Wittenborg Presentation Marketing Strategy

Marketing Strategy
Analysis of the Marketing Environment:

An important input in the Marketing Plan
• Situation Analysis
▫ Background data on:
Sales
Costs
Profits
Market (definition, size, growth and trends)
Competitors
Macro-environment
▫ SWOT Analysis
Internal analysis
External analysis
External analysis
• Environmental analysis
• Market analysis
• Competitor analysis
• Customer analysis
▫ Organizations
▫ Final Consumers
Competitive Position Tactics
Michael Porter’s Industry Analysis
PPT 1-6
Overview of Strategic Market Management
External Analysis Internal Analysis

• Customer Analysis • Performance Analysis
• Competitor Analysis • Determinants of strategic options
• Market/submarket Analysis
• Environmental Analysis
Strategic Analysis
Outputs
Strategy Identification,
Selection, and Implementation
Figure 2.1
7
Strategic Marketing -
2015-16 -TW
Marketing Auditing and the Analysis of

Capability
• Before making a marketing plan, it is important
to conduct a marketing audit to find out:
• The company’s current market position (past
and current performance, present activities)
• The nature of environmental opportunities and
threats (OT)
• The company’s ability to cope with
environmental demands (SW)
8
The structure and focus of the audit: 3

diagnostic steps
1. Review of the organization’s environment (to
understand the opportunities and threats) [macro-
environmental forces (PEST) and micro-
environmental actors (markets and competition)]
2. Its marketing strategy, structures, systems,
processes and culture: are they capable of dealing
with the demands of the environment?
(identification and analysis of the organization’s
strengths, weaknesses and capabilities).
3. Its marketing activities, and in particular, the
components of the marketing mix and how well –
or badly – they have been managed.
9
The role of SWOT analysis

A. Identifying opportunities and threats
• The marketing planner should set up a Marketing
Information System to track developments in the
marketplace.
• What seems to be an opportunity needs to be examined
against the company’s resources.
• An opportunity here is any sector or market rendering
(sustainable) competitive advantage. The opportunities
will be assessed according to their attractiveness and
chance of success (probability).
10
The SWOT (cont.)

ØThreats are challenges posed by an
unfavourable trend or developments in the
environment which will lead to erosion of the
company’s market position if no action is
taken.
ØThreats can be classified according to their
seriousness and probability of their occurrence
11
The SWOT (cont.)

By putting together the major opportunities and
threats, the marketing planner tries to arrive at a
measure of the market’s overall attractiveness.
In essence, four possibilities exist:
1. An ideal business (many opportunities, low threats)
2. A speculative business (high both in opportunities
and in threats)
3. A mature business (low both in opportunities and
threats)
4. A troubled business (low in opportunities and high
in threats).
12
SWOT (cont.)
B. Identifying and evaluating strengths and
weaknesses
- Each factor is measured in terms of
performance and importance (high, low).
- Another way is also looking at the competition.
A strength may not be that important: it is not
highly valued by customers or because it is an
area in which competitors are equally strong.
13
SWOT should contribute to insight in a

company’s capabilities
Capability is in essence the ability of the management team to get things done.
To measure capability, the following seven principal areas have to be
considered:
1. Managerial capability (individual and team work)
2. The Managerial culture and the organizational DNA
3. Financial capability (availability of funds, use of funds, risk proneness,
expected returns)
4. Operational capability (the levels of day-to-day efficiency and
effectiveness)
5. Distribution capability (geographic reach, market penetration in terms of
proportion of possible outlets, and the quality of the distributors)
6. Human resource capability (nature and experience of staff)
7. Intangible factors (such as brand, which influences pricing and access to
forms of distribution)
8. Factors which inhibit capability are e.g. attitudes to risk and a lack of
discipline in adhering to a well-developed business model.
14
Strategic Marketing -
2015-16 -TW
From SWOT to TOWS

• A TOWS uses the same elements as a SWOT but
links them directly to strategic options.
(SMART) Objectives
• Objectives should be specific and measurable

• Establish objectives for key area
• Exciting yet believable objectives
• Evaluate feasibility
Marketing Strategy
• Organizational output – what?

