CHAPTER THREE

21/02/2017

Strategic Marketing Management

 Strategic Marketing Management
 strategic management involves
planning, implementation, and
evaluation
 implies ongoing revision of the
marketing program, based upon
feedback
 consistent with the firm’s mission
statement and based upon clear goals
and objectives
 strategies suggest how firm will reach
its goals
 tactics relate to how strategies will be
implemented
 policies guide how the firm does
business
 PLANNING SEQUENCE
Strategic Company Planning
1. Define org. mission 3. Set org. objectives
2. Conduct situation analysis 4. Select appropriate strategies

Strategic Marketing Planning

1. Conduct situation anal. 4. Select target markets,
2. Develop marketing obj. measure market demand
3. Determine positioning and 5. Design strategic
differential advantage marketing mix

3-4

Annual Marketing Planning

Prepare annual marketing plan
for each major product and
company division

IMPLEMENTATION AND EVALUATION

 Strategic Marketing Planning
 strategic planning is based upon what
is happening in the firm’s environment
 matches resources with the
opportunities, changes, and
characteristics of the marketplace
 must be consistent with the firm’s
mission
 objectives must be actionable and
measurable
 formulation of objectives is often based
upon an analysis of strengths,
weaknesses, opportunities, and threats
(SWOT-to TOWS)
 The Planning Process
 involves carrying out a situational
analysis; often including a SWOT
analysis
 setting realistic marketing objectives
 determining strategies for positioning
and for gaining a differential advantage
on competitors
 selection of appropriate target market
segments and an assessment of market
demand
 identifying a strategic marketing mix
that will appeal to the target segments
 The Annual Marketing Planning

 short-term plan prepares for a firm’s

major functions
 summarizes strategies that will be used
to achieve specific objectives over the
year
 points out other activities that must be
performed in implementation and
evaluation
 outlines who is responsible and what
resources are to be made available
 represents a “road map” to guide
marketing activity over the coming year
 Contents of the Annual Plan
 executive summary  tactics --activities
 situation analysis -- to carry out
including resources strategies
 financial schedules
 objectives tailored
-- projections
to organizational
 timetable to guide
goals
implementation
 strategies relating  evaluation of
to segments and performance
marketing mix against goals
 Strategy approaches-Programming

 The design school: Strategy

formations as a conceptual
process
 The planning school: Strategy as a
formal process
 The positioning school: Strategy
formation as an analytical process
 Strategy approaches-Incrementalism

 The entrepreneurial school: Strategy

formations as a visionary process
 The cognitive school: Strategy
formation as a mental process
 The learning school: Strategy
formations as an emergent process
 The political school: Strategy
formations as a power process
 The cultural school: Strategy
formations as an ideological process
 The environmental school: Strategy
formation as a passive process
 The configuration school: Strategy
formation as an episodic process
 Strategic approaches summarised

 Programming, Prescriptive
(how strategy should be made)
 Incrementalism, Descriptive
(how strategy gets made)
Competing Views of the Future-See next slide

Incrementally similar Radically different

Past and
present

16
Past Now Future

Extrapolate from past

to plan for future Future
Can’t extrapolate
• The future can either be broadly similar to
the present (but perhaps a bit bigger or
smaller) or it can be radically different. If
the future is likely to be similar then you
can extrapolate forward a few years and
get a fairly clear picture of what a sector
might look like, making planning relatively
straightforward.
• However, if the future is likely to be radically
different from the present then planning is a lot
harder.
• It needs a different set of skills, including scenario
planning.
• The Emerging Themes Unit is asking you to find
something in your sector that will make it radically
different in the future – a breakpoint.
• You then have to use your judgement to work
through the potential impacts (or scenarios) to
identify which is the most likely, and then comment
on what organisations should do about it.
 Definitions of Strategy-Contd

