Module I: Understanding Marketing Management

Session 1: An Overview of Marketing

Session 2: Marketing Strategy

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Learning Objectives
1. Explain strategic planning process and the

contribution of marketing in developing

marketing strategy.
2. Describe business portfolio and growth
strategies.
3. Explain how a company obtains Sustainable
competitive advantage.
4. Describe the elements of a marketing plan.

Steps of Strategic Planning

Mission
Statement

Statement of an
organizations purpose;
should be market
oriented.

Corporate
Strategy

Collection of businesses
and products that make up
the company.

Business Unit
Strategy

Supporting goals and

objectives to guide the
entire company.

Marketing Mix Elements:

1. Product
2. Distribution
3. Promotion
4. Pricing
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Marketing
Strategy

Detailed planning for each department

designed to accomplish strategic objectives.

Day: Strategy as Choices

Arena

Advantage

Business Scope
Served Market
Target Segments

Value Proposition
Target
Competitors
Limitability

Market-driven
Organization

Access
Channel Structure
Communication mix

Activities
Scope & Scale of
Activities
Partnerships

Marketing Strategy
Mapping
Business
Landscape

Developing
Competitive
Advantage

Competitive
Strategies

Competitors

Company

Customers

Complementors

Environment

Anticipating
Competitive Dynamics
and Sustaining
Superior Performance

Suppliers

Business
Portfolio
Planning

Marketing
Strategies

Market Shared
Based
Strategies
Offensive and
Defensive
Strategies

Growth
Strategies

Segmentation
Targeting
Positioning

Marketing mix:
Product
Promotion
Place
Price

Operational Excellence
Superior value via convenience, quality and
price (Toyota, Dell)

Customer Intimacy
Superior value by means of building strong
relationships with buyers and satisfying
needs (Home Depot, Kraft)

Product Leadership
Superior value via product innovation (3M,
Sony, Apple)

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i
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i
C ateg
Str

Designing the
Business Portfolio
The best portfolio is the one
that best fits the companys
strengths and weaknesses to
the opportunities in the
environment.
The company must:

analyze its current business

portfolio or Strategic Business
Units (SBUs)
decide which SBUs should
receive more, less, or no
investment
shape the future portfolio by
developing growth strategies for
adding new products or
businesses to the portfolio

The BCG Growth-share Matrix

BCG Matrix Strategies

Build

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Preserve market share

Good for cash cow

Harvest

Increase market share

Works well for question
marks

Hold

Increase short-term cash

flow (by decreasing
investment and
expenditure)

Divest

Sell or liquidate
Good for dogs and
question marks (due to poor
market position or poor fit
with care products)

Portfolio Scenarios Alternative

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The GE Strategic Planning Grid

GE Matrix

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Market Attractiveness
Market growth rate
Market size
Demand variability
Business profitability
Macroenvironmental
factors
Business rivalry
Global opportunities

Business Strength
Market share
Growth in market share
Brand equity
Distribution channel
access
Production capacity
Profit margins relative
to competitors
9 cells

Developing Growth Strategies

Diversification

Market
Development

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Market
Penetration

New
Markets

New
Products
Product
Development

Present
Markets

Present
Products

Growth Strategies (1)

Market Penetration
Primary Demand
Development (New Use,
More Usages)

Market Share Increase

Market Acquisition
Market Rationalization

Market Development

New Market Segments

(Industrial & Consumer
Markets, New Industrial
Sectors, New Consumer
Segment)

New Distribution Channel

(Direct Marketing, Vending
Machine, Franchise System)

Geographic Expansion
(Local Expansion, Global
Expansion)
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Growth Strategies (2)

Product Development

Discontinuous
Innovation
New Generation of
Products
Product Line Extension,
Rationalization or
Acquisition
Features Adding
Product Performance
Improvement
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Diversification

Concentric
Diversification
Pure Diversification
Diversification based
on core competency

Growth Strategies: An Example

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Market Penetration: Company growth by

increasing sales of current products to current
market segments without changing the product.
How?
Market Development: Company growth by
identifying and developing new market
segments for current company products. How?
Product Development: Company growth by
offering modified or new products to current
market segments. How?
Diversification: Company growth through
starting up or acquiring businesses outside the
company s current products and markets. How?

Marketing Strategy
Mapping
Business
Landscape

Developing
Competitive
Advantage

Competitive
Strategies
Business
Portfolio
Planning
Growth
Strategies

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Anticipating
Competitive Dynamics
and Sustaining
Superior Performance

Market Shared
Based
Strategies
Offensive and
Defensive
Strategies

Marketing
Strategies

Market Position Strategies

Strategies for
Market

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Readers

Market

Challengers

Market

Followers

Market

Nichers

Market-Leader Strategies (1)

Expanding the total market
Targeting Product to New Users
Promoting New Uses of Product (Vaseline, Baking Soda)
Encouraging Greater Product Use (Michelin, Gillette)

Market Share Expansion

Defending Market share
The leader must continuously defend its territory.
The most constructive response to attacks is

continuous innovation.

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Market-Leader Strategies (2)

2) Flank
Defense

Attacker

3) Pre-emptive
Defense
4) CounterOffensive
Defense
5) Mobile
Defense

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Defensive Strategies

1) Position
Defense
Defender

6) Contraction
Defense

Market-Challenger
The market challengers strategic objective is to

gain market share and to become the leader

eventually
How?
Do nothing

Attack the market leader, which is high risk.

Attack other firms of the same size,

underperforming or poorly financed.

Attack small local and regional firms that are

underperforming and poorly financed.

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Market-Challenger General Attack

Strategies
(4) Bypass attack
Flank attack) 2(
Frontal attack) 1(
Attacker

Defender
Encirclement attack) 3(

Guerilla attack) 5(
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Market Challenger Specific Attack

Strategies
Value-priced goods
Product
proliferation
Prestige
goods
Product
innovation

Manufacturing cost
reduction

Specific
Attack
Strategies

Price discounts
Improved
services

Distribution
innovation
Intensive advertising promotion

Lower-priced goods

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Market-Follower Strategies
Follow the market leader
Many advantages:
Learn from the market leaders experiences
Copy or improve on the leaders offerings
Strong profitability

Does not mean being a carbon copy of the leader

Four broad follower strategies:

o Counterfeiter
o Cloner; e.g. the IBM PC clones
o Imitator; e.g. car manufacturers imitate the style of one another
o Adapter; e.g. many Japanese firms are excellent adapters
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initially before developing into challengers and eventually leaders

Market-Nicher Strategies
Smaller firms can avoid larger firms

by targeting smaller markets or niches

that are of little or no interest to the
larger firms.

Nichers must create niches, expand

the niches and protect them.

e.g. Nike constantly created new

niches--cycling, walking, hiking,

cheerleading, etc.

What is the major risk faced by

nichers?

Market niche may be attacked by

larger firms once they notice the

niches are successful.

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Niche Specialties:
End-user
Customer-size
Vertical-level
Specific customer
Geographic
Product/product line
Product feature
Job-shop
Quality-price
Service
Channel

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Controls
Budgets
Action Programs
Marketing Strategy
Objectives and Issues
Threats and Opportunities
Current Marketing Situation
Executive Summary

Elements of a Marketing Plan

THANK YOU
For LISTENING
Principles of Marketing
Module I
SESSION TWO

....

Presented by N.Karami

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