Ateneo 6 implementation

IMPLEMENTING STRATEGIES:IMPLEMENTING STRATEGIES:MANAGEMENT, MARKETING, MANAGEMENT, MARKETING, FINANCE/ACCOUNTING, R&D, FINANCE/ACCOUNTING, R&D,

AND MIS ISSUESAND MIS ISSUES

2ATENEO GRADUATE SCHOOL OF BUSINESS

HILDA L. TEODORO

There is no “perfect” strategic decision. One always has to pay a price. One always has to balance conflicting objectives, conflicting opinions, and conflicting priorities. The best strategic decision is only an approximation—and a risk

-- Peter Drucker

Implementing Strategies


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Matching Structure with Strategy

1. Structure largely dictates how objectives and policies will be established.

2. Structure dictates how resources will be allocated


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Basic Forms of Structure

1. Functional StructureGroups tasks and activities by business function

2. Divisional Structure• Decentralized and organized by geography, product,

customer, or process

3. Strategic Business Unit Structure (SBU)• Groups similar divisions; delegates authority and

responsibility to SBU executive

4. Matrix Structure• Most complex of all designs. Depends upon both vertical and

horizontal flows of authority and communication


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Creating a Strategy-Supportive Culture

Strategists should strive to preserve, emphasize, and build upon aspects of existing culture that support new strategies.

Elements linking culture to strategy:

1. Formal statements of philosophy, charters, etc. used for recruitment and selection, and socialization

2. Designing of physical spaces, facades, buildings3. Deliberate role modeling, teaching and coaching4. Explicit reward and status system, promotion criteria5. Stories, legends, myths about key people and events6. What leaders pay attention to, measure and control7. Leader reactions to critical incidents and crises8. How the organization is designed and structured9. Organizational systems and procedures10. Criteria used for recruitment, selection, promotion, retirement


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Marketing variables affect success or Marketing variables affect success or failure of strategy implementationfailure of strategy implementation

Market SegmentationMarket Segmentation

Product PositioningProduct Positioning

Marketing Issues


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Subdividing of a market into distinct Subdividing of a market into distinct subsets of customers according to subsets of customers according to needs and buying habitsneeds and buying habits

A segment is a part of an overall market made up of customers with similar characteristics.

Market Segmentation


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Geographic – Region, Country, Density, Climate

Demographic – Age, Family Size, Family Life Cycle, Income Occupation, Education, Religion, Race Nationality

Psychographic - Social Class, Lifestyle, Personality

Behavioral - Use occasion, Benefits sought, User status, Usage rate, Loyalty status, Readiness Stage, Attitude toward product

Bases for Segmenting Markets


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MARKET SEGMENTATION

Socio-EconomicSegmentation

Approach


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Market Segmentation

The Three Main Product SegmentsThe diagram below shows the three main product segments that make up the NIVEA Sun range. As you will see, there are a variety of products in each, which can also be segmented as shown.

1. Protection2. After SunNIVEA Sun is the market leader within this segment in the UK, which has been growing rapidly.3. Self-tanIn contrast to protection and after sun, the self-tan category is concerned mostly with cosmetic appeal. Many adults use self-tan to have an all year round sun kissed glow.


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Market Segmentation1. ProtectionIt is vital that skin is adequately protected against the sun’s harmful effects. NIVEA Sun provides products that enable people to be as safe as possible. Protection is the largest segment in the sun care market with a purchase penetration of 28%. Penetration relates to the percentage of potential customers that purchase a product. NIVEA Sun is the protection segment market leader by value (i.e. more money is spent on NIVEA Sun protection products than any other sun care brand in the UK).When choosing sunscreens there are two important factors to consider:i. skin type The chart below shows segmentation by skin type. The level of protection required for each segment will vary according to generalised skin types (as seen below):

Skin type applies to children, as well as adults. Children’s skin is thinner and its repair mechanism is not yet fully developed. As a result they require extra protection and sun screens that are specifically developed for their skin.

• ii. locationNIVEA Sun provides a range of lotions and sprays targeted at different climates and to users with different skin types. Someone with fair skin may be well protected with a SPF 20 product when in England, but when in the Philippines they would need SPF 40.


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Market Segmentation

03_Brand VisionA vision paints a picture of what you are trying to achieve with your brand in a simple sentence. NIVEA Sun’s vision is "To be the Number 1 brand in the UK sun care market in penetration, sales and likeability."One key way to achieve the vision is to provide innovative solutions to market needs. This has been a key success factor for NIVEA Sun. As a brand it has achieved this through continually segmenting its consumers in order to:• effectively meet consumers’ needs• identify new market opportunities.


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Consumer Segmentation

Segmentation has been vital to the success of NIVEA Sun and allowed the brand portfolio to grow to over 40 products, all meeting clear consumer needs. The following factors are used to develop and define the sun care segments:• Demographics - different groups of consumers behave differently (factors relate to age, gender, etc). Demographic differences relevant to NIVEA Sun include different buying behaviours between men/women and adults with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products). Similarly, adults with children are another broad segment with differing needs.Demographic segments are broad. As research shows, the level of awareness of sun care transcends income and social class.

