Lecture Notes Module 2 PDF

MM555
Module 2 Environmental Analysis
Curtin University is a trademark of Curtin University of Technology CRICOS Provider Code 00301J
Source: http://www.forbes.com/sites/sap/2012/12/03/6-stepsto-executing-a-content-strategy/
Session Outline
Welcome & Overview Nominate Student Representative Review & brief Recap of Module 1 Digging Deeper Module 2: Environmental Analysis; Market Information and Market Research Analysing Cases & Assessment Requirements for MM555 (details in separate presentation) Next Steps
Review of Module 1
Reviewed the Marketing Management Framework & Expectations for the Unit Examined the various marketing orientations Investigated the link between expectations and customer satisfaction and why it is important to have satisfied customers. We reflected on the importance of creating value and developing customer relationships so that loyalty is built.
In each Module we encourage you to hunt out the latest news; explore the research and scan social media for whats new, whats important and what has piqued your interest on the topic of marketing
In the News; Out of Academia; Around the Grounds
DIGGING DEEPER
..What Caught Your Eye This Week?

Source: http://thisweekin.com
From Mad Man to Superwoman

The inevitable rise of the chief marketing officer in the age of the empowered consumer
A good online article highlighting the changing role of the Chief Marketing Officer and the shifting expectations that go with it. To deliver, CMOs will need to adopt new operational frameworks for harnessing the art, science and individuals involved.
Suketu Gandhi, Giovanni Rodriguez and Greg Banks, From Mad Man to Superwoman, Deloitte Univeristy Press Curtin University is a trademark of Curtin University of Technology URL http://dupress.com/articles/from-mad-man-to-superwoman-theCRICOS Provider Code 00301J legitimization-of-the-chief-marketing-officer/?ind=
This Weeks Reading. ..Which Ideas Will You Hold Onto?

Chan, K.W. & Mauborgne,R.1999. Creating new market space. Harvard Business Review 77 (1): 83-93. Rust R., C. Moorman and G. Bhalla. 2010. Rethinking Marketing. Harvard Business Review 88 (1/2): 94-101. Ho Yin Wong, Kylie Radel, Roshnee Ramsaran-Fowdar 2011 Building a Marketing Plan: Chapter 1: Introduction to Marketing Planning: Ho Yin Wong, Kylie Radel, Roshnee Ramsaran-Fowdar 2011 Building a Marketing Plan: Chapter 2: The Situation Analysis, HBP Product number: Ofek, Elie; Wathieu, Luc 2010 Are You Ignoring Trends That Could Shake Up Your Business? Harvard Business Review. Jul/Aug, Vol. 88 Issue 7/8, p124-131. 8p. 3 What were your top 3 concepts from the readings? Share these in class or online
Creating New Market Space*

6 Basic Approaches.
Image: http://www.blueoceanstr ategy.com/too/boss.html
Chan,Curtin K.W. & Mauborgne,R.1999. Creating new market space. University is a trademark of Curtin University of Technology CRICOS Provider Code 00301J Harvard Business Review 77 (1): 83-93.
Creating New Market Space* (cont)

Conventional Boundaries of Competition Industry Head-To-Head Competition Focuses on rivals within its industry. Creating New Market Space Looks across substitute industries. Innovative Company Examples Home Depot, Intuit's Quicken Software, Federal Express, UPS, and Southwest Airlines. Focuses on the competitive position Looks across strategic groups Polo Ralph Lauren, Toyota's within a strategic group. within its industry. Lexis, Sony Walkman, and Strategic Group Champion prefab housing. Focuses on better serving the buyer Redefines the buyer group of Bloomberg business group. the industry. information, and Philips Buyer Group Lighting Company. Borders Books & Music, Focuses on maximizing the value of Looks across to product & service offerings within the complementary product and Barnes & Noble, Virgin service offerings that go Entertainment, Dyson vacuum Scope of Product & bounds of its industry. beyond the bounds of its cleaners, and Zeneca Cancer Service Offerings industry. Centers. Rethinks the functionalFocuses on improving priceemotional orientation of its performance in line with the functional-emotional orientation of its industry. industry. Starbucks coffee bars, Swatch watches, the Body Shop and Direct Line Insurance.
FunctionalEmotional Orientation of an Industry Time
Focuses on adapting to external trends as they occur.
Participates in shaping external trends over time.
Enron, and Cisco Systems.
Chan,Curtin K.W. & Mauborgne,R.1999. Creating new market space. University is a trademark of Curtin University of Technology CRICOS Provider Code 00301J Harvard Business Review 77 (1): 83-93.
Identifying opportunities in the marketplace
MODULE 2: ENVIRONMENTAL ANALYSIS

