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Marketing Strategy for Management
• Introductions – Who am I – Who are you • Rules of Engagement • What about MKT4010?
– – – – – Aims Structure Core texts Lectures and Seminars Assessment
Who am I?
• Dr. Olga Mourouti
– Senior Lecturer in Marketing
– – – – – PhD Strategic Marketing MSc Quality Management BA Marketing PGDip CIM PGDipHE
• Professional Experience
– Brand Manager for Greece, Bulgaria and Romania at Visa Europe – Purchasing Manager Retailing – Assistant Marketing Manager Retailing
or poor preparation . arrogance.Who are you? Percentage These People Are Not Here Low Mean Academic Ability High If you fail. it will almost certainly be because of laziness.
Rules of Engagement • Things You ARE Allowed to Do? • Late Entry Strategy – Ask questions – Ask for clarification – Contribute with your experience – You won’t get shouted at… – …IF you QUICKLY find a seat – Chat to your friends – Leave your mobile phone on – • Things You DO NOT Do .
MKT 4010 Aims •To provide you with a framework for analysing marketing processes from a strategic and managerial perspective in a diverse range of organisations •To provide you with the skills and knowledge necessary to develop and implement marketing strategies so that organisations gain a competitive advantage in highly volatile operating environments •Detailed information on skills & knowledge on p. 3 of module handbook .
Selection. and Implementation Identify business strategy alternatives Select strategy / strategies Implement the operating plan(s) Review strategy / strategies .Structure of the Module Strategic Analysis External Analysis Customers Micro Macro Internal Analysis Performance Marketing capabilities Strategic Analysis Outputs Opps / threats / strategic uncertainties Strategic strengths / weaknesses / constraints / problems / uncertainties Strategy Identification.
McGraw-Hill •Baines.F..Three Core Texts •Aaker. 5 of module handbook . (2008) Strategic Marketing. P. and Page. Wiley •Cravens. Oxford University Press Additional Reading and Oasis Plus Information on p. European Edition. K.A. Fill. D. C. (2008) Marketing.. and Piercy. N. 9th Edition. D. D. and McLoughlin. (2007) Strategic Market Management.
9-12) .5 hours) •Aim: •To present and explain theoretical concepts •Seminars (approx.5 hour) •Aim: •To allow you to present.Learning Methods •Lectures (approx. debate and apply concepts discussed in class. •To provide you with feedback on your work • • Lecture and Seminar programmes included in module handbook (p. 1. 1.
Assessment Scheme – p. 13 of module handbook There are four elements of assessment for this module – 100% coursework: 1The Development of a Case Study (35%) – presentation and written work 2Individual Portfolio (25%) 3Marketing report (30%) 4Reflective Overview (10%) •Word limits apply •Point (I) group work •Points (ii) – (iv) individual work .
13 module handbook •Group work •groups will be formed during seminars (week 2) •Groups to select ONE company in ONE industry: üCar üCatering üFashion üComputer/Telecommunications üAutomobile üHealth and Beauty etc •3 persons per group maximum .Assessment: Case study & Presentation – p.
13 module handbook •You are required to: •Deliver a 10 minute presentation + a two page written summary (5%) – weeks 7 & 8 •Write a 3500 words case study with two accompanying questions and solutions (30%) – 14th January 2011 •Notes: üBoth Hard copy and electronic submission of case study üBriefing session/tips on Week’s lecture 4 üFurther help on Week 5 and 10 seminars .Assessment: Case study & Presentation cont’d – p.
you are required to: üAnswer a series of pre-set questions •Notes: üSubmission Deadline: 11th March 2011 üBoth Hard copy and electronic submission of case study üBriefing session/tips on Week’s 10 lecture üFurther help on Week’s 16 seminar üPractice exercise to help familiarise . 15 of Module Handbook • •You will receive: üA Portfolio of articles pertaining to the Book/Ebook industry •After conducting additional research. p.Assessment – Individual Portfolio.
16 of module handbook • •For a company of your choice. p.Assessment – Marketing Report. you are required to: üWrite a marketing report in two phases •Phase I: üSituation Analysis (10% of overall mark) •Phase II: üObjectives and Strategies (20% of overall mark) •Notes: üSubmission Deadline: 4th May 2011 üBoth Hard copy and electronic submission of case study üBriefing session/tips on Week’s 19 .
17 of module handbook •You are required to: •Complete a reflective account of your entire learning •Notes: üBoth Hard copy and electronic submission – 4th May 2011 üBriefing session/tips on Week’s lecture • 19 üFurther help on Week’s 22 seminar . p.Assessment – Individual Reflective Overview.
Any Questions ? .
The Concept of Marketing Marketing Strategy for Management MKT4010 Lecture 1 .
Learning Outcomes •To understand the importance of marketing & marketing strategy •To identify the dimensions of Marketing Strategy •To understand the Strategic Marketing Process .
What is marketing? Marketing Concept The achievement of corporate goals through meeting and exceeding customer needs better than the competition Customer Orientation Corporate activities are focused upon providing customer Value and Satisfaction Integrated Effort All staff accept the responsibility for creating customer satisfaction Goal Achievement The belief that corporate goals can be achieved through customer satisfaction .
