Marketing Strategy and PLanning

Strategies

Marketing Strategy and Planning

Dilip S. Mutum PhD Nottingham University Business [email protected]: @admutum

Learning OutcomesTo 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 Lexushttp://youtu.be/MEbcA0NDOkg

StrategyA strategy is a plan of action designed to achieve 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!!4Marketing Strategy How it Fits w Business Strategy (HBR)StrategyStrategies 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 PlanningStrategic planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.Note to InstructorStrategic planning sets the stage for the rest of the planning in the firm.

In slideshow view, click on movie icon to launch Live Nation video snippet. See accompanying DVD for full video segment.

Discussion QuestionHow might the strategic plan of the college or university influence decisions in the schools programs and offerings. How might it influence decisions in food services, dormitories, executive education, and undergraduate versus graduate programs.

6Excellent CompaniesIn 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 strategyPascale, R.T. (1990), Managing on the edge, New York: Simon and Schuster, 352 ppTHE STRATEGY-TACTICS MATRIXEffectiveIneffectiveEfficient Thrive

1Die-Quickly

2Inefficient Survive

3

Die-slowly

4Tactics doing things rightStrategydoing the right things Strategic Planning

- External environment, Business unit goals Business unit strength & weaknesses Product/Market Analysis9Strategic Planning, Implementation, & Control Processes

10

The Marketing Planning Process, McDonald, 2007:49

12KEY OUTPUTS

Mission StatementFinancial SummaryMarket OverviewSWOT AnalysesPortfolio SummaryAssumptionsMarketing Objectives and StrategiesThree Year Forecasts and BudgetsOne-Year Short Term PlanManaging the Marketing EffortAnalysisMarketing Analysis SWOT Analysis

14Porters Generic Strategies

Overall Cost LeadershipDifferentiationFocusThe lowest production and distribution costs so they can under price competitors and win market shareThe 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 segment15Five Forces Determining Segment Structural Attractiveness

16ExampleMat 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:Porters Five Forces Buying a Farm Threat of New entrySupplierPower Buyer PowerThreat of substitutionThreat 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 RivalryIndustry Concept of CompetitionNumber of sellers and degree of differentiationEntry, mobility, and exit barriersCost structureDegree of vertical integrationDegree of globalization19Strategic PlanningAll 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 company21Strategic Planning Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses

Company divisionProduct line within a divisionSingle product or brandAnalyzing the Current Business Portfolio

Note to InstructorThis Web link is to Procter & Gamble is an interesting site to explore with the students. Click on the Family of products.

Discussion QuestionWhich product categories might be growing markets, slower markets, and emerging markets. This site can be explored again when viewing Figure 2.2the BCG grid.

22Strategic PlanningStrategic planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.Note to InstructorStrategic planning sets the stage for the rest of the planning in the firm.

In slideshow view, click on movie icon to launch Live Nation video snippet. See accompanying DVD for full video segment.

Discussion QuestionHow might the strategic plan of the college or university influence decisions in the schools programs and offerings. How might it influence decisions in food services, dormitories, executive education, and undergraduate versus graduate programs.

23Strategic Planning Assessing Growth OpportunitiesAssessing 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 PlanningDifficulty in defining SBUs and measuring market share and growthTime consumingExpensiveFocus on current businesses, not future planning

Problems with Matrix Approaches

26The 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.27Strategic Planning Intensive GrowthProduct/market expansion grid is a tool for identifying company growth opportunities throughmarket penetration market developmentproduct development or diversification

Developing Strategies for Growth and Downsizing

28Jaguar 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/)

Ansoffs Product-Market Expansion Grid (Intensive Growth)

31Strategic PlanningMarket 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)

32Strategic PlanningProduct 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 companys current products and markets Virgin group of Companies

Note to InstructorThis Web link leads to the hompage for Virgin. This is a great company to discuss as they provide examples of market development, product development and diversification. Their homepage lists all their industries and products including tourism, leisure, shopping, media, finance, and healthcare.33

Victorinox AdaptsMore than 130 years old companyCore product: Swiss Army KnifePost 9/11 and aircraft bansSales 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 fashionMoved into new markets: Russia, India and China

Categories of Marketing AlliancesProduct or Service AlliancesPromotional AlliancesLogistics AlliancesPricing CollaborationsCredit card Travel web hotel, car rental, admission ticket etcVisa and Olympic3PL & Businesses35

Hypothetical Market Structure

36Strategies for Market Leaders##1. Expanding the Total Market

New customersMore usagethose who might use it but do notthose who have never used itthose 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

NCH38Expanding the market: New Customers39

Mango Carrot, Sweet Greens and StrawberrySmoothies / Kale2. Protecting Current Market Share 40Offensive Strategy - Proactive marketingResponsive anticipationCreative anticipationProactive companies create new offers to serve marketHave a vision of the future and of investing in it

Defensive Marketing 6 strategies

Market Challenger - Pepsi buys Gatorade in a Bypass Strategy

Bypass attack diversify into unrelated products New geographical market Leapfrogging into new technologies41Market-Follower StrategiesCounterfeiterDuplicate the leaders product and packages and sells it on the black market

ClonerEmulates the leaders product, name and packaging with slight variations e.g.cereal

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

AdapterThe adapter takes the leaders product and adapts or improve them

Followers can achieve success by taking advantage of the groundwork that market leaders laid. They can hold an advantage over competitors through its location or service offerings, and keeping manufacturing costs low. Followers can use a variety of strategies including:

Counterfeiter - Duplicate the leaders products and package and sell on the black market or through disreputable dealers.Cloner Emulate the product leaders products, name, and packaging, but with slight variations. Ralcorp Holdings sells imitations of name brand cereal in look-alike packaging, which retail for nearly $1 less per box.Imitator Copies some things from the leader but differentiates on packaging, advertising, pricing, or location. Leaders do not protest too much unless the imitator seeks to attack aggressively.Adapter Takes the leaders products and improves them. May select a different market than the leader but if left uncheck may grow into a formidable opponent. Japanese automakers are examples.42Market Nicher Strategies43Aims to be leader in a small market (niche)Target small profitable segmentsAchieve high margins

Nicher tasksCreate nichesExpand nichesProtect niches

Market Nicher Strategies

44Niche Specialist RolesEnd-User SpecialistVertical-Level SpecialistCustomer-Size SpecialistSpecific-Customer SpecialistGeographic SpecialistProduct-Line SpecialistJob-Shop SpecialistQuality-Price SpecialistService-SpecialistChannel Specialist45Brand LeadershipConsumer Insights: DuluxPaint is not consumer friendlyDont think of paint not until we have to paint our houseWe choose the color but painter will decide the brandLow involvement, no interaction, not thrill about shopping for paintrecommend by contractor, painterboring functional value (cold hard facts) fungus free, color doesnt fade

Nippon - Brand LeadershipNippon - 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 oftena new need : odorless, spotless, solar reflect (product names reflect the benefits)Contemporary, fun, engaging (website), modern, colorful

Break down the mindset

Brand presence, intense brand engagementEducate through advertisementManage to charge premium price Thankswww.dilipmutum.comChart129211816519

Series 1

Sheet1Series 1Asia Pacific29China Region21North America18UK16Europe5Others19To resize chart data range, drag lower right corner of range.