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BCOM HONOURS: STRATEGIC MARKETING
© 2010 Pearson Education, Inc. publishing as Prentice Hall
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LECTURE OUTLINE
1.THEORETICAL DISCUSSION ON
STARTEGIC MARKETING
2. ASSIGNMENT DISCUSSION
3.EXAMINATION DISCUSSION
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CHAPTER
1
Foundations of
Strategic
Marketing
Management
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PURPOSE OF MARKETING
To create long-term and
mutually beneficial
exchange relationships
between an entity and the
publics (individuals and
organizations) with which it
interacts.
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STRATEGIC MARKETING
MANAGEMENT PROCESSES
 Define business, mission, and goals
 Identify/frame growth opportunities
 Formulate product-market strategies
 Budget resources
 Develop reformulation and recovery
strategies
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BUSINESS MISSION: written statement
that
 Underscores the scope of an organization’s operations
 Reflects management’s vision of the organization
 Describes an organization’s purpose
 Crystallizes the organization’s long-term direction and
character
 Helps identify and evaluate product-market opportunities
 Inspires employees
 Provides direction for goal-setting
 Applies to not-for-profit organizations as well
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BUSINESS MISSION
American
Red Cross
XEROX
“Do great work”
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“Provide for
victims of
disaster”
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BUSINESS GOALS OR OBJECTIVES
 Convert the mission into tangible
actions and results to be achieved
by a specified time frame
 Are divided into three categories:
Production
Objectives
Financial
Objectives
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Marketing
Objectives
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CONVERTING ENVIRONMENTAL OPPORTUNITIES
INTO ORGANIZATIONAL OPPORTUNITIES
Ask three questions:
 What might we do?
Environmental
Opportunities
 What do we do best?
Distinctive
Competencies
 What must we do?
Success
Requirements
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SWOT ANALYSIS
SWOT analysis is a formal framework
for identifying and framing organizational
growth opportunities.
- Type of Factor Organization
Favorable
Unfavorable
Internal
Capabilities
Strengths
Weaknesses
External
Environment
Opportunities
Threats
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PRODUCT-MARKET STRATEGIES
A product-market strategy involves selecting specific markets and
profitably reaching them through an integrated program called
a marketing mix.
Markets
Existing
Existing
New
Market
Penetration
Market
Development
New Offering
Development
Diversification
Offerings
New
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STRATEGY SELECTION
Strategies are chosen based on:
 Costs and benefits of a strategy
 Probabilities of success for a strategy
 Competitive structure, market dynamics,
and opportunity costs
 The offering itself
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THE MARKETING MIX
Communication
Aggressive
Strategy
competition
Product
Strategy
Customer
Aggressive
competition
Channel
Strategy
Passive
competition
Price
Strategy
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DEVELOPING REFORMULATION AND RECOVERY
STRATEGIES: MARKETING AUDIT
Addresses the following questions:
Strategic
Operational
Are we doing the right things?
Are we doing things right?
 Allows for contingency plans, preplanning of
reformulation and recovery strategies that lead to
faster reaction time in implementing remedial action
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MARKETING PLAN
A marketing plan is a formal, written document that describes the
context and scope of an organization’s marketing effort to achieve
defined goals or objectives within a specific future time period.