What is marketing? Positive Customer value Negative Perceived benefits Perceived sacrifice Product benefits •Service benefits •Relational benefits •Image benefits • Monetary costs •Time costs •Energy costs •Psychological costs • .
selecting target market strategies. implementing. setting objectives. and developing.What is Marketing Strategy? • Consists of: – Analysis. 2006: 29) • • . and managing the marketing program positioning strategies designed to meet the value requirements of the customers in each target market – • (Cravens and Piercy. strategy development and implementation activities in: – Developing a vision about the market(s) of interest to the organisation.
. – .and is crucial to the on-going value added • • . – Centres around the customers of the organisation – Involves the entire organisation – Is likely to concern itself with the survival of the organisation as a minimum objective.Importance of Marketing Strategy Because it deals with the fundamental issues that affect the •future of the organisation • • • Marketing strategy. and – The creation of value added as a maximum objective • • Two vital areas: – Strategy is central to the development of sustainable competitive advantage for the organisation......
Main Elements of Marketing Strategy…..... Context Content Context: the environment within Context: the environment within which the strategy is operating which the strategy is operating Content: the main actions of the Content: the main actions of the proposed strategy proposed strategy Process: how the strategy will Process: how the strategy will be developed and achieved be developed and achieved Process Pettigrew and Whipp 1991 .. • The three dimensions of marketing strategy...
..The Strategic Marketing Process.
As highlighted in Lecture 3
As highlighted in Lecture 4
The Industry Competitors Internal The Internal Environment Firm Environment
As highlighted in Lecture 2
As highlighted in Lecture 8
As highlighted in Lecture 6
Designing Marketing Strategy
As highlighted in Lecture 8
As highlighted in Lecture 9 As highlighted in Lecture 14
• Selecting Segments to Target
– Which segments are most attractive? – Which segments can we best serve?
• How are these Targets Selected?
– Situation Analysis
• Existing Products
– Continue with existing target? – Adapt/evolve product/marketing mix to hit a new target? – –
Competitive Advantage • The Critical Importance of Competitive Advantage – Success depends on having (and being perceived to have) an ability to do something better than your competitors • Examples – – – – – Quality Speed Convenience Efficiency Availability .
Growth Strategies… Products/Services Existing New Product/Servic e Development Existing Markets Market Penetration New Market Extension Diversificatio n .
Marketing Program Development 4P’s .
Marketing Program Development: Branding Brand potential Brand name and images Service Brand potential Deliver y Quality and design Core product Guarantee s Packaging Brand potential .
Intangibility cannot be seen.The Service Offering… Characteristics of Services….. felt. heard. tasted or smelled prior to purchase Inseparability production and consumption occur simultaneously Heterogeneity difficult to achieve Standardisation Perishability cannot be stored / seasonality issues .
The Service Offering… Therefore … Process Our understanding of the 3 Ps… “The extended Marketing Mix for a Service” •Involvement of consumers. emphasises the process / procedures of transaction / service delivery •Operational factors affecting perceptions and satisfaction •Friendliness of staff. training and motivation / personnel / customers •Everyone is a marketer!!! Stress tangible cues . queuing systems Physical Evidence •Ambience / furnishings •Environment in which service is offered People •Selection.
Summary •Importance of Marketing Strategy •Main Elements of Marketing Strategy •The Strategic Marketing Process Any Questions? .
Competitor Analysis Marketing Strategy for Management MKT4010 Lecture 2 .
Lecture Outline • Knowledge Refreshment – Marketing Strategy – Process of formulating it • Competitor Analysis – Identifying Competitors – Understanding Competitors .
and managing the marketing program positioning strategies designed to meet the value requirements of the customers in each target market – • (Cravens and Piercy. strategy development and implementation activities in: – Developing a vision about the market(s) of interest to the organisation. and developing.Definition of Marketing Strategy • Consists of: – Analysis. setting objectives. implementing. 2006: 29) • • . selecting target market strategies.
• The three dimensions of marketing strategy... Context Content Context: the environment within Context: the environment within which the strategy is operating which the strategy is operating Content: the main actions of the Content: the main actions of the proposed strategy proposed strategy Process: how the strategy will Process: how the strategy will be developed and achieved be developed and achieved Process Pettigrew and Whipp 1991 ...Main Elements of Marketing Strategy…....
.The Strategic Marketing Process. .
Situation Analysis Macro.Environment As highlighted in Lecture 5 The Industry Competitors MicroEnvironment Internal Internal The Environment Environment Firm Consumers .
et al 1995) p.191 Competitors . Source:Adcock.Key Factors for Success within an Industry – Micro Environment Customers The Competitive Triangle Company (Inspired by Ohmae.
What is competitor analysis? • ‘The process of identifying key competitors. assessing their objectives. and selecting which competitors to attack or avoid’ • • Jobber . weaknesses. strengths. and reaction patterns.
Competitor Analysis Identifying Competitors Understanding Competitors .
Identifying Competitors Product Technically similar products/ Technically dissimilar products Form Competito rs Technically similar products Potential New Entrants Product Substitute s Products that solve the problem or eliminate it in a dissimilar way Generic Competito rs Technically dissimilar products .
