Chapter 1 Strategic Marketing PDF

Strategic Marketing Chapter 1 The nature of strategic marketing What should you understand when walking out of today’s class? Where does Strategic marketing fit/sit in the Corporate environment? Rise of Chief Marketing Officer – Why has Strategic marketing become so importa...

Strategic Marketing Chapter 1 The nature of strategic marketing What should you understand when walking out of today’s class? Where does Strategic marketing fit/sit in the Corporate environment? Rise of Chief Marketing Officer – Why has Strategic marketing become so important to present day corporates? Strategic marketing versus marketing management – so what’s the difference? Typical marketing plan framework - so how does a marketing plan look like? Footnote 2  Class Discussion Source: Pepkor Holdings Ltd. Footnote 3  Discussion: Pepkor Group Source: Image from Pepkor Holdings Ltd. Footnote 4  Class discussion: Pepkor Group PEP stores is a well-known retail brand in South Africa, known for its affordable clothing, footwear and textiles. According to their LinkedIn page, PEP is Africa's largest single brand retailer operating more than 2600 stores across Southern Africa. Since 1965 PEP has aimed to delight their remarkable customers who make smart choices every day, on a limited budget for their families to grow and shine. Footnote 5  It is part of the Pepkor group, which operates in eleven countries, including Australia, the UK and South Africa. But the Pepkor group also has other brands… Footnote 6 Footnote 7  All these brands contribute to the development of the group and its objectives. While part of the Pepkor group, PEP’s mission is stated as follows: ‘We are the friendliest and most trusted retailer, offering wanted products and services at the lowest prices” Their values are ‘honesty, passion and resourcefulness’. In recent years, PEP has expanded into offering mobile services as well as financial services (such as loans and funeral services). All of these additional services are aimed at a clearly defined target market. They have also opened stores focusing on homeware (PEP home) while also launching a chain of discount variety stores (Dealz), currently comprising 200 stores Another strategic development has been the introduction of a parcel service (PAXI). Footnote 8  This allows customers, agents and suppliers to send parcels and documents from one PEP store to another, where the customer can collect the parcel that has been sent. This parcel service is possible due to the high number of PEP stores spread throughout South Africa. Footnote 9  Class Discussion How do you think the introduction of the parcel service (PAXI) contributes to the mission of PEP? Footnote 10  The role of the CMO in Corporate environments Although heavily dependent on industries and corporate culture, Some roles of the Chief Marketing Officer (CMO) include: The development and implementation of marketing strategies and plans. Customer centricity and insight: CMOs understand customer psychology, preferences, and behaviors using tools from focus groups to neuromarketing, enabling them to exceed customer Providing insights (client & competitive) to top management Predicting and reviewing trends and establishing the impact of such trends on the business Providing strategic vision and leadership: CMOs act as strategic leaders, aligning marketing initiatives with the company's overall goals. Footnote 11  CMO role continued… Brand building and reputation management: CMOs are crucial in building and managing strong brand equity, akin to iconic brands like Apple, Coca Cola, and BMW. Driving revenue and growth: CMOs create marketing strategies that boost sales, expand market share, and promote growth by identifying new market opportunities. Adapting to technological changes: CMOs keep companies ahead of tech trends, using digital tools and data analytics to engage customers and drive digital transformation. Footnote 12  Strategic marketing defined Strategic marketing is defined as a continuous process of planning, implementing and controlling the market and marketing strategies, which is mainly done at the top management level of an organisation (Jooste et al., 2011). The role of strategic marketing is to lead an organisation towards opportunities by identifying customer needs and providing market- driven solutions. Footnote 13  Why is strategic marketing becoming so important? The organisation has a need to provide value to a wide range of stakeholders, which impacts strategic marketing. An increasingly competitive marketplace. An increasingly demanding customer, and customers put pressure on the organisation. Rapidly changing technology and systems which impact how business is transacted. The impact of social media (e.g., Twitter, Instagram) on how the organisation does business. Footnote 14  Components of Strategic Marketing Strategic analysis oThis clarifies what business the organisation is in, who they are and what product offerings (need-satisfying benefits) are offered to consumers. Market strategies oThey are implemented to reach their customers and markets to develop a sustainable competitive advantage. Strategy implementation and metrics oStrategy must be implemented