MARKETING STRATEGY

O.C. FERRELL • MICHAEL D. HARTLINE, 6e

Marketing in
Today’s Economy

1
 Basics of Marketing
• Review the Basics of Marketing document to
understand some of the key terms and concepts
we use in marketing.

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 Introduction
• Commoditization
– A consequence of mature industries, where slowing
innovation, extensive product assortment, excess supply,
and frugal consumers force margins to the floor.
• All organizations – both for-profit and nonprofit –
require effective planning and a sound marketing
strategy to achieve their goals and objectives.

3
 Basic Marketing Concepts:
What Is Exchange?

• Exchange
– The process of obtaining something of value by offering
something in return; typically obtaining products for money
• Five Conditions of Exchange
– There must be at least two parties to the exchange.
– Each party has something of value to the other party.
– Each party must be capable of communication and delivery.
– Each party must be free to accept or reject the exchange.
– Each party believes it is desirable to exchange with the other
party.

4
 The Marketing Mix
• Product line/mix range
• Design concept
• Product variations Product
Product Issues
Issues
• Branding
• Packaging
• Services
• Warranties

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 The Marketing Mix
• Physical distribution
– Inventory control
– Storage Distribution/
Distribution/
– Transportation Place
Place mix
mix
• Distribution channels
– Retailers
– Distributors
– Wholesalers
• Export/import

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 The Marketing Mix
• Advertising
• Personal Selling
– Field sales force
– Telephone sales
Communications/
Communications/
• Public Relations
Promotion
Promotion mix
mix
• Direct Marketing
• Sales promotion
• Publicity
• Market Research
• Electronic interaction
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 The Marketing Mix
• Price structure
• Discounting
• Payment terms
• Psychology of Pricing
Pricing
Pricing mix
mix
• 4 C’s
– Costs
– Customers
– Competition
– Conditions
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 Challenges and Opportunities
In the New Economy
• Customer/Market Trends
– Power Shift to Customers
– Audience Fragmentation (micro markets)
– Increasing Demands of Customers
– Overall Decline in Brand Loyalty of Customers
– Increasing Price Sensitivity Among Customers
– Increasing Consumer Cynicism about
Business/Marketing
– More Spending Power in Developing Countries
– Shifting Demand Patterns 1-9
 Challenges and Opportunities
In the New Economy
• Competition/Industry Trends
– Increasing Numbers and Strength of Foreign
Competitors
– Massive Increase in Product Selection
– But Little Real Differentiation Among Product
Offerings
– Rapid Technology Advances
– Aggressive Cost-Cutting Measures in Order to
Increase Competitiveness
– Increasing Cooperation with Supply-Chain
Partners and Competitors 1-10
 Challenges and Opportunities
In the New Economy
• Critical Issues
– Unending, Rapid Change
• Customers change, competitors change, and marketing organizations
change
– Privacy, Security, and Ethical Concerns
– World Economic Volatility
– World Political Unrest
– Depletion of Critical Resources
– Unclear Legal Jurisdiction
• Especially with Internet and international trade

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American Customer Satisfaction
Index (Exhibit 1.5)

12
MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

Strategic Marketing
Planning

2
 Strategic Planning
Corporate
Mission

Corporate
Goals/Objectives

Marketing
Goals

Marketing
Objectives

Marketing
Strategy/Implementation

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 Organizational Mission versus
Organizational Vision
• Mission Statement
– Answers… “What business are we in?”
– Clear and concise
– Explains the organization’s reason for existence
• Vision Statement
– Answers… “What do we want to become?”
– Tends to be future oriented
– Represents where the organization is headed

15
 Organizational Mission

• Five basic questions to be answered:

– Who are we?
– Who are our customers?
– What is our operating philosophy?
– What are our core competencies or
competitive advantages?
– What are our stewardship responsibilities
(human, financial & environmental aspects)?
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 Federal Express
• Vision
– Leading the Way

• Mission
– FedEx will produce superior financial returns for shareowners by
providing high value-added supply chain, transportation, business and
related information services through focused operating companies.

