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iv

Preface

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Cataloguing-in-Publication Data Soundaian, S. (1953-2011). Strategic Marketing Management / by S. Soundaian. Chennai : MJP Publishers, 2012 xx, 344 p.; 24 cm. Includes References and Index. ISBN 978-81-8094-097-2 (pb.) 1. Management, Marketing 2. Marketing Management I. Title. 658.8 dc 22 SOU MJP 110

ISBN 978-81-8094-097-2 © Publishers, 2012 All rights reserved Publisher Managing Editor Project Editor Acquisitions Editor Editorial Team

MJP PUBLISHERS

New No. 5, Muthu Kalathy Street Triplicane Chennai 600 005 : : : : :

J.C. Pillai C. Sajeesh Kumar P. Parvath Radha C. Janarthanan B. Ramalakshmi, V.R. Padma, R. Hemalatha, S. Jeevasruthi, M. Gnanasoundari, B. Annalakshmi, Lissy John CIP Data : Prof. K. Hariharan, Librarian RKM Vivekananda College, Chennai.

This book has been published in good faith that the work of the author is original. All efforts have been taken to make the material error-free. However, the author and publisher disclaim responsibility for any inadvertent errors.

Preface v

TO My Dear Grandson Rithek Sankar

35()$&( A customer is the one who has the power to customise not only the strategies of the organisation but also the organisation’s objectives. Customers are not ordinary humans. As Gandhiji said, they are special people and the organisation depends on them; they do not depend on the organisation. These words of Gandhiji which were said many decades ago hold true even today and it will continue to do so. In those days, selling was the primary objective of business. Those were the days when most of the products were sold in a seller’s market. But things changed as the race for customers intensified. The customer became knowledgeable, thanks to the consumer movements around the world. Even though the consumer movement in India started at Ahmedabad long back, it could not pervade the entire country because there were few sponsors to take the idea to the grass roots, viz., the customers. As Indian literacy rate increased steadily barring a few states, the product awareness increased because of globalisation which brought to the fore the existence of organisations like the ISO as far as India is concerned. Now Indian customers know much better about the ISO, thanks to the propaganda made by companies in their advertisements. Today’s Indian consumers are very well aware of their value in the market and have started demanding things like better quality and lower price for their product. Thus the concept of marketing slowly replaced the concept of selling in India. Business in India has become comparable to that of developed countries because it is the Indian middle class that makes the chunk of the consumers in the country. The consumers in the low-income group of the country are not serious on their purchases, barring a handful of knowledgeable people among them. Marketing implied production of goods as per the desires of the customers. It studies the pulse of the consumers, and the companies react accordingly. Those companies which were able to do this process effectively grew fast and the image of such companies in the minds of the buyers reached Himalayan heights. The other companies which failed to study the minds of the customers could not grow fast and they still relied on the concept of selling. Therefore they lagged much behind, struggling for their very survival. This made them realise their mistakes, and now most of the Indian companies are pursuing policies based on total quality, and recognition of the value of a customer. Thus things changed in India too.

