CH 14: Marketing Strategy

Marketing Management
Dawn Iacobucci
2010 South-Western, a part of Cengage Learning

Marketing Strategy
Chapter 14
Marketing Strategy
Marketing strategy is the link

between corporate goals
and operational tactics
Specifies a target market
and a related marketing mix
There are two primary
considerations in marketing
strategyStrategic Fit
Where are we?
Where do we want to go?
Elements of a Firms Marketing Program
Competitive Advantage
Competitive
advantage: the
firm has a
marketing mix
that the target
market sees as
better than a
competitor's mix
Marketing Strategies
GEs Strategic Planning Grid
Boston Consulting Group
Ansoffs Product-Market Expansion
Grid
Porter Generic Strategies
Treacy and Wiersema
Positioning Matrix
Un-segmented/Segmented
Marketing Strategy
Product Orientation vs. Market
Orientation
Strategies to Increase Profitability
Basic Strategies
GEs Strategic Planning Grid
A way of organizing business
judgments about existing and/or
proposed product-market plans
Strategic Fit
Business Strengths Dimension
Company size, market share
Profit margins
Technology position
Limiting factors (personnel,
capital needed, etc.)
Industry Attractiveness Dimension
Size of market and growth
trends
Competitive situation
Social impact
Industry profitability
Planning Grids Help Evaluate Portfolio
Opportunities
Industry Attractiveness
High Medium Low
High
Business Strength
Medium
No Growth
Low
Borderline
Growth
Portfolio Assessment Tool
Boston Consulting Group matrix
(another extension of strategic fit)
Brands or products are
classified according to whether
each has a:
strong or weak market share
&
slow or growing market
Dog: low share, low growth
Star: high share, high growth
Cash cow: high share, low
growth
Question mark: low share, high
growth
BCG Matrix
BCG Portfolio Analysis
Stars: optimize or hold
Dogs: minimize or divest
Cash cows: milk
Question marks: unknown
New technologies, uncertain
markets, etc.
If stars and cash cows are
sufficiently profitable,
companies can carry dogs
and question marks
Discussion Questions
Using the BCG Matrix

Where would you likely categorize the
market leader in the typewriter market?
10 years ago, where would you have
likely categorized a small player in the
cell phone business?
Where would you categorize the market
leader in cell phones today?
Ansoffs Product-Market Expansion Grid
2-13
Examples of Different Types of
Opportunities
Market Penetration
Arm & Hammer promotes new uses of its baking soda
Market Development
Marriott Hotels target families for weekend get-aways to rent
rooms filled by business travelers during the week
Product Development
Microsoft develops a new version of its Windows operating
system to appeal to the people who bought an earlier version
but now want more features
Diversification
RJR, the cigarette producer, adds baked goods to its product
line to appeal to new customers
Porters Generic Strategies
Overall Cost Leadershiplowest

production and distribution costs to be
able to price lower than competitors and
to obtain larger market share.
Differentiationuniquely achieving
superior performance in an important
customer benefit area.
Focuson one or more narrow market

segments
2-15
Porter
Cost leadershipWere
efficient
Producing goods and
services (Wal-mart)
DifferentiationWere
unique
Distinguish ones products as
unique (Apple)
FocusedWe do one thing
very well
Narrower (Caf Du Monde
makes beignet
Treacy and Wiersema
Operational Excellence
Were smooth and reliable
DHL, FedEx, UPS
Product LeadershipWere
excellent and special
Dupont chemical solutions,
HP printers
Customer IntimacyWe know
our customers very well
Amazon.com, Netflix.com
Positioning Matrix
High Quality, high price,
selective promotion,
exclusive distribution
4Seasons, Porsche,
BMW
Low quality, low price,
broad promotion, mass
distribution
Wal-Mart, Movies, Gap
If veer from either, have a
good reason
UNSEGMENTED MARKET STRATEGY WITH A SINGLE
MARKETING MIX COMMUNITY WRITING COMPANY
MARKETING MIX TARGET MARKET
LEAD PENCIL ALL POTENTIAL

79 CENTS USERS OF A WRITING
TELEVISION INSTRUMENT
EXTENSIVE
DISTRIBUTION
19
SEGMENTED MARKETING STRATEGY
WITH MULTIPLE MARKETING MIXES
MARKETING MIXES TARGET MARKETS
FELT-TIP PEN SEGMENT A