Identifying Competitors – Customer Approaches Look at competitors from the customers’ •perspective • – Customer Choices • What would you buy if Kit-Kat was not available? • What would be substituted for coffee if price is increased? • What other universities have you considered? – Product Use Associations • Identify list of use situations or applications • Name all products appropriate for each use .
Understanding Competitors Assess competitors’ current and future objectives Assess competitors’ current strategy Assess competitors’ capabilities profile Predict competitors’ future strategies .
Competitor Objectives… Assess competitors’ current and future objectives ØWhat are they trying to achieve? ØWhy are they trying to achieve it? ØAre they satisfied with their achievements? Key Indicators: Stated goals Ownership Market assumptions Investment priorities .
Objective: Build Market Share… Frontal Attach Comp etitor Flanking Attack Comp etitor Encirclement Attack Comp etitor Chall enger Chall enger Chall enger .
Grocery networking. Spain.Acquire in UK Lynch (2003) Corporate Strategy 3/ed CP Resources: Brand name. Own label .a (lower in UK but larger market) Share: Kellogg’s 50-60% 1991-96: extend UK range 1991: launch France .European Breakfast Cereals: Cereal Partners 1990: buy Shredded Wheat.Kelloggs flanking attack via product innovation 5. Portugal 1992: launch Italy 1993: launch Germany etc Options: Head-on against Kelloggs Environment: Options: Flanking via Segment Purpose: Purpose ’20% Market Share’ Choice: Implementation: Resources: Options: Totally new breakfast format Chosen strategies: 1. UK Size: US$ 3bn Growth: +10% p.Econs of scale 3. Low cost manufacture. Unique product range.Concentrate resources 2.Tackle country-by-country 4.Example .
Competitor Strategies… Assess competitors ’ current strategies Key Indicators: ØWhat market targets are they pursuing? ØWhat is their strategic focus? ØWhat marketing mix do they use? ØHow do they organise their marketing? Advertising media and messages New product introduction rates Recruitment advertisements Price levels charged Distribution channels used .
Competitor Capabilities… Assess competitors’ capabilities profile ØMarketing culture? ØMarketing assets and competences? ØProduction and operation competencies? ØFinancial resources? ØHuman Resources? Key Indicators: Customer relationship strength New product success rates Quality of the people Product availability Promotional expenditure .
Competitor Capabilities… Key Success Factors Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing -2 -2 -2 -2 -2 -2 Self: total 5 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 2 2 -2 -2 -2 -2 -2 -2 Competitor A: total 6 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 2 2 Key Success Factors Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing -2 -2 -2 -2 -2 -2 Competitor B: total 4 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 2 2 -2 -2 -2 -2 -2 -2 Competitor C: total -2 -1 -1 -1 -1 -1 -1 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 2 2 .
Future Competitor Strategies… Predict competitors ’ future strategies Key Indicators: Past strategies Past reactions ØWhat might the competition do? ØWhat under-utilised resources do they have? ØHow will they react to our actions? ØWho are the competitors to attack? Past successes and failures Changes in ownership Recent resource acquisitions .
decisions may be based on unknown criteria ict red np ble U a Re ta y Aggressive response.Competitor Response Patterns Appears random. competitor does not consider the move important . often by market leader l ia tor Responds only to moves it considers significant Respons e Categor y Hemmedin Com plac e nt Competitor feels unable to respond c ti Sele ve Passive response.
Who to attack? • Weak Competitors – Easier to attack – Require fewer resources to engage – Failed attack not fatal – Potential rewards relatively low • The Dynamic Environment – Your competitors change over time – The weak may become strong. and vice versa • Do Unto Others… – Your competitors are analysing you and your behaviour – What are they planning to do unto you? • Strong Competitors – Difficult to attack – Firm must focus on the attack – Failed attacks can be devastating – Potential rewards very high – • .
Summary • Competitor Analysis involves: – Identifying Competitors – Understanding Competitors .
Analysing the Industry Marketing Strategy for Management MKT4010 Lecture 3 .
The Strategic Marketing Process. ..
Learning Outcomes… Macro.Environment As highlighted in this lecture The Industry Competitors Internal The Internal Environment Firm Environment As highlighted in Lecture 2 MicroEnvironment Consumers .
Learning Outcomes • To understand the complex nature of the marketing environment As highlighted in Lecture 2 • Explain and identify Key Factors for Success .
Introduction What is an Industry? –A group of firms that market products that are close substitutes for each other We Speak of: –The car industry –The computer industry –Definitions normally product based .
…Some Dimensions of Industry Analysis Industry Size. Growth Industry Profitability Distribution Systems Key Success Factors Distribution systems: Distribution systems: Analysis should Analysis should include: include: •What are the alternative •What are the alternative distribution channels? distribution channels? •What are the trends? •What are the trends? •Who has the power in •Who has the power in the channel and how the channel and how is that likely to shift? is that likely to shift? .
