Chapter 2 Marketing Strategies Ilk Ders

8/3/2019 Chapter 2 Marketing Strategies Ilk Ders

1/86

CORPORATE MARKETINGPLANNING

MARKETING STRATEGIES

Guiltinan, Paul & Madden, Chapter 2


2/86

Strategic Management

Is crucial to building a successfulbusiness.

Involves developing a game plan to guidea company as it strives to accomplish itsmission, goals , and objectives, and tokeep it on its desired course.


3/86

Strategic ManagementProcess

Step 1. Develop a vision andtranslate it into a missionstatement.Step 2. Assess strengths andweaknesses.Step 3. Scan environment foropportunities and threats.Step 4. Identify key success

factors .


4/86

Strategic Management Process

Step 5. Analyze competition .Step 6. Create goals and objectives. Step 7. Formulate strategies .Step 8. Translate plans into actions .

Step 9. Establish accurate controls .

(continued)


5/86

Step 1: Develop a Vision andCreate a Mission Statement

Vision the result of an entrepreneurs dreamof something that does not exist yet and theability to paint a compelling picture of thatdream for everyone to see.A clearly defined vision:

Provides directionDetermines decisionsMotivates people


6/86

Step 1: Develop a Vision andCreate a Mission Statement

Addresses question: What business are wein? The mission is a written expression of how thecompany will reflect an entrepreneurs values,beliefs, and vision more than just makingmoney.


7/86

A mission statement shouldaddress

1) Customers (the target market)2) Products/services (offerings and value provided to customers)3) Geographic markets (where the organisation seeks

customers)4) Technology (the technology used to produce and market

products)5) Concern for survival/growth/profits (the organisations concern

for being financially sound)6) Philosophy (the organisations values, ethics, beliefs) 7) Public image (contributions the organisation makes to

communities)8) Employees (the importance of managers and employees)9) Distinctive competence (how the organisation is better than or

different from its competitors).


8/86

Step 2: Assess CompanyStrengths

and WeaknessesStrengths

Positive internal factors a company

can draw on to accomplish itsmission, goals, and objectives.

WeaknessesNegative internal factors that inhibit acompanys ability to accomplish itsmission, goals, and objectives.


9/86

Step 3: Scan for Opportunitiesand Threats

OpportunitiesPositive external factors the company

can exploit to accomplish its mission,goals, and objectives.Threats

Negative external factors that inhibitthe firm's ability to accomplish itsmission, goals, and objectives.


10/86

The Power of External Market Forces

Competitive Economic

Political andRegulatory

Technological

Social andDemographic


11/86

Threats & Opportunities

Major Environmental Forces:

Demographics

Social and cultural values

Economic factors

Technology

Legal and regulatory actions

Competition


12/86

Strengths & Weaknesses

Firms strengths are analyzed by identifying its resourcesand competencies

Resources and competencies include;

Financial resources

Labor and managerial skills

Production capacity and efficient equipment

Research and development skills and patents

Control over ke raw materials

Size and expertis of sales force

Efficient and effective distribution channels and systems


13/86

A firms strongest resource or competency isgenerally referred to as a core competency

COMPETENCY POTENTIAL USE EXAMPLE

R&D Capability

Emphasize high

technology in productdevelopment 3M

Financial resources Acquiring otherbusinessPhilip Morris acquires

Kraft

Company reputationfor quality

Select markets wherereputation is known

Motorola emphasizesmarkets familiar with

its success inelectronics


14/86

Step 4: Identify Key SuccessFactorsKey success factors:controllable variables thatdetermine the relativesuccess of marketparticipants.The keys to unlocking the

secrets of competingsuccessfully in a particularmarket segment.


15/86

Identifying Key SuccessFactors

List the skills, characteristics, and core competencies that yourbusiness must possess if it is to be successful in its marketsegment.

Key Success Factor How Your Company Rates

1. Low 1 2 3 4 5 6 7 8 9 10 High2. Low 1 2 3 4 5 6 7 8 9 10 High

3. Low 1 2 3 4 5 6 7 8 9 10 High

4. Low 1 2 3 4 5 6 7 8 9 10 High5. Low 1 2 3 4 5 6 7 8 9 10 High

Conclusions:


16/86

Step 5: Analyze Competitors

Analyzing key competitors allows an entrepreneur to: Avoid surprises from existing competitors newstrategies and tactics.

