Strategy & Marketing
Dr Paul Fifield
Visiting Professor
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
1
Paul Fifield
• Paul advises companies on Market Strategy and has
written widely on the subject.
• He has 25 years’ experience in strategic consulting with
previous clients in: Agri Chemicals, Aviation, Banking,
Brewing, Business Services, Computing and Software,
Construction, Distribution, Domestic Appliances,
Economic Development, Education, Housing, Hotels and
Catering, Insurance, Leisure & Tourism, Online gaming,
Public Sector, Publishing, Retailing,
Telecommunications, Utilities, Web services and others.
• He holds a degree in Business Studies as well as an MBA and a PhD in
Marketing Strategy, both from Cranfield University.
• Paul teaches on a number of MBA programmes and is currently Visiting
Professor at the University of Southampton and the College des Ingénieurs in
Paris. He is President of the CIM Southern Region and a Fellow of the Royal
Society for the encouragement of Arts, Manufacturers and Commerce (FRSA).
• Paul co-founded The GreenField Organisation LLP in 2008
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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3
The Approach
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2 days of THINKING
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Dealing with strategy & marketing
A ‘Puzzle’
A ‘Problem’
..has a correct ‘Answer’
..has more than one ‘Solution’
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
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Strategy Terminology
• The OBJECTIVE(S)
– The goal or aim to which ALL activities in the organisation are directed
– An objective always begins with the word ‘TO’
– Objectives do NOT change in the short term
• The STRATEGY
– The ONE route which is both NECESSARY and SUFFICIENT to ACHIEVE
the objective
– A strategy always begins with the word ‘BY’
– Strategy is not changed in the short term
• The TACTICS
– The short term actions required to implement the strategy
– Manoeuvres on the field of battle
– Tactics do change in the short term
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Filling the ‘strategy gap’
€
The Gap
0
+1
+2
+3
+4
+5
+6
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+7
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Strategy and Implementation
STRATEGY FORMULATION
STRATEGY
IMPLEMENTATION
ineffective
effective
effective
Die quickly
Thrive
ineffective
Die slowly
Survive
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Planning
1. Strategic:
• Three to Five years depending on the nature of the business.
2. Tactical:
• One year to 18 months.
3. Programmes:
• Rolling quarterly with quarterly and annual milestones and
reporting.
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12
First, agree the Financial Hurdles
Every organisation has one or more ‘financial imperatives’ that it must
satisfy to remain in business. These are not the same as objectives.
These ‘hurdles’ just need to be seen, measured and jumped. They
should NOT guide the destiny of the organisation
Our financial hurdles are:
1.
2.
3.
4.
……………………………
……………………………
……………………………
……………………………
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Then, set the business objective
1. What is our Business Objective?
 What do we want/need to achieve in this business?
 How is it measured?
 By when?
 How will we know when we have achieved it?
 If we achieve it, will it satisfy the Financial Hurdles?
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Objectives
What is our Business Objective?
OBJECTIVE:
 What do we want/need to achieve in
this business?
•Begins with “To…….”
 How is it measured?
•Must be ‘SMART’
 By when?
•Different from Financial
Targets*
 How will we know when we have
achieved it?
•One is better than many
*“Too many organisations
confuse ‘purpose’ with
‘measures of success” RSA
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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Business Strategies
What is our Business
Strategy?
 How do we achieve the agreed
objective?
STRATEGY:
•Begins with “By…….”
•Not short term
 What are the alternatives?
•Not ‘straws in the wind’
 Can it be done?
•Not changed every Friday
 Can we do it?
•Not another word for important
tactics >
Must be both ‘NECESSARY’ and
‘SUFFICIENT’ to achieve the objective
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The Generic Strategies
Focus
Stuck in
The Middle
Cost Leadership
Differentiation
[Source: Porter 1983]
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Red Ocean – Blue Ocean (Kim & Mauborgne)
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Strategy is rarely linear
Sales/Profit/Market share/other objective
The
Changing Market
Environment
B
rk
Ma
Vision/Objective
gy
e
t
tra
S
et
A
Today
1
2
3
4
5
6
7
8 ……………..……….. x
Time
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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Henry Ford
“It is not the employer
who pays the wages.
