Week 3: Gap Analysis - Setting Objectives &

Developing a Marketing Strategy

Dr Raphaël Akamavi
r.k.akamavi@bham.ac.uk

Learning Outcomes
➢ To comprehend an appropriate business mission statement, vision & objectives,
➢ To define ‘strategic choice’
➢ To describe the process of setting marketing objectives
➢ To identify the strategies & describe characteristics of market leaders, challengers,
followers and nichers
➢ To evaluate the advantages and disadvantages of being a market pioneer or a close
follower
➢ To develop an understanding of generic
➢ To understand how portfolio models are used to select alternatives strategies

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 AGENDA
➢ Business mission statement, vision and objectives
➢ Strategic fit
➢ Closing the Strategic Gap
➢ Competitive position and strategies
➢ Alternative Strategies
➢ Key Critical Success Factors
➢ Summary

Defining Marketing Strategy

 Marketing strategy is “a market-oriented approach that establishes a

profitable market position for an organisation against all forces that
determine industry competition by continuously creating & developing a
sustainable competitive advantage (SCA) from the potential sources that
exist in a firm’s value chain.” (West et al., 2015)
 Marketing strategy is “an approach to enable an organisation to best use it
resources to meet the needs of its customers”. (West et al., 2015)
 Marketing strategy consists of decisions and actions focused on building a
sustainable differential advantage, relative to competitors, in minds of
customers, to create value for stakeholders (Palmatier and Sridhar 2015, p. 5)
 Marketing strategy is a Gap analysis .” (West et al., 2015, p.10)

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 Purpose of Strategy
▪ To set the future direction for the organisation

▪ To state how it is to create value to customers

▪ To identify what product/s and in which markets the

firm will invest its resources

▪ To describe how it is to perform better than

competition

Three levels of strategy

Corporate
The overall goals of the business; often expressed in financial
terms

Competitive/Business (SBU)
How to compete in individual product-markets and support the
corporate strategy

Functional
Functional strategies for the organisation’s functional areas in
support of SBUs and corporate strategies
Strategic management may be initiated at any or all of these hierarchical levels of an
organisation

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 Strategic Fit

Strategic Concept: E-V-R Model

Environment
Where are (Opportunities and Threats):
Critical Success Factors Plans &
we Now? Where Actions
• Position
• Relative
do we to reach
Resources Targets
success Values Want
(Strengths and
The Process Weaknesses): to reach? How do we
Know?
Skills and
Capabilities
By when?
Source: Adapted from Thompson, J. (1995) Strategy in Action

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 The Strategic Planning Gap
Revenue
Estimated Revenue

Planning Gap

Actual Revenue

0 Years 5

What type of gaps can occur?

Why does a gap occur?

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 Kodak’s Strategic Gap:
Why does Kodak have this gap?

Food Discount Sector Size and Forecast

Food discounters’ sector size (£m excl VAT),
2011-21

Source: Mintel (2015)

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 Responses to environmental change
Environmental change

Ignorance Barriers to

Delay change

Retrenchment

Gradual strategic Radical strategic

repositioning repositioning
D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill 11

Influences on Organisational
Objectives (and strategy)
EXTERNAL INFLUENCES
NATURE OF THE BUSINESS
•Societal values
•Market situation
•Pressure groups
•Products
•Government
•Technology
•Legislation

OBJECTIVES

ORGANISATIONAL CULTURE
INDIVIDUALS & GROUPS
•History and age
•Expectations of
•Leadership and
stakeholders and
management style
coalitions
•Structure and systems

Source: adapted by Wilson & Gilligan (1997: 211) from Johnson & Scholes (1997)

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 Strategic marketing fit

Environment

Fit Fit

Fit
Strategy Organization

Closing the Planning Gap

➢ Operations gap (efficiency gains)
– greater productivity (reduced costs)
– improved margins (from better sales mix or Intensive
growth
higher prices)
– increased market penetration
➢ Strategies gap (effectiveness gains)
– market extension Integrative
growth
– product development
– new strategies Diversification

Based on: McDonald (1999: 260-1)

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 Where do we want to be?
Strategic Decisions
▪ Strategic decisions at corporate level
➢ Mission statement,
➢ Directional strategy (Growth, Stability,
Retrenchment)
➢ Resource allocation

▪ Strategic decisions at SBU level

➢ Choosing Generic Strategy; cost leadership,
differentiation & focus

▪ Marketing-related strategic decisions

➢ Products to offer
➢ Market segments to target
➢ Positioning strategy
➢ Competitive stance to take

Corporate, Business and Marketing Planning

➢ Corporate plan
– involves applying business planning to several different
units of the business aggregate
➢ Business plan
– involves other resources which must be brought to bear
on the identified markets
➢ Marketing plan
– based on markets / customers and products
Source: McDonald (2002: 39)

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 Corporate and Marketing Objectives
➢ Corporate objectives
– growth (organic v acquisition)
– return on investment
– profit
– social responsibility
➢ Marketing objectives
– market share
– sales volume
– margin
– market positioning
Based on: Drummond & Ensor (2001: 135-6) Strategic Marketing, 2nd ed. Butterworth-Heinemann

Strategic choice for closing the Gap

DEVELOPMENT
STRATEGIES

GENERIC ALTERNATIVE ALTERNATIVE

STRATEGIES DIRECTIONS METHODS
Cost leadership Do nothing Internal development
Differentiation Withdrawal Joint development
Focus Consolidation
Market penetration
Product development
Market development
Diversification
Adapted from Johnson and Scholes

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 Choice of Typical Generic Strategies

Build turning question marks into stars, grow market share

Hold preserve market share – yield cash from cash cows

Harvest grab short term cash flow, at whatever cost to longer term value –
cashing in!