Consists of:
Business
Plan

Marketing
Plan
Product
Plan
Each has these time dimensions:
Short-term
Focus: 1-year period
Long-term
Focus: 3- to 5-year period
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CHAPTER
2
Financial
Aspects of
Marketing
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TYPES OF COSTS
Variable
Costs
Variable/
Fixed
Costs
Fixed
Costs
Cost of
Goods Sold
Other
Variable
Costs
Programmed
Costs
Committed
Costs
Selling
Expenses
Materials
Sales
Commissions
Advertising
Rent
Salary
Labor
Discounts
Sales
Promotion
Administrative/
Clerical
Commissions/
Bonus
Overhead
Delivery
Sales
Salaries
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RELEVANT AND SUNK COSTS
Relevant Costs
Are expenditures that:
 Are expected to occur in the future as a
result of some marketing action
 Differ among marketing alternatives being
considered
 Include opportunity costs, the forgone
benefits from an alternative not chosen
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RELEVANT AND SUNK COSTS
Sunk Costs
 Are past expenditures for a given activity that
are typically irrelevant in whole or in part to
future decisions
 Are the opposite of relevant costs
 Include past R&D, test marketing, and advertising
expenses
 Sunk cost fallacy: Recouping spent dollars by
spending still more dollars in the future
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MARGINS
Margin
 Is the difference between the selling price
and the “cost” of an offering
 Is expressed on a total volume or individual
basis, dollar terms, or percentages
 Consists of three types:
Gross Margin
Trade Margin
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Profit Margin
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CONTRIBUTION ANALYSIS
Contribution
 Is the difference between total sales revenue
and total variable costs
 Or on a per-unit basis, is the difference
between unit selling price and unit
variable cost
 Is used to analyze the relationship between
costs, prices, volume, and profit
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CONTRIBUTION ANALYSIS
Break-Even Analysis
 Identifies the unit or dollar sales volume
at which an organization neither makes
a profit nor incurs a loss
 Break-even is shown by this equation:
Total
Revenue
=
Total
Variable Costs
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+
Total
Fixed Costs
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EXHIBIT 2.1: BREAK-EVEN ANALYSIS
CHART
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Slide 1-23
CONTRIBUTION ANALYSIS
Sensitivity Analysis
Break-even points can change if there are changes
in selling price, variable costs, and/or fixed costs
Unit
Selling Price
(P)
Unit
Variable
Costs
(UVC)
Contribution
Per Unit
CU = (P - UVC)
Unit
Break-Even
Volume
(FC / CU)
Dollar
Break-Even
Volume
(FC / CM*)
Total
Fixed Costs
(FC)
Scenario #1
$5.00
$2.00
$40,000
$3.00
13,333 units
$66,667
Scenario #2
$4.00
$2.00
$30,000
$2.00
15,000 units
$60,000
Scenario #3
$5.00
$1.50
$30,000
$3.50
8,571 units
$42,857
* Contribution margin (CM) = [(P – UVC) ÷ P]
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LIQUIDITY AND WORKING CAPITAL
Liquidity
Working
Capital
Current
Assets
Current
Liabilities
A firm’s ability to meet short-term financial
obligations within a budget year
=
Current
Assets
–
Current
Liabilities
Consists of cash, accounts receivable,
prepaid expenses, inventory, etc.
Consists of short-term accounts payable,
income taxes, etc.
Managers must be aware of the impact of marketing
actions on working capital
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OPERATING LEVERAGE
 Operating leverage refers to the extent to which
fixed costs and variable costs are used in the
production and marketing of products and services
High
Operating
Leverage
High total fixed costs relative to
total variable costs
Low
Operating
Leverage
Low total fixed costs relative to
total variable costs
 The higher the operating leverage, the faster total
profits will rise or fall once sales volume rises or
falls below break-even volume
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DISCOUNTED CASH FLOW
 Discounted cash flows are future cash flows
expressed in terms of their present value
 Incorporates the theory of the time value
of money or present-value analysis
 Premise: A dollar received next year is worth
less than a dollar received today because its
future value is affected by risk, inflation, and
opportunity cost
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CUSTOMER LIFETIME VALUE
Customer
Lifetime
Value
(CLV)
The present value of future cash
flows from a customer relationship
The CLV calculation requires this information:
$M
=
Sales
Revenue
Retention
Rate
= (r)
Interest
Rate
= (i)
–
(
Variable
Costs
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+
Other Customer
Acquisition Costs
)
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PRO FORMA INCOME STATEMENT
 Displays projected revenues, budgeted
expenses, and estimated net profit for an
organization, product, or service during a
specific planning period, usually a year
 Includes a sales forecast and a listing of
variable and fixed costs that can be
programmed or committed
 Reflects a marketer’s expectations (sales)
given certain inputs (costs)
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Slide 1-29
EXHIBIT 2.4: PRO FORMA INCOME STATEMENT FOR
THE 12-MONTH PERIOD ENDED DECEMBER 31, 2006
Sales
Cost of goods sold
Gross margin
Marketing expenses
Sales expenses
Advertising expenses
Freight or delivery expenses
General and administrative expenses
Administrative salaries
Depreciation on buildings/equipment
Interest expense
Property taxes and insurance
Other administrative expenses
Net profit before (income) taxes
$1,000,000
$500,000
$500,000
$170,000
$90,000
$40,000
$120,000
$20,000
$5,000
$5,000
$5,000
© 2010 Pearson Education, Inc. publishing as Prentice Hall
$300,000
$155,000
$45,000
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CHAPTER
3
Marketing
Decision
Making and
Case Analysis
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DECISION-MAKING PROCESS: DECIDE
Define the problem
Evaluate the decision factors
Consider relevant information
Identify the best alternative
Develop a plan for implementing
the chosen alternative
Evaluate the decision and the
decision process
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DECISION-MAKING PROCESS: DECIDE
Step 1: Define the Problem
“A problem well defined is half solved.”
— John Dewey
Problem definition framework includes:
Objectives
Constraints
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Success
Measures
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DECISION-MAKING PROCESS: DECIDE
Step 2: Enumerate the Decision Factors
Two decision factors to be enumerated
and related to each other:
Alternative
Courses of Action
Uncertainties
Controllable by the
decision maker such as
the marketing mix
Uncontrollable factors
that the manager cannot
influence
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DECISION-MAKING PROCESS: DECIDE
Step 3: Consider Relevant Information
Relevant information consists of information that
