Strategic Marketing Management, 8th Edition

Book Preface

M
FOREWORD
arketing is both an art and a science. Many of its practitioners view marketing as an art, in which both intuition and creativity play a major role—a popular view, particularly in the advertising and sales spheres. Yet, if marketing plans were to be based primarily on intuition and creativity, they would be less effective and less credible to senior management and the company’s stakeholders and collaborators. What gives marketing its growing respect and impact is the development and use of a broad range of scientific and analytic tools. Over the past decades, the field of marketing has accumulated numerous tools. They help define goals and target markets, and facilitate positioning, differentiation, and branding. These tools, however, are usually scattered within marketing textbooks and fail to come together in a clear framework. Here lies the unique contribution of Strategic Marketing Management. This concise book presents the major tools and decision processes involved in planning and controlling marketing. The theory presented in this book is based on three cornerstone ideas: The first idea is that an offering’s ultimate success is determined by the soundness of the five key components of its business model: goal, strategy, tactics, implementation, and control, or the G-STIC framework. This framework is used to streamline a company’s marketing analyses and deliver an integrative approach to marketing planning. The second idea is that when developing its offerings, a company should strive to create value for three key market entities: target customers, the company, and its collaborators. An offering’s value proposition, therefore, should be optimized to deliver superior value to target customers in a way that enables the company and its collaborators to reach their strategic goals. These three types of value—customer value, collaborator value, and company value—comprise the 3-V framework, which is the foundation of strategic marketing analysis. The third idea is that a company’s marketing activities can be represented through the process of designing, communicating, and delivering value to its key constituencies. This framework offers a novel interpretation of the traditional 4-P approach to capture the dynamic nature of the value management process. Strategic Marketing Management applies these ideas to common business problems, such as increasing profits and sales revenues, developing new products, extending product lines, and managing product portfolios. By linking the theory to practical applications, this book offers a structured approach to analyzing and solving business problems and delineates a set of methodologies to ensure a company’s success in the market. Student testimonies are evidence that this book is very helpful for analyzing marketing cases in the classroom. This book is also very helpful to managers involved in the development and implementation of marketing plans. I further recommend it to senior executives to improve their understanding of what constitutes great marketing analysis and planning. A company’s main focus should be on maximizing value for the customer, the company, and its collaborators. This can be achieved by applying the strategic marketing framework outlined in this book.
Philip Kotler S. C. Johnson Distinguished Professor of International Marketing Kellogg School of Management Northwestern University

Agreat deal of confusion exists about the nature of marketing. This confusion stems from a more general misunderstanding of marketing as a business discipline. Managers often think of marketing in terms of tactical activities such as sales, advertising, and promotion. In fact, within many organizations marketing is thought of as an activity designed to support sales by helping managers sell more of the company’s products and services. The view of marketing as an activity designed to support selling is particularly common among organizations whose primary activity is selling large inventories of warehoused products. These companies often view the goal of marketing as “selling more things, to more people, more often, and for more money.” Many managers find this view appealing because it is intuitive, clear, and succinct. The problem with this view is that it does not describe marketing but a related business activity—sales. Indeed, selling more things, to more people, more often, and for more money is a definition of sales, not marketing. This raises the question of defining the boundaries between sales and marketing. Marketing as a business discipline is much broader than sales; it involves all aspects of developing the offering that is to be sold. The goal of marketing is to create a product that sells, not to sell a product. While marketing certainly can facilitate selling, this accounts for only a portion of its scope. Marketing is not only much broader than selling, it is not a specialized activity at all, writes Peter Drucker, business philosopher and writer, viewed by many as the founder of modern management science. It encompasses the entire business. The aim of marketing is to make selling superfluous. Marketing is also regarded by many organizations as equivalent to advertising and sales promotion. Thus, marketing is frequently defined as a process of communicating the value of a product or service to customers—which is, in fact, a better definition of advertising than of marketing. Advertising is only one aspect of marketing, albeit its most visible aspect. Marketing begins long before advertising is conceived: marketing guides the development of the offering that will later be advertised. In the same vein, marketing is often equated with sales promotions such as price discounts, coupons, and rebates. Yet, sales promotions aimed at nudging customers to purchase a company’s offerings reflect only one facet of marketing. This view of marketing as an activity that helps bring products to market is oblivious to marketing’s role in creating the very products that need to be promoted. Equating marketing with sales, advertising, and sales promotions share is a common misperception, whereby marketing is defined as a tactical activity. This myopic view of marketing as a tactical tool limited to creating awareness, incentivizing customers to make a purchase, and facilitating sales precludes companies from harnessing marketing’s full potential to develop a comprehensive business strategy. What is missing is the understanding of how sales, advertising, and promotions fit together and how they relate to the other tactical aspects of the marketing process, including product development, pricing, and distribution. More important, the view of marketing as a tactical tool does not address the question of what drives the individual marketing activities, how the company creates offerings for its target customers, and how these offerings create value for these customers and the company. Marketing is far more than tactics. In addition to specialized tactical activities that include sales, advertising, and sales promotion, marketing also involves strategic analysis and planning, which provide the foundation for the success of its tactical elements. As a strategic discipline, marketing is first and foremost about creating value; the different marketing tactics—such as sales, advertising, and promotion—are the means for achieving the company’s value-creation goals. Focusing on value recognizes marketing as a central business function that permeates all areas of an enterprise. This view of marketing as a fundamental business discipline is the basis of the strategic marketing theory outlined in this book

TABLE OF CONTENTS
Foreword
PART ONE THE BIG PICTURE

Marketing as a Business Discipline Marketing Strategy and Tactics The Marketing Plan
PART TWO MARKETING STRATEGY

Identifying Target Customers: Segmentation and Targeting Analysis Creating Customer Value: Developing a Value Proposition and Positioning Creating Company Value: Managing Revenues, Costs, and Profits Creating Collaborator Value: Managing Business Markets
PART THREE MARKETING TACTICS

Managing Products and Services Managing Brands Managing Price Managing Incentives Managing Communication Managing Distribution
PART FOUR MANAGING GROWTH

Gaining and Defending Market Position Managing Sales Growth Managing New Products Managing Product LinesPART FIVE STRATEGIC MARKETING WORKBOOKS

Segmentation and Targeting Workbook Business Model Workbook Positioning Statement Workbook
About the Author

Acknowledgments