Market Size and Growth Collect Data on Total Sales Levels • • Trade Associations/Trade Magazines/Government Data • Estimate Market Growth • Historic growth + Leading indicators of market sales More sales and profits if market grows Reduced sales and increased price pressure if market declines • • • Thus: • Identify and Invest in growth contexts? Identify and disinvest in declining situations? • .
profitability. . takes advantage • • Represented by Prof Michael Porter: Five-Forces Analysis But such theories do not explain why two companies in the same industry achieve widely differing results….how firms behave towards each other . share in market – Degree to which company is careful vs.Industry Profitability • • Industry profitability derives from an analysis of: • Market structure .will then influence strategy utilised • Market performance – In terms of power.the number of firms and the degree of rivalry forms the basis of competitive development • Market conduct .
current competito rs .Industry profitability: Analysing Competitive Forces Porters Five Forces Model Industry rivalry .
Analysing Competitive Forces… Bargaining Power of Bargaining Power of Buyers Power high: Buyers --Power high: •Few buyers many sellers •Few buyers many sellers •Standardised products •Standardised products •Buyers threaten to integrate •Buyers threaten to integrate backwards backwards •Suppliers cannot integrate •Suppliers cannot integrate forward forward •Switching Costs for Buyers •Switching Costs for Buyers •Profit Levels •Profit Levels •Importance of Product or •Importance of Product or Service to Buyer Service to Buyer Bargaining Power of Bargaining Power of Suppliers Power high: Suppliers --Power high: •Few sellers many buyers •Few sellers many buyers •Differentiated products •Differentiated products •Suppliers threaten to integrate •Suppliers threaten to integrate forward forward •Buyers cannot integrate •Buyers cannot integrate backwards backwards •Switching Costs for Suppliers •Switching Costs for Suppliers •Importance of Customer to •Importance of Customer to Supplier Supplier •Level of Product Differentiation •Level of Product Differentiation .
Analysing Competitive Forces… Threat of Potential Threat of Potential Entrants – Barriers to Entrants – Barriers to Entry Entry •Economies of scale •Economies of scale •Capital requirements •Capital requirements •Customer switching •Customer switching costs costs •Access to distribution •Access to distribution •Expected retaliation •Expected retaliation •Govt policy •Govt policy •Brand identity strength •Brand identity / /strength •Unique Resources •Unique Resources Competitive Rivalry Competitive Rivalry •Structure of •Structure of competition competition •Structure of costs •Structure of costs •Degree of •Degree of differentiation differentiation •Strategic objectives •Strategic objectives •Exit barriers •Exit barriers •Rate of growth •Rate of growth •Number/relative Size •Number/relative Size of Competitors of Competitors •Capacity in Relation to •Capacity in Relation to Demand Demand Threat of Substitutes Threat of Substitutes •Buyer’s willingness to •Buyer’s willingness to substitute substitute •Relative price and •Relative price and performance of performance of substitute substitute •Switching costs •Switching costs •Availability •Availability •Similarity •Similarity •Comparative •Comparative –Price –Price –Quality –Quality –Branding –Branding .
Market Structure and Concentration Level of Competition HIGH MEDIUM No. of Firms Profitability Influence on Market LOW Level of Competition Perfect Imperfect Competition or Monopolistic Oligopoly Monopoly NONE .
CR5 or CR8 respectively” . Intensity of competition in an industry Measured by: • Degree of concentration of companies in the industry • Range of aggressive strategies of competitors in the market place • Degree of concentration often summarised in the concentration ratio: • • • “The percentage of industry ‘value added’ or ‘turnover’ controlled by the largest four.Market Structure and Concentration…. five or eight firms in an industry: CR4.
1 Safeway £ 6270.9 Therefore.3 Costcutters £ 497.2m Top 4 Firms: 87685.5 Total £ 114191.3 Iceland £ 1565.3 Aldi Stores £ 1318.0 J.Example: Concentration Ratios of UK Supermarkets Leading Supermarkets & Superstores by Turnover (£m) 2006/7 in the UK Tesco £42641.0 Marks & Spencer £ 8588.2 x 100 = 76.0 Asda Group £15667.4 Waitrose £ 3497. Sainsbury £17151.9 Key Notes 2008 Top 4 Retailers’ Turnover £87685.2 Wm Morrisons £12226.6 Somerfield £ 4325.7 All Firms: CR4 = 77% 114191. 4 firms account for 77% of the Turnover between them .2 Budgens £ 444.
• • • • Assets and competences that provide the basis for competing successfully Include: • Strategic Necessities • Not necessarily providing a competitive advantage • Absence leads to disadvantage Strategic Strengths • Superior assets and competences • Provide competitive advantage Which are the most critical now? Which will be more critical in the future? • • Points to consider: • • .Key Factors for Success within an Industry….
Conclusion • Know your industry and competitors: structure / conduct / performance • Building on key resources can provide organisation with sustainable competitive advantage • Strategic development should be based on sound external analysis Any Questions? .
Environmental Analysis and Strategic Uncertainty Marketing Strategy for Management MKT4010 Lecture 4 .
Aims • By the end of this session you will • Be able to differentiate between the components of the marketing (business) environment • Understand the role of environmental analysis in marketing strategy • Consider the marketing implications of these components .
