1、MARK 512 Marketing Strategy and PolicyJC Salvacruz2MARK 512 Marketing Strategy and PolicyJC Salvacruz3Process of PLANNING and EXECUTING the 4Psvideas, goods, and services to create exchanges that satisfy individual and organizational objectivesMARK 512 Marketing Strategy and PolicyJC Salvacruz4Exter
2、nal Market EnvironmentMARK 512 Marketing Strategy and PolicyJC Salvacruz5PlacePromotionPriceProductC Quality Features Style / Options Brand name Packaging Services/parts Guarantees / Warranty List price Discounts Allowances Credit terms Payment period Rental / lease Advertising Personal selling Sale
3、s promotion Point-of-purchasematerials Publicity Middlemen: types and number Location Inventory levels TransportationMARK 512 Marketing Strategy and PolicyJC Salvacruz6 not a production orientationv“consumers will favor products that are available and highly affordable, thus, management should focus
4、 on improving production and distribution efficiency” not a product philosophyv“consumers will favor products that offer the most quality, performance, and featuresMARK 512 Marketing Strategy and PolicyJC Salvacruz7 or a selling conceptv“consumers will not buy enough of the products unless the organ
5、isation undertakes a large-scale selling and promotion effort”MARK 512 Marketing Strategy and PolicyJC Salvacruz8 continuous collection of informationvabout customers needs, andvcompetitors capabilities sharing this information across departments using the information to create customer value.MARK 5
6、12 Marketing Strategy and PolicyJC Salvacruz9 ValuevCustomers form expectations regarding valuevMarketers must deliver value to consumersCostsBenefitsValue concerns the difference between the benefits a customer sees from a firms market offering and the costs of obtaining those benefitsThe customers
7、 view of costs and benefits is not just limited to economic (or even rational) considerations-and a low price may NOT result in superior value.MARK 512 Marketing Strategy and PolicyJC Salvacruz10Provided by marketingProvided by production with guidance of marketingTaskTimePlacePossessionUtilityValue
8、 that comesfrom satisfyinghuman needsFormTypes of Utility and How They Are ProvidedUtility is the benefit or customer value received by uses of a product.MARK 512 Marketing Strategy and PolicyJC Salvacruz11 Developing a customer- or market-centric orientation rather than product- or factory-focus. C
9、reating an employee culture that is responsive to customers and changing market conditions Measuring profits at the market level and to track market-based performance metrics.MARK 512 Marketing Strategy and PolicyJC Salvacruz12 Measuring profits at the market level and to track market-based performa
10、nce metrics.ObjectiveMeasuresTargetsInitiativesCUSTOMERHow do our customers see us?ObjectiveMeasuresTargetsInitiativesLEARNING andGROWTHCan we continue to improve and create value?ObjectiveMeasuresTargetsInitiativesFINANCIALHow do we look to shareholders?ObjectiveMeasuresTargetsInitiativesINTERNAL B
11、USINESSPROCESSWhat must we excel at?VisionandStrategyObjectiveMeasuresTargetsInitiativesCUSTOMERHow do our customers see us?ObjectiveMeasuresTargetsInitiativesLEARNING andGROWTHCan we continue to improve and create value?ObjectiveMeasuresTargetsInitiativesFINANCIALHow do we look to shareholders?Obje
12、ctiveMeasuresTargetsInitiativesINTERNAL BUSINESSPROCESSWhat must we excel at?VisionandStrategyVisionandStrategyA Balanced Scorecard Perspective on PerformanceSource: A Management Guide for the deployment of strategic metrics, RatheonMARK 512 Marketing Strategy and PolicyJC Salvacruz13Production orie