• Market Segments – to whom?
• Marketing Mix – how?
Marketing Strategies for different market situations
PPT 1-18
Product-Market Growth Directions
Present New
Products Products
Present Market Product

Markets Penetration Expansion
New Market
Diversification
Markets Expansion
Vertical Integration
Source: H. Igor Ansoff, “Strategic Diversification”, Harvard Business
Review, September-October 1957, pp.113-24
Figure 2.4
Budget
• Financial representation of the decisions regarding
the marketing strategy
• Budget per brand and overall
Marketing Plan
• Internal and External Analysis
• Objectives
• Marketing Strategy
• Budget
Marketing Process
HBR (2000), Note on Marketing Strategy

Marketing Strategy
• What do we offer?
▫ Product/service selection
• To whom?
▫ Country/market selection
• How?
▫ Type of market entry
▫ Marketing mix - distribution, promotion, pricing.
Value proposition – what do we offer?
• Is there a real Customer Value Proposition?
▫ E.g BIC pens and underwear
• Is there a perceived Customer Value Proposition?
• Is the Strategy Feasible?
• Is the Value Proposition relevant to the Customers?
• Is the Value Proposition a Point of Difference that is
sustainable?
Customer-Driven Marketing Strategy
Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Market Segmentation
Market segmentation requires dividing a market into smaller segments
with distinct needs, characteristics, or behaviors that might require separate
marketing strategies or mixes.

Market Segmentation
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation

Market Segmentation
Segmenting Consumer Markets
Geogra Demog
phic raphic
segme segme
ntation ntation
Psychog Behavi
raphic oral
segmen segme
tation ntation

Market Segmentation
Geographic segmentation divides the market into different geographical

units such as nations, regions, states, counties, cities, or even neighborhoods.

Market Segmentation
Demographic segmentation divides the market into segments based on
variables such as age, life-cycle stage, gender, income, occupation, education,
religion, ethnicity, and generation.

Market Segmentation
Age and life-cycle stage segmentation divides a market into different age
and life-cycle groups.
Gender segmentation divides a market into different segments based on
gender.
Income segmentation divides a market into different income segments.

Market Segmentation
Psychographic segmentation divides a
market into different segments based on
social class, lifestyle, or personality
characteristics.

Market Segmentation
Behavioral segmentation divides a market into segments based on

consumer knowledge, attitudes, uses of a product, or responses to a
product.

Market Segmentation
Behavioral Segmentation
• Occasions
• Benefits sought
• User status
• Usage rate
• Loyalty status

Market Segmentation
Multiple segmentation is used to
identify smaller, better-defined target
groups.
Experian’s Mosaic USA system classifies
U.S. households into one of 71 lifestyle
segments and 19 levels of affluence.

Market Segmentation
Segmenting Business Markets
Consumer and business marketers use many of the same
variables to segment their markets.
Additional variables include:
• Customer operating characteristics
• Purchasing approaches
• Situational factors
• Personal characteristics

Market
Segmentation
Segmenting International Markets
Geographic Economic
location factors
Political and Cultural

legal factors factors

Market Segmentation
Segmenting International Markets
Intermarket segmentation involves forming segments of consumers

who have similar needs and buying behaviors even though they are located
in different countries.

Market Segmentation
Requirements for Effective Segmentation
Measurable Accessible Substantial
Differentiable Actionable

Market Targeting
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources

Market Targeting
Selecting Target Market Segments
A target market is a set of buyers who share common needs or

characteristics that the company decides to serve.

Market Targeting
Figure 7.2 Market-Targeting Strategies.

Market Targeting
Undifferentiated marketing targets the whole market with one offer.
▫ Mass marketing
▫ Focuses on common needs rather than what’s
different

Market Targeting
Differentiated marketing targets several
different market segments and designs
separate offers for each.
• Goal is to achieve higher
sales and stronger position
• More expensive than
undifferentiated marketing

Market Targeting
Selecting Target Markets
Concentrated marketing targets a
large of a smaller market.
• Limited company resources
• Knowledge of the market
• More effective and efficient

Market Targeting
Selecting Target Markets
Individual marketing involves tailoring
products and marketing programs to the
needs and preferences of individual
customers.
Also known as:
▫ One-to-one marketing
▫ Mass customization

Market Targeting
Choosing a targeting strategy depends on
▫ Company resources
▫ Product variability
▫ Product life-cycle stage
▫ Market variability
▫ Competitor’s marketing strategies

Differentiation and Positioning
Product position is the way the
product is defined by consumers on
important attributes.

