Welcome to Marketing Strategy Duncan – Marketing Strategy Welcome to Marketing Strategy...

Scott Duncan – Marketing Strategy

Welcome to Marketing Strategy sduncan@culturecalling.com

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Put “Marketing Strategy” in the heading

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Syllabus

50% from contrôle continu and your final project 50% from the final exam

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Group 3

Group 4

The process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment Customers

the focal point of all marketing activities

What is Marketing?

What is Marketed?

Services

Products

Events

Experiences

People

Places

Key Customer Markets

Consumer Business

Global Non-profit

Consumer purchases made by individual decision makers or a decision-making unit (family)

Consumer Market

B2B Focused on understanding business buying centers

Business Market

Requires a global mindset “Think Global, Act Local”

Global product customized to local tastes

Global Market

Includes nonprofit, voluntary and government markets

Nonprofit Market

The Marketing Mix

The 4Ps of the Marketing Mix The 4Ps of the Marketing Mix

Scott Duncan – Marketing Strategy The 7Ps of the Marketing Mix

Marketing Strategy

The Management Cycle

An approach to business that incorporates all the interests of stakeholders in a business. It widens the view that a firm is responsible only to its owners Created by R. Edward Freeman (1984)

Stakeholder Theory

A technique you can use to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of your activity or project.

Stakeholder Analysis

Mission Statement & Objectives

Company capabilities

Environment

Analysing competitors

Culture, values and technology

Political economy &

created advantage

Public policy, risk & regulation

Product and brand strategies

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Acquisitions and FDI

Strategic market entry

Selling and negotiations

Assessing performance

Services

Part 1

Part 2

Part 3

Part 4

SBU & Situation Analysis

Industrial products

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

A mission statement is: A broad statement of the company’s purpose Explains the purpose of the organization Provides direction for the entire company

Mission Statement

“As a global eye care company, we will help consumers see, look, and feel better through innovative technology and design.”

“Apple, Inc. is focused on providing innovative products and solutions to consumer, SMB, education, enterprise, government and creative customers that greatly enhance their evolving digital lifestyles and work.”

"To push the leading edge of aviation, taking huge challenges doing what others cannot do."

“To make people happy.”

Three Guiding Principles: 1. Success depends on customer

satisfaction 2. Consumer-oriented perspective 3. Avoid short-sighted, narrow-minded

thinking

Mission Statement

Objectives

The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The Company's primary financial goals are to maximize earnings and cash flow, and to allocate capital profitably toward growth initiatives that will drive long-term shareholder value.

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

Levels of Company Strategy

Operates as a “company within a company” A SBU is organized around some common element such as…. Technology

Industry

Target Market

Customer need

Strategic Business Units

SBU 1 SBU 2 SBU 3 SBU 4 SBU 5

Marketing Strategies at the SBU LEVEL

Marketing managers focus on two key aspects of SBU strategies:

1. Establish a competitive advantage

Superior to or favorably different from competitors Examples include: price leadership, differentiation strategy

2. Plan growth strategies

Business-Level Strategies

Company has lower cost than the competitor

Cutting Cost Low customer loyalty

Low-Cost Leadership

Products designed to be unique Quality Design Brand image

Differentiation

Narrowly Defined Market Segment Low-cost leader Differentiating

Focus Strategies

Company has lower cost than the competitor

Cutting Cost Low customer loyalty

Low-Cost Leadership

Marketing Strategies at the SBU LEVEL

Marketing managers focus on two key aspects of SBU strategies:

1. Establish a competitive advantage

Superior to or favorably different from competitors Examples include: price leadership, differentiation strategy

2. Plan growth strategies

BCG Matrix

Growth-Share Matrix Developed by the Boston Consulting Group in the 1970s Simple way to compare Market Growth vs. Market Share Offers a very useful 'map' of the organization's product (or service) strengths and weaknesses

BCG Matrix

STARS High growth, High market share Stars are leaders in business. They also require heavy investment to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share and the star will become a CASH COW.

CASH COWS Low growth , High market share

• They are foundation of the company and

often the stars of yesterday. • They generate more cash than required. • They extract the profits by investing as

little cash as possible • They are located in an industry that is

mature, not growing or declining.

DOGS Low growth, Low market share

Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

QUESTION MARKS High growth , Low market share

Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low).

QUESTION MARKS High growth , Low market share

Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.

Ansoff Matrix

Developed Igor Ansoff in 1957 Four Growth Strategies

Market-Penetration Market-Development Product-Development Diversification

Ansoff Matrix

The Marketing Strategy

Components of Marketing Strategy

Situation analysis Marketing strategy

Diagnostic in relation to a

specific market/issue

Marketing Mix 4Ps + 3

Strategic marketing Operational marketing

Segmentation Targeting

Positioning

3. ECONOMY

Environmental uncontrollables country market A

Environmental uncontrollables country market B

Environmental uncontrollables country market C

1. Competition

2. Technology Price Product

Promotion Place or Distribution

6. Geography and Infrastructure

Foreign Environment (Uncontrollables)

7. Structure of Distribution

3. Economy

5. Political- Legal

Domestic environment (Uncontrollables)

(Controllables)

2 .Technology

4. Culture

5. Political- Legal

4. Culture

Target Market

Situation Analysis: two major components: Environmental scanning & monitoring

External forces and trends are identified as opportunities and threats Forces include: sociocultural, demographic, economic, etc.

