INTEGRATIVE MKTG STRATGY
INTEGRATIVE MKTG STRATGY MKT 460
U of L
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This 113 page Class Notes was uploaded by Walton Heaney on Friday October 23, 2015. The Class Notes belongs to MKT 460 at University of Louisville taught by Charles Sharp in Fall. Since its upload, it has received 53 views. For similar materials see /class/228340/mkt-460-university-of-louisville in Marketing at University of Louisville.
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Date Created: 10/23/15
Chapter 11 Marketing Implementation and Control Control and the Managerial Process Issues to Resolve e Identification of the key variables to be measured or controlled e Standards of performance for entire company and subunits 1 Performance measures to be applied e Assessment reassessment procedures A Plan for correcting identified problems or weaknesses Basic Performance Evaluation Questions e What isisn t working 4 Why are strategies workingnot working 1 Have marketing strategies been implemented according to plan Have resources been used efficiently and effectively as What are direct and indirect competitors current and evolving marketing strategies and tactics What is their impact A What and how are trends and critical events in the environment affecting the industry Income Statement and Balance Sheet Example 140000 80000 60000 J 7 45000 2 7 15000 70000 m 220000 40000 M 160000 g 60000 134 5 E 1 HM 220000 Financial Terms Variable Costs expenses that are uniform per unit of output within a relevant time period CoSt of Goods Sold gt directly related i to production or cost of merchandise Financial Terms Fixed Costs expenses that do not fluctuate with volume within a relevant time period Procirammed costs gt attempts to generate volume ie marketing expenses Committed costs gt required to maintain the organization eg rent administrative salaries Financial Terms 4 Relevant Costs future expenditures unique to the decision alternative under consideration Sunk Costs direct opposite of relevant costs past expenditures irrelevant in whole or part to future lfde cisions eg past RampD test marketing last year s advertising expense Financial Terms Cannibalization Rate The degree to which new products or line extension products attract business from products that currently exist in the product line Financial Terms Margins gt Selling Price Cost Expressed in terms of eTotal volume 4 Per Unit Dellars e Percentage Example 1 gt Margins Suppose a wholesaler purchases an item for 200 Also suppose that the wholesaler seeks to achieve a 30 margin on this item based on selling price Calculate the fwholesaler selling price Example 2 gt Margins Suppose a manufacturer suggests a retail selling price of 600 on an item for ultimate resale to the consumer The item will be sold through retailers whose policy is to iob tain a 40 margin based on selling price At what price must the manufacturer sell the item to the retailer Breakeven Analysis Breakeven Point gt TR TC The stage at which the firm makes no profit and incurs no expenses BEP 4TFCCM EMunit SPunit VCunit Example 1 gt Breakeven Jhe price of the Flick pen in 150 A ording to the comptroller the ick Company reports a fixed cost of if f 00 and incurs a variable cost of 100 Chapter 2 Strategic Marketing Planning Marketing Today Hypercompetition Refined target marketing Importance of services Electronic commerce Growing consumer choice Shifting power among channel members Marketing Today HVDercomDetition Advantages fade relatively quickly Segments proliferate Selffeeding Marketing Today Disequillibrium Management Focus on dynamic relationships Changes in consumer satisfaction Changes in costs Changing environment Marketing Today Competitive Rationalitv Dynamic theory Endless innovation Responding imitation Buyer preferences evolve Products evolve Demographic Trends in the US Market The typical American no longer exists Singleperson households increasing Older households are increasing Better educated More technically skilled Expect valueadded products Convenience important Gender roles less defined Strategic Planning and the Marketing Process Plans are nothingPanning is everything Dwight Eisenhower Far better an approximate answer to the right question which is often vague than an exact answer to the wrong question which can always be made precise John Tukey Statistician Strategic Marketing ManagementWhy If you don t know where you are going you might end up somewhere else Casey Stengel Strategic Planning Strategic vision of the future 5 7 year horizon Context to marketing planning topdown g bottomup approach Ongoing process Strategic Planning The Strategic Plan Organization Mission Organization Objectives Organization Strategies Organizational Portfolio Strategic Marketing ManagementWhy Precipitate consideration of strategic choices Force longrange view Make resource allocation decisions Aid strategic analysis and decision making Provide a strategic management and control system provide horizontal and vertical communication and coordination system Cope with change Organization Strategy Growth Strategies Products Present New Products