Chapter three: The strategic marketing process

Strategy formulation
Strategic Analysis

By: Aschalew A. (Asst. Prof)

aschalewadane@yho.com
aschmagna@gmail.com

2/13/2022 1
 The strategic marketing process.
1. Market opportunity analysis
2. Customer analysis
3. Market demand analysis
4. Competitive analysis
5. Macro environmental analysis
6. Internal analysis
7. Market segmentation
8. Market targeting
9. Positioning
10. Marketing plans
11. Marketing plan implementation
12. Measuring and feedback.
 External Analysis
 Strategy Development or review logically starts with
external analysis – an analysis of the factors
external to a business that can affect strategy.

 Concepts and methods related to external analysis

will be discussed:
 Customer analysis
 Competitor analysis

 Market analysis
 Environmental analysis

2/13/2022 3
 Strategic Management –Analysis

2/13/2022 4
 Strategic Management –Analysis

2/13/2022 5
 The Scope of Customer Analysis

2/13/2022 6
 1. Segmentation
• Target... every customer as a target, however its
segmentation is mainly based on
• Age .. 10-35

• Sex:..box..but,..d/t in preference..taste...Light for girls..Vs

Strong for. B

• Family size ...bottle size & packaging

• Income.” ...d/nt price

• Geograhpy... 200 countries .. climate, income, culture or

custom are considered

2/13/2022 7
 Coca Cola... CONT’D
2. Motivation
Coca-cola motivates its consumers through its
themed message (Open Happiness), and

This can be explained in the hedonic needs

(Consumers emotional benefits)

2/13/2022 8
• “I want it fresher, I want it healthier and I
want it now.”

• This is the demand from consumers today,

according to Coca-Cola

2/13/2022 9
 1. Customer Analyses
Customer Motivation
What elements of the product/ service do customers value most?
What are the customers’ objectives?
What are they really buying?
How do segments differ in their motivation priorities?
What changes are occurring in customer motivation?

Unmet Needs
Why are some customers dissatisfied?
Why are some changing brands or suppliers?
What are the severity and incidence of consumer problem?
What are unmet needs that customers can identify?
Are there some of which consumers are unaware?
Do these unmet needs represent leverage points for competitors?
2/13/2022 10









2/13/2022 11
 Approaches to Defining Segments


2/13/2022 12
 Customer Motivation
After identifying customer segments, the
next step is to consider their motivations:

what lies behind their purchase decisions?

And how does that differ by segment?

2/13/2022 13
 Shopper segments
 Newbie shoppers- need as ample interface, as well as a lot of hand-holding and
reassurance

 Reluctant shoppers-Need information , reassurance, and access to live customer

support.

 Frugal shoppers : need to be convinced that the price is good and they don't to
search elsewhere.

 Strategic shoppers –need access to the opinion of peers or experts , and choices
in configuring the product they buy.

 Enthusiastic Shoppers: need community tools to share their expertise , and

choices in configuring the product they buy.

Convenience shoppers: wants efficient navigation, a lot of

information from customers and experts , and superior
customer service
2/13/2022 14
 .

2. Competitor analysis

2/13/2022 15
 Introductory Proverbs


2/13/2022 16
 Definition of Competitor Analysis

 The analysis should focus on the identification of

threats, opportunities, or strategic questions created by
emerging or potential competitor moves, weaknesses, or
strengths.

 Competitor analysis starts with identifying current

and potential competitors.

2/13/2022 17
 Coca – Cola.. competitors
Direct competitors
1. Pepsi..
Very strong in their distribution and have
excellent marketing and sales policies.
2. Red Bull ...
Energy drink/sports drink and is amongst the
strongest direct coca cola competitors in terms
of brand valuation.
3. Gatorade... Science ..6th ranked
4.. Dr Pepper... 7up & RC Cola
2/13/2022 18
 Coca – Cola.. competitors
• 5. Mountain dew

• Fanta C C...100 FLAVOUR

• Sprite C C

• Diet coke Vs Diet Pepsi

2/13/2022 19
 Coca – Cola.. competitors
• Indirect coca cola competitors.
1. Lipton... tea drinking nations like UK,
India, China, and others

2. Nescafe... superb taste and fantastic

distribution.

