CHAPTER three Strategic marketing Principles of Marketing FIFTH

CHAPTER three Strategic marketing Principles of Marketing FIFTH EUROPEAN EDITION Kotler, Armstrong, Wong, Saunders

Previewing concepts (1) • Explain company-wide strategic planning and its four steps • Discuss how to design business portfolios and develop growth strategies • Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value Principles of Marketing 5 e, © Pearson Education 2008 2

Previewing concepts (2) • Describe the elements of a customerdriven marketing strategy and mix, and the forces that influence it • List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measurement • Manage return on marketing investment Principles of Marketing 5 e, © Pearson Education 2008 3

Prelude case: Poor little rich brands Principles of Marketing 5 e, © Pearson Education 2008 4

Overview of planning Annual plan Long-range plan Strategic plan Principles of Marketing 5 e, © Pearson Education 2008 5

Figure 3. 1 Market analysis, planning, implementation, and control Principles of Marketing 5 e, © Pearson Education 2008 6

Components of a strategic plan • • • Mission Strategic objectives Strategic audit SWOT analysis Portfolio analysis Objectives and strategies Principles of Marketing 5 e, © Pearson Education 2008 7

Mission statements • e. Bay’s mission is to provide a global trading platform where practically anyone can trade practically anything Principles of Marketing 5 e, © Pearson Education 2008 8

Desired characteristics of mission statements • • Realistic Specific Based on distinctive competencies Motivating Principles of Marketing 5 e, © Pearson Education 2008 9

What is a strategic audit? An external audit is a detailed examination of the markets, competition, business and economic environment in which the organisation operates. An internal audit is an evaluation of the firm’s entire value chain. Principles of Marketing 5 e, © Pearson Education 2008 10

Key financial statements in a strategic audit • A balance sheet shows the assets, liabilities, and net worth of a company at a given time • The operating statement shows company sales, cost of goods sold, and expenses during a given period of time Principles of Marketing 5 e, © Pearson Education 2008 11

What is a SWOT analysis? A SWOT analysis draws the critical strengths, weaknesses, opportunities, and threats from the strategic audit. Principles of Marketing 5 e, © Pearson Education 2008 12

The SWOT analysis Opportunities • Economic climate • Demographic changes • Market • Technology Threats • Politics • Competitive activity • Channel pressure • Demographic changes Principles of Marketing 5 e, © Pearson Education 2008 13

What are critical success factors? Critical success factors are the strengths and weaknesses that most critically affect an organisation’s success. They are measured relative to competitors. Principles of Marketing 5 e, © Pearson Education 2008 14

The business portfolio • Analysing the current business portfolio and decide which businesses should receive more, less or no investment • Develop growth strategies for adding new products or businesses to the portfolio Principles of Marketing 5 e, © Pearson Education 2008 15

What is a strategic business unit? A strategic business unit is a unit of the company that has a separate mission and objectives, and which can be planned independently from other company business. Principles of Marketing 5 e, © Pearson Education 2008 16

Figure 3. 2 The BCG growth-share matrix Principles of Marketing 5 e, © Pearson Education 2008 17

Figure 3. 3 GE’s strategic business-planning grid Principles of Marketing 5 e, © Pearson Education 2008 18

Figure 3. 4 Product/ market expansion grid Principles of Marketing 5 e, © Pearson Education 2008 19

What is downsizing? Downsizing means reducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy. Principles of Marketing 5 e, © Pearson Education 2008 20

Marketing plays a role in strategic planning • Marketing provides a guiding philosophy • Marketing provides inputs to strategic planners by helping to identify attractive market opportunities and by assessing the firm’s potential to take advantage of them • Marketing designs strategies for reaching unit objectives Principles of Marketing 5 e, © Pearson Education 2008 21

Value chain A value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver and support a firm’s products Principles of Marketing 5 e, © Pearson Education 2008 22

The marketing plan • Executive summary • Current marketing situation • SWOT analysis • Objectives and issues • Marketing strategy • Marketing implementation • Budgets • Controls Principles of Marketing 5 e, © Pearson Education 2008 23

What is a marketing audit? A marketing audit is a comprehensive, systematic, independent and periodic examination of a company’s environment, objectives strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance. Principles of Marketing 5 e, © Pearson Education 2008 24

Marketing strategy is the logic by which the company hopes to create customer value and achieve profitable relationships – Segmentation and targeting – Differentiation and positioning Principles of Marketing 5 e, © Pearson Education 2008 25

Marketing mix Product Place Price Promotion Principles of Marketing 5 e, © Pearson Education 2008 26

Figure 3. 5 Return on marketing Principles of Marketing 5 e, © Pearson Education 2008 27

Figure 3. 5 Return on marketing Marketing Birmingham Principles of Marketing 5 e, © Pearson Education 2008 28

What is marketing control? Marketing control is the process of measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that marketing objectives are attained. Principles of Marketing 5 e, © Pearson Education 2008 29

Discussing the concepts • What are the benefits of a long-range plan? • Why is it important that marketing audits address relative, not absolute, strengths and weaknesses? • For what types of decisions would the GE strategic business-planning grid be helpful? For what decisions would it be less useful? Principles of Marketing 5 e, © Pearson Education 2008 30