Products Markets Present Market Product CUStOmerS Penetration Development New M r ket Diversi cation Customers Development Boston Consulting Group Matrix Relative Share of Market High Low 20 Stars Qu ngh Marks Market Growth 10 Rate Cas DO S 0 LOW Cows g C 0 10X 1X 10X General Electric Model Industm Business Strength Attractiveness Market Position Market size Domestic market share Market growth World market share Profitability Share growth Ability to recover from Share Compared to leading inflation competitor World scope Competitive Strengths Quality leadership Technology Marketing Relative profitability General Electric Model Business Strength Industry Attractivenes Strong Average Weak High A A B Medium A B C LOW B C C i Chapter 1 Marketing In The New Economy v Marketing defined Functional Process Exchange Marketing Is the process of planning and executing conception pricing promotion and distribution of ideas goods and services to create exchanges that satisfy individual and organizational goals The American Marketing Association Marketing is quot quot exchange I GOOCIS Sew ces I ideas 5 Conditions of Exchange Buyer ltgt Seller relationship Communication Freedom to accept or reject Mutual benefits derived The Marketing Global Superhighway Customer Relationships Distributor Relationships Supplier Relatio vships Marketing Facilitator Producer Relationships Relationships InternalEmployee Relationships Marketing and Marketing gManagement Marketing The management function responsible for assuring that every aspect of the organization focuses on customer relationships by delivering superior value Marketing Management Continuous process at all organizational levels and across business functions from formulation to implementation of marketing strategy and tactics Marketing Management isrequires High visibility Numerous opportunities Related risks Trained professionals Integrative skills Imbalance gt Responsibility Authority Communication skills ihe Whee39 of Marketing 9 6 5 3o 390 O I g P Fl ce 9 Culfure The Marketing Concept Primary goal gt Customer Satisfaction The Customer is king Profit goal gt Investor Satisfaction Total company commitment Focus on Customer Satisfaction Customeroriented strategies adapted to changes in markets and buying behavior Customers involved earlier in the marketing process better understanding of customers Valueadded marketing strategies quality service and value Internal marketing programs for employees The Marketing Mix 5 Price Customer Place Value Target Mar Distribution 7 2959 Promotion Integrated Marketing Communications Integration of Marketing amp Other Business Functions 60 3 2a 0Q Human Resources The Marketing Organization Organizational structures are changing Recession Restructuring DownsizingRightsizing Privatizing More strict accountabilities Conscientious cost management Technological advancements The Marketing Organization Crossfunctional Teams Collection of various functional areas Common goal Does not conform to typical hierarchal structure relationships Effective communication can be a chaHenge it Product Strategy Chapter 7 Super Bowl ads Today httpwwwusatoday C0mmheyadvertisingad meter 201 1s uperbQWIaCImeter432714321 Z Product amp Service Stratng Product gt a need satisfier 0 Physical good tangible maintain in inventory produced befOre usage associated COSt liability stored and transported Product amp Service Strategy Product gt a need satisfiieir Service intangible produced only when sold direct interaction between buyerseller cannot be stored or transported New Product Development Effective product development involves Incorporating design simplicity Setting demandingaggressive goals Concurrent design product and production processes New Product Development Effective product development involves con39t Fasttrack approach 0 crossfunctional involvement support 0 improves competitiveness Ongoing process Senior management in leadership role New Product Der eEIOpment 1 Idea Generation 0 Use a wide range of sources for new product ideas Employees New technology Consumers Channel members Global markets Suppliers 0 Innovation ltgt Imitation New Product Der eEIOpment 2 Screening Ideas Preliminary evaluation 0 musthavequot criteria 0 shouldhavequot criteria 0 weighted considerations Batch vs ad hoc vs batchad hoc New Product Development 3 Concept Development Develop the following positioning concept product specifications economic feasibility Several design concepts considered even a single additional design added Emerge with single design concept Green lightquot to develop the product New Product DevelIOpment 4 Develogment Plan Planning necessaryon how to proceed Create subteams Concurrent engineering Effective but challenging to implement Requires many informal meeting wsubteams Synchronization of efforts is key New Product DevelOpment 5 Development and Testing 0 Develop prototype designed to meet specification experimentation gt improvements understand tradeoffs and conflicts sell senior management advertising agency 0 Numerous prototypes an advantage 0 Field testing consumer Usage situation New Product DevelOpment 6 Launch Commercialization