Markting Essentials

Lecture 2

• Overview of Marketing Strategy
• SWOT

Strategic Planning

• Game plan for long-run survival and growth
• Helps to maintain a strategic fit between its goals and capabilities and changing marketing opportunities

1. Define the company mission
2. Setting company objective goals
3. Designing the business portfolio
4. Planning marketing and other functional strategies

Company Structure

• Company

• SBU

• Product Lines

• Brands

Marketing Plan

• A road map for the marketing activities of an organization for a specific future period of time, such as one year or five years.

Situation Assessment (SWOT analysis) First Step

Looking at these things

• Organizations appraisal
• Internal strengths and weaknesses
• External opportunities and threats that are out there

• Internal are the Strengths and Weaknesses
• External are Opportunities and Threats out there

Situation assessment

Organizational Assessment

• Analyze the organization’s resources and capabilities

• Identify strength and weaknesses
• What is the distinct thing a company does better than others?

Environmental Assessment

• Monitor the environment

• as environment changes threats occur and opportunities occur

Organizational Assessment

• Core Competencies

• Things a firm does extremely well (Strengths), which sometimes give it an advantage over its competition

• Skills, what skills do we have that will lead to an advantage
• Resources, Example- Patents or more assets

• Match the core competencies to opportunities in the market
• Strategic windows – temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a firm

How to Compete

• Creating Value (Leverage core competencies)

• Lower Price (Having the lowest price for a product)
• Differentiation (Having a different unique product)

Marketing Environment

• Outside forces (anything outside of the company) that affect marketing management’s ability to build and maintain successful relationships with target customers

Steps in environmental assessment

• Environmental Scanning: process of collecting information  about forces in the marketing environmental
• Environmental Analysis: process of assessing and interpreting the information gathered through environmental scanning

Marketing Environment

• Competitive
• Economic
• Political
• Legal
• Regulatory
• Socio-cultural
• Technological

• Competition refers to alternative firms that could provide a product to satisfy a specific market’s need

• Competitive structure

• Monopoly – one company that offers a specific product, many barriers of entry, almost no substitute products Ex. Water utilities
• Oligopoly – Few competitors, some barriers of entry, homogenous or differentiated products, Ex. UPS, FedEx, Postal Service
• Monopolistic Competition – Many competitors, few barriers of entry, product differentiation with many substitutes, Wrangler and Levi Jeans
• Pure Competition – Unlimited competitors, no barriers of entry, Homogenous products, Ex. Vegetable farm (Sweet Corn)

• Levels of Competition

• Budget Competition - competition for customer dollars (car vs. trip around the world)
• Generic Competition - Substitutable product categories fulfilling same customer needs (Bikes vs. Cars) Something totally outside of your market that will wipe you out.
• Product Competition – compete in the same product class. (SUVs vs. Cars)
• Brand Competition – products that compete for the same segment (Viper vs. Corvette, Diet Coke vs. Diet Pepsi)

Economy

• Pertains to the income, expenditures, and resources that affect the cost of running a business or household

Business Cycle

• Prosperity (Unemployment Rate goes down)
• Recession or Depression (Unemployment Rate goes up)
• Recovery

Consumer Income

• Gross Income – the total amount of money made in one year by a person, household, or family unit
• Disposable Income – the money a consumer has left after paying taxes (Buying Power)

Political Environment

• Create and enforce laws of regulations
• Governments are potentially large customers (Guns)
• Political Officials can assist in securing foreign markets

Legal Environment

• Laws on the book (pro competitive and consumer protection law)
• Lanham Act (1946) – Provides protection and regulations of brand name, trade marks
• Regulatory Agencies - have responsibility to oversee certain aspect of society
• FTC, FDA, CPSC, EPA

• Sociocultural

• Demography – is the study of human populations in terms of size, density, location, age, gender, race, occupation, etc.
• Culture

• Changing attitudes and roles of men and women
• Changing values

• Technology

• Application of knowledge and tools to solve problems and perform tasks more efficiently

• Blue ray vs HD

Ethics and Social Responsibility

• Difference between ethics and social responsibility
• Ethics – judgement at the individual level to make a decision, moral principles and values
• Social responsibility – deals with total effect of marketing decisions on society

Code of Conduct

• Consists of formalized rules and standards that describe what the company expects of its employees

• Promote ethical behavior by reducing opportunities for unethical behavior
• Employees know:

• What is expected of them
• What kind of punishment they face if they violate the rules
• What factors influence unethical behavior

• Individual: personal values and moral philosophies

• Moral idealism: considers certain individual rights or duties universal regardless of outcome
• Utilitarianism- considers the :greatest good for the greatest number” by assessing the costs and benefits of the consequences

• Organization, company, coworkers
• Opportunity: reward/cost

• S/R Organization- are a part of a larger society are accountable to that society for their action

• Responsibilities

• Economic - Be profitable
• Legal - Obey the Law
• Ethical - Be ethical
• Philanthropic - Be a good corporate citizen – contribute resources to the community, improve quality of life.

• Social Responsibility Strategies (doing something wrong but knowing it was there)

• Reaction – keep quiet, hope no one finds out
• Defense – if they do find out, not our fault
• Accommodation – addressing issues because you have too not because you want too
• Pro-action – addressing conflict because you want too not because you have too

• Market – a group of individuals that have needs for a product and have the ability and willingness to buy products.

• Beer market is very heterogenous (not everyone likes the same beer)
• Are there submarkets? Yes. In heterogenous markets there are sub markets always.

S-T-P Process

•  Segmentation of  the Market – if market is heterogenous then segment the  market

1. Identify segmentation variables and segment the market
2. Develop Profiles of Resulting Segments

• Market Targeting – Take all segments

1. Evaluate the attractiveness of each segment
2. Select the Target Segment(s).

• Product Positioning – What is the image that we want to create in the mind of the consumer

1. Identify possible positioning concept for each target segment (Value proposition)

Market Segmentation

• Market Segmentation - Process of dividing a heterogenous market

• Put segments into smaller groups of people who like different things
• Having certain relative homogenous problems that can be satisfied by the firm

• Market segment – a group or individuals that share one or more similar characteristics which make them have relatively similar product needs
• Assumptions about market segmentation

• Consumer preferences vary
• Tailoring offering to specific segment it will increase the value to the people in the segment

Divide and Conquer Strategy!!!

• TWO approaches to segmentation

• A-priori segmentation - segments are predefined and other characteristics are used to describe the segments.
• Post-hoc Segmentation  – Segments are developed by clustering respondents into homogenous groups based on several relative variables. The clusters are then described in terms of other characteristics.

Segmentation Model