WHY A STRATEGY? n We can’t predict the future, we have to build it and take decisions in the present as part of a coherent long-term plan.

WHY A STRATEGY? We can’t predict the

future, we have to build it and take decisions in the present as part of a coherent long-term plan.

Taking a decision in an uncertain environment

A lucid view of the future (external assessment)

A lucid view of the company’s capabilities (internal assessment)

The principles of strategic thinking:

THE WAY IN WHICH THE COMPANY INVESTS THE WAY IN WHICH THE COMPANY INVESTS ITS RESOURCES TO CHANGE A COMPETITIVE ITS RESOURCES TO CHANGE A COMPETITIVE SITUATION TO ITS ADVANTAGE OR STABILIZE SITUATION TO ITS ADVANTAGE OR STABILIZE IT, TAKING INTO ACCOUNT THE CHANGES IN IT, TAKING INTO ACCOUNT THE CHANGES IN ITS ENVIRONMENT.ITS ENVIRONMENT.

DO NOT CONFUSE WITH THE CONCEPT OF OBJECTIVES.

THE NOTION OF STRATEGY:

Internal assessment A questioning about the company’s

capabilities and future development An evaluation of the strengths and

weaknesses Strength: an expertise that will enable the

company to secure its position in the market Weakness: a key success factor that the

company does not fully master

THE STAGES IN STRATEGIC DECISION-MAKING

STRENGTHSCONSTRAINTS

OPPORTUNITIESTHREATS

ENVIRONMENT COMPANY

Does the company have the means to exploit

this opportunity?

Is there amarket opportunity?

MARKETING STRATEGY

Marketing objective Target

Positioning

Marketing mix

Overall objectives Financial or

non-financial

Financial

objectives

Production

objectives

HRM

objectivesMarketing

objectives

Are based on the company’s overall objectivesConcern the target markets for which the company

is seeking to change reactions.

Marketing objectives

Distribution objectives: presence in retail outlets,

sales force

Communication objectives: image recall

They may also be set out in accordance with different

policies (communication, sales force, distribution

Increased purchases by current customers

Maintain market share Increase in the number of

product tests Obtain a better re-purchase rate

Grow by 15 % insegment A within 2 years,

13 to 15 % market share

in 1 year...

To be operational, they must be: expressed in measurable terms accompanied by deadlines evaluated in a realistic, stimulating

manner prioritized and consistent with each

other

The concept of “target”

Understanding the concept

Know-how: choosing the target

Segmentation is an observation

The target is the first major decision in the marketing strategy

THE CONCEPT OF TARGET

MARKET SEGMENT (S) AT WHICH THE PRODUCT IS AIMED

A B C

focused marketing

differentiated marketing

undifferentiatedmarketing

The focused targeting strategy

Propose a single offer to a single segment:– Porsche for sports cars

A distinctive expertise based on specialization

Limitations linked to dependence on a single market segment

The differentiated targeting strategy

Propose different offers to different segments

Greater independence with regard to the ups and downs of the market

A more expensive strategy

Th undifferentiated targeting strategy

Propose a single offer and ignore segmentation – Guérande salt

The least expensive strategy The riskiest strategy:

– risk of trivializing the product– the offer must be highly attractive, e.g. as a result of

an innovation that modifies traditional segmentation• smart

Choosing the targeting strategy:

the segment’s potential

consistent with the company’s capabilities

Once you have chosen the target

Differentiate the offer

The concept of positioning

Understanding the concept

Know-how: define a positioning in the marketing strategy

In a context of market congestion, the consumer finds it less easy to distinguish between products or brands.

Positioning is used to fight against this trivialization.

Why define a positioning?

DEFINITION:

•Promoting a product vis-à-vis competitors’ products in the consumer’s mind•through the expression of differences that are objective•or imaginary•desired by the market

e.g. a technical feature

e.g. brand image

The conditions for good positioning: the reference triangle for positioning

Product features: a coherent differentiation

Competitive brand positioning: an exclusive differentiation

Market expectations: a differentiation that is decisive for the consumer.

