Formulating Strategic Marketing Programs

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Formulating Strategic Marketing Programs
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What are the Benefits of Strategy?
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Components of Strategy
Statement of goals objectives
Establish general direction of strategy
Selection of strategic alternative(s)
Selection of customer targets
Choice of competitor targets
Positioning
Statement of core strategy
Description of supporting marketing mix
Implement strategy
Description of supporting functional programs
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Marketing goals objectives are tied to

• Organizational mission
• What is the organizations reason for being?
• What does the firm stand for?
• What is the basic operating philosophy?

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Marketing Goals

• Desired general accomplishments stated in vague
  terms.
• Indicate the direction the firm is attempting to
  move and the set of priorities it will use in
  evaluating alternatives and making decisions.

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• Should be attainable and realistic.
• Should be internally consistent.
• Should be comprehensive and help to clarify the
  roles of all parties in the organization.
• Should involve some degree of uncertainty.

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Goals vs. Tactics

• To have the largest, best-trained sales force in
  the industry.
• Hiring 100 new salespeople.
• Having the best recognized company in the
  industry.
• Doubling the advertising budget.

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Marketing Objectives

• Provide specific and quantitative benchmarks that
  can be used to gauge progress toward the
  achievement of the marketing goals for which they
  are developed.
• Should be attainable with a reasonable degree of
  effort.

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• Should specify the time frame for their
  completion.
• Usually related to sales revenues, market share,
  profitability, or cash flow

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Examples of Objectives

• The marketing department will be responsible for
  having 40 of customers listing this financial
  institution as their primary financial
  institution within one year.
• The sales department will increase sales 18
  during the next 2 years.

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Strategic Alternatives

• Three basic strategic directions
• Growth (sales or market share)
• Profitability
• Cash flow

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Growth Strategies

• Market development strategies
• Attract non-users
• Enter new markets

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Attracting non-users

• Increase willingness to buy
• Demonstrate benefits of product form
• Develop new product forms with desired benefits
• Increasing ability to buy
• Offer lower prices or credit
• Provide greater availability

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Enter new markets

• Broaden distribution
• Move into new geographic markets
• Add channels of distribution
• Product-line extension
• Vertical product line extension
• Horizontal product line extension
• Expansion through acquisition or diversification

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• Market penetration strategies
• Increase purchase rate of existing customers
• Attract competitors customers

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Increasing purchase rate

• Broaden usage
• Provide examples of additional uses of product
• Increase consumption levels
• Lower prices, special-volume packaging
• Improve buyers perceptions of product benefits
• Increase rate of replacement
• Improve benefits, e.g., convenience, lower
  operating costs, that encourage early replacement

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Attracting competitors customers

• Head-to-head competition
• Superior marketing effort
• Quality, selection, availability, brand name
  recognition
• Price-cost leadership
• Offer comparable quality at lower price

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• Differentiation
• adding a set of meaningful and valued differences
  to distinguish the firms offering from
  competitors offerings
• Criteria
• important ? preemptive
• distinctive ? affordable
• superior ? profitable

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• Differentiation Variables

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Profitability Strategies

• Maintain satisfaction
• Consistent, high quality
• Effective customer complaint system
• Build strong customer relationships
• Encourage repeat business through formal
  relationships
• Target best customers
• Develop complementary products
• Increase dependence on firm

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• Decrease costs/increase efficiencies
• Increase price
• Decrease product offerings/emphasize selling of
  most profitable products

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Cash Flow Strategies

• Harvest market position
• Systematically increase profit margin by reducing
  marketing expenses to capitalize on ST
  performance opportunities may sometimes be able
  to increase price, also
• Divest market position
• Sell firm
• Close down operation and sell assets

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Implications of Product Life Cycle on Marketing
Strategy
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Introduction Stage

• Objective Create awareness and product trial
• Market development
• Productoffer a basic product
• Pricecharge cost-plus
• Distributionselective
• Communicationstarget advertising to early
  adopters and dealers to increase awareness
  heavy sales promotion to stimulate trial

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Growth Stage

• Objective Maximize market share
• Market penetration
• Productproduct extensions, warranties
• Pricedecrease prices to penetrate
• Distributionintensive
• Communicationstarget advertising to mass
  market to increase awareness reduce
  sales promotions

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Maturity Stage

• Objective Maximize profit while defending
  market share
• Productdiversify products and brands
• Pricematch or best competitors prices
• Distributionmore intensive
• Communicationsuse advertising to stress brand
  differences and benefits increase
  sales promotions to encourage brand
  switching

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Decline Stage

• Objective Reduce expenditure and milk the
  brand focus on cash flow
• Productphase out weak models
• Pricecut price
• Distributionselective phase out unprofitable
  outlets
• Communicationsreduce and target hard-core
  loyals reduce sales promotions to minimal
  levels