Chapter 19 - Strategic Marketing and Planning

Question 1

Introduction

Answer 1

• Marketing : traditionally -> functional activity + tactical role , now -> key strategic role.
• Modern consumers -> sophisticated + quality conscious
• Effective planning enables : (1) proactive stance to markets, (2) anticipate changes, (3) remian competitive.

Question 2

Corporate and Marketing Strategy

Answer 2

Set Objectives Firm as a whole. For products and markets, increase turnover.
Internal appraisal Review diff aspects of org. Marketing audit.
External Appraisal Review PESTEL Review Environmental Factors for P & M.
Gaps Desired and Forecast. Close it. Growth in desired markets.
Strategy Diversification + Enter New markets. “• Plan -> achieve obj -> specify: Resources + how to use !
• Marketing concept -> Strategy : Identify markets + needs -> Plan products to satisfy -> Organize resources.”
Implementation Delegated to Depts Put plans to action.
Control Results reviewed -> Plan ! Marketing obj achieved?
see notes.

Question 3

The Marketing Plan

Answer 3

Marketing plans may take following forms:
Section Content
• Executive Summary Finalized planning doc -> goals + recommendations.
• Situation analysis SWOT analysis + forecasts.
• Objectives & goals Org`s hopes + needs to achieve : market share / profits / returns.
• Marketing Strategy Consider target markets + marketing mix + marketing expenditures.
Strategic mktg plan ♣ 3 to 5 yrs long ♣ scope + activities of markting defined ♣ match activities to competencies.
• Tactical mktg plan ♣ 1 yr ♣ based on existing P & M ♣ concerned with marketing mix issues.
• Action Plan ♣ Sets how stratigies achieved:
(1) Marketing mix ( 7 Ps ),
(2) Mix strategy vary for each segment.
• Budegts Developed from action programme.
• Controls Monitor progress of plan and budgets.

Question 4

Marketing Objectives

Answer 4

• Clear statement : Where the oorg wants to be in mktg terms. • Describes : Expectations to planned mktg actions. • Objectives be : SMART + develpoed from Corp strategy. • E.g.↑ market share x% to y% by 20xx. Or achievew Rs. X m revenue at 80% cost.

Question 5

Marketing Strategy

Answer 5

• Ansoff(1987) develpoed matrix showing possible strategies for P & M.
Products
Existing New
Markets Existing Market penetration 1 Product development 4
New Market development 2 Diversification 16
* Numbers describe risks attached to each strategy with diversification being the riskiest.
• Market penetration : ↑ sales with exisiting P in existing M. • Market development : new market with existing product.
• Product development : Redesign, reposition and introduce completely new one. • Diversification - more risky b/c new product + new market + no experience. • Ansoff``s matrix -> leads naturally to research new P and M + deployment marketing mix to exploit opportunities for growth.
see notes.

Question 6

Segmentation as a Strategy

Answer 6

• Subdividing markets into distinct subsets of customers with each subset being target woth distinct marketing mix.
Mass Market Approach
• Customers are not distinguished + single marketing mix + e.g. Commodities / utilities.
Segmentation
• Segement potential groups / customers + target the segement.

Question 7

Targeting as a Strategy

Answer 7

• Limitation to sell to entire market b/c competitition, resources and expansion of market- select target markets.
• Marketing managers may choose following policy options:
1 - Undifferenciated marketing : produce single products, get as amny customers (segmentation ignored). E.g.android
2 - Concentraated marketing : Produce ideal product, single segment of market (Apple), Rolls Royce.
3 - Differenciated Marketing : Produce several versions of a product, each for different segment. Denizen by Levi`s.

Question 8

Positioning as a Strategy

Answer 8

• This strategy accepts that a product cannot be “all things to all people”, but will always be compared to other products. E.g. Etihad Airlines.

   High price			 Low Quality	Cowboy Brand ( Business Class)	Premium (Private suite)		 High Quality
Economy ( Economy class)	Bargain Brand ( First Class)		
    Low price			 see notes

Question 9

3 - Strategy Formulation

Answer 9

• In developing market strategy, co. seeks : meet customers` needs more efficiently than competitors.

