Principles of Marketing LT3 PDF

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Summary

PRINCIPLES OF MARKETING LTSTRATEGIC MARKETING VS. TACTICALMARKETINGMARKETING STRATEGYᴥ A core strategy ᴥ Composed of market segmentation, targeting, and brand positioning – STPMARKETING TACTICS ᴥ More popularly known as the 4Ps of marketing (product, place, price, and promotions) ᴥ They are put toge...

Description

PRINCIPLES OF MARKETING LT3 STRATEGIC MARKETING VS. TACTICAL MARKETING MARKETING STRATEGY ᴥ A core strategy ᴥ Composed of market segmentation, targeting, and brand positioning – STP MARKETING TACTICS ᴥ More popularly known as the 4Ps of marketing (product, place, price, and promotions) ᴥ They are put together to influence consumers to buy the company’s brand rather than the competition’s.

Concept

Purpose

Activities

Strategic Marketing Thought process (Big Idea – Big Picture) To attain the company’s objectives Understanding: ᴥ Environment ᴥ Industry ᴥ Customers ᴥ Competition ᴥ Brand STP (Segmentation – Targeting – Positioning)

Tactical Marketing Taking action near term (How To) To execute the strategy Promoting selling to consumers

and the

Marketing Mix (4Ps for products or 7Ps for services, to include people, process and physical environment) Time-bound Timetable Timeless Absence Too much talking Blind action – without of the – Nothing gets Doing done having a plan Other Side Key Concepts

MARKETING is about value creation (serving customers better than competition) and value capture (profit maximization).

In order to do that, marketers follow a marketing process. ᴥ Marketing Analysis ᴥ Marketing Planning ᴥ Marketing Implementation ᴥ Marketing Control Marketing strategy formulation must begin by analyzing external factors of the business, focusing on seeking opportunities first rather than on the marketing mix. This looks into environmental analysis, assumptions and capability building that can help its ability to serve its market. MARKETING ENVIRONMENT ᴥ Includes the forces outside of marketing, consisting of macro-environment (national issues) and micro-environment (company issues), both of which can influence marketing decisions. ᴥ Macro: 3 popular frameworks are PESTLE trends, Industry Analysis, as well as Key Factors for Success. ᴥ Micro: a popular framework is the 6Cs. MACRO-ENVIRONMENT TOOL 1: PESTLE TRENDS 1. POLITICAL FACTORS (how and to what degree do government policies affect the economy) ᴥ Tax policy ᴥ Labor law ᴥ Environmental law ᴥ Trade restrictions ᴥ Tariffs ᴥ Political stability ᴥ Health ᴥ Education ᴥ Infrastructure 2. ECONOMIC FACTORS (the impact of a country’s financial indicators on how businesses operate and make decisions) ᴥ Economic growth – higher EG, more goods and services expressed in GNP or GDP ᴥ Interest rates – higher IR more interest expense to b e paid and higher cost of capital

- lowers the profitability of a firm and affects the extent a business grows and expands ᴥ Exchange rate – a higher foreign ER has two meanings: 1. exporters get more peso when they ship out goods while 2. imported products become more expensive to buy due to more peso for every dollar. ᴥ Inflation rate – Higher prices means higher IR, affecting the purchasing power, which will lead to, or warrant a wage increase. 3. SOCIAL FACTORS (how the demand for a company’s products and how firms should operate are affected by social demographics, attitudes, and opinions on issues like the following) ᴥ Careers ᴥ Culture ᴥ Education ᴥ Ethics ᴥ Health ᴥ Safety ᴥ Housing ᴥ Fashion and Lifestyle ᴥ Immigration ᴥ Diversity 4. TECHNOLOGICAL FACTORS (how technological aspects affect innovation, productivity, investment, and cost) ᴥ R&D ᴥ Automation ᴥ Technology incentives ᴥ Rate of technological change 5. LEGAL FACTORS (how the laws of a country can affect how companies adopt policies as to its operation, cost structure, and the demand for its products) ᴥ Discrimination Law ᴥ Consumer Law – “No return, no exchange” ᴥ Antitrust Law – fair playing field Employment Law – regularized after 6 months of service ᴥ Health and Safety Law

6. ENVIRONMENTAL FACTORS (ecological and environmental aspects that can affect businesses such as insurance, tourism, farming) ᴥ Weather ᴥ Climate and Climate Change TOOL 2: INDUSTRY ANALYSIS 1. Threat of New Entrants ᴥ Economies of scale ᴥ Product differentiation ᴥ Capital requirements – lowering of capital ᴥ Switching costs – ability to change suppliers ᴥ Access to distribution ᴥ Cost disadvantage independent of scale ᴥ Government policy 2. Threat of Substitutes 3. Rivalry Among Existing Competition Rivalry - most intense in a price war, followed by a promo war, which can significantly lower profitability. Rivalry among existing competition is considered high when prices are adjusted downward frequently. It is affected by the: ᴥ Number of major or equally balanced competition ᴥ Industry growth ᴥ Fixed costs ᴥ Product differentiation ᴥ Switching costs ᴥ Unused plant capacity or enlarged new capacity ᴥ Diversity of competition ᴥ Strategic stakes ᴥ Exit barrier 4. Bargaining Power of Customers ᴥ Volume purchase by customers ᴥ Buying a price vis-à-vis product cost ᴥ Number of suppliers in an industry ᴥ Actual or perceived differentiation ᴥ Switching costs ᴥ Threat of backward integration ᴥ Quality of the seller ᴥ Full information