Customer requirements will be met in the highest quality manner

appropriate to each market segment served. FedEx will strive to
develop mutually rewarding relationships with its employees, partners
and suppliers. Safety will be the first consideration in all operations.
Corporate activities will be conducted to the highest ethical and
professional standards.

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 Other Sample Missions
• Aflac Mission Statement
To combine aggressive strategic marketing with quality
products and services at competitive prices to provide
the best insurance value for consumers.
• Bristol-Myers Squibb Mission Statement
To discover, develop and deliver innovative medicines
that help patients prevail over serious diseases.
• ConocoPhillips Mission Statement
Use our pioneering spirit to responsibly deliver energy to
the world.

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 Marketing Plan
• Executive Summary
– Synopsis; write last, but put at front of plan
• Situation Analysis
– Internal, Customer, External Environments
• SWOT Analysis
– Strengths, Weaknesses, Opportunities, Threats
– Find competitive advantages and strategic focus

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 Marketing Plan (cont.)
• Strategic Marketing Goals
– Measurable & with a time frame
• Marketing Strategy
– Primary/secondary target markets
– Product/Positioning; Pricing; Distribution;
Promotion Strategies
• Implementation, Evaluation, Control
– Structure, tactics, timeline, controls, audits

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 Marketing Plan Tips
• Comprehensive and integrative
• Flexible (with contingency planning)
• Consistent and logical
• Frequent revision and updating (new data)
• Common sense and judgment – but creative
• Consider resources and implementation
• Must be communicated

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 Shifting Focus
• From “Marketing Concept” to long-term,
value-added relationships with customers,
employees, suppliers, and other partners.
– “Market Orientation”
• More balanced strategic planning
– Balanced Performance Scorecard
• Financial, Customer, Learning/Growth, Internal
Processes
– Consider less tangible assets

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MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

Situation Analysis
Collecting and Analyzing
Marketing Information

3
Issues to Be Considered in a Situation
Analysis (Exhibit 3.1)

25
Internal, Customer, and External
Environments (Exhibit 3.2)

26
Conducting a Situation Analysis

• Analysis + Intuition + Judgment

• Data and Information are Not the Same

– Data: numbers or facts
– Information: Data that has been made useful to
decision makers

• Benefits of research/analysis must outweigh

the costs 1-27
 Internal Environment
• Current marketing objectives, strategy, and
performance
• Current and anticipated organizational resources
– Financial, human, experience, partnerships, etc.
• Current and anticipated cultural and social issues
(within the organization)

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 Customer Environment (Exh. 3.4)
• Who are our current and potential customers?
• What do customers do with our products?
• Where do customers purchase our products?
• When do customers purchase our products?
• Why (and how) do customers select our
products?
• Why do potential customers not purchase our
products?
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 External Environment (Exh. 3.5)
• Competition
– Identification, Characteristics, Assessment (S/W),
Capabilities, Likely Response
• Economic conditions
• Political trends
• Legal and regulatory issues
• Technological advances
• Sociocultural trends (Exhibit 3.7)
• Physical environment (e.g., climate, disaster)
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Growth in the Number of Older
Americans (Exhibit 3.8)

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Major Types of Competition
(Exhibit 3.6)

32
 Competitive Structure
• Issues affecting structure of competition:
– Economies of scale (entry/exit barriers)
– Government influence/regulation
– Competitive history of firms (intensity)
– Distribution channels (suppliers/distributors)
– Production capacity configuration
– Number and types of competitors

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 Collecting Environmental Data
and Information (1 of 2)
• Secondary Information Sources
– Internal Data Sources
– Government Sources
– Periodicals/Book Sources
– Commercial (Fee-Based) Sources

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 Collecting Environmental Data
and Information (2 of 2)
• Primary Data Collection
– Direct Observation
– Focus Groups
– Surveys
– Experiments
• Problems in Data Collection & Analysis

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MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

Developing Competitive
Advantage and
Strategic Focus

4
 SWOT Analysis
Positive factors: Negative factors:

Internal
factors: Strengths Weaknesses

External Opportunities Threats

factors:

* See Exhibit 5.4 for potential issues to consider in each area.

