Strategic Marketing

Vytautas Magnus UniversityAssoc. Prof. Nina Klebanskaja

nina@evf.vdu.ltCourse based on: J.J.Lambin. Market-Driven Management. Macmillan Business. 2000.

Evaluation of marketing function: from product orientation to market driven management

Marketing Definitions (AMA)*

1935 1985 2004 2007

Marketing is the performanceof business activities thatdirect the flow of goods andservices from producers to customers

Marketing is the process of planning and executing the conception, pricing promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

*AMA – American Marketing Association

Marketingo mantra: CCDVTP*(by Ph.Kotler)

C - create (product management) C – communicate (brand management) – DV - deliver value (customer

management) T – target market P – profit - pelningai

http://www.youtube.com/watch?v=bilOOPuAvTY&feature=related

Marketing megatrends

http://www.imediaconnection.com/content/24911.asp

I. Mass collaboration is powering the new economy

It's no secret among iMedia readers that "user-generated content" was a sucker punch to the jaw of the marketing world over the past several years.

A fundamental shift has occurred in which brands have become a conversation -- and audiences have just as much of a say in the shape of that dialogue as marketing directors and agency copywriters.

II. Constant connectivity in an on-demand world

We are wired. Almost every minute of every day, it seems we are connected. Emailing, surfing, Twittering, streaming, gaming, texting, Facebooking, downloading, chatting - will it ever end?

III. Globalization. Making the world smaller place

Globalization is an unstoppable force reshaping our society. The world's economies are inextricably linked. Technology has made geography irrelevant. Businesses around the world are doing business with one another and will continue to do so. This is big. This is mega big Gl

IV. Pervasive distrust in big corporations

People do not trust in big corporations. Corporate social responsibility is one of

the important issue.

V.A global sense of urgency to fix the problems of a modern world

Being green is a minimum standard. But being green is symptomatic of another

megatrend that is influencing the world on a massive scale - a global sense of urgency.

Marketing Evolution: the changing role of

customer

Prahalad and Rawaswamy (2000)

Customers are stepping out of their traditional roles to become cocreators as well as consumers of value

Customer as a passive audience Customers as active players

Persuading predetermined groups of buyers

Transacting with individual buyers

Lifetime bonds with individual customers

Customer as cocreators of value

Time frame 1970, early 1980s Late 1980s and early 1990s

1990s Beyond 2000

Nature of business exchange and role of customers

Customers are seen as passive buyers with a predetermined role of consumption

Customers are the part of the enhanced network; they cocreate and extract business value

Managerial mind-set

The customer is an average statistic; groups of buyers.

The customer is an individual statistic in a transaction

The customer is a person; cultivate tryst and relationship

The customer is not only an individual but also part of an emergent social and cultural fabric

Company interaction with customers, and development of product and services

Traditional market research; product and services created without much feedback

Shift from selling to helping customer via help desks, call centers, etc.; Identify problems from customers, feedback

Providing for customers through observation of users; identify solutions from lead users.

Customers are codevelopers of personalized experience.

Purpose and flow of communication

One way communication

Database marketing’ two-way communication

Relationship marketing; two-way communication and access.

Active dialog with customers; multilevel access and communication

P.Doyle. Marketing in the new millenium

Marketing mistakes

Marketers have generally made the mistake of seeing the subject as a functional discipline rather than an integrative business process.

Marketing directors have sought to make marketing decisions rather than share responsibility for satisfying customers with cross-functional teams.

Steps of strategic and operational marketing

Situationanalysis

Segmen-tation

Target-ing

Positioning Marketing mix

Environment- Consumers- Markets- Competitors- Distributors Opportunities and

threat

Strength and weaknesses

Market attractiveness and competitiveness analysis

Competitive advantages

Goals and strategies

4P- Product- Price- Marketingcommunica-tion - Distribu-tion ….

Segmentation-criteria

Contrasting operational and strategic marketing

OPERATIONAL MARKETING

Action-oriented Existing opportunities Non product/market

variables Stable environment Short term management Reactive behaviour Marketing department

STRATEGIC MARKETING• Analysis-oriented• New opportunities• New products and new markets• Dynamic environment• Longer planning horizon• Pro-active behaviour• Cross- functional organisation

Marketing in practice

Passive marketing(Product orientation)

Operational marketing(Sale orientation)

Strategic marketing(Marketing orientation)

Market driven management(Market orientation)

Passive marketing(reasons)

• Supply is scare. Demand is higher than supply.• Needs are known and stable.• Technological innovation proceeds at a slow pace.• Markets are stable.