viii

Preface

The entry of multinational corporations into India and the entry of Indian companies in the global market have made a sea change in the domestic as well as international business scenario. The companies, be it Indian or foreign, have to follow the dictums of the customer. They found it not only from their experience but also from researches conducted by various experts and organisations like McKinsey, CII, and BCG. The global market is becoming nearer and nearer to all, be it consumer, seller, supplier, or a channel member. The IT revolution has converted Mother Earth into a global village. Today’s customer places orders via Internet and is able to get the goods needed within a very short period of time. Companies are also keeping up their promises by despatching the goods reliably to the unknown customers. The customers have begun placing trust on the companies as they receive the goods as per their instructions from the sellers. All these things have resulted in a battle among the manufacturers to bring the customers into their fold. This battle has made the customer more prominent. Now the customer is occupying the centre stage while the sellers act as the audience who study the behaviour of the players on the stage. The race among the companies forced them to think better ways of marketing their products and finally they came to the conclusion that customers must be given more prominence in their approaches towards them. This was realised long back in the developed countries like the U.S., and the result was strategic marketing management. American companies were the first to recognise the need for approaching the market from strategic management point of view. What is strategic marketing management? Strategic marketing management stresses strategic approaches to the challenge of marketing. The term strategy implies a long-term look on policies and objectives of the organisation. The past, present, and future environments play a vital role in the formulation of marketing strategies suitable for an organisation. By reading the environment, the companies are able to study the market more effectively, and thus, they are able to take proactive measures to win the minds of the customers. Take for example, a channel of distribution. Previously (in India even now, many companies are following the old ways only), channel members were selected on the basis of some criteria. Strategic marketing management suggests that the internal and external environment be considered first, and only those people who fit into the environments are selected as members of the supply chain. If a person’s policies are incompatible with the mission and vision of the organisation, then that person does not deserve to become a member of the supply chain. Thus strategic marketing management stresses the need for giving a fresh look at the marketing strategies of the organisation this way. In India, some of the companies have already started adopting the concept of strategic marketing and many others are yet to follow the new idea. However, very soon they will also realise the need for adopting the concept of strategic marketing. The market is becoming more and more complex, and marketers find it more difficult than ever before to study

Preface ix

buyers’ behaviour. In this environment, the concept of strategic marketing ought to be a valuable tool with the marketer. This book studies the concept of strategic marketing in a succinct manner so that even a beginner will be able to understand the idea of strategic marketing easily. This book offers useful information to students of management and marketers from companies of all sizes.

S. Soundaian

&217(176 1.

Essentials of Strategic Marketing Management

1

Introduction

2

What is Strategic Marketing Management

3

The Connection between Strategic Management and Strategic Marketing Management Resource-based View of Strategic Marketing

4 5

The Strategic Marketing Plan

7

Scope of Strategic Marketing Management

8

Key Terms Revisited

11

Information Technology and Strategic Marketing Management

Summary Review Questions References

2. The Process of Strategic Marketing Management

13 14 15 16

19

Introduction

20

Marketing Strategy Planning/Formulation

20

Environmental Scanning

22

Marketing Strategy

23

The Process of Marketing Strategy Implementation

32

The Challenge of Strategy Implementation

35

Strategic Marketing Decisions

38

Strategic Market Position

41

Performance Evaluation, Review and Control

Summary Review Questions References

3. Analysing Buyer Behaviour

41 48 49 50

53

Introduction

54

What is Buyer Behaviour

55

xii

Contents

Consumer Buying Process Need Identification Gathering Information Studying Products Making the Purchase Decision Using the Product Business Customer’s Buying Process Factors Influencing Buyer Behaviour Personal Factors Social Factors Psychological Factors What do Firms Learn from Research on Buyer Behaviour

57 57 57 60 60 60 60 62 62 63 65

4 . Strategic Marketing Factors for Growth

71

Summary Review Questions References

Introduction Strategic Marketing Factors Strategic Marketing Planning Marketing Communications (MARCOMs) Market Positioning Product Pricing Brand Management Winning Competitors Strategic Marketing Research Product Life Cycle Management Salesforce Management Summary Review Questions References

66 68 69 70 72 72 73 76 77 78 79 80 82 83 84 85 85 86

5. Strategic Marketing Planning

87

Introduction What is Planning What is Strategic Management What is Strategic Planning

88 88 89 90

Contents

What is Strategic Marketing Planning Executive Summary Corporate Vision and Mission Statements Statement of Corporate Objectives The SPIRIT of Performance Statement of Marketing Objectives Situation Analysis—Internal and External Marketing Portfolio Analysis Formulation of Marketing Strategies Marketing Action Plan Marketing Budget Marketing Strategy Performance Evaluation and Review

xiii

Summary Review Questions References

90 91 93 96 97 98 100 103 105 106 108 109 110 110 111

6. Situation Analysis

113

Introduction Situation Analysis and Strategic Marketing Management Process of Internal Situation Analysis Employee-oriented Situation Analysis Customer-oriented Situation Analysis Prospects-oriented Situation Analysis Distribution-oriented Situation Analysis Media-oriented Situation Analysis Management-oriented Situation Analysis External Situation Analysis and Strategic Marketing Management Physical Environment Socio-cultural Environment Legal Environment Economic Environment Technological Environment Political Environment Total Situation Analysis Summary Review Questions Reference