$1.00 (STUDENTS)
CAMPUS NEWSPARER
VENDING MACHINES
FELT-TIP PEN SEGMENT B
49 CENTS (PROFESSORS)
PERSONAL SELLING
DIRECT FROM FACTORY
GOLD INK PEN SEGMENT C
$50.00 (EXECUTIVES)
MAGAZINES 20
DEPARTMENT STORES
A SEGMENTED MARKETING STRATEGY
WITH SINGLE MARKETING MIX
MARKETING MIX TARGET MARKET
SEGMENT A
(PROFESSORS)
FELT-TIP PEN SEGMENT A

$1.00 (STUDENTS)
CAMPUS NEWSPARER
VENDING MACHINES
SEGMENT C
(EXECUTIVES)
Product Orientation vs. Market Orientation
Company Product Market

Missouri-Pacific We run a railroad We are a people-
Railroad and-goods mover
Xerox We make copying We improve office

equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain

people
Marketing Metrics
Profitability
Sales
Share
Average prices
Levels of awareness
Penetration in trial
Customer satisfaction
Employee satisfaction,
etc.
How to Increase Profitability
Grow Profit By Increase Volume
Grow the market

Grow market share
Up-selling (more
expensive offerings) to
current customers
Getting current
customers to buy more
frequently
Grow Profit By Increase Volume
(continued)
Stealing customers from our
competitors
Finding another segment
Create new products for
current/new customers
Reduce brand switching of
our current customers by
enhancing brand equity:
Raise our customer
satisfaction
Adding value through a
loyalty program
Raise switching cost
Grow Profit By Changing Price
Cutting prices to increase
volume
Raise prices to get
greater margins
Enhance perceived
benefits to customer to
make them less price-
sensitive
Shift our target
segment to more
upscale buyers
Grow Profit By Decease Variable
or Fixed Costs
Decrease Variable Costs
Try to find less
expensive but quality
suppliers.
Outsource parts of our
business that appear
to be expensive for us
Decrease Fixed Costs
Spend less on R & D.
Spend less on
Advertising
Basic Strategies
Do nothing
Let the brand sink or swim on its own
Do nothing differently
Maintain business as usual
Take action
Do something different
Marketers have control over STP and 4Ps
Dashboard
Indicator of a companys
success
Some measures will

confirm advantages over
competitors
Others can serve as a

diagnostic in identifying
problems
Discussion Question
What story does the dashboard tell?

Study Question 1
Apples iPod brand has a relatively large

share in a growing market, and thus is
best classified as a
a. cash cow.
b. star.
c. question mark.
d. dog.
Study Question 2
Innovative Manufacturing Co. is a consumer products

company that produces dozens of items ranging from toys to
electronics. The company holds many trademarks and
patents for the new products it has developed over the
years. In the companys experience, the least likely reason
for a new products failure would be related to which of the
following?
a. product is just too new to the customer
b. customers dont have a frame of reference with which to compare
these products
c. the product is over-priced
d. customers do not know how to think about the product, what to
look for, what attributes are considered good
Study Question 3
Which of the following is a dimension on

which a companys performance can be
measured?
a. sales
b. market share
c. profit margins
d. all are indicators for measurement
Study Question 4
Bill advises Mary that there are essentially three

strategies to achieving goals. Assuming Bill is
correct, how would he describe these three
strategies?
a. do nothing; do nothing different from status quo; do
something different
b. segment, target, position
c. customer satisfaction, customer loyalty, customer
retention
d. be the leader, be a quick follower, be a follower
Study Question 5
Marketing strategy ultimately is the

link between
a. corporate goals and operational
tactics.
b. leaders and followers.
c. offensive and defensive identities.
d. stars and dogs.

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What are some of the frameworks discussed for evaluating a company's product portfolio?

What are some of the frameworks discussed for evaluating a company's product portfolio?

What factors are considered when categorizing products in the Boston Consulting Group (BCG) matrix?

What factors are considered when categorizing products in the Boston Consulting Group (BCG) matrix?

Marketing Management

2010 South-Western, a part of Cengage Learning

Marketing strategy is the link

Using the BCG Matrix

Overall Cost Leadershiplowest

Focuson one or more narrow market

MARKETING MIX TARGET MARKET

LEAD PENCIL ALL POTENTIAL

FELT-TIP PEN SEGMENT A

FELT-TIP PEN SEGMENT A

Company Product Market

Xerox We make copying We improve office

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain

Grow the market

Some measures will

Others can serve as a

What story does the dashboard tell?

Apples iPod brand has a relatively large

Innovative Manufacturing Co. is a consumer products

Which of the following is a dimension on

Bill advises Mary that there are essentially three

Marketing strategy ultimately is the

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