Employers only handle
the money. It is the
customer who pays the
wages.”
Henry Ford 1863-1947
American industrialist and pioneer of the
assembly-line production method,
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22
Levitt on Customers
“Customers just need to get
things done. When people
find themselves needing to
get a job done, they
essentially hire products to
do that job for them”
Theodore Levitt (1925-2006), American
economist and professor at Harvard Business
School. Editor of the Harvard Business Review
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We know that customers are Selfish
WIIfm
• What’s
• In
• It
• For
•
Me
Me
Me
Me
Me Me
Me?
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Consumer Behaviour models
The Process
Cultural
Sociological
Economic
Cultural beliefs
& values
Lifestyles, etc
Social class structure
Family/group influence
Life-Cycle
Opinion leadership, etc
Price
Delivery
Payment terms
Sales, services, etc
Individual Psychological Factors
Level of knowledge & awareness
Personal (emotional) characteristics
Motivations, Attitudes, etc
Buying Proposition
Product or Service
[Chisnall]
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The B2B Decision Making Unit (DMU)
DECISION-MAKER
USER
GATE-KEEPER
INFLUENCER
CUSTOMER
SPECIFIER
BUYER
FINANCIER
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26
Three Aspects of Customer Value
Constant Environmental Change
Functional
Your
Offer
Emotional
Economic
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From Commodities to Experiences
Customer Perceived Value increases….
The Experience
(enjoyed in a
5 star restaurant)
The Service
(brewed in a
regular cafe)
The Good
(ground, packaged,
sold)
The Commodity
(harvested & traded)
$2-5
50¢
5–25¢
1–2¢
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Laura Ashley
“We don't want to push our
ideas on to customers, we
simply want to make what
they want”
Laura Ashley CBE,
(1925 – 1985),
Welsh designer
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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What business?....
1. Are we in?
2. Should we be in?
“Product led”
Motor Cycles
Watches
Electric Motors
Railroads
Electronics
Cars
Watches
Beer
Cosmetics
Pubs
Coffee Shops
Leather/Luggage
Encyclopedias
Company
Harley Davidson
Swatch
B&D
Amtrak
Sony
Jaguar
Rolex
A Busch
Revlon
Bass Taverns
Starbucks
Louis Vuitton
Britannica
“Market led”
Big Boys’ Toys
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HD and their business definition
x
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What business?
“Product led”
Motor Cycles
Watches
Electric Motors
Railroads
Electronics
Cars
Watches
Beer
Cosmetics
Pubs
Coffee Shops
Leather/Luggage
Encyclopedias
Our Product?
Company
Harley Davidson
Swatch
B&D
Amtrak
Sony
Jaguar
Rolex
A Busch
Revlon
Bass Taverns
Starbucks
Louis Vuitton
Britannica
Our Company
“Market led”
Big Boys’ Toys
Fashion Accessories
DIY
Transport
Entertainment
Status
Jewelry
Friendship
“Hope”
Entertainment
The Third Place
The Art of Traveling
Parental guilt
Our Business
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What business are we in?
Our business is key to our plans, it:
1 Is defined by the customer
- Would our customers understand our business?
2 Focuses the organisation on needs satisfied
- What needs should we be satisfying?
3 Establishes directions for growth
- Where should we be investing for the future?
4 Establishes boundaries for effort
- What should we do more of/stop doing?
5 Determines real competitors
- Who are we really competing with?
6 Establishes the markets to be served
- What is our core target market?
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Case Task
1. What business do you think your company should be in?
2. Who are your target Customers?
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What businesses for Sony & Apple?
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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Case Task
• What objective or vision will you set for your company?
– Remember these must be ‘SMART’
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38
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
39
Case Task
• What strategy will you use for your company to achieve the
objective or vision you have set?
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Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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Nobody can foretell the future
The future is
where you must
invest. Now!
There are NO:
• Answers
• Solutions
• Guarantees
The only
Certainty IS that
this is the world
in which you will
live and work.