Marketing Management Framework

Customer
Consider factors such as decision making, values, needs & wants
Company
Or organisation. What is our Strategic Purpose? Capabilities? Weaknesses?
Context
Whats going on in the macro environment?
Collaborators
Who do we work with? Who are our partners?
Competitors
Who are our current and potential competitors? Where are they placed in the market?
Marketing Objectives
Focus for Module 2
Segmentation
Based on geographic, demographic, psychographic and/or behavioural factors
Targeting
Consider strategic fit; potential and defensibility against competition
Differentiation
Differentiating the market offering to create superior customer value
Positioning Analysis & Strategy

Create Value
Marketing is about creating customer value and profitable customer relationships
Product / Service People Processes Physical Evidence
Your place in the market space Core benefit proposition Unique selling proposition Positioning Statement
Planning & Implementation
Capture Value
Communicate Value
Integrated Marketing Communications (including Promotion)
Deliver Value
Price
Placement Logistics
The MM555 Marketing Management Framework draws on a number of sources including Iacobucci Curtin University is a trademark of Curtin University(2013), of Technology CRICOS Codeand 00301J Armstrong et Provider al (2012) Gibbs (2009) and includes the key factors which need to be taken into account when developing a comprehensive marketing strategy.
Implementation, Monitoring & Measuring Outcomes
Module 2: Learning Objectives

1. Develop an understanding of organisation-wide strategic planning. 2. Discuss portfolios analysis and growth strategies. 3. Explore marketings role in strategic planning and how marketing works with its partners to create and deliver customer value. 4. Describe the environmental forces that affect the companys ability to serve its customers. 5. Review the SMART approach to setting Marketing Objectives 6. Review the importance of information in gaining insights about the marketplace and customers. 7. Develop an understanding of the marketing information system 8. Explain how companies analyse and use marketing information, including a brief review of the role of Market Research and the Marketing Research Process.
PepsiCo Europe PepsiCo Americas Foods PepsiCo Americas Beverages
PepsiCo Middle East Africa
Source: http://www.pepsico.com/Purpose/Performancewith-Purpose/Our-Business-and-Brands.html
Understand Your Boundaries
STRATEGIC PLANNING & LEVELS OF STRATEGY

Thinking Strategically: The Three Big Strategic Questions

At the Strategic (organisation wide) level the questions are: 1. Where are we now -- what is our situation? 2. Where do we want to go?
Business(es) we want to be in and market positions we want to stake out Buyer needs and groups we want to serve Outcomes we want to achieve
3. How will we get there?

Thus at the Marketing Management level the business we are in is a given, but the target groups, product offering etc. still needs to be decided.
The Hierarchy of Strategy
Corporate Strategy Business Strategy (SBU) Functional Strategy

Consumer Product Firms Industrial Product Firms Service Organisations Non Profit Organisations
Levels of Strategy - Corporate

Corporate Level strategic decisions are concerned with: overall purpose and scope adding value to shareholder investment portfolio issues resource allocation between SBUs structure and control of SBUs corporate financial strategy
Levels of Strategy - SBU (Cont)

Business Unit strategy is concerned with: overall purpose and scope competitive strategy developing market opportunities developing new products/services resource allocation within the SBU structure and control of the SBU
Our Focus is here
Levels of Strategy - Operational

Operational strategies are concerned with: The integration of resources, processes, people and skills to implement strategy
And here
Context is also important
Strategic Management in Different Contexts (1)

In small businesses, the importance of:
the expectations of individuals (e.g. Owners and founders) competitive positioning
In the multi-national corporation, the importance of:

product and geographic scope portfolio decisions corporate structure and control
Strategic Management in Different Contexts (2)

In the public sector, the importance of: powerful stakeholder influence (e.g. by government)
constraints or guidelines on strategic decision making by government competition for resources delivery of value for money within a political context
In the professional service organisations, the importance of:

the expectations and standards of professionals the powerful influence of internal stakeholders (e.g. partners) increasingly, competitive positioning.
Source: Deloitte Website. Tracking the Trends This is about identifying opportunities and informed decision making
Sometimes referred to as a Situation Analysis
THE ENVIRONMENTAL ANALYSIS

