Marketing management introduction - unit i - EMBA - purbanchal university

Singa Lama
Faculty: Kantipur Valley College, Purbanchal University
Chairman/CEO: ICER Multiversity
Principal: Golden Gate Eng. Sec. School
Master Trainer: QUEST – Nepal
Chief Trainer: SCHeME – Nepal
International Council of Education & Research
ICER MULTIVERSITY
EMBA, Sem. II, Purbanchal University (Nepal)
604:
Marketing Management
www.facebook.com/singa.lama | singa_lama@yahoo.com
www.icernepal.blogspot.com | www.ggess.blogspot.com

Unit II: Strategic Analysis
1. Business Strategy and Sustainable
Competitive Advantage
2. Strategic Business Unit
3. Strategic Market Management
I. Development
II. Characteristics
III.Trends and needs
IV.Components of Strategic Market Management
V. Process of Strategic Market Management
Syllabus

1. Business Strategy &
Sustainable Competitive Advantage
• Marketing deals with identifying and meeting human and
social needs. One of the shortest definitions of marketing is
“meeting needs profitably.” Whether the marketer is
Procter & Gamble, which notices that people feel
overweight and want tasty but less fatty food and invents
Olestra; or CarMax, which notes that people want more
certainty when they buy a used automobile and invents a
new system for selling used cars; or IKEA, which notices
that people want good furniture at a substantially lower
price and creates knock-down furniture—all illustrate a
drive to turn a private or social need into a profitable
business opportunity through marketing.
Definition: Marketing

• AMERICAN MARKETING ASSOCIATION: Marketing
(management) is the process of planning and executing the
conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy
individual and organizational goals.
Definition: Marketing
One of the key factors in Barack Obama’s
victory in the 2008 U.S. presidential election
was a well-designed and well-executed
marketing program

• A business strategy describes how a particular business intends
to succeed in its chosen market place against its competitors. It
therefore represents the best attempt that the management can
make at defining and securing the future of that business. A
business strategy should provide clear answers to the
questions:
– What is the scope of the business (or offering) to which this strategy
applies?
– What are the current and future needs of customers and potential
customers of this business?
– What are the distinctive capabilities or unique competence that will
give us competitive advantage in meeting these needs now and in the
future?
– What in broad terms needs to be done to secure the future of our
business?
Definition: Business Strategy

Six Tests of Business Strategy
• It will be correctly scoped.
• It will be appropriately documented.
• It will address real customer needs.
• It will exploit genuine competencies.
• It will contribute to competitive advantage.
• It will lay the ground for implementation.

• The best business strategies are those which use the capabilities of the
firm to address customer needs in a way which leads to sustainable
competitive advantage. In practice, business strategies may have to
tolerate less lofty achievements than long-term sustainable advantage.
• The business strategy has to address the issue of competitive advantage
realistically in the context of that business. This may require an
admission that former competitive advantages are being eroded so that
the strategy is as much defensive as offensive.
• As John Kay (1999) has pointed out, businesses, like people, have to go
through good times and bad times. It is probably impossible to achieve
competitive advantage permanently and the excellent corporation that
can achieve a permanent and irreducible lead is a myth.
• The business strategy must describe what the basis of competition
is, how this basis is changing, and how the strategies take advantage of
these changes.

The 6 Keys To Real Sustainable Competitive Advantage
I. Real intellectual property
II. A dynamic product line, rather than a single product
III. Dramatic cost improvement for cause
IV. Proven team with inside relationships
V. Lock on the market or customer base
VI. Strong focus and differentiation
Summary
• Overall, a sustainable competitive advantage requires value-creating
products, processes, and services that cannot be matched by competitors
now, and plan content to maintain that position as you scale. Of course
all of this assumes you are in a big growing market, with adequate
resources, marketing, and great people to deliver. No one said it would
be easy!

• In business, a strategic business unit (SBU) is a profit center which
focuses on product offering and market segment. SBUs typically
have a discrete marketing plan, analysis of competition, and
marketing campaign, even though they may be part of a larger
business entity.
• An SBU may be a business unit within a larger corporation, or it
may be a business unto itself. Corporations may be composed of
multiple SBUs, each of which is responsible for its own profitability.
General Electric is an example of a company with this sort of
business organization. SBUs are able to affect most factors which
influence their performance. Managed as separate businesses, they
are responsible to a parent corporation.
• Companies today often use the word segmentation or division when
referring to SBUs or an aggregation of SBUs that share such
commonalities.
Definition: SBU

Definition: SBU
Four Strategies
1. Build: The objective here is to increase market share, even forgoing short-term
earnings to achieve this objective if necessary. Building is appropriate for question
marks whose market shares must grow if they are to become stars.
2. Hold: The objective in a hold strategy is to preserve market share, an appropriate
strategy for strong cash cows if they are to continue yielding a large positive cash
flow.
3. Harvest: The objective here is to increase short-term cash flow regardless of long-
term effect. Harvesting involves a decision to withdraw from a business by
implementing a program of continuous cost retrenchment. The hope is to reduce
costs faster than any potential drop in sales, thus boosting cash flow. This
strategy is appropriate for weak cash cows whose future is dim and from which
more cash flow is needed. Harvesting can also be used with question marks and
dogs.
4. Divest: The objective is to sell or liquidate the business because the resources can
be better used elsewhere. This is appropriate for dogs and question marks that are
dragging down company profits.