Internal analysis Internal strengths and weaknesses are identified Key topics include: customers, suppliers

Situation Analysis

Strengths Very profitable organization 9000 cafes in almost 40 countries

Weaknesses Only one main product

Opportunities Threats New products and services that can be retailed in their cafes New Markets

Rises in the cost of coffee and dairy products New beverage?

Strengths A powerful retail brand - #1 IT logistics system

Weaknesses Is global, but has a presence in relatively few countries worldwide

Opportunities Threats

Mergers, takeovers Emerging markets

Target for competition, since is #1 Political problems in countries it operates in

Porter’s Five Forces

Five competitive forces that shape every industry and every market.

The intensity of competition The profitability and attractiveness of an industry.

Five competitive forces that shape every industry and every market.

The intensity of competition The profitability and attractiveness of an industry.

High - a threat of substitute products; and existing power of suppliers and buyers in the market.

Rivary

Barriers to Entry – how easy is it to enter the market?

Threat of New Entrants

Product-for-product substitution (email for mail, fax); is based on the substitution of need;

Substitutes

High – few, large players in the market, as it is the case with retailers and grocery stores

High - Switching costs are high (switching from one Internet provider to another)

Supplier

Moderate to High

Low Low

Moderate, but soon will be High

Rivary

P88 Kindle

Archos 9 JooJoo

High - Even though it’s normally low (high tech), it is high in this case because there are several new products coming to the market.

HP Slate Lenovo IdeaPad U1 Hybrid Notion Ink Adam Entourage Edge

Threat of New Entrants

High – Since the iPad hasn’t found a niche, one can substitute it with a

MP3 Player Phone Netbook Laptop Book

Substitutes

Low – Apple is a powerful brand and is an innovator. The iPad is a consumer product and rarely can the consumer influence the price of a mass-market product.

Low - Apple works with several different suppliers and has a strict regulation of whom it will work with. Therefore, the suppliers have limited bargaining power

Simplo Technology Fox Conn Catcher Technologies Samsung

Supplier

Value-Chain Analysis

Each activity is a source of either

strength or weakness

Insights gained are fed into the strategy formulation process

Divide company activities into primary and support activities and identify those that

create value for customers

Value Chain Components

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

International Strategies

1. Multinational (Multidomestic) Strategy 2. Global Strategy 3. Transnational Strategy

Multidomestic Strategy Strategy and operating decisions are decentralized to strategic business units (SBU) in each country Products and services are tailored to local markets Business units in one country are independent of each other Assumes markets differ by country or regions Focus on competition in each market Prominent strategy among European firms due to broad variety of cultures and markets in Europe

SBU 1 SBU 2 SBU 3 SBU 4 SBU 5

P&G Multidomestic Strategy UK

Germany France

P&G Multidomestic Strategy

Global Strategy Products are standardized across national markets

Decisions regarding business-level strategies are centralized in the home office

Strategic business units (SBU) are assumed to be interdependent

Emphasizes economies of scale

Often lacks responsiveness to local markets

Requires resource sharing and coordination across borders (hard to manage)

Economies of Scale (Les économies d'échelles)

The increase in output from Q to Q2 causes a decrease in the average cost of each unit from C to C1.

Transnational Strategy Seeks to achieve both global efficiency and local responsiveness Difficult to achieve because of simultaneous requirements:

Strong central control and coordination to achieve efficiency Decentralization to achieve local market responsiveness

Must pursue organizational learning to achieve competitive advantage

Standarization versus

Adaptation

Arabic

read right to left

Chinese

“delicious/happiness”

The faces of Coca-Cola around the world

McDonald’s Global Marketing Marketing Mix Element Standardization Localized

Product

Promotion

Big Mac

Brand name

Advertising slogan “I’m Loving It”

Free-standing

Big Mac is $3.10 in U.S. and Turkey

McAloo Tikka potato burger (India)

Slang ’Macca’s (Australia)

MakDo (Philippines)

McJoy magazine, “Hawaii Surfing Hula” promotion (Japan)

Home delivery (India)

Swiss rail system dining cars

$5.21 (Switzerland)

$1.31(China)

WORKING TIME REQUIRED TO BUY A BIG MAC

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

Market Selection

Market Segmentation

Represents an effort to identify and categorize groups of customers and countries according to common characteristics

Consumer Market (B2C) vs. Organizational Markets (B2B) Market segment

Portion of a larger market

Market segmentation Dividing the mass market into smaller groups with similar characteristics that are likely to become the target market

Target market The specific group(s) the organization directs its marketing mix towards

Analyzing Market Segments

Global Market Segmentation

Demographics Psychographics Behavioral characteristics Benefits sought

Targeting

The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond Focus on the segments that can be reached most effectively, efficiently, and profitably