.The Strategic Marketing Process. .
Environment As highlighted in this lecture The Industry Competitors Internal The Internal Environment Firm Environment As highlighted in Lecture 2 MicroEnvironment Consumers .Learning Outcomes… Macro.
Frameworks of the Macro-environment: PEST/STEP/STEEPLE Analysis Technological/Product Innovation Social/Cultural
•What environmental factors are affecting the organisation? •Which of these are the most important at the present time? In the next few years?
Models of the Environment…
Socio-cultural Environment •Demographic Change •Changing life-styles and living patterns •Multi-ethnic societies •The Grey Market •The Youth Market
Political and Economic Environment •Economic growth rates •Inflation Rates •Foreign trade regulations •Interest rates, consumer and business confidence •Taxation policy •Employment and unemployment •Income distribution
Technological, Environmental and Legal Environment •New discoveries/developments •Waste disposal •Competition law •Product Safety •Energy Consumption •Health and Safety Law •Environmental Laws
Models of the Environment… Society Changes…
Social change and its effects on organisations
•Many goods and services are no longer considered socially and culturally relevant – e.g. formal clothing
•In most societies, divisions exist between groups of people in terms of their access to privileges and status
•As the size of each class changes, so market segments, which are •New opportunities emerge for made up of people who are businesses – e.g. Islamic compliant similar in some important products / services respects, also change •Two way effect - businesses and new technology affect social and cultural •Is a “classless” society a myth or reality? environment (e.g. microwave ovens / e-business / e-commerce / mobile technology)
e The notion of Britishness •What is the significance of “Mecca Cola”? .Models of the Environment… Cultural Changes… The Cultural Environment Cultural Convergence? •A culture's values are expressed in a complex set of beliefs. customs and symbols which help to identify individuals as members of one particular culture rather than another •Distinguish between "core" and "secondary" cultural values •Are cultures converging in their in their values and attitudes? •Or do multi-cultural societies lead to a growing need for cultural identity? I.
a lifestyle translated •Attitudes and lifestyle may say more about a person's consumption patterns than class. status etc •Even supermarket sandwiches reflect differences in lifestyles •Compare buyers of Chunky BLT with buyers of Mediterranean Vegetable Panini .Models of the Environment… Lifestyle Changes… Values. Attitudes and Lifestyles •Values are deep seated sets of beliefs •Attitudes may be more open to change •Attitudes may eventually be into behaviour .
.Models of the Environment… Lifestyle Changes… Waistline Vs Bottomline….
drift from north to south-east •Drift from towns to rural areas •More recently. many people have moved •What are the implications for: –patterns of demand? –availability of workforce? .Models of the Environment… Demography Reasons why businesses should study changing demographic structures: –Helps to predict the size of the market that a product is likely to face –Demographic trends have supply side implications –Implications for public sector service –Demographic change can influence the nature of family life and communities Geographical Distribution •In the UK.
Models of the Environment… Changes in UK Population Population change can be attributed to three main factors: –the birth rate –the death rate –the difference between inward and outward migration .
What if Turkey joined the EU? 2.What does the future hold? 1. What if a major American firm entered our European markets? 3. What if a break in production prevents us fulfilling customer orders? Illustrations of the ‘three rings’ model of the environment 3 2 1 …what about? Technology Trends •To what extent are existing technologies maturing? •What technological developments or trends could affect the industry? Government/Economic Trends •What changes in regulation are possible? What will their impact be? What are the political risks? •What are the economic prospects and inflation outlets for the countries in which the firm operates? .
Examples: –Alfa Romeo: •What will the sales profile of sports cars be in upcoming years? –British Airways •How will the economy evolve? –Ski operator •How will the weather be in 15 years? • Response: • Uncertainty reduction – Information acquisition – Level of resources depend on outcome of Impact Analysis • Uncertainty modelling – Scenario Analysis .Strategic Uncertainties… Specific unknown outcomes that can affect a company’s strategic decisions.
Strategic Uncertainties… Impact Analysis Low Monitor and Analyse. Contingent Strategies Considered Immediacy High Analyse Indepth. Develop Strategy Impact Low High Monitor Monitor and Analyse .
Strategic Uncertainties… Scenario Analysis • A process that creates a plausible set of alternative “stories” about the future for elements of the business environment that are: – “strategically” very important – beyond your ability to control – often beyond your ability to predict what will happen • Improved decision-making by allowing more complete consideration of outcomes and implications Therefore… Relate Scenarios to Existing or Proposed Strategies Estimate Scenario Probabilitie s Identify Scenario .
Strategic Uncertainties… Scenario Analysis Example: British Airways • British Airways might attempt to forecast several possible scenarios for the economy – Scenario I: Rapid growth – Scenario II: Moderate growth – Scenario III: Slow growth – Scenario IV: Decline Scenario IV – Decline in the UK economy Implications: •People will have less disposable income, hence will not be travelling as frequently •Airlines will reduce their capacity, number of flights and destinations in line with the declining demand for their services •Increased competition among airlines for a declining market. •Demand to further shift to Nofrills airlines
Changes in the environment have led to an increase in customer dynamics and related marketing opportunities
Internal Analysis, SWOT Analysis & Objectives
Marketing Strategy for Management
MKT4001 Lecture 5
Aims • Internal Analysis • SWOT analysis – Strengths – Weaknesses – Opportunities – Threats • Setting objectives and strategies to achieve them .