3. Tropicana.. natural juices

2/13/2022 20
 Questions To Structure Competitor Analysis

WHO ARE THE COMPETITORS?

Against whom do we usually compete?

Who are our most intense competitors?

Less intense but still serious competitors?

Makers of substitute products?

Can these competitors be grouped into strategic groups on the

basis of their assets, skill, and/ or strategies?

Who are the potential competitive entrants? What are their

barriers to entry?

 Is there anything that can be done to discourage them?

2/13/2022 21
 Questions To Structure Competitor Analysis

Evaluating The Competitors

What are their objectives and strategies? Their
level of commitment? Their exit barriers?

What is their cost structure? Do they have a cost

advantage or disadvantage?

What is their image and positioning strategy?

Which are the most successful/unsuccessful

competitors over time? Why?

What are the strengths and weaknesses of each

competitor or strategic group?
2/13/2022 22
 i) Identifying Competitor-customer-based Approaches

In most instances, primary

competitors are quite visible and
easily identified.

2/13/2022 23
 ii)IDENTIFYING COMPETITORS-STRATEGIC GROUPS




2/13/2022 24
 COMPETITOR STRENGTHS AND WEAKNESSES
What Are the Relevant Assets and Skills?
Competitor strengths and weaknesses are based
on the existence or absence of assets or skills.

Thus, an asset such as a well-known name or a

prime location could represent a strength, as
could a skill such as the ability to develop a strong
promotional program.

Conversely, the absence of an asset or skill can

represent a weakness.

2/13/2022 25
 3. Market Analysis

2/13/2022 26
 Coca Cola...
• 15% of its total profits from the U.S.

• more than 200 countries and territories

worldwide

• 3,500 products in the Coca-Cola distribution

line.
• Product : Energy Drinks, Sports Drinks,
tea/coffee, Juice/Juice Drinks

2/13/2022 27
 Coca Cola...
• Europe, Middle East and Africa – Sales: 29%
and Profit: 7.21%
• Asia Pacific – Sales: 28% and Profit: 4.92%
• North America – Sales: 23% and Profit: 4.30%
• Latin America – Sales: 20% and Profit: 3.78%
• Corporate – Sales: 14% and Profit: 0.07%
• Bottling Investments Operating Segment: –
Sales: -16% and Profit: -3.70% (The Coca-Cola
Company, 2017).
2/13/2022 28
 Coca Cola...
Size .. Its closest competitor, Pepsi, is less than three fourths the size of Coca-Cola
Growth:
• Energy Conservation/Climate Change -reduce their carbon foot print by 15%

• Sustainable packaging/recycling -reduce packaging impact and attempt to

utilize recycling to recover 100% of current packaging

• Water stewardship -minimize water consumption and attempt to cause a

water neutral impact, returning the same amount of clean and fresh water
used

• Product portfolio/wellbeing -provide refreshing beverages for every occasion

and individual lifestyle

• Diverse and inclusive culture -create a workplace that reflects the communities
they support and make sure every team member is valued and respected for
their various backgrounds and beliefs

2/13/2022 29
 Size

2/13/2022 30
2/13/2022 31
 Market Profitability

2/13/2022 32
 Cost Structures

2/13/2022 33
2/13/2022 34
 Market Trends

2/13/2022 35
2/13/2022 36
 Coca cola...PEST
1. Political
• U.S. trade sanctions against countries designated
by the U.S. government as state sponsors of
terrorism
2. Economics
• The organization contributes to the economic
stability by employing local people from each
community, paying expenses to governments,
paying suppliers for products, and by supporting
local community programs.
2/13/2022 37
 Coca cola...PEST..P
• Political stability and importance of Beverages - Soft Drinks sector in the country's economy.
• Risk of military invasion
• Level of corruption - especially levels of regulation in Consumer Goods sector.
• Bureaucracy and interference in Beverages - Soft Drinks industry by government.
• Legal framework for contract enforcement
• Intellectual property protection
• Trade regulations & tariffs related to Consumer Goods
• Favored trading partners
• Anti-trust laws related to Beverages - Soft Drinks
• Pricing regulations – Are there any pricing regulatory mechanism for Consumer Goods
• Taxation - tax rates and incentives
• Wage legislation - minimum wage and overtime
• Work week regulations in Beverages - Soft Drinks
• Mandatory employee benefits
• Industrial safety regulations in the Consumer Goods sector.
• Product labeling and other requirements in Beverages - Soft Drinks

