STRATEGIC MARKETING

What is Strategy?
Business Definition
Core Competencies
Integrative
Consistency of Approach

The Basics of Strategy
Business definition
_______________
Scope
Environment Analysis
Integration of activities
----------------------
Coordinate
Synergy
vision
Core competencies
---------------------------Competitive Advantage
Match
Resources implications
Strategy
----------------------
Major decisions
Long term direction
Consistency of approach
Corporate strategic plan (s)

Change -Shaping Strategy
Change is an accepted consequence of modern life
Organizations are subject to increasing levels of change
Cyclical change- repetitive and often predictable
1.What drives change?
2.How does change impact on our markets and business environment?
3.What is the result of change on the organizations strategy?

Strategy and Change
Driving Change
Political
Economic
Social
Technical
Result of change
Opportunity
Strategic Drift
Impact of Change
Volatility
Globalization
Intense competition
Re-define

Balanced Scorecard Approach
Financial Measures: How we are perceived by investors and shareholders
Customers: What the customers think about us?
Internal Activities: Check activities which deliver customer satisfaction. Identify gaps where organisation should outdo its competitors
Innovation and learning: Organisations need to improve and adapt.
Business activity as learning experience

Production Orientation
Product Orientation
Sales Orientation
Market Orientation
Societal Market Orientation
Customer-Driven
Role of marketing within strategy

The Production Orientation
Mass production, economy of scale and cost control
Available and affordable products
Improving production and distribution efficiency
Management looks for volume and production schedule
Packaging designed primarily to protect product
Minimal promotion and advertising, limited to raising awareness of the existence of the product
(Henry Ford's model T)- The Model T was the first automobile mass produced on moving assembly lines with completely interchangeable parts, marketed to the middle class segment.

Henry Ford said of the model T vehicle :
"I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one—and enjoy with his family the blessing of hours of pleasure in God's great open spaces."

Henry Ford said of the model T vehicle :
"I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one—and enjoy with his family the blessing of hours of pleasure in God's great open spaces."

The Product Orientation
The most quality, performance and features- innovation and design
A little or no effort is put into establishing what the customer wants
Marketing myopia- a dangerous route!
Management thinks product is so good that it will sell automatically

The Sales Orientation
Sales volume as the key determinant of success
Focus is aggressive selling persuades customer to buy
A short term perspective and not approach to relationship building
Management tries to create a demand for unwanted products
A wrong approach and high risks

The Market Orientation
Understanding and meeting customer
needs
Want of the market is considered
Long term relationships with customer
Seek to build loyalty and offer superior value

The Societal Market Orientation
Organization determines the needs and wants of the target market delivering the desired satisfaction in a way that it maintains or improves the consumer's and society's well being.
Pure marketing and societal marketing (Eg: fast food industry- Mac Donalds)

Achieving Market Orientation
Customer focused
Competitor focused
Integrate market into the business
Strategic vision
Realistic expectations

What Is Marketing Strategy
Analysing the business environment and defining
customer needs
Matching activities or products to customer segments
Implementing programs that achieve a competitive position
Marketing strategies- 3 Elements
Customer
Competitors
Internal Corporate Issue

The Basis of Marketing Strategy
Internal Corporate factors
Achieving a superior competitive position within a defined market
Segmentation
Targeting
Positioning
Customer
Competitors
Marketing Strategy

Strategic Marketing
Strategic Analysis
External Analysis Internal analysis Customer analysis
Future Orientation
Formulation Strategy
Targeting
Positioning
Branding
Product Development
Innovation
Relationships
Alliances
Strategic Marketing Plan
Implementation
Implementation
Control

Information Search In Five Areas
Source: adapted from Aguilar
Market Intelligence- market potential, structural change, competitors and industry, pricing, sales negotiations, customers
Technical Intelligence- new product, processes and tech, product problems, costs, licensing and patents
Acquisition Intelligence- leads for JVs and acquisition
Broad Issues- general conditions, govt. action and policies
Other Intelligence- suppliers and raw materials, resources available, miscellaneous