Identify potential new competitors and thethreats they pose.Improve reaction time to competitors actions.

Anticipate rivals next strategic moves.


17/86

Step 5: Analyze Competitors

Techniques do not require unethical behavior:Monitor industry and trade publications.Talk to customers and suppliers.Regularly debrief employees, especially salesrepresentatives and purchasing agents.Attend trade shows and conferences and studycompetitors sales literature. Watch for employment ads from competitors to get

an idea about their plans for the future.Conduct patent searches for patents competitorshave filed.


18/86

Step 5: Analyze CompetitorsTechniques do not require unethical behavior:

Learn about the kinds of equipment and rawmaterials competitors are importingBuy competitors products and benchmark them.Get competitors credit reports. Check out the reports publicly held by competitorsCheck out the resources in your local library.Use the World Wide Web to learn more aboutcompetitors.Visit competing businesses to observe theiroperations.


19/86


20/86

tep : reate ompanyGoals

and ObjectivesGoals - broad, long-range attributes to beaccomplished.Objectives - more detailed, specific targets ofperformance that are S.M.A.R.T.

SpecificMeasurableAttainableRealistic (yet challenging)Timely

S 7 F l


21/86

Step 7: FormulateStrategies

Strategy - a road map of the actions anentrepreneur draws up to achieve a companysmission, goals, and objectives. It is the companysgame plan for gaining a competitive advantage.

Three basic strategies:

Strategy?

Cost leadership

Differentiation

Focus

Th S i


22/86

Three StrategicOptions

Competitive Advantage

TargetMarket

Industry

Niche

Uniqueness Perceivedby the Customer

Low CostPosition

Differentiation Low Cost

DifferentiationFocus

CostFocus


23/86

Cost LeadershipGoal: to be the low-cost producer in the industry(or market segment).Low-cost leaders have an advantage in reachingbuyers who buy on the basis of price, and they

have the power to set the industrys price floor. Works well when:Buyers are sensitive to price changes.Competing firms sell the same commodityproducts.A company can benefit from economies of scale.


24/86

Differentiation

Company seeks to build customer loyaltyby positioning its goods or services in aunique or different fashion.Idea is to be special at somethingcustomers value.Key: Build basis for differentiation on adistinctive competence, something that thesmall company is uniquely good at doing incomparison to its competitors.Examples: the Ice Hotel


25/86

Focus

Company selects one or more customersegments in a market; identifies customersspecial needs, wants, or interests; and thentargets them with a product or service designedspecifically for them.Strategy builds on differences among marketsegments.Rather than try to serve the total market, thecompany focuses on serving a niche (or severalniches) within that market.


26/86

Step 8: Translate Strategiesinto Action Plans

Create projects by defining:Purpose

ScopeContributionResource requirementsTiming


27/86

Step 9: Establish AccurateControls

Plan establishes the standardsagainst which actual performance ismeasured.Entrepreneur must:

identify and track keyperformance indicators.take corrective action.


28/86

Balanced Scorecards

A set of measurements unique to acompany that includes both financial andoperational measuresGives managers a quick, yetcomprehensive, picture of a companysoverall performance.


29/86

Balanced Scorecards

Four Perspectives:Customer: How do customers see us?

Internal Business: At what must weexcel?Innovation and Learning: Can wecontinue to improve and create value?Financial: How do we look toshareholders?


30/86

The Balanced Scorecard Links Performance Measures

Financial PerspectiveGoals Measures

Customer PerspectiveGoals Measures

Internal Business PerspectiveGoals Measures

Innovation and Learning PerspectiveGoals Measures

How do customerssee us?

How do we lookto shareholders?

At what must weexcel?

Can we continue toimprove and createvalue?


31/86

Corporate Marketing Planning

is the process by which an organization sets its long

term priorities regarding products and markets in order

to enhance the value of the overall company


32/86

Elements of Corporate Marketing Planning

Corporate Strategy

Which products to offer

Which markets to serve

Product Mix StrategyWhat each product should contribute to the firm

How resources should be allocated across products


33/86

Factors Influencing Corporate Strategy

Environmental Threatsand Opportunities

Corporate Mission andObjectives

Organizational Strengths

and Weaknesses

CORPORATE STRATEGY


34/86

Corporate Mission and Objectives

Corporate mission describes the broad purposes the

organization serves and provides general criteria for

assessing long-run organizational effectiveness.

