Principles of

Strategic
Marketing
Management
What is a strategy?

• A long term action plan

• The game plan
• Company or organization direction
• What we’re doing
• The plan to achieve competitive advantage
Strategy is the answer to:

1. What do we want to do?

2. What do we bring to the table?
3. Where should we put our efforts & why?
4. What do we need to do to compete, survive, and meet
our goals?
 “How’s” of strategy
• How to respond to changing market conditions
• How to outcompete rivals
• How to grow the business
• How to manage each functional piece of the business
and develop needed organizational capabilities
• How to achieve strategic and financial objectives
• How to balance short term and long term
The role of strategy

Corporate Strategy:
Mission & •Corporate Operating
Objectives •Business Plans
•Functional
“Know your enemy, know yourself, and your
victory will not be threatened.
Know the terrain, know the weather, and your
victory will be complete.”
Sun Tze
What is Competitive Advantage?
“Competitive advantage is a company’s ability to perform in
one or more ways that competitors cannot or will not match.”
Philip Kotler

“If you don’t have a competitive advantage, don’t compete.”

Jack Welch, GE
Competitive advantages
offered

• Differentiating feature(s)
• Narrow market niche
• Serving unique needs better
• Expertise, resource strengths, and capabilities not easily
imitated
• Low-cost provider
Companies seeking competitive
advantages
• Positions of advantage
• Superior customer value
• Lower relative total cost

• Performance advantages
• Customer satisfaction, Loyalty, Market Share, Profit

• Sources of advantages
• Superior skills & knowledge, Superior resources,
Superior business process
Other characteristics of CA
Substantiality
• Is it substantial enough to make a difference?

Sustainability
• Can it be neutralized by competitors quickly?
• Ability to be leveraged into visible business attributes that
will influence customers
 Distinctive Capabilities

• Sophisticated distribution systems – Wal-Mart

• Product innovation capabilities – 3M
• Defect-free manufacturing – Toyota & Honda
• Superior e-commerce capabilities – Dell computers
• Personalized customer service – Ritz Carlton Hotels
Mission Statement
A mission statement points to goals that are definable,
measurable, actionable, and with emotional appeal that
everyone understands and can act upon.

An Organization’s Mission:

 Reflects management’s vision of who the firm

serves.
 Provides a clear vision of what the firm provides
customers.
 Directs managers where the firm should be staking
out a competitive position in the marketplace.
Mission
Answers the question: What drives us?
Beat GM Honda
Crush Reebok Nike

A good mission statement:

Elicits an emotional, motivational response in
company employees.
Is easily understood and can be transferred into
individual action.
Points to a tangible and measurable goal.
Speaks to the competitive environment in which
the company operates.
Corporate Missions of
Companies

SINGAPORE AIRLINES is engaged in air transportation and

related businesses. It operates world-wide as the flag carrier
of the Republic of Singapore, aiming to provide services of
the highest quality at reasonable prices for customers and a
profit for the company

MARRIOTT’S Mission Statement:

We are committed to being the best lodging and food service
company in the world, by treating employees in ways that
create extraordinary customer service and shareholder value
OTIS Elevators: Mission
Statement

“To provide any customer a means of moving

people and things up, down, and sideways
over short distances, with higher reliability
than any similar enterprise in the world.”
“To offer food prepared in the same high-quality
manner world-wide, tasty, reasonably priced, and
delivered in a consistent, low-key and friendly
atmosphere.”…..Mc Donald’s

“To be the number one sports and

fitness company in the world." …Nike
Corporate Objectives & Goals

• An objective is a long-range purpose

• Not quantified and not limited to a time period
• Eg. increasing the return on shareholders’ equity

• A goal is a measurable objective of the business

• Attainable at some specific future date through
planned actions
• Eg. 12% growth in the next two years
Levels of Goals/Plans - Honda

 A Mission Statement describes our

Mission
Statement
purpose.
Beat General Motors
Strategic Strategic  Strategic level is the “Big
Goals Plans
Picture”.
Senior Management Build cars for the American market.

Tactical Goals Tactical Plans

 Tactics break strategies into
steps.
Middle Management Develop car designs for American
market.
Operational Goals Operational Plans  And smaller steps.
Lower Management Do research on American
Market
Strategic Goals and Plans: Nike

 Protect and improve Nike’s position as the number one

athletic brand in America.

