Marketing Management
Introduction to Marketing Strategy
Paul Dishman, Ph.D. Department of Business Management Marriott School of Management Brigham Young University Lecture 4 1
Marketing Management
Paul Dishman, Ph.D.
Learning Objectives • Primer on Marketing Strategy • Introduction to Target Marketing and Segmentation • Examples and lessons from a variety of industries and businesses
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Marketing Management
Paul Dishman, Ph.D.
Possible Marketing Paths MR uncovers unmet needs in market
R&D invents product
Product/Service Creation
To whom do we sell this product?
Product produced
Market tests conducted
Product benefits articulated
Product/Service Testing Who do we tell about this product?
What do we need to tell them?
Marketing Decisions
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Marketing Management
Paul Dishman, Ph.D.
Stakeholders vs. Audiences Audiences • Identified Market Segments • Media • Stakeholders
Audiences
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Marketing Management
Stakeholders • Shareholders • Employees • Customers • Suppliers • Community
Stakeholders
Paul Dishman, Ph.D.
To Whom Do We Want to Speak? • • • •
Who should receive our message? What message do they want? need? How should the message best be delivered? Who is our Target Audience? – Mass Market or Targeted Market? – To what group of people do we want to aim this product? Aim our messages? – What common characteristics do they possess?
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Marketing Management
Paul Dishman, Ph.D.
Mass Marketing vs. Target Marketing
Mass Marketing “one product for all customers”
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Marketing Management
Target Marketing “a product for a specified sub-group with common needs”
Custom Marketing “each product unique for each person”
Paul Dishman, Ph.D.
Introduction to Product-Markets • What is a Product-Market? – “a market defined by a common application of a product class” – baby-food market – home internet computer market – couture fashion market
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Marketing Management
Paul Dishman, Ph.D.
Product-Markets • Are “living” entities • Constantly changing and evolving • Managers must monitor changes and predict trends through intelligence efforts • Markets can be: • • • • •
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alive dead dormant bifurcating mutating
Marketing Management
Paul Dishman, Ph.D.
Product-Markets 1985: Desktop Personal Computer Market by Usage Areas
Home
Business
Education Science 9
Marketing Management
Paul Dishman, Ph.D.
Product-Markets 1987: Desktop Personal Computer Market by Usage Areas
Home Business Education
Science
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Marketing Management
Paul Dishman, Ph.D.
Product-Markets 1987: Desktop Personal Computer Market by Usage Areas
Home Business Portability Education Science 11
Marketing Management
Paul Dishman, Ph.D.
Product-Markets 1997- 2004: Personal Computer Market by Product-Market Personal Digital Assistants
Laptop PC’s Desktop PC’s
Mini Laptops
Network Server PC’s 12
Marketing Management
Digital Devices
Special Purpose PC’s Paul Dishman, Ph.D.
Product-Markets 1997: Personal Computer Market by Product-Market by Usage
Education Home Scientific Business Desktop Laptop Mini-laptop PDA Server Special Purpose
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Marketing Management
Paul Dishman, Ph.D.
Product-Market Expansion • Three ways to grow – Expand with expanding market – Expand by taking market share away from competitors – Create new markets
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Marketing Management
Paul Dishman, Ph.D.
Product-Market Expansion
Existing Market Existing Penetration
Product New Product Development
Market Market Development
Diversification
New
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Marketing Management
Paul Dishman, Ph.D.
Apply the Marketing Mix + + + +
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Product Price Place Promotion
Customer needs and wants Cost to customer Convenience Communication
POSITION
Customer concept vis-a-vís competitors
Marketing Management
Paul Dishman, Ph.D.
Positioning Prestige Cars
Price
Accura High
Accord Low
Sentra Malibu Popular Priced
BMW Volvo “Baby Benz”
?
Lexus
High
Quality
Cars
Escort Economy Cars 17
Marketing Management
Low
Paul Dishman, Ph.D.
Summary • • • •
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Intro to Marketing Strategy Intro to Target Marketing (and Segmentation) Product Market Expansion Strategies Application of Marketing Mix for Positioning
Marketing Management
Paul Dishman, Ph.D.
Strategy Lecture • • • •
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Terms Traditional Approach to Strategy Two Views of Competitive Analysis Dynamic Model of Competitive Strategies
Marketing Management
Paul Dishman, Ph.D.
Coming to Terms • Goal (something you strive for- but can never measure) – Objective (attainable, S*M*A*R*T) • Strategy (plan to achieve objective) –Tactic (operation, program required to execute strategy) » Action Plan (tasks, assignments, CPM)
• Resource Analysis (all resources required to achieve the objective)
–Budget (monetary resources)
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Marketing Management
Paul Dishman, Ph.D.
