STRATEGIC MARKETING PART 2

What is Strategic Intent?
Vision + Intent
Where we want
to get to
How we intend
to get there

Definition Strategic Intent
“Strategic intent is defined as a compelling statement about where an organization is going that succinctly conveys a sense of what the organization wants to achieve long-term."
Characteristics of strategic intent
According to Hamel and Prahalad, strategic intent captures the essence of winning, it is stable over time, and it sets a target that deserves personal effort and commitment. Strategic intent goes beyond simply copying what competitors are doing.

How does a company foster personal effort and commitment?
According to Hamel and Prahalad, top management must first create a sense of urgency and then develop a competitor focus at every level through widespread use of competitive intelligence. Leadership must also provide employees with the skills they need to work effectively and not try to pursue too many challenges at one time.

The Pyramid of Purpose
The language of Strategic Intent
Decision Criteria

Influences on Strategic Intent

High
Low
Low
High
Extent of
Power
Inclination to exercise power
Consult and Involve
Inform
Avoid annoying
Least important
Model for analysing stakeholder power

Influence On Organzation’s mission and Objectives
Corporate Governance
Whom should the
organization serve
Accountability and
regulatory framework
Stakeholders
Whom does the organization serve
Balance of power and
Influence of various
stakeholders
Business Ethics
Social Responsibility
Expectations of individuals’
ethical behaviour
Cultural Context
What aspects of the
Mission are prioritize?
Influence of the
cultural environment
Mission Objectives

Goals vs. Objectives

Examples of Goals
Reorganize the entire organization for better responsiveness to customers
We will partner with other businesses, industry leaders, and government agencies in order to better meet the needs of stakeholders across the entire value stream.
Manage our resources with fiscal responsibility and efficiency through a single comprehensive process that is aligned to our strategic plan.
Improve the quality and accuracy of service support information provided to our internal customers.
Establish a means by which our decision making process is market and customer focus.
Maintain and enhance the physical conditions of our public facilities.

Objectives
Relevant - directly supports the goal
Compels the organization into action
Specific enough so we can quantify and measure the results
Simple and easy to understand
Realistic and attainable
Conveys responsibility and ownership
Acceptable to those who must execute
May need several objectives to meet a goal

Gap Analysis
Baseline / Org Profile
Challenges / SWOT
Gap = Basis for Long-Term Strategic Plan

Gap Analysis
70
60
50
40
30
20
10
Sales ($m)
Current forecast
Objectives
The Strategic gap
2
4
6
8
10
Time
Where you are
and where you
Want to be

Gap Analysis
Gap Analysis is a strategic planning tool to help you understand where you are, where you want to be and how you’re going to get there.
Decide the topic you’re going to do the Gap Analysis on? This is the challenge you’re trying to tackle.

Gap Analysis Steps
Topics:
Revenue; Profit; Market Share; Product Functionality/Features
Determine how the Gap should be filled.
Identify where you are right now based on metrics or attributes
Market Share- Present 10% of the market
Identify where you’d like to be over a specific time frame?
Market Share — Like to have 25% of a particular market by 2013
Identify the gap between where you are and where you want to be.
Market share — The gap is 15% market share by 2013
Determine how the gap should be filled

Filling the Gaps
SWOT Analysis
Fishbone analysis:
Manpower — The people resources you need
Methods — The processes you need
Metrics — The measurements you need.
Machines — The technology you need.
Materials — The material items (such as physical goods or marketing collateral) you need.
Minutes— The time required.

