strategy

1. Chapter 9
Marketing Strategy
Reformulation:
The Control Process

2. 9-2
In this chapter, you will
learn about…
1. Strategic Change
Sources of Strategic Change
Strategic Change: Threat or
Opportunity?
2. Operations Control
Nature of Marketing Cost Analysis
Product-Service Mix Control
Sales Control
Marketing Channel Control

3. 9-3
In this chapter, you will
learn about…
3. Considerations in Marketing Control
Problems versus Symptoms
Effectiveness versus Efficiency
Data versus Information

4. 9-4
Components of Marketing
Control
MARKETING CONTROL
Doing the right things
Operations Control
Strategic Control
Doing things right

5. 9-5
Remedial Actions under..
Improving effectiveness
in seeking opportunities
and mitigating threats
in the environment
Strategic
Control
Operations
Control
Focus on heightening
the marketing effort or
identifying ways to
improve efficiency

6. 9-6
Strategic Change
Change in the environment that
will affect the long-run well-being
of the organization

7. 9-7
Sources of Strategic
Change
Market Evolution
(Calcium)
Technological
Innovation
(DVDs)
Market
Redefinition
(Electronic
banking)
Change in
Marketing
Channels
(Internet)

8. 9-8
Dealing with Strategic
Change
Attempt to marshal the resources necessary
to alter its technical and marketing
capabilities to fit market-success
requirements.
Shift emphasis to product markets where
match between success requirements and
the firm’s distinctive competency is clear.
Leave the industry.

9. Goal of
Operations Control
To Improve the Productivity
of Marketing Efforts

10. Purpose of Marketing-
Cost Analysis
To trace, assign, or allocate costs to a
specified marketing activity or entity in a
manner that accurately displays the financial
contribution of activities or entities to the
organization. It is based on the principle that
certain costs are directly or indirectly
assignable to every market segment.

11. 9-11
Marketing Segment
Variables for Cost Analysis
Marketing
Channels
Elements of
Product-Service
Offering
Sales Divisions,
District, or
Territories
Type or Size
of Customers

12. 9-12
Issues in
Cost Allocation
How should costs
be allocated to
separate market
segments?
What costs should
be allocated?
Should all costs
be allocated to
market segments?

13. 9-13
Product-Service
Mix Control
Assessing the performance of the offerings
Sales (Kodak vs. Fuji)
Market Share (Goodyear)
Appraising financial worth of product-
service offerings
Assign costs to offerings (red-eye flight)
Contribution-margin approach (gas station)

14. Sales Control
Sales Control
Cost Aspects
Performance
Expenses
Sales-function
Administration
Behavioral Aspects
Sales Effort
Allocation of
Selling-Time

15. 9-15
Measures to Assess
Sales Performance
Gross Profit
Sales Revenue
Sales Call
Frequency
Penetration of
Accounts in
Sales Territory
Selling and Sales
Administration
Expenses

16. Example of Disaggregating Service
Station Costs for Product-Service Mix Control
($’000)
Department
Total Gasoline
General
Merchandise
Automobile
Service
Sales $4000 $2000 $1700 $300
COGS and Variable
Expenses
$3000 $1600 $1220 $180
Contribution Margin $1000 $400 $480 $120
Fixed Expenses $900 $500 $310 $90
Net Income $100 ($100) $170 $30

17. Performance Summary for Two Sales Reps
(1) (2) (3) (4) (5) (6) (7)
Account
Category
Potential
Accts in
Sales Dt.
Active
Accts.
Sales
Volume
Gross
Profit
Total
Calls
Selling
Expenses
Sales
Admin.
A 80 60 $48000 $14000 195 $18400
B 60 40 $44000 $15400 200 $17900
C 40 10 $25000 $12250 50 $11250
D 20 6 $33000 $16500 42 $9000
Totals 200 116 $150000 $58550 487 $56550 $10000

18. Selected Operating Indices of Sales
Performance
Account
Category
Sales Volume /
Active Account
(Col 3 Col 4)
Gross Profit /
Active
Account
(Col 4 Col 2)
Selling
Expenses /
Active Account
(Col 6 Col 2)
Contribution to
Sales Admin.
(Gross Profit –
Selling
Expenses)
A $800 $240 $307 -$67
B $1100 $385 $448 -$63
C $2500 $1225 $1125 $100
D $5500 $2750 $1500 $1250

19. Selected Operating Indices of Sales
Performance
Account
Category
Account
Penetration
(Col 2 Col 3)
Call
Frequency /
Active
Account
(Col 5Col 2)
Selling
Expenses per
Call
(Col 6 Col 5)
Gross Profit % /
Active Account
(Col 4 Col 3)
A 75% 3.25 $94.36 30%
B 67% 5.00 $89.50 35%
C 25% 5.00 $225.00 49%
D 30% 7.00 $214.29 50%

20. 9-20
Marketing Channel
Control
Assess Environmental and
Organizational Factors
Evaluate Profitability of
Marketing Channels

21. 9-21
Types of Costs in
Marketing Channel
Control
Include sales
expenses and
advertising
allowances
Order-
Getting
Cost
Include packaging
and delivery costs,
warehousing costs,
and billing costs
Order-
Servicing
Cost

22. Marketing Channel
Total
Furniture
Stores
Hardware
Stores
Home
Improvement
Stores
Sales $12000 $5000 $5000 $2000
COGS $8000 $3500 $3100 $1400
Gross Margin $4000 $1500 $1900 $600
Expenses
Selling $1000 $617 $216 $167
Advertising $750 $450 $150 $150
Pkg & Delivery $800 $370 $300 $130
Warehousing $400 $200 $150 $50
Billing $600 $300 $250 $50
Total Expenses $3550 $1937 $1066 $547
Net Income (Loss) $450 ($437) $834 $53
Disaggregated Costs of Furniture Improvement
Products for Marketing Channel Control ($’000)

23. 9-23
Considerations in
Marketing Control
Problems
versus
Symptoms
Effectiveness
versus
Efficiency
Data
versus
Information