Positioning maps show

consumer perceptions of
marketer’s brands versus
competing products on important
buying dimensions.

Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen position to the market

Competitive advantage is an advantage over competitors gained by

offering consumers greater value, either through lower prices or by providing
more benefits that justify higher prices.

Identifying a set of possible competitive
advantages to differentiate along the lines of:
Product
Services
Channels
People
Image

Positioning Statement Example for Evernote:

“To busy multitaskers who need help remembering things, Evernote is a
digital content management application that makes it easy to capture and
remember moments and ideas from your everyday life using your computer,
phone, tablet, and the Web.”

Communicating and Delivering the Chosen Position
Choosing the positioning is often easier than implementing the position.
Establishing a position or changing one usually takes a long time.
Maintaining the position requires consistent performance and
communication.

The Marketing-Mix : the Company’s
Perspective
Product Price
Promotion Place
Marketing Mix: Price
Price
Quantity
Price Elasticity of Demand
• Elastic Demand
▫ P ß * Q = TR Ý
• Inelastic Demand
▫ P Ý * Q = TR Ý
Marketing Mix: Price
Price
Quantity
Pricing Strategy
• Sandwich strategy
▫ re-segment the market as opposed to changing the
price
▫ Federal Express example
Q+,P+
Company
Quality, Price Competitors
Quality, Price (P-Y)
Q/Q-, P-
Different Perspectives on Price and
Quality: The Customer
Psychological
Functional Economic
Value perception of Customers
• Think of customer cost of thinking (minimize)

• Think of customer cost of switching (maximize)
• Value = cost of switching/cost of thinking

Different Perspectives on Price: The
Customer, Company and Competition
Price
Value Profit
Competition
Benefits Cost
Eight Steps to Better Pricing
• Assess what value your customers place on a
product or service
• Look for variations in the way customers value
the product
• Assess customers’ price sensitivity
• Identifies an optimal structure
• Considers competitive reaction
• Monitor the transaction level
• Consider customers’ emotional response
• Analyzes revenues versus cost to serve
Dolan, HBR, Sept-Oct 1995, pp. 174-183

Marketing Mix: Price and Other Variables
Price
D1
D0
Quantity
The Sales Response Function
Sales
Advertising
The Sales Response Function
Sales
No. of sales persons

Marketing Mix
• The marketing mix is concerned with
providing, communicating, and delivering
value to customers.
Sales response
• Sales response = f ( Market segment, environmental
conditions, input strategies)
• Example of input strategy for umbrella sales
(retailer)
▫ window display
▫ sign in window
▫ station a salesperson
Marketing Strategy Alternatives
A0, S2
E0
A1, S1
P1 E1
A2, S0
X,M E0
P2
x = product E1
m=segment
p=price
E0
e=promotion P3
a=advertising
s=selling exp. E1
Alternative marketing strategies
• How can you reduce the large number of alternative
choices of strategies:
▫ constraints of the environment
▫ resources available
▫ potential contribution of the alternative strategy to the
objectives
Strategy: Some Scenario’s
• Most Probable Case

• Pessimistic Case
• Optimistic Case
Environmental assessment
! assign reasonable values to

each scenario
! define ranges for key variables
! describe plausible futures
! put in writing
! limit yourself to three scenarios
! watch for consistency
How to select the “best” alternative
marketing strategy Profit
Alternative A 10000
Alternative B 15000
Alternative C 20000
Assessing the Utility of Various
Alternatives
• Which criteria did you use for selecting your
marketing strategy?
• How important are each of the criteria?
• Would this explicit knowledge have changed the
choices you made?
Assessing the Utility of Various Alternatives
Factor Criteria A B C
Importance
Size of Potential Market
Profit Margin
Risk
Competitive Reaction
Price relative to competition