ᴥ Seller’s ability to influence their customer’s purchasing decisions 5. Bargaining Power of Suppliers ᴥ Industry dominance ᴥ Availability of substitutes ᴥ Importance of buyer to seller ᴥ Importance of input to buyer ᴥ Product differentiation ᴥ Switching costs ᴥ Threat of forward integration TOOL 3: KEY FACTORS FOR SUCCESS AND SWOT KEY FACTORS FOR SUCCESS ᴥ Source document of Strength and Weakness analysis ᴥ One half of SWOT analysis ᴥ Also known as Logic of Industry (LOI) or Economics of Business (EOB) ᴥ Simply a blueprint composed of controllable and uncontrollable variables critical to the success of a firm that must be managed well, in order to attain its goals and outperform competition The word “Key” in the Key Factors for Success connoted a limited number so it is important to include only those that have a high impact to the industry and to the firm. To know if an item is a KFS or not, simply list down all variables that make the firm attain their KRAs in a particular market segment relative to competition, then assign a weight for each variable based on their relative importance with a cut-off score of 80%. Those within the first 80% are KFS while the rest are not. ᴥ Include similar products that can provide the same satisfaction to the consumers in considering a segment. ᴥ KFS must be reviewed periodically because not all rules will be the same in the future. ᴥ A breakthrough idea can “reinvent” the rules in an industry. ᴥ In looking at the LOS, never fear dominant players. ᴥ Strength of one is actually a weakness of another.

6Cs MICRO-ENVIRONMENT 1. COMPANY – Can indicate a plus for relative strength and a minus for relative weakness for each department’s performance. A weakness in a specific functional area means improvement projects are needed. ᴥ R&D ᴥ Sourcing ᴥ Purchasing ᴥ Production ᴥ Warehouse ᴥ Marketing ᴥ Operations ᴥ Sales ᴥ Credit ᴥ Order Processing ᴥ Delivery ᴥ Collection ᴥ Service 2. CUSTOMERS ᴥ Consumer markets – individual buyers who buy for their own use. ᴥ Business markets – organizational buyers who buy as input to their own products. ᴥ Government markets – government agencies that buy to produce public services. ᴥ International markets – buyers are from countries. ᴥ Reseller markets – organizational or individual buyers who buy or resell at a profit without adding anything to the product. 3. COMPETITION ᴥ Direct competiton – similar offerings from the perspective of customers ᴥ Indirect competition – offerings deemed as substitutes to another product or service 4. CHANNEL – Individuals or companies who buy and resell the company’s products to final buyers. ᴥ Distributors ᴥ Wholesalers ᴥ Retailers

ᴥ Direct sellers ᴥ Home TV Shopping ᴥ Online retailers 5. COMPLEMENTORS – Individuals or businesses who can help an organization understand, promote and/or sell its products or services. ᴥ Physical distribution – store and transport ᴥ Marketing agencies help understand and/or promote ᴥ Financial intermediaries – help give credit 6. COMMUNITIES – Public stakeholders where organization needs to be sensitive to their public opinions ᴥ Financial publics – can ease or hinder an organization’s access to credit ᴥ Media public – publish articles or create social media posts influencing customer’s opinions ᴥ National Government public – government laws can be created that can ease or restrict company’s actions ᴥ Local Government public – mayors or powerful councilors can create problem for uncooperative businesses ᴥ General public – attitude or change in attitude that can affect a company’s sales volume ᴥ Local publics – neighborhood and community groups who can question a company’s effect on the local area ᴥ Citizen-action publics – environmental or health groups can question the action of a company publicly ᴥ Employees – employed within an organization ᴥ Suppliers –employed to help an organization produce products or get specific jobs done

RIGHT TO WIN ANALYTICAL SEQUENCE PESTLE Trends Industry Analysis Key Factors for Success 6Cs

ᴥ Marketers must look outside of the firms to consider the effect of PESTLE trends to their marketing mix. ᴥ They can look at the industry they operate to understand where profitability can be compromised or grown. ᴥ Diving deeper into why industry winners are winners and why industry losers are losers ᴥ Key factors for success are used to understand the existing winning variables of the industry as well as using the LOI as basis to designing innovation of what to add or what to abandon when new industry rules are created. ᴥ The 3Cs of marketing is expanded into the 6Cs in order to analyze opportunities, as well as what may affect the company’s operations if attention is not given to one of the 6Cs. JOANNA FRONDA 1/21/19...