Problems with traditional strategic marketing planning process Products, brands and innovation Price and value Distribution channels and value chains.

Problems with traditional strategic marketing planning process

Products, brands and innovation Price and value Distribution channels and value chains Marketing communications The “new marketing” challenge Marketing is strategy

1 Mission

2 Corporate Objectives

7 Marketing objectives and strategies

3 Marketing Audit

4 Market overview

5 SWOT analysis

6 Assumptions

8 Estimate expected results and identify alternative plans and mixes

9 Budget

10 First year detailed implementation programme

Phase OneGoal Setting

Phase TwoSituation Review

Phase ThreeStrategy Formulation

Phase FourResource allocationand Monitoring

Measurementand review

4 MAIN STAGES - A. ANALYSIS – data driven/market-place/company

position within it/relative to competition B. OBJECTIVES – link to corporate strategy/ use ‘SMART’

technique C. STRATEGY – consistent with corporate strategy/general

direction which will deliver the objectives D. TACTICS – the detailed action plans underpinning the

strategy

Requires one year to complete all stages Needs hard data from detailed and in-

depth analysis of market before company can make decisions

Undertaken by marketers/strategists without involvement of other people in organisation

Requires one year to complete all stages Nope not necessarily

Needs hard data from detailed and in-depth analysis of market before company can make decisions Should be ongoing

Undertaken by marketers/strategists without involvement of other people in organisation insane

Based on ideas of “Planning School” Machine assumption

produce each of the component parts as specified, assemble them according to the blueprint, and the end product (strategy) will result!

Often reduced to a numbers game of performance control that had little to do with strategy

Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

1. Predetermination Organisation must be able to predict the

course of its environment, to control it, or simply to assume its stability Impossible to predict discontinuities (e.g.

technological breakthroughs or price increases) Requires stability during strategy making

Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

2. Detachment It is through administrative systems that planning and policy

are made possible, because the systems capture knowledge about the task… true management by exception, and true policy directions are now possible, because management is no longer wholly immersed in the details of the task itself.

Effective strategists .. immerse themselves in daily detail while being able to abstract the strategic messages

Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

3. Failure of formalisation• Failure of:

forecasting to predict discontinuities institutionalisation to provide innovation Hard data to substitute for soft Fixed schedules to respond to dynamic factors

Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall

Companies don’t have time to wait for plan to be developed

Rejected marketing and strategy (strategy departments closed in 1980’s)

Customers not accept being dictated to by companies and changed relationship – Customer is King

Old marketing is about marketing programmes structured/planned around traditional model operations/tactical

New marketing is concerned with the underlying process of going to market and strategic choices

Confronting revolution in markets Identifying renewal opportunities Developing new ways of doing

business/new business models or reinvention

Is it real? Are markets revolutionised (since when?) The need for renewal –is it new? Is reinvention/revolution necessary or

irresponsible? Or is this a message for incompetent 2nd

raters? How did your firm get where it is? What are its problems and opportunities?

Disruptive pressureson existing businessmodels

Value-creatingopportunities fornew business models

REVOLUTIONRadical marketand customerchange/trends

RENEWALCoping/

adaptationmechanisms

REINVENTIONDesigning newways of doing

business

“the fate of marketing hinges on elevatingthe role of marketing executives from promotions- focused tacticians to customer-focused leaders of transformational initiatives that are strategic, cross-functional and bottom-line oriented”

Nirmalya Kumar, 2004

“the fate of marketing hinges on elevatingthe role of marketing executives from promotions- focused tacticians to customer-focused leaders of (transformational)

initiatives that are strategic, cross-functional and bottom-line oriented”

Nirmalya Kumar, 2004

Brand marketing Relationship marketing Value-driven strategy The search for customer value

Branding Relationship marketing Value

Branding is central to conventional marketing thinking – brand the product/service, company, person, country, etc.

Brands bring important benefits to customers (reduced search time) and companies (brand equity or value)

Branding can transform markets Cool brands often win BUT – brands do not make you

unbeatable Coca-Cola Levi-Strauss Marlboro

Most valuable brand in world 1999 had 50% market share of world soft drinks market Problem – world fell out of love with carbonated soft

drinks Tried to keep up with fragmenting soft drinks market Introduced bottled water, flavoured water, juice-based

drinks, flavoured iced tea and coffee drinks and energy drinks

Use local brands Products not always branded with Coca-cola name Lost market share to Pepsi

UK customers assume bottled water from natural sources ie springs

Coca- Cola purified water from tap water in London

Origin came to light when a complaint was made to the British Food Standards Agency over Coke's use of the word "pure" in its Dasani marketing - implies that tap water is 'impure'.

Like Nestle, McDonald's and Cadbury Schweppes, Coke makes a

gratifying target for journalists, in that all those companies trade heavily on their brand.

Source: Guardian March 4, 2004

Issues that go wrong with branding blind branding private brand competition brands which are liabilities counterfeit brands wrong brand trajectory, e.g., Stella Artois

“wife beater”

Strategic brand management is the priority not creativity

Does the brand create customer value and how?

Customer relationship provides the basis for market segmentation

Contrast the relationship the customer wants (long-term vs short-term) with the closeness wanted in the supplier relationship (close vs distant)

Value has become the central focus of strategy (because there is no choice)

The key issue is now value innovation (in the customer’s terms)

But value does not have a single meaning e.g., operational excellence vs. customer

intimacy vs. product leadership (Treacy and Wiersema, 1995)

Operational Excellence Providing customers with reliable products or services at

competitive prices and delivered with minimal difficulty or inconvenience

Customer intimacy Segmenting and targeting markets precisely and then tailoring

offerings to match exactly the demands of those niches Companies combine detailed customer knowledge with

operational flexibility – can respond quickly to almost any need and creates customer loyalty

Product Leadership Offering leading-edge products and services that enhance the

customer’s use or application of the product Make rivals goods obsoleteSource: Treacy, M. and Wiersema, F., 1993, Customer Intimacy and Other Value Disciplines

Harvard Business Review January- February

Operational excellence Product leadership Customer intimacy

Strategic value pathway (value proposition)

Best total cost Best product Best total solution

Golden rule Variety kills efficiency

Cannibalising your success with breakthroughs

Solve the client’s broader problem

Core processes End-to-end product delivery

InventionCommercializationMarket exploitation

Client acquisition & developmentSolution development

Improvement levers Process redesignContinuous improvement

Product technologyR&D cycle time

Problem experienceService customization

Major improvement challenges

Shift to new asset base

Jump to new technology

Total change in solution paradigm

Choice of strategic value pathway

Source: Barnes et al (2009) Creating and Delivering your Value Proposition, Kogan Page p 46

The danger of making assumptions “we know what our customers want” “bung in some customer service” “just make it cheaper” or, perhaps, take customer value seriously?

Value as rational cost/benefit analysis Value migration

value migrates from one attribute feature to another

different people buy different value Customer value is complex, multi-

dimensional, unstable and idiosyncratic, but it is what matters