 Intensify the company’s effort to develop products that

women want and need.

 Explore the market for products specifically designed

for the requirements of maturing Americans.

 Continue the drive for increased margins through

inventory management and new product development.
Tactical & Operational Goals and
Plans: Nike

Strategic Goal: Build momentum in fitness market

Marketing manager works with advertising manager
and sales manager to devise point-of-purchase
displays for fitness centers.
Sales manager incorporates sales calls to fitness
centers thru salesperson

Strategic Goal: Increase margins via inventory mngt

Purchasing managers evaluate production lead

times

Information Technology manager assigns inventory

analyst to task of updating with more current
software.
What is a Strategic Business Unit?
(SBU)

• A set of products or product lines

• With clear independence from other products
or product lines
• for which a business or marketing strategy
should be designed
Characteristics of a viable SBU

• Unique business mission

• Definable set of competitors
• Integrative planning done independently
• Responsible for resource management in all areas
• Large enough but not so large as to become
bureaucratic
Organizational Marketing Levels

Organizations develop strategies at 3 structural levels:

• Corporate level – (corporate marketing)

• SBU level - (Strategic Marketing)
• Product/Market level – (Functional Marketing)
Marketing at the SBU Level: Strategic
Marketing
Strategic Marketing
• Focuses on what the firm does best at the SBU level
• To secure and maintain a sustainable competitive
advantage

Requires
•Detailed understanding of market needs
•Proactive use of competitive intelligence at the corporate
as well as SBU’s levels
Strategic planning
• Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s goals
and capabilities and its changing marketing opportunities
• Process to establish priorities on what you will accomplish
in the future
• Forces you to make the right choices
• Pulls the entire organization together around a single
game plan for execution
• Broad outline on where resources will get allocated
 Why do Strategic Planning?
• If you fail to plan, then you plan to fail – be proactive about
the future

• Strategic planning improves performance

• Counter excessive inward and short-term thinking

• Solves major issues at a macro level

• Communicate to everyone what is most important

 Key questions to ask
• Where are we now? (Assessment)

• Where do we need to be? (Gap / Future End State)

• How will we close the gap (Strategic Plan)

• How will we monitor our progress (Balanced Scorecard)

 A good strategic plan should . . .
• Address critical performance issues

• Create the right balance between what the organization is capable

of doing vs. what the organization would like to do

• Cover a sufficient time period to close the performance gap

• Visionary – convey a desired future end state

• Flexible – allow and accommodate change

• Guide decision making at lower levels –operational, tactical,

individual
“Marketing Strategy is a series of
integrated actions leading to a
sustainable competitive
advantage.”
John Scully
A Viable Marketing Strategy
• Must have a clearly defined market

• Must have a good match between corporate

strengths and market needs

• Must have significant positive differentiation in the

key success factors of the business
Strategic Marketing
Planning
 How to go about it?
• Defining the corporate mission
• Establishing SBUs
• Allocating resources for SBUs
• Planning for new business
 5 questions that the firm must ask itself

• What is our business?

• Who is our customer?
• What does our customer need?
• What will our business be?
• What should our business be?
 Assigning resources to each SBU

• A business portfolio will always have some

“ yesterday's has beens “as well as “tomorrow's
breadwinners”
• Need to have an analytical tool for classifying its
businesses by profit potential

• B.portfolio evaluation models

1. Boston Consulting Group
2. General Electric Model
 The Boston Consulting Group’s Growth-
Share Matrix

20%-
Market Growth Rate

Stars Question marks

4
?2 ?
18%-
16%- 3 1
14%-
12%- 5 ?

?
10%-
8%- Cash cow Dogs
6%- 8
4%-
2%- 6
0
7
10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x
Relative Market Share
• The growth-share matrix is divided into 4 cells, each indicating a
different kind of business decision need.

• Dogs – located in the Bottom Right Hand Quadrant.

• These are businesses that have weak/low market share in low-growth
markets.
• They generally generate low profits or losses and may be candidates
for elimination unless there are reasons to hold on to them.

