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.