Advance the manufacturing process to full speed 0 Changes at this point are expensive 0 production modification 0 consumer response unknown Product Strategy Branding Considerations 0 Brand Name providesa conditioned association with a set of attributes o Represents the product 0 Assures reliability 0 Shortcut for consumers o 39ll39lLe brand name gt the mOSt important graphic on the a e o Often the organization s most valuable asset Product Strategy Brand name develonm en t co ngiderations Attract attentiondistinctive Be memorable Communicate the product positioning Easy to pronounce Globally safe TVDes of brands Manufacturer Private Generic Product Strategy ManufacturerNational Brand de iclnated owned and used bv the mgnufacturer or producer Examples Xerox Black amp Decker Bridgestone Product Strategy Private Brand desiqna tgd owned and used by a wholesaler or retaileii Examples Sears Diehard CVS Cough Syrup Kroger Private Selection Product Strategy Generic Product a Droduct that is identified only bv a riotdiuct Cate o Examples Green beans Breakfast flakes Orange juice Product Strategy Why do manufacturers Drowducggrii gate brand and qeneric groducts Available excess capacity gt better return on company assets Generate a more predictale cash flow Manufacturer does not bear related marketing costs Refusing to produce them does not stifle competition Product Strategy Brand Lovaltv the level of commitment that consumers feel as reresented b their continuincl purchase Ultimate goal of most marketing efforts Provides insurance against rapid and significant share loss due to competitive entries Difficult to predict and measure Product Strategy Brand equitv considerations 0 Brand equity combined goodwill and reputation represented in the brand name Brand Value Physical assets Brand equity Recognizes the overall strength of the brand in the marketplace Enduring and durable value Product Strategy Line Extension Vs Bra7d EXtension Line extension gt additional SKU within the same product category with the same brand name Brand extension gt new product in a different product category with the same brand name Product Life Cycle Sales Introduction Growth Maturity Decline Time Product Life Cycle Introductom Stage Stimulate demand gt heaw promotion Build distribution Potentially ongoing product development Major financial challenge Innovative product gt little or no competition Product Life Cycle Growth Stage 0 Sales increase dramatically Prices stabilize gt more sujliers involved 0 Competition enters stimulate demand greater priomiotion investment added featuressupporting services prices adjust downward o Profits grow early mgf Costs decrease decrease later competitive impact Product Life Cycle Maturity Stage Profits decline gt low price a major competitive parameter Focus on loyal current Customers Decrease marketing expense gt reap reasonable profits Major investment decision concerning the future of the product Product Life Cycle Decline Stage Major investment decision concerning the future of the product Cut the promotional budget phase out the product Major investment in the promotion budget another shot at stardom 39 Customers Segmentation and Target Marketing and Positioning Chapter 6 CustOmers 39 Types of Consumer Decisions Extensive Limited Routine Involvement Consumer Decision Making Consumer Buying Process gt Alternative Search gt Alternatlve Evaluation Purchase Decision Postpurchase Evaluation Analyzing Consumer Consumer choice rules 0 Logic 0 Emotions o Habit 5quot Analyzing Consumers Logical choice behavior 0 Rational man Choice Model 0 Vroom s Choice Model The Behavioral Intentions Model The Fishbein Model predicts consumer behavior Aijk Z ZBijink iatt1ibute Ithe importance weight given attribute I by consumer k Jbrand Bconsumer k s belief regarding the extent to which brand j possesses attribute i Kconsumer Aa particular consumer s k s attitude score for brand j Considers salient beliefs consumers have about an object A0 Assesses the probability that a particular object has an important attribute Evaluates each of the important attributes Psychological In uences 0 Motivation 0 Perception 9 Learning o Beliefs amp Attitudes Theories of Motivation Freudian Theory 0 Largely unconscious psychological forces shape consumer buying behavior 0 Consumers do not fully understand their own buying behavior 0 Marketers then must guess to understand to understand buyer behavior Theories of Motivation Maslow s Theory hierarchical arrangement 0 Selfactualization needs 0 Esteem needs 0 Social needs 0 Safety needs 0 Physiological needs Theories of Motivation Herzberg s Theory 0 Twofactors Dissatis ers gt cause dissatisfaction Satis ers gt cause satisfaction 0 Absence of dissatis ers not enough 0 Satis ers must be present to motivate purchase Perception The process by which an individual selects organizes and interprets information inputs to create a meaningful picture of the world 9 Perception in uences motivation o Perception is individual Learning Involves changes in an individual s behavior arising from experience e Learning produced through interplay of drives stimuli CUGS responses reinforcement