Marketing strategy and planning

MARKETING STRATEGY AND PLANNING

Dilip S. Mutum PhD

Nottingham University Business [email protected]

twitter: @admutum

Learning Outcomes

To define strategy, strategic planning and to understand the key concepts of the marketing planning process.

To understand the differences between strategic and tactical marketing planning.

To understand the key concepts and some strategic marketing analysis tools.

History of Lexus

http://youtu.be/MEbcA0NDOkg

Strategy

A strategy is a plan of action designed toachieve certain defined objectives

Strategy is a plan that aims to give the enterprise a competitive advantage over rivals.

Strategy is about understanding what you do,Knowing what you want to become,

and most importantlyFocusing on how you plan to get there.

Strategy is indeed a process!!

Strategy

Strategies are developed at multiple levels in the organizations – corporate, divisional, business unit, and departmental. They form an integrated plan for the organization as a whole.

Corporate strategies are the sum of business unit strategies plus any plans for new business initiatives.

Strategic Planning

Strategic planning is the process of developing and maintaining a

strategic fit between the organization’s goals

and capabilities and its changing marketing opportunities.

Excellent Companies

In Search of Excellence – (Tom Peters and Robert Waterman,1982)

43 “excellent companies”

8 years later - only 6 excellent companies left (Pascale, 1990)

Fixation with excellent tactics at the expense of strategy Pascale, R.T. (1990), Managing on the edge, New York:

Simon and Schuster, 352 pp

THE STRATEGY-TACTICS MATRIX

Effective Ineffective

Efficient Thrive

1

Die-Quickly

2

Inefficient Survive

3

Die-slowly

4

Tactics – doing things right

Strategy–doing the right things

Strategic Planning

- External environment, - Business unit goals- Business unit strength &

weaknesses

Product/Market Analysis

Strategic Planning, Implementation,

& Control Processes

The Marketing Planning Process, McDonald, 2007:49

KEY OUTPUTS

Mission Statement

Financial Summary

Market Overview

SWOT Analyses

Portfolio Summary

Assumptions

Marketing Objectives and Strategies

Three Year Forecasts and Budgets

One-Year Short Term Plan

Managing the Marketing EffortAnalysis

Marketing Analysis – SWOT Analysis

Porter’s Generic Strategies

Overall Cost Leadership

Differentiation

Focus

The lowest production and distribution costs so they can under price competitors and win market share

The business concentrates on achieving superior performance in an important customer benefit areas valued by a large part of the market

The business focuses on one or more narrow market segments, get to know them intimately, and pursue either cost leadership or differentiation within the target segment

Five Forces Determining Segment Structural Attractiveness

Example

Mat Ramli is deciding whether to switch career and become a farmer

He's always loved the countryside, and wants to switch to a career where he's his own boss.

He creates the following Five Forces Analysis as he thinks the situation through:

Porter’s Five Forces – Buying a Farm

Threat of New entry

SupplierPower Buyer

Power

Threat of substitutio

n

Threat of new entry-Not too expensive to enter the industry-Experience needed, but training easily available-Some economies of scale-No technology protection-Low barriers to entryNew entry quite easy (-)

Competitive rivalry-Vary many competitors-Commodity products-Low switching costs-Low customer loyalty-High costs of leaving market High competition (- -)

Buyer Power-Few, large supermarkets-Vary large orders-Homogeneous product-Extreme price sensitivity-Ability to substituteHigh buying power (- -)

Supplier power-Moderate number of suppliers-Suppliers large-Able to substitute-Able to changeNeutral supplier power

Threat of substitution-Some cross-products-Ability to import foodSome substitution (-)_

Competitive

Rivalry

Industry Concept of Competition

Number of sellers and degree of differentiation

Entry, mobility, and exit barriers

Cost structure

Degree of vertical integration

Degree of globalization

Strategic Planning

All corporate headquarters undertake four planning activities:

Defining the corporate mission.

Establishing strategic business units (SBUs).

Assign resources to each SBU.(attractiveness)

Assessing growth opportunities.

(strategic fit )

Strategic Planning

The business portfolio is the collection of businesses and products that make up the company

Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company

Strategic Planning

Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separatelyfrom other company businesses

Company division

Product line within a division

Single product or brand

Analyzing the Current Business Portfolio

Strategic Planning

Strategic planning is the process of developing and

maintaining a strategic fit between the organization’s goals and capabilities and

its changing marketing opportunities.

