Strategic Marketing - Lecture 5 Market Vision, Structure and Analysis

Strategic Marketing: Market Vision, Structure and Analysis

Week 3: Lecture A

Strategic Marketing

Agenda Corporate, Business and Marketing Strategy

– Corporate Strategy– Business and Marketing Strategy– Marketing Strategy Process– Preparing the Marketing Plan

– Reading. Ch2 from ‘Strategic Marketing’ by David Cravens, 8/e.

Strategic Marketing

Corporate Strategy Corporate Strategy

Unique Competitive Position for the company Activities tailored to strategy Clear Trade-offs and choices Competitive advantage arising from fit across activities Sustainability coming from the whole system Operational effectiveness is a given

– It’s a way a company creates value through the configuration and coordination of its multi-market activities

Strategic Marketing

Strategic Marketing

Corporate Strategy Corporate Strategy

it is decided in the context of defining the company’s mission and vision, i.e, saying what the company does, why and how it exists, and what it is intended to become.

– Lays down corporate mission, vision and overall objectives

– Design effective organization structures and processes

– Creating organizational culture and philosophies

– Deciding on attaining distinctive competencies by generating superior human, financial and technological resources

– and seeking synergy among the firm’s various businesses

Strategic Marketing

Corporate StrategyStrategy Component Key Issues

Scope, mission, vision what business should we be in? what customers needs, target segments, and/or technologies should be focused on?

Objectives (SMART) what performance dimensions? what are the benchmarks? what is the time frame?

Resource Allocation what financial and non-financial resources are required?

Sources of competitive advantage

what are businesses’ sources of competitive advantage? how do we do things differently and favorably w.r.t the competition?

Synergy when activities and departments reinforce and complement each other The whole becomes greater than the parts

Strategic Marketing

Corporate Strategy Components of Corporate Strategy

– Corporate Vision and the Vision Statement:

An overall direction of the company in the long run.

– The reason for company’s existence– The firms customers and the needs to be met– The extent of specialization within each product market and

geographical area to be covered– The amount and type of diversification– The stage in the value chain – Management’s performance expectation– Other guidelines: overall business strategy, technologies to be

used and R&D

Strategic Marketing

Corporate Strategy Components of Corporate Strategy

– Objectives: Why do we need them?

These are required so that performance can be gauged

Objectives are set at several levels in an organization; marketing, finance, HR, operations

what they want to

achieve Are they attainable?

be able to measure whether you are meeting the objectives or not.

When do you want to achieve the set

objectives

Do u have the resources?

Strategic Marketing

Corporate Strategy Components of Corporate Strategy

– Objectives: Generally its more than the financial numbers that you want to

achieve

Handout: The Balanced Scorecard

Strategic Marketing

Corporate Strategy The Hierarchy of Strategies

Strategic Marketing

Business and Market Strategies Corporate Strategy (Some insights)

Horizontal Integration– The process of acquiring or merging with industry

competitors

Vertical Integration– Expanding operations backward or forward

Strategic Outsourcing or Partnering – Letting some value creation activities within a business

be performed by an independent entity or performing a strategic alliance or mergers

Strategic Marketing

Corporate Strategy Components of Strategy

– Business Level Strategy (SBU)

a single product or brand a line of products or a mix of related products

– meeting a common market need or a group of related needs

The strategy of each business unit is mutually exclusive and each businesses act as a separate entity

Strategic Marketing

Corporate Strategy Components of Strategy

Characteristic Rationale

Serves a homogenous market Enhances a coherent and focus strategy

Serves a unique set of product markets No duplication or cannibalization

Autonomy and control over production, marketing, distribution

Empowering to determine how its share of resource will be used effectively

Has responsibility for its own profitability Autonomy leads to accountability

Strategic Marketing

JBS JBL Murshid Builders Shoa

Jaffer Group of Companies

Corporate Strategy Components of Strategy

Strategic Marketing

Corporate Strategy Components of Strategy

– Business Level Strategy (SBU)

– Corporate management must first decide what business areas to pursue and set priorities allocating resources to each SBU

– Corporate strategy and resources should help SBUs to compete more effectively:

low cost capital smart professionals R&D Marketing Etc.

Strategic Marketing

Corporate Strategy Functional Level Strategies

Marketing Finance Production & Operations Human Resource

Eg.

• Penetration strategy

• Product development

strategy

•Diversification strategy

• Marketing Mix

Eg.

Capital acquisitions

Resource allocation

Dividends, stocks or

reinvestments

Eg.

• Manufacture or outsource

• develop or attain

technology

• location and workshops- equipment

and supplies

Eg.

Talent Acquisition

work arrangements and training

Motivation and Appraisal

Handout: Exhibit 2.5, Ch. 2, Marketing Management-A Strategic Decision Making Approach, Boyd, 4/e, McGraw Hill.