relates to the alternatives identified by the
manager as being likely to affect future events.
Includes characteristics of the following:
Industry
Consumers
Competitors
Organization
(competitive
strengths and
position)
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Alternatives
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DECISION-MAKING PROCESS: DECIDE
Step 3: Consider Relevant Information
 Identifying relevant information is difficult:
• There is often too much info and viewpoints
• Determining what does and does not matter
is a skill learned through experience
• Don’t consider everything as factual info
• Sometimes relevant info must be created
 A manager has performed a situation analysis
when steps 1 through 3 are completed
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DECISION-MAKING PROCESS: DECIDE
Step 4: Identify the Best Alternative
 Decision analysis:
• Matches each alternative with the uncertainties
in the environment
• Assigns a quantitative value to the outcome
associated with each match
 Uses a decision tree and a payoff table to
show the relationship among alternatives,
uncertainties, and potential outcomes
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Slide 1-37
DECISION-MAKING PROCESS: DECIDE
Step 4: Identify the Best Alternative
A payoff table:
 Displays the alternatives, uncertainties, and
outcomes facing a firm
 Includes management’s determination of the
probability of an uncertainty’s occurrence
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DECISION-MAKING PROCESS: DECIDE
Step 5: Develop a Plan for Implementing
the Chosen Alternative
An implementation plan involves:
 Allocating marketing, financial, and
manufacturing resources
 The time needed to develop a
marketing plan
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DECISION-MAKING PROCESS: DECIDE
Step 6: Evaluate the Decision and the Decision Process
With respect to the decision itself, ask:
 Was a decision made?
 Was the decision proper given the situation?
• Insufficient information present?
• Failure to consider and interpret relevant information?
• Logical assumptions made regarding data gaps?
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DECISION-MAKING PROCESS: DECIDE
Step 6: Evaluate the Decision and the Decision Process
Ask 5 questions of the decision-making process:
1. Was the problem defined adequately?
2. Were all the pertinent alternatives and uncertainties
identified? Were the assumptions realistic?
3. Was all the relevant information considered?
4. Was an appropriate course of action recommended?
Was the logic consistent? Was any important piece of
information overlooked?
5. How can the recommendation be implemented?
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CHAPTER
4
Opportunity
Analysis,
Market
Segmentation,
and Market
Targeting
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Slide 1-42
MARKETING STRATEGY FRAMEWORK
Marketing
Strategy
Market
Selection
Marketing
Programs
Target
Markets
Realized
Organization
Objectives
Satisfied
Customers
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Slide 1-43
OPPORTUNITY ANALYSIS
Opportunity analysis consists of
three interrelated activities:
Opportunity
Identification
OpportunityOrganization
Matching
Opportunity
Evaluation
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Slide 1-44
OPPORTUNITY ANALYSIS
Opportunity Identification
 Opportunities arise from:
• Identifying new types of buyers
• Uncovering unsatisfied needs of buyers
• Creating new ways or means for satisfying
buyer needs
 Opportunity analysis focuses on finding
markets that an organization can profitably
serve
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OPPORTUNITY ANALYSIS
Opportunity-Organization Matching
Determines whether an identified market
opportunity is consistent with the definition of
the firm’s business, mission statement, and
distinctive competencies
 Assesses strengths and weaknesses via a SWOT
 Identifies the success requirements
 Rejects those that do not conform to a firm’s
character even if they offer sizable sales and profit
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Slide 1-46
OPPORTUNITY ANALYSIS
Opportunity Evaluation
Qualitative
Quantitative
Matches the attractiveness of an
opportunity with the potential
for uncovering a market niche,
which depends on:
• Competitive activity
• Buyer requirements
• Market demand
• Supplier sources
• Environmental
forces
Consists of:
• Market sales
potential estimates
• Sales forecasts
• Budgets
• Organizational
capabilities
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Slide 1-47
WHAT IS A MARKET?
A market consists of the prospective buyers (individuals
or organizations) willing and able to purchase the existing
or potential offering (product or service) of an
organization.
Implications for marketers:
Buyers
Focus on buyers, not products or services
Effective
Demand
Exchanges cannot occur unless buyers are
able and willing to purchase a product or
service
Offerings
Purchases consist of offerings, not
products or services, due to the values or
benefits that buyers derive from them
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-48
WHAT IS A MARKET?
Market Share
 A served market is one in which a company,
offering, or brand competes for targeted customers
 Marketing managers often look closely at served
market share when considering strategic options
“High” Served
Market Share
Use a market development strategy
“Low” Served
Market Share
Use either a product development
or market penetration strategy
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Slide 1-49
WHAT IS A MARKET?
Market Share
Market share is the sales dollars ($) or units(#)
of a firm, offering, or brand divided by the sales
of the “market,” expressed as a percentage (%):
Firm, Offering, or Brand Sales
($ or #)
Market
Share
=
=
X%
Market Sales
($ or #)
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Slide 1-50
MARKET SEGMENTATION
Market Segmentation
 A technique that involves breaking down or building up
of potential buyers into groups, which are called
market segments
 Each segment possesses a homogeneous characteristic
that relates to its purchasing behavior and response
to a marketing program
 “Cannot be all things to all people”
 Information technology and flexible manufacturing and
service delivery systems can create “segments of one”
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-51
MARKET SEGMENTATION
Mass Customization
 Tailors products and services to the tastes
and preferences of individual buyers in high
volumes and at a relatively low cost
 Combines the efficiencies of mass
production and the effectiveness of
designing offerings to a single buyer’s
unique wants
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Slide 1-52
MARKET SEGMENTATION
Benefits of Market Segmentation
 Identifies opportunities for new product
development
 Helps in the design of marketing programs
that are most effective for reaching
homogeneous groups of consumers
 Improves the allocation of marketing
resources
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-53
MARKET SEGMENTATION
Bases for Market Segmentation
