Transcript marketing strategy reformulation—the control process

CHAPTER 9
Marketing Strategy
Reformulation: The Control
Process
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-1
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Define the concept of strategic control.
2. Describe the nature and sources of
strategic change.
3. Explain each element of operations
control.
4. Discuss the nature of marketing costs
analysis and the issues involved.
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-2
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
5. Describe offering mix analysis and
its two interrelated tasks.
6. Discuss sales and marketing
channels analyses and their impact
on the firm.
7. Explain three considerations
involved in strategic and operations
control.
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-3
Marketing Control
Set
marketing
goals
Measures
performance
Evaluates
causes of
differences
Take
corrective
actions
2- 4
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Measuring and Managing Return on Marketing
Investment
Return on marketing
investment
(marketing ROI) is
the net return from
a marketing
investment divided
by the costs of the
marketing
investment.
2- 5
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Return on Marketing Investment
2- 6
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
THE MARKETING STRATEGY
CONTROL PROCESS
The marketing control process serves as the
mechanism for achieving:
 Strategic adaptation to environmental change
 Operational adaptation to productivity needs
Strategic
Control
Operations
Control
“Doing the right things”
“Doing things right”
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-7
THE MARKETING STRATEGY
CONTROL PROCESS
Strategic Control
 Assesses the direction of the organization
as evidenced by its:
• Implicit or explicit goals and strategies
• Capacity to perform in the context of changing
environments and competitive actions
 Defines the fit between an organization’s
capabilities and objectives and
environmental threats and opportunities
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-8
THE MARKETING STRATEGY
CONTROL PROCESS
Operations Control
 Assesses how well the firm performs
marketing activities as it seeks to
achieve planned outcomes
 Assumes that:
• The direction of the firm is correct
• Only the organization’s ability to perform
specific tasks needs to be improved
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-9
CHAPTER 9: MARKETING STRATEGY
REFORMULATION—THE CONTROL PROCESS
STRATEGIC
CHANGE
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-10
STRATEGIC CHANGE
 Is the change in the environment
that will affect the long-run well-being
of the organization
 Represents opportunities or threats
to an organization, depending on its
competitive posture
 Example: The aging of the U.S.
population
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-11
OPTIONS FOR DEALING WITH
STRATEGIC CHANGE
 Allocate the resources necessary to alter
the firm’s technical and marketing capabilities
to fit its market-success requirements
 Shift emphasis to product markets where the
match between success requirements and the
firm’s distinctive competency is clear
 Cut back efforts in those product markets
where the firm has been outflanked
 Leave the industry totally
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-12
CHAPTER 9: MARKETING STRATEGY
REFORMULATION—THE CONTROL PROCESS
OPERATIONS
CONTROL
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-13
OPERATIONS CONTROL
 The goal of operations control is to improve
the productivity of marketing efforts
 Ways to identify and allocate costs are:
Marketing
Channel
Analysis
Marketing-Cost
Analysis
Sales
Analysis
Customer
Profitability
Analysis
Product-Service
Mix Analysis
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-14
OPERATIONS CONTROL
Marketing-Cost Analysis
Its purpose is to:
 Trace, assign, or allocate costs to a
specified marketing activity or segment
 Accurately display the financial contribution
of activities or entities to the organization
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-15
OPERATIONS CONTROL
Product-Service Mix Analysis
This analysis involves two interrelated tasks:
 Assess the performance of offerings in relevant
markets:
Sales Volume Analysis
Market Share Analysis
 Appraise the financial worth of offerings via:
Contribution Margin Approach
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-16
OPERATIONS CONTROL
Sales Analysis
Its purpose is to direct attention to both the:
Behavioral
Aspect of Sales
Cost Aspect
of Sales
Consists of sales effort and
allocation of selling time
Consists of expenses from the
performance and administration
of the sales function
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-17
OPERATIONS CONTROL
Customer Profitability Analysis
A profitable customer is a person,
household, or company that, over
time, yields a revenue stream that
exceeds, by an acceptable amount,
the organization’s cost of attracting,
selling, and servicing that customer.
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-18
OPERATIONS CONTROL
Customer Profitability Analysis
Is calculated as follows:
Customer
Profitability
=
Customer
Gross
Margin
(
–
Customer
Acquisition
Costs
© 2013 Pearson Education, Inc. publishing as Prentice Hall
+
Customer
Retention
Costs
)
Slide 9-19
OPERATIONS CONTROL
Customer Profitability Analysis
 When this is done for each customer,
it is possible to classify customers into
different profit tiers
 Drop them to eliminate their costs entirely
 Charge them higher prices/fees to increase profits
 Reduce the cost of serving them to make them
more profitable
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-20
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
© 2013 Pearson Education, Inc. publishing as Prentice Hall
Slide 9-21