Transcript Basic Marketing, 13th edition

Chapter 2:
Marketing Strategy Planning
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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The Marketing Management Process
Whole-Company
Strategic
Management
Planning
Adjust Plans
As Needed
Control Marketing
Plan(s) and Program
Marketing
Planning
Implement Marketing
Plan(s) and Program
Exhibit 2-4
2-9
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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Target Marketing vs. Mass Marketing
TARGET MARKETING
Marketing mix is tailored to fit
specific target customer(s)
MASS MARKETING
Vaguely aims at "everyone" with the
same marketing mix
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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Marketing Strategy Planning
The
Marketing
Mix
C
Exhibit 2-5
2-10
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The Four Ps of the Marketing Mix
Product
Place
C
Price
Promotion
Exhibit 2-7
2-11
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Strategy Decision Areas
Organized by the Four Ps
Product
Place
Promotion
Price
Physical Goods
Service
Features
Benefits
Quality Level
Accessories
Installation
Instructions
Warranty
Product Lines
Packaging
Branding
Objectives
Channel Type
Market Exposure
Kinds of
Middlemen
Kinds and
Locations of
Stores
How to Handle
Transporting
and Storing
Service Levels
Recruiting
Middlemen
Managing
Channels
Objectives
Promotion Blend
Salespeople
Kind
Number
Selection
Training
Motivation
Advertising
Targets
Kinds of Ads
Media Type
Copy Thrust
Who Prepares?
Sales Promotion
Publicity
Objectives
Flexibility
Level over PLC
Geographic
Terms
Discounts
Allowances
Exhibit 2-8
2-12
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The Marketing Plan
Marketing plan: a written statement of a
marketing strategy and the time related
details for carrying out the strategy.
Spells out, in detail:
 What marketing mix is to be offered
 To what target market
 For how long
 What resources (costs) are needed at what
rate
 What results are expected
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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Marketing Program
Marketing program: blends all of the firm's
marketing plans into one "big" plan—
which is an integrated part of the wholecompany strategic plan
 Program requires an effective "building
up" process
 A good program must be based on good
plans
 Each plan must be carefully developed
 Each plan is based on a marketing
strategy
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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Marketing Objectives
Should Be in Writing
Objectives must be clearly defined &
quantitatively measured
Measures should be taken at regular
intervals
Measures must be useful to managers
Measures should be linked to rewards
Measures should directly relate to tactical
and strategic goals of the firm
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Profits, Revenues & Costs
Marketing Concept – meet the needs of the
target market at a profit (C1, pg 16).
Profits = Total Revenues – Total Costs
What are Revenues?
What are Costs?
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© The McGraw-Hill Companies, Inc., 1999
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Revenues
Total Revenues = price x quantity sold
Example: Price = $10 a unit. 50 Units sold
Total Revenues = 50 x $10 = $500
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Revenues
Most companies sell multiple products and
revenues are summed across products sold
Example: Company sells Product A &
Product B
Product A price = $10; B = $20
Units Sold A = 50; B = 100
What is the total revenue?
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Total Revenue
($10 x 50) + ($20 x 100)
= $2,500
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Costs
Total Costs = Fixed Costs + Variable Costs
Fixed Costs = Costs that do not change over
some time period or level of production
Variable Costs = costs that change when
units produced or sold changes
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Costs Example
Movie Theater monthly rent = $4,000
Monthly Utilities = $1,000
Labor Costs = $3,000 if avg. number of
people go to the movies
 = $2,000 if people going to the movies is
25% below average
= $5,000 if people going to the movies is
50% greater than average
What are fixed costs? Variable Costs?
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Movie Theater Costs
Fixed Costs = $5,000
Variable Costs = $2,000; $3,000 or $5,000
depending on attendance
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Customer Equity & Differentiation
Customer Equity = is the expected earnings
stream (profitability) of a firm’s current and
prospective customers over some period of
time (pg 43).
Differentiation = means that the marketing
mix is distinct from and better than what is
available from a competitor (pg 50)
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© The McGraw-Hill Companies, Inc., 1999
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Only 3 Ways A Firm Increase Profits
1] Sell more units at the same price (if
selling above costs)
2] Lower costs while maintaining price and
quantity sold
3] Meet target market needs better than
competitors and successfully charge a
higher price
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
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Companies that are highly profitable
May have higher or lower costs per unit
than competitors
May sell more or fewer units than
competitors
May have a higher or lower price than
competitors
We judge marketing success by profits –
NOT costs, units sold, price or total
revenues ALONE
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© The McGraw-Hill Companies, Inc., 1999
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Competitive Advantage
 Competitive advantage: the firm has a marketing mix that
the target market sees as better than a competitor's mix
 A better marketing mix offers target customers better
customer value
 Note: customers who are not in the target market may
not see the marketing mix as offering better value
 Requires that the firm:
 understand current competitors' offerings
 anticipate competitors' likely plans
 monitor effects of changes in competition
 REALLY understand the target customers' needs
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© The McGraw-Hill Companies, Inc., 1999
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Marketing Strategy Planning Process
Narrowing down to focused strategy with screening criteria
Customers
Company
S.
W.
O.
T.
Segmentation
& Targeting
Product
Place
Target
Market
Differentiation
& Positioning
Price
Promo
Competitors
External Market Environment
Exhibit 3-1
3-3
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© The McGraw-Hill Companies, Inc., 1999
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Types of Opportunities
Four Basic Types of Opportunities
Present Products
Present Markets
New Markets
New Products
Market
Penetration
Product
Development
Market
Development
Diversification
Exhibit 3-2
3-4
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
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 "getaways" 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
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Considering International Opportunities
3-5
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© The McGraw-Hill Companies, Inc., 1999
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