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 McDonald’s Strengths
• Brand Equity/Awareness; Trademarks
• Dominant Market Leader
• Multiple years of increase in Same-Store Sales
• Experienced Management
• Operational Expertise
• Site Development Expertise
• Recent New Product Successes
• Financial Clout
• Global Infrastructure
• Promotional Expertise (e.g., Co-op with Disney)
• Quality/Service/Cleanliness

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 McDonald’s Weaknesses
• Bad Food (poor taste and unhealthy)
• Questionable Ethics
– Negative Effects on the Environment and People
• Inflexible Policies (for franchises)
• Poor Record of Launching New Products (in past 20
years, until recently)
• Limited Brand Position (difficult to change image)
• Lack of Diversity in Management

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 McDonald’s Opportunities
• Global Trends
– Increasing buying power & Westernization of Countries
– More kids in other countries
– Positive Perceptions of “American” Products in Foreign
Countries
• Increasingly Fast-Paced Society
• More Working Couples
• Trend of Children Having More Decision Influence
• Cheap Toys Available from China
• Recession (consumers may “trade down” from more
expensive dining options)
• Smaller Household Size – less eating in
• Young people “living” on their smart phones

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 McDonald’s Threats
• Increased Direct Competition from Burger King, etc.
• Increasing Popularity of Pizza, Subway, and Other
Substitutes/Alternatives
• More Health-Conscious Society
• Rising Food and Packaging Costs
• Fluctuating Currency Values
• Negative Public Backlash (McBashing)
• Lawsuit-Happy Society
• Government Increasing Minimum Wage/Benefits
• Health Care Reform
• Saturated Market
• Baby Boomers Prefer More Upscale Dining
• China toy recalls due to lead

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 SWOT Notes
• Only a tool to help you organize your internal and
external environment
• Base on research where possible (cite sources)
• Keep it focused
• Consider all levels of competition (including substitutes)
• Be objective; consider customer’s viewpoint
• Consider causes behind the characteristics
• Any one item could be both a strength and a weakness,
or both an opportunity and a threat (depending on how it
is explained and presented)

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 Organization Resources (p. 127)
• Financial
• Intellectual
• Legal
• Human
• Organizational
• Informational
• Relational
• Reputational

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 Leveraging Competitive Advantages

• Competitive advantages can arise from many

external or internal sources (Exhibit 5.8).
• Competitive advantages refer to real differences
between competing firms.
• Three basic strategies for competitive advantage:
– (1) Operational Excellence
– (2) Product Leadership
– (3) Customer Intimacy
– *See Exhibit 5.9
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MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE

Marketing Implementation
and Control

9
 The Elements of Marketing
Implementation (Exhibit 9.2)

47
 Notes on Implementation
• Strategies can fail because:
– Poor strategy
– Poor implementation of a good strategy
– Conditions change
• Therefore:
– Develop good marketing strategies based on thorough
research and understanding of the situation.
– Make sure you have the resources/timing to effectively
implement the strategies.
– Continually monitor situation for changes; use contingency
planning.

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 Go with the Flow!
• All parts of marketing plan should be consistent.
– Start with understanding of mission/situation
– Establish good marketing objectives based on that
understanding (measurable; realistic; time frame)
– Devise an integrated marketing strategy (e.g., target
markets, marketing mix) with objectives in mind
– Demonstrate how the strategy can be implemented
effectively (e.g., resources, tactics, timing, etc.)
– Plan for measurement and control (e.g., Are we meeting the
objectives?)

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 Good Resources
• Exhibit 9.3 – Implementation Approaches
• Exhibit 9.5 – Marketing Controls
• Exhibit 9.6 – Sample Marketing Audit

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