13、ntationCompany sells what it canmake; primary focus on functional performance and cost.Narrow.Based on production and distribution costs.Technical research; focus on product improvement and cost cutting in the production process.Business activity or functionProduct offeringProduct linePricingResearc
14、hMarketing orientationCompany makes what it can sell; primary focus on customers needs and market opportunities.Broad.Based on perceived benefits provided.Market research; focus on identifying new opportunities and applying new technology to satisfy customer needs.MARK 512 Marketing Strategy and Pol
15、icyJC Salvacruz14What happens when we underwhelm our customers?Adopted from Best, Roger J. Market-Based Management: Strategies for Growing Customer Value and Profitability. Pearson-Prentice Hall, 2005.MARK 512 Marketing Strategy and PolicyJC Salvacruz15 Customer Satisfaction Index (CSI) derived from
16、 customers ratings of their overall satisfaction on a six-point scale.Very DissatisfiedModerately DissatisfiedSomewhat DissatisfiedSomewhat SatisfiedModerately SatisfiedVery Satisfied(0)(20)(40)(60)(80)(100)MARK 512 Marketing Strategy and PolicyJC Salvacruz16MARK 512 Marketing Strategy and PolicyJC
17、Salvacruz17 Sales Market share Customer satisfactionMARK 512 Marketing Strategy and PolicyJC Salvacruz18MARK 512 Marketing Strategy and PolicyJC Salvacruz19MARK 512 Marketing Strategy and PolicyJC Salvacruz20Unhappy Customers Only 4% of dissatisfied customers complain Over 90% of unhappy customers w
18、ont be back Each dissatisfied customer tells nine other peopleHappy Customers Retaining customers costs one-fifth to one-sixth less Satisfied customers are willing to pay more Each happy customer will tell five people about good serviceMARK 512 Marketing Strategy and PolicyJC Salvacruz21MARK 512 Mar
19、keting Strategy and PolicyJC Salvacruz22 Understand what different customers are worth to you Understand what your valuable customers need from youEnables you to: Concentrate on those with the best potentialMake sure you satisfy their needsBe careful:The word Value works both ways-What is their Valu
20、e?-What do they Value?MARK 512 Marketing Strategy and PolicyJC Salvacruz23Not all customers are equalWho is a “good” customer?-Large account-Loyal-Always pays on time-High life-time valueMARK 512 Marketing Strategy and PolicyJC Salvacruz24 Losing a customer means losing the entire stream of purchase
21、s that the customer would make over a lifetime of patronageSupermarket: $50,000 lost per sulking customer-$100/week x 50 weeks per year x 10 yearsLexus $600,000 in lifetime salesTaco Bell $12,000MARK 512 Marketing Strategy and PolicyJC Salvacruz25Value at Acquisitionvrevenues (application fee + init
22、ial purchase)vLess costs (marketing + credit check + account set up)Annual Value (project for each year of relationship)vrevenues (annual fee + sales + service fees + value of referrals)vLess costs (account management + cost of sales + write-offs)Net Present ValuevDetermine anticipated customer rela
23、tionship lifetimevSelect appropriate discount figurevSum anticipated annual values (future profits) at chosen discount rateCustomer Equity is total sum of NPVs of all current customersMARK 512 Marketing Strategy and PolicyJC Salvacruz26MARK 512 Marketing Strategy and PolicyJC Salvacruz27You own a te
24、nnis club where the annual membership fee is $300. vThe average club member spends about $100 dollars a year at the club (in balls, drinks, snacks, etc.).vThe annual cost of these miscellaneous goods (the balls, drinks, snacks, etc) to you is $40 per player.vOn average people who join a tennis club
25、have a playing career of 6 years.vHistorically, 80% of the members in a given year rejoin the following year.vThe discount rate of money is 8% a year.Based on this information, what is the life-time value of a customer?MARK 512 Marketing Strategy and PolicyJC Salvacruz285544332208.1360$8.0+08.1360$8