Question 10

SWOT Analysis

Answer 10

• Basic principle is that any statement about an org / its env can be classified as S,W,O and T.
Classification Comment
♠ Strength Particular skill or distinctive competence possessed, aiding in achieving stated objectives.
♠ Weakness Aspect of co. hindering achievement of specific objective.
♠ Opportunity Any feature creating conditions advantageous to the firm.
♠ Threat Env development - hinderance in achieving objectives + Threat to one is opportunity to other.
• Two major strategic options for SWOT analysis:
1 - Match strengths with opportunities presented by the markets.
2 - Convert weakness into strength - avail opportunities/ convert threats into opportunities-match existing strength.

Question 11

Competitive Strategies

Answer 11

• Mgt must : (1) Identify way to compete. (2) Perceived basis of competitive advantage.
• American strategist Micheal Porter argues that startegy opted - method to create and sustain profitable position in particular market environment. Profitable industry may perform bad because of opted strategy and vice versa.

• Porter categorizes five competitive forces :
► Threat of new entrants. Nokia to Q mobile. ► Threat of substitute product / service. Pager to cell phone.
► Bargaining power of customer. Supermarts to suppliers. ► Bargaining power of supplier. Software service provider.
► Rivalry amongst current competitors. Internet service providers.
• Competitive strategy requires - decide: how it will compete? + compete across entire market or segment? + compete on price or product range(competitive advantage)

• According to Ennnew, Watkins and Wright : believe 4 possible strategies.
“(a) Cost leadership
Low cost producer, factors: Economies of sccale, superior working practices, technological advantage.”

(b) Cost Focus (c) Differentiation focus
Focus / niche - aims to serve particularly attractive or suitable segements or niches + org does not take on big playeers but identifies market niche with different needs + niche must be large enough to be profitable + large will depend on size and goals of the org.

(d) Differentiation through leadership / focus products - Focus products become highly valued by segment targeted, creating customer loyalty. Success of strategy: Price premium must outweigh cost.

• Its important to avoid being stuck in the middle - trying to be all things to all consumers. Trying to be well on cost and differentiation is likely to lose out yto firm concentrating on either one strategy.

Question 12

Growth Strategy

Answer 12

Ansoffs product market mix. Refer above. • Market Penetration: Possible options include - attract / persuade customers - only viable in unsaturated market. • Market Development: new segment / geographic / new use of product + use e-commerce for new markets. • Product development: modify to satisfy consumers needs + get competitive advantage.
• Diversification: riskier = no experience + rare and only opted when no other way to growth.

Question 13

4 - Market segmentation, Target Markets and Positioning

Answer 13

• “A segment is a group of customers with similar characteristics who can be targeted with the same marketing mix.”
• Segmentation bases : (a) Objective. E.g. age (b) subjective. E.g.lifestyle/attitudes.

Question 14

Market Segmentation

Answer 14

• Market = X homogenous group + consists of potential buyers with diff needs + buying behaviour.
• Def Market Segmentation : see definition notes.
• Market : diff group of customer, diff needs and prferences ,react to `market stimuli’ in much the same way.
• To exploit each segment successfully, target each segment with a unique marketing mix.

Question 15

Identifying segments

Answer 15

• One basis may not be valid in every market, while 2 / more valid at the same time.
• Segmentation variable might be superior to another in hierarchy of variables. + primary & secondary seg variables.
• Segmentation variable include: geography, population, demographic and behaviour.

Question 16

Market Segemntation and Marketing Planning

Answer 16

• Segmentation enables: alternatives to mass marketing+ targeting particular groups of buyers.
• Market segmentation is based on the recognition of diverse needs of potential buyers + segment : customer attitudes + diff market approach for each segment + imp elements in market segmentation:

○ Each segment = common needs + pref, react to ‘market stimuli’. ○ Each segement : target with unique marketing mix.
• Total market = homogenous -> rare + segmentation possible : where identifiable clusters of consumer wants.