 The term “strategy” is intended to focus on the

interdependence of the adversaries’
decisions and on their expectations about
each other’s behavior”
 “Strategy can be defined as the
determination of the basic long-term
goals and objectives of an enterprise,
and the adoption of courses of action
and the allocation of resources
necessary for carrying out those goals.”
 “The pattern or plan that integrates an
organization’s major goals, policies, and
action sequences into a cohesive whole. A
well formulated strategy helps to marshal and
allocate an organization’s resources into a
unique and viable posture based on its
relative internal competencies and
shortcomings, anticipated changes in the
environment , and contingent moves by
intelligent opponents.” (James Brian Quinn,
Logical Incrementalism)
 Definitions of Strategy

….is the development of a clear picture of the

direction an organisation wants to go in,
coupled with a well-thought out plan of how to
steer the organisation in the right
direction………...Needham et al, 1997
…it is a course of action aimed at ensuring that the
firm will achieve its objectives by matching its
internal resources and skills with the
environmental opportunities and risks it faces
 The concept of corporate strategy

 "Strategy is the pattern of decisions in a

company that determines and reveals its
objectives, purposes, or goals, produces the
principle policies and plans for achieving
those goals"
 The strategy process should be a rational
and conscious planning activity, in which
formulation and implementation are carried
out sequentially
 The logical activity of planning is preferable
to the "muddling through" of incrementalism
 Definitions contd

 "A strategy is the pattern or plan

that integrates an organization's
major goals, policies and action
sequences into a cohesive whole"

James Brian Quinn

Definition Contd…

 ……..involves  ….determination of
matching effectively the basic long term
the business’ goals and objectives,
competences the adoption of a
(knowledge, expertise course of action,and
and experience) and the allocation of
resources with the resources necessary
opportunities and for carrying out these
threats created by the goals… A.E.
marketplace - Michael Chandler, 1962
Porter
The Role of Strategy In Business is to Generate and
Sustain Value via the Linkages Between Position,
Resources, and Organization

Positioning

Resources
& Capabilities Organization
 Positioning

 Scope of the Firm:

– Geographic Scope

– Product-market Scope: Choice of businesses

(corporate portfolio analysis)

– Product Market Positioning within a business

– Vertical integration decisions

 Resources

 Tangible Resources
– e.g., physical capital

 Organizational Capabilities
– e.g., routines and standard operating procedures

 Intangible Resources
– e.g., trademarks, “know-how”
 Organization

 Structure
– Formal Definition of authority
– Conflict Resolution

 Systems
– Rules, Routines, Evaluation and rewards

 Processes
– Informal communication, networks, recruitment
The Elements of Strategic Problem-Solving

 Strategy is applicable to business

within defined boundaries.
 There are specified direct competitors
within the defined demand area, while
Indirect competition is usually ignored
or covered by the concept of price-
cross elasticity of demand.
 Strategy unfolds over a sequence of time
periods.
 Market share has intrinsic value. Past
sales levels influence subsequent
customer buying and costs reduce with
single-period volume and accumulated
experience.
 Competitors differ in market share,
accumulated experience, production
capacity and resources. Competitors are
unequal, identified and positioned.
 Main Elements of a Strategy

 Fundamental issues involving direction

to take
 Big decisions
 Holistic picture
 Long term planning (3-10 years
typically)
 Rooted in the outside world (need to
understand markets, opportunities,
changes, trends and external threats)
 Product or service mix info required
 Market information required
 Complex decisions
 Uncertainty
 Needs to be sensitive and flexible to
change
 Often involves trade offs
 Key Characteristics Of Strategic Decisions-
Recapped
 Important;

 Typically, under some Uncertainty;

 Involves Alternatives, Consequences, and Choice;

 Significant Commitment of Resources; and

 Not Easily Reversible.