SELF-TAN SEGMENTATION The segmentation variables will differ considerably for the self-tan range of products. This is concerned primarily with providing cosmetic benefits.


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Consumer SegmentationAttitudinal – this is the most important segmentation variable. Consumers’ attitudes towards sun care influences their purchases. NIVEA Sun conducts market research to understand user attitudes. This involves questionnaires using a nationally representative sample, and more intensive research with small groups, to discuss individual skin protection habits and preferences. This has identified 5 distinct groups for protection and after sun:PRIMARY SUN CARE USERSConscientious Sun Lovers - adore sunshine and like to use a trustworthy brand with suitable protection factors. They know about sun care and use this knowledge to purchase suitable products for their skin.Naive Beauty Conscious - like to have a good sun tan. They recognise that sun protection is important but fail to understand about Sun Protection Factors (SPFs). These consumers may still be interested in the core features of a sun protection product (e.g. SPF) and be more inclined to purchase an added-value offering such as a mousse.Concerned Consumers – ‘a good tan is not important’. These consumers are conscious of the harmful effects of the sun and purchase sun protection products that are most likely to offer high sun protection factors. such as a mousse. Consumer segments were identified by analysing answers to questions about attitudes.SECONDARY SUN CARE USERSSun Avoiders - avoid sunbathing and using sun protection when in the sun - it is seen as a chore. These are unlikely to purchase a sun care product. Through education, this segment may be convinced to protect using more easy-to apply such as spraysCareless Tanners - adore the sun but don’t protect against harmful dangers. Tanning is important to this group, not protection. They don’t worry about the long-term damage to their skin and may purchase a low SPF product, if any at all.


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Consumer Segmentation

The two main aspects of attitudes relate to: Usage occasion (when) – e.g. holiday, outdoor sports, gardening, working etc. This relates to the Sun Protection Factor (SPF) required, e.g. the SPF required for a holiday in Egypt differs greatly to outdoor work in the UK. This is one of the reasons why NIVEA Sun produce a wide range of sun protection from SPF 4 to 50+. Research has shown that consumers often purchase a variety of SPF’s for differing needs and occasions. This factor alone however is not an accurate means of segmenting markets.Benefit sought - protection is the primary benefit but the preference by which this is delivered will vary by segment, e.g. convenience is important to men (so they choose spray applicators). Parents want to provide maximum protection for children (high SPFs and coloured products are therefore important).


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Brand StrategyThe key proposition of the NIVEA Sun brand is protection. The main elements of this proposition include:

• making sun care simple• educating that protection can lead to safer tanning• reinforcing the immediate protection message.

NIVEA Sun follows a strategy of product development, in order to achieve its long-term objectives. This takes the form of timely new product launches to enable the brand to more closely meet the needs of different types of consumers.Some good examples of innovative launches include:

spray products that are easy to apply (particularly appealing to men)a coloured formulation for children’s sun products (making application more fun)reformulation of the products to offer immediate protection.NIVEA Sun has developed ‘Long Lasting Water Resistance’ for children, a product which has increased the water resistance of sun protection from 80 minutes to 120 minutes.


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Conclusion

Segmentation is the tool that enables NIVEA Sun to identify different groups of customers, and provide the best possible products to meet individual requirements. The sun care market consists of different consumers with differing needs. The UK has the biggest sales of NIVEA Sun within Europe. Understanding segmentation enables NIVEA Sun to maintain a Number 1 value position in protection and after sun in the UK.


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Market Segmentation – Maggi ‘A

The research revealed that the market was divided into a number of segments. Chefs fitted into four main segments:


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Market Segmentation

Maggi ‘A Natural Choice’ combines thegoodness and taste of real ingredients with time and cost saving.Target market - Maggi ‘A Natural Choice’ target was to be ‘chefs who aim to please’. Their prime aim is to provide delicious, wholesome foods that customers enjoy. These chefs enjoy their work and have a pride in the satisfaction they give customers. They are not in business just to make money.The Maggi ‘A Natural Choice’ range has clear and easy to understand nutrition and allergy information on all packaging to help chefs understand what is in the products so they in turn can inform their customers.Two main strategies to deliver this ambition were implemented:


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Product Development

The research showed a sizeable demand for Segment 3 – a target for Maggi ‘A Natural Choice’ products.Brand proposition– the research defined a proposition for developing the new brand. This new proposition was to create a product with more natural qualities for ‘chefs who aim to please’ who want their cooking to be as fresh tasting as possible. Natural qualities would be defined in terms of taste, smell, look and texture.Nestlé’s strength in product research and development makes it possible to develop products to fit market requirements. Maggi is committed to providing cutting edge products that chefs want, e.g. products with a lower salt content. These products are high quality and easy to use. The new products need a more natural taste while at the same time offering value for money.The Maggi ‘A Natural Choice’ range is now lower in salt and made using sunflower oil. In addition, where possible the range benefits from having no added MSG, is gluten free and contains no artificial colours or flavours.The Maggi ‘A Natural Choice’ range has clear and easy to understand nutrition and allergy information on all packaging to help chefs understand what is in the products so they in turn can inform their customers. The range is aimed at a variety of chefs. For example, two Maggi ‘A Natural Choice’ products widely used in school kitchens are:

multi-use tomato saucesbouillons (i.e. stock or broth for soup and sauces produced by cooking vegetables, poultry, meat or fish in water, which is then strained).


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Developing schematic representations that reflect how products or services compare to competitors’ on dimensions most important to success in the industry

Product Positioning based on:

Customers wants

Customers needs

Product Positioning


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STRATEGIC POSITIONING

CompanyMarket Share

Carnival 34%

Royal Caribbean 27%

Star Cruises 12%

STRONG

HIGH

WEAK

LOW

Fun Image

Strength ofGlobal Brands

(CustomerAwareness)

Royal Caribbean

Carnival

Star


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Pro Forma Financial StatementsPro Forma Financial Statements

Allows an organization to examine the expected results of Allows an organization to examine the expected results of various actions and approachesvarious actions and approaches

6 Steps in Pro Forma Financial Analysis6 Steps in Pro Forma Financial Analysis

1.1. Prepare income statement before balance sheet (forecast Prepare income statement before balance sheet (forecast sales)sales)

2.2. Use percentage-of-sales method to project CGS and Use percentage-of-sales method to project CGS and expensesexpenses

3.3. Calculate projected net incomeCalculate projected net income4.4. Subtract dividends to be paid from Net Income and add Subtract dividends to be paid from Net Income and add

remaining to Retained Earningsremaining to Retained Earnings5.5. Project balance sheet beginning with retained earningsProject balance sheet beginning with retained earnings6.6. List comments (assumptions) on projected statementsList comments (assumptions) on projected statements


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1

ACTION PLANS


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ACTIVITIESTIME

TABLEEXPECTED

OUTPUT

PERSON RESPON-

SIBLE

Rewards Program –Earned mile points are convertible to discounts or upgrades

Mar 2004

To increase to 20% the number of 1st time cruisers annually

To increase to 20% the frequency of regular cruisers annually

To increase exposure in North America and European television

VP Marketing

Account executives assigned to Corporate accounts

Mar 2004

Tie up with top rating TV shows in North America and EU where cruise ship is used as set location, e.g., “The Bachelor”, “Friends”

Mar 2004

Hold semi-monthly sales meetings to track key performance indicators & handle issues

Jan 2004

Departmental Program - Marketing


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ACTIVITIESTIME

TABLEEXPECTED

OUTPUT

PERSON RESPON-

SIBLE

Inventory management for menu items

Jan 2004

To achieve 99% Customer satisfaction for room & banquet service

To achieve 99% Customer satisfaction for on-board entertainment and recreation

VP Operation

Independent Quarterly review of menu/international cuisine

Mar 2004

Monthly inspection of ship facilities and equipment

Jan 2004

3 year replacement plan of all onboard entertainment and recreation equipment

Jan 2004

Departmental Program - Operations


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ACTIVITIESTIME

TABLEEXPECTED OUTPUT

PERSON RESPON-

SIBLE

Professional Development Program– encourage promotion internally/ succession planning

Mar 2004

To encourage performance above targets by providing increased variable compensation

To provide employee and management continuing professional education & training

VP Human Resources

Programmed Training Course for Sales and On-board Crew – Certification required

Jan 2004

Hire top notch sales agents with extensive experience in the leisure/tourism industry

Apr 2004

Departmental Program - HR


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ACTIVITIESTIME


PERSON RESPON-

SIBLE

Pool treasury operations with one global banking partner

Mar 2004

To efficiently manage cash generated from operations for departmental programs

To reduce operating expenses from 77% to 70%

VP Finance

Centralize purchasing function at corporate headquarters

Jan 2004

Financial data for performance review available by workday 3 after month end

Apr 2004

Departmental Program - Finance


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ACTIVITIESTIME


PERSON RESPON-

SIBLE

Identify application systems designed to educate potential first-time cruisers & to allow interaction with regular cruisers

Feb 2004

To explore new sources of customer interface & sales stimulation

To build a world class information system to ensure internal efficiencies and to serve the business needs

VP IT Systems

Identify key process for HR, Finance, Marketing, and Operations which can be done through an integrated IT system (internal & external)

May 2004

Build customer database & market information

Apr 2004

Departmental Program - IT

Ateneo 6 implementation

Documents

natural choice

main product

nivea sun

natural qualities

market segmentation

skin type

sun protection

product development