Presentation1

Marketing Strategy

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• Marketing as per Peter Drucker – the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.

• Chartered institute of marketing– marketing as the process of discovering, expecting and suiting the customer needs and at the same time making profits.

Marketing……

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• In Greek – strategos means to lead.• To be successful in business an organization should plan to utilize

available resource.• Strategy helps organization to realize its mission and be successful.

Strategy……….

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To achieve long term goals…. Good Strategy …… What needs to be achieved? What it needs to be achieved? How it needs to be achieved?

Strategy helps…. Business to develop. Sustain its competitive advantage. Build brand image. Enhance performance. Define market position. Create USP….

Strategy………. In Business

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• What to do..• What not to do…• Who the customers are…• What requirement of theirs to be met…• At what price…

Strategy………. Specifies…

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• Scope --- Type of businesses , Industries, market segments (company operates or plans to)..

• Goals --- Specific goals and objectives of the organization.

• Resource allocation --- Human & Financial. Optimal utilization of available resources.• Sustainable competitive advantage --- comes from strength

& core competence of organization.• Synergy --- Combined effort of various group working together.

Components of Strategy….

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Levels of strategy

Corporate level strategy

Business level strategy

Functional level strategy

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Corporate level strategy

Diversifying Coordination between businesses.

Strengthening Co. position thru out its business.

Financial, operating, managerial

aspects, sharing resource,

knowledge & expertise.

Identifying strategic fit to find competitive

advantage.

How well Co’s. objectives and

strategies match – competencies and

External environment.

Identifying the priorities for allocating

the resources.

Identify profitable business &

allocate resource

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Business level strategy

Responding to

the changes in the environ

ment

InternalEnvironment

External Environment

Attaining

competitive

advantage.

Identify

product/servic

es that offer competitiv

e advantag

e.Develop

unique

capabilities.

Protect

business

from tactics of

competitor

s.

Developing

distinctive

competencies.Technological advantag

e.Defe

ct free product.

Specialize

d marketing

.JIT…etc

Coordinating

initiative of

functional units.

Synergy

enhances effectiveness of strategy.

Dealing with

strategic issues

of busines

s.

Approval from top management for

major

actions &

inform of developments, modification or revision of strategies

.

Plan of action to deal within its industry

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• Focuses on product or market.• Focuses on functional unit, department, or

process within the business.

Functional level strategy.

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Strategic Marketing Marketing StrategyIt is the formulation of a strategy taking into consideration the constantly evolving trends in business environment by giving customer satisfaction at most importance.

It is analysis, development, implementation of selected market target strategy for the product markets in which the organization has interest.

It involves monitoring the environment constantly to identify the changes and to modify the strategy accordingly.

It involves implementation and managing the marketing strategy that have been formulated to meet the marketing objectives and customer needs.

It focuses on the performance of the organization as a whole.

It focuses on the performance of a product / service in the target market.

It views marketing as a key activity of the entire business rather than the specialized function.

It combines the customer- influencing strategies with market focused activates to gain competitive advantage in the industry.

It has a boarder perspective, i.e. it is concerned with the changing trends in business, changes in the customer needs and customer satisfaction.

It has a narrow perspective : Concerned with the customer , organization boundaries, market and competitors.

It is about how to do. It is about what to do.

Strategic management & Marketing strategy

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• Competitive strategy refers to how a company competes in a particular business.

• Competitive strategy is concerned with how a company can gain a competitive advantage through a distinctive way of competing.

Competitive Strategy

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•

Sustainable competitive advantage is the focal point of your corporate strategy. It allows the maintenance and improvement of your enterprise's competitive position in the market.

• It is an advantage that enables business to survive against its competition over a long period of time.

Competitive Advantage of Corporate ………..

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• Hilton & Marriott

» Vs

» La Quinta Motor inns

Marketing strategy & competitive advantage -- CS

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• Success in business depends on VISION & Competitive advantage.

• Vision vs. Mission

• Vision –where the co. expects to be in future.• Mission –Basic purpose for which the co. is in

business.