• Question Marks – located in the Upper Right Hand Quadrant.

• Question marks have low market shares in high growth markets –
cash is needed to make question marks into stars.
• This requires management decision concerning whether to continue to
spend money to turn the low market shares in to high market shares in
an opportunity rich high growth market.
• Most business start off as question marks.
• Question marks require a lot of resources if the firm wants to be
successful.
• Stars – Upper left hand quadrant.
• A star is the market leader in a high growth market.
• A Star does not necessarily make money for the firm but continues to
take advantage of growth opportunities and hold off competitors.

• Cash Cows - lower left hand quadrant.

• When the market’s annual growth rate falls a star becomes a cash
cow.
• The firm has a large market share in a low growth market. Given the
low growth, most competitors drop out of the market, and the firm is
left to dominate the industry.
• Because the firm is the market leader, it enjoys economies of scale
and higher profit margins.
• The firm utilizes cash from its cash cows to pay bills and support other
efforts.
 The 4 strategies to be pursued
• Results from the analysis can be used to decide on strategies to adopt.
• Managing the firm as an investment portfolio with respect to four strategies that the
firm can adopt:

• Build: Here the goal is to increase market share. This is a strategy best suited for
“question marks” as they must grow to become stars.

• Hold: The goal is to keep market share and is best suited for “cash cows” so that they
could continue to yield large positive cash flow.

• Harvest: Here the goal is to increase short-term cash flow. Harvesting involves a
decision to exit from the business (market). Harvesting involves “milking the business”
to get out as much resources as it can. Harvesting best suited for weak cash cows,
question marks and dogs.

• Divest: Sell or liquidate to be able to direct the resources elsewhere. This strategy
best suited for “dogs” and “question marks” that are a drag on profitability and has no
real chance of future profitability. Before divesting the firm should evaluate whether
divesting is a better option than harvesting.
Three Paths to Success
Relative Market Share
High Low

High

Market
Growth
Rate

Low
Three Paths to Failure

Relative Market Share

High Low

High

Market
Growth
Rate

Low
 Ansoff’s Product-Market Grid

Current products New products

Mkt penetration Product development

Current Mkts
strategy strategy

Mkt development Diversification

New Mkts strategy strategy

•Is a tool that helps businesses decide their product and market growth strategy.

•Suggests that a business' attempts to grow depend on whether it markets new or

existing products in new or existing markets.
Market Penetration (existing markets, existing products):
Market our existing products to our existing customers. This means increasing our
revenue by, eg: promoting the product, repositioning the brand, and so on.
However, the product is not altered and we do not seek any new customers.

Seeks to achieve 4 main objectives:

1.Maintain or increase the market share of current products - this can be achieved by
a combination of competitive pricing strategies, advertising, sales promotion and
perhaps more resources dedicated to personal selling

2.Secure dominance of growth markets

3.Restructure a mature market by driving out competitors; this would require a much
more aggressive promotional campaign, supported by a pricing strategy designed to
make the market unattractive for competitors

4.Increase usage by existing customers. For example by introducing loyalty

schemes.

.
Market Development (new markets, existing products):
Market our existing product range in a new market.
This means that the product remains the same, but it is marketed to a new
audience.

Eg: Exporting the product, or marketing it in a new region, New distribution

channels

Different pricing policies to attract different customers or create new

market segments

Product Development (existing markets, new products):

This is a new product to be marketed to our existing customers.
Develop and innovate new product offerings to replace existing ones & then
marketed to our existing customers.

This often happens with the auto markets where existing models are updated or
replaced and then marketed to existing customers.
Business Diversification (new markets, new products):
Market completely new products to new customers.

There are two types of diversification, namely related and unrelated

diversification. Related diversification means that we remain in a market or
industry with which we are familiar.

Diversification is an inherently higher risk strategy because the business is

moving into markets in which it has little or no experience.

For a business to adopt a diversification strategy, it must have a clear idea

about what it expects to gain from the strategy and a transparent and honest
assessment of the risks.
The strategic marketing process
The Planning Process

• Analyzing market opportunities

• Developing marketing strategies
• Planning marketing programs
• Managing the marketing effort
Elements of the marketing mix that comprise a
cohesive marketing program