Marketing and Business Strategy Enterprise & Project Management

Please note that these slides are not intended as a substitute

to reading the recommended text for this course.

PESTEL

Five Forces

SWOT

Corporate Marketing Strategy

Marketing Plan

Data Collection / Market Segmentation

Objectives

1

Firm is trying to identify:

– Environmental factors that may pose a threat to organizational objectives

– Environmental factors that may offer an opportunity based on organizational capabilities

Environmental Analysis

2

Macro Industry Internal

Creating Strategic Fit to Leverage Internal Strengths

3

PESTEL

4

The General Environment: Segments and Elements

5

PESTEL – Airline Example

6

What are the industry’s dominant economic traits?

What competitive forces are at work in the industry and how strong are they?

What are the drivers of change - impact?

Which companies are in the strongest /weakest competitive positions?

Who is likely to make a competitive move next?

How attractive is the industry in terms of above – average profitability?

The Industry Environment

7

Porter’s 5 Forces

8

Deals with the firm’s external environment.

– Specifically its industry and the up- and down-stream industries.

Buyers are those that pay the focal firm for its services, not end users or consumers.

Sellers are those that sell goods and services to the focal firm, not the firm itself.

Porter 5 Forces Model – Summary

9

Create effective links with consumers and suppliers.

– e.g. Improving your supply chain and locking in customers.

Build barriers to new entrants and substitutes.

Basic Objectives

10

Industry rivalry increases when:

– There are numerous or equally balanced competitors.

– Industry growth slows or declines.

– There are high fixed costs or high storage costs.

– There is a lack of differentiation opportunities or low switching costs.

– When high exit barriers prevent competitors from leaving the industry.

Intensity of Rivalry Among Competitors

11

It has large, concentrated buying power that enables it to gain volume discounts and/or special terms or services.

What it is buying is standard or undifferentiated and there are multiple alternative sources.

The product is unimportant to the quality of the buyers’ products or services.

A Buyer Has Power If:

12

Its product is unique or at least differentiated.

It provides benefits through geographic proximity to its customers.

A long time working relationship provides unique capabilities.

A Supplier Has Power If:

13

Strong, established brands.

Proprietary product differences.

Limited or restrained access to distribution.

Large capital expenditure requirements.

Government policy.

Possible barriers to Entry

14

Buyer propensity to substitute.

Relative price/performance of substitutes.

Substitute Threats

15

Better Image

16

Five Forces – Apple Example

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Five Forces – The Body Shop

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1. New entrants

Are there any barriers for new entrants into the market?

High capital requirements – sunk costs • Access to distribution channels • Excess capacity

High switching costs for customers • Brand image/preference • Regulation

2. Bargaining power of buyers

What bargaining power do buyers have?

High or low profit margins • Low switching costs

Undifferentiated products / services • Backward integrate

3. Substitute products or services

How easily could XXX product / service be substituted for another type of product or service?

What new technologies might make XXX product / service redundant?

4. Bargaining power of suppliers

What bargaining powers do suppliers have?

Absence of substitutes • Switching costs • Can they forward integrate

Value of suppliers component to your product / service • Difficult to switch supplier

5. Rivalry among existing competitors

What rivalry currently exists between competitors?

– Slow industry growth •

– Pricing strategies - Competing by out spending on advertising on innovation is not considered highly rivalrous - Competing by cutting prices is considered highly rivalrous

Important slide for Exam Prep

19

Interpreting Industry Analyses

Intense rivalry among competitors

Strong threats from substitute products

Suppliers and buyers have strong positions

Low entry barriers

Unattractive Industry with

Low Profit Potential

20

Interpreting Industry Analyses

Suppliers and buyers have weak positions

Few threats from substitute products

Moderate rivalry among competitors

High entry barriers

Attractive Industry with

High Profit Potential

21

Gathering and interpreting information about all of the companies that the firm competes against.

Understanding the firm’s competitor environment complements the insights provided by studying the general and industry environments.

Competitor Analysis

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S W O T

SWOT Ananlysi

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SWOT is a business or strategic planning

technique used to summarise the key

components of your strategic environments.

Strengths

Weaknesses

Opportunities

Threats

What is SWOT?

24

INTERNAL

EXTERNAL

Strengths - internal attributes and resources that support a successful outcome.

Weaknesses - internal attributes resources that work against a successful outcome.

Opportunities - external factors the project can capitalize on or use to its advantage.

Threats - external factors that could jeopardize the project.

SWOT analysis examines four elements…

25

Characteristics of the business or a

team that give it an advantage over

others in the industry.

Positive tangible and intangible

attributes, internal to an organization.

Beneficial aspects of the organization

or the capabilities of an organization,

which includes human competencies,

process capabilities, financial

resources, products and services,

customer goodwill and brand loyalty.

Examples - Well-known brand name,

Lower costs [raw materials or

processes], Superior management

talent, Better marketing skills, Good

distribution skills, Committed

employees.

What is SWOT Analysis – Strengths?

26

Characteristics that place

the firm at a disadvantage

relative to others. Detract the organization from its

ability to attain the core goal and

influence its growth.

Weaknesses are the factors

which do not meet the standards

we feel they should meet.

However, sometimes

weaknesses are controllable.

They must be minimized and

eliminated.