Situational Analysis and the 5Cs
Company
Customer [&Collaborators]
You could use a SWOT analysis to bring these elements together and start to create meaningful information from the raw data
Context
Competitors [& Collaborators]
SWOT
Examples of questions to explore
Strength
What do you do particularly well? What do you do that is unique in the marketplace? What do your customers/clients/patrons ask for you to do over and over again? What do you have the right tools/resources to accomplish?
Weaknesses
What do you not feel as comfortable doing? What needed resources, staff, or skills do you lack?
Internal Factors
Opportunities
Are there new situations coming down the road that you can take advantage of (new programs being offered, new faculty joining the department, new tools available to you)? Are there gaps in the market that you can fill? Are there partnerships that might be fruitful?
Threats
Who is your competition and what do they offer that you cant do as well or at all? Are there environmental changes or situations that could cause problems for you and your programs? What other roadblocks are being thrown in your path?
External Factors
The big question is So what..?! i.e. so what does this all mean? What are the implications of the information in each quadrant? A list on its own is of little value.
Be SMART!
SETTING OBJECTIVES
Writing Objectives be SMART!
Specific
Objectives have to be specific and positively described.
Measurable
A goal achievement should be measurable.
Attainable
It should be attractive for the team to reach the goal.
Realistic
The objective needs to be achievable in a realistic way.
Timebound
The objective has to be set within a time frame.
Marketing Objectives Sample targets

Economic marketing j objectives
Close connection to general economic company objectives
revenue / profitability profit contribution / Return-on-Investment growth (revenue/sales/profit) rationalizing capacities security (risk distribution) market position /market share
Non-economic marketing j objectives

Connecting to mental processes of buyer (purchase behavior)
customer retention customer satisfaction name recognition attitude (image / sympathie) repurchase rate level of distribution effects of knowledge strength of purchase intention
Additional Sample Metrics
Marketing Objectives - Target Pyramid

Objectives are generally set at each level of the pyramid, but it is important that they are inter-connected.
Corporate objectives
Measures such as ROI sit at the corporate level. Objectives would relate to things like Increase in sales, improvement of company image; greater brand awareness Specific objectives related to each area
Marketing objectives
Financial target
Price Communication Distribution policy target target target
PR- objectives
Exhibition objectives
Advertisement objectives
Managing customer data, raise purchase interest, increasing popularity of brand; campaign specfiic objectives
These strategic choice models are often applied at the Corporate Level, but can be equally valuable at the SBU or Functional Level as indicated in this section.
Ansoff s Growth Matrix
Innovation Pentagram
BCG Matrix Portfolio Analysis & Strategic Options
!
Tracy and Wiersemas Approach
We will only review these in brief. Please refer to your text for more details.
GE Matrix
Some Ideas for your Tool box
Porters Strategic Options
STRATEGIC OPTIONS
Ansoffs Growth Matrix

Current products Current markets
Market Penetration e.g convince current users to have Sultana Bran as an afternoon snack
New Products
Product Development e.g selling cheese to current customers that buy milk
Consider how Apple has or could - implement a strategy in each of these quadrants. Give examples. Which strategy do you think Apple primarily uses?
New markets
Market Development e.g selling chalk to not only schools, but also to kids
Diversity e.g a cigarette producer selling macaroni and cheese

Image: http://www.apple.com/au/
The BCG Matrix is based on the product life cycle theory. The assertion is that you should have both high growth products as well a cash generators. It has 2 dimensions (market share and market growth). The basic ideas is that the bigger the share or the faster the growth the better it is for the company.
BCG Portfolio Matrix (Market Growth / Market Share matrix)
Key
Each circle represents one of the organisations business units. However, this matrix can also be used to evaluate a product portfolio. Size of circle represents the relative size of the business unit in terms of revenue Implications: Stars: Fund so they can continue to grow Question marks: Review further investment or sell? Cash Cows: Milk funds to invest in more promising opportunities Dogs: Sell, abandon, or reposition for niche opportunities Curtin University is a trademark of Curtin University of Technology
CRICOS Provider Code 00301J
Think of an example for each category
6-33
GE Multifactor Portfolio Matrix

Industry Attractiveness High Protect Position Medium Invest to Build Low Build selectively
High
A
Build selectively Selectively manage for earnings
Medium
Limited expansion or harvest
Invest/Grow Selectivity /earnings Harvest /Divest
B
Low Protect & refocus Manage for earnings
D
Divest
Size of circle = market size Size of pie = market share
General Electric/McKinsey Grid Multifactor Portfolio Analysis

Business Strength
Strength of assets and competencies Relative brand strength Market share Market share growth Customer loyalty Relative cost position Relative profit margins Distribution strength and production capacity Innovation strength Quality Limitations: Access to capital