2/13/2022 38
 Coca cola...PEST..E
• Type of economic system in countries of operation – what type of economic system there is and
how stable it is.
• Government intervention in the free market and related Consumer Goods
• Exchange rates & stability of host country currency.
• Efficiency of financial markets – Does The Coca-Cola Company needs to raise capital in local
market?
• Infrastructure quality in Beverages - Soft Drinks industry
• Comparative advantages of host country and Consumer Goods sector in the particular country.
• Skill level of workforce in Beverages - Soft Drinks industry.
• Education level in the economy
• Labor costs and productivity in the economy
• Business cycle stage (e.g. prosperity, recession, recovery)
• Economic growth rate
• Discretionary income
• Unemployment rate
• Inflation rate
• Interest rates

2/13/2022 39
 Coca cola...PEST..S
• Demographics and skill level of the population
• Class structure, hierarchy and power structure in the
society.
• Education level as well as education standard in the
The Coca-Cola Company ’s industry
• Culture (gender roles, social conventions etc.)
• Entrepreneurial spirit and broader nature of the
society. Some societies encourage entrepreneurship
while some don’t.
• Attitudes (health, environmental consciousness, etc.)
• Leisure interests

2/13/2022 40
 Coca cola...PEST..T
• Recent technological developments by The
Coca-Cola Company competitors
• Technology's impact on product offering
• Impact on cost structure in Beverages - Soft
Drinks industry
• Impact on value chain structure in Consumer
Goods sector
• Rate of technological diffusion
2/13/2022 41
 Identifying a Company’s Market Opportunities

• Characteristics of Market Opportunities:

– An absolute “must pursue” market
• Represents much potential but is hidden in “fog of the
future.”

– A marginally interesting market

• Presents high risk and questionable profit potential.

– An unsuitable\mismatched market
• The firm’s strengths are not matched to market
factors—best avoided.
2/13/2022 43
 INTERANL ANALYSIS

2/13/2022 44
 Performance Analysis
Profitability and sales provide an evaluation of
past strategies and an indication of the current market
viability of a product line.

Return on assets (ROA), the most commonly used

measure of profitability, needs to be compared to the cost of
capital in order to determine if the business is adding value
for the shareholder.

ROA can be distorted by the limitations of

accounting measures in particular, it ignores intangible
assets, such as brand equity.

Sales is another performance measure that

can reflect changes in the customer base that have long-
term implication.
2/13/2022 45
 Performance Analysis

2/13/2022 46
 Performance Analysis


2/13/2022 47
 Performance Analysis

2/13/2022 48
 Product Portfolio Analysis

2/13/2022 49
 Strengths and Weaknesses

2/13/2022 50
 Dimensions Of Environmental Analysis

i)Technology
One dimension of environmental analysis is
technological trends or technological events
occurring outside the market or industry that
have the potential to impact strategies.

They can represent opportunities to those in

a position to capitalize.

 A new alternate technology could also pose

a significant threat.

2/13/2022 51
 Environmental Analysis
ii) GOVERNMENT

What changes in regulation are

possible?
What will their impact be?
What tax or other incentives are being
developed that might affect strategy?
What are the political risks of operating
in a governmental jurisdiction
2/13/2022 52
 Environmental Analysis

III) Economics

What are economic prospects and

inflation outlets for the countries in
which the firm operates?

How will they affect strategy?

2/13/2022 53
 Environmental Analysis
iv)CULTURE
What are the current or emerging trends in
lifestyles, fashions, and other components of
culture?
Why?
What are their implications?
Cultural Trends
Cocooning: consumers are retreating into safe cozy
“home like” environments to shield themselves from
the Harish realities of outside world.

2/13/2022 54
 Environmental Analysis

v)DEMOGRAPHICS
What demographic trends will
affect the market size of the industry
or its submarkets?
What demographic trends represent
opportunities or threats?

2/13/2022 55
 ASSIGNMENT

PEST analysis of Tiret, Midroc & BKIEA

2/13/2022 56