Introduction to Marketing Strategy

What is STRATEGY?

A campaign to win in a competitive situation, taking into account your resources, your competition’s resources and the nature of the battlefield to obtain a sustainable competitive advantage.

What is Marketing Strategy?

It means deliberately choosing a different set of activities to deliver a unique mix of value to the target market.

Two components of marketing strategy– Target market selection (STP)– Selection of marketing mix variables

“if you don’t know where you are going, all roads will take you there!”

Strategy provides the directions!

The Essence of Strategy!

Choosing to perform activities differently than rivals do to create a sustainable competitive advantage!!

What does Southwest Airlines do?

Example: Southwest Airlines

If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.

Activity Map of Southwest

Low prices

Frequent Departures

Lean and

productive crew

Point-to-Point flights

Limited Passenger Amenities

High aircraft utilization

No meals

No assign. seats

No transfers

No connections

Standard fleets

Limited use of travel agents

Automatic Ticketing machines

High employee compensation Emply. Stock

ownership

Flexible Union contracts

15 min.turnaround

What is Strategy? A game plan to win in a competitive situation.

– Know yourself - your resources, your abilities, your strengths, your weaknesses

– Know your competition - how will they react to you, their strengths, weaknesses

– Identify a plan that leads to SUSTAINABLE COMPETITIVE ADVANTAGE.

– To win - look at both the big picture as well as execution details.

Marketing: A Brief History

Production Era (Ended in the 1920s)– Can we produce enough of the product

Sales Era (ended in the late 1940s)– Find a way to sell what we produce

Marketing Era (today, but ever changing)– What do customers want and how do we

provide it for them at a price to make a profit.

“The business enterprise has only two basic functions — marketing

and innovation.”Peter Drucker

Internal vs. Market OrientationInternal View External View

Persuade customer to buy what company produces Focus

Produce what customer wants to buy

Generic product, production process, and delivery system

Augmented product, customer benefits, and market segments

Lowest deliverable cost Competitive Advantage

Superior customer value

Volume, cost, profit margins Objectives

Profitable use of resources, market position, customer satisfaction, and loyalty

Short-term, reactiveTime

Horizon

Medium and long-run view of threats and

opportunities

What is marketing?

Gathering, monitoring, analyzing information– Environment– Customers– Competitors

Interacting with all areas of organization, sharing information Developing, implementing, and controlling strategic marketing

plan, based on information Creating satisfying exchanges

MarketingManager

Marketing& Sales

R & D

Other internal information

sources

Finance &Accounting

Production

Consultants& Advisors

Competition

Consumers

OtherOrganizations

OtherPublics

Suppliers

Retailers &Wholesalers

Marketing Role

What is Market Orientation?

Superior ability to understand, attract, and keep valuable customers.

Externally oriented culture

Capabilities in market sensing, market relating, and anticipatory strategic thinking

Adaptable and coherent organizational configuration of culture, capabilities, andprocesses

Elements of Market Orientation

SharedKnowledge

Base

Configuration

Focus on superior customer value

Coherence of structure & systems Adaptability

Cultureis

externallyoriented

CapabilitiesMarket sensingMarket relating

Strategic thinking

SuperiorAbility toUnderstand,Attract, andKeep ValuableCustomers

Customers Competitors

Channels Collaborators

Advantages of Market Orientation

Market Orientation

Market-Based Strategy

Customer Satisfaction & Retention

$ $

Why does market orientation lead to greater profits?

Cost and investment efficiency Employee satisfaction Price premium Revenue growth Competitive preemption

But…. Have to be truly market driven!!

Superior ability to understand markets Sense emerging opportunities Anticipate competitors’ moves Make fact-based decisions

Superior ability to attract and keep customers Deliver superior value Encourage loyalty Leverage market investments

Impediments to Being Market Driven

Being oblivious to market

Becoming compelled by the market

Feeling superior to the market

Market Driven CultureMarket-Driven Organization Self-Centered Organization

All decision start with the customer and opportunities for advantage

We’ll sell to whoever will buy

Quality is defined by customersQuality is conformance to internal standards

The best ideas come from living with customers

Customers don’t know what they want

Employees are customer advocatesCustomer relations are problems for the marketing dept

Customer loyalty is key to profitability

Customer data are a control mechanism and channels are conduits

Customer knowledge is a valuable asset and channels are value adding partners

New accounts (conquests) are what matters

Market Driven CultureMarket-Driven Organization Self-Centered Organization

No sacred cows—cannibalize yourself

Protect the existing revenue stream

Learn from mistakes Avoid mistakes

Market research is decision insurance

Market research is a justification tool

Paranoia about competitors is healthy

We can live with our competitors

The behavior of competitors can be anticipated and influenced

Competitors are unpredictable

We know more than the competitors

If competition does it, it must be good

Strategic AnalysisStrategic Analysis

The 5C framework

Customers What needs do we satisfy?

CompanyWhat special competence do we possess to meet those needs?

CompetitorsWho competes with us in meeting those needs?

Context What environmental factors limit us?

Collaborators Who should we enlist to help us?

The 5 C Strategic Analysis Framework

Schematic of the Marketing ProcessBased on Robert Dolan’s Note on Strategy, HBR Press

CollaboratorsCustomers ContextCompany Competitors

SegmentationTarget Mkt

SelectionPositioning

Product Place Promotion Price

Acquisition Retention

PROFITS