Market Attractiveness
Market size Market growth rate Market profitability Pricing trends Competitive intensity/rivalry Risk of returns in the industry Entry barriers Demand variability Segmentation Distribution structure
Subjective measurements across SBUs Process also highly subjective - from the selection and weighting of factors to the subsequent development of both a firms position and the market attractiveness Businesses may have been evaluated with respect to different criteria Sensitive to how a product market is defined
Competitive Strategy Michael Porter

Generic Competitive Strategies
Competitive Strategy
Risks of the Generic Strategies
Risks of Cost Leadership
Cost leadership is not sustained competitors imitate technology changes other bases for cost leadership erode Proximity in differentiation is lost
Risks of Differentiation
Differentiation is not sustained competitors imitate bases for differentiation become less important for buyers
Risks of Focus
The focus strategy is imitated The target segment becomes structurally unattractive structure erodes demand disappear Broadly targeted competitors overwhelm the segment the segments differences from other segments narrow the advantages of a broad line increase New focusers sub segment the industry
Cost proximity is lost
Cost focusers achieve even lower cost in segments
Differentiation focusers achieve even greater differentiation in segments
Dr Margot Wood
Tracy and Wiersemas Value Discipline Model

This model reflects Porters three basic strategy concepts of cost leadership, segmentation strategy and differentiation strategy. Tracey and Wiersema extend them into value disciplines. The primary difference between Porters work and the value discipline model is that Tracey and Wiersema deepened the focus on the customer relationship by defining the Customer Intimacy value discipline. Porters focus was market-focussed, Tracey and Wiersema shifted to a customer focus.
Source: The Tracey & Wiersema Value Discipline Model Part 1
Disciplines
Operational excellence: deliver products smoothly, reliably (e.g., Fandango,
TurboTax)
Product leadership: excellent quality; innovation (e.g., Apple, BMW) Customer intimacy: knowledge of customer needs (e.g., Amazon, Facebook)
38
Innovation Strategies - Innovation Pentagram

A tool of innovation management
Motive: Which motive targets the innovation?
Business system: With what kind of business system is the innovation implemented?
Advantage: What kind of advantages does the innovation provide?
Timing: When are we applying these measures?
Revenue model: How is the revenue generated?
MARKET INFORMATION & MARKET RESEARCH

Data Collection to form the Marketing Information System (MIS)

How does your organisation collect information? What are some of the issues with collection of information?
Internal records Marketing Intelligence
Market research
The Magic of Mindreading.
Sources of Competitive Information

Independent online review forums Sales agent feedback sites Combination sites offering customer reviews and expert opinions Customer complaint sites Public blogs Former employees
Textbook Resource: Kotler, Keller, Burton: Marketing Management 2009 Pearson Education Australia
Sources of Secondary Data

Begin the data collection phase with secondary data from both internal and external sources: Internal sources: Sales reports, by geographical area, product or product line Accounting information Competitive information External sources: Magazines and newsletters Trade and industry associations On-line databases Government databases (e.g. ABS)
Textbook Resource: Kotler, Keller, Burton: Marketing Management 2009 Pearson Education Australia
http://bit.ly/wJgvL4
Possible secondary data sources for Assessment 3.

Small Business Development Corporation
http://www.smallbusiness.wa.gov.au/
IBISWorld
http://www.ibisworld.com.au//
Gartner
http://www.gartner.com/technology/home.jsp
Australian Bureau of Statistics

http://www.abs.gov.au/
What can you add to this list?

Marketing Research
Marketing decisions should be fact-based Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
A specific problem or opportunity
46
The Marketing Research Process

Example of Interrelationship: At the first step the researcher must understand what is involved in the remaining stages
Ex 2.1 The Research Project Steps Source: Marketing Research By A. Parasuraman, Dhruv Grewal, R. Krishnan 2007 Houghton-Mifflin Co. Fisher Price draw extensively on market research
Types of research
Exploratory Research
Research conducted to gather more information about a problem or to make a tentative hypothesis more specific.
Descriptive Research
Research conducted to clarify the characteristics of certain phenomena to solve a particular problem.
Causal Research
Cause and effect research in which it is assumed that a particular variable X influences a variable Y.
Research An Example
There are many avenues for collecting data. Heres an example from Westnet. What they do with it is clearly linked to brand implications. Click here to link through to Awards.
Module 2: Learning Objectives Checking In..