and is success (benefit) must be determined using marketing metrics. Footnote 15  Strategy levels Corporate strategy o Relates to the organisation as a whole and reflects what the CEO has as the vision for the organisation. Business strategy o At this level, the strategy is developed to focus on the specific business unit. o Strategic business unit (SBU) is part of a larger business which sells a product range to a target market, it operates independently from the other units in the business, and they focus on profitability. Functional strategy o This refers to the strategy that is implemented within the functional areas, such as finance, logistics or marketing. Footnote 16 Differentiating strategic marketing and marketing management Strategic marketing Marketing management Long-term, with decisions having an impact Short(er)-term, with decisions impacting within one many years into the future year Analytical in nature, thus seeking new Action-orientated, exploiting existing opportunities opportunities Dynamic, unstable environment Stable predictable environment Proactive (due to its analytical focus) Reactive (due to its action orientation) Top or upper levels of the organisation Middle or lower levels of the organisation Affects the entire organisation, including other Focused on the marketing department areas, functions or business units Identifying new opportunities in an ever- Identifying existing opportunities in the current changing, dynamic environment environment Focuses on what the organisation needs to Focuses on managing the existing situation prioritise or emphasize Requires a high degree of creativity and Requires experience, maturity and a control originality orientation Inductive and intuitive Deductive and analytical Footnote Table 1.1 Strategic marketing and marketing management 17 The Changing Role of Strategic Marketing in South African Organisations Change is seen in the global context, but there are additional changes that have affected the South African market and the task of strategic marketing. Yellowwood (2014) reported some of these changes: The changing South African consumer: The nature of the market has changed in the last 20 years, with more consumers living in urban areas, and increasing expenditure. One example is the rise of the so-called black middle class. More connected consumers, open to engaging digitally with organisations and peers: Consumers are more informed and access information in different ways from the past, including through the internet. Social media is also an important example. The importance of trust in brands and organisations: Recent research suggests that trust in institutions such as businesses and media has declined. In interacting in the digital space, the issue of trust is also important as it may be clear which the organisation is or where it is based. The move from offline to online: Digital has meant that competitors are not only located within the borders of the country but could be in another part of the world. It impacts the way in which the organization defines and views its competitors as well as the competing offerings. Key developments in marketing This discussion introduces various perspectives and their significance for strategic marketing. Marketing thought has evolved over time to adapt to changing markets. We will explore the historical developments, culminating in Marketing 4.0 and Service Dominant Logic (SDL). Footnote 19 Marketing 1.0 - Product-Driven Also known as the product orientation. Focuses on the product offered for sale. Emphasises features and quality. Believes efficiency leads to profits. Risk: Potential myopia as organisations prioritise products over developing solutions for customer needs. Marketing 2.0 - Customer-Centric Embraces customer-oriented marketing. Shifts focus to customer needs and interests. Understanding customer behaviours and preferences is essential. Aimed at offering the best possible service. Footnote 20 Marketing 3.0 - Human-Centric: Also known as the value-driven era. Customers are seen beyond just buyers. Organisations aim to make the world a better place. Addressing human aspirations, desires, and values. Marketing is about providing value to customers. Marketing 4.0 Marketing 4.0 is the latest development in marketing thought. It acknowledges the importance of the digital environment & its focus on value is critical for the organisation. Marketing 4.0 integrates online and offline channels in marketing activities. Footnote 21  In marketing 4.0, organisations are shifting from multi-channel to omni-channel strategy. This implies that an organisation must devise new ways of transacting with the customer seamlessly irrespective of the channel used Convergence of technologies enabling new approaches. Customers decide how to interact with the organisation. Convenience and seamless transactions have become paramount. Footnote 22  In a nutshell Marketing thought has transformed from product-centric to value-driven. Understanding historical perspectives is crucial for modern marketing practices. Marketing 4.0 embraces digitalisation and omni-channel strategies. Continuous adaptation is necessary to meet evolving customer demands. Footnote 23 That’s a wrap! 