26、.0+08.1360$8.0+08.1360$8.0+08.1360$8.0+360$=CLV1159$=MARK 512 Marketing Strategy and PolicyJC Salvacruz29MARK 512 Marketing Strategy and PolicyJC Salvacruz30 As satisfied customers increases, so does loyalty There is a tremendous difference between the loyalty of satisfied customers and completely s
27、atisfied customers.LoyaltyHighLowLocal telephoneAirlinesPersonalComputersHospitalsAutomobilesSatisfactionCompletelydissatisfiedCompletelysatisfiedNon-competitiveZoneHighlycompetitiveZoneMARK 512 Marketing Strategy and PolicyJC Salvacruz31CLI = (Customer Satisfaction) x (Customer Retention) x (Custom
28、er Recommendation)MARK 512 Marketing Strategy and PolicyJC Salvacruz32CommTech is a $454 million business that manufactures a wide range of imaging and data transmission products for medical, industrial, and business-to-business markets. Five years ago, a new management team was put in place after s
29、everal years of disappointing performance. The new management team reorganized the business and designed programs to lower unit costs, control overhead expenses, and facilitate better management of assets. The new management team also put in place an extensive sales training program that enabled the
30、 sales force to improve its sales productivity from $1.4 million to $2.2 million per salesperson.MARK 512 Marketing Strategy and PolicyJC Salvacruz331.How would you rate the companys performance over the last 5 years?2.What aspects of the companys performance were most impressive?3.Should the compan
31、y follow the same strategy for the next 5 years?CommTechs 5-Year Financial PerformanceMARK 512 Marketing Strategy and PolicyJC Salvacruz34MARK 512 Marketing Strategy and PolicyJC Salvacruz35Financial Performance MetricsCostProductivityProfitabilityMarketing Performance MetricsMarketCompetitivenessCu
32、stomerMARK 512 Marketing Strategy and PolicyJC Salvacruz36Should the company drop the casual shorts and knitted sweaters product lines?MARK 512 Marketing Strategy and PolicyJC Salvacruz37Net Profits (before taxes) = Revenues ExpensesProfits casual shorts = Sales Revenues CGS Op Expenses= $10M - $8M
33、- $3M= -$1MMARK 512 Marketing Strategy and PolicyJC Salvacruz38Profits casual shorts = SRev CGS Mktg & Sales Exp Other Op Exp- $1M = $10M - $8M - $1M - $2M- $1M = $1M - $2MMARK 512 Marketing Strategy and PolicyJC Salvacruz39Profits (before tax) = (All Product NMCs) - OEMARK 512 Marketing Strategy an
34、d PolicyJC Salvacruz40MARK 512 Marketing Strategy and PolicyJC Salvacruz41MARK 512 Marketing Strategy and PolicyJC Salvacruz42MARK 512 Marketing Strategy and PolicyJC Salvacruz43 Companies often talk about their strategies. What does strategy mean? A fundamental pattern of present and planned object
35、ives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.MARK 512 Marketing Strategy and PolicyJC Salvacruz44A Model for Marketing Strategy FormulationSOURCE: E. Raymond Corey, Marketing Strategyan OverviewMARK 512 Marketing Strategy
36、and PolicyJC Salvacruz45PlaceProductPricePromotionBrandType of Brand:Individual or familyManufacturer or dealerProductIdeaPhysicalgood/serviceFeaturesQuality levelAccessoriesInstallationInstructionsProduct lineWarrantyNone, full, orlimitedPackageProtection,Promotion,or bothTarget MarketMARK 512 Mark
37、eting Strategy and PolicyJC Salvacruz46Augmented ProductActual ProductCoreProductMARK 512 Marketing Strategy and PolicyJC Salvacruz47IntangibilityInseparabilityHeterogeneity (Variability)PerishabilityMARK 512 Marketing Strategy and PolicyJC Salvacruz48Brand Name Selection Brand SponsorshipBrand Deve
38、lopmentGood Brand Names:Suggest something about the product or its benefitsAre easy to say, recognize and rememberAre distinctiveAre extendableTranslate well into other languagesCan be registered and legally protectedMARK 512 Marketing Strategy and PolicyJC Salvacruz49Brand Name Selection Brand Spon