Passive marketing(implementation)

• The firm is "product-oriented" and has an "inside-in" perspective.• Marketing research scale and frequency are low.• Promotional budget is limited.• Firm capacity to predict the market changes is week

Passive marketing: product orientation

• The main attitudesDemand exceeds supply.Needs are well known and defined.The technological environment is stable.The priority is to build the production capacity.Markets are well known and exports easy

• Limitations of this approachThe risk of product myopia is high.The firm's behaviour is reactive and not pro-active.

Operational marketing:implications

• The firm is sales-oriented and has an "inside-out" perspective.

• Selective and exclusive distribution systems are created.

• Creation of a strong brand image through mass media advertising.

• "Pull" strategies tend to replace traditional "push" strategies.

• Development of powerful multinational (or multi-domestic) organisations.

Operational marketing: the sales concept

Implicit assumptions The market can absorb anything if enough pressure

is applied. Commercial aggressiveness through mass media

advertising and hard selling is the key success factor.

Limitations of this culture Risk of manipulative or wild marketing practices. To mould demand to the requirements of supply

rather than adapt supply to the expectations of demand.

Strategic marketing: reasons

Saturation of the core market in a growing number of sectors.

Shortening of the product life cycle (PLC) due to the acceleration of technological progress.

Coming of age of mass marketing techniques. Internationalisation of the European and of the

world economy.

Strategic marketing: implications The firm is ”customer-oriented" and has now an

"outside-in" perspective. Market segmentation is actively used to guide the

product policy - main tool. The interface "R&D-Marketing-Production" is in charge

of new product development. Marketing people need R&D.

Brand management is responsible for strategic marketing - it is new function - brand management function.

Permanent marketing information systems are developed -acceleration of change.

Strategic marketing: the marketing concept

Implicit assumption. Satisfying customer's needs is the best way for

achieving the firm's growth and profit objectives. The emphasis is placed on the customer.

Limitations of this culture Satisfaction of short term needs may be in conflict

with long term well-being. Individual customer's needs are not always compatible with societal common good.

Risk of market myopia if too much emphasis is placed on expressed needs.

Implementing Strategic marketing (I)

1. What business are we in ? (reference market definition) 2. What is the diversity of needs in each

segment ? (macro and micro segmentation) 3. How attractive are the different segments ? (business opportunity analysis) 4. What value proposition is sustainable in

each segment ? (competitiveness analysis)

Implementing strategic marketing (II)

5. What are the priority segment(s) we want to be in ?

(market coverage decision)6. How do we want to compete in the

target segment(s) ? (market positioning decision)7. Which marketing programme is

consistent with our value proposition ? (operational marketing plan)

The coming of age of traditional marketing

Increased professionalism of customer buying behaviour. Customers are well educated in economics. Diversify behaviour according the consumption situation. The same person buy very expensive products and cheep products.

Proliferation of weakly differentiated brands targeted to specific segments.

Decrease in brand loyalty. Weakening of television advertising communication

effectiveness. “Yes, I remember” - only few % Escalade in self-defeating promotions. Every day low

price (EDLP), no promotion Diversification of retail outlets.

Market-driven management: reasons

Changing socio-demographic structure. Slowing down of economic growth in Western Europe. Acceleration and generalisation of technological progress. Power of the consumerism movement. Rise of the environmentalist movement and of green

marketing. Growing power of mass merchandisers. Development of electronic commerce and e-business Globalisation of the European and of the World economy. Rise of the "accountable" marketing concept.

Levels of Market OrientationLevels of Market Orientation

Consumers (k)

Competitors (c)

(d)

Stebėtojai (p)

K - - - √ - - - K C - - √ √ - - K - D - √ - √ - K - - P √ - - √ K C D - √ √ √ - K C - P √ √ - √ K - D P √ - √ √ K C D P √ √ √ √

CEO

Operations Finance HR ITOperationalMarketing

Teamprocess

Customerteam

MA

RK

ET

Categoryteam

Organization of a Market-Oriented Firm