 Example from British Airways
Vision: To be the world’s favourite airline
Mission: To set new industry standards in customer
service and innovation, deliver the best financial
performance and evolve from being an airline to a world
travel business with the flexibility to stretch its brand in
new business areas
Strategy
 Maintain a pace of quality, innovation and service
delivery that keep us ahead of the competition
 Keep costs firmly under control
 Create marketing alliances where beneficial or if there is
sufficient return on capital, by investing in other airlines
 Example from Starbucks

Vision: To become the replacement for bars as social centres

Mission: Establish Starbucks as purveyors of finest coffee in the world
while maintaining our uncompromising principles as we grow
Strategy
 Moving into new markets - new types of products, geographic
regions, new types of customers - open coffee houses in airports;
introduce ice-cream into their product portfolio; provide coffee to
airlines; sell products from web-site
 Finding news ways of delivering products or service - partnerships,
acquisitions - partnerships with Barnes & Noble; alliance with
Canadian bookstores Chapters; partnerships in Japan and China;
develop fair trade partnerships
 Divesting or selling off parts of the business - converting debentures
into stock
 What Strategy is Not…….

……..in order to understand what it is

not, we need to look at how strategy fits
into the bigger picture…….
 The Bigger Picture - EFQM Model
Vision or Guiding Philosophy
what we want to be

Core Values and Beliefs Strategy

who we want to be the way we are

going to achieve it
Mission
Our purpose and the
scope of our work

Critical Success Factors (CSFs)

Key Performance Targets
what success will look like-
Indication (KPIs)
a balanced scorecard of results

Core Processes
People Resources
how success will be
achieved

Process Management
 The EFQM model

The EFQM model shows how it all fits

together
…….from vision, strategy and mission
through to the elements you need to have in
place to make it happen - including ways of
measuring, the resources and the processes
and systems to support the business in
achieving its strategy
 EFMQ Model
Vision or Guiding Philosophy
what we want to be
Vision
Core Values and Beliefs Strategy
Futuristic and inspiring view of
who we want to be the way we are
going to achieve it
what an organisation can become
Mission
Our purpose and the Long term aspiration
scope of our work

Critical Success Factors (CSFs)

Usually expressed in the future
Key Performance what success will look like
- Targets tense
Indication (KPIs)
a balanced scorecard of results

Core Processes
People Resources
how success will be
achieved

Process Management
Mission
Essential purpose of an
organisation
Reason why an organisation exists
Usually expressed in the present
tense
Vision - Futuristic and inspiring view of what
an organisation can become. Long term
aspiration. Usually expressed in the future
tense e.g. Starbucks - to become the
replacement for bars as social centres
 EFQM Model
Vision or Guiding Philosophy
what we want to be
Next step is to understand the
Strategy
strategy - how the organisation
Core Values and Beliefs
who we want to be the way we are intends to ensure that it gets
going to achieve it
Mission there….
Our purpose and the
scope of our work

Critical Success Factors (CSFs)

Key Performance what success will look like
- Targets
Indication (KPIs)
a balanced scorecard of results

Core Processes
People Resources
how success will be
achieved

Process Management
Examples of what can be in a
strategy
 Move into new markets X, Y and Z
 Find news ways of delivering products
or service
 Divest or sell off parts of the business
Once vision and mission are known, the
next step is to understand the strategy -
how the organisation intends to ensure
that it gets there
Once vision and mission are known, the
next step is to understand the strategy -
how the organisation intends to ensure that
it gets there
 Andrews strategy model
Resource Corporate Management
analysis capabilities values

Strengths
Strategic Strategic New strategy
Current Weaknesses
alternative decision ready to
strategy Opportunities
s making implement
Threats 03.01.01

Environmental Market Social

scan opportunities responsibilities

Strategi 2, 2001 vinter

The fine art of crafting strategy
Though Henry Mintzberg has much to say about how others see
strategy, it's less easy to capture what he thinks about it himself

Unrealized
strategy Realized
03.01.01
strategy

Strategi 2, 2001 vinter

Strategic Marketing Management: Defined

 Strategic marketing Management

involves the careful analysis of an
organisation's environment, its
competitors and its internal strengths
in order to develop a sustainable plan
of action, which will develop the
organisation's competitive advantage
and maximise it within given resource
availability.
 What Is Strategic Marketing Management
About?
 Sustainable competitive advantage occurs when a firm
implements a value-creating strategy of which other
companies are unable to duplicate the benefits or find it
too costly to imitate.

 An important basis for sustainable competitive

advantage is the development of resources and
capabilities.

