Hult | Pride | Ferrell

Marketing
Part 1
Marketing
Foundations 5e
Strategy and
Environment
 1: Strategic Marketing Management
2: Developing and Implementing
Marketing Strategies
3: The Global Marketing Environment

© 2013 South-Western, a part of Cengage Learning 2-2

 Learning Objectives
 To describe the strategic planning process
 To explain how organizational resources and
opportunities affect the planning process
 To understand the role of the mission statement in
strategic planning
 To examine corporate, business-unit and marketing
strategies
 To understand the process of creating the marketing
plan
 To describe the marketing implementation process
and the major approaches to marketing
implementation
© 2013 South-Western, a part of Cengage Learning 2-3
 Strategic Planning

The process of establishing an organizational

mission and formulating goals, corporate
strategy, marketing objectives, marketing
strategy and a marketing plan
 Should be guided by a market orientation

© 2013 South-Western, a part of Cengage Learning 2-4

 Components of Strategic Planning

© 2013 South-Western, a part of Cengage Learning 2-5

 Firms You Should Know: IKEA
 Swedish furniture chain
• World’s largest furniture retailer
• Click on logo to access the website
 Named one of the top 100 most ethical
companies by Ethisphere magazine
 Donates to causes that build infrastructure
and help children in the developing world
 Invests in renewable energy and recycling
• Aims to have 100% renewable energy sources
• Recycling bins in stores
• Only offers reusable bags; no plastic bags
© 2013 South-Western, a part of Cengage Learning 2-6
 Marketing Strategy

A plan of action for identifying and analyzing a

target market and developing a marketing mix
to meet the needs of that market

© 2013 South-Western, a part of Cengage Learning 2-7

 Effective Marketing Strategy

 Reflects overall direction of organization

 Coordinated with firm’s functional areas
 Contributes to achievement of:
 Marketing objectives
 Organizational goals

© 2013 South-Western, a part of Cengage Learning 2-8

 Marketing Plan

A written document that specifies the activities

to be performed to implement and control the
organization’s marketing activities
Strengths
Weaknesses
Opportunities
Threats

© 2013 South-Western, a part of Cengage Learning 2-9

 Assessing Organizational
Resources and Opportunities
Core
Competencies

Competitive
Advantage
Strategic Market
Windows Opportunities

The place where opportunities, core competencies, and strategic windows meet

© 2013 South-Western, a part of Cengage Learning 2-10

 Discussion Question

 Stonyfield Farm
products do not
contain artificial
growth hormones or
other potentially
harmful ingredients –
does this represent a
competitive
advantage?

© 2013 South-Western, a part of Cengage Learning 2-11

 Core Competencies

Things a firm does extremely well, which give

it an advantage over competition
 McDonald’s consistent fast food quality
 Starbuck’s gourmet coffee drinks
 BMW’s production of sporty, luxury
automobiles
 Apple’s trendy, desirable electronics devices

© 2013 South-Western, a part of Cengage Learning 2-12

 Market Opportunity

A combination of circumstances and timing that

permits an organization to take action to reach a
particular target market
 Many tech companies see a market
opportunity in China and India
• Large potential market of over 2 billion people
• Growing wealth and middle class

© 2013 South-Western, a part of Cengage Learning 2-13

 Strategic Window

A temporary period of optimal fit between the

key requirements of a market and the particular
capabilities of a firm competing in the market

© 2013 South-Western, a part of Cengage Learning 2-14

 Discussion Question

 Was Southwest Airlines Bags Fly Free

marketing campaign an effective response to
competitors’ charging for checked baggage?
What marketing opportunity did Southwest
respond to?
© 2013 South-Western, a part of Cengage Learning 2-15
 Competitive Advantage

The result of a company’s matching a core

competency (superior skill or resources) to
opportunities in the marketplace
e.g. cheaper, more widely available, stronger
service support, higher quality

© 2013 South-Western, a part of Cengage Learning 2-16

 Think About It
• Patagonia has built its reputation on being
environmentally friendly
• Click here for an ad featuring Yvon Chouinard,
the owner of Patagonia
 Is being “green” a competitive advantage for
Patagonia?

© 2013 South-Western, a part of Cengage Learning 2-17

 Who is Buying Green Products?

© 2013 South-Western, a part of Cengage Learning 2-18

 The Four-Cell SWOT Matrix

© 2013 South-Western, a part of Cengage Learning 2-19

 Establishing an Organizational
Mission and Goals

© 2013 South-Western, a part of Cengage Learning 2-20

 Mission Statement

 Mission Statement
• A long-term vision of what the organization
wants to become
 Who are our customers?
 What is our core competency?