Consumers
Socioeconomic
Characteristics
Industrial Buyers
Behavioral
Variables
Socioeconomic
Characteristics
• Gender
• Benefits Sought
• Company Size
• Age
• Usage
• Location
• Occupation
• Income
• Family Life Cycle
• Industry
Psychographic
Variables
• Education
• Lifestyle
• Location
• Attitudes
Behavioral
Variables
• Purchasing
Objectives
• Product
Benefits
• Customers Served
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-54
MARKET SEGMENTATION
Requirements for Effective Market Segmentation
Need to answer six buyer-related questions:
 Who are they?
 What do they want to buy?
 How do they want to buy?
 When do they want to buy?
 Where do they want to buy?
 Why do they want to buy?
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-55
MARKET SEGMENTATION
Requirements for Effective Market Segmentation
Measurable
Differentiable
Accessible
Substantial
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Slide 1-56
MARKET TARGETING
Marketers ask three questions after a
market has been segmented:
Where to
Compete?
How to
Compete?
When to
Compete?
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-57
MARKET TARGETING
How to Compete?
Differentiated Marketing
 Simultaneously pursues several different
market segments with a unique marketing
strategy for each segment
 Manages multiple products across multiple
market segments, which increases
marketing-related expenditures
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Slide 1-58
MARKET TARGETING
How to Compete?
Concentrated Marketing
 Focuses on a single market segment, sometimes
marketing one product to one segment
 More commonly, offers one or more product lines
to a single market segment
 Provides operating economies
 Limits growth opportunities if the segment size
declines
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-59
MARKET SALES POTENTIAL AND
PROFITABILITY
Market Sales Potential
 Estimating a market’s sales potential for
an offering is a difficult task
 Markets and offerings can be defined in
ways that can lead to different estimates
of market size and dollar sales potential
 For new offerings or markets, marketers
may rely entirely on judgment and creativity
when estimating market sales potential
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-60
MARKET SALES POTENTIAL AND
PROFITABILITY
Market Sales Potential
Is the maximum sales level that might be
available to all organizations serving a defined
market in a specific time period given:
 The marketing-mix activities and related
expenditures of all organizations and
 A set of environmental conditions
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-61
SALES AND PROFIT FORECASTING
Sales Forecast
 Is the level of sales a single organization expects
to achieve based on a chosen marketing strategy
and an assumed competitive environment
 Is some fraction of estimated market sales potential
 Reflects the size of the target market(s) chosen by
the organization and the marketing mix chosen for
the target market(s)
 Reflects the assumed number of competitors and
competitive intensity in the chosen target market(s)
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-62
CHAPTER
5
Product and
Service
Strategy and
Brand
Management
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Slide 1-63
OFFERING STRATEGY DECISIONS
 An organization’s profitability depends on its product or
service offering(s) and the strength of its brand(s)
 Marketers face three offering-related strategy decisions:
Modifying the
Offering Mix
Positioning
Offerings
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Branding
Offerings
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THE OFFERING PORTFOLIO
The Offering Concept
 An offering consists of the benefits or satisfaction
provided to target markets by an organization
 It contains the following elements:
Tangible
Product/Service
Warranties/
Guarantees
Related
Services
Packaging
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Brand
Name(s)
Other Features
Slide 1-65
THE OFFERING PORTFOLIO
The Offering Concept
 Focusing on an offering’s benefits or satisfaction
establishes a conceptual framework for
marketers
 This framework is useful in:
• Analyzing competing offerings
• Identifying target market unmet needs and wants
• Developing new products or services
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-66
THE OFFERING PORTFOLIO
Offering Mix/
Portfolio
The totality of an organization’s
offerings
Groups of offerings similar in
terms of usage, buyers
marketed to, or technical
characteristics
Offering
Lines
Offering
Items
© 2010 Pearson Education, Inc. publishing as Prentice Hall
A specific product or
service noted by a
brand, size, or price
Slide 1-67
THE OFFERING PORTFOLIO
Offering Mix/Portfolio Decisions
Width
(Breadth)
The number of offering lines
Depth
The number of items in each line
Consistency
The extent to which offerings satisfy
similar needs, appeal to similar buyer
groups, or use similar technologies
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Slide 1-68
THE OFFERING PORTFOLIO
Offering Mix/Portfolio Decisions Based on:
Organizational
Resources
Competitive
Situation
Marketing
Strategy
One
Offering
High-Profit or
High-Volume
Offerings
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Complete
Lines
Slide 1-69
THE OFFERING PORTFOLIO
Bundling
Is the marketing of two or more items in a single
“package” that creates a new offering
 Is valued by consumers more than the individual items
sold separately
 Has the following benefits:
• Don’t have to make separate purchases
• Satisfaction from one item given the presence of another
 Provides a lower total cost to buyers and lower marketing
costs to sellers
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Slide 1-70
MODIFYING THE OFFERING MIX
Offering Mix Decisions
Adding to the
Offering Mix
Modifying
the Offering
New Offering
Development
Single
Offering
Entire
Line
Trading
Up
Trading
Down
Harvesting
the Offering
Eliminating
the Offering
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Slide 1-71
ADDITIONS TO THE OFFERING MIX
Additions to the Offering Mix
 Additions take the form of:
Single
Offering
Entire
Line
 Questions to ask:
Consistency
How consistent is the new offering with
existing offerings?
Resources
Does the organization have the resources to
introduce and sustain the offering?
Market
Is there a viable market for the offering?
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Slide 1-72
STAGES IN THE NEW-OFFERING
DEVELOPMENT PROCESS
Idea
Generation
Idea
Screening
Business
Analysis
Market
Testing
Commercialization
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Slide 1-73
LIFE-CYCLE CONCEPT
 A life cycle plots the sales curve of
an offering or a product class over
a period of time
 Life cycles are divided into 4 stages:
Introduction
Growth
MaturitySaturation
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Decline
Slide 1-74
POSITIONING OFFERINGS
Positioning is the act of designing an organization’s offering and image so
that it occupies a distinct and valued place in the target customer’s mind
relative to competitive offerings.
Positioning Approaches