Major Components of the
Strategic Plan / Action
Mission
Vision
Goals
Objectives
Measures
Why we exist
What we want to be
Indicators and
Monitors of success
Desired level of performance and timelines
Planned Actions to Achieve Objectives
O1
O2
AI1
AI2
AI3
M1
M2
M3
T1
T1
T1
Specific outcomes expressed in measurable terms (NOT activities)
Targets
Initiatives
What we must achieve to be successful

Strategic Planning Model
A B C D E
Environmental Scan
Assessment
Background Information
Situational Analysis
SWOT – Strength’s, Weaknesses, Opportunities, Threats
Situation – Past, Present and Future
Significant Issues
Align / Fit with Capabilities
Mission & Vision
Values / Guiding Principles
Major Goals
Specific Objectives
Performance Measurement
Targets / Standards of Performance
Initiatives and Projects
Baseline
Components
Performance Management
Review Progress – Balanced Scorecard
Take Corrective Actions
Down to Specifics
Evaluate
Where we are
Where we want to be
How we will do it
How are we doing
Gaps
Action Plans
Feedback upstream – revise plans

The Formulation of Strategy
Competitive Advantage
Generic Strategy
Identify advantage
Experience/Value
Product/market strategy
Ansoff Matrix
PIMS
PLC
Industry Position
Market position
Offensive strategy
Defensive strategy
Strategic Formulation

PORTER’S GENERIC STRATEGIES

PORTER’S GENERIC STRATEGIES
Companies can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs.
Three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.
The focus strategy has two variants, cost focus and differentiation focus.

PORTER’S GENERIC STRATEGIES
Cost Leadership: In cost leadership, a firm sets out to become the low cost producer in its industry.
Differentiation: In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers.

PORTER’S GENERIC STRATEGIES
Focus: The generic strategy of focus rests on the choice of a narrow competitive scope within an industry.
The focus strategy has two variants
In cost focus a firm seeks a cost advantage in its target segment, while in
differentiation focus a firm seeks differentiation in its target segment.
Are you ‘Stuck in the Middle’

Identify Advantage
Competitive Advantage- Sustainability
In order to be sustainable the CA must be:
Relevant- Appropriate to current and future market
needs. Must be relevant to organisation achievable within the available resource base
Defensible- There must be barriers to replication or success will be duplicated by competitors.
Barriers tend to be:
Asset based- location, plant, machinery etc. Tangible
Skills based- skills and resources required to make optimum
use of the assets (quality management, brand development,
product design etc)

BCG Strategic Advantage Matrix
Fragmented
Specialized
Source: BCG (Hooley et al., 1998
Stalemate Volume
Size of Advantage
Number of
ways to achieve
Competitive
Advantage

BCG Strategic Advantage Matrix
Stalemate Industries: Potential for CA is limited. Technological advances are adopted by players. Mature industry. Frequent design changes, commodity type products (eg: manufacturing desktop computers)
Volume Industries: Few but highly significant CA exists. Capital intensive industries. Dominated by few large players with economies of scale (eg: volume car manufacture)
Fragmented Industries: Market needs are less well defined. Niche players and profitability may not be linked directly to size. Organisation grow by offering range of Niche products to different segments (eg: computer software).
Specialized industries: Advantage of differentiation. Profitability and size are not always related. Customised solutions to specific problems (eg: management consultancy)

Experience And Value Effects
Cumulative experience
Unit Cost
Volume
Experience curve is a pattern of
Decreasing cost as a result of cumulative experience of carrying out an activity or function

4-
Value Chain Model
Firm Infrastructure (General Management)
Human Resource Management
Technology Development
Procurement
Inbound Logistics
Ops.
Outbound Logistics
Sales & Marketing
Service and Support
PRIMARY ACTIVITIES
SUPPORT ACTIVITIES
Customer Value
Customer Value
Margin
Margin

Value Chain and the QCT Triangle
VC allows alignment of processes with customers. This generates a quality advantage.
VC focuses cost management efforts.
VC provides for efficient processes which improves the timeliness of operations.

