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The Marketing Management Process McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Marketing Management—A Definition The process of analyzing, planning, implementing, coordinating, and controlling programs Involves the conception, pricing, promotion, and distribution of products, services, and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving organizational objectives 1-2 1-2 Marketing Management—A Definition Basic focus of and the sequence of events within marketing management A decision-making focus Analyzing the 4Cs 1-3 1-3 Integrating Marketing Plans with the Company’s Strategies and Resources Corporate strategy: Reflects the company’s mission and provides direction for decisions about what businesses it should pursue, how it should allocate its available resources, and its growth policies Business-level strategy: Addresses how the business intends to compete in its industry Marketing strategy: Reflect a firm’s interrelated decisions about market segments, product line, advertising appeals and media, prices, and partnerships with suppliers, distributors, retailers, and other agencies 1-4 1-4 Market Opportunity Analysis Understanding market opportunities Customer analysis Marketing research and forecasting Market segmentation, targeting, and positioning decisions Market segments: Distinct subsets of people with similar needs, circumstances, and characteristics that lead them to respond in a similar way to a particular product or service offering or to a particular strategic marketing program 1-5 1-5 Formulating Strategic Marketing Programs Specifying marketing objectives and strategies Marketing program components 4 Ps: Product offering, price, promotion, place Marketing mix: The combination of controllable marketing variables that a manager uses to carry out a marketing strategy in pursuit of the firm’s objectives in a given target market 1-6 1-6 Exhibit 1.5 - Decisions within the Four Elements of the Marketing Mix 1-7 1-7 Formulating Strategic Marketing Programs for Specific Situations The strategic marketing program for a product should reflect market demand and the competitive situation within the target market Different marketing strategies are typically more appropriate and successful for different market conditions and at different life-cycle stages 1-8 1-8 Implementation and Control of the Marketing Program A final critical determinant of a strategy’s success is the firm’s ability to implement it effectively This depends on whether the strategy is consistent with the resources, the organizational structure, the coordination and control systems, and the skills and experience of company personnel 1-9 1-9 The Marketing Plan—A Blueprint for Action A written document detailing the current situation with respect to customers, competitors, and the external environment and providing guidelines for objectives, marketing actions, and resource allocations over the planning period for either an existing or a proposed product or service 1-10 1-10 Exhibit 1.6 - Contents of a Marketing Plan 1-11 1-11 Exhibit 1.6 - Contents of a Marketing Plan 1-12 1-12 Some Recent Developments Affecting Marketing Management Globalization Increased importance of service Information technology Relationships across functions and firms 1-13 1-13 The Marketing Implications of Corporate and Business Strategies McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Three Levels of Strategy: Similar Components, but Different Issues The hierarchy of strategies Corporate strategy Business-level strategy Functional strategies 1-15 1-15 Corporate Scope—Defining the Firm’s Mission A good mission statement guides an organization’s managers as to which market opportunities to pursue and which fall outside the firm’s strategic domain Market influences on the corporate mission Criteria for defining the corporate mission Social values and ethical principles Ethics: Concerned with the development of moral standards by which actions and situations can be judged 1-16 1-16 Exhibit 2.6 - Characteristics of Effective Corporate Mission Statements 1-17 1-17 Corporate Objectives A performance dimension or attribute sought A measure or index for evaluating progress A target or hurdle level to be achieved A time frame within which the target is to be accomplished 1-18 1-18 Exhibit 2.8 - Common Performance Criteria and Measures That Specify Corporate, Business-Unit, and Marketing Objectives 1-19 1-19 Exhibit 2.8 - Common Performance Criteria and Measures That Specify Corporate, Business-Unit, and Marketing Objectives 1-20 1-20 Corporate Objectives The marketing implications of corporate objectives: Most organizations pursue multiple objectives Trying to achieve many objectives at once leads to conflicts and trade-offs Managers can reconcile conflicting goals by prioritizing them Another approach is to state one of the conflicting goals as a constraint or hurdle 1-21 1-21 Corporate Sources of Competitive Advantage A sustainable competitive advantage at the corporate level is based on company resources - resources that other firms do not have, that take a long time to develop, and that are hard to acquire 1-22 1-22 Corporate Growth Strategies A firm can go in two major directions in seeking future growth Expansion of its current businesses and activities Diversification into new businesses, either through internal business development or acquisition 1-23 1-23 Exhibit 2.9 - Alternative Corporate Growth Strategies 1-24 1-24 Corporate Growth Strategies Expansion by increasing penetration of current product-markets Expansion by developing new products for current customers Expansion by selling existing products to new segments or countries 1-25 1-25 Corporate Growth Strategies Expansion by diversifying: Vertical integration Forward vertical integration occurs when a firm moves downstream in terms of the product flow Backward integration occurs when a firm moves upstream by acquiring a supplier Related (or concentric) diversification Unrelated (or conglomerate) diversification 1-26 1-26 Allocating Corporate Resources To exploit the advantages of diversification Corporate managers must make intelligent decisions about how to allocate financial and human resources across the firm’s various businesses and productmarkets Two sets of analytical tools have proven useful in making such decisions Portfolio models Value-based planning 1-27 1-27 Portfolio Models Enable managers to classify and review their current and prospective businesses by viewing them as portfolios of investment opportunities and then evaluating each business’s competitive strength and the attractiveness of the markets it serves The Boston Consulting Group’s (BCG) growth-share matrix 1-28 1-28 Exhibit 2.10 - BCG’s Market Growth Relative Share Matrix 1-29 1-29 Exhibit 2.11 - Cash Flows across Businesses in The BCG Portfolio Model 1-30 1-30 The Marketing Implications of Business-unit Strategy Decisions Strategic business units: Components of a firm engaged in multiple industries or businesses Steps in developing business-level strategies Deciding how to divide into SBUs Managers must recommend: The unit’s objectives The scope of its target customers and offerings Which broad competitive strategy to pursue How resources should be allocated 1-31 1-31 How Should Strategic Business Units Be Designed? Characteristics of strategic business units A homogeneous set of markets to serve with a limited number of related technologies A unique set of product-markets Control over those factors necessary for successful performance Responsibility for their own profitability 1-32 1-32 How Should Strategic Business Units Be Designed? Dimensions that define the scope and mission of the entire corporation also define individual SBUs Technical compatibility Similarity in the customer needs Similarity in the personal characteristics 1-33 1-33 The Business Unit’s Objectives Corporate objectives typically broken down into subobjectives for each SBU Breaking down an SBU’s objectives into subobjectives for each of its productmarket entries is often a major part of developing business-level strategy 1-34 1-34 The Business Unit’s Competitive Strategy Decisions about an SBU’s scope Allocating resources within the business unit Gaining a competitive advantage Marketing resources and competitive advantage 1-35 1-35 Exhibit 2.13 - Three Competitive Strategies and the Traits and Competencies of Businesses That Implement Them Effectively 1-36 1-36