Corporate objectives reflect managements specific

expectations regarding organizational performance.

The process of developing


35/86

The process of developinga corporate strategy

Examining environmental threats and opportunities

Selecting corporate objectives

Acquiring any additional competencies required for

successful implementation


36/86

Types of Corporate Strategies

GROWTH STRATEGIESFor Current Markets Market Penetration Product Development Vertical Integration

For New Markets Market Development Market Expansion Diversification

CONSOLIDATION STRATEGIES Retrenchment Pruning Divestment


37/86

Market Penetration

Aim: increasing sales of existing products in the

current markets

Increasing the level of marketing effortStatus quo strategy

Example???

Coca-Cola in Turkey

Advertising strategies in Ramazan

Support some sport teams etc.
http://kkazul.tripod.com/articulos34/coca-cola-botella.jpg


38/86

Sana Crme Bonjour

Product Development

Development of new products for existing markets in order to

meet changing customer needs

match new competitive offerings

take advantage of new technologymeet the needs of specific market segments

Replacing or reformulating existing products

Example???


39/86

Vertical Integration

When a firm becomes its own supplierbackward integration

When a firm becomes its own intermediary

forward integrationThese strategies will be most appropriate

When the ultimate markets have high growth potential

Example???Pnar Hindi

Backward integration


40/86

Market Development

Current products to newmarkets

When existingmarkets are stagnantWhen market-shareincreases are difficultto achieve

Because;

market sharesare alreadyvery high

competitorsare very

powerfulExam le???

Johnson & Johnson

Shampoo

Market Development

Current products to new marketsWhen existing markets are stagnantWhen market-share increases are difficult toachieve

Because; market shares are already very high competitors are very powerful

Identify new users or new usesExample???
http://images.google.com.tr/imgres?imgurl=http://mutyasadipolog.com/Johnson%2520%26%2520Johnson%2520Pure%2520Essentials.JPG&imgrefurl=http://mutyasadipolog.com/MutyaSponsors2003.htm&h=143&w=247&sz=38&tbnid=xXbKiwP6OfoJ:&tbnh=60&tbnw=103&start=1&prev=/images%3Fq%3Djohnson%2Band%2Bjohnson%26hl%3Dtr%26lr%3D%26ie%3DUTF-8


41/86

Market Expansion

Moving into a new geographic market area.

A regional strategy implies that a company will concentrate

its resources and efforts in one or two areas

A multinational strategy involves a commitment to a broad

range of national markets

A global strategy is employed when an organization operates

in a broad set of markets but with a common set of strategic

principles

Example???

Beko
http://www.beko.com.tr/index.php


42/86

Diversification

New products and new markets

This strategy is likely to be chosen when

No other growth opportunities

Unstable sales or profits

The firm wishes to capitalize on a core competence

Example???

Algida

Miko (France)

Frisko (Denmark)

Langnese (Germany)


43/86

Consolidation Strategies

RetrenchmentOpposite of market developmentA firm reduces their existing products by withdrawing fromweaker market

Pruning

A firm reduces the number of products offered in a marketOpposite of product developmentDivestment

A firm sells off a part of its business to anotherorganization

Example???

d
http://images.google.com.tr/imgres?imgurl=http://image.superonline.com/haber/image/20031217/nestle.jpg&imgrefurl=http://www.nethaber.com/haber/haberler/0,1082,108358_4,00.html&h=150&w=150&sz=11&tbnid=zDyg0yfjjnIJ:&tbnh=90&tbnw=90&start=1&prev=/images%3Fq%3Dnestle%2Bs%25C3%25BCt%26hl%3Dtr%26lr%3D%26ie%3DUTF-8http://images.google.com.tr/imgres?imgurl=http://www.indc3.hacettepe.edu.tr/images/sponsor_logo/danone_sa.gif&imgrefurl=http://www.indc3.hacettepe.edu.tr/sponsors.html&h=84&w=259&sz=5&tbnid=o-21tIR2diUJ:&tbnh=34&tbnw=104&start=1&prev=/images%3Fq%3Ddanone%2Bs%25C3%25BCt%26hl%3Dtr%26lr%3D%26ie%3DUTF-8