How consumers perceive a brand relative to its competition

Positioning

Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand does and does not offer

Attribute or benefit Quality and price Use or user Competition

Positioning Strategies

Global consumer culture positioning Identifies the brand as a symbol of a particular global culture or segment High-touch and high-tech products

Foreign consumer culture positioning Associates the brand’s users, use occasions, or product origins with a foreign country or culture

Local consumer culture positioning Identifies with local cultural meanings Consumed by local people Locally produced for local people Used frequently for food, personal, and household nondurables

Ex: Budweiser is identified with America

The Marketing Mix

The 4Ps of the Marketing Mix The 4Ps of the Marketing Mix

Scott Duncan – Marketing Strategy The 7Ps of the Marketing Mix

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

Foreign Market-Entry Strategies

Which Strategy Should Be Used?

It depends on Vision Attitude toward risk Available investment capital How much control is desired

Company sells its products directly to buyers in a target market

Sales representatives Distributors Agents Export Management Companies Export Trading Companies

Exporting

Advantages Simple Low risk

Disadvantages Low profit Trade barriers Difficult when home currency is strong

Practice of one company that owns the “property” (licensor) grants another firm (licensee) the right to use that property for a specified period of time.

Licensing

Advantages + Finance expansion + Reduce risk + Reduce counterfeits + Upgrade technologies

– Restrict licensor’s future – Reduce global consistency – Lend strategic property

Disadvantages

Company owning intangible property (licensor) grants another firm (licensee) the right to use it for a specified time

One company (the franchiser) provides another company (the franchisee) with the “property” and other assistance over an extended period of time

Franchising

Advantages + Low cost and low risk + Rapid expansion + Local knowledge

– Cumbersome – Lost flexibility Disadvantages

Company (franchiser) supplies another (franchisee) with intangible property over an extended period

Production of goods by one firm, under the label or brand of another firm. Outsourcing

Contract Manufacturing

Himjal Beverages

CM – Production of goods by one firm, under the label or brand of another firm. SC - The practice of assigning part of the obligations and tasks under a contract to another party

Contract Manufacturing (CM) & Subcontracting (SC)

Investment Entry

Joint Venture Strategic Alliances Wholly Owned Subsidiary

Separate company created and jointly owned by two or more independent companies to achieve a common business objective.

Joint Venture

Joint Venture Separate company created and jointly owned by two or more independent entities to achieve a common business objective

Advantages

• Reduce risk level • Penetrate markets • Access channels • Protect interests

Disadvantages

• Partner conflict • Lose control

Two or more companies cooperate (but do not form a separate company) to achieve the strategic goal of each

Strategic Alliance

Disadvantages

Create competitor Partner conflict

Advantages

Share project cost Tap competitors’ strengths

Gain channel access Protect interests

Entities cooperate (but do not form a separate company) to achieve strategic goals of each

Education

Trium (www.triumemba.org) Partners: NYU (US); LSE (UK); HEC Paris (France) 16 month program leading to single jointly-awarded MBA Six intensive modules held in London, Paris, New York (2), and two locations depending on business issues

Wholly-owned subsidiary Facility entirely owned and controlled by a single parent company

Build Buy

Direct Investment

Environment

Political economy &

created advantage

Market Selection

Market entry

Operations and

performance

Consumer products

Strategic alliances

Exporting

Distribution

Pricing

Services

Part 1

Part 2

Part 3

Part 4

Industrial products

Distribution

International

International firm

Distributor in foreign market

Customer/user in foreign market

Customer/

user in foreign market

Wholly owned sales

subsidiary

International border

Home Country International Market

End-user/ Customer

Trading Company

Buying Organisation Distributor/

Importer

Export Agent

Sales Subsidiary

Wholesaler

Retailer Regional

distribution centre

Pricing

Factors influencing price escalation in international markets

Price escalation

Exchange rate fluctuations

Transportation costs

Varying currency values

Taxes, tariffs & administrative

Source: Cateora, P. R. and Ghauri, P. N. (1999) International Marketing, European Edition, McGraw Hill Publishing Company, London

Intermediary margins

Inflation

Range of feasible prices Upper price limit Competitor’s price Absorption cost Lower price limit

Marginal Cost

Range of feasible prices

Selling

Composition of Sales team

Advantages Disadvantages

Expatriates • Product knowledge • High service levels • More control

• Highest cost • High training costs • Ineffective

Host country people

• Market knowledge • Language skills • Cultural sensitivity • Quick response time • May be economical

• Lack product knowledge • May not be loyal

Third country sales people

• Language skills • Cultural sensitivity • Regional sales coverage • May be economical

• Identity problems • Career moves in jeopardy • Lack product knowledge • May not be loyal

Selecting the international sales team

Assessing Performance

International marketing performance and control

International marketing activities

Performance standards

Evaluation of international marketing

performance

Corrective action/ re-alignment

Cost analysis

International marketing

planning and control

Marketing performance

analysis

Sales performance analysis in

each country

Welcome to Marketing Strategy Duncan – Marketing Strategy Welcome to Marketing Strategy...

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