Chapter 22

Marketing: Pulling It All Together: The Strategic Marketing Process
 

AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
  • Explain how marketing managers allocate their limited resources, both in theory and in practice.
  • Describe three marketing planning frameworks: Porter's generic strategies, profit enhancement options, and market-product synergies.
  • Describe what makes an effective marketing plan and some problems that often exist with them.
  • Describe the alternatives for organizing a marketing department and the role of a product manager.
  • Schedule a series of tasks to meet a deadline using a Gantt chart.
  • Understand how sales and profitability analyses and marketing audits are used to evaluate and control marketing programs.
 

 

PULLING IT ALL TOGETHER:  THE STRATEGIC MARKETING PROCESS

 
MARKETING STRATEGY AT GENERAL MILLS:  SHARES, SEGMENTS, AND SYNERGIES
 
 

 

STRATEGIC MARKETING’S GOAL:  EFFECTIVE RESOURCE ALLOCATION
  1. •Maximizing Incremental Revenue Minus Incremental Cost
 

 

Sales Response Function
Relates the expense of marketing effort to the marketing results obtained.
 

 

FIGURE 22-1  Sales response function showing the situation for two different years
 

 

STRATEGIC MARKETING’S GOAL:  EFFECTIVE RESOURCE ALLOCATION
  • •Allocating Marketing Resources Using Sales Response Functions (cont)
  1. •A Numerical Example of Resource Allocation
 

 

STRATEGIC MARKETING’S GOAL:  EFFECTIVE RESOURCE ALLOCATION
  • •Allocating Marketing Resources in Practice
  1. §Share points
  • •Resource Allocation and the Strategic Marketing Process
 

 

Share Points
Percentage points of market share; often used as the common basis of comparison to allocate marketing resources effectively.
 

 

FIGURE 22-2  The strategic marketing process: . . .

THE PLANNING PHASE OF THE STRATEGIC MANAGEMENT PROCESS
  • •The Variety of Marketing Plans
  1. •Long-Range Marketing Plans
  2. •Annual Marketing Plans
 

 

FIGURE  22-3   Steps in developing marketing plan

Concept Check

 
1.  What is the significance of the S-shape of the sales response function in Figure 2201?
 
A:  This means that different levels of marketing effort will cause different rates of sales revenue growth.  In figure 21-1, and additional $1 million of marketing effort results in far greater increases of sales revenue in the midrange of the curve than at different ends.
 
 

 

Concept Check
2.  What are the main output reports from each phase of the strategic marketing process?
A:  Each phase has a different kind of output report:
•Planning phase—Marketing plans (or programs) that define goals and marketing mix strategies to achieve them
•Implementation phase—Memos or computer outputs that describe the outcomes of implementing the plan.
•Control phase—Corrective action memos, triggered by comparing results with plans.
 

 

Concept Check
3.  What are two kinds of marketing plans?
 
A:  Long-range marketing plans and annual marketing plans.
 

 

THE PLANNING PHASE OF THE STRATEGIC MANAGEMENT PROCESS

 
  • •Marketing Planning Frameworks:  The Search for Growth
  1. §Cost leadership strategy
  2. §Differentiation strategy
  3. §Cost focus strategy
  4. §Differentiation focus strategy
 
 

 

Generic Business Strategy

 
Strategy that can be adopted by any firm, regardless of the product or industry involved, to achieve a competitive advantage.
 

 

Cost Leadership Strategy

 
Using a serious commitment to reducing expenses that, in turn, lowers the price of the items sold in a relatively broad array of market segments.
 
 

 

Differentiation Strategy

 
Requires innovation and significant points of difference in product offerings, brand image, higher quality, advanced technology or superior service in a relatively broad array of market segments. 
 
 

 

Cost Focus Strategy

 
Involves controlling expenses and, in turn, lowering prices, in a narrow range of market segments.
 
 

 

Differentiation Focus Strategy

 
Using significant points of difference in the firm’s offerings to reach one or only a few market segments.
 
