MAR3023 Exam 3 Material Live Lecture April 3rd 2014 Part 1 and 2 Marketing Strategy and Implementation Example of Channels in the news Craft brewers up in arms over beer bills Craft brewers are pushing the bill for 64 oz selling of beer in Florida The law limits the selling of beers to the public in order to preserve the alcohol sales system that wants the beer to go through the distributor to the customer The bill limits the ability of the brewer to sell directly to the customer This is an example of channel conflict in which a brewer can sell its product as a direct retailer Outline Setting corporate goals Formulating marketing strategy Implementing that strategy Main issue Pull together everything that we ve learned to set and implement a strategy Corporate Goals Specific measurable objectives the organization seeks to achieve and by which it can measure its performance Setting Corporate Goals Product portfolio analysis BCG s growth share matrix allow you to evaluate the health of all your product lines and which to devote resources to also compare the value of your product to competitors Shows your Market Growth Rate and Relative Market Share Are you a market leader or not If 1 you re a leader if 1 you re not a leader If market growth is 10 GOOD 10 Not good Greater than 10 and 1 STAR want to invest in this product worth putting into Greater than 10 and 1 QUESTION MARK need to decide if it s worth investing in Less than 10 and 1 CASH COW want to monitor and keep healthy not main focus Less than 10 and 1 DOGS want to cut off this product Only going to be one cash cow star when calculating market share Relative Market Share Raw Market Share Market share of Largest Competitor Note focus on market growth rate instead of market size care more about growth than size because it helps you evolve and see where you ll be in the future Why is market share so important o Market power increases creates entry barrier so it s harder for other firms to compete o Production costs often decrease as market share increases Experience Curve Every time unit production doubles the cost of production falls by some fixed percentage e g 10 Difficulties with the growth share matrix not sure if you re in a fast or slow market Not sure which is the appropriate cut off Implementation isn t easy BCG analysis only gets you so far Marketing Strategy Formulation Planning Execution Implementation Planning The annual marketing plan Components o Executive summary overview o Situation analysis SWOT Internal within firm vs External economy environmental factors taste changes demographic changes to firm Favorable vs Unfavorable o Objectives big picture goals o Strategy general game plan o Tactics specific steps actions o Budget how much it will cost o Timing when it is going down o Contingency plans where could you have gone wrong How will you fix it Objective formulation want to be specific and measurable o Sales revenue o Profit o Market share o Can be tension among these three sales can go up while share is unchanged Strategy formulation based on market share Grow market share Maintain market share Harvest for declining market keep the product in stock but not promoting it Divest discontinue a product or sell it to someone else Marketing Strategy Formulation Planning Budgeting for marketing strategy See notes for Promotions IMC Recall concepts like o Affordable method o Percentage of sales method o Optimization o Competitive parity method Maintenance vs Growth PART 2 Marketing Implementation and Evaluation Need to establish who is doing what Implementation Phase o Establish the marketing organization o Roles and responsibilities o Human resource deployment workers are in the right place Develop Timetables New Product Launch Critical path analysis PERT Chart Program Evaluation and Review Technique Try to manage and develop large products Need to develop the longest path critical path possible the longest sequence is the floor for how quickly you can launch the product Need to identify how long each part will take too Obtain and Allocate Budgets Sharepoint Analysis 1 of market share o Estimate industry sales o Estimate firm s market share o Compute gross margin o Compute gross margin per share point Gross margin sales revenue cost of goods sold Gross margin the contribution to covering selling administrative and other expenses as well as profit o Decide How much is the firm willing to spend in marketing to increase sales by one share point Sharepoint Analysis Example o Given Industry sales 39 million o Given Firm s sales 12 million o Compute Firm s market share Firm s sales Industry sales o 12M 39M 31 o Given Firm s gross margin 3 1 Million o Compute Firm s gross margin per share point o 3 1M 31 share points 100 000 o Given Total industry marketing effort 5 million o Compute One share of voice point o 5 million 100 50 000 o Assume firm wishes to expand its market share by 2 points to The firm should calculate How much will we have to spend to increase our market share by How much will we gain in gross margin if we do this Does the gain offset the cost Assume firm wishes to expand its market share by 2 points to 33 from 31 above what would it cost By the 1 5 rule need to spend enough to capture 3 more SOV 50 000 per SOV point x 3 points 150 000 additional spending 50 000 x 3 SOV points 33 2 points points What could we gain If successful market share would expand by 2 points Each share point is worth 100 000 in gross margin 2 additional share points yield 200 000 in gross margin Is it worth it Firm needs to decide Might still be worth it even if it s negative because the share points are extremely useful in the long run Execute the Marketing Program Planning vs Implementation Good Implementation and Good Planning Success Good Implementation and Bad Planning Trouble Bad Implementation and Good Planning Trouble Bad Implementation and Bad Planning Failure Example of Pepsi trying to implement a low calorie soda Pepsi Max and how it has not worked for them Execute the Marketing Program Improving Implementation o Communicate within the organization make sure info is flowing up from within and outside the organization o Leadership Champion having a leader with a bigger picture of the product s vision o Reward Performance are you rewarding your sales people in the right way Do you have the right people o Schedule tasks give people specifics on what to do o Seek Feedback Internally and Externally want HONEST feedback from