PORTER’S FIVE FORCES
Source: M Porter

PORTER’S FIVE FORCES
Five Forces Analysis helps the marketer to contrast a competitive environment.
Five Forces helps to understand where power lies in a business situation. This is useful, because it helps you to understand both the strength of your current competitive position, and the strength of a position you're looking to move into.
Five Forces Analysis assumes that there are five important forces like Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution and Threat of New Entry

PORTER’S FIVE FORCES
Rivals are competitors within an industry. Rivalry in the industry can be intense, with many competitors fighting in a cut-throat environment.
Factors affecting the intensity of rivalry are:
Number of firms, Fixed costs ,Product differentiation
New Entrants-Industries with high barriers to entry are usually too expensive for new firms to enter. Industries with low barriers to entry, are relatively cheap for new firms to enter.
Common barriers to entry:
Patents, High cost of entry, Brand loyalty

PORTER’S FIVE FORCES
Substitute Products - This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. When switching costs (the costs a customer incurs to switch to a new product) are low the threat of substitutes is high.

PORTER’S FIVE FORCES
Buyer Power-There are two types of buyer power. The first is related to the customer’s price sensitivity. The other relates to negotiating power.
Some factors affecting buyer power are:
Size of buyer, Number of buyers,Purchase quantity
Supplier Power- The power of suppliers tends to be a reversal of the power of buyers. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.
A few factors that determine supplier power include:
Supplier concentration, Switching costs, Uniqueness of product

ANSOFF MATRIX

ANSOFF MATRIX
The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.
Market Penetration: Existing product in existing market (growth strategy)
Four Objectives:
Maintain or increase the market share of current products
Secure dominance of growth markets
Restructure a mature market by driving out competitors
Increase usage by existing customers

ANSOFF MATRIX
Market Development: To sell its existing products into new markets (GrowthStrategy)
Ways of approaching this strategy:
New geographical markets
New product dimensions or packaging
New distribution channels
Different pricing policies to attract different customers or create new market segments

ANSOFF MATRIX
Product Development: Introduction of new products into existing markets
Diversification: New products in new markets
Risk strategy: New market with little or no experience

Strategic Groups
Attributes to identify strategic groups:
Size of the group
Assets and skills
Scope of the operation
Breadth of the product range
Choice of distribution channel
Relative product quality
Brand image

Briti
Briti
Briti
British Airways
KLM
Air France
Britannia
Air 2000
Easy Jet
Go
Ryanair
Debonair
Price
Regional
Global
Scope of operation

Competitor Analysis
What is the relative position of the organization’s rivals?
Do conditions favour one particular operator
Could conditions change in favour of one particular operator?
Strategies of the competitors
Assess company’s competitive position

Competitor’s Objectives
Current performance fulfilling their objectives- if not- CHANGE OF STRATEGY
Any commitment to further investment in business- Check financial objectives
Future direction of competitor’s strategy- may be gaining technology leadership

Competitor’s Current And Past Strategies
Identify current market or segments where
Competitors currently operates-
Indication scope of the business
The way they are competing in the those markets-
quality of service, brand image or on price-
low cost or differentiation strategy
Comparison between current and past strategies-
product and market development

Competitor’s Capabilities
Management Capabilities
Marketing Capabilities
Innovation Capabilities
Production Capabilities

Competitor’s Future Strategies And Reactions
Certain Retaliation- React in an aggressive manner
Failure to React- False sense of security “Slow Reaction”
Specific Reactions- Reaction to price reduction or
sales promotion
Inconsistent Reactions- Unpredictable reaction
(can sometimes ignore competitive challenges

Identifying Competitors
Overlooking smaller competitors
Focusing on existing competitors and ignoring new entrants
Concentrating on current domestic and ignoring international competitors

The Market Analysis
Actual Potential Market Size
Trends
Customers
Customer Segments
Distribution Channel

DIFFUSION OF INNOVATION
Source: Everett M. Rogers

DIFFUSION OF INNOVATION
This extension of the product life cycle was developed by Everett M. Rogers in 1962 and simply looks who adopts products at the different stages of the life cycle.
Innovator: purchase the product at the beginning of the life cycle.
Early Adopters: they are usually opinion leaders and naturally adopt products after the innovators.