Marketing strategy & Competitive advantage….

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• Business can achieve comp. Advantage by..• Focus on customers..• Analysis of requirements of buyers..• Identify gaps in service provided by the

competitor product/ service..• Identifying unmet requirements.. To find

opportunities..• Customer satisfaction analysis..

Competitive advantage..

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• Competence is the ability to perform a specific task, action or function successfully.

• Success of an organization lies in identifying its ability to identify, develop, and take advantage of its core competences..

Competence..

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• Provide access to wide variety of market.• Contributes by providing benefits which are perceived important by

customer.• Difficult for competitors to imitate.

Core Competence advantage..

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• The link between the core competences and final product is CORE PRODUCT.

• Honda Engines -- CS

Core Competence

Area of expertise Core Competence Company

Engines Efficiency & Performance

Honda

R & D Research Merck.co

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• Capability-based strategies • Evaluation of these capabilities begins with a company capability profile, which examines a company's

strengths and weaknesses in four key areas:managerial marketing financial technical

• Core competencies can be defined as the unique combination of the resources and experiences of a particular firm. It takes time to build these core competencies and they are difficult to imitate. Critical to sustaining these core competencies are their:

• Durability - their life span is longer than individual product or technology life-cycles.• In transparency - it is difficult for competitors to imitate these competencies quickly. • Immobility - these capabilities and resources are difficult to transfer.

Core competence vs. capabilities

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• Can be defined as factors external to the system , yet have a affect on the system.

• Cs –KFC

Marketing Enviorment

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Micro -environment

Customer

Competitors

Intermediaries

Suppliers

Other stake holders

Environment…..

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• Identify the info. Required by the organization.• Collection of info.• Analysis of Info.• Communicating results.• Making decisions.

Environment scanning

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Strengths What are the core competencies of the company?

What is the company known for?

What is the strength of the company in the market?

Does the company have a strategy?

Does the company provide a supportive work culture?

Weaknesses - What are the liabilities for the company?

What are the improvements that can be made in the company?

What are the areas in which the company performs poorly?

What should be avoided? Is the company able to upgrade its technology?

Opportunities Who are the existing and potential customers?

What is the attractiveness of the market?

What are the favorable conditions in the market?

What are the market trends and is the company positioned to take on trends?

What are the new markets or markets with potential?

How advanced is the company in the use of technology?

Threats What are the competitors' strategies and tactics?

What are the barriers in the market?

Is the rapidly changing technology a threat?

What are the political and economic conditions of the market and how do they affect the company?

Swot Analysis…

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• Leader - major resources are focused upon the SBU.

• Try harder - could be vulnerable over a longer period of time, but fine for now.

• Double or quit - gamble on potential major SBU's for the future.

• Growth - grow the market by focusing just enough resources here.

• Custodial - just like a cash cow, milk it and do not commit any more resources.

• Cash Generator - Even more like a cash cow, milk here for expansion elsewhere.

• Phased withdrawal - move cash to SBU's with greater potential.

• Divest - liquidate or move these assets on a fast as you can.

DPM…… Directional Policy Matrix

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• dogs are cash traps because of the money tied up in a business that has little potential.

• Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption.

• Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out.

• As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume.

BCG matrix……

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GENERIC STRATEGIES

PORTERS THREE GENERIC STRATEGIESCOST LEADERSHIP STRATEGYDIFFERENTIATION STRATEGYFOCUS STRATEGY

MARKET LEADER STRATEGIESi. POSITION DEFENCEii. MOBILE DEFENCEiii. PREMPTIVE DEFENCEiv. COUNTER OFFENSIVE DEFENCEv. FLANK POSITIONING DEFENCEvi. STRATEGIC WITHDRAWL

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• DIRECT ATTACK

• ATTACKING COMPETITORS WEAKNESS

• ATTACKING COMPETITOR FROM ALL SIDES

• INDIRECT ATTACK

• GUERRILLA WARFARE

MARKET CHALLENGER STRATEGIES

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• MARKET NICHER STRATEGIES

• MARKET PIONEER STRATEGIES

• RELATIONSHIP STRATEGIES

MARKET FOLLOWER STRATEGIES

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• Marketing mix ---the “P”