Strategies include positioning by:
Attribute or
Benefit
Product or
Service Class

Use or
Application
Competitors
Product or
Brand User
Price and
Quality
Marketers often combine two or more of these strategies when positioning a
product, service, or brand
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-75
BRAND EQUITY AND BRAND
MANAGEMENT
Brand
Brand Equity
A brand name is any
word, “device” (design,
sound, shape, or color),
or combination of these
that are used to identify
an offering and set it
apart from competing
offerings.
Brand equity is the
added value a brand
name bestows on a
product or service
beyond the functional
benefits provided.
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-76
BRAND EQUITY AND BRAND
MANAGEMENT
Brand Equity
Has two marketing advantages:
 Provides a competitive advantage, such as signifying
quality, retailer acceptance, higher ROI and intangible
value
 Can charge a higher price since consumers are often
willing to pay for the brand’s equity premium
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-77
BRAND EQUITY AND BRAND
MANAGEMENT
Brand Equity
Arises from a four-step process:
1. Develop positive brand awareness and link it with a
product class or create brand identity
2. Establish a brand’s meaning in the minds of consumers,
consisting of:
• Brand functional performance
• Brand imagery
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-78
BRAND EQUITY AND BRAND
MANAGEMENT
Brand Equity
Arises from a four-step process:
3. Elicit the proper consumer responses to
a brand’s identity and meaning—how they think
and feel
4. Create an intense, active loyalty relationship
between consumers and the brand
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-79
BRAND EQUITY AND BRAND
MANAGEMENT
Branding Strategy
Multiproduct
Branding
Multibranding
Private
Branding
A firm uses one name for all
its products in a product class
A firm gives each product or product
line a distinct name
A firm supplies a reseller with
a product bearing a brand name
chosen by the reseller
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-80
BRAND EQUITY AND BRAND
MANAGEMENT
Brand Growth Strategies
Line
Extension
Brand
Extension
Introducing additional offerings with the same brand
in a product class that it currently serves
Using a current brand name to enter a completely
different product class
New
Brand
Developing of a new brand and often a new offering for a
product class not yet served by the firm
Fighting/
Flanker Brand
Creating a new brand to attract specific consumer
segments not served by a firm’s existing brands
to counteract competitors’ brands
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-81
BRAND EQUITY AND BRAND
MANAGEMENT
Brand Extension Strategy
Allows for co-branding, which:
 Pairs the two brand names of two manufacturers
(General Mills and Hershey’s) on a single product
(Reese’s Puffs)
 Permits firms to enter a new product class (Hershey’s—
cereal) and capitalize on an already established brand
name (Hershey’s—Reese’s)
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-82
BRAND EQUITY AND BRAND
MANAGEMENT
Flanker/Fighting Brand Strategy
Flanker Brand
Adding new brands on the high or
low end of a product line based on
a price-quality continuum
Fighting Brand
Adding a new brand whose sole
purpose is to confront competitive
brands in a product class being served
by an organization
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-83
BRAND EQUITY AND BRAND
MANAGEMENT
Fighting Brand Strategy
Introduced when:
 An organization has a high relative market share of
the sales in a product class
 Its dominant brand is susceptible to having its high
market share reduced by competitors through
aggressive pricing or promotion
 The organization wishes to preserve its profit margins
on its existing brand
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-84
BRAND EQUITY AND BRAND
MANAGEMENT
Flanker/Fighting Brand Strategy
 Fighting and flanker brand strategies risk
cannibalizing other lower-priced brands in a
product line
 A preemptive cannibalism strategy is the
practice of stealing sales from a firm’s existing
products or brands to keep buyers from
switching to competitors’ offerings so as to not
lose sales
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-85
CHAPTER
6
Integrated
Marketing
Communication
Strategy and
Management
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-86
MARKETING COMMUNICATION
 Marketing communication is the process by which
information about
a firm and its offerings is disseminated to selected
markets.
 Its goals are to:
Induce
Initial Trial
Achieve
Postpurchase
Satisfaction
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Generate
Repeat Sales
Slide 1-87
MARKETING COMMUNICATION
 Communication informs buyers of the:
• Availability of an offering
• Unique benefits of the offering
• Where and how to obtain and use the offering
 The message should be:
Desirable to
the Target
Market
Exclusive to
the Offering
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Believable as to
the Offering’s
Benefits
Slide 1-88
MARKETING COMMUNICATION
Advertising
Personal
Selling
Public
Relations
Marketing
Communication
Mix
Sales
Promotion
Direct
Marketing
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-89
INTEGRATED MARKETING COMMUNICATION STRATEGY
DECISIONS
1. What are the info requirements of target markets?
2. What objectives must the communication strategy achieve?
3. How might the mix of communication activities be combined to
convey information to target markets?
4. How much should be budgeted for communicating with target
markets and how should resources be allocated among various
communication activities?
5. How should the communication be timed and scheduled?
6. How should the communication process be evaluated?
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-90
INFORMATION REQUIREMENTS IN
PURCHASE DECISIONS
 The purchase (or adoption) process model
describes how buyers purchase a particular
offering and defines the role of information
Awareness
Consideration
Preference
Purchase
 At any point in time:
• Different buyers are in different stages of the model
• Each stage requires a different communication strategy
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-91
INFORMATION REQUIREMENTS IN
PURCHASE DECISIONS
To communicate effectively, a marketer must know:
What
Information consumers think is necessary
(price, location, size, etc.).
Where
Consumers will seek it (newspapers, the
Internet, friends, etc.).
When
Consumers will seek it (how far in advance,
on what days, etc.).
How
Consumers will apply the
information obtained.
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-92
SETTING REASONABLE
COMMUNICATION OJBECTIVES
Communication objectives depend on:
The offering-market
strategies of the firm
The stage of the
offering life cycle
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-93
SETTING REASONABLE
COMMUNICATION OJBECTIVES
Communication goals for the offering life cycle:
Primary Demand
Selective Demand
 Demand for the offering class
 Demand for a brand or offering
 Occurs early in the life cycle
 Occurs later in the life cycle
 The message focuses on:
 Substitute offerings exist
• Introducing the benefits of
an offering
• Overcoming the objections
to the offering
 The message:
• Focuses on the benefits of a specific
brand or offering
• Differentiates the offering from
competitive ones
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-94
DEVELOPING AN INTEGRATED
MARKETING COMMUNICATION MIX
Factors to consider when designing the communication mix
are:
Information
Requirements
of Buyers
Nature of the
Target Markets
Nature of the
Offering
Capacity of the
Organization
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-95
PUSH VERSUS PULL
COMMUNICATION STRATEGIES
Push Strategy
Pull Strategy
Producer
Producer
Wholesalers
Wholesalers
Retailers
Retailers
Consumers
Consumers
The offering is pushed through a marketing
channel to buyers in a sequential fashion
Buyers demand the product from
intermediaries, pulling the offering
through a marketing channel
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-96
MARKETING WEBSITES AND IMC
Is a place where a provider makes available
information to Internet users
Website
Marketing
Website
Engages buyers/potential buyers in interactive
communication to sell a firm’s offerings or move
them closer to a purchase
Transactional
Website
Is an electronic storefront that tries to
convert online browsers into online
buyers
Promotional
Website
Promotes a firm’s offerings and provides
information on how they are used and
where they are purchased
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-97
COMMUNICATION MIX BUDGETING
Budgeting Approaches
Percentage
of Sales
•
•
•
•
•
•
Most widely used approach
Past or anticipated sales are used as the basis
When sales rise, communication expenses rise
Simple to calculate
Which comes first—sales or communication?
Is not flexible or market-oriented
Fixed Dollar
Amount per
Offering Unit
• Budget equals the per-unit allocation multiplied by the
number of units expected to be sold
• Used by durable-goods manufacturers
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-98
COMMUNICATION MIX BUDGETING
Budgeting Approaches
Competitive
Parity
• Balances the firm’s and competitors’ communication
expenses
• Uses advertising share of voice
• Expressed as a percentage of total advertising
by all competitors in a market at a point in time
All Available
Funds
• Employed in introducing a new offering for
which maximum exposure is desired
• Used by nonprofit organizations
ObjectiveTask
• Objectives are set for a communication program
• Costs are based on the tasks to achieve the goals
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-99
COMMUNICATION BUDGET
ALLOCATION
Media selection is based on these factors:
Cost
Expressed as cost per thousand (CPM) readers or viewers to
facilitate cross-vehicle comparisons
Reach
The number of buyers potentially exposed to an advertisement
in a particular vehicle
Frequency
• The number of times buyers are actually exposed
to an ad in a given time period
• Total exposure
Audience
=
Reach
×
Frequency
The more closely target market’s characteristics match those of
a vehicle’s audience, the more appropriate it is
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-100
COMMUNICATION BUDGET
ALLOCATION
Media timing strategies include:
Blitz
Strategy
Concentrating advertising dollars in a
relatively short time period when new
products or services are introduced
Continuity
Strategy
Spending advertising dollars over the
long term to maintain continuity
Pulse
Strategy
Concentrating its advertising but also
attempts to maintain some semblance
of continuity
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-101
EVALUATION AND CONTROL OF
THE COMMUNICATION PROCESS
 Continuously monitor the execution of
any communication plan or strategy to ensure
that the communication objectives (sales, profits,
etc.) are being met
 Use budgeting to add/delete funds for specific
communication activities as a
form of control
 Use incremental analysis to evaluate and control
advertising, personal selling, and expenditures
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-102
CHAPTER
7
Marketing
Channel
Strategy and
Management
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-103
MARKETING CHANNELS
 A marketing channel consists of individuals and
firms involved in the process of making an
offering available for consumption or use by
consumers and industrial users.
 Channels link the producer and its buyers:
Producer
Marketing Channel
Intermediaries
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Consumers
Slide 1-104
MARKETING CHANNELS
Marketing channels affect an organization’s:
Segmentation
Strategy
Communications
Strategy
Pricing
Strategy
Determines whether its chosen target markets
are reached
Dictates its advertising, sales promotion, direct
marketing, etc. activities
Influences its markup and discount policies
Impacts its:
Offering
Strategy
 Branding policies
 Willingness to stock and customize offerings
 Ability to augment offerings
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-105
THE CHANNEL-SELECTION DECISION
 Marketers must make these marketing channel
decisions regarding intermediaries:
Type
Location
Density
Functions
 Conduct a market analysis to identify the
target markets served and their buying
requirements that will be served by
prospective marketing channels
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-106
EXHIBIT 7.1: TRADITIONAL
MARKETING CHANNEL DESIGNS
Producer
Brokers or Agents
Distributors or Wholesalers
Retailers or Dealers
Ultimate Buyers
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-107
THE CHANNEL-SELECTION DECISION
Direct vs. Indirect Distribution
Marketers must decide whether to use:
 Intermediaries to reach target markets
 Contact buyers directly via either channel strategy:
Producer
Own
Sales Force
Producer
Own Distribution
Outlets
Ultimate Buyers
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Own
Marketing
Website
Ultimate Buyers
Slide 1-108
THE CHANNEL-SELECTION DECISION
Electronic Marketing Channels
 Employ some form of electronic communication,
including the Internet, to make offerings
available for consumption or use by consumers
and industrial users
 Many services can be distributed through
electronic marketing channels, while others still
involve traditional intermediaries
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-109
THE CHANNEL-SELECTION DECISION
Marketers ask three questions when selecting the
type and location of retail outlets:
Target Market
Coverage
Buyer
Requirement
Satisfaction
Profitability
Which retailers will provide the best
coverage of the target market?
Which retailers will best satisfy the target
market’s buying requirements?
Which retailers will be the most
profitable?
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-110
DUAL DISTRIBUTION
Dual distribution occurs when an organization distributes its offering through
two or more different marketing channels that may or may not compete for
similar buyers.
A firm uses dual distribution because it:

Produces its own brand (for resellers) as well as
a private store brand (for a specific retailer)

May distribute directly to a large-volume retailer
and use wholesalers for small-volume retailers

Considers geography:
• Uses it own sale force in concentrated markets
• Uses intermediaries elsewhere

Employs a multibrand strategy
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-111
DUAL DISTRIBUTION
 The viability of dual distribution is situational and
depends on the relative strengths of manufacturers and
retailers
 If a manufacturer decides to distribute directly to ultimate
buyers in a retailers territory:
• The retailer may drop the firm’s offering lines or
• May not drop them if they too important to it or
• May not drop them if competitive offerings have a strong presence
in the market
 If a retailer accounts for a significant sales volume,
dropping the lines will negatively affect the firm
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-112
MULTI-CHANNEL MARKETING
Multi-channel marketing involves the blending of an electronic marketing channel
and a traditional channel in ways that are mutually reinforcing in attracting,
retaining, and building customer relationships.
Disintermediation is the practice whereby a traditional intermediary
member is dropped from a marketing channel and replaced by an
electronic storefront.
A firm uses multi-channel marketing because:

The addition of an electronic marketing channel
can provide incremental revenue

An electronic marketing channel can leverage
the presence of a traditional channel

It can satisfy buyer requirements
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Electronic
Marketing
Channels
Slide 1-113
MULTI-CHANNEL MARKETING
Electronic Marketing Channels
Multi-channel marketing is viable if an electronic
marketing channel:
 Generates incremental revenue
 Doesn’t cannibalize sales from traditional intermediaries
 Reaches a different market segment than the traditional
channel
 Reinforces with traditional channels in attracting,
retaining, and building customer relationships
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-114
SATISFYING INTERMEDIARY
REQUIREMENTS
The following contribute to long-term exchange relationships
between a manufacturer and their intermediaries:
Trade
Discounts
Lead-Time
Requirements
Fill-Rate
Standards
Offering
Exclusivity
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Cooperative
Advertising
Profit
Margins
Slide 1-115
SATISFYING TRADE RELATIONS
Channel Conflict
 Marketing managers recognize that conflicts
often occur in trade relations
 Channel conflict arises when one channel member
(such as a manufacturer or an intermediary)
believes another channel member is engaged in
behavior that is preventing it from achieving its
goals
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-116
SATISFYING TRADE RELATIONS
Channel Conflict
Occurs when:

A channel member bypasses another member and sells or buys direct

There is a dispute over how profit margins are distributed among
channel members

Manufacturers believe wholesalers or retailers are not giving their
offerings adequate attention