 

 

FIGURE 22-4  Porter’s four generic business strategies

THE PLANNING PHASE OF THE STRATEGIC MANAGEMENT PROCESS

 
  • •Marketing Planning Frameworks:  The Search for Growth (cont)
  1. •Profit Enhancement Options
 
 

 

FIGURE 22-5  Profit enhancement options for increasing a firm’s profits

 

THE PLANNING PHASE OF THE STRATEGIC MANAGEMENT PROCESS

 
  • •Marketing Planning Frameworks:  The Search for Growth (cont)
  1. §Market-product concentration
  2. §Market specialization
  3. §Product specialization
  4. §Selective specialization
  5. §Full coverage
 
 

 

Synergy

 
The increased customer value achieved through performing organizational functions more efficiently.
 
 

 

FIGURE 22-6  Market-product grid of alternative strategies for a lawnmower manufacturer

 

FIGURE 22-7  An ideal merger for Great States to obtain full market-product coverage

Concept Check
 
1. Describe Porter's four generic business Strategies

A:  With cost leadership strategy, a firm tries to drive down expenses, say through manufacturing or supply-chain improvements, in order to lower its prices of items sold in many market segments; With cost leadership strategy, a firm tries to drive down expenses, say through manufacturing or supply-chain improvements, in order to lower its prices of items sold in many market segments ; With cost leadership strategy, a firm tries to drive down expenses, say through manufacturing or supply-chain improvements, in order to lower its prices of items sold in many market segments; With cost leadership strategy, a firm tries to drive down expenses, say through manufacturing or supply-chain improvements, in order to lower its prices of items sold in many market segments. 

 

 

 

Concept Check
2.  What are four alternative ways to increase a firm’s profits when considering product enhancement strategies?
A:  Answer: There are four profit enhancement option strategies:  (1) Market penetration involving selling more present products to present markets, (2) product development involving selling new products to present markets, (3) Market development involving selling present products to new market segments, and (4) Diversification involving selling new products to new market segments.
 

 

Concept Check
3.  Where do (a) marketing synergies and (b) R&D-manufacturing synergies appear in a market-product grid framework?
A:  In a market-product grid:
  • •Market synergies run horizontally across the rows.  It is efficient for marketing to sell new products or services in its existing market segments. 
  • •R&D and manufacturing synergies run vertically down the columns because it is efficient for R&D and manufacturing to provide existing products and services to new market segments.
 

 

THE PLANNING PHASE OF THE STRATEGIC MANAGEMENT PROCESS
  • •Some Planning and Strategy Lessons
  1. •Guidelines for an Effective Marketing Plan
  2. •Problems in Marketing Planning and Strategy
  3. •Big G Plus Pillsbury:  Increasing Emphasis on Synergies and Segments
  4. •Balancing Value and Values in Strategic Marketing Plans
 

 

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Is Planning or Implementation the Problem?
 

 

FIGURE 22-8  Results of good and bad marketing planning and implementation

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Increasing Emphasis on Marketing Implementation
  • •Improving Implementation of Marketing Programs
  1. •Communicate Goals and the Means of Achieving Them
 

 

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Improving Implementation of Marketing Programs (cont)
  • •Have a Responsible Program Champion Willing to Act
  • §Product or Program Champion
  • •Reward Successful Program Implementation
  • •Take Action and Avoid “Paralysis by Analysis”
 

 

Product or Program Champion
A person who is able and willing to cut red tape and move the program forward.
 

 

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Improving Implementation of Marketing Programs (cont)
  • •Foster Open Communication to Surface the Problems
  • •Schedule Precise Tasks, Responsibilities, and Deadlines
  • §Action item list
 

 

Action Item List
An aid to implementing a market plan, consisting of three columns:  (1) the task, (2) the name of the person responsible for completing the task, and (3) the date by which the task is to be finished.
 

 

 

FIGURE 22-9  Tasks to complete a term project

FIGURE 22-10  Gantt chart for scheduling the term project

Concept Check
1.  Why is it important to include line operating managers in the planning process?
A:  When plans are made by planners without involving the operating managers, the latter fell little ownership in executing the plans, which may simply gather dust in files.

 

 

Concept Check
2.  What is the meaning and importance of a product champion?
A:  This is a person willing to cut red tape and move the program forward.  The importance lies in “making the program happen”--getting it implemented.
 

 

 

Concept Check
3.  Explain the difference between sequential and concurrent tasks in a Gantt chart.
A:  In sequential scheduling, certain tasks must be completed before subsequent tasks can be completed.  In concurrent scheduling, several tasks can be worked on at the same time.
 