• Relationship mix ---- “B”

Product management & Analysis

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• 4 ‘P”• Product• Promotion• Price• Place• Extended “P”• People• Physical evidence• Process

Who are the customers? Who are the persons actually

buying? What are they buying? Why are they buying? Whom are they buying from? How are they buying

The “P” & “B”

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PLC

Develop strategy

Stabilize strategy

Turn around strategy

Harvesting strategy

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• Introduction. --The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

• Growth. -- Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize.

• Maturity.--Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

• Decline.-- At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Strategies for the differing stages of the Product Life Cycle

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Product levels

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Porter's 5 Forces - Elements of Industry Structure

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consumer buyer behaviour

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Consumer Needs & Motivation

• Motivation is the driving force within individuals that impels them to action– The driving force is produced by state of tension, which exists

as a result of an unfulfilled need.

Unfulfilled Needs, Wants & Desires

Cognitive Processes

BehaviorTension

Previous Learning

Goal or Need FulfillmentDrive

Tension Reduction

• Consumer Package Goods (CPG) market that adopt the theory of running their business centered around Consumer, Shopper & Retailer needs.

• Marketing departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant insights (both mindsets and behaviors) on their target Consumers, Shoppers and retail partners.

• Growth Opportunities emerge from changes in market trends, segment dynamics changing and also internal brand or operational business challenges.

The Consumer-Centric Business

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• Segmentation is a process of dividing the market into distinct subunits of customers with similar needs. (ATM… personalized banking)…

Segmentation

Market segment & positioning

Emerging markets( united breweries. Sab miller VS. Sappora Growth

markets Mobile services -VAS

Mature & Declining markets J&J baby care products for adults

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• Positioning by attributes- Colgate for 12 hr protection, Volvo cars for safety,

• Positioning by price … Ariel as premium product,. Tide as low price product

• Positioning by product use … Sony Erricsson W800i as walkman..• Positioning by product user --- pink RAZR as designer item.• Positioning by product class --- rolex as best expensive watches• Positioning with respect to competition -- Oil of olay vs. dove

Positioning Strategy….

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• Price sales • Ability to recall price –low.• Similar price amongst competitors..• Low price perceived by some as poor quality

Customer analysis

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• Cost plus strategy---production cost + variable cost + profit margin.• Target pricing strategy--- target return pricing:: to achieve target return on

target achievement.• Early cost recovery ---maximum profit return from the product at the

earliest.

Pricing strategy

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• Customer loyalty is widely accepted as being worth nurturing, but what are the main business factors that directly influence the loyalty of your customers?

Customer loyalty

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Customer loyalty

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Nordstrom (www.nordstrom.co

m

Customer loyalty matrix

switchers

Fence sitters

Loyals

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• Analysis customer needs.• There buying pattern.• Ways in which they can be satisfied.

• Analysis use full in ::• Identify the competition in the market.• To identify ,why customer choose one product over the other.• To analysis the present strategies of the co. vis. Competition.

Customer analysis

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Corporate situation

Strategic intentions.

Financial situation & portfolio, opportunities pursuing.

Identify Competitor objectives

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• Laid back competitors.• Aggressive competitors. ( HUL Pepsodent 102 % better)• Selective competitors.• Unpredictable competitors.

Types of competitors

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• Identifying customers—who and how they are served.• Identify current & potential competitors.• Collect information about each competitor.• Conduct in-depth analysis of each competitor.• Comparison with competitors.

Competition analysis

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• simple consistency - first order fit between each activity and the overall strategy

• reinforcing - second order fit in which distinct activities reinforce each other

• optimization of effort - coordination and information exchange across activities to eliminate redundancy and wasted effort

How is competitive advantage implemented?

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• Difference in ORG. buying & individual buying…• Org. buying involves multiple individuals in decision process.• Governed by rules & standards.