Use of Existing Resources
Promotion pre-test results
Utility index
Importance
25 Size of Potential Market
20 Profit Margin
15 Risk
15 Competitive Reaction
10 Price relative to
competition
10 Use of Existing
Resources
5 Promotion pre-test
results
100 Utility index

Importance
25 Size of Potential Market 5
20 Profit Margin -10

15 Risk 0
15 Competitive Reaction 5
10 Price relative to 10
competition
10 Use of Existing 5
Resources
5 Promotion pre-test 0
results
100 Utility index 150

Importance
25 Size of Potential Market 5 -5 5
20 Profit Margin -10 -5 10

15 Risk 0 5 -5
15 Competitive Reaction 5 0 -5
10 Price relative to 10 0 -10

competition
10 Use of Existing 5 10 0
Resources
5 Promotion pre-test 0 10 10
results
100 Utility index 150 0 100

Different Alternatives under varying conditions of
demand
Variation -10 -5 0 5 10
of demand
A -5 0 10 25 30
B 10 13 15 20 22
C 8 10 20 22 25
demand
Variation -10 -5 0 5 10
of demand
A -5 0 10 25 30
B 10 13 15 20 22
C 8 10 20 22 25
Forecasting Accuracy
Demand/Forecast (in %) Probability

<-10
-10 ----- -2
-2 ----- 2
>2 ----- 10
> 10
demand: Expected Payoff
Variation -10 -5 0 5 10
of demand
A -.5 0 4 5 3 11.5
B 1 2.6 6 4 2.2 15.8
C .8 2 8 4.4 2.5 17.7

Marketing Strategy
• Marketing Strategy in Red Oceans
• Marketing Strategy in Blue Oceans
Red Oceans and Competitive Advantage
• Focus is on how to outperform (beat) the competition
• What gives our company competitive advantage?
• Focus is on existing markets
• Focus is on existing customers
Day & Reibstein, Wharton on Dynamic Competitive Strategy, 1997
Day & Reibstein, Wharton on Dynamic Competitive Strategy, 1997
Blue Oceans
• Alternative markets
• New (not yet) existing customers
• No competition therefore always competitive advantage!
Research of Kim and Mauborgne (2004)
shows:
• Blue Oceans are not about technology innovation
• Incumbents often create Blue Oceans and usually
within their core business
• Company and Industry are the wrong unit of
analysis.
• Creating Blue Oceans builds brands
Kim & Mauborgne, HBR, Oct 2004
Kim & Mauborgne, California Management Review, Spring 2005
Kim & Mauborgne, 2005
Kim & Mauborgne, 2005
Customer matrix
Existing Existing market Customers who
customers/ will not be
markets customers in
the near future
Not yet existing Potential Unknown

customers/ customers who customers
makets do not want to
be a customer
Conclusions relating to marketing in blue
en red oceans
• If competition is high the maketing mix is often reduced to

price.
• An alternative market approach is the discovery of “blue
oceans”
• The discovery of new markets/products demands “out-of-
the-box thinking” of managers.
• The importance of the discovery of blue oceans reinforces the
importance of innovation!
Conclusions relating to marketing in
blue en red oceans
• If competition is high the marketing mix is often reduced to
price.
• An alternative market approach is the discovery of “blue
oceans”
• The discovery of new markets/products demands “out-of-
the-box thinking” of managers.
• The importance of the discovery of blue oceans reinforces the
importance of innovation!
Marketing Strategy in Emerging
and Developing Markets
The World Economic Pyramid
Per Capita Income Population in