 

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Organizing for Marketing
  1. •Line versus Staff and Divisional Groupings
 

 

FIGURE 22-11  Organization of a Pillsbury business unit, showing two product or brand groups

THE IMPLEMENTATION
PHASE OF THE STRATEGIC MARKETING PROCESS
  • •Line versus Staff and Divisional Groupings (cont)
  1. §Line positions
  2. §Staff positions
  3. §Product line groupings
  4. §Functional groupings
  5. §Geographical groupings
  6. §Market-based groupings
  • •Role of the Product Manager

 

 

Line Positions
People in line position, such as senior marketing managers, have the authority and responsibility to issue orders to the people who report to them, such as product managers.
 

 

Staff Positions
People in staff positions have the authority and responsibility to advise people in the line positions but cannot issue direct orders to them.
 

 

Product Line Groupings
Organizational groupings in which a unit is responsible for specific product offerings.
 

 

Functional Groupings
Organizational groupings such as manufacturing, marketing, and finance, which are the different business activities within a firm.
 

 

Geographical Groupings
Organization groupings in which a unit is subdivided according to geographical locations.
 

 

Market-Based Groupings
Organizational groupings that utilize specific customer segments.
 

 

FIGURE 22-12  Units with which the product manager and product group work

THE CONTROL PHASE OF THE STRATEGIC MARKETING PROCESS
  • •The Marketing Control Process
 

 

FIGURE 22-13  The control phase of the strategic marketing process

THE CONTROL PHASE OF THE STRATEGIC MARKETING PROCESS
  • •The Marketing Control Process (cont)
  1. •Measuring Results
  2. •Taking Marketing Actions
  1. §Sales component analysis
 

 

Sales Analysis
A tool for controlling marketing programs using sales records to compare actual results with sales goals and to identify strengths and weaknesses.
 

 

Sales Component Analysis
A tool for controlling marketing programs that traces sales revenues to their sources, such as specific products, sales territories, or customers. 
 

 

Profitability Analysis
A means of measuring the profitability of the firm’s products, customer groups, sales territories, channels of distribution, and order sizes.
 

 

 

Marketing Audit
A comprehensive, unbiased, periodic review of the strategic marketing process of a firm or strategic business unit.
 

 

FIGURE 22-14  Marketing audit questions

Concept Check
1.  What is the difference between a line and a staff position in a marketing organization?
A:  Line positions have the authority and the responsibility to issue orders to those who report to them.  Staff positions have the authority and responsibility to advise people in line positions but cannot issue orders to them.
 

 

Concept Check
2.  What are four groupings used within a typical marketing organization?
A:  Product-line, functional, geographical, and market-based groupings
 

 

Concept Check
3.What two components of the strategic marketing process are compared to control a marketing program?
A:  Actual results are compared with planned goals for the marketing program
 

 

 

 

Chapter 22 - Summary

 

  1. Marketing managers use the strategic marketing process to allocate their resources as effectively as possible. Sales response functions help them assess what the market's response to additional marketing effort will be.
  2. The planning phase of the strategic marketing process usually results in a marketing plan that sets the direction for the marketing activities of an organization. There are two kinds of marketing plans: long-range and annual.
  3. Three useful frameworks to improve marketing planning are (a) Porter's generic business strategies, (b) profit enhancement options, and (c) market-product synergies.
  4. An effective marketing plan has measurable, achievable goals; uses facts and valid assumptions; is simple, clear, and specific; is complete and feasible; and is controllable and flexible.
  5. The implementation phase of the strategic marketing process is concerned with executing the marketing program developed in the planning phase and has achieved increased attention the past decade.
  6. Essential to good scheduling is separating tasks that can be done concurrently from those that must be done sequentially. Gantt charts are a simple, effective means of scheduling.
  7. Organizing marketing activities necessitates recognition of two different aspects of an organization: (a) line and staff positions and (b) product line, functional, geographical, and market-based groupings.
  8. The product manager performs a vital marketing role in both consumer and business product firms, interacting with numerous people and groups both inside and outside the firm.
  9. The control phase of the strategic marketing process involves measuring the results of the actions from the implementation phase and comparing them with goals set in the planning phase. Sales analyses, profitability analyses, and marketing audits are used to control marketing programs.
 

 

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