DIFFUSION OF INNOVATION
Early Majority: They wait to see if the product will be adopted by society and then do the purchase
Late Majority: They usually purchase the product at the late stages of majority within the life cycle.
Laggards: They are the ‘wait and see’ group.

Marketing Process Involves
Market orientation as philosophy
Market segmentation
Targeting the market
Positioning in the market
Marketing mix

Segmentation
“Market segmentation is the subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix”. (Kotler)

Segmentation
Segmenting means dividing a heterogeneous demanding markets into homogenous groups based on similar characteristics or traits
Heterogeneous demand- different groups of customers have differing needs from specific products.
Homogeneous segment- the separation of markets into distinctive groups based on homogeneous characteristics.

Importance of Segmentation
To meet consumer needs more precisely.
Customers with decent life and individualism have heterogeneous demands. This has given rise to need segmenting to offer customers better solutions.
To increase profit. Price sensitivity. Organization can gain the best price in every segment by effectively raising the average price and increase profit
To gain segment leadership
To retain customers
To focus marketing communication

KEY ASPECTS OF SEGMENTATION
Segmentation should increase benefits to consumers by providing product features matching their needs
Segmentation enables the firm to identify potential customers which helps in effective use of resources. Results are lower cost, greater sales and high profit
Segmentation across the industry will provide greater customer choice by generating variety of products within a particular class from which consumer can choose

Criteria For Successful Segmentation

Criteria for Segmentation
Distinctive- Clear differences in consumer preferences for a product must exist.
Measurability- refers to the degree to which information exists or is cost effectively obtainable on the characteristics of interest
Accessibility- refers to the degree to which the company can identify and communicate with the chosen segments
Substantiality- refers to the degree to which the segments are large enough to offer profitable return
Actionability- does the organisation have enough resources to reach their segments

Segmentation Base
Situation Segmentation
Psychographic Segmentation
Geographic Segmentation
Behavior/Usage Segmentation
Demographic Segmentation
Benefits-Sought Segmentation

Demographic Segmentation
The population can be divided into age, gender, income, and family lifecycle amongst other variables
AGE: As people age their life style, needs & want change
GENDER: Commonly used within the cosmetics, clothing and magazine industry
INCOME: Used by many organisations for eg: Harrods, TSUM (aimed at affluent market).
LIFECYCLE: Products and services aimed at different lifcycle for eg: family tourism, tourism etc.

GEOGRAPHIC SEGMENTATION
Geographical segmentation divides markets into different geographical areas. An area can be divided by the town, the region or the country.
Why do you need geographic segmentation ?
To understand consumers certain characteristics and behaviours which are peculiar for that region, country or area.

Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)
Useful but more difficult to identify and measure compared to demographic variables
Psychological Segmentation

Maslow’s Hierarchy Of Needs
Hunger, thirst
Security
Sense of
Belonging,love
Recognition,
self esteem
Self development

Benefits- sought
Markets can be segmented based on the benefits that consumers desire from using a specific product

Situational Segmentation
Purchase situation or occasion
Physical surroundings
Social surroundings
Temporal perspective

Consumer Buying Decision Process
Problem
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Post-Purchase
Evaluation

Consumer buying process
Involvement in the purchase decision varies considerably

THE 80/20 Golden Rule
- 80% of an effect under study will be generated by 20 of the examples analyzed
- A small fraction of elements account for a large fraction of the effect
Examples:
80% of sales from 20% of sales force
80% of orders from 20% of customers

Strategic Problem-Solving Model
Data
Intuition
Managing
Team
Client
Self
Leadership
Vision
Inspiration
Delegation
Problem
Solution
Implementation
Dedication
Reaction
Completion
Iteration
Business Need
Competitive
Organizational
Financial
Operational
Analyzing
Framing
Designing
Gathering
Interpreting
Presenting
Structure
Buy-in