 Core competencies are resources and capabilities

(often related to functional-level skills) that serve as a
source of competitive advantage for a firm over its rivals.
Strategic Planning/Mgmt

Strategic
Planning/Mgmt The managerial process of
creating and maintaining a fit
between the organization’s
objectives and resources and
evolving market opportunities.

The goal is long-term

profitability and growth.
Notes:
1.Strategic planning creates and maintains a
fit between the organization’s resources
and objectives and the evolving market
opportunities. The goal is to sustain and
increase long-run profitability and growth.
Strategic decisions require long-term
commitments of resources.
1.Strategic errors can threaten a firm’s survival, but a good plan can
help protect and grow the firm.
2.Examples of strategic decisions:
* Sears purchase of Lands’ End
* Reebok’s decision to stop competing with Nike in the hard-core
sports market and instead focus on being the top shoe brand for
fashion-forward consumers.
* McDonald’s decision to offer more healthful foods
* S.C. Johnson’s introduction of Shout Color Catchers

Discussion/Team Activity:
1.Discuss strategic planning decisions of other companies.
2.Discuss why strategic planning is important for these companies.
Strategic Marketing Management:
Practical Quiz

What is the organization’s main activity?

How will it reach its goals?

Notes:
How do companies go about strategic
marketing planning? How do employees
know how to implement the long-term goals
of the firm?
The answer is a marketing plan.
 A Conceptual Framework for a Market-driving Strategy

A conceptual framework for a market-driving strategy

Source: Carrillat et al. 2004, modified
The Marketing Strategy Triangle
Technological Environment

Other
Customers market
Target
segments segments

Value Value

Competitors
Product/Servic
e
Economic Social
Differentiation
Environment Environment
Mgmt/Planning at Different Levels
 The Three/Four Distinct levels of Strategy in a
Commercial Context
 Network
 Corporate strategy: this deals with the
allocation of resources among the various
businesses of divisions of an enterprise.
 Business strategy: this exists at the level of the
individual business or division, dealing primarily
with the question of competitive position.
 Functional level strategy: this is limited to the
actions of specific functions within specific
businesses.
Strategic Planning/Mgmt

Marketing Plan

A written document that acts as a

guidebook of marketing activities
for the marketing manager.
Levels of strategy

Network Alliance I
Network II

level Corporation Y
Business B Corporation T Corporation X Corporation Z

Business L

Corporation X
Corporate Business A
Level
Business B Business C

Business Business B

Level Finance
HRM
R&D

Marketing
Operations
&sales

Functional
Marketing & Sales
Level Product
Price

Promo
Place
Strategi 2, 2001
vinter
 Corporate
Headquarters

Strategic
Strategic Strategic
Business Unit 2
Business Unit 1 Business Unit 3
(e.g., Lodging and
(e.g., Travel Services) (e.g., Real Estate)
Foodservice)

Human
Marketing Operations Resources Accounting

Unit Unit Unit Unit Unit Unit Unit Unit

Level Level Level Level Level Level Level Level
 The Levels of Strategy

Corporate
Corporate - General Electric Headquarters

Division A Division B Division C

Business - Home
Appliances R&D R&D R&D

HR HR HR

Functional - e.g., Finance Finance Finance

Production Production Production Production

Mktg/Sales Mktg/Sales Mktg/Sales

 Corporate Mission

Identification of SBUs Portfolio Analysis

SWOT

SBU Mission
and Strategies

Positioning

Functional Strategies
and Plans
The Strategic Marketing Mgmt Process
 Where are we now?  Analyses-Audit

 Where do we want to  Decisions-

go? formulation of
strategies
 How do we get  Decision/Actions
there?

 How do we know if  Actions-

we got to where we Implementation &
wanted to go? Control
Where are we now? Stage One-Marketing Audit
and Capability Analysis
 The starting point in the process of strategic and
marketing analysis involves a detailed marketing
audit and review of marketing effectiveness.
 Aimed to show us:
– The organisation’s current market position;
– The nature of environmental opportunities
and threats; and
– The organisation’s ability to cope with the
demands of this environment.