Samenvatting: (Strategic) Marketing Planning
Lecture 1.2 – Overview
1. Overview
First principles
1) All customers differ
2) All customers change
3) All competitors react: even if you manage the first and the second principles
4) All resources are limited: we live in a world where there are limited budgets. It is important that
you chose the dimension that is the most profitable
Brief history of Marketing Strategy
• Strategy arose from a military context: “The forces available must be employed with such skill that
even in the absence of absolute superiority, relative superiority is attained at the decisive point” -
Karl von Clausewitz, On War (1832)
• Management scholars added two elements to apply the strategy concept to business: the need to
make the differential advantage sustainable and the idea that the objective of any business strategy
is to enhance firm performance (60 and 70s)
• Marketers argue that it must be from the perspective of the customer (90s)
• Thus, five key elements are critical to marketing strategy:
1) Leads to a differential advantage over competitors
2) Sustainability: if it is easy to copy your product, in one year they will be remaking your product.
Therefore patents were invented to protect your product
3) Ability to enhance firm performance
4) Customer perspective
5) Guides decisions and actions ex. Promotions will increase your sales but decrease your
margin
Customer-centricity is Key to an Effective Marketing Strategy
• Customer ultimately determines strategy’s success or failure
• The shift in focus from firm to customer by incorporating the customer’s perspective represents a
natural, long-term progression in strategy
o Economists tend to take an industry-level perspective, and management scholars adopt a firm-
centric perspective, but customer is an even smaller unit of analysis
o Helps explain variation in firms’ performance by addressing smaller and smaller units of analysis
Customer-centricity. Why so important? Nowadays, customers are really connected. Threating one
customer badly can have a bad influence on your strategy --> negative WOM effect
Example: Philips (Netherlands)
• Netherlands-based technology company
• Over past 125 years, Philips innovated its marketing strategy many times to remain competitive
• Company builds a strong presence in each market to understand the local market and customer
desires
• Innovates continually; created “technology incubator” to develop new technologies
• Customer-centric view → success
Example: Amazon (US)
• First online book retailing – 1995
• Put customer first!
• Always innovate and enter new markets
,• Add several new business models:
o Amazon Marketplace (B2B)
o Prime video (video streaming)
o Audible (audio books)
o Amazon Music (music streaming)
o Amazon Fresh (food retailing)
o Amazon Web Services (cloud computing)
▪ 2006 for other companies
▪ 2012 for private users
• Most profitable business model is now AWS
o Originally created for internal reasons
Differences Between Corporate Strategy and Marketing Strategy
What is marketing strategy key to Long-Term Financial Performance?
• Large amount of research documents its impact on financial performance, but many people don’t
realize the scope of influences on sales and profits
o Grow market size (new products and services, lower prices)
o Grow share (better products and services than competition, higher loyalty to retain,
and/or steal customers with acquisition strategies)
o Better prices and margins (improve loyalty, brand image, relationships, products,
targeting of high margin customers)
o Reduce costs (WOM, brand, relationships, retain with loyalty)
Notes:
Not every household had a car, 30 years ago, if you earned some money, you needed a car. But
nowadays, it is only half of the population that has a car because you can also go by train or by bike.
You can increase the margin by branding (price above your production costs)
Marketing can also reduce your costs: launch a product ex. New Harry potter book, people were waiting
the night before for the shop, it came in the newspaper, so you don’t need to pay for the advertising.
Mainly intrested in the profit
Different channels, if you do one action it will influence other channels.
,Example of Chain Ratios: Apple (US)
• Launch of Apple’s iPhone catalyzed explosive growth of smartphone market
• Market grew from 109 million units than 486 million in 5 years
• iPhone’s market share increased from 3.3% to 18.4%.
• Apple maintains premium price
Notes:
Apple introduced a product and had only 3% of the market share of mobile phones
But then the share increased although the price increased.
By just making people custom to some features that are not easily to copy, you get some competition.