Internal Analysis • • Is: An assessment of the performance and activities of the business in light of environmental developments .
Internal Analysis Assessment of Marketing Capabilities… Operating Results Marketing Mix Effectivene ss Marketing Structures Marketing Systems Strategic Issues Analysis Sales Market Share Profit Margins Costs Product Price Promotion Distributio n Organisati on Training Internal Communicati on Informatio n Systems Planning Systems Control Systems Objectives Segments Competitive Advantage Positioning Portfolio Analysis .
400 . difficulties of having only a small marketing share •Assuming that the two most important factors in such an analysis are: 1. the attraction of a fast growing market.Portfolio Analysis •Basic Logic dictates that many companies are involved with products in many industries •Each market will bring its own strategic opportunities and problems e.g.Marketing Growth 2.Market Share •These factors can be plotted in a Matrix against competitors aiding the exploration of this strategic issue (Boston Consultancy Group Matrix BCG) Also read: Jobber 2007 – pg 396 .
Product Portfolio Analysis… BCG Matrix – Example… High 12% Per Annum 12% Star BMP 2 8% Question Mark Hunter 200 Tiger 520 BMP 5 Dog Market Growth Rate % 5% Cash Cow 3% BMP 3 Low: Starting at 0% Per Annum Gazelle 300 0% x10 x5 x1 x0.5 x0.1 Relative Market Share .
SWOT Analysis What is a SWOT Analysis? – A structured approach to evaluating the strategic position of a business – Identifies strengths. weaknesses. opportunities and threats •What does a SWOT •Analysis do? – Synthesises the situation • Internal (Controllable) Strengths Weaknesses Opportunitie s Threats Lectures 3/4 External (Uncontrollable) .
SWOT Analysis: Conversion / Matching Strategies StrengthsConversion Weaknesses Strategies Conversion Threats Opportunities Strategies Matching Strategies .
Strategic Objectives Objective is to increase sales and market share Objective is to maintain market share Build Hold Objective is to maximise profits whilst sales and market share are falling Harves t Divest Objective is to drop or sell the product .
Build… • When is a Build Objective Attractive? – Growth markets – In mature markets where there are exploitable competitive weaknesses – Exploitable corporate strengths • Examples – Rapidly growing MP3 player market means that all companies have growing sales – Cadbury’s chocolate bars Vs Rowntree Macintosh ‘Yorkie’ – Casio built on expertise in microelectronics to move from calculators to watches. M&S used the trust in its brand to launch financial services .
How to achieve a Build Objective… Bypass Attack Flanking Attack Gue rrilla Alpha Frontal Attack Encircleme nt Beta Atta ck .
Hold… • When is a Hold Objective Attractive? – A market leader in a mature or declining market – The ‘cash cow’ position – In a growth market where the costs incurred by trying to build market share outweigh the benefits • Examples – T-Mobile and mobile phone services • .
How to achieve a Hold Objective…Defence strategies Pre-emptive defence Flanking Defence Position Defence Alpha Counteroffensive Beta Withdrawal Mobile Defence .
Harvest… • When is a Harvest Objective Attractive? – Second-rate products in mature or declining markets – Core of loyal customers – Resources can be better used elsewhere • What Happens? – – – – Eliminating R&D spending Reducing promotional budgets Rationalisation of product line Possibly increase price .
Divest… • The Organisation Sells or Shuts Down an SBU – Poor performance – Bad fit with rest of organisation – Tempting offer from a potential buyer • Strategic Focus – Getting out as quickly and cheaply as possible – Be careful about relationships with other products and services .
. • Be SMART – Specific – Measurable – Actionable – Realistic – Time bound – • Example: – L’Oreal: • To increase market share by 3% (from 15%) in the male cosmetics market by January 2009 .Objectives… Objectives should….
Conclusion • • Importance of identifying Marketing capabilities • SWOT analysis • Setting objectives and strategies to achieve them .
Analysing Consumers’ Needs. Expectations and Buying Patterns Marketing Strategy for Management MKT4010 Lecture 6 .
Aims •To understand the process arising from the simple act of buying a product or service •To identify the key factors that influence the buying decision process •The characteristics of organisational buying. who buys and how •To provide a framework for understanding how marketers can influence the buying decision process .
Marketing Stimuli Other stimuli Buyer’s black box Buyer Characteristics Buyer’s responses Product choice Brand choice Dealer choice Purchase timing Purchase amount Product Economic Price Technological Political Cultural Place Promotion Buyer decision process .Consumer Behaviour A Simple Black Box Model….
Dimensions of Consumer Behaviour: The Key Questions Consumer Behaviour Where do they buy? Who buys and for whom? Custom ers What are their choice Criteria ? When do they buy? How do they buy? .
