Shift from Consumer Behavior to Strategic Marketing

Level of analysis?
Consumer behavior: micro level Strategic marketing: macro level

Focus?
Consumer behavior: customer Strategic marketing: competitor

Duration?
Consumer behavior: short-term Strategic marketing: long-term

Organizational level
Consumer behavior: front-line marketers Strategic marketing: top-level marketers

STRATEGIC MARKETING
Basic Goal of Strategic Marketing Environmental Analysis (SWOT) Generic Competitive Strategies Portfolio Analysis Product/Market Expansion Grid

BASIC GOALS OF STRATEGIC MARKETING

Identifying a core competency Developing a sustainable competitive advantage Focusing on a long-term strategy Being proactive rather than reactive

CEOs top priorities

Of these following 10 issues, which should be the top priority for a CEO?
Talent acquisition Innovation Corporate brand and reputation Sustainability Investor relations Business growth Cost optimization Government regulation Customer relationships International expansion

ENVIRONMENTAL ANALYSIS (SWOT)

Marketers must analyze strengths and weaknesses for their company and their key competitors. Goal is to identify distinctive competencies that can be used for competitive advantage.

Fortunes Annual List of Most Admired Companies Fortunes methodology

Survey of executives Evaluate companies in their industry, but not their own company

Fortune focuses on 8 key attributes

Fortunes 8 attributes
Innovation Financial soundness Use of corporate assets Long-term investment People management Quality of management Social responsibility Quality of products/services

ENVIRONMENTAL ANALYSIS (SWOT)

Marketers must also analyze environmental opportunities and threats that could impact company
Political/Legal/Regulatory Economic Technological Societal Competitive

GENERIC COMPETITIVE STRATEGIES: Prof. Porter

Cost Leadership: lowest price in a broad market Differentiation: superior features in a broad market Niche or Focus: superior customer satisfaction in a narrow market

Which strategy will work?

Each of these 3 generic competitive strategies can be effective. In most industries you will find all 3 strategies represented by various competitors. If you dont, this might signal a market entry opportunity. Beware! Getting caught in the middle can be a recipe for failure.

THE NEED TO DIFFERENTIATE BRANDED PRODUCTS FROM PRIVATE-LABELS OR GENERICS

Companies that pursue a differentiation strategy often have to explain to consumers why their products are better than lower priced or generic competitors.

Linking Promotional Strategy and Competitive Strategy

Companies that follow a differentiation strategy usually invest heavily in promotional efforts (often advertising) to drive home their superior features and benefits.

THE LINK BETWEEN BRAND EQUITY AND DIFFERENTIATION

MOST COMPANIES THAT PURSUE A DIFFERENTIATION STRATEGY ARE ALSO ATTEMPTING TO BUILD BRAND EQUITY. BRAND EQUITY REPRESENTS THE INTRINSIC VALUE OF A BRAND. BRANDS WITH A HIGH DEGREE OF BRAND EQUITY USUALLY ARE WIDELY RECOGNIZED AND HAVE HIGHLY LOYAL CUSTOMERS.
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PORTFOLIO ANALYSIS
Most corporations have multiple product lines and strategic business units (SBUs). Challenge: How can you effectively manage these various units? Answer: You must manage these diverse units as a portfolio. Portfolio theory was first developed in finance.
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The Boston Consulting Groups Growth-Share Matrix

Market growth rate
20%18%16%14%12%10%8%6%4%2%0 10x

Stars

Question marks

?
2x 1.5x

5
Cash cow

?2

Dogs

8 6
4x

7
1x .5x .4x .3x .2x .1x
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Relative market share

MARKET SHARE RELATED TO RETURN ON INVESTMENT

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Cost Per Unit as a Function of Accumulated Production

$10Cost per unit
Current price B A T1 Experience curve

$8$6$4$2-

100,000 200,000

400,000 800,000
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Accumulated production

Product /Market Expansion Grid Product /Market Expansion Grid

Existing Products New Products

Existing Markets 1. Market 3. Product Penetration Development New Markets 2. Market 4. Diversification Development

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STRATEGIC MARKETING
Basic Goal of Strategic Marketing Environmental Analysis (SWOT) Generic Competitive Strategies Portfolio Analysis Product/Market Expansion Grid