Millions
> $20000 400
$1500-$20000 1500-1750
<$1500 4000
BOP as seen from Consumption
Patterns – A $ 5 trillion market
Income Segment
BOP 3000
BOP 2500
BOP 2000
BOP 1500
BOP 1000
BOP 500
Significant Markets in Major Sectors of the
Economy
• Health
• Energy
• Food
• Water
• Housing
• Transportation
• ICT
• Other
BOP Markets: A $5 trillion market
• A few examples:
▫ The Cell Phone Industry
India 6 million consumers/month
Cell Phone is becoming the device of
choice
▫ Grameen Bank (Bangladesh)
▫ Unilever’s HLL
▫ BP
Participation in BOP Markets
• Converting Consumers from Unorganized,
Inefficient Markets to Organized and Efficient
Private Sector
• A Market Development Task
• BOP Markets will force Breakthrough Innovations
• Think differently:
▫ Price-Profit=Cost vs. Cost+Profit=Price
Emerging markets as a test bed of innovation
• New Price-Performance Levels
• Scale of Operations
• Sustainable Development
• Innovative High Tech Solutions
Innovation and Entrepreneurship at the heart
of Economically Sustainable Solutions for the
BOP markets
• Innovations in Product/Services
• Innovations in Building a new Paradigm
• Innovations in Work Processes
• Innovations in Business Models
• Innovations in the Use of Technology
• Innovations in Governance
• Private Sector and Public Health
The Health Care Revolution
Group Field of Specialization Cost adv. Over the Size
Western Countries
Jaipur Foot Prosthetics 200x 16000/year
Aravind Eye Operation 100x April 2009 to March
2010, including the
work done in the
Managed Eye
Hospitals, over
2.5million out patients
were treated and over
300,000 surgeries
were performed.
Escorts Cardiac Care 15X 7000/year

Narayana Hridayalaya Pediatric Cardiac Care 30X 7500/year
Building New Supply Chains
• Micro-producers: connecting rural poor to

global markets
▫ e.g. Amul (India)
AMUL Diary Company: The Biggest Diary Company in
the World
• Members: 13 district cooperative milk producers'

Union
• No. of Producer Members: 2.79 million
• No. of Village Societies: 13,328
• Total Milk handling capacity: 11.22 million litres
per day
• Milk collection (Total - 2008-09): 3.05 billion litres
• Milk collection (Daily Average 2008-09): 8.4
million litres
• Milk Drying Capacity: 626 Mts. per day
• Cattlefeed manufacturing Capacity: 3500 Mts per
day
AMUL Diary Company: Sales Revenues in US$
Year Sales Revenues in $
1994-95 355 million
2000-01 500 million
2008-09 1504 million

Video on AMUL
Creating capacity to consume
•Affordability
•Access (intensity of
distribution)
•Availability (distribution
efficiency)
BOP Consumers
•The poor are brand and value
conscious
•BOP market is connected
•BOP consumers readily accept
technology
BOP Commercial Infrastructure
• Creating Buying Power
▫ Access to credit
▫ Income generation
• Improving Access
▫ Distribution Systems
▫ Communication links
• Shaping Aspirations
▫ Consumer education
▫ Sustainable development
• Tailoring local solutions
▫ Bottom-up innovation
▫ Target product development
Capacity to Consume

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Marketing Strategy

Analysis of the Marketing Environment:

Overview of Strategic Market Management

External Analysis Internal Analysis

Marketing Auditing and the Analysis of

The structure and focus of the audit: 3

The role of SWOT analysis

The SWOT (cont.)

The SWOT (cont.)

SWOT should contribute to insight in a

From SWOT to TOWS

• Objectives should be specific and measurable

• Organizational output – what?

Present Market Product

HBR (2000), Note on Marketing Strategy

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Geographic segmentation divides the market into different geographical

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Behavioral segmentation divides a market into segments based on

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Political and Cultural

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Intermarket segmentation involves forming segments of consumers

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Measurable Accessible Substantial

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Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

A target market is a set of buyers who share common needs or

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Positioning maps show

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Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Competitive advantage is an advantage over competitors gained by

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

Positioning Statement Example for Evernote:

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Copyright © 2018 Pearson Education Ltd. All Rights Reserved.

• Think of customer cost of thinking (minimize)

• Value = cost of switching/cost of thinking

Dolan, HBR, Sept-Oct 1995, pp. 174-183

No. of sales persons

• Most Probable Case

! assign reasonable values to

Price relative to competition

100 Utility index

20 Profit Margin -10