Definition
Strategic Market Management is:

a) Development
1. The Production Concept: One of the oldest concepts in business. It holds that
consumers prefer products that are widely available and inexpensive.
Managers of production-oriented businesses concentrate on achieving high
production efficiency, low costs, and mass distribution. This orientation
makes sense in developing countries such as China, where the largest PC
manufacturer, Legend (principal owner of Lenovo Group), and domestic
appliances giant Haier take advantage of the country’s huge and inexpensive
labor pool to dominate the market. Marketers also use the production concept
when they want to expand the market.
2. The Product Concept: proposes that consumers favor products offering the
most quality, performance, or innovative features. However, managers are
sometimes caught in a love affair with their products. They might commit
the “better-mousetrap” fallacy, believing a better product will by itself lead
people to beat a path to their door. A new or improved product will not
necessarily be successful unless it’s priced, distributed, advertised, and sold
properly.

a) Development
3. The Selling Concept: holds that consumers and businesses, if left alone, won’t
buy enough of the organization’s products. It is practiced most aggressively
with unsought goods—goods buyers don’t normally think of buying such as
insurance and cemetery plots—and when firms with overcapacity aim to sell
what they make, rather than make what the market wants. Marketing based on
hard selling is risky. It assumes customers coaxed into buying a product not
only won’t return or bad-mouth it or complain to consumer organizations but
might even buy it again.
4. The Marketing Concept: emerged in the mid-1950s41 as a customer-
centered, sense-and-respond philosophy. The job is to find not the right
customers for your products, but the right products for your customers. Dell
doesn’t prepare a perfect computer for its target market. Rather, it provides
product platforms on which each person customizes the features he or she
desires in the computer. The marketing concept holds that the key to achieving
organizational goals is being more effective than competitors in
creating, delivering, and communicating superior customer value to your target
markets.

a) Development
5. The Holistic Marketing Concept: Without question, the trends
and forces that have defined the first decade of the 21st century
are leading business firms to a new set of beliefs and practices.
“Marketing Memo: Marketing Right and Wrong” suggests
where companies go wrong—and how they can get it right—in
their marketing.
The holistic marketing concept is based on the development,
design, and implementation of marketing programs, processes,
and activities that recognize their breadth and
interdependencies. Holistic marketing acknowledges that
everything matters in marketing—and that a broad, integrated
perspective is often necessary.

b) Characteristics
Strategic Market Management is:

c) Trends
1. Value-based planning:
• combines mktg planning ideas & financial planning techniques > to assess
how SBU’s contribute to company stock
• value = financial return of strategic activity > cost of resources allocated
to that activity
2. Value-driven strategies:
• incorporates ethics, integrity, employee health & safety, environmental
safeguards with common corporate values such as
growth, profitability, customer service, & quality
• socially responsible & support sustainable development

d) Needs

e) Components of Strategic Market Management
1. Analysis of Current Situation
2. Opportunity Assessment
3. Target Markets
4. Goals
5. Strategies
6. Implementation Time Line
7. Marketing Budget

Process of Strategic Marketing Management
1. Planning: The first step is to perform a thorough SWOT analysis. The
results from this analysis should directly help in the formation of a firm's
strategy which will aim to minimize threats while maximizing on
opportunities as well as reveal new product and market opportunities
The second step in the planning phase takes a market-product approach and
involves goal and objective setting (Kerin-Hartley-Rudelius, 2007). This
begins with understanding the consumer's wants and needs and involves
conducting market research. From a strategic marketing perspective it is
important to identify critical issues and attitudes related to the product
amongst other things
The third and final phase of planning would be to decide on the marketing
process. In this step the marketing mix will also have to be set. This step
involves deciding on strategies the product, price, place and promotion (4 p's).
The end result of the planning phase is to set measurable and attainable goals
which can be measured in the control phase.

2. Implementation: The next step would be the implementation phase in which
all the planning begins to turn into action. Here the firm obtains resources
and designs the market organization which is then put into action. Schedules
are developed and the marketing programs are executed (strategy and tactics).
The product or service will now be available to the public, at the places and
prices decided upon in the planning stage. The implementation phase also
requires close monitoring to make sure necessary changes occur if internal or
external contingencies are affected (McFarland, 2001).
3. Control: The control phase involves comparing results against the goals and
benchmarks set in the planning phase. This is where the organization
evaluates its process, outcomes and consumer satisfaction (McFarland, 2001).
This will allow the firm to view the planning gap to see where the results
deviated from the plan. The organization can then act on the data to exploit
positive deviations while correcting the negative. This analysis and is
necessary for a firm to ensure that their marketing plan is moving in the
directions set out in the planning phase and critical for success in measuring
whether objectives were met.

Marketing management introduction - unit i - EMBA - purbanchal university

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