Consumer Behaviour Who Buys? Five Roles identified(Blackwell et al. 2000) • Initiator (begins process) • Influencer (persuades others) • Decider (Power/funds) • Buyer (conducts transaction) • User (actual consumer/user of product) • ..
How do they Buy? • • • • • Problem recognition Information search Evaluation of alternatives Purchase decision Post purchase behaviour Engel-Kollat-Blackwell. 1968 .
Evaluation of Alternatives and Purchase • • • • • Consumer Behaviour Reduce the awareness set (solutions) to a smaller set of brands Produce an evoked set: a shortlist of brands for careful evaluation Rank the evoked set through an application of criteria .
Choice Criteria used when evaluating Alternatives Consumer Behaviour Criteria Technical Economic Social Personal Reliability Durability Performance Style/looks Comfort Delivery Convenience Taste Price Value for money Running costs Residual value Life style costs Status Social belonging Convention Fashion Self-image Morals Emotions .
Post-Purchase Evaluation Consumer Behaviour Actual Performance ? Cognitive Dissonance Higher when: Expensive product Many Alternatives Irrevocable Decision Expected Performance Marketing Implications: Reinforce wisdom of decision Solve problem at root Cognitive Dissonance .
Influences on Consumer Behaviour .
Consumer Behaviour The Buying Situation Extende d Problem Solving brP l eo m ls vo n gi la u ti a bH m e l br oP gi n vo ls iL m e dti .
Consumer Behaviour Personal/Psychological Factors • Influences – values. status. beliefs. opinions. attitudes. security. perception – motivation. selfbecoming needs •Demography . concept of ‘Self’ •The subconscious (Freud) –marketing and the subconscious •Hierarchy of needs (Maslow) –physiological. safety.
Roles and family Changing family structures Strong identification Opinion leaders Similar social Social Classes rank Common behaviour Affects product quality/quantity Culture and Sub-culture Values, generational Male head of household? Reference groups
Organisational Buying – Some Characteristics
al l r Sm be m nu f O to us c
Eco i nom c/
er s m
La rge tr a r ns ac ns tio
Mo p re eopl e invo lved
Organis/ nal purchas es
Who buys Users Final users
Buying Centre Buyers Select suppliers and negotiate terms
Influencers specifications and alternatives
Deciders Choose products and suppliers
Gatekeepers Control flow of information
Organisational Decision Making Performance Feedback and Evaluation .
Summary •The black box model •Factors influencing the buying process •Difference between consumer buying behaviour and organisational buying behaviour •The buying decision making process •Note: Surgery seminar session next week: Final Clarification on DVD case studies Any Questions? .
Strategic Market Segmentation Marketing Strategy for Management MKT4010 Lecture 7 .
Aims •To define the term segmentation and to explain why it is a key concept in marketing •Explain the process of market segmentation •Discuss how to segment: –Consumer markets –Business Markets •Understand the requirements for effective segmentation .
Mass Market .
What is Segmentation? The process of identifying individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy Jobber (2004:210) .
Market Segments .
Target market selection Differenti ation Market segmentation Tailored marketing mix Source: After Jobber. D. McGraw-Hill Opportunit ies and threats .Benefits of Segmenting. (2004)... Principles and Practice of Marketing.
Segmenting Consumer Markets Consumer segmentation Behavioural Psychographic Profile Benefits sought Benefits sought Purchase occasion Purchase occasion Purchase behaviour Purchase behaviour Usage Usage Lifestyle Lifestyle Personality Personality Demographic Demographic Geographic Geographic What is a Base for Segmentation? A variable by which people can be divided into groups of ‘similar customers’ Source: Jobber. D. Principles and Practice of Marketing. McGraw-Hill . (2004).
attitudes. potential customers – heavy users – brand switchers – value-sensitive users – complimentary product users – end use users – benefits sought Psychographic •Personality types e. low achiever –security. social. self-fulfilling needs •Value. middle-ofthe roaders. business-woman. spiritualists –environmentalist. life styles (Vals) –go-getters. livefor-today •Social class –Upper/middle/lower class . existing. status. quietlycomfortable. –introverted. extroverted –high achiever.Segmenting Consumer Markets… • Behaviour – past.g.
country. nationality . religion. continent • Demographic – population growth. movements. town. ethnic group.Segmenting Consumer Markets… • Geographic – region. city. D. district. C2. education. family unit. gender. • Socioeconomic – social class: A. B. C1. income. occupation. E – age. dispersion.
B2B Product Usage Situatio nal Attitude s and Beliefs Public .Segmenting Business Markets . Private Not for Profit Density By Location Needs and Preferen ces Customer Size Usage Rates Purchase Behaviou r Industry Classifi cation .
Requirements for Effective Segmentation Identifiable Segments Actionable Segments Response Difference s Cost/ Benefits of Segm/tion Stability Over Time .
Segmentation Attractiveness and Compatibility Internal Compatibility High Attractive segments that match with company capabilities Low Attractive segments but with poor match with company capabilities High Market Segment Attractiveness Low Unattractive segments but with match to company capabilities Unattractive segments that do not match with company capabilities .