Strategic Marketing

Corporate Strategy Components of a Corporate Strategy

– Structure, Systems and Processes (Business Model)

Structure determines the composition of the business

Systems are formal policies and procedures

Processes are functions or activities

Strategic Marketing

Corporate Strategy Components of a Corporate Strategy

• Structure, Systems and Processes (Business Model) U-form

– Unitary form / Functional form (U Form)

– Decomposed into specialized/functional units where similar tasks are group together (such as production and sales)

– Coordination of specialized units is centralized by top managers so that economies of scale are obtained, but the coordination problem is harder to solve, as the top managers have to rely on imperfect information transmitted by local managers

Recruitment

Training

Human Resource

A ccounting

Investment

Finnance

Product

Sales

M arketing

Website

Database

M IS

Executive

Strategic Marketing

Business and Market Strategies Components of a Corporate Strategy

• Structure, Systems and Processes (Business Model) U-form

M-Form

operating authority is assigned to divisions organized along either product or geographic lines

Strategic decisions are made at the executive office who – also audits and evaluates the performance of the divisions– and allocates capital among the divisions based on the relative

performances of the divisions.

M arketing

HR

A sia Division

M arketing

HR

A merica Division

CRM

B2B

Business Consulting

Technical Support

M aintenance

Global Service

Headquarter

Strategic Marketing

Business and Market Strategies Components of a Corporate Strategy

• Structure, Systems and Processes (Business Model) U-form

M-Form

local managers can more easily solve the coordination problem by making good use of local information,

but then the advantages of specialization are not fully appropriated and there is duplication.

M arketing

HR

A sia Division

M arketing

HR

A merica Division

CRM

B2B

Business Consulting

Technical Support

M aintenance

Global Service

Headquarter

Strategic Marketing

Corporate Strategy Components of a Corporate Strategy

– Structure, Systems and Processes (Business Model)

M-form organization is able to promote innovation or reform through experimentation, that is, it can experiment an innovation or reform program in some part of the organization first before implementing it in the entire organization.

serious problems are likely to arise under the U-form between functional departments, such as production and sales, when the firm introduced new products or adopted innovations

Strategic Marketing

Corporate Strategy

Components of a Corporate Strategy– Corporate Competitive Advantage

If the business of businesses are adding value to the overall business of the company?

Are the offshoots a good strategic fit?

Harvest, Divest or Invest?

Strategic Marketing

Business and Market Strategy

The Connection Between Business/Corporate Strategy

and

Marketing!

Strategic Marketing

Business and Market Strategy Business and Marketing Strategy Relationships

– “Marketing is so basic that it cannot be considered a separate function with in the business. Marketing requires separate work and distinct group of activities. But it is first, a central dimension of the entire business. It is the whole business seen from the point of view of its final result, that is from the customer’s point of view” Peter F. Drucker

– “Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions:

marketing and innovation; rest are costs”! Peter F. Drucker

Strategic Marketing

Business and Market Strategy Defining Strategic Marketing

– Strategic Marketing is a market driven process of strategy development, taking into account a constantly changing business environment and the need to deliver customer value

– The focus is on organizational performance rather than on increasing sales

– It links the organization with the environment and view marketing as a responsibility of entire business rather than a specialized department or person.

Strategic Marketing

Marketing Strategy ProcessStrategic Situation

Analysis

Implementingand ManagingMarket-Driven

Strategy

Market-DrivenProgram

Development

DesigningMarket-Driven

Strategies

Strategic Marketing

Marketing Strategy Process

1. Strategic Situation Analysis– Market Vision, Structure and Analysis

For a market to exist, there must be people with particular needs and wants and buyers must be willing to purchase a product to satisfy their needs

Analyzing markets and forecasting their change

Evaluating competitors’ strategy

– Segmenting Markets Identifying distinct buyers with similar needs Evaluating future transformations and transitions

Strategic Marketing

Marketing Strategy Process

2. Designing Market Driven Strategies

– Market Targeting and Strategic Positioning Selecting attractive segments to target Carving out Unique Selling Proposition or differentiation

– Marketing Relationship Strategies collaboration with customers, channel members, suppliers,

competitors, and internal teams to achieve greater value

strategic partnering is the mainstay as compared to vertical integration

Strategic Marketing

Marketing Strategy Process

2. Designing Market Driven Strategies– Planning for New Products

New product planning starts with identifying gaps in customer satisfaction – the differences between available product attributes than the desired provides opportunities

3. Marketing Program Developments Deciding on the 4Ps that implement the positioning

strategy. Product: Developing new products, managing existing ones

and deciding what to do with problem ones Pricing Decisions Promotion Distribution

Strategic Marketing

Marketing Strategy Process

4. Strategy Implementation and Control– preparing the market plan and budget – using the plan in implementing and controlling the

strategy

– Activities to implement; who does what, the dates or milestones, location of

implementation and how this implementation will be accomplished

Strategic Marketing

Case: YMCA of London Ontario1. What are the basic issues faced by Shaun Elliot?

1. What factors have contributed to the recent success of the YMCA in London? Will these factors enable it to reach participation levels in excess of 100,000 by 2010?

2. How do you assess YMCA’s corporate strategy in terms of its structure, resources and diversification?

3. What competitive Forces does YMCA face in HFR?

4. What competitive Forces does YMCA face in Child care?

5. What competitive Forces does YMCA face in Camping and Outdoor Education?

7. What should Shaun do about its corporate strategy?