1. Develop an understanding of organisation-wide strategic planning. 2. Discuss portfolios analysis and growth strategies. 3. Explore marketings role in strategic planning and how marketing works with its partners to create and deliver customer value. 4. Describe the environmental forces that affect the companys ability to serve its customers. 5. Review the SMART approach to setting Marketing Objectives 6. Review the importance of information in gaining insights about the marketplace and customers. 7. Develop an understanding of the marketing information system 8. Explain how companies analyse and use marketing information, including a brief review of the role of Market Research and the Marketing Research Process.
Next Steps
Review the Material for Module 3: Segmentation, Targeting & Positioning Complete the required reading
Piskorski, M. 2011 Social strategies that work Harvard Business Review no. 11 pp 116 -122. Theres also an interesting interview with Piskorski via this link. Kumar, V. 2006. Knowing what to sell, when, and to whom. Harvard Business Review 84 (3): 131-137. Thomas, J.S. 2004. Getting the most out of all your customers. Harvard Business Review 82 (7/8).
Finalise team and focus for Applied Project Watch for Announcements Internal Classes Practical Activity Dont forget to Dig Deeper!
BRICS, CIVETS & the Next Eleven!

Next week we are putting theory into practice Take note of your assigned country.
o Group 1: China o Group 2: India o Group 3: Indonesia o Group 4: Sub Saharan Africa o Group 5: Australia
Locate at least 1 report that relates to that country. More if you can. Bring along next week. We will be exploring questions such as:
o What are the opportunities? o Where should organisations focus? Which industries? Markets? o What is required for an organisation to succeed in that market?
This is an in-class activity. Just make sure you have something to work with!
Sample Resources
Report| McKinsey Global Institute Manufacturing the future: The next era of global growth and innovation
o http://www.mckinsey.com/insights/mgi/research/productivity_competitiveness_and _growth/the_future_of_manufacturing
Report| It's a MAD world: How Mobile, Agile, Digital employees and consumers are reforming Australia
o http://www.accenture.com/Microsites/futurebusinesstrends/Pages/trend-onevideo.aspx
Report| The Rise of the African Consumer

o http://www.mckinsey.com/global_locations/a frica/south_africa/en/rise_of_the_african_co nsumer

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MM555

Module 2 Environmental Analysis

In the News; Out of Academia; Around the Grounds

..What Caught Your Eye This Week?

From Mad Man to Superwoman

This Weeks Reading. ..Which Ideas Will You Hold Onto?

Creating New Market Space*

Image: http://www.blueoceanstr ategy.com/too/boss.html

Creating New Market Space* (cont)

FunctionalEmotional Orientation of an Industry Time

Focuses on adapting to external trends as they occur.

Participates in shaping external trends over time.

Enron, and Cisco Systems.

Identifying opportunities in the marketplace

MODULE 2: ENVIRONMENTAL ANALYSIS

Marketing Management Framework

Positioning Analysis & Strategy

Planning & Implementation

Implementation, Monitoring & Measuring Outcomes

Module 2: Learning Objectives

PepsiCo Europe PepsiCo Americas Foods PepsiCo Americas Beverages

PepsiCo Middle East Africa

Understand Your Boundaries

STRATEGIC PLANNING & LEVELS OF STRATEGY

Thinking Strategically: The Three Big Strategic Questions

3. How will we get there?

The Hierarchy of Strategy

Corporate Strategy Business Strategy (SBU) Functional Strategy

Levels of Strategy - Corporate

Levels of Strategy - SBU (Cont)

Levels of Strategy - Operational

Strategic Management in Different Contexts (1)

In the multi-national corporation, the importance of:

Strategic Management in Different Contexts (2)

In the professional service organisations, the importance of:

Sometimes referred to as a Situation Analysis

THE ENVIRONMENTAL ANALYSIS

Situational Analysis and the 5Cs

Competitors [& Collaborators]

Writing Objectives be SMART!

Marketing Objectives Sample targets

Non-economic marketing j objectives

Additional Sample Metrics

Marketing Objectives - Target Pyramid

Price Communication Distribution policy target target target

Ansoff s Growth Matrix

BCG Matrix Portfolio Analysis & Strategic Options

Some Ideas for your Tool box

Porters Strategic Options

Ansoffs Growth Matrix

Diversity e.g a cigarette producer selling macaroni and cheese

BCG Portfolio Matrix (Market Growth / Market Share matrix)

Think of an example for each category

GE Multifactor Portfolio Matrix

Limited expansion or harvest

Invest/Grow Selectivity /earnings Harvest /Divest

Size of circle = market size Size of pie = market share

General Electric/McKinsey Grid Multifactor Portfolio Analysis

Competitive Strategy Michael Porter

Cost proximity is lost

Cost focusers achieve even lower cost in segments

Differentiation focusers achieve even greater differentiation in segments

Tracy and Wiersemas Value Discipline Model