A manufacturer engages in dual distribution—particularly when
different retailers or dealers carry the same brands
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-117
CHANNEL-MODIFICATION
DECISIONS: QUALITATIVE FACTORS
When modifying existing or adding new channels, ask :
1. Will the change improve the effective coverage of the target markets
sought?
2. How will the change improve the satisfaction of buyer needs?
3. Which marketing functions must be absorbed in order to make the
change?
4. Does the firm have the resources to perform the new functions?
5. What effect will the change have on other channel members?
6. What will be the effect of the change on the achievement of long-range
organizational objectives?
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-118
CHANNEL-MODIFICATION
DECISIONS: QUANTITATIVE FACTORS
 Consider the financial impact of a
channel modification decision
 If a firm eliminated its wholesalers, it
would have to assume the costs of:
• Sales to retail accounts
• Sales administration
• Carrying the inventory
• Delivery and storage
• Carrying the accounts receivable
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-119
CHAPTER
8
Pricing
Strategy and
Management
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-120
PRICING CONSIDERATIONS
Pricing Objectives
 Be consistent with a firm’s overall
marketing objectives
 Objectives include:
• Enhancing brand image
• Providing customer value
• Obtaining an adequate ROI or cash flow
• Maintaining price stability in an industry or market
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-121
PRICING CONSIDERATIONS
Pricing Factors
 Demand for an offering sets the price ceiling
 Costs, particularly variable costs, determine the price
floor
 Consumer value perceptions and price sensitivity
determines the maximum price charged
 The price must at least cover unit variable costs;
otherwise, a loss will result for each offering sold
 Government regulations, such as predatory pricing
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-122
PRICING CONSIDERATIONS
Pricing Factors
 Life-cycle stage of the offering—greater price discretion
exists earlier than later in the life cycle
 Profit margins of marketing channel members
 The price differentials of a firm’s offerings to maintain
perceived value differences among buyers
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-123
PRICING CONSIDERATIONS
Price as an Indicator of Value
 Consumers compare price with the perceived benefits derived
from an offering to determine value
 Value is the ratio of perceived benefits to price:
Perceived Benefits
Value
=
Price
 This shows that for a given price, value increases as perceived
benefits increase and vice versa
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-124
PRICING CONSIDERATIONS
Price Elasticity of Demand (E)
 Measures how responsive consumer demand
is to changes in an offering’s price
 Is the ratio of the percentage change in quantity
demanded relative to a percentage change in price
Price
Elasticity
of Demand
Percentage Change in
Quantity Demanded
=
E
=
Percentage Change in Price
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-125
PRICING CONSIDERATIONS
Product-Line Pricing
In most organizations, offerings are not priced in
isolation:
 They may be sold at a loss to entice buyers
 They ensure that the organization can offer
potential buyers complete product lines
 Thus, the price may bear little relationship
to the actual cost of an offering
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-126
PRICING CONSIDERATIONS
Product-Line Pricing
Involves determining the:
Lowest-Priced Product
Price
Highest-Priced
Product & Price
Price Differentials
for All Other
Products in the Line
Is the traffic builder designed to capture the attention
of the hesitant or first-time buyer
Is typically positioned as the premium item in quality
and features
• Should reflect differences in their perceived
value of the products offered
• Should get larger from less to more expensive
items as one moves up the product line
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-127
PRICING STRATEGIES
Pricing strategies can be termed as either:
Full-Cost
Price Strategies
Variable-Cost
Price Strategies
Those that consider both
variable and fixed costs
(also called direct and indirect
costs)
Those that take into account only
the direct variable costs
associated with an offering
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-128
PRICING STRATEGIES
Full-Cost Price Strategies
Mark-up
Pricing
Is determined simply by adding a fixed
amount to the cost of the offering
Break-Even
Pricing
Equals the per-unit fixed costs plus the per
unit variable costs of an offering
Rate-of-Return
Pricing
Obtain a pre-specified rate of return on
investment (ROI) for the organization
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-129
PRICING STRATEGIES
Variable-Cost Price Strategies
A form of demand-oriented pricing that either:
Stimulates
Demand
Since variable cost prices are lower
than full-cost prices, the assumption
is that they will increase demand
Shifts
Demand
Shifts demand from one time period to
another
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-130
NEW-OFFERING PRICING
STRATEGIES
Conceptual new-offering pricing strategies are:
Skimming Pricing
Strategy
The price for a new offering is
set very high initially and is
typically reduced over time
Penetration
Pricing Strategy
An offering is introduced at a
low price
Intermediate
Pricing Strategy
The price is set between the two
extremes and is used in the vast
majority of initial pricing decisions
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-131
PRICING AND COMPETITIVE
INTERACTION
Price War
Marketers should consider price cutting only when one or
more conditions exist:
 The firm has a cost or technological advantage
over its competitors
 Primary demand for a product class will grow if
prices are lowered
 The price cut is confined to specific products or
customers and not across-the-board
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-132
CHAPTER
9
Marketing
Strategy
Reformulation:
The Control
Process
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-133
THE MARKETING STRATEGY
CONTROL PROCESS
The marketing control process serves as the
mechanism for achieving:
 Strategic adaptation to environmental change
 Operational adaptation to productivity needs
Strategic
Control
“Doing the right things”
Operations
Control
“Doing things right”
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-134
THE MARKETING STRATEGY
CONTROL PROCESS
Strategic Control
 Assesses the direction of the organization as evidenced by
its:
• Implicit or explicit goals and strategies
• Capacity to perform in the context of changing
environments and competitive actions
 Defines the fit between an organization’s capabilities and
objectives and environmental threats and opportunities
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-135
THE MARKETING STRATEGY
CONTROL PROCESS
Operations Control
 Assesses how well the firm performs marketing activities
as it seeks to achieve planned outcomes
 Assumes that:
• The direction of the firm is correct
• Only the organization’s ability to perform specific tasks
needs to be improved
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-136
THE MARKETING STRATEGY
CONTROL PROCESS
 A “poorly executed plan can produce undesirable
results just as easily as
a poorly conceived plan.”
 Remedial efforts should focus on:
Strategic
Control
Operations
Control
Improving effectiveness by:
• Seeking opportunities
• Mitigating environmental threats
Improving efficiency by heightening the
marketing effort
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-137