 Corporate Identity
• Should support all corporate activities
• Unique Symbols
• Personalities
• Philosophies

© 2013 South-Western, a part of Cengage Learning 2-21

 Think About It

 Read Starbucks’ and Whole Food’s mission

statements by clicking on the links
• Which do you think is the stronger of the two?
• Why?
 Starbucks has a mission
statement that addresses all
its stakeholders
 Whole Foods has built its
reputation on providing organic
and sustainable gourmet foods
© 2013 South-Western, a part of Cengage Learning 2-22
 Marketing Objective

 A statement of what is to be accomplished

through marketing activities
 Should:
 Be based on a study of the SWOT analysis
 Be stated in clear, simple terms
 Be accurately measurable
 Specify a time frame for accomplishment
 Be consistent with business-unit and corporate
strategy

© 2013 South-Western, a part of Cengage Learning 2-23

 Developing Corporate, Business-Unit
and Marketing Strategies

Business Unit Strategies

© 2013 South-Western, a part of Cengage Learning 2-24

 Levels of Strategic Planning

© 2013 South-Western, a part of Cengage Learning 2-25

 Corporate Strategy

A strategy that determines the means for

utilizing resources in the various functional
areas to reach the organization’s goals

© 2013 South-Western, a part of Cengage Learning 2-26

 Business-Unit Strategy

Strategic Business Units (SBUs)

 A division, product line, or other profit center
within a parent company
Market
 A group of individuals and/or organizations that
have needs for products and the ability,
willingness and authority to buy
Market Share
 The percentage of a market that actually buys a
specific product from a specific company

© 2013 South-Western, a part of Cengage Learning 2-27

 Growth Share Matrix

© 2013 South-Western, a part of Cengage Learning 2-28

 BCG Product Classifications

Stars
 Dominant market share & good growth prospects
Cash Cows
 Dominant market share & low growth prospects
Dogs
 Low market share & low growth prospects
Question Marks
 Small market share of a growing market &
require significant cash to build market

© 2013 South-Western, a part of Cengage Learning 2-29

 Marketing Strategy

Marketing
Strategy

Target Market Creating a

Selection Marketing Mix

© 2013 South-Western, a part of Cengage Learning 2-30

 Marketing Strategy

 Components of marketing strategy

 Target Market Selection
 Creating the Marketing Mix
 Sustainable Competitive Advantage
• An advantage not readily copied by competitors
• e.g. Walmart’s buying power as the world’s
largest retailer

© 2013 South-Western, a part of Cengage Learning 2-31

 Target Market Selection

 Selecting an appropriate target market may

be the most important decision a company
has to make in the strategic planning process
• Define the target market
• Develop an appropriate marketing mix

© 2013 South-Western, a part of Cengage Learning 2-32

 Discussion Question

 Piperlime is a shoes and

accessories store owned
by The Gap Co.
 For those of you who
have shopped there, who
is the target market for
Piperlime handbags?

© 2013 South-Western, a part of Cengage Learning 2-33

 Think About It

Click here to watch a Crocs ad

 What is Crocs’ target market in this ad?

• Why do you think this company selected
this particular target market?

© 2013 South-Western, a part of Cengage Learning 2-34

 Creating the Marketing Mix

 All marketing mix decisions should be

consistent with the business unit and
corporate strategies
 Target market selection is the basis for
creating a marketing mix
 Sustainable Competitive Advantage
• An advantage that the competition cannot easily
copy in the foreseeable future

© 2013 South-Western, a part of Cengage Learning 2-35

 Think About It

 Click here to watch the FedEx “castaway”

commercial
• How does FedEx demonstrate its commitment to
serving its customers?
 Do you think FedEx has a sustainable
competitive advantage?

© 2013 South-Western, a part of Cengage Learning 2-36

 Marketing Planning

The systematic process of:

Assessing marketing opportunities and
resources
Determining objectives
Defining strategies
Establishing guidelines for implementation
and control of the marketing program

© 2013 South-Western, a part of Cengage Learning 2-37

 Components of the Marketing Plan

© 2013 South-Western, a part of Cengage Learning 2-38

 Marketing Implementation

Marketing
Implementation

Intended Strategy Realized Strategy

© 2013 South-Western, a part of Cengage Learning 2-39

 Marketing Implementation

The process of putting marketing strategies into

action
 Intended Strategy: The strategy the
organization decides on during the planning
phase and wants to use
 Realized Strategy: The strategy that actually
takes place