114 114 115 116 119 122 122 123 124 124 125 126 128 129 129 130 131 131 132 133

xiv

Contents

7. Market Segmentation and Product Positioning

135

Introduction

136

Need for Segmentation

136

What is Market Segmentation

137

Approaches to Segmentation

138

Common Bases for Segmentation

139

Geographic Segmentation

139

Demographic Segmentation

139

Psychographic Segmentation

140

Behavioural Segmentation

140

Features of Segments

141

The Segmentation Process

142

Segmentation

143

Targeting

144

Positioning

147

The Action Plan

147

Competitive Forces and Segmentation

149

Process of Product/Firm Positioning for Mass Marketing Firms

150

Process of Product/Firm Positioning for Differentiated Marketing Firms The Ten Commandments for Perfect Positioning

Summary Review Questions References

8. Strategic Product Pricing

151 152 153 154 155

157

Introduction

158

What is Strategic Pricing

159

When Does the Pricing Matter

160

Need for Strategic Pricing

162

The Strategic Pricing Process

164

Summary Review Questions References

9. The Distribution Strategy

168 169 169

171

Introduction

172

What is a Channel of Distribution

172

Contents

Need for Middlemen Middlemen as Suppliers Middlemen as Providers Factors Determining the Right Channel Market Factors Consumer Factors Product Factors Organisational Factors Multi-Channel Marketing Strategic Channel Alliances Vertical Marketing Systems Channel Management Summary Review Questions References

10. Product Life Cycle Management Strategies

Introduction Product Life Cycle Stages Revisited Introduction Stage Growth Stage Maturity Stage Decline Stage Strategic Product Life Cycle Management Decision to Develop a New Product Idea Generation Product Development Exit Strategies Summary Review Questions References

11. New Product Strategies

Introduction The Whole Product New Product Strategies Creating Value for the Customer Delivering the Right Quality

xv

174 175 175 177 177 178 178 178 178 180 182 184 185 186 187 189

190 190 191 192 192 193 193 194 196 196 200 202 203 204

205

206 206 208 208 209

S. Soundaian was Associate Professor in the Department of Business Administration of VHNSN College, Virudhunagar, Tamil Nadu. He obtained his post-graduate degree in Business Administration from PSG College of Technology, Coimbatore, and M. Phil. degree from Annamalai University through the FIP of the UGC in 1990. He had more than 33 years experience in teaching management subjects. He had been head of the Department of Business Administration for more than 12 years in VHNSN College. He served as Chairman of Board of Studies in Business Administration (UG) and as member of the Board of Studies in Business Administration (PG) of Madurai Kamaraj University. He has delivered guest lectures in various academic fora. He is the author of the books EXIM Management, Principles of Management and New Dimension of Management.

Strategic Marketing Management is a field of management which provides strategic approaches to the challenges of marketing. This book studies the concept of strategic marketing in a succinct manner so that even a beginner will be able to understand the idea of strategic marketing easily. This book offers useful information for students of management and for marketers from companies of all sizes. CONTENTS

 Essentials of Strategic Marketing Management

 New Product Strategies

 The Process of Strategic Marketing Management  Competition-winning Strategies  Analysing Buyer Behaviour  Advertising and Sales Promotion Strategies  Strategic Marketing Factors for Growth  Strategic Marketing Planning

 Salesforces Management Strategies  Strategic Brand Management

 Strategic Analysis  Marketing Segmentation and Product Positioning

 Creating of Competitive Advantages

 Strategic Product Pricing

 Strategic Services Management

 The Distribution Strategy

 Customer Relationship Management

 Product Life Cycle Management Strategies

 Index

For

 Commerce, Management and other Allied Courses  Business Executives, Entrepreneurs, Policy-Makers and Marketing Personnel

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