STRATEGIC CHANGE: SOURCES
Market
Evolution
Technological
Innovation
Results from changes in primary demand
for a product class
Creates strategic change as newer
technologies replace older ones
Market
Redefinition
Results from changes in the offering
demanded by buyers or promoted by
competitors
Marketing
Channel
Change
• The increasing role of Internet technology
• The focus on reducing distribution costs
• The power shifts within marketing channels
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-138
OPTIONS FOR DEALING WITH
STRATEGIC CHANGE
 Marshal the resources necessary to alter
the firm’s technical and marketing capabilities to fit
its market-success requirements
 Shift emphasis to product markets where the match
between success requirements and the firm’s
distinctive competency is clear
 Cut back efforts in those product markets where the
firm has been outflanked
 Leave the industry
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-139
OPERATIONS CONTROL
 The goal of operations control is to improve
the productivity of marketing efforts
 Ways to identify and allocate costs are:
Marketing-Cost
Analysis
Marketing
Channel Analysis
Sales
Analysis
Customer
Profitability
Analysis
Product-Service
Mix Analysis
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-140
CONSIDERATIONS IN MARKETING
CONTROL
Problems
vs.
Symptoms
Effectiveness
vs.
Efficiency
Data
vs.
Information
• Recognize the difference between root problems and
surface symptoms
• Must develop causal relationships between occurrences
• Effectiveness assesses whether the firm is achieving its
intended goals given its constraints, capabilities, and
environmental opportunities
• Efficiency relates to productivity—the levels of output
given a specified unit of input
• Data are essentially reports of activities, events,
or performance
• Information is the classification of activities, events, or
performance designed to be interpreted and useful for
decision making
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-141
CHAPTER
10
Global
Marketing
Strategy
© 2010 Pearson Education, Inc. publishing as Prentice Hall
Slide 1-142
GLOBAL MARKETING STRATEGY
 World trade is driven by:
• Global competition among…
• Global organizations for…
• Global consumers
 Global marketing involves the performance of
activities designed to plan, price, promote, and
direct the flow of an organization’s offerings in
more than
one country for a profit
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GLOBAL MARKETING STRATEGY
Global marketing involves two related
strategic decisions:
Where to
Compete
How to
Compete
• Is global marketing right for the firm?
• Which countries/markets should be pursued?
• What mode? Different options for entering and
competing in a foreign market.
• What means? Choice regarding market targeting
and the marketing mix within and between
countries.
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THE DECISION TO GO GLOBAL:
REASONS
 Gain access to new buyers:
• Potential for increased revenues, profits, and
long-term growth
• Attractive if home country’s markets are mature
 Spread business risk across a wider market base
 Capitalize on an firm’s distinctive competencies and
capabilities
 Lower costs and achieve operating efficiencies,
thereby enhancing a firm’s competitiveness
© 2010 Pearson Education, Inc. publishing as Prentice Hall
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IDENTIFYING GLOBAL MARKETING
OPPORTUNITIES
The process for identifying global marketing opportunities
involves:
Developing Country
Screening Criteria
Assessing Market
Attractiveness
• Establishing and prioritizing country
screening criteria
• Gathering, summarizing, and interpreting
data pertaining to the screening criteria
for each country
• Classifying countries based on screening
criteria
• Comparing countries based on the firm’s
marketing competencies/practices
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IDENTIFYING GLOBAL MARKETING
OPPORTUNITIES
Developing Country Screening Criteria
Quantitative
Criteria
• Market and profit potential (chain ratio)
• Variables: demographics and usage
• Sociocultural factors that underlie behaviors
Qualitative
Criteria
• Country income and technological infrastructure
• Trade regulations or free-trade zones
• Strength of competitors (local & foreign)
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IDENTIFYING GLOBAL MARKETING
OPPORTUNITIES
Assessing Market Attractiveness
 Depends on the firm’s characteristics:
• Strengths and weaknesses
• Offerings
• Marketing policies and practices
• Financial resources
 Marketing adaptations increase as the differences
between the firm’s home
country and foreign markets increase
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EXHIBIT 10.2: FOUR GENERAL MODES
OF ENTRY INTO FOREIGN MARKETS
Exporting
Licensing
Joint
Venture
Direct
Investment
Increasing financial commitment, risk,
marketing control, and profit potential
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CRAFTING A GLOBAL MARKETING
STRATEGY
Market Segmentation Variables
Consumer
Socioeconomic
Behavioral
Psychographic
Industrial Buyers
• Demographic
• Firm size
• Geographic
• Geographic
• Benefits sought
• Purchasing goals
• Usage
• Benefits sought
• Lifestyle
• Attitudes
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EXHIBIT 10.3: FIVE GLOBAL
OFFERING AND COMMMUNICATION
STRATEGIES
Offering Emphasis
Communication Message
Same
Offering
Same
Communication
Adapt
Communication
Offering
Extension
Strategy
Communication
Adaptation
Strategy
Adapt
Offering
Offering
Adaptation
Strategy
Dual
Adaptation
Strategy
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Create New
Offering
Offering
Invention
Strategy
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CRAFTING A GLOBAL MARKETING
STRATEGY
Offering and Communication Strategies
An offering may be sold globally in 1 of 3 ways:
Offering
Extension
• Selling the same offering in other countries
• Works best when the offering’s target market is
alike across countries and cultures
Offering
Adaptation
Changing an offering in some way to match
a country’s climate or consumer preferences
Offering
Invention
Inventing new offerings to satisfy common needs
across countries
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CRAFTING A GLOBAL MARKETING
STRATEGY
Marketing Channel and Pricing Strategies
 Standardization of marketing channel
and pricing strategies is a challenge due
to trade regulations and consumer buying
preferences and practices of the various countries
 Competitive, political, tax, exchange rates, and
legal constraints affect the pricing latitude and
strategy of global marketers
© 2010 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER
11
ASSIGNMENT
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Criteria to consider:
Assignment due
 You need to understand the theory very well
 Practical application of theory, critical discussions and
evidence of research are NB
 Follow ‘Assignment format’ instructions
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EXAMINATION PREPARATION
Two sections: Section A: Case study (compulsory) & Section B:
choose 3 out of 4 essay questions
3hr paper, closed book examination
Please read the question correctly and only answer what the question
requires.
You are allowed to bring in other theories and models BUT you need
to relate to the question and explain model/diagram
Think critically, use examples to aid your discussion, apply theory to
the question/case
You will be provided with a exam guideline nearer to the exam:
chapters to focus on BUT YOU HAVE TO HAVE A COMPLETE
UNDERSTANDING AND KNOWLEDGE OF THE ENTIRE MODULE.
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