44/86

Product Mix Strategy

What objectives will be established for each product

or business

How various products or business will be prioritized

for the purpose of allocating scarce resources


45/86

Product Life Cycle

MAJOR CONTRIBUTIONS OF PLCProvide to know more about the market opportunitiesEnable a firm to project future costs and profits

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)


46/86

Product life cycle

Table 2.2 Product life-cycle stages and their potential strategies

A li i f h P d Lif C l


47/86

Applications of the Product Life Cycle

The PLC concept can describe a:Generic need (i.e. sales of all cars)

Product class which has the longest life cycles (i.e.gas-powered cars),

Product form which tend to have the standard PLCshape (i.e. minivans),

Brand which can change quickly because of changing

competitive attaches and responses (i.e. Ford Taurus)

Generic need life cycle are seldom useful for strategy purposes


48/86

Problems Using the PLC

Trouble identifying Which Stageof the PLC the Product Is In

Difficult to Forecast the SalesLevel, the Length of Each Stage,and Shape of the PLC

Strategy is Both a Cause and aResult of the Products Life Cycle


49/86

BCG Matrix

Problem Childs

High growth, low share Build into Stars or phase out Require cash to holdmarket share

Stars

High growth & share Profit potential May need heavyinvestment to grow

Cash Cows

Low growth, high share Established, successful

SBUs Produce cash

Dogs

Low growth & share Low profit potential

MarketDominance High Low

M a r k e

t G r o w

t h R a

t e

L o w

H i g h ?


50/86

BCG Matrix

Cash Generated ++

Cash Use - - - _____________________

Net 0. -

Cash Generated +

Cash Use - - - _____________________

Net - - -

Cash Generated +++

Cash Use -

_____________________

Net ++

Cash Generated +

Cash Use -

_____________________

Net - . 0

STAR PROB. CHILD

CASH COW DOG

H L

H

L

MarketGrowth

Rate

MarketDominanceCash Generated 0

Cash Use - - -

_____________________

Net - - -

R&D

$$

BCG Matrix


51/86

The Directional Policy Matrix

Competitive Position

High

Medium

Low

Strong Average Weak

M a r k e

t A t t r a c

t i v e n e s s

Maintainleadership

Challengeleader

Overcomeweakness

Challengeleader

Manage forearnings

Harvest

DivestHarvestCash generator


52/86

The Business Screen

Competitive Position

High

Medium

Low

Strong Average Weak

M a r k e

t A t t r a c

t i v e n e s s

BUILD

HOLD

QUESTION

HARVEST

TERMINATE

G /M ki b i


53/86

Ge/Mckinsey business screen

Figure 2.9 The GE/McKinsey business screen portfolio matrixSource : Adapted from Kerin et al. 1990

Li it ti f P tf li M d l


54/86

Limitations of Portfolio Models

Portfolio models implicitly assume that the portfolio

must be in cash balance

Portfolio models suggest that cash cows can be milked with

impunity

Portfolio models indicate that resources should be invested in

stars and in problem child products

The BCG Model is criticized for relying on only two elements while

the Directional Policy Matrix accommodates a large number of

factors.

Identify the important synergistic relationships

Specif ing Prod ct Objecti es


55/86

Specifying Product Objectives

Market-Share Growth

Market-Share Maintenance

Cash Flow Maximization

Sustaining Profitability

Harvesting

Establishing an Initial Market Position

Relationship Between Corporate Marketing


56/86

p p gPlanning and Middle-Management Activities

CORPORATE MARKETING PLANNING

Environmental Threatsand Opportunities

Corporate Mission andObjectives

Organizational Strengthsand Weaknesses

CORPORATE STRATEGYMarkets to serve

Product objectives

Product PortfolioAnalysis

PRODUCT MIXSTRATEGY

Allocation of resourcesProduct objectives

Situation AnalysisBuyer behavior and segmentsCompetitionMarket size and growthProduct profitabilitySales productivity

MARKETING STRATEGIES ANDPROGRAMS

Feasibility of achieving productobjective


57/86

Chapter 2

Opening up

analysis andpositioning

e nteract on etween operan an


58/86

poperant resources in the value-creationprocess

Figure 2.1 The interaction between operand and operant resources in the value-creation process

