Strategic Marketing This Page Intentionally Left Blank Strategic Marketing In the Customer Driven Organization Frank Bradley University College Dublin Some images in the original version of this book are not available for inclusion in the eBook . Copyright 2003 John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England Telephone (+44) 1243 779777 Email (for orders and customer service enquiries): [email protected] Visit our Home Page o n www.wileye urope.com o r www.wiley.com All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP, UK, without the permission in writing of the Publisher. 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Other Wiley Editorial Offices John Wiley & Sons Inc., 111 River Street, Hoboken, NJ 07030, USA Jossey-Bass, 989 Market Street, San Francisco, CA 94103-1741, USA Wiley-VCH Verlag GmbH, Boschstr. 12, D-69469 Weinheim, Germany John Wiley & Sons Australia Ltd, 33 Park Road, Milton, Queensland 4064, Australia John Wiley & Sons (Asia) Pte Ltd, 2 Clementi Loop #02-01, Jin Xing Distripark, Singapore 129809 John Wiley & Sons Canada Ltd, 22 Worcester Road, Etobicoke, Ontario, Canada M9W 1L1 Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Library of Congress Cataloging-in-Publication Data Bradley, Frank, 1942– Strategic marketing : in the customer driven organization / Frank Bradley. p. cm. Includes bibliographical references and index. ISBN 0-470-84985-1 (alk. paper) 1. Marketing – Management. 2. Marketing. I. Title. 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This book is dedicated to my wife and best friend, Breda, with love This Page Intentionally Left Blank Contents Preface xiii About the author xvii 1 Scope of strategic marketing 1 Understanding marketing – antecedents 2 Marketing and sales orientations 3 Strategic marketing concept 5 Internal marketing 7 Responsibility in marketing 8 Providing customer value in marketing networks 10 Sources of marketing advantage 13 Organizational resources and marketing capabilities 14 Strategic marketing effectiveness 15 Key marketing success factors 16 Marketing focus on customers 17 References 18 Part I Identifying and Selecting Customer Value 21 2 Focus on the customer 23 Relevance of a customer orientation 23 Consumer–organizational market continuum 24 Exchange relationships in marketing 26 Understanding consumer buyer behaviour 29 Stimulating buying behaviour 30 Cultural values and social influences 31 Involvement in buying behaviour 33 Nature of organizational buying 35 Complexity in organizational buying 35 Product complexity and commercial uncertainty 35 Buying process framework 37 References 40 [viii] Contents 3 Market segmentation and positioning 41 Portfolio analysis of product markets 41 Competitive business position of the organization 42 Attractiveness of markets 43 Market investment opportunities 43 Market segmentation 46 Market segmentation – theory and experience 46 Macro segmentation criteria 50 Micro segmentation criteria 51 Segmenting organizational markets 53 Selecting a target segment 54 Applying and extending segmentation analysis 55 Process of market positioning 57 References 61 4 Strategic market planning 63 Managerial framework for market planning 63 Strategic differentiation in the organization 65 Stages in marketing planning 65 Marketing objectives and performance 66 Marketing performance and financial objectives 68 Preparing the marketing plan 72 References 74 5 Obtaining customer information 75 Strategic and operational marketing information 75 Information on latent customer needs 76 Immediacy of information requirements 77 Converting data into knowledge 78 Information on market potential 79 Information on product and services 81 Information on marketing practices 83 Information on customers 85 Wealth effect in emerging markets 87 Sales forecasting 87 References 91 6 Competition in the business system 92 Marketing in the business system – customer acquisition and retention 93 Positioning in the business system 93 Marketing perspective of value added 95 Value of an organization’s resources 96 Strategic response to competition 99 Generic strategies 99 Business strategies 99 Time-based competition 103 Challenges in the business system 105 References 107 Contents [ix] Part II Providing the Value 109 7 Building competitive brands 111 Nature and significance of branding 111 Meaning of branding 112 Building equity in the brand 114 Branding added values 116 Building and communicating brand values 119 Managing brand extensions 122 Threats to branding 123 Branding decisions 126 Manufacturer brand decisions 126 Private-label brands 128 Generic brands 129 Brand and category management 129 Rise and fall of the brand manager 129 Prevalence of category management 130 Positioning the brand 130 Effective brand positioning 131 Repositioning of the brand 131 Relaunching the brand 132 References 133 8 Developing new products and services 134 Dimensions of the product 134 Core products and benefits 135 Role of product design 137 Innovation and evolution of markets 141 Special position of high technology products 142 Diffusion of innovation 143 New products as marketing innovation 146 New product-market decisions 148 New products and market share 148 Process of new product development 149 Idea generation and screening 150 Concept development and testing 151 Business and marketing analysis 151 Product market testing 152 Commercialization of a new product 152 New product development myopia 153 Traps in new product development 155 References 156 9 Managing the product through the life cycle 158 Innovation and product life cycle 159 Managing products through the life cycle 159 Stages in the product life cycle 160 [x] Contents Ideal product life cycle 164 Life cycle for frequently purchased products 166 Product category life cycle 167 Management implications of the life cycle 168 Expansion of business system 168 Managing the maturity stage 169 Managing the renewal stage 172 Managing cash flow 172 References 173 Part III Communicating the Value 175 10 Marketing communications 177 Marketing communications process 177 Common tasks in communications 178 Marketing communication objectives 179 Effect of marketing communications 180 Influence of marketing communications on the customer 181 Methods of marketing communication 183 Marketing communications as investment 184 Communicating through advertising 187 Deciding an advertising strategy 188 Communicating through publicity and public relations 189 Communicating through sponsorship 190 Sponsorship and self-image 191 Communicating through sales promotion 192 Complementary role of sales promotion 194 Extra costs and brand debasement 196 Permanent or temporary gain 197 Integrated marketing communications 197 References 198 11 Direct marketing and personal selling 200 Communicating through direct marketing 200 Building direct customer relationships 202 Components of direct marketing 204 Direct marketing process 205 Increasing customer loyalty 206 Applications of databases 207 Communicating through personal selling 210 Nature of personal selling 210 Sales objectives and tasks 210 Evolution of consultative selling 212 Process of selling 215 Sales conferences 216 Organization of the sales force 217 References 218 Contents [xi] Part IV Delivering the Value 219 12 Pricing strategies and tactics 221 Nature and significance of price 221 Prices, costs and values 222 Approaches to pricing 224 Influence of cost on price 225 Customer-oriented pricing 227 Strategic pricing 230 Pricing for market segments 231 Product line pricing 235 The pricing trap 237 Limits of pricing discretion 238 References 239 13 Marketing channels of distribution 240 Nature and function of channels of distribution 240 Multiple channels 241 Functions of marketing channels 242 Formulating a distribution strategy 245 Intensity of market coverage 245 Strategic goals for distribution 247 Selecting and motivating intermediaries 249 Evaluating distributors 250 Cost and efficiency in distribution 250 Total distribution cost analysis 251 Power conflict and co-operation 253 Managing channel conflict 253 Controlling the marketing channel