B2C Marketing Strategies PDF

Fachhochschule Südwestfalen We create momentum Business-to-Consumer Marketing Prof. Dr. Valerie Wulfhorst Agenda Business-to-Consumer Marketing 1. Marketing – Definition and Goals 2. Marketing Strategy 2.1. The Key Aspects of Marketing Strategy...

Fachhochschule Südwestfalen We create momentum Business-to-Consumer Marketing Prof. Dr. Valerie Wulfhorst Agenda Business-to-Consumer Marketing 1. Marketing – Definition and Goals 2. Marketing Strategy 2.1. The Key Aspects of Marketing Strategy 2.2. Analysis of the Initial Strategic Situation 2.3. Formulation, Evaluation and Selection of Marketing Strategies 3. Marketing Mix 3.1. Product 3.2. Price 3.3. Sales 3.4. Communication 3.5. Customer Relationship Management Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 2 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 2.1. The Key Aspects of Marketing Strategy 2.1.1. An Initial Overview of the Marketing Strategy Concept 2.1.2. The ‘Classics’ of Strategic Success Factor Research 2.1.3. The Marketing Strategy Development Process Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 3 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Learning Objectives In this chapter you will become familiar with: § The different types of company strategies and marketing objectives § The various strategy levels in companies and how they relate to each other § The fundamental and most important findings of PIMS (Profit Impact of Market Strategies) research and the critical evaluation of the PIMS Project § The key findings of the experience curve model, the critical evaluation of the implications for strategic marketing § The key findings of the life cycle model , the critical evaluation of the life cycle model, as well as its implications for strategic marketing § The individual steps involved in the process of developing marketing strategies Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 4 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 2.1.1 OVERVIEW OF THE MARKETING STRATEGY CONCEPT Learning Objectives The different types of company strategies and marketing objectives The various strategy levels in companies and how they relate to each other Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 5 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Marketing Strategy Strategies limit the ways you can go / limit your choices -> simplify your decision making process! § What is strategy? "Viele Wege führen nach Rom" - "There's more than one way to skin a cat." Car Walk with others Bike Min Time! Min environmental pollution! Airplane Max adventure/social contacts! Train Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 6 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 What Is Strategy? definition § Grant, R.M.: Contemporary Strategy Analysis, 6th ed., Hoboken, 2008, p. 17-19. § Strategy is the means by which individuals or organizations achieve their objectives. “Means”: refers not to detailed actions but the plans, policies, and principles that guide and unify a number of specific actions. § Common features of various definitions of strategy in research: § strategy is focused on achieving certain goals with certain plans, policies, principles § actions involve allocation of resources § implies consistency, integration, or cohesiveness § long-term perspective § Corporate Strategy: Where to compete? § scope of the firm in terms of the industries and markets in which it competes § e.g. investment in diversification, vertical integration, resource allocation between SBUs, divestment § Business Strategy: How to compete within a particular industry/market? Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 7 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Corporate Strategy definition § Defines the basic orientation of the company and involves a long-term planning horizon § Key aspects: § to determine the strategic alignment of the overall company § to establish the central financial and non-financial company objectives § to define the relevant markets and the SBUs § to distribute the resources across the SBUs § to define the scope of action for strategic measures in the SBUs and functions § to develop and explore the strategically relevant resources and capabilities of the company Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 8 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 System of Company Objectives long-term objectives related to the Business nature and purpose of the company Mission Company Objectives financial & non-financial goals Functional Objectives … on SBU- & functional levels Instrumental Objectives marketing: related to the 4p’s C. Homburg/S. Kuester/H. Krohmer (2009), p. 16. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 9 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Examples Business Missions Practical example Steve Jobs's (1980): “To make a contribution to the world by making tools for the mind that advance humankind.” Business Missions in Slogans: “It's not the destination, “To create a better everyday life for the “Just do it” it‘s the journey” people we aim to serve” Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 10 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Example: Business Mission/“Values” of Tesla Practical example Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 11 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Example: Business Units at Mercedes-Benz Practical example Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 12 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Example: Mercedes-Benz “Cars” Strategy (=SBU) Practical example Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 13 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Marketing Objectives of a Company § Marketing objectives related to potential: prerequisites and important drivers for market success § Marketing objectives related to market success: essential factors that impact the