Example: Flixbus (Germany)
• Before 2013 intercity bus connections in Germany were prohibited
o Protect monopoly of railway company (Deutsche Bahn)
• After 2013 growth in market size due to regulatory change
o Low budget segment
• Entry by many competitors
o Flixbus, MeinFernbus, ADAC Postbus, IC Bus
o Market consolidation: Mergers and market exists
• Competitive Advantage: Price and customer friendly application (Technology)
• Now entering other markets: Flixtrain (railway)
• Let’s see how it will further develop… Will there be Flixplane (airline)?
2. First Principles of Marketing Strategy
Why a First Principles Approach to Marketing Strategy?
• Managers are being overwhelmed with more and more analysis tools, processes, and research
techniques, but hard to know when to apply each one
• Why not just use “case” examples?
o Hard to find a case example for every marketing problem
o Often what works for “case firm” will not work for your firm because:
, ▪ Different customers
▪ Different stage of product or industry lifecycle
▪ Different competitive situation
▪ Different resources
▪ Thus, a key requirement for making good marketing decisions is to identify underlying
factors on which the decisions depend
Marketing Principles: aligning Key Marketing Decisions with the First Principles of Marketing Strategy
A. First principle #1: all customers differ
• For most products and services customers vary widely on desires/needs
o Over 9000 mutual fund options, Grocery stores carry 60,000+ SKUs
o Even for “commodities” (e.g., coffee, water)
• Thus, firms are targeting smaller & smaller segments
o Mass marketing → niche marketing → 1-to-1 marketing
o Competitive race as firms target smaller segments
o Retail (Galeria Inno/Kaufhof vs. Decathlon), cars (Model T vs. today)
• Why smaller segments?
o Matches inherent customer desires (real, perceived)
o Faster response to customer trends and changes
o Technology enabled (more economical to target/customize)
o Only limited by tradeoff in efficiency (cost) versus benefit of better match to need (solution)
Example: Godiva (Belgium)
• Addressed MP #1 by developing different products for different consumers
• 3 reasons people buy chocolate
1) To gift to others
2) To share with a group
3) To eat by themselves
• Expanded product line to meet all these needs (individually wrapped candies for candy dishes,
fondue baskets for sharing with a group, packaged candy bars for people to eat themselves)
• Sales have increased by more than 10% per year for many years
Lecture 1.2 – Overview
1. Overview
First principles
1) All customers differ
2) All customers change
3) All competitors react: even if you manage the first and the second principles
4) All resources are limited: we live in a world where there are limited budgets. It is important that
you chose the dimension that is the most profitable
Brief history of Marketing Strategy
• Strategy arose from a military context: “The forces available must be employed with such skill that
even in the absence of absolute superiority, relative superiority is attained at the decisive point” -
Karl von Clausewitz, On War (1832)
• Management scholars added two elements to apply the strategy concept to business: the need to
make the differential advantage sustainable and the idea that the objective of any business strategy
is to enhance firm performance (60 and 70s)
• Marketers argue that it must be from the perspective of the customer (90s)
• Thus, five key elements are critical to marketing strategy:
1) Leads to a differential advantage over competitors
2) Sustainability: if it is easy to copy your product, in one year they will be remaking your product.
Therefore patents were invented to protect your product
3) Ability to enhance firm performance
4) Customer perspective
5) Guides decisions and actions ex. Promotions will increase your sales but decrease your
margin
Customer-centricity is Key to an Effective Marketing Strategy
• Customer ultimately determines strategy’s success or failure
• The shift in focus from firm to customer by incorporating the customer’s perspective represents a
natural, long-term progression in strategy
o Economists tend to take an industry-level perspective, and management scholars adopt a firm-
centric perspective, but customer is an even smaller unit of analysis
o Helps explain variation in firms’ performance by addressing smaller and smaller units of analysis
Customer-centricity. Why so important? Nowadays, customers are really connected. Threating one
customer badly can have a bad influence on your strategy --> negative WOM effect
Example: Philips (Netherlands)
• Netherlands-based technology company
• Over past 125 years, Philips innovated its marketing strategy many times to remain competitive
• Company builds a strong presence in each market to understand the local market and customer
desires
• Innovates continually; created “technology incubator” to develop new technologies
• Customer-centric view → success
Example: Amazon (US)
• First online book retailing – 1995
• Put customer first!
