Marketing Chapter 2 Developing Marketing Strategies Dhruv Grewal

Marketing Chapter 2 Developing Marketing Strategies Dhruv Grewal Michael Levy Mc. Graw-Hill/Irwin Copyright © 2008 by the Mc. Graw-Hill Companies, Inc. All rights reserved.

2 -2 Disney Goes Digital l l Global positioning satellites Smart sensors Wireless technology Mobile devices Pal Mickey © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -3 The Strategic Marketing Planning Process Steps in developing the strategic marketing plan © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -4 Three Phases of a Strategic Planning Implementing © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Controlling

2 -5 Step One: Defining the Mission and/or Vision 1. Defining the Mission and/or Vision MADD mission statement: MADD strives to stop drunk driving, support the victims of this violent crime and prevent underage drinking. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -6 MADD Promotion

2 -7 Sustainable Competitive Advantage Discussion question What do you think are the keys to Mc. Donald’s sustainable advantage? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -8 Test Your Knowledge What is sustainable competitive advantage? A) A broad description of the firms objectives and scope of it’s activities. B) Tool used to evaluate marketing performance. C) Something the firm can consistently do better than it’s competitors. D) Written document that discusses competitor strengths and weaknesses, and the firms advantages over them.

2 -9 Sustainable Competitive Advantage What can a firm to do compete against a wellestablished market leader? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -10 Case in Point: Apple Computers Challenge Answer Results Competing against a wellestablished market leader. Produce high-quality, low cost, easy to use products that incorporate high technology for the individual. We are proving that high technology does not have to be intimidating for noncomputer experts. 54% increase in sales, over 2 million computers sold. 50, 000 Mac. Intosh computers sold in the first 100 days after launch. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -11 Step Two: Conduct a Situation Analysis Using SWOT 2. Situation Analysis © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -12 Step Three: Identifying and Evaluating Opportunities Using STP Segmentation Targeting Positioning © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -13 Disney: Segmentation, Targeting, Positioning Magic Kingdom Families w/younger kids Pleasure Island Singles and Couples © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Epcot Adults, families w/older kids

2 -14 Test Your Knowledge Which of the following refers to a group that responds similarly to a firm’s marketing efforts? A) Segmentation B) Following the leader C) Targeting D) Positioning

2 -15 Step Four: Implement Marketing Mix and Allocate Resources 4. Implementing Marketing Mix and Resources © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -16 Product and Value Creation Discussion question How does satellite radio deliver value?

2 -17 Price and Value Capture Customer perception of value. Price is only a part of value. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -18 Pricing Strategies l Cost-Based Pricing l Competitor-Based Pricing l Value-Based Pricing © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -19 Implementing Pricing Strategies The Internet has had a dramatic impact on pricing strategies. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -20 Place and Value Delivery Must be readily accessible l Examples: l – – Staples integrated Internet Vodaphone’s new “Quickphone” vending machines © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -21 Test Your Knowledge One of the keys in place and value delivery is to provide the consumer ________. A) a wide product selection B) more than one channel of distribution C) a variety of media communication methods D) accessible management personnel to handle complaints

2 -22 Promotion and Value Communication Television l Radio l Magazines l Sales force l New Media l © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -23 Allocating Resources © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -24 Step Five: Evaluate Performance and Make Adjustments 5. Evaluate Performance © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -25 Strategic Planning is Not Sequential X X © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -26 Topic Two: Growth Strategies © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -27 Test Your Knowledge Which of the strategy? A) B) C) D) following is NOT considered a marketing growth Market penetration Diversification Product development Sequential planning

2 -28 Market Penetration l l Existing marketing mix Existing customers Discussion question In what way is a sale a market penetration strategy? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -29 Market Development Strategy What can a company do to continue to grow in a difficult retail environment? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -30 Case in Point: Dunkin Donuts Challenge Answer Results To continue to grow in a difficult retail environment. Continue an aggressive global expansion strategy combined with an expanding multi-channel strategy. 4, 400 US outlets, 1, 700 non US in 29 countries including: Philippines, Indonesia, South Korea, and Thailand as well as in the EU. Revenue worldwide of $3. 6 Billion © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -31 Product Development New product or service Current target market A good example is the Healthy Choice line. What examples of product development can you identify? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -32 Ethical Dilemma 2. 1: Microsoft’s Marketing Penetration and Product Development Strategies When is a firm too big and too powerful? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -33 Diversification New product or service New market segment Related • Existing vendors • Same distribution system • Same management information system • Same advertising venue Unrelated – no common elements with the present business © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -34 Test Your Knowledge A diversification strategy introduces a new product or service to a market segment that ________. A) is currently not served B) includes many ethnicities C) already exists D) does not traditionally respond to mixed media

2 -35 Entrepreneurial Marketing 2. 1: Fed. EX Kinkos l l New service/new market Current service/current market New service/current market Current service/new market

2 -36 Topic Three: Macro Strategies © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -37 Customer Excellence Retaining loyalty with excellent customer service. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -38 Operational Excellence l l Efficient operations Excellent supply chain management © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -39 Product Excellence Achieving effective branding and positioning Discussion question How are these two firms positioned in the market place? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

2 -40 Adding Value 2. 1: Customer Service at Virgin Atlantic l l l Focused on service Three tiers of service Even the lowest offers increased service

2 -41 Chapter 2 Glossary l l l l l Competitor-based pricing: When a firm prices below, at, or above its competitors’ offerings. Cost-based pricing: When a firm determines the costs of producing or providing its product and then adds a fixed amount above that total to arrive at the selling price. Market penetration strategy: Employs the existing marketing mix and focuses the firm’s efforts on existing customers. Market segmentation: The process of dividing the market into groups of customers with different needs, wants, or characteristics—who therefore might appreciate products or services geared especially for them. Mission statement: a broad description of a firm’s objectives and the scope of activities it plans to undertake. Positioning: When the firm decides which segments to pursue, it must determine how it wants to be positioned within those segments so that target customers have a clear, distinctive, desirable understanding of the product in comparison with competing products. Sustainable competitive advantage: Something the firm can persistently do better than its competitors. Targeting: After a firm has identified the various market segments it might pursue, it evaluates each segment’s attractiveness and decides which to pursue. Value-based pricing: When the firm first determines the perceived value of the product from the customer’s point of view and then prices accordingly.