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STRATEGIC MARKETING PROBLEMS BY KERIN AND PETERSON (12TH ED.)
LECTURE NOTES
Presented by: Teoman Duman
Chapter 1. Foundations of Strategic Marketing Management
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Importance of marketing
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Marketing is a managerial function. Today, marketing managers are active in shaping the future of many
companies.
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Strategic marketing processes – Strategic marketing consists of five complex and interrelated processes:
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Defining the organization’s business, mission and goals
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Identifying and framing organizational growth opportunities
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Formulating product-market strategies
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Budgeting marketing, financial, and production resources
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Developing reformulation and recovery strategies
Defining the organization’s business, mission and goals
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Business definition – an organization should define a business by;
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the type of customers it wished to serve
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the particular needs of those customer groups it wishes to satisfy
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the means or technology by which the organization will satisfy these customer needs.
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Products and services are transient while needs are enduring.
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The experience of Encyclopaedia Britannica is a case in point. The company is not in the book business but in
the information business.
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Business mission
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A mission underscores the scope of an organization’s operations apparent in its business definition and reflects
management’s vision of what the organization seeks to do.
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Most mission statements describe an organization’s purpose with reference to its customers, producrs or
services, markets, philosophy and technology.
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Business goals
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Goals or objectives convert the organization’s mission into tangible actions and results that are to be achieved,
often within a specific time frame.
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Goals or objectives divide into three major categories:
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Production goals (the use of manufacturing and service capacity and to product and service quality)
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Financial goals (focus on return on investment, return on sales, profit, cash flow, and shareholder wealth)
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Marketing goals (emphasize market share, marketing productivity, sales volume, profit, customer
satisfaction, customer value creation and customer lifetime value)
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Identifying and framing organizational growth opportunities
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Three questions help marketing managers decide whether certain environmental opportunities represent viable
organizational growth opportunities
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What might we do? Relates to environmental opportunity (e.g. unmet needs)
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What do we do best? Relates to distinctive competency (e.g. strengths)
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What must we do? Relates to success requirements (e.g. distribution and inventory control)
SWOT analysis – Exhibit 1.1.
Formulating product-market strategies
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Exhibit 1.2. Product Market Strategies
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Market penetration strategy dictates that an organization seeks to gain greater dominance in a market in which
it already has an offering (e.g. increasing buyers’ usage or consumption rates).
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Market development strategy dictates that an organization introduce its existing offerings to markets other
than those it is currently serving (e.g. serving to other geographical areas).
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Product development strategy dictates that the organization create new offerings for existing markets (e.g.
Apple’s İpod).
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Diversification involves the development or acquisition of offerings new to the organization and its markets
(e.g. Coca Cola’s entertainment investments).
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Budgeting marketing, financial, and production resources
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Manager’s use decision tree approach to identify possible actions and outcomes.
An organization’s master budget consists of two parts :
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An operating budget (focuses on income statement)
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A financial budget (focuses on capital expenditures)
Developing reformulation and recovery strategies
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Marketing audit is a periodic examination of marketing performance
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Contingency plans – based on what if questions and recovery strategies
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