• Always innovate and enter new markets
,• Add several new business models:
o Amazon Marketplace (B2B)
o Prime video (video streaming)
o Audible (audio books)
o Amazon Music (music streaming)
o Amazon Fresh (food retailing)
o Amazon Web Services (cloud computing)
▪ 2006 for other companies
▪ 2012 for private users
• Most profitable business model is now AWS
o Originally created for internal reasons
Differences Between Corporate Strategy and Marketing Strategy
What is marketing strategy key to Long-Term Financial Performance?
• Large amount of research documents its impact on financial performance, but many people don’t
realize the scope of influences on sales and profits
o Grow market size (new products and services, lower prices)
o Grow share (better products and services than competition, higher loyalty to retain,
and/or steal customers with acquisition strategies)
o Better prices and margins (improve loyalty, brand image, relationships, products,
targeting of high margin customers)
o Reduce costs (WOM, brand, relationships, retain with loyalty)
Notes:
Not every household had a car, 30 years ago, if you earned some money, you needed a car. But
nowadays, it is only half of the population that has a car because you can also go by train or by bike.
You can increase the margin by branding (price above your production costs)
Marketing can also reduce your costs: launch a product ex. New Harry potter book, people were waiting
the night before for the shop, it came in the newspaper, so you don’t need to pay for the advertising.
Mainly intrested in the profit
Different channels, if you do one action it will influence other channels.
,Example of Chain Ratios: Apple (US)
• Launch of Apple’s iPhone catalyzed explosive growth of smartphone market
• Market grew from 109 million units than 486 million in 5 years
• iPhone’s market share increased from 3.3% to 18.4%.
• Apple maintains premium price
Notes:
Apple introduced a product and had only 3% of the market share of mobile phones
But then the share increased although the price increased.
By just making people custom to some features that are not easily to copy, you get some competition.
Example: Flixbus (Germany)
• Before 2013 intercity bus connections in Germany were prohibited
o Protect monopoly of railway company (Deutsche Bahn)
• After 2013 growth in market size due to regulatory change
o Low budget segment
• Entry by many competitors
o Flixbus, MeinFernbus, ADAC Postbus, IC Bus
o Market consolidation: Mergers and market exists
• Competitive Advantage: Price and customer friendly application (Technology)
• Now entering other markets: Flixtrain (railway)
• Let’s see how it will further develop… Will there be Flixplane (airline)?
2. First Principles of Marketing Strategy
Why a First Principles Approach to Marketing Strategy?
• Managers are being overwhelmed with more and more analysis tools, processes, and research
techniques, but hard to know when to apply each one
• Why not just use “case” examples?
o Hard to find a case example for every marketing problem
o Often what works for “case firm” will not work for your firm because:
, ▪ Different customers
▪ Different stage of product or industry lifecycle
▪ Different competitive situation
▪ Different resources
▪ Thus, a key requirement for making good marketing decisions is to identify underlying
factors on which the decisions depend
Marketing Principles: aligning Key Marketing Decisions with the First Principles of Marketing Strategy
A. First principle #1: all customers differ
• For most products and services customers vary widely on desires/needs
o Over 9000 mutual fund options, Grocery stores carry 60,000+ SKUs
o Even for “commodities” (e.g., coffee, water)
• Thus, firms are targeting smaller & smaller segments
o Mass marketing → niche marketing → 1-to-1 marketing
o Competitive race as firms target smaller segments
o Retail (Galeria Inno/Kaufhof vs. Decathlon), cars (Model T vs. today)
• Why smaller segments?
o Matches inherent customer desires (real, perceived)
o Faster response to customer trends and changes
o Technology enabled (more economical to target/customize)
o Only limited by tradeoff in efficiency (cost) versus benefit of better match to need (solution)
Example: Godiva (Belgium)
• Addressed MP #1 by developing different products for different consumers
• 3 reasons people buy chocolate
1) To gift to others
2) To share with a group
3) To eat by themselves
• Expanded product line to meet all these needs (individually wrapped candies for candy dishes,
fondue baskets for sharing with a group, packaged candy bars for people to eat themselves)
• Sales have increased by more than 10% per year for many years