success of a company or of SBUs on the basis of actual customer behavior § Financial marketing objectives: targeted performance of a business along conventional economic success factors Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 14 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Systematization of the Marketing Objectives of a Company Marketing Objectives Marketing Objectives Marketing Objectives Related to Market Related to Financial Related to Potential Success Performance For example: For example: For example: § Degree of Familiarity § Sales § Turnover with Company § Market Share § Marketing Costs § Company Image (absolute or relative) § Contribution Margin § Perceived Service § Number of Customers § Profit Quality § Customer Loyalty § Return on Sales § Customer Attitude § Purchasing towards Company Frequency § Customer Satisfaction § Customer Equity § Price Level Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 15 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Goals of Marketing – the Value-Based View Marketing Non-Financial Financial Decisions Performance Performance Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 16 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Marketing-Performance-Chain Marketing Value-Based Marketing Assets Actions Performance Customer Customer Satisfaction Retention EVA Product ROCE Price Quality Brand Value CVA Place Defection Customer CFROI Promotion Rate Value Etc. Image Etc. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 17 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Differentiation of Strategies According to Level in the Organization Corporate Strategy Functional Strategies Procurement Production Marketing … SBU 1 Business Unit SBU 2 Strategies SBU 3 … Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 18 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Business Unit Strategy § SBU Strategy: Defines the competitive measures to be applied in a specific market § Functional Strategy: Defines the strategic alignment of certain functions in the company § How is the marketing strategy positioned within this strategic framework? Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 19 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Different Approaches to Classifying the Marketing Strategy Marketing Strategy as One of Several Marketing Strategy as Marketing Strategy as Functional Strategies Corporate Strategy Dominant Functional Strategy Production Strategy Personnel Production Personnel Production Strategy Strategy Personnel Marketing Strategy Strategy Marketing Strategy Strategy Corpoate Corporate Corporate Strategy Strategy = Strategy Marketing Strategy Strategy Research and Procurement Research and Procurement Research and Procurement Development Strategy Development Strategy Development Strategy Strategy Strategy Strategy Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 20 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 2.1.2 THE CLASSICS OF SUCCESS FACTOR RESEARCH Learning Objectives The fundamental and most important findings of PIMS (Profit Impact of Market Strategies) research and the critical evaluation of the PIMS Project The key findings of the experience curve model, the critical evaluation of the implications for strategic marketing The key findings of the life cycle model, the critical evaluation of the life cycle model, as well as its implications for strategic marketing Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 21 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 The “Classics” of Strategic Success Factor Research overview PIMS Project Experience Curve Model Life Cycle Model Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 22 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25  Strategic choices PIMS – Project Structure … … ROI Member Companies (currently about 2.600 SBUs) … Data Data input Input For specific problems PIMS_Database § Research database § Start-up database § OASIS-Program § Entry-Database § Analytical models § MPIT-Database § Simulation models Research based on existing Data Outputs of specific models and reports Publications, trade Publcications of the SPI journals, books etc. (e.g. PIMSLETTERS Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 23 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 What is PIMS? § Profit Impact of Market Strategies (PIMS) is a comprehensive long-term study of the performance of a strategic business unit (SBU) in thousands of companies in all major industries. § PIMS objective is to obtain insights about the factors influencing the business success of an SBU. § The PIMS project began at the US General Electric company in the 1950s. The company started to establish a database for collecting the data needed to characterise the strategic competitive position of individual SBUs. The PIMS database was later maintained and managed by the Strategic Planning Institute (SPI). Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 24 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 The PIMS Database The data collected in the PIMS database related mainly to five areas, which are; 1. Competitive position of the strategic business unit (market share, relative product quality) 2. Characteristics of business environment (long term and short term market growth, price trends, number of customers, customer’s buying frequency) 3. Characteristics of the production of goods and rendering of services (investment intensity, productivity, capacity, utilisation) 4. SBU strategy (changes in respect to variables such as relative price and relative marketing expenditure) 5. Budget allocation (budget for advertising, sales promotion, personal selling) The PIMS study based on these data, showed that ROI is influenced by § investment intensity § relative market share § relative product quality Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 25 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 PIMS – The ROI is Affected by the Following Three Key Influencing Variables Consumer goods Capital goods ROI% ROI% 30 30 20 Relative product quality 20 10 10 0 0 25 60 % 25 60 % ROI% ROI% 30 30 20 Relative market share 20 10 10 0 0 8 35 % 8 35 % ROI% ROI% 30 30 20 20 10 Investment intensity 10 0 0 73 105 % 73 105 % Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 26 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 PIMS – The ROI is Affected by the Following Three Key Influencing Variables § Relative product quality: has a positive impact on the ROI due to the attainment of higher prices on the basis of superior quality § Relative market share: has a positive impact on the ROI due to economies of scale (large market share = lower operating costs) § Investment intensity: has a negative impact on the ROI, because high investment intensity forces a company to strive for a high utilization of its expensive capacities Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 27 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Summary of Criticism of the PIMS Project disadvantages Data Basis Analysis/Methodology Strategy Recommendations § Evaluation of individual § Empirical correlations do not § Too narrow orientation on variables (e.g. relative necessarily imply causation. ROI as success factor (no product quality) is subjective. § Interdependencies between SV regarded). § Short-term examination of explanatory variables may § Neglect of potential individual variables despite be neglected. synergies between the long-term conceptual § Multiple regression analysis individual SBUs within a orientation. not suitable for the company. § Inadequate representation of investigation of complex § No consideration of feature less successful SBUs, non- dependency structures, such and issues specific to certain US-American SBUs, smaller as causal chains. industries. SBUs and SBUs from the § Disregards time lags service sector. between cause (success factors) and effect (ROI). Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 28 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 The “Classics” of Strategic Success Factor Research overview PIMS Project Experience Curve Model Life Cycle Model Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 29 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Experience Curve Model: Explanation § Basic idea: based on the development of unit costs of products over time the more often a task is performed the lower the costs per unit of conducting this task § Possible reasons for cost reductions in the experience curve: § Fixed cost degression (the higher the production volume, the lower the fixed cost per piece) § Learning effects (enhancement of operational efficiency) § Economies of scale & realization of synergies § These reasons/effects allow potential reduction of 20-30% by doubling the amount of production Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 30 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Empirically Determined Cost Reductions when Doubling Accumulated Volume for Various Product Types Cost Reduction in Cost Reduction in Product Type Product Type Percent Percent Electric Stove 11.7 Television Set 20.0 Industrial Air Automobile 12.0 20.0 Conditioning System Home Air 12.3 Electric Razor 23.0 Conditioning System Washer-Dryer 12.5 Integrated Circuit 27.8 Gas Stove 17.2 Semiconductor 40 to 50 Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 31 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Experience Curve c: cost in € / unit at 20% reduction at 30% reduction x: accumulated volume (experience) Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 32 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Experience Curve Model: Critical Evaluation disadvantages § Assessment requires a product with a consistent identity over a longer period of time difficult for many products § Limited implications for strategic marketing because of the restriction to one influencing variable (volume) and only one dependent variable (cost per unit) § Relevance for strategic marketing depends on the characteristics of the market environment § Is the price important for the customer? § In which phase of the life cycle is the product? § Is the market for the product growing? § Relevance focused on standardized products/”high volume”-products (and not for individualized products) § Basic implication: strive for high market share to quickly gain a cost advantage Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 33 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 The “Classics” of Strategic Success Factor Research overview PIMS Project Experience Curve Model Life Cycle Model Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 34 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Sales and Profit Curves According to the Life Cycle Model Introduction Growth Maturity Saturation 2 3 6 Sales Erlkönig: BMW 1 series, 2024 Time 1 5 7 Profit 4 1 Date of introduction 4 Initial loss (development costs) 2 Sales maximum 5 Profit threshold 3 Increase due to, e.g. 6 Profit maximum product enhancements 7 Re-entry into loss zone Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 35 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Life Cycle Model: Explanation § Introduction: company has to convince the early adopters/first buyers, therefore e.g. extensive marketing activities necessary § Growth: if everything goes well, there will be a rapid growth in demand most common problem to keep up with (production) capacity § Maturity: demand is at maximum, company operates with full production capacity (‘sales maximum’) company should look for operational efficiency (better cost-benefit relationship) § Saturation or Re-launch: company has to do a decision end production or re-launch Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 36 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Characteristics of Market Life Cycle Phases Life Cycle