Situational Analysis (SWOT) • Internal – Strengths – Weaknesses • External – Opportunities – Threats
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Marketing Management
Strategic Planning: The most profitable match of company strengths with opportunities presented by the marketplace which would provide long-term advantage.
Paul Dishman, Ph.D.
Situational Analysis (SWOT) • • • • • • • • • 22
Market share gain Market entry Intellectual property Financial Management team Owners, founders Products/services Manufacturing Strategic fit
Marketing Management
Paul Dishman, Ph.D.
Situational Analysis (SWOT)
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Criteria
Strengths
Gain Mkt Share
- ext. current prod. line - entry into Mkt 6
Intellectual Property
Product Leverage
Marketing Management
Weaknesses
Opportunities
Threats
- Prod1 CAGR>250% - Prod2 CAGR>54% - Prod3 emerging
- major competitors
- 4 patents - unclear if SW - 3 pending patents okay - 9 2B submt’d - need license for - clear tech 1/2 of roadmap roadmap
- some leveraging with our R&D
- 2 possible infringement suits
- prods extend - EDP is not our our Mkts primary focus 1&2 - Prod2 requires cust support we don’t have
- can take Prod1 into our Gamma with extra FAB’s
- time to mkt - no resources to leverage
- no prod. history - may have over designed prods
Paul Dishman, Ph.D.
Strategic Planning Approaches • • • • •
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Mission Statement Orientation Business Portfolio Analysis Strategic Business-Planning Grid Product Market Expansion Strategies Customer Marketing Mix
Marketing Management
Paul Dishman, Ph.D.
Mission Statement Orientation • “Invisible Hand”
• Market, not technology- or productorientation • Capture vision • Provide direction in decision making
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Marketing Management
Paul Dishman, Ph.D.
Production vs. Market Orientation Company
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Marketing Management
Production
Market
cosmetics
lifestyle, status expression
theme parks, film
fantasy, entertainment
credit cards
exchange value
copiers, faxes
document management Paul Dishman, Ph.D.
Vision Components IAYF: “information at your fingertips” “personal, portable entertainment” “within an arm’s reach of every person in the world”
“become $100 billion company” 27
Marketing Management
Paul Dishman, Ph.D.
Business Units as Portfolio • Financial Approach (Internal Rate of Return, Return on Investment) • Market Relation Approach – Growth-Share Matrix
• Business Planning Approach • SBU = Strategic Business Unit • Issues
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Marketing Management
Paul Dishman, Ph.D.
Growth-Share Matrix (Boston Consulting Group)
Relative Market Share High
Low
High
Market Growth Rate
Star
Cash Cow
???
Question Mark
Dog
Low 29
Marketing Management
Paul Dishman, Ph.D.
Growth-Share Matrix (Boston Consulting Group)
Relative Market Share High
Low
High
Market Growth Rate
Star
Cash Cow
???
Question Mark
Dog
Low 30
Marketing Management
Paul Dishman, Ph.D.
Growth-Share Matrix Strategies • Build
• Hold
• Harvest
• Divest 31
Marketing Management
Paul Dishman, Ph.D.
Business Planning Grid
(GE)
• 1: Industry Attractiveness Index (vertical) – Market Size – Market Growth Rate – Industry Profit Margin – Amount of Competition – Seasonality, Cyclicality of Demand – Industry Cost Structure
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Marketing Management
Paul Dishman, Ph.D.
Business Planning Grid
(GE)
• 2: Business Strength (horizontal) – Company’s relative market share – Price competitiveness – Product quality – Customer and market knowledge – Sales effectiveness – Other advantages
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Marketing Management
Paul Dishman, Ph.D.
Business Planning Grid
(GE)
Business Strength Strong Ave. Weak
Industry Attractiveness
High Medium Low
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Marketing Management
Paul Dishman, Ph.D.
Issues with Portfolio Approaches • 75% of Fortune 500 use portfolio approach • Investment in implementation • Good at current assessment • Need additional tools for future planning • Avoid “attractiveness trap” • Provided leverage for custom approaches
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Marketing Management
Paul Dishman, Ph.D.
Company Orientation Customer-centered
NO
NO
Competitioncentered YES
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Marketing Management
Product Orientation Competitive Intelligence Competitor Orientation
YES
Customer Orientation Market Research Market Orientation Paul Dishman, Ph.D.