Intended Realized
Implementation
Strategy Strategy

© 2013 South-Western, a part of Cengage Learning 2-40

 Customer Relationship Management
(CRM)

Strives to build satisfying exchange

relationships between buyers and sellers
Involves gathering useful data at customer-
contact points and analyzing it to better
understand customers’ needs, desires and habits
Requires a shift in thinking away from share of
market to share of customer

© 2013 South-Western, a part of Cengage Learning 2-41

 Improving CRM

 Technology has helped marketers build

better databases and improve CRM
 Customer Lifetime Value (CLV)
• A measure of a customer’s worth to a firm
• May include an individual’s purchases and his or
her word-of-mouth communication about
products

© 2013 South-Western, a part of Cengage Learning 2-42

 Internal Marketing
 External Customers: The individuals who
patronize a business
• The familiar definition of “customers”
 Internal Customers: The company’s
employees
 For implementation to succeed, the needs of
both groups of customers must be met
 Internal Marketing: Coordinates internal
exchanges to achieve success
• A company uses internal marketing to attract,
motivate and retain qualified internal customers
© 2013 South-Western, a part of Cengage Learning 2-43
 Total Quality Management

A philosophy that commitment to quality in all

organizational areas will promote a culture that
meets customers’ perceptions of quality
Quality is free, but not having quality can be very
expensive
Benchmarking: Comparing the quality of the
organization’s goods, services, or processes with
high-performing competitors
Empowerment: Gives employees the authority
and responsibility to make marketing decisions
without the approval of their supervisors
© 2013 South-Western, a part of Cengage Learning 2-44
 Marketing Activities

Organizing Marketing Activities

Organizing
Organizing Organizing Organizing
by
by by by
Types of
Functions Regions Products
Customers

© 2013 South-Western, a part of Cengage Learning 2-45

 Degree of Centralization

Centralized Organizations
Authority is concentrated at the top level
Very little delegation to lower levels
Decentralized Organizations
Decision making authority is delegated as far
down the chain of command as possible

© 2013 South-Western, a part of Cengage Learning 2-46

 Discussion Question

 The U.S. Army is a highly centralized

organization
 Very little decision-making authority by
lower levels
 Can you think of other highly centralized
organizations?

© 2013 South-Western, a part of Cengage Learning 2-47

 Organizing
By Functions
By general marketing functions
• Marketing research, product development, distribution,
sales, advertising and customer relations
Works well for centralized organizations
Can cause communication problems in decentralized
organizations
By Products
Businesses that produce diverse products sometimes
organize their marketing units according to product
groups
• Flexibility to develop different marketing mixes for
different products
Can be expensive
© 2013 South-Western, a part of Cengage Learning 2-48
 Organizing (continued)

By Regions:
Good for large companies that market products over a
broad area
Managers of marketing functions for each region
report to their regional marketing manager; all the
regional marketing managers report directly to the
executive marketing manager
By Types of Customers:
Good for a company with diverse customer groups
who have differing needs

© 2013 South-Western, a part of Cengage Learning 2-49

 The Marketing Control Process
Establishing performance standards, evaluating actual
performance by comparing it with standards and
reducing the differences between desired and actual
performance

© 2013 South-Western, a part of Cengage Learning 2-50

 Performance Standards

 An expected level of performance against

which actual performance can be compared
 Managers must know what employees are
doing to evaluate performance well
 When corrective actions are needed,
managers can
 Improve actual performance
 Reduce or change the performance standard

© 2013 South-Western, a part of Cengage Learning 2-51

 Problems in Controlling
Marketing Activities

 The information required to control marketing

activities is unavailable or expensive
 The time lag between marketing activities and
results limits a marketing manager’s ability to
measure their effectiveness
 Because marketing and other business activities
overlap, marketing managers cannot determine
the precise costs of marketing activities
 It may be very hard to develop exact
performance standards for marketing personnel

© 2013 South-Western, a part of Cengage Learning 2-52

 Important Terms
Strategic planning Sustainable competitive advantage

Marketing strategy Marketing planning

Marketing plan Marketing implementation

Core competencies Intended strategy

Market opportunity Realized strategy

Strategic windows External customers

Competitive advantage Internal customers

SWOT analysis Internal marketing

Mission statement Total quality management (TQM)

Marketing objective Benchmarking

Corporate strategy Empowerment

Strategic business unit (SBU) Centralized organization

Market Decentralized organization

Market share Marketing control process

Market growth/market share matrix Performance standard

© 2013 South-Western, a part of Cengage Learning 2-53