Divest realise or liquidate remaining value

BUILD OBJECTIVES

STRATEGIC FOCUS
Market expansion
➢New users
Attractive conditions ➢New uses
• Growth markets ➢Increased frequency of use
• Exploitable competitive weakness
Winning market share
• Exploitable corporate strengths
➢Product innovation
• Adequate corporate resources
➢Distribution innovation
➢Promotional innovation
➢Penetration pricing
➢Competitor confrontation
D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

Merger or acquisition
Forming strategic alliances

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 HOLD OBJECTIVES

Attractive conditions
• Market leader in a mature Strategic focus
or declining market Monitoring the competition
•Costs exceed benefits of building Confronting the competition

D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

NICHE OBJECTIVES

Attractive conditions
• Small budget Strategic focus
• Strong competitors dominating Market segmentation
major segments Focused R&D
• Pockets existing for profitable Differentiation
operations Thinking small
• Creating a competitive advantage

D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

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 HARVEST OBJECTIVES

Attractive conditions
Strategic focus
• Market is mature or declining
Eliminate R&D expenditure
(dog products)
Product reformulation
• In growth markets where costs of
Rationalise product line
building or holding exceed the
Cut market support
benefits (selected problem children) Consider increasing price
• Care of loyal customers
• Future breadwinners exist

D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

DIVEST OBJECTIVES

Attractive conditions
• Loss-making products or business Strategic focus
drain on resources
Get out quickly:
• Often low share in declining markets
Costs of turnaround exceed benefits Minimise the costs
• Removal will not significantly affect
sales of other products

D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill

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 Choices of Marketing Plan Direction

Higher Level objectives & Strategy

Growth (attack) Maintenance Retrenchment

•Market Penetration (defence) (withdrawal)
•Market Development •Sustain current •Exit markets
•Product Development revenues or market share •Drop products
•Diversification •Wring short-term •Downsize all
profits from existing •marketing
product markets •Limit distribution
•Prepare for future growth •Close down in orderly fashion
• ause/Proceed with Caution •Turnaround,
• No Change •Sell-Out/ Divestment,
• Profit • Bankruptcy/ Liquidation

Marketing plan objectives, strategies and programs

Wood, M. B. (2004) Marketing planning: principles into practice, Harlow: Essex, FT Prentice-Hall.

Success and Disaster in the

Product Portfolio
High
MARKET GROWTH RATE (%)

STARS QUESTION MARKS

Disaster sequences

Success sequences
CASH COWS DOGS

Low
High Low
RELATIVE MARKET SHARE
Source: Wilson & Gilligan (1997: 314) Strategic Marketing
Management, 2nd ed. Butterworth-Heinemann.

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 Product Portfolio Analyses

A Star Problem Child

(Question Mark)
F
High
relative to GNP growth)
Market Growth Rate

B
(in constant dollars,

Divestment
D

Cash Dog
Cow E
Low

G
Divestment
10x 1x .1x
Market Share Dominance
(Share relative to largest competitor)

Boston Consulting
Group Matrix (1)
Relative Market Share
H L

Intensify
Marketing
Intensify
Marketing
?
H Efforts to Efforts
Increase or Leave
Share Market
Industry
Growth
Rate Use Profits to Reduce Efforts
Aid Growing SBUs, or Divest
Maintain Position
L

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 General electric model
Business Position
Strong Medium Weak

High
Industry Attractiveness

Medium

Low

Most attractive: Investment for Growth Least attractive: Harvesting/Divesting Medium attractiveness: Selectivity

General Electric’s Business Screen

C
Winners Winners
A Question
High B Marks

Winners
E Average
Businesses
F
Medium
Losers

H
Losers
G
Low
Profit
Producers Losers

Strong Average Weak

Business Strength/Competitive Position

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 Ansoff matrix
PRODUCTS
increasing technological newness
Present New

Present Market Product

Penetration Development
MARKETS
increasing
market
newness
New
Market Diversification
Extension

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Ansoff’s product/market matrix
Present Products New Products

Penetration Strategy Product Development

Existing
Market

•Increase share of customer

Strategy
•Product modification via new
spending
features
• Increase market share
• Different quality levels
• Non-users to users (where both are
• New Product(s)
in the same segment)

Market Development Strategy

Diversification
Market

•New markets Strategy

New

• New distribution channels

• New geographical areas •Joint ventures
• Mergers
• Acquisitions/takeovers

Strategic thrust: the Generic Options

(Ansoff Model/Matrix: Growth Strategies)

Market
Penetration Market
Existing or Development
Expansion

Products
Product Enter New
Development Markets with
New/Related New product/Sce

Existing New/Related
D Jobber, Principles and Practice of Marketing, © 2001 McGraw-Hill Markets

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 Strategic Marketing

Product

• What business are Old New

we in now?
Market

Old
High Reward

Expansion
• In five years time, Market Penetration
(product development)
what business do

Limited Success
we want to be in?
New

Unrelated Diversification
• What self-imposed
Related Diversification
constraints are
there on our (Danger Area)
(market development)
business?