Question 17

Benefits of market segmentation

Answer 17

• Customer needs identified : better opportunities identified + subgroups may be formed.
• Specialists may be used for each major segment. E.g. couseller for small businesses + effective marketing system.
• Proportionate marketing budget into segements + return on investments.
• Small adj to product offerings + promotion campaigns - promotes efficiency. • Dominate particular segemnts + improves synergy. • Product range reflects diversification of customer needs + responsiveness to customer = benefits flow to org. • Other benefits : • Better customer satisfaction • revenue growth • customer retention • targeted communications • innovation

Question 18

The Bases for segmentation

Answer 18

• Diff basis + appropriateness vary + one superior to other in hierarchy. • Simple bases could be : CARNEGIE2 BLOG
• Lifestyle segmentation : as opposed to product - lifestyle pattern considered (distinct way of living)
• Lifestyle Categories : (1) upwardly mobile,ambitious (2) Traditional and sociable (3) Security and status seeking (4)Hedonistic preference.

Question 19

Changing Aspects of Market segmentation and product positioning

Answer 19

• Approaches to product positioning and market segmentation have continually changed. Few develpoments are:
♠ Consumers be segmented purpose wise: e.g. bank`s consumers - account profile for product cross selling, attitude to risk taking for delivering advertising messages, socio eco type for marketing medium.

♠ Customer database analysis + idea of letting data speak fo itself: Data mining to identify pattern of behaviour + preferences.
♠ Segementation by ‘soft’ data: e.g. age, lifestyle, social grouping, etc. ♠ sub segmentation or hybrid segmentation: divide and target each segment differently. ♠ Computer models are used: discover suitable addition to product line that will appeal to a separately distinguished market segment.

Question 20

Validity and attractiveness of the current served segment

Answer 20

• Segment validity - market segment - valid if designing ang developing a unique marketing mix is feasible. Questions to ask:
♠ Can the segment be measured? - e.g. conservative consumers, how mus conservative? Cant measure !
♠ Segment big enough ? - profitable + huge potential ? ♠ can the segment be reached? - promotion + distribution !
♠ Do segments respond differently - 2 segments + same response to a mktg mix, both are same.
♠ Can segment be reached profitably ? - cost

Question 21

Target markets

Answer 21

Company selects a target market based on segment attractiveness - focus through a special marketing mix.
Marketing Strategy - Comment - Allignment to competitive strategy
1 - Mass or undifferentiated produce single product + get as many buyers possible+ segmentation ignored Can be pursued by cost leaders / co.s pursuing differentiation strategy with single mktg mix
2 - Concentrated produce ideal product + single segment reliance = risk Focus strategy, by cost or differentiation
3 - Differentiated several product version for different segments + risk = over differentiated.. It’s a multi focus strategy + co. pursuing diff opportunities in diff segments

Question 22

Micro Marketing

Answer 22

Micro marketing : The move from traditional to micro marketing is rapidly gaining ground as marketers explore new ways to recruit more customers cost effectively. New trends that are brought about are:

• Markets are becoming overcrowded as ability to create product variants have increased without increasing resources.
• Mass customization has caused less need for standard products if people`s preferences can be created for.
• Growth in minority lifestyle has improved creating opportunities for niche brand aiming consumers with distinct preferences.
• Fragmentation of media to service ever more specialist and local audiences has curtailed dominance of major brand advertisers.
• Advance in IT has led development of individual profiles of customers for their preferences about different products.

Question 23

5 - Positioning products and brands

Answer 23

• Positioning is how a product appears in relation to other products.					
	• On products map, brands can be positioned based on different chracteristics:				* see diagram in book pg: 495	
	♠ Specific features of a product.    ♠ Benefits, problems, solutions and needs.   ♠ specific occasions use.   ♠ user category.   ♠ against another product.   ♠ product class disassociation.   ♠ hybrid basis. 					

♦ Identifying a gap in the market
• See diagram of customer location based on price and quality, price and calories and price and speed of preparation Pg : 495
♦ Competitive positioning concerns ‘ a general idea of what kind of offer to make to the target market in relation to a competitive offer’ (Kotler).

♦ Fragmented industries and market segmentation When fragmentation of industries and proliferation of market segments occur:
• Low entry barriers. • Few economies of scale or learning curve effect. • Transport and distribution costs are high. • Rapid product changes or style changes. • Highly diverse product line. • Scope of product differentiation - quality or brands differences.