Ch 1 Strategic planning and the marketing management process 02 10 2015 Marketing Concept Org should seek to make a profit by serving the needs of customer groups Purpose focus attention of marketing managers on serving broad classes of customer needs customer orientation Strategic Planning Organizational mission Organizational objectives Org strategies based on Products and markets o Market penetration present products present customers Increase sale of present products to present customers Tactics price reduction ads that stress many benefits o Market development present products new customers o Product development new products present customers o Diversification new products new customers o Strategies based on Competitive advantage Michael porter o Cost leadership vs differentiation Value o Offer best price Dell CostCo Southwest airlines o Best product Nike Rubbermaid Starbucks Microsoft o Best service Airborne Express Roadway Lands End Choose the Appropriate Strategy Strategy which gives you a sustainable competitive advantage Key to SCA is focus and build on assets and skills that will lead to long term performance gains Organizational Portfolio Plan Identify strategic business units SBU o Have a distinct mission o Have their own competitors o They are a single business or collection of related businesses o Can be planned independently of the total organization Once identified resources should be allocated efficiently to SBUs The Marketing Management Process defined on pg 14 Emphasizes serving target market needs as the key to achieving organizational objectives Situational Analysis 6 major areas of concern Analyses of past trends and current situations are most useful for predicting the future situation 1 Cooperative environment o all firms and individuals who have a vested interest in the firms accomplishments of its objectives suppliers resellers other departments of firm subdepartments and employees of marketing department primarily related to methods of increasing efficiency constraints consist of unresolved conflicts shortages of materials 2 Competitive Environment o consists of other firms rivals in the industry o opportunities include acquiring competing firms offering better value to customers and attracting them away from competitors and driving competitors out of the industry o constraints include demand stimulation activities of competing firms and consumers who cannot be lured from competitors 3 Economics environment the state of the macroeconomy and changes in it bring about marketing opportunities and contraints o changes in inflation and unemployment o developments in technology can create opportunities and threats 4 Social Environment includes general cultural and social traditions norms and attitudes o changes in these values bring about the need for new products and services o business practices which are contrary to social values become political issues which are resolved by legal contraints ex public demand for cleaner environment lead to govt requirements of auto manufacturers to meet certain gas mileage and emissions standards 5 Political Environment includes attitudes and reactions of general public social and business critics and other orgs such as the Better business Bureau o adapting business and marketing practices to these attitudes can be an opportunity ex unbreakable childrens toys high efficiency air conditioners more economical automobiles 6 Legal Environment includes a host of federal state and local legislation directed at protecting both business competition and consumer rights o Can be a constraint but also an opportunity to market safer and more efficient products Marketing Planning 1 Establish marketing objectives derived from organizational objectives o must be specified and performance must be measurable o standards of performance or tasks to be achieved by certain dates 2 Selecting Target market identify consumer needs and organize resources to satisfy them profitably o 4 important questions must be answered 1 What do customers want or need 2 What must be done to satisfy these wants needs 3 What is the size of the market 4 What is its growth profile o present and potential target markets are ranked according to profitability present and future sales volume and match between what it takes to appeal successfully to the segment and the orgs Capabilities those that offer greatest potential are selected 3 Developing the Marketing Mix set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives o controllable variables classified into 4 major areas product price promotion place Channels of distribution o Marketing mix is the core of the marketing management process o Formal statement of decisions that have been made on marketing activities Implementing Marketing Plan involves putting plan into action and performing marketing tasks according to the predefined schedule Control of Marketing plan involves three steps 1 results of implemented marketing plan are measured 2 Results are compared with objectives 3 Decisions are made on whether the plan is achieving objectives Cross Functional Strategic Planning bringing managers and employees together to participate Advantage ability to consider situations from a number of viewpoints o Avoid costly mistakes and poor solutions Japanese manufacturers use this US manufacturers use contrasting tactics divisions work separately Figure 1 6 illustrates cross functional perspective of strategic planning Ch 5 Market Segmentation 02 10 2015 Market Segmentation the process of dividing a market into groups of similar consumers and selecting the appropriate groups for the firm to serve 6 steps o 1 Delineate firm s current situation intended to be a reminder of tasks to be performed prior to marketing planning o 2 Determine consumer needs and wants o 3 Divide markets on relevant dimensions 3 Q s to consider Should the segmentation be priori or post hoc Priori approach decide on appropriate basis for segmentation before doing any research on the market Post Hoc approach people are grouped into segments based on research findings Used to segment for entirely new products How does one determine the relevant dimensions or bases to use for segmentation figure 5 2 Benefit segmentation segment based on the benefits that consumers seek from a certain product Market oriented approach Psychographic Segmentation focuses on segmenting based on consumer lifestyles