Ansoff’s Growth Vector Matrix

PRODUCT
Current New

Market penetration
Product development
•increase market
•product improvement
Current

•increase quantity used

•product line extension
•increase frequency of use
•new products for same
•new uses for same
MARKET

customers RI market

Market extension
SK Diversification
•geographic expansion •vertical integration
•new market segments •horizontal integration
New

•new uses for new •concentric diversification

customers (related businesses
•unrelated diversification

Source: Ansoff (1957) in Wilson & Gilligan (1997: 221)

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 Strategic options for a firm in relation to the
importance of the Internet as a channel

Source: Chaffey & Chadwick (2013)

Think-pair-share Questions
Discussion Question:
What are organisational problems if no E-marketing
strategy?

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 Think-pair-share Questions
Discussion Question:
What are Internet strategic marketing benefits?

Think-pair-share Questions

Discussion Question:
What are Digital marketing strategy essentials?

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 Porter’s Three Generic
Strategies
Focus

Stuck in the middle

Cost
Differentiation
leadership

Source: Adapted by Wilson & Gilligan (1997: 327) from Porter (1980)

Some examples of
distinctive corporate capabilities

Operational excellence - mass market

products at best price, least inconvenience

› Excellent service delivery

› Standardised quality
› High discipline/low-skilled staff
› Logistical efficiencies
› Supply chain management
› Transaction processing
› Continuous brand strength development
› Glocal strategic options
› Value co-creation

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 Some examples of
distinctive corporate capabilities

Product leadership - products that

push boundaries of product and service
performance
❖ - Decentralised management
structure (team-orientated)
➢ - Openness to new ideas
➢ - Major technological advances
➢ - Rapid product variations
➢ - Flexible manufacturing
➢ - Aggressive market stance
➢ - R&D

© Wiley 2010
46

 Four Important Operations Questions: Will you

Competitive Priorities- The Edge
compete on –
Cost?
Quality?
Time?
Flexibility?

 All of the above? Some? Tradeoffs?

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© Wiley 2010
47

Competing on
Cost?
 Offering product at a low price relative to competition
– Typically high volume products
– Often limit product range & offer little customization
– May invest in automation to reduce unit costs
– Can use lower skill labor
– Probably use product focused layouts
– Low cost does not mean low quality

© Wiley 2010
48

Competing on Quality?
 Quality is often subjective
 Quality is defined differently depending on who is defining it
 Two major quality dimensions include
– High performance design:
 Superior features, high durability, & excellent customer service

– Product & service consistency:

 Meets design specifications
 Close tolerances
 Error free delivery

 Quality needs to address

– Product design quality – product/service meets requirements
– Process quality – error free products

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© Wiley 2010
49

Competing on
Time?
 Time/speed one of most important competition priorities
 First that can deliver often wins the race
 Time related issues involve
– Rapid delivery:
 Focused on shorter time between order placement and delivery
– On-time delivery:
 Deliver product exactly when needed every time

© Wiley 2010
50

Competing on
Flexibility?
 Company environment changes rapidly
 Company must accommodate change by being flexible
– Product flexibility:
 Easily switch production from one item to another
 Easily customize product/service to meet specific requirements of a customer

– Volume flexibility:
 Ability to ramp production up and down to match market demands

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 Porter’s Value Chain

Example Critical Success Factors

➢ Speed of introduction of new products
➢ Product and market profitability
➢ Improving customer service and e-service quality
➢ Development of creativity in management activities - (R&D)
➢ Identification of new product opportunities
➢ Achievement of critical mass in production or distribution channel
throughput: off & on-line
➢ Achievement in product or market leadership
➢ Achieving a position of good corporate citizen
➢ Continuous innovation and customisation
Source: Fifield & Gilligan (1996: 161)

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 An example of the relationship between e-marketing
objectives, strategies and performance indicators

Note: CPA= Cost per acquisition; SEO=Search engine optimization; AOV= Average order value

Source: Chaffey & Chadwick (2013)

Online performance management grid for an e-

retailer

Source: Chaffey & Chadwick (2013)

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 Conclusion
• Strategic choice involves understanding the underlying bases guiding future
strategy, and generating strategic options for evaluation and selecting from
among them.

• Strategic decisions are usually taken at corporate level (e.g., directional

strategy, resource allocation), at SBU level (e.g., generic strategy), and at
functional level in relation to various functional areas (e.g., marketing, R&D,
finance, HR, production, etc.).

• Strategic marketing decisions include products to offer, market segments to

target, and positioning strategies.

• Organisational failure is arguably a product of repeated strategic mistakes and

unsuccessful interactions between the firm and its environment.

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Thank You

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