Strategic Planning – Assessing Growth Opportunities

Assessing growth opportunities include planning new businesses, downsizing and terminating older businesses.

If there is a gap between future desired sales and projected sales, corporate management will need to develop /acquire new businesses to fill in.

To release needed resources for other use, and to reduce costs, companies must be carefully prune, harvest or divest tired old businesses.

Strategic Planning

Difficulty in defining SBUs and measuring market share and growth

Time consuming

Expensive

Focus on current businesses, not future planning

Problems with Matrix Approaches

The Strategic Planning Gap - Assessing Growth Opportunities

Integrative - horizontal, backward and forward integration - Identify opportunities within current business, build/acquire businesses related to current businessDiversification - identify opportunities to add businesses unrelated to current businesses.

Strategic Planning – Intensive Growth

Product/market expansion grid is a tool for identifying company growth opportunities through

market penetration

market development

product development or

diversification

Developing Strategies for Growth and Downsizing

Jaguar XE

JLR Sales first 8 months 2013

Source: JLR Media Centre (10 Sept. 2013) (http://newsroom.jaguarlandrover.com/en-in/jlr-corp/news/2013/09/jlr_record_sales_performance_in_august_100913/)

Ansoff’s Product-Market Expansion Grid (Intensive Growth)

Strategic Planning

Market penetration is a growth strategy increasing sales to current market segments without changing the product (new stores/branches, get people to shop more often (improvement in prices, communication mix, selection of menu, etc)

Market development is a growth strategy that identifies and develops new market segments for current products (overseas market,

demographic profile)

Strategic Planning

Product development is a growth strategy that offers new or modified products to existing market segments (bank, new menu)

Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets – Virgin group of Companies

Expanding the Total Market

New customers

More usage

•those who might use it but do not•those who have never used it•those who live elsewhere

To increase the amount, level, frequency of product consumption-Through packaging or product redesign, larger packages increase

the amount consumer use at one time (impulse buying)-Increasing frequency of consumption

-to identify additional opportunities to use the brand in the same way - to identify completely new and different way to use the brand

Expanding the Total Market

New customers

More usage

Planta, Mayonnaise

Promo Segmen Nona PlantaResipi Warisanku @ Tv3! (SetiapAhad)

New Ways to Use a Brand

Arm and Hammer – not just a baking soda…..

Victorinox Adapts

More than 130 years old company

Core product: Swiss Army Knife

Post 9/11 and aircraft bans

Sales drop by 30%

What did Victorinox do?

Adapt products – without knife blades with USB memory sticks, etc.

Diversified into new product categories: watches, luggage and fashion

Moved into new markets: Russia, India and China

Categories of Marketing Alliances

Product or Service Alliances

Promotional Alliances

Logistics Alliances

Pricing Collaborations

Credit card

Travel web – hotel, car rental, admission ticket etc

Visa and Olympic

3PL & Businesses

Hypothetical Market Structure

Market Challenger - Pepsi buys Gatorade in a

Bypass Strategy

Bypass attack – diversify into unrelated products- New geographical market- Leapfrogging into new technologies

Market Follower Strategies

Counterfeiter

Cloner

Imitator

AdapterThe adapter takes the leader’s product and adapts or improve them

The imitator copies some things from the leader but differentiates on packaging

Emulates the leader’s product, name and packaging with slight variations – e.g.cereal

Duplicate the leader’s product and packages and sells it on the black market

Market Nicher Strategies

Niche Specialist Roles

End-User Specialist

Vertical-Level Specialist

Customer-Size Specialist

Specific-Customer Specialist

Geographic Specialist

Product-Line Specialist

Job-Shop Specialist

Quality-Price Specialist

Service-Specialist

Channel Specialist

Brand Leadership

Consumer Insights: Dulux

• ‘Paint’ is not consumer friendly

• Don’t think of paint not until we have to paint our house

• We choose the color but painter will decide the brand• Low involvement, no interaction, not ‘thrill’

about shopping for paint

• recommend by contractor, painter

• boring functional value (cold hard facts) –fungus free, color doesn’t fade

Nippon - Brand Leadership

Nippon - What Color Are You

Nippon Paint Superheroes

•Target 25 years and above (young adults)•show happy, easy to paint, icon (blobby), fashionable to paint more often

•a new need : odorless, spotless, solar reflect (product names reflect the benefits)

•Contemporary, fun, engaging (website), modern, colorful

Brand presence, intense brand engagementEducate through advertisementManage to charge premium price

Thanks www.dilipmutum.com