Buy two identical Michelin tyres at the same time and gain access to Michelin OnWay, three innovative services for coping with mishaps on the road in Europe

Tyre Assistance  Tyre Damage Warranty  SOS Direction

Product features: The quality image of the brand,A structure set up specially

Competitive brand positioning: The only brand to offer this service

Marketexpectations: safety and rapid repair service: undeniable expectations on the part of motorists.

The conditions for good positioning; the differentiation must also be:

Communicable Defendable Accessible for the consumer Profitable for the company

Points for positioning

Via the product– Certain product features

• Enriched with omegas3– Solutions to a problem

• Palmolive for sensitive skin– Opportunities for use

• Washing powder for black clothing– User categories

• Jacques Dessange anti-ageing– By creating a new category

• “The morning health treatment”– …

Via the service– Practicality

• Change your contract with Bouygues Télécom

– Delivery • “La Redoute 48-hr delivery”

– Installation– Advice– After-sales service– Employees in contact with the customers…

Positioning strategies

very poor very good

not prominent Do not actReinforce the

decisive nature of the characteristic

prominent

Improve the evaluation

of the producton the

characteristic

Maintain thepositioning

Evaluating the product on its characteristics

Importance of the characteristic

The required positioning The positioning required by the

company is conveyed by the choices made on the mix, which aim to express the distinctive features that the company wishes to see consumers attribute to the product.

Perceived positioning:

The positioning perceived by the consumer matches the characteristics that the consumer attributes to the product

Differentiation criterion A

Differentiation criterion B

brand A

brand C

brand B

brand D

Positioning analysis tools

Perceptual analysis: this pinpoints those attributes that are decisive in the consumer’s mind and his perception of the different offers on the market

Perceptual maps: these are used to pinpoint brands that are perceived in a similar way– pinpoint brands whose positioning is isolated– show variances between required and perceived

positioning

Dream

The others

Nous deuxIntimité

Femme actuelle

AvantagesPrimaModes and travaux

Marie ClaireElleMadame FigaroMarie France

The example of the perception of women’s magazines

Me

Reality

Seduction

Practical

Escape

brand A

brand C

brand B

brand D

segment4

segment3

segment2

Price

Snow sport identity

Once you have defined the positioning,

Express it through the product, the price, distribution and communication

THE MARKETING MIX A set of variables on which the company can act to

implement its strategy. A combination of four policies, which,

together, form the global offer to the customer:– the product policy,– the price policy,– the distribution policy,– the communication policy.

Guiding principle: positioning

MANAGING THE MARKETING MIX: 3 principles The Coherence rule,

Budget distribution,

Choosing the driving component:– Skimming strategy or penetration?

PULL STRATEGY

Attract the consumer towards the product

Communication: the driving component in the mix

Importance of the brand in the buying criteria

PUSH STRATEGY Push the product towards the

consumer Distribution: the driving

component in the mix Importance of retail outlet

advice in the buying criteria

The conditions for the success of a strategy Is the envisaged strategy coherent? Is the strategy compatible with the

company’s resources. Is the strategy a winning one? Is the strategy not too risky? Will the strategy be profitable?

THE NOTION OF PRODUCT

Here, it is the consumer’s perception that defines the product

The solution chosen by the company with a view to satisfying a previously detected need in a market

Product and /or service

– which frontier?product service

tangible product

global product

generic product

The three levels of a product satisfactionfelt by the consumer

services before, during and after the sale

functional characteristics

THE CONCEPT OF LIFE CYCLE

A product has a limited life Its sales go through different

evolutionary phases Its level of profit varies according to

each stage in the cycle The way in which the mix policies are

managed differs at each stage.

The life cycle

time

sales

launch

growth

maturity

decline

It is not a predictive modelThe definition of the

phases is subjective In practice we see some

very different life cycles

THE LIMITATIONS OF THE MODEL

IMMORTAL PRODUCT

Long learning process

SUCCESSIVE RELAUNCHESGimmick product

Other life cycle curves

The value of the model

It attracts the attention to the limited life span of the product

It helps us to analyze the life cycle of the product compared to that of the market, brand, etc.

