Formulating Strategic Marketing ProgramsWhat are the Benefits of Strategy?Components of StrategyMarketing goals & objectives are tied to:Marketing GoalsSlide 6Goals vs. TacticsMarketing ObjectivesSlide 9Examples of ObjectivesStrategic AlternativesGrowth StrategiesAttracting non-usersEnter new marketsSlide 15Increasing purchase rateAttracting competitors’ customersSlide 18Slide 19Profitability StrategiesSlide 21Cash Flow StrategiesImplications of Product Life Cycle on Marketing StrategyIntroduction StageGrowth StageMaturity StageDecline StageFormulating Strategic Marketing ProgramsWhat are the Benefits of Strategy?Components of StrategyStatement of goals & objectivesSelection of strategic alternative(s)Selection of customer targetsChoice of competitor targetsStatement of core strategyDescription of supporting marketing mixDescription of supporting functional programsEstablish generaldirection of strategyPositioningImplementstrategyMarketing goals & objectives are tied to:Organizational missionWhat is the organization’s reason for being?What does the firm stand for?What is the basic operating philosophy?Marketing GoalsDesired general accomplishments stated in vague terms.Indicate the direction the firm is attempting to move and the set of priorities it will use in evaluating alternatives and making decisions.Should be attainable and realistic.Should be internally consistent.Should be comprehensive and help to clarify the roles of all parties in the organization.Should involve some degree of uncertainty.Goals vs. TacticsTo have the largest, best-trained sales force in the industry.Hiring 100 new salespeople.Having the best recognized company in the industry.Doubling the advertising budget.Marketing ObjectivesProvide specific and quantitative benchmarks that can be used to gauge progress toward the achievement of the marketing goals for which they are developed.Should be attainable with a reasonable degree of effort.Should specify the time frame for their completion.Usually related to sales revenues, market share, profitability, or cash flowExamples of ObjectivesThe marketing department will be responsible for having 40% of customers listing this financial institution as their primary financial institution within one year.The sales department will increase sales 18% during the next 2 years.Strategic AlternativesThree basic strategic directions:Growth (sales or market share)ProfitabilityCash flowGrowth StrategiesMarket development strategiesAttract non-usersEnter new marketsAttracting non-usersIncrease willingness to buyDemonstrate benefits of product formDevelop new product forms with desired benefitsIncreasing ability to buyOffer lower prices or creditProvide greater availabilityEnter new marketsBroaden distributionMove into new geographic marketsAdd channels of distributionProduct-line extensionVertical product line extensionHorizontal product line extensionExpansion through acquisition or diversificationMarket penetration strategiesIncrease purchase rate of existing customersAttract competitors’ customersIncreasing purchase rateBroaden usageProvide examples of additional uses of productIncrease consumption levelsLower prices, special-volume packagingImprove buyers’ perceptions of product benefitsIncrease rate of replacementImprove benefits, e.g., convenience, lower operating costs, that encourage early replacementAttracting competitors’ customersHead-to-head competitionSuperior marketing effortQuality, selection, availability, brand name recognitionPrice-cost leadershipOffer comparable quality at lower priceDifferentiationadding a set of meaningful and valued differences to distinguish the firm’s offering from competitors’ offeringsCriteria:important □ preemptivedistinctive □ affordablesuperior □ profitableDifferentiation VariablesProduct Services Personnel Channel ImageForm Ordering ease Competence Coverage SymbolsFeatures Delivery Courtesy Expertise MediaPerformance Installation Credibility Performance AtmosphereConformance Customer training Reliability EventsDurability Customer consulting ResponsivenessReliability Maintenance & repairCommunicationRepairability MiscellaneousStyleDesignPackageProfitability StrategiesMaintain satisfactionConsistent, high qualityEffective customer complaint systemBuild strong customer relationshipsEncourage repeat business through formal relationshipsTarget best customersDevelop complementary productsIncrease dependence on firmDecrease costs/increase efficienciesIncrease priceDecrease product offerings/emphasize selling of most profitable productsCash Flow StrategiesHarvest market positionSystematically increase profit margin by reducing marketing expenses to capitalize on ST performance opportunities; may sometimes be able to increase price, alsoDivest market positionSell firmClose down operation and sell assetsImplications of Product Life Cycle on Marketing StrategyIntroduction StageObjective: Create awareness and product trialMarket developmentProduct—offer a basic product Price—charge cost-plus Distribution—selective Communications—target advertising to early adopters and dealers to increase awareness; heavy sales promotion to stimulate trialGrowth StageObjective: Maximize market shareMarket penetration Product—product extensions, warranties Price—decrease prices to penetrate Distribution—intensive Communications—target advertising to mass market to increase awareness; reduce sales promotionsMaturity StageObjective: Maximize profit while defending market shareProduct—diversify products and brandsPrice—match or best competitors’ pricesDistribution—more intensiveCommunications—use advertising to stress brand differences and benefits; increase sales promotions to encourage brand switchingDecline StageObjective: Reduce expenditure and milk the brand; focus on cash flowProduct—phase out weak modelsPrice—cut priceDistribution—selective; phase out unprofitable outletsCommunications—reduce and target hard-core loyals; reduce sales promotions to minimal