Value Chain Benefits
Identifies value processes
Identifies areas for cost improvement

4-
Goal of Value Chain
Driven by customer perceptions
Increase margins
Focus on value processess
Distinctive capabilities
Cost advantages
Some examples
Southwest Airlines
Intel Corporation

Discovering Your Own Value Processes
Distribute a summary of the value chain model.
Create functional process lists.
Transfer lists to color-coded labels.
“Pin the process” on a large VC diagram.
Identify appropriate processes as:
$ (cost advantage)
CC (core competency)

4-
Using the Value Chain
Helps you to stay out of the “No Profit Zone”
Presents opportunities for integration
Aligns spending with value processes
Provides for reconfiguration of the value chain
outsourcing
off-shoring
co-location with customers or suppliers
redesign for efficiency
Involves chain partners: customers & suppliers

Value Chain and the TBC Triangle
Technical:
Increases knowledge of no profit zones
Increases knowledge of forward and/or backward integration opportunities
Identifies value processes
Identifies win-win alliance opportunities
Behavioral:
Focus shifts to “the customer”
Focus shifts from conflict to partnering with customers & suppliers
Cultural
Creates externally focused mindset
Generates information sharing environment with respect for confidentiality

Industry Position
Market Position:
Market leaders- Strategies: market expansion, Offensive Strategy, Defensive Strategy
Market Challengers- Strategies: Selective targeting, Attack the leader
Market followers- Strategies: Duplication, Adaptation
Market Nichers- Strategies: Focus, product line specialisation

Offensive and Defensive Strategies
Attacker
Defender
4 Bypass Attack
2 Flank Attack
1 Frontal Attack
3 Encirclement attack
5 Guerrilla Attack
Source: Kotler et al., 1999

Frontal Attack
Seldom work unless
The challenger has sufficient fire-power (a 3:1 advantage) and staying power, and
The challenger has clear distinctive advantage(s)
e.g. Japanese and Korean firms launched frontal attacks in various ASPAC countries through quality, price and low cost

Flank Attack
Attack the enemy at its weak points or blind spots i.e. its flanks
Ideal for challenger who does not have sufficient resources
e.g. In the 1990s, Yaohan attacked Mitsukoshi and Seibu’s flanks by opening numerous stores in overseas markets

Encirclement Attack
Attack the enemy at many fronts at the same time
Ideal for challenger having superior resources
e.g. Seiko attacked on fashion, features, user preferences and anything that might interest the consumer

Bypass attack
By diversifying into unrelated products or markets neglected by the leader
Could overtake the leader by using new technologies
e.g. Pepsi use a bypass attack strategy against Coke in China by locating its bottling plants in the interior provinces

Guerrilla Attack
By launching small, intermittent hit-and-run attacks to harass and destabilize the leader
Usually use to precede a stronger attack
e.g. airlines use short promotions to attack the national carriers especially when passenger loads in certain routes are low

Defensive Strategy
Attacker
5 Mobile defence
3 Pre emptive
Defence
4 Counter
defence
2 Flank defence
1 Position Defence
Defender
6 Contradiction Defence
Source: Kotler et al., 1999

Position Defense
Least successful of the defense strategies
“A company attempting a fortress defense will find itself retreating from line after line of fortification into shrinking product markets.” Saunders (1987)
e.g. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus.

Mobile Defence
By market broadening and diversification
For marketing broadening, there is a need to
Redefine the business (principle of objective), and
Focus efforts on the competition (the principle of mass)
e.g. Legend Holdings, the top China PC maker Legend has announced a joint venture with AOL to broaden its business to provide Internet services in the mainland

Flanking Defence
Secondary markets (flanks) are the weaker areas and prone to being attacked
Pay attention to the flanks
e.g. San Miguel introduced a flanking brand in the Philippines, Gold Eagle, as a defense against APB’s Beerhausen

Contraction Defence
Withdraw from the most vulnerable segments and redirect resources to those that are more defendable
By planned contraction or strategic withdrawal
e.g. India’s TATA Group sold its soaps and detergents business units to Unilever in 1993

Pre-emptive Defence
Detect potential attacks and attack the enemies first
Let it be known how it will retaliate
Product or brand proliferation is a form of pre-emptive defense e.g. Seiko has over 2,000 models

Counter-Offensive Defence
Responding to competitors’ head-on attack by identifying the attacker’s weakness and then launch a counter attack
e.g. Toyota launched the Lexus to respond to Mercedes attack