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Strategic Marketing

Strategic Marketing. Vytautas Magnus University Assoc. Prof. Nina Klebanskaja nina@evf.vdu.lt Course based on: J.J.Lambin. Market-Driven Management. Macmillan Business. 2000. Evaluation of marketing function: from product orientation to market driven management.

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Strategic Marketing

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  1. Strategic Marketing Vytautas Magnus University Assoc. Prof. Nina Klebanskaja nina@evf.vdu.lt Course based on: J.J.Lambin. Market-Driven Management. Macmillan Business. 2000.

  2. Evaluation of marketing function: from product orientation to market driven management

  3. Marketing Definitions (AMA)* *AMA – American Marketing Association

  4. Marketingo mantra: CCDVTP*(by Ph.Kotler) • C - create (product management) • C – communicate (brand management) – • DV - deliver value (customer management) • T – target market • P – profit - pelningai http://www.youtube.com/watch?v=bilOOPuAvTY&feature=related

  5. Marketing megatrends http://www.imediaconnection.com/content/24911.asp

  6. I. Mass collaboration is powering the new economy • It's no secret among iMedia readers that "user-generated content" was a sucker punch to the jaw of the marketing world over the past several years. • A fundamental shift has occurred in which brands have become a conversation -- and audiences have just as much of a say in the shape of that dialogue as marketing directors and agency copywriters.

  7. II. Constant connectivity in an on-demand world • We are wired. Almost every minute of every day, it seems we are connected. Emailing, surfing, Twittering, streaming, gaming, texting, Facebooking, downloading, chatting - will it ever end?

  8. III. Globalization. Making the world smaller place • Globalization is an unstoppable force reshaping our society. The world's economies are inextricably linked. Technology has made geography irrelevant. Businesses around the world are doing business with one another and will continue to do so. This is big. This is mega big Gl

  9. IV. Pervasive distrust in big corporations • People do not trust in big corporations. • Corporate social responsibility is one of the important issue.

  10. V.A global sense of urgency to fix the problems of a modern world • Being green is a minimum standard. • But being green is symptomatic of another megatrend that is influencing the world on a massive scale - a global sense of urgency.

  11. Marketing Evolution: the changing role of customer

  12. Prahalad and Rawaswamy (2000) • Customers are stepping out of their traditional roles to become cocreators as well as consumers of value

  13. P.Doyle. Marketing in the new millenium

  14. Marketing mistakes • Marketers have generally made the mistake of seeing the subject as a functional discipline rather than an integrative business process. • Marketing directors have sought to make marketing decisions rather than share responsibility for satisfying customers with cross-functional teams.

  15. Steps of strategic and operational marketing Situation analysis Segmen- tation Target-ing Positioning Marketing mix Segmentation-criteria Environment - Consumers - Markets - Competitors - Distributors Opportunities and threat Strength and weaknesses Market attractiveness and competitiveness analysis Competitive advantages Goals and strategies 4P - Product - Price - Marketing communica-tion - Distribu-tion ….

  16. Contrasting operational and strategic marketing OPERATIONAL MARKETING • Action-oriented • Existing opportunities • Non product/market variables • Stable environment • Short term management • Reactive behaviour • Marketing department • STRATEGIC MARKETING • Analysis-oriented • New opportunities • New products and new markets • Dynamic environment • Longer planning horizon • Pro-active behaviour • Cross- functional organisation

  17. Marketing in practice Passive marketing (Product orientation) Operational marketing (Sale orientation) Strategic marketing (Marketing orientation) Market driven management (Market orientation)

  18. Passive marketing(reasons) • Supply is scare. Demand is higher than supply. • Needs are known and stable. • Technological innovation proceeds at a slow pace. • Markets are stable.

  19. Passive marketing (implementation) • The firm is "product-oriented" and has an "inside-in" perspective. • Marketing research scale and frequency are low. • Promotional budget is limited. • Firm capacity to predict the market changes is week

  20. Passive marketing: product orientation • The main attitudes • Demand exceeds supply. • Needs are well known and defined. • The technological environment is stable. • The priority is to build the production capacity. • Markets are well known and exports easy • Limitations of this approach • The risk of product myopia is high. • The firm's behaviour is reactive and not pro- active.

  21. Operational marketing:implications • The firm is sales-oriented and has an "inside-out" perspective. • Selective and exclusive distribution systems are created. • Creation of a strong brand image through mass media advertising. • "Pull" strategies tend to replace traditional "push" strategies. • Development of powerful multinational (or multi-domestic) organisations.

  22. Operational marketing: the sales concept • Implicit assumptions • The market can absorb anything if enough pressure is applied. • Commercial aggressiveness through mass media advertising and hard selling is the key success factor. • Limitations of this culture • Risk of manipulative or wild marketing practices. • To mould demand to the requirements of supply rather than adapt supply to the expectations of demand.

  23. Strategic marketing: reasons • Saturation of the core market in a growing number of sectors. • Shortening of the product life cycle (PLC) due to the acceleration of technological progress. • Coming of age of mass marketing techniques. • Internationalisation of the European and of the world economy.

  24. Strategic marketing: implications • The firm is ”customer-oriented" and has now an "outside-in" perspective. • Market segmentation is actively used to guide the product policy - main tool. • The interface "R&D-Marketing-Production" is in charge of new product development. Marketing people need R&D. • Brand management is responsible for strategic marketing - it is new function - brand management function. • Permanent marketing information systems are developed -acceleration of change.

  25. Strategic marketing: the marketing concept • Implicit assumption. • Satisfying customer's needs is the best way for achieving the firm's growth and profit objectives. • The emphasis is placed on the customer. • Limitations of this culture • Satisfaction of short term needs may be in conflict with long term well-being. Individual customer's needs are not always compatible with societal common good. • Risk of market myopia if too much emphasis is placed on expressed needs.

  26. Implementing Strategic marketing (I) 1. What business are we in ? (reference market definition) 2. What is the diversity of needs in each segment ? (macro and micro segmentation) 3. How attractive are the different segments ? (business opportunity analysis) 4. What value proposition is sustainable in each segment ? (competitiveness analysis)

  27. Implementing strategic marketing (II) 5. What are the priority segment(s) we want to be in ? (market coverage decision) 6. How do we want to compete in the target segment(s) ? (market positioning decision) 7. Which marketing programme is consistent with our value proposition ? (operational marketing plan)

  28. The coming of age of traditional marketing • Increased professionalism of customer buying behaviour. Customers are well educated in economics. Diversify behaviour according the consumption situation. The same person buy very expensive products and cheep products. • Proliferation of weakly differentiated brands targeted to specific segments. • Decrease in brand loyalty. • Weakening of television advertising communication effectiveness. “Yes, I remember” - only few % • Escalade in self-defeating promotions. Every day low price (EDLP), no promotion • Diversification of retail outlets.

  29. Market-driven management: reasons • Changing socio-demographic structure. • Slowing down of economic growth in Western Europe. • Acceleration and generalisation of technological progress. • Power of the consumerism movement. • Rise of the environmentalist movement and of green marketing. • Growing power of mass merchandisers. • Development of electronic commerce and e-business • Globalisation of the European and of the World economy. • Rise of the "accountable" marketing concept.

  30. Levels of Market Orientation

  31. Organization of a Market-Oriented Firm CEO Operational HR IT Operations Finance Marketing Team process Category MARKET team Customer team

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