o Marketers build demand by association with drives stimuli cues responses etc Beliefs amp Attitudes A belief is a descriptive thought that a person holds about something 0 May be based on knowledge opinion or faith 9 May or may not have emotional attachment 9 Beliefs make up brand images a key basis of purchase Beliefs amp Attitudes An attitude is a person s enduring favorable or unfavorable evaluations emotional feelings and action tendencies toward some object or idea 0 Attitudes are interrelated 0 They are dif cult to change Social In uences 0 Culture and subculture 9 Family 0 Social class 0 Peer group 0 Reference group Situational In uences 0 Physical environment 0 Social environment 9 Time 0 Task de nition 0 Antecedent statesmoods Marketing In uences 0 Product 0 Place 0 Price 0 Promotion Market Segmentation and Target Marketing Analyzing Customers Market Segmentation o Dividingpartitioning the universe 0 Prerequisite to target market development 0 Market segment group of consumers with distinct needsbehaviors 0 Education 0 Income 0 Residence 9 Ethnicity Analyzing Customers Need to consider segmentation bases beyond demographics 0 Bene ts 0 Needs 0 Lifestyle 0 Lifecyole 0 Usage Analyzing Customers Bene ts segmentation 0 Can be used to design a product 0 Most product markets can be segmented into bene ts sought 0 Products are frequently purchased to achieve several bene ts Analyzing Customers Lifecvcle segmentation is important because 0 Quantities of consumers Within age segments can be predicted With relative reliability 0 Needs and wealth of individuals change as they move through the life cycle stages Lifestyle segmentation often based on psychographios o Interests 0 Activities 0 Opinions Product Positioning Product Positioning The wav consumers perceive the product versus competitive products Examples 9 Polaroid gt pictures available instantly o Cannon gt take now develop later Product Positioning Product Repositioning Change the way consumers perceive the product versus competitive products Repositioning is a good strategy when 9 Negative perceptions of the product are broadly held by the target market 9 Opportunity to expand the potential market 9 Increase differentiation between the product and a competitor Product Positioning Perceptual Mapping provides 9 graphic representation of the positioning of products in the industry 0 two dimensional key features sought 0 relative industry sales SOM 0 Ideal positioning 39 Product Positioning Positioning Strategies 9 Needs amp Bene ts convenience health low price c Features Embassy Suites gt Every room is a 2room suite offered at approximately the same price a regular hotel single rooms JVC Component Systems gt CompuLink System synchronizes all components with a simple cable connection Product Positioning Positioning Strategies Con t 0 Usage How Where and When Pepsi AM gt drink during the moming hours Nyquil gt to be taken for cold symptoms during the evening hours 9 Users Who Topol gt a toothpaste for smokers The Louisville Cardinal gt newspaper for Uo students alums 9 Competition directly against or far away 7Up gt the Uncola far away IBM Computers directly against Managing Customer and Competitive Relationships Chapter 5 Analyzing The Competition Analyzing The Competition De ning Competition I Similar products I Switching interactions I Substitute products Analyzing The Competition Competitive Structure I Market share analysis I History of the market I Search for new competitors I Focus on major rivals Analyzing The Competition Market structure analvsis I Avoid over reliance on statistics I Consider dynamics I Consider drivers of change I Consider competitor survival Analyzing The Competition Look over your shoulder the small companies I Often develop radical changes I They have little established stake I Not usually considered traditional rivals Analyzing The Competition Consider shares beyond market share or SOM l SOC I SOV I SORampD I SOSF Analyzing The Competition Barriers to Competition I Customer loyalty IBM I Customer switching costs I Government regulations I Proprietary patents I Advertising expenditure I Locked in distribution channels I Economies of scale eg research production distribution logistics Analyzing The Competition Consider other competitive threats I New technology I Competitive vertical integration l Competitive mergers l Your own company gt mergers acquisitions Analyzing The Competition Competitor Analysis Considerations I Marketing miX obj ectives strategies I Product positioning I Strengthsweaknessesvulnerabilities I Financial condition I Trade relations sales force strength I Production processes I Next moves Analyzing The Competition When anticipating competitor behavior I Understand its objectives and thinking I Study past decision making I Understand your company s vulnerability I Understand the rules of the industry I Not all industry members are competitors Analyzing The Competition Process of Analyzing Competition I Insure topmanagement commitment I Ongoing and continuous effort I Regular periodic reporting procedure I Delegated authority for quick response I Budgetary commitment necessary