Understand the principles of strategicmarketing management

Objective 1.3Understand Corporate strategyEvaluate the links between strategic

marketing and corporate strategy

2

3

Systematic process of envisioning a desired future,

and translating this vision into broadly defined

goals or objectives and a sequence of steps to

achieve them. In contrast to long-term planning

(which begins with the current status and lays

4

5

Set of decisions and actions used to implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals

Responsibility = top managers & chief executive

6

Managers ask such questions as... What changes and trends are

occurring? Who are our customers? What products or services should we

offer? How can we offer these products or

services most efficiently?

7

General plan of major action to achieve long-term goals

Falls into three general categories1. Growth2. Stability3. Retrenchment

8

A separate grand strategy can be defined for global operations

Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions- Internal growth = can include development

of new or changed products- External growth = typically involves

diversification – businesses related to current product lines or into new areas

9

Stability, sometimes called a pause strategy, means that the organization wants

› to remain the same size or

› to grow slowly and in a controlled fashion

10

Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses

Liquidation = selling off a business nit for the cash value of the assets, thus terminating its existence

Divestiture = involves selling off of businesses that no longer seem central to the corporation

11

Is there a link to marketing?

12

13

Need for National Responsiveness HighLow

Low

High Transnational Strategy• Seeks to balance global

efficiencies and local responsiveness

• Combines standardization and customization for product/advertising strategies

Globalization Strategy

• Treats world as a single global market

• Standardizes global products/advertising strategies

Multi-domestic Strategy• Handles markets

independently for each country

• Adapts product/advertising to local tastes and needs

Nee

d f

or

Glo

bal

In

teg

rati

on

ExportStrategy

•Domestically focused

•Exports a few domestically produced products to selected countries

Globalization = product design and advertising strategies are standardized around the world

Multi-domestic = adapt product and promotion for each country

Transnational = combine global coordination with flexibility to meet specific needs in various countries

14

The plan of action that prescribes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, that help the organization attain its goals

Strategies focus on:● Core competencies● Developing synergy● Creating value for customers

15

16

Corporate-Level Strategy: What business are we in?

Corporation

Business-Level Strategy: How do we compete?

Textiles Unit Chemicals Unit Auto Parts Unit

Functional-Level Strategy: How do we support the business-level strategy?

Finance R&D Manufacturing Marketing

17

Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control systems

SWOT

Formulate Strategy – Corporate, Business, Functional

Define new Mission Goals, Grand Strategy

Identify Strategic Factors – Strengths, Weaknesses

Identify Strategic Factors – Opportunities, Threats

Scan Internal Environment – Core Competence, Synergy, Value Creation

Evaluate Current Mission, Goals, Strategies

Scan External Environment – National, Global

Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan

Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes

18

Experiential Exercise: Developing Strategy for a Small Business

19

Sources: Based on Howard H. Stevenson, “ Defining Corporate Strengths and Weaknesses,” Sloan Management Review 17 (spring 1976), 51-68; and M.L.Kastens, Long-Range Planning for Your Business (New York: American Management Association, 1976).

Management and Organization

Management qualityStaff quality

Degree of centralization

Organization charts

Planning, information, control systems

Finance

Profit margin

Debt-equity ratio

Inventory ratio

Return on investment

Credit rating

Marketing

Distribution channels

Market share

Advertising efficiency

Customer satisfaction

Product quality

Service reputation

Sales force turnover Production

Plant location Machinery obsolescence

Purchasing system

Quality control

Productivity/efficiency

Human Resources

Employee experience, education

Union status

Turnover, absenteeism

Work satisfaction

Grievances

Research and Development

Basic applied research

Laboratory capabilities

Research programs

New-product innovations

Technology innovations

Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage

20

BCG Matrix

21

Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).

•Internet reduces barriers to entry

•Internet expands market size, but creates new substitution threats

•Internet tends to increase the bargaining power of suppliers

•Internet shifts greater power to end consumers

Internet blurs differences among competitors in an industry

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitute Products

Potential New Entrants

Rivalry among

Competitors

Differentiation = attempt to distinguish products or services from that of competitors

Cost leadership = aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors

Focus = concentrates on a specific regional market or buyer group

22

23

Organizational Combination

Strategic Alliances

Preferred Supplier Arrangements

Strategic Business Partnering

Mergers

Acquisitions

Low High

Joint Ventures

Degree of Collaboration

De g

ree

of C

oll a

bor a

ti on

Leadership Structural design Information and control systems Human resources

24

Can you see a link to customers or marketing?

25

26

Environment

Organization

Strategy Performance

Leadership Persuasion Motivation Culture/values

Structural Design Organization Chart Teams CentralizationDecentralization, Facilities, task design

Human Resources Recruitment/selection Transfers/promotions Training Layoffs/recalls

Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115, Used with permission.

Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures

The strategic marketing process is the approach whereby an organization allocates its marketing mix resources to reach its target markets

27

The application, tracking and review of a company's marketing resources and activities.

The scope of a business' marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.

28

29

30

Can we achieve corporate objectives without a marketing plan?

Can a successful marketing plan be develop without proper strategic marketing process?

Can a proper strategic marketing plan be carried out without an effective development of corporate strategy?

Can an effective corporate strategy be developed without carrying out a proper strategic management process?

31

32