achieves significance.

• To successfully develop corporate imagination and expeditionary policies, companies need strategic marketing.

The Process of Strategic Marketing