Remington. Panasonic Electric Shaving .Selecting a Market to Segment • • Level of Competition • • • Product Definition • • Illustrative Competitors Consumer Product Companies Gillette. Bic Need/Want Satisfied Enhancement of Health & Beauty • Generic • • • • Health & Beauty • Aids • • • • Product Type • • • • Shaving Equipment • • • Shaving • • Product Variant • • Electric Razors Braun.
Approaches to Forming Market Segments IDENTIFIERS OF CUSTOMER GROUPS CUSTOMER RESPONSE PROFILE E Characteristics of People and Organizations E E E E E Use Situation Buyers Needs and Preferences .
middle-aged men.half under 25 years of age .Example Segmentation: Gasoline Buyers Road Warriors Higher-income. drive 25-50000 miles a year buy premium with a credit card… purchase sandwiches and drinks from the convenience store… will sometimes use carwash Men and women with moderate to high incomes.constantly on the go … drive a lot snack heavily from the convenience store Usually housewives who shuttle children around during the day and use whatever gas station is based on town or on route of travel Not loyal to brand or station and rarely buy premium … frequently on tight budgets. Food & Fast) 27% of buyers Homebodies 21% of buyers Price Shoppers 20% of buyers . 16% of buyers True Blues 16% of buyers Generation F3 (Fuel. loyal to a brand and sometimes a particular station …frequently buy premium. pay in cash Upwardly mobile men and women .
Summary •Identify segmentation variables and segment the market •Develop profiles of resulting segments Any Questions? .
Market Targeting and Positioning Contemporary Marketing Strategy MKT4001 Lecture 8 .
Aims • Explain the concepts of market targeting and positioning • Explore different targeting alternatives and the factors influencing them • Discuss the options involved in strategic positioning .
Targeting What is Targeting? Selecting one or more segments as a focus for the company’s offering or communications • Jobber (2004) • .
D. Principles and Practice of Marketing.Targeting… Target Market Strategies Undifferentiated Marketing Company Marketing Mix Market Differentiated Marketing Marketing Mix 1 Marketing Mix 2 Marketing Mix 3 Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Concentrated Marketing Company Marketing Mix Source: Jobber. McGraw-Hill . (2004).
Targeting… Choosing a Targeting Strategy Segment Attractiveness Product/Market Maturity Diversity in Buyers’ Preferences Targeting Strategy Organisational Capabilities Resources Industry Structure Opportunities for Competitive Advantage .
Targeting… Target Market Strategies Segment Attractiveness • Lecture 7 • Collect Data on: – Current sales value – Market growth – Profitability Review – Competitors – Concentration and dependency on market? Strengths and weaknesses? – Customers – Power?. labour – Buyer power – high or low? . levels of satisfaction? – Supplier power – raw materials.
Targeting… Types of Market Environments (based on the stage of product/market maturity) Sales Sales and Profits Profits Emerging Growth Maturity Decline Life-Cycle Stage/Time .
Extensive market coverage by firms with established businesses in related markets 2.Selective targeting by firms with diversified product portfolios 3.Very focused targeting strategies by small organisations Emerging Markets Buyer Diversity • Segmentation limited due to similarity of buyers’ preferences •Industry Structure • Typically small new organizations • Limited access to resources •Capabilities and Resources • Unique benefit (differentiation) strategy rather than lowcost • First-mover advantage •Targeting Strategy • Single target or a few broad segments • .Targeting… Growth Markets Buyer Diversity •Segments should exist Industry Structure •Numerous competitors Capabilities and Resources •Survival requires aggressiveness by firms seeking large market positions •Otherwise select one or a few market segments Targeting Strategy •Three possible strategies 1.
Targeting… Mature Markets Buyer Diversity • Segments should exist •Industry Structure • Intense competition for market share • Emphasis on cost and service. and pressures on profits •Capabilities and Resources • Management’s objectives: cost reduction. product differentiation •Targeting Strategy • Firms pursuing extensive targeting strategies may decide to exit from certain segments • Retained targets may be prioritised • Declining Markets Buyer Diversity •Changes in consumer tastes. selective targeting. Brand loyals remain Industry Structure •Typically organisations exit •Reduction of product depth Capabilities and Resources •A harvest strategy with emphasis on productivity Targeting Strategy •Focus on those targets to boost profit margins .
Aaker and McLoughlin (2006) .Positioning What is Positioning? The face of the Business Strategy. It specifies how the business aspires to be perceived relative to its competitors and markets.
Positioning… Strategic Position Options Quality Product Attribut es/ Functio nal Benefits Origin Emotio nal Benefit s Competi tors Experi ence .
Source: Lilien & Rangaswamy.. 1999 .Example.Positioning .
Developing and Selecting Strategic Options • • • Resonate with the target market – Strategic position needs to create a difference – Value of emotions? Differentiate from competitors – Important – Distinctive – Superior – Communicable – Affordable Reflect the culture. strategy and capabilities of business .
Summary Segment •Identify segmentation variables and segment the market •Develop profiles of resulting segments Target •Evaluate attractiveness of each segment •Select the target segment(s) Position •Identify possible positioning concepts for each target segment •Select. develop and communicate the chosen positioning concept Lecture 7 Any Questions? .
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