Managing the marketing mix during the life cycle. LAUNCH PHASE LANCEMENT:

–product: no major modifications–price: decision to be taken:

skimming or penetration–distribution: placing the product–communication: objective: publicize

the product, high budget

GROWTH PHASE:–product: no change in general

–price: no change in general

–distribution: broaden the circuits

–communication: keep up the effort

MATURITY PHASE :–product: minor modifications (adjustments

compared to competitors), range extension

–price: response to the competition

–distribution: slow the arrival of competitor products

–communication: keep up the image

DECLINE PHASE:– product: no expensive modifications

– price: occasional special offers or frequent price reductions

– distribution: abandon certain retail outlets

– communication: any promotional actions

Managing the product portfolio

The B.C.G. modelvertical axis: market

growth ratehorizontal axis: relative

market share

Relative market share

Marketgrowthrate

Strong Weak

Strong

WeakCASH COWS

STARS DILEMMAS

DEAD WEIGHTS

What is a brand? the distinctive sign of a product much more than that: a vehicle for

the emotional components in the relationship with the consumer

takes a very long time to build, quickly destroyed

The brand’s functions

Product location Guarantee Personalization Fun aspect

Managing a brand portfolio: 4 possible strategies Own a global brand Sell several products under the same

brand: umbrella brand Be established in several segments with

different brands : product brand Propose a varied offer by covering the

same target with a broad assortment and a single brand: range brand

Brands in danger?

Two threats:– consumer trends– company errors

Changes in consumer practices

the role of the distributors:– the increasing interest in own

Consumer behaviour– the role of price– product information: a consumer who buys

like a professional

Company errors

brand overkill widespread use of umbrella brands over-exploitation of a brand’s potential

What’s the future for brands?

Established brands– legendary–Significant–cultural exceptions

Condemned brands–followers–opportunists–bulimics

What is a new product?

A new brand on a market, A range extension, A product improvement, A less expensive product, Repositioning, An entirely new product

Market fragmentation, lower profits, Complexity of regulations, Production cost, Shorter life cycles

Having a good idea ...

Increasingly difficult

SOURCES OF IDEAS:

Internal:–sales force, R&D, creativity

groups External:

–customers, distributors.

STAGES IN THE LAUNCH PROCESS

CONCEPT TEST FINANCIAL ANALYSIS PRODUCT FABRICATION

THE CONCEPT TEST:

A description of the idea from the point of view of the benefits that the consumer will gain from it,

Objectives:–evaluate the obstacles and incentives,–Define the competitive environment

FINANCIAL ANALYSIS Sales estimates Cost estimates:

– Raw materials, labour, etc.– Development costs: R&D, studies ...

– Allocated overheads– Marketing expenditure

Estimate of the product’s gross contribution Evaluation of the rate of return on investment

THE PROCESS OF ADOPTION BY THE CONSUMER

The time taken to adopt the product depends on the product’s characteristics:– relative advantage of innovation,

– compatibility with the individual’s experience

– communicability 

The differences in behaviour in adopting innovation

time

2.5% 16%34%34%13.5%

Early receptives Early

majority

Late majority

Latecomers

The pioneers

Reflection Scepticism

Tradition

Risk

PRICE: A SPECIFIC VARIABLE The only variable in the mix in which

external/internal coherence is expressed A monetary expression of value

– Greater value in exchange for an expected satisfaction

Notion of perceived value:– in cash – in time– in effort …

The traditional approach to price-fixing

INTERNAL ASPECTS EXTERNAL ASPECTS

Acceptability in the market

Competition

Regulations

Marketing objective

Positioning

Cost analysis

PRICE

Determining the psychological price

We have to ask two questions– What is the price beyond which the

consumer would not buy the product because he finds it too expensive?

– What is the price below which the consumer would not buy the product because he finds it of insufficient quality?

