Environment and marketing strategy

27 November 2017
Learning objectives
 Understand how factors in the external and internal business environment influence marketing strategies and
outcomes
 Describe the strategic planning process
 Describe the steps in marketing planning, a sub-process of strategic planning
 Understand the relationship between planning and decision making
 Describe the role of implementation and control in marketing planning
 
What is strategy?
Strategy: speculating to a certain extent
 It is about the relationship (degree of fit) between a firm and its environment
 It is looking into a future that can be foreseen but is unknowable
 It is about expectations, options, choices and instrumentality (means and ends)
 It is about composing scenarios, forecasts and horizon scanning.
 It is about allocating resources with a view to achieve future ends
 
Planning
“An ongoing process of making decisions that guide the firm both in the short term and for the long haul. Planning
identifies and builds on firms’ strengths, and it helps managers at all levels make informed decisions in a changing
business environment. Planning means that an organisation develops objectives before it takes action.”
Solomon et al. 2013
 
The Hierarchy of Planning

 
 
*these layers work together and not in isolation
Strategy plan must inform other plans because they need to be pulling in the same direction
 
Strategic planning process: Steps in marketing planning, a sub-process of strategic planning
 
 
 
 
 Strategic level plans inform marketing activity
 Mission statement: who do we want to serve, where to focus efforts etc. describe overall purpose of
organisation - what they stand for + what they are seeking to achieve
 If too narrow, restrict opportunities; if too broad then would fail to target specific people
 Broad mission statement allows people to move into more target markets -e.g. Nike's mission statement
e.g. Samsung's mission statement [very broad]: can allow them to diversify into different markets
e.g. Tesla's narrow statement: focus on electronic car market
 
Next step: evaluate the environment in which you operate
 Levels of Marketing Environment

 
Micro environment: sit closer to company but company can't control them
 
Macro-environment- global environment - may have marketing implications though marketers have no control
over them
  
P:   Political and legal forces
E:   Economic forces
S:   Social (socio-cultural) forces
T:   Technological forces
PEST + Physical/Ecological forces
 
PEST: Political and legal forces
 Competition law (e.g., preventing of the abuse of firms’ dominant position) - implications for companies who
want to branch into international markets
 Consumers (protection)
 Employment and social policy - might need to think about government policies e.g are they pursuing a
nationalisation agenda?
 Environment (risk of nationalization?)
 Food safety
 Product labelling and packaging -Advertising Standards Authority in UK works on behalf on consumers and
they can bring claims [e.g. recently looking at broadband ads; currently changed the law saying that they need
to advertise the AVERAGE speed and not the max speed bc it was misleading]
 Taxation
 
PEST: Economic forces

 Indicators of economic health

 GDP, GDP per capita, population below poverty line, unemployment rate, etc
 Level of economic development - consumer income may have bearing on price setting
 The business cycle
 Economic development - growth or recession?
 
 PEST: Technological forces
 

 
Pace of technological change is rapid - companies need to be aware of new trends and be aware the potential
obsolescence of new products
Potential new products might render yours obsolete

PEST + Physical/Ecological forces

 Environmental imperatives
 Recycling
 Alternative power sources
 Sustainability
 A growing part of society wants to make ecological and environmentally friendly choices but this may just be the
bae line of entrance in the future - i.e. it is not an added benefit but more of a requirement/norm e.g. animal
testing
 Compliance v. opportunities for differentials through CSR?
 PEST analysis is an ongoing process because every aspect will be changing - thus may be difficult to execute.
Organizations do environmental scanning where they constantly survey the market and feed info into their
analysis.
 
Levels of Marketing Environment: Micro-environment
o Suppliers
o Distributors
o Consumers
o Competition
o Stakeholders that find themselves closer to the organization
 If there is a lengthy supply chain, may be complicated
 
Consumer - retailer - manufacturer
*retailers deal with a lot of manufacturers
*manufacturers deal with a lot of suppliers for raw materials
*other stakeholders in general marketing activity e.g. advertising agencies - tv company
*distributors between manufacturer - retailer
*wider society impact e.g. citizens, government, communities
 
FOCUS: COMPETITIORS

 
 