The representation of various internal resources in


59/86

relation to their value for customers, and with thecompetitive strength

Figure 2.2 The representation of various internal resources in relation to their valuefor customers and strength against competition


60/86

Horizontal/vertical positioning

Figure 2.6 The process of horizontal/vertical positioning of a firm in the value-addedchain of activities


61/86

Porter analysis

Figure 2.7 Porters five forces model of industry analysis Source : Adapted from Porter 1985


62/86

Porter factors

Industry concentrationRange and diversity of competitors

Product differentiationCapacity utilisation and exit barriersCost advantages and disadvantages

Buyer and supplier powerThreat of substitutes


63/86

The influence of technology Porters five forces

Figure 2.8 The influence of technology on the five forces identified by Porter


64/86

Product life cycle

Table 2.2 Product life-cycle stages and their potential strategies


65/86

BCG analysis

Figure 2.3 The BCG product portfolio matrix


66/86

Roger s diffusion theory

Relative advantage

Compatibility

Complexity

Trialability and observability

Rogers diffusion theory


67/86

Roger s diffusion theory(Continued)

Figure 2.4 The typology of new product users



68/86


Figure 2.9 The GE/McKinsey business screen portfolio matrixSource : Adapted from Kerin et al. 1990


69/86

The directional policy matrix

Figure 2.10 The directional policy matrixSource : Robinson et al. 1978

Business prospects and company


70/86

Business prospects and companycapabilityBusiness prospects

Market growth

Market quality

Environmental aspects.

Companys competitive capabilities

Market position Production capability

Product research and development.


71/86

Growth and product capabilities

Figure 2.11 Growth vector analysisSource : Rowe et al. 1986

The centralised information system implemented by


72/86

e ce t a sed o at o syste p e e ted bycustomer-focused organisations

Figure 2.12 The centralised information system implemented by customer-focusedorganisations


73/86

Segmentation factors to consider

The macro-environment

The sector in which an organisation operates

Its portfolio of products and services

An understanding of consumer characteristics

An understanding of physical variations such

as geographic location and environment


74/86

Market segmentation factors

Is the market segment measurable?

Is the market segment accessible?

Is the market segment substantial?

Can marketing strategies be actioned to serve the segment?


75/86

Segmenting markets

Figure 2.13 Segmenting markets

Observable and unobservable


76/86

Observable and unobservablesegmentation characteristics

Table 2.5 Segmentation criteriaSource : Adapted from Frank et al. 1972

The operational requirements for implementing customer-oriented strategies


77/86

based on customer lifetime value analysis

Table 2.9 The operational requirements for implementing customer-orientatedstrategies based on customer lifetime value analysisSource : Guru and Ranchhod 2002

The operational requirements for implementing customer-oriented strategies


78/86

based on customer lifetime value analysis (Continued)

Table 2.9 The operational requirements for implementing customer-orientatedstrategies based on customer lifetime value analysis (Continued)Source : Guru and Ranchhod 2002


79/86

Segmentation

Table 2.7 The Warner index of social classificationSource : Adapted from Hawkins, Best and Coney 2004. Reproduced with permission of The McGraw-Hill Companies

il lif l


80/86

Family lifecycle

Table 2.8 The stages of the family life lifecycleSource : Wells and Gubar 1966

P h hi i


81/86

Psychographic segmentation

Figure 2.14 Psychographic segmentation

C lif i l


82/86

Customer lifetime value

Figure 2.15 Seven-step process for measuring customer lifetime value

The interrelation between the three


83/86

The interrelation between the threedeterminants of strategic positioning

Figure 2.17 The interrelatedness of the three determinants of strategic positioning

The representation of car market positioningon a perceptual map considering the price ad


84/86

on a perceptual map, considering the price adthe design as salient features

Figure 2.18 Representation of car market positioning on a perceptual map,considering price and design as the salient features

P t d f t


85/86

Postmodern factors

Figure 2.20 Postmodern marketing as a juxtaposition of oppositesSource : Adapted from Cova 1996

New segmentation factors for


86/86

gconsideration

Fig 2 21 The postmodern consumer and postmodern segmentation

Documents

Chapter 2 Marketing Strategies Ilk Ders