Strategic Marketing Management Unit 1 - 5

Market-Oriented Perspectives

• A market-oriented perspective is essential for successful corporate, business, and marketing strategies.
• It involves understanding customer needs, wants, and expectations, and creating value for them.

Corporate Strategy

• Corporate strategy involves decisions about the organization's scope, resource deployments, and competitive advantage.
• Goals and objectives are a component of corporate strategy, detailing the desired levels of accomplishment on one or more performance dimensions over specified time periods.

Business Strategy

• Business strategy allocates resources among businesses in the corporate portfolio.
• It focuses on creating a sustainable competitive advantage in a specific product-market.

Marketing Strategy

• Marketing strategy focuses on allocating and coordinating marketing resources and activities to accomplish the firm's objectives within a specific product-market.
• It involves specifying the target market, competitive advantage, and marketing mix elements (4 Ps: product, price, place, promotion).

Market Orientation

• Market-oriented firms are characterized by a consistent focus on customers' needs by personnel in all departments.
• They prioritize customer satisfaction, adapt to environmental changes, and use cross-functional teams during the development of new products.

Product-Oriented vs. Market-Oriented

• Product-oriented firms focus on the product's functional performance and cost, and prioritize production and distribution efficiency.
• Market-oriented firms, on the other hand, focus on customer needs, wants, and expectations, and prioritize customer satisfaction and value creation.

E-Commerce

• E-commerce can be classified into four categories: business-to-business, consumer-to-business, business-to-consumer, and consumer-to-consumer.
• Examples of e-commerce include Amazon (business-to-consumer) and PriceTag.com (consumer-to-business).

Marketing Plan

• A marketing plan is a written document detailing the current situation, objectives, marketing actions, and resource allocations over the planning period for a specific product or service.
• It is an important tool for communicating and coordinating expectations and responsibilities within the firm.

Corporate Objectives

• Corporate objectives specify the goals to be accomplished in terms of sales volume, market share, and profit.
• They should be SMART (Specific, Measurable, Attainable, Relevant, and Time-bound).

Performance Criteria

• Performance criteria include profitability, contribution to owners, competitive strength, and growth.
• They are used to assess the success of a firm's strategies and objectives.

Growth Strategies

• Growth strategies include market penetration, market development, product development, and diversification.
• They are used to expand a firm's market share, customer base, or product offerings.### Diversification Strategies
• A processed-meat manufacturer launching a chain of retail outlets is an example of forward vertical integration.
• A generic drug manufacturer planning a foray into the design and manufacture of re-locatable structures is an example of unrelated diversification.

Cash Cows and Dogs

• Cash cows are businesses with a high relative share of low-growth markets.
• Dogs are low-share businesses in low-growth markets.

Growth-Share Matrix

• A limitation of the growth-share matrix is that outcomes are highly sensitive to variations in how growth and share are measured.

Value-Based Planning

• Value-based planning provides a basis for comparing the economic returns to be gained from investing in different businesses pursuing different strategies.
• A limitation of value-based planning is that it is typically a tool for evaluating strategy alternatives identified and developed through managers' judgments.

Customer Equity

• Customer equity is the sum of the lifetime values of a firm's current and future customers.
• Customer equity can be used to estimate the value of alternative marketing actions by calculating the economic return for a prospective marketing initiative based on its likely impact on customer equity.

Sustainable Competitive Advantage

• Sustainable competitive advantage at the corporate level is based on company resources, resources that other firms do not have, that take a long time to develop, and that are hard to acquire.
• Examples of sustainable competitive advantage include highly developed information systems, extensive market research operations, and cooperative long-term relationships with customers.

Synergies

• There are three sources of synergies: knowledge-based, corporate identity and the corporate brand, and shared resources.
• Knowledge-based synergies enhance the performance of one business by the transfer of competencies, knowledge, or customer-related intangibles from other units within the firm.
• Corporate identity and the corporate brand give a firm a sustainable advantage in the market.
• Shared resources involve sharing operational resources, facilities, and functions across business units.