Examples - Limited financial

resources, Limited distribution,

Higher costs, Out-of-date

products / technology, Weak

market image, Poor marketing

skills, Limited management skills.

What is SWOT Analysis – Weaknesses?

27

Chances to make greater profits in the

environment - External attractive factors

that represent the reason for an

organization to exist & develop. Arise when an organization can take

benefit of conditions in its

environment to plan and execute

strategies that enable it to become

more profitable.

Organization should be careful and

recognize the opportunities and

grasp them whenever they arise.

Opportunities may arise from market,

competition, industry/government

and technology.

Examples - Rapid market growth,

Changing customer needs/tastes,

New uses for product discovered,

Economic boom, Sales decline for

a substitute product .

What is SWOT Analysis – Opportunities?

28

SWOT ANALYSIS - THREAT

!

External elements in the

environment that could cause

trouble for the business - External

factors, beyond an organization’s

control, which could place the

organization’s mission or operation

at risk.

Arise when conditions in external

environment jeopardize the

reliability and profitability of the

organization’s business.

Examples - Entry of foreign

competitors, Changing customer

needs/tastes, Rival firms, adopt

new strategies, Increased

government regulation, Economic

downturn.

What is SWOT Analysis – Threats?

29

How to conduct SWOT Analysis?

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WEAKNESSES

• High training costs due to high turnover. • Not much variation in seasonal products • Quality concerns due to franchised operations. • Focus on burgers / fried foods not on healthier options for their customers.

• Community oriented • Global operations all over the world • Cultural diversity in the foods • Excellent location • Assembly line operations.

STRENGTHS

INTERNAL

• Marketing strategies that entice people from small children to adults. • Lawsuits for offering unhealthy foods. • The vast amount of fast food restaurants that are open as competition.. • Down turn in economy affecting the ability to eat that much.

THREATS

• Opening more joint ventures. • Being more responsive to healthier options. • Expanding on the advertising on being more socially responsible • Expansions of business into newly developed parts of the world.

OPPORTUNITIES

EXTERNAL

McDonalds – SWOT (Fictional)

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Three Levels of Business Planning

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CORPORATE MARKETING

Set Objectives Increase profits by X%

Specific to market / product; X% increase

Internal Appraisal Review effectiveness of operations

Marketing audit

External Appraisal Review PESTEL Review factors that impact the customer

Gaps Desired v Forecasted objectives – How should the gap be closed

Marketing will focus on growth

Strategy Actual strategies to close the gap – diversify, new markets

Target markets, assign marketing resources

Corporate and Marketing Strategy

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To summarize marketplace knowledge

To show what marketing will accomplish

To detail marketing strategies, activities

To show how progress will be measured

To explain implementation control

What is a marketing plan for?

34

Executive summary, table of contents

Current situation (with SWOT)

Objectives and issues analysis

Target market

Marketing strategy and programs

Financial plans

Implementation controls

Marketing plan contents

35

Examine external environment

Assess internal capabilities

Understand competitors’ strategies

Analyze stakeholders’ influence

Market Research - Researching the current situation

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Define the Problem

Develop Hypothesis

Collect the Data

Analyse the Data

Report Findings

Learn about markets and customers

Examine needs, wants, attitudes

Research buying behaviors

Identify segments, decide which to target

Create competitively distinctive position in the minds of targeted customers

Understanding markets/customers

37

Determine strategic direction

Set objectives

Plan customer service support

Plan internal marketing support

Understanding markets/customers

38

Surveys / Questionnaires

Experimentation

Observation

Focus groups

In-depth interviews

Projective techniques – word association

Online research – Survey Monkey

Scanner data - Tesco

Data Collection - Primary Research Methods

39

This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups.

All members in a group have similar factors that influence their demand for the particular product.

Market segmentation: Definition

40

Geographic — The city size, urban/ suburban/ rural population distribution and climate.

Demographic — The distribution of a population’s age, sex, income, stage in family cycle and ethnic background.

Psychographic — Personalities, lifestyles, social class including activities, interests and opinions (AIO).

Behaviour towards products.

– Benefits desired or sought.

– Product usage rate.

Bases for segmentation

41

Segmentation enables marketers to:

– Identify and satisfy specific benefits sought by particular groups.

– Divide the market into segments by separating marketing programs.

– Select target market.

– Action the market segmentation plan.

Benefits of segmentation

42

The process involves:

– Identifying the needs and wants of customers.

– Identifying the different characteristics between market segments.

– Estimating the market potential.

Market segmentation process

43

The characteristics used to categorise customers must be measurable and the data obtainable.

The segment itself must be accessible through existing marketing institutions with a minimum of cost and waste.

A segment must be large enough to be profitable.

Conditions for effective segmentation

44

The target market should be compatible with an organisation’s goals and image.

The marketing opportunity presented by the segment must match the company’s resources.

The business must generate a profit if it is to continue its existence.

Target market strategies

45

Segment 1

Segment 2

Segment 3

Company marketing

mix

Segment 1

Segment 2

Segment 3

Company marketing

mix

Company mix 1

Company mix 2

Company mix 3

Market

A. Undifferentiated marketing (Aggregation)

B. Differentiated marketing (Single segment)

C. Concentrated marketing (Multiple segments)

Market coverage strategies

46

Appeal to

‘All’

Think

Coca

Cola /

Cars

Shoes,

B&P lines