Phase Introduction Growth Maturity Saturation Criterion Market Growth Increasing growth rate. Steeply increasing growth Stagnation, negative growth Negative to strongly rate. rate towards end of phase negative growth rate Market Difficult to determine; Still considerably difficult to Limited market potential. Very limited market Potential realization of small estimate market potential potential, frequently only percentage of potential mainly due to price demand for replacement. demand. reductions. Market Shares Not feasible to estimate Market shares concentrated in the hands of a few Increased concentration and market share development. companies. consolidation as weak competitors are eliminated. Stability of Strong fluctuation of market Consolidation of market shares. High degree of stability, fluctuations mostly due to Market Shares shares – high volatility. exit of competitors. Number of Small. Number of competitors reaches Exit of competitors that do Number of Competitors maximum. not possess competitive competitors is advantage. further reduced. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 37 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Characteristics of Market Life Cycle Phases Life Cycle Phase Introduction Growth Maturity Saturation Criterion Customer Hardly any loyalty towards Certain degree of customer Relatively high degree of customer loyalty. Loyalty companies. loyalty while alternatives are frequently explored. Entry Barriers In general, entry barriers do Market access difficult Market entry increasingly In general, companies do not exist; entry depends on (established companies use difficult because of growing not have incentives to enter financial capacity, technical cost reduction potential); as “experience” of competition; a stagnating market. know-how and the a rule, entry feasible when market shares can only be willingness to take risks. market niches (beachheads) increased at the cost of can be created. competitors. Technology Technological innovation as Product and process Familiarity with market Well-known, widespread and a prerequisite for tapping improvements. requirements; streamlining stagnating technology. into new markets. of production and distribution processes. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 38 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Life Cycle Model: Critical Evaluation disadvantages § Time as the only variable for explaining sales simplifies reality to a large extent § Empirically observed sales curves frequently do not correspond the S-shaped curve (or say ideal curve) § Sales curve is regarded as exogenous in a sense that it cannot be influenced by management § But: Empirical findings show that managers can actively manage sales and life cycles by several actions (e.g., market penetration strategies, product compatibility etc.) Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 39 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Product Life Cycle Types Sales Sales (a) (b) Time Time Sales Sales (c) (d) Time Time Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 40 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Typical Strategic Behavior in the Various Life Cycle Phases Phase Strategic Introduction Growth Maturity Saturation Issues Market-related Market is being established. Market penetration. Maintenance of market Leveraging of market Objective position. position. Target Market Test markets. Domestic/international. Multinational. Differentiated. Range Product Narrow product range, Relatively narrow product Extensive product range, Reduced product range, not Decisions frequently only one basic range, frequently one several variants and brands. profitable product variants product model. product technology. are discontinued. Pricing Price level tends to be on Price level tends to be on Differentiated price levels, Differentiated price levels Decisions the lower end in order to the higher end. willingness to grant larger with tendency towards lower increase market share. price discounts (e.g. trade end. discounts). Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 41 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Typical Strategic Behavior in the Various Life Cycle Phases Phase Strategic Introduction Growth Maturity Saturation Issues Communi- Communication very Communication intensely Communication intensity Communication tends to be cation intense, geared towards aimed at establishing a high tends to decrease, less intense. Decisions innovators. level of product awareness establishment of brand and a positive product loyalty. image. Sales and Selective distribution, quick Intensive sales and distribution. Selective distribution, not Distribution development of sales and profitable sales and Decisions distribution system. distribution channels are discontinued. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 42 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 2.1.3 THE MARKETING STRATEGY DEVELOPMENT PROCESS Learning Objectives The individual steps involved in the process of developing marketing strategies Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 43 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Process of Strategy Development in Marketing Analysis of Initial Strategic Situation: § Environment § Market § Company Situation Formulation of Alternative Marketing Strategies Evaluation of Alternative Marketing Strategies Selection of Marketing Strategy Strategy Implementation and Implementation Monitoring Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 44 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25 Kahoot!-Time § Open your Kahoot!-App § Enter Game PIN, e.g.: § Give yourself a nickname § Read the multiple choice question. § Press the button of answer which you think is correct, e.g. red for 1914. Prof. Dr. Valerie Wulfhorst I Business Administration – Focus on Controlling 45 I Business-to-Consumer Marketing I Ch2.1 I WS2024/25