Strategic Business Units (SBUs)

• SBUs are components of a firm engaged in multiple industries or businesses.
• Ideal characteristics of SBUs include:
  • A homogeneous set of markets to serve with a limited number of related technologies.
  • A unique set of product-markets, in the sense that no other SBU within the firm competes for the same customers with similar products.
  • Control over those factors necessary for successful performance, such as production, R&D and engineering, marketing, and distribution.
  • Responsibility for their own profitability.

Business Strategies

• A prospector strategy involves operating within a broad product-market domain that undergoes periodic redefinition.
• A defender strategy involves protecting its domain by offering lower prices, higher quality, or better service than competitors.
• A reactor strategy lacks any well-defined competitive strategy.
• An analyzer strategy involves maintaining a strong position in its core product-market but also seeks to expand into new—usually closely related—product-markets.

Performance Dimensions

• Adaptability is measured in terms of speed and effectiveness in responding to changes in the environment.
• Effectiveness is measured in terms of sales growth relative to competitors or changes in market share.
• Efficiency is measured in terms of profitability as a percent of sales and return on investment.
• Synergy is measured in terms of the ability to create value by sharing resources across business units.

Environmental Factors

• A prospector strategy is favored by an industry in early growth stage, with a large number of competitors, and a relatively high level of uncertainty.
• A defender strategy is favored by an industry in late growth stage, with a small number of competitors, and a relatively low level of uncertainty.### Market-Oriented Perspectives
• A market-oriented perspective is essential for successful corporate, business, and marketing strategies.
• Low-cost defenders focus on efficiency and low price as their primary competitive strategy.
• This strategy is not effective in fragmented markets, but rather in commodity industries such as basic chemicals, steel, or flour.
• Businesses pursuing other strategies should also operate efficiently given the functional activities necessary to implement those strategies.

Pricing and Distribution Policies

• Success in offering low prices relative to competitors is positively related to the performance of low-cost defender businesses.
• Differentiated defenders and prospectors seldom adhere to a policy of low competitive prices.
• Distribution policies for defenders involve maintaining tight control over the behavior of channel members, particularly in established markets.
• Prospectors rely on independent channel members, such as manufacturer's representatives or wholesale distributors, to distribute their products.

Understanding Market Opportunities

• A market is defined as a group of individuals and organizations interested in and willing to buy a good or service to obtain benefits that will satisfy a particular need.
• An industry is a group of firms that offer a product or class of products that are similar and are close substitutes for one another.
• Demographic trends, such as an aging population, influence market attractiveness.
• Sociocultural trends, such as fitness and nutrition patterns, also impact market attractiveness.

Macroenvironmental Trends

• The natural environment, such as the rise of hybrid gas-electric vehicles, affects market opportunities.
• Technological advancements, such as the use of the internet and social media, influence market opportunities.
• Economic trends, such as changes in interest rates, impact market opportunities.
• Regulatory trends, such as the rise of government regulations, also influence market opportunities.

Porter's Five Competitive Forces

• The threat of new entrants is a key force in the fast-food industry.
• The threat posed by substitute products is a key force in the fast-food industry.
• The bargaining power of suppliers and buyers also impacts industry attractiveness.
• Rivalry among competitors is greater when low switching costs exist for buyers.

Market Analysis

• Opportunities are attractive at the micro level on the market side when the company has other segments for which the currently targeted segment may provide a springboard.
• Attractive opportunities are available at the micro level when the company's business model is economically viable.
• Critical success factors, such as price, location, and promotion, are essential for success in retailing.

Forecasting and Market Knowledge

• A top-down approach is used to prepare a sales forecast in centralized firms.
• A bottom-up approach is used to prepare a sales forecast in decentralized firms.
• Statistical forecasting methods, such as time series analysis, are used to forecast sales and market potential.
• Survey methods, such as surveys of buyer's intention, are used to forecast sales.
• Analogy methods, such as comparing the sales of similar products, are used to forecast sales of new products.