Organization buying behavior

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• Users.- who will use the purchase product.• Buyers.-responsibility & authority for negotiating• Influencers.-influence directly or indirectly ORG. decision process • Deciders.-take final decision.• gatekeepers.-control info. In buying centre

Buying centre

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Segmentation

Targeting

Positioning

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• Dividing the market into subunits of customers of similar needs…

• Then to identify the most profitable product segments and services that the ORG. can cater to….

Segmentation

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• Customers response to product , positioning.• Segments should respond differently to companies products.• Action ability of segment-(focus on target buyers &not waste resource).• Financial strength of the segment.• Stability of segment—( financially attractive).

Requirement of effective segmentation

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• Single seller or company controls the goods & service-prevents others from entering.

• E.g. – De beers control 90% of diamond mkt.

Monopoly segment

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• Exists when few players are in market.• Entry barriers like huge investment. E.g. –aluminum production ( Nalco,

Balco, hindalco,) • Opec.……

Oligopoly

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• Case study Amul Pizza`s • An unlikely entrant has stirred the pizza market in India. Indian company

Amul, well known for its milk products, has introduced a pizza for 20 rupees (41 US cents), or one-third that charged by competitors.

• Amul is one of the largest food cooperatives in the world and carries immense financial and advertising clout. Its parent company, the Gujarat Cooperative Milk Marketing Federation (GCMMF), turned around 25 billion rupees last year. And even though they may not admit it, competitors have started tightening their belt, in different ways. ……………..

Segmentation Invasion positioning & repositioning

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• Identify and serve small but very profitable segment.• Identify specific & personalized needs of customer & fulfill them.• Long term relation with customers & provide them the best service.

• Maybach

Niche segment

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Customer analysis

Specific needsProducts.Collect data of customerProvide customized solutionsProvide customer satisfaction.

Competitor analysis

Co. has to perform better than competitors.Analysis existing competition and potential new entrants.Strength , weakness of competitors…Info on Financial ,operational ,technical capabilities, market position, customer base,Strategic vision , objectives ….

Positioning analysis

Segment analysis helps in positioning,Decision on how to position the product & company can be done by positioning analysis.Helps meet the customers need Effectively.

Strategic analysis of MKT. segments

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• Who there customers are & who will purchase?? SUBWAY……targeting strategy…• Cadbury …. Rich & creamy chocolate… for weight conscious customers…. “Under 99 cal”

Targeting strategy

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• Undifferentiated strategy..same marketing mix for all segments… e.g…South west airlines.. Same fare for all ..spot bookings only ..no advance reservations.

• Concentrated strategy…effort on a single segment…House of chanel- makes hand bags and perfumes…no advt. for bags& perfumes , are made on order only.

• Differentiated startegy….different strategy for two or more segments…Horlicks for sick persons as health drink & mothers and children--- a pleasurable nourishing drink .

Targeting startegy

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• Positioning enables the customer to differentiate between competing products…

• Kinetic Zing…transport need for college going youngsters.. designed to reflect the needs & life style of the segment…

Zing rock series .. Dual tone colors…cell phone charger point..mobile holder..cola can holder

Positioning startegy

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Positioning strategy -- recall.

• Positioning by attributes- Colgate for 12 hr protection, Volvo cars for safety,

• Positioning by price … Ariel as premium product,. Tide as low price product

• Positioning by product use … Sony Erricsson W800i as walkman..• Positioning by product user --- pink RAZR as designer item.• Positioning by product class --- rolex as best expensive watches• Positioning with respect to competition -- Oil of olay vs. dove

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1.Revamped position strategy• Initially –basic product• Attain maturity –add one or two features.

2. Break free position strategy… changing the way the product is consumed.• Dettol soap—anti septic soap –all purpose anti

bacterial soap.

position strategy…cont..

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• Identify competitor.• Customers perception & evaluation.• Competitor's position.• Analyzing customer

• Market research techniques…..

position strategy.. Implementation ???

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