Analyzing the answers

the percentage of non - buyers– the people who indicate a maximum price are – non-buyers at higher prices

the percentage of buyers with regard to the maximum

price– the person who announces a minimum price considers that the

quality is insufficient for all the other higher prices

the percentage of buyers – the people who are above the minimum limit and for whom the

maximum price is not reached

Taking the results into account

We obtain a demand curve The psychological price is the one that

maximizes the number of buyers The chosen price is not necessarily the

psychological price

The two price policies

Sales volumeUnit margin

Skimming policy

Penetrationpolicy

PENETRATION POLICY

Choose a low price to make your mark across a large part of the market

from the outset

Choose a low price to make your mark across a large part of the market

from the outset

As long as there is:elastic demand at the price,high-end market already satisfied,strong competition,Intensive distribution

SKIMMING POLICY:

Sell at a high price, focusing on a group of buyers prepared to

pay that price

As long as:the life cycle is quite short,the product can be imitated quickly,a low price would not be very profitable,demand is inelastic

Buyer reactions to price changes

Possible perceptions of a price reduction– the product is selling badly– the product is about to be replaced– the quality has fallen– the price will fall even further, it’s better to wait

Possible perceptions of a price increase– heavy demand and the risk of a stock shortage– Risk of an increase at a later date– the price is fixed at the maximum tolerated by the

market

Competitor reactions to price changes

Problem of anticipating the competitor’s reactions– Statistical analysis of his previous

reactions– Analysis of his strategy

The company’s reactions to competitor price changes

Maintain our price– and do nothing– counter-attack in other areas

Reduce our price Increase and counter-attack on the

product

Price: variable number 1 in the mix?

A choice criterion for the consumer against a background of ferocious competition

A challenge to the traditional price-fixing model

The new price paradox

quality

price

Value-added offer

Stripped-down offer

New price-fixing methods

The value price approach The target price approach The target cost approach

Limitations: the “reduction in cost/human resources management” equation

The Every Day Low Price

Objective: to put an end to the promotional overkill by offering low, stable prices

How? Through a better reorganization of all the company’s processes

The New Deal offer Create new market conditions by

differentiating the product differently

Innovate!!! Differentiate through a combination

of quality /price/ innovation.

The distribution functions From the production site to the consumer

location: transport making up an assortment storage consideration of the commercialization

risk pre- and after-sales services

DESIGNING A DISTRIBUTION CIRCUIT CHANNEL: a set of agents who

intervene between the production site

and the place where the product

is consumed;– there are several types of channels

CIRCUIT: a set of channels chosen by

a company to distribute its product

PROBLEM:

WHAT FUNCTION(S) SHOULD THE PRODUCER DELEGATE?

WARNING!!

the removal of an intermediary from the channel does not mean that the function is removed

the final price does not necessarily depend on the number of people involved in the channel

GENERALLY SPEAKING:

SCREEN WITH THE MARKET

COST:Short circuit

Long circuit

THE CRITERIA FOR CHOOSING A CHANNEL:

The target marketThe product The company

Market criteria

buying behaviour, customer spread,order frequency.

Product criteria

need for advice in the retail outlet

life cycle phase type of purchase: day-to-

day consumption or not

TYPES OF PURCHASES AND TYPES OF CIRCUITS:

Day-to-day purchase:

Considered purchase :

Speciality purchase:

Intensive distribution

Selective distribution

Exclusive distribution

Company criteria

financial resources,previously established in the

channel,ability to negotiate with the

different people involved in the channel

THE PREDOMINANCE OF THE RETAILER

anonymous, unbranded product local market traditional distribution structures retailer in control of his supplies

THE TRIUMPH OF THE PRODUCER

development of producer brands

development of pull-type strategies

The distributors’ reaction

development of central purchasing consortiums

existence of a listing right appearance of distributor brands need for “distributor marketing”

Managing the power struggle: the manufacturers’ advantages the intense competitive pressure

between the distributors–the development of hard discount–the need for greater differentiation

between the distribution chains The essential role of a significant

brand

The distributor’s expectations:

Sales growthSales growth Optimized brand policy

Optimized brand policy

Reduction in stock

Reduction in stock

Reduction in costsReduction in costs

Benefits of partnership