39、sorshipBrand DevelopmentManufacturer (national) brandsv.created and owned by the producerPrivate (store) brandsv.created and owned by the resellervCostly to establish and promotevHigher profit marginsLicensed brandsvName and character licensing has grownCo-brandingGenericMARK 512 Marketing Strategy
40、and PolicyJC Salvacruz50Brand Name Selection Brand SponsorshipBrand DevelopmentPRODUCT CATEGORYNewLINEEXTENSIONNEW BRANDSMULTIBRANDSBRANDEXTENSIONExistingExistingbrand nameNewbrand nameMARK 512 Marketing Strategy and PolicyJC Salvacruz51Profit+ $ 0IntroductionGrowthMaturityDeclineTimeSalesMARK 512 M
41、arketing Strategy and PolicyJC Salvacruz52Total IndustryProfit+ $ 0 IntroductionGrowthMaturityDeclineTimeTotal IndustrySalesLowHighNegativeInnovatorsFewRapidly rising then slowing downLower than introHigh/peak profits, then starts to declineEarly adopters and early majorityGrowing no.of imitatorsPea
42、k sales; cyclicity sets inLowAverageMiddle/ late majorityMost number, then starts to declineDecliningFallingDecliningLaggardsFurther declineSalesPricesProfits(per unit)CustomersCompetitionCHARACTERISTICSMARK 512 Marketing Strategy and PolicyJC Salvacruz53 Product development Introduction Growth Matu
43、rity DeclineBegins when the company develops a new-product ideaSales are zeroInvestment costs are highProfits are negativeMARK 512 Marketing Strategy and PolicyJC Salvacruz54 Product development Introduction Growth Maturity DeclineLow salesHigh cost per customer acquiredNegative profitsInnovators ar
44、e targetedLittle competitionStrategies Product Offer a basic product Price Use cost-plus basis to set Distribution Build selective distribution Advertising Build awareness among early adopters and dealers/resellers Sales Promotion Heavy expenditures to create trialMARK 512 Marketing Strategy and Pol
45、icyJC Salvacruz55 Product development Introduction Growth Maturity DeclineRapidly rising salesAverage cost per customerRising profitsEarly adopters are targetedGrowing competitionStrategies Product Offer product extensions, service, warranty Price Penetration pricing Distribution Build intensive dis
46、tribution Advertising Build awareness and interest in the mass market Sales Promotion Reduce expenditures to take advantage of consumer demandMARK 512 Marketing Strategy and PolicyJC Salvacruz56 Product development Introduction Growth Maturity DeclineSales peakLow cost per customerHigh profitsMiddle
47、 majority are targetedCompetition begins to declineStrategies Product Diversify brand and models Price Set to match or beat competition Distribution Build more intensive distribution Advertising Stress brand differences and benefits Sales Promotion Increase to encourage brand switchingMARK 512 Marke
48、ting Strategy and PolicyJC Salvacruz57 Product development Introduction Growth Maturity DeclineDeclining salesLow cost per customerDeclining profitsLaggards are targetedDeclining competitionStrategies Product Phase out weak items Price Cut price Distribution Use selective distribution: phase out unp
49、rofitable outlets Advertising Reduce to level needed to retain hard-core loyalists Sales Promotion Reduce to minimal levelMARK 512 Marketing Strategy and PolicyJC Salvacruz58PricingobjectivesTargetMarketPricePromotionPlaceProductGeographicterm who paystransportationand howDiscounts andallowancesto w
50、hom andwhenPrice levelsover productlife cyclePriceflexibilityMARK 512 Marketing Strategy and PolicyJC Salvacruz59Overview of the Pricing ComponentPerformance Objectives( sales volume, profit)Setting Prices within and across Market SegmentsIndustry PricingValue-based PricingTransactional PricingPrice