 Will be fighting for profit with a broader set of people and not just your direct competition
 Identified that potential threat of new entrance makes the market less attractive e.g. if easier for people to
enter the market
 Easy to switch and customers can shop around - less attractive
 Whether there is a strong bargaining power from consumers
 Threat of substitutes: how many alternative products that can be bought to satisfy the same needs - would
mean that you cannot overcharge
 This framework can be applied for every industry
 A lot of complications when applying the framework in reality - rivalry may be positive kind but to what extent?
e.g. rivalry could provide consumers with more choices
 Start with an industry analysis - what your market is, identify the structure of that industry, how is the industry
changing? 5 forces are not constant - always changing
 
Levels of Marketing Environment: Internal environment
 Controllable elements in a company but companies still need to be aware of this as it can shape the
organizations' future
 Employees
 Cash flow
 Capital assets
 Materials/resources
 Structure
 Processes
 
 Strengths & weaknesses: something that can be built on for future purposes
 Opportunities & threats: cannot be controlled by companies
 SWOT analysis: facilitates decision making based on selecting opportunities for biz to pursue playing according
to their strengths
 

Set organisational objectives

Cannot be broad and vague - should meet the SMART criteria
 
Establishing business portfolio:
 
BCG growth–market share matrix
(Boston Matrix)
o Likely that there would be multiple goods to sell
o This structure allows you to understand the portfolio of your products and thus give you an idea as to
whether a company should invest in it but doesn’t tell you how to invest
o Portfolio analysis: evaluate your product and see which to focus on

o STARS: high profit but also high cost - need a lot of investments *cash hungry products
o Question Marks: aka 'problem children' products in a high growth market but have a low market share -
invest in them to turn them into star or not due to the industry being too competitive?
o Cash cows: high market share but in a market which is not strongly growing - can milk them for profits but
do not need high investments
o Dogs: low market share in a poorly growing market - usually products that company are looking to divest
 
Product–market growth matrix
Aka Ansofff matrix
 Identifies 4 potential growth strategies for companies to pursue
 Market penetration: increasing sales to existing markets of existing products - often done through heavy
investment and promotion; safest of the growth strategy because staying in comfort zone
 Product development strategy: develop new products in the same market - extending product line e.g.
McD's extending into McCafe; slightly more risky because bringing in new product but still got knowledge of
the market
 Market development strategy: usually extending into new geographical market - capitalising on strengths
through international expansion; may be risky if unsure of the markets you are going into
 Diversification strategy: new products & new markets - moving out of comfort zone e.g. Virgin, Amazon with
Kindle, Echo etc -requires a lot of investment to gain the skills and capabilities but companies can capitalise
on the new opportunities
 
 

 
  

 
Functional/Marketing Planning
 Internal and External Environment

SWOT analysis (product/brand specific)
 
Marketing objectives
 Growth strategies on a product level
 Market penetration
 Product development
 Market development
 Diversification
 Sales (e.g., to grow average customer spending by 5%)
 Market share (e.g., to increase UK market share to 17%)
 
 Marketing objectives will be smart and will have reduced time frame as compared to a corporate
objective

Develop and implement marketing strategies: Specific marketing strategies

Product related
 Product
 Price
 Place
 Promotion
 
Service related
 Product
 Price
 Place
 Promotion
 People
 Physical evidence
 Processes
 
 What should be used to achieve the marketing objectives? Marketing mix for each business will vary.
 Cannot happen in isolation - need to be integrated together
 
Monitor and control marketing strategies
 Either revise objectives or strategies
 Marketing plan needs to have some degree of flexibility within in case you need to tweak it e.g. run
promotion or to take advantage of any opps that may arise
 
Marketing metrics
 Acquisition cost
 Sales metrics (AOV, daily trading, etc.)
 Return on campaign investment
 Customer commitment
 Response rate to direct marketing
 Referral rate
 Customer retention - brand loyalty
 Customer satisfaction
 Usage rates
 Reach and frequency of advertising
 Sales calls per time period
 
 Combo of matrix will be used by to reach objective
 
Operational planning: Develop action plans to implement the marketing plan
 May be annual or quarterly depending on various factors e.g. seasonal product that you sell
 
Action plan

 Provide structure for implementing various objectives

 Responsibility for the action plan: who take responsibility of what and thus whose performance to
review?
 Action plan sets smaller objective and targets - allows you to have quick checks on whether you are
following your objectives
 Measurement and control of the action plan:

Marketing metrics
 Acquisition cost
 Sales metrics (AOV, daily trading, etc.)
 Return on campaign investment
 Customer commitment
 Referral rate
 Response rate to direct marketing
 Customer retention
 Customer satisfaction
 Timeliness
 Usage rates
 Reach and frequency of advertising
 Sales calls per time period