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42
Some Global Strategic Issues
Some issues for consideration:1.
2.
3.
4.
5.
6.
The changing nature of society: technological advance;
demographic shifts; environmental issues; ethnic and religious
issues
Political instability: middle east; Africa; Russia; EU
The changing climate: real or imagined; who bears the brunt;
rate of change; influencing factors
The changing nature of work: new work patterns; decreasing job
security; sectoral shifts; ‘stakeholder’ demands
The changing face of organisations: increasing adaptability;
agility; more participative style; more openness
The changing world economy: global recession; changing
balance of power
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43
Dependency Ratios
UK Pensioners :
Working Age
2008, 1:3.23
2033, 1:2.78
Sources, Business
Week & ONS
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Political Instability
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UK Average Temperature Estimates
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Worldwide Rising Sea Levels?
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Europe Rising Sea Levels?
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A fresh look at the
current “Recession”
© 2013
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49
Some research areas covered
Dynamic capability
Market research
Adaptive advantage
Futurology
Horizontal organisations
Management accountancy
Customer value
Organisation development
Buyer behaviour modelling
Theory of growth
Organisational buying
behaviour
Systems theory
Value-based marketing
Swarm theory
Change management
Behavioural finance
Value innovation (‘blue
ocean’)
Theory of the firm
Corporate strategy (incl.
business-model innovation
competitive advantage,
emergent strategy, decisionmaking etc.)
Discontinuity
Business development
Econometrics
Action learning
Customer experience
management
Unreason
Chaos theory
Organisational culture
Behavioural economics
Strategic market theory
Knowledge management
Stakeholder management
Leadership
Personal Values
Classical economics
Strategic & scenario
planning
Structured creativity
Complexity theory
Economic cycle theory
Benchmarking
Brand equity
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50
NICE (Mervyn King) has become NASTY
• Non
• Inflationary
• Continuous
• Expansion
• Nightmare of
• Austere and
• STagflationary
• Years
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Copyright 2011
51
Is it just another Recession?
Discontinuity:
“A break or gap in a
process that would
normally be
continuous”
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52
Despite the protestations of the media…….
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Kondratiev waves
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Kondratiev and Stock Market Cycles since 1789
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From Datastream – the 6th wave = ???
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End of wave 5 - Timeline
Late 2008
US & global
Government
Interventions
Sep 2007
Northern Rock
receives liquidity
support from BoE
Feb 2007
HSBC writes down subprime bonds by $10nb
May 2010
Greek Bailout
Mid 2009
First indications from
OECD that situation
is stabilising
2011
2008
2007
Dec 2007
US enters
recession
Early 2009
OECD composite
leading indicators
begin to turn up
2009
Aug 2007
Sachsen LB
rescued after
E17bn lifeline
2010
Early 2008
Scale of sub-prime
problem clear when Fannie
Mae & Freddie Mac have
problems
Late 2010
Bailout of Irish Banks
Sep 2008
Collapse of Lehman
Bros (Considered the
‘precipice’ of crisis
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And the dark side…..
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We are in the economic ‘Winter’
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Waves appear to be shortening
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Case Task
• What do you believe will drive the 6th Wave?
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Implications –
Customer Behaviour?
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Customer Value has MIGRATED….
Much has been spoken about:
• The Economic Implications of Social &
Political concerns
• End of consumerism
• Local/Provenance/Authenticity
• The Environment – Really?
• Return of manufacturing
• From Global to Local?
• From Quantity to Quality?
• Make-do-and-mend/Repair-ability
• B-I Obsolescence versus Sustainability?
• Slow Tech & ‘robustness’
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Brand shift through the discontinuity
• Down:
•
•
•
•
“Exclusive” -60%
“Arrogant” -41%
“Sensuous” -30%
“Daring” -20%
• Up:
•
•
•
•
“Kindness & Empathy” +391%
“Friendly” +148%
“High Quality” +124%
“Socially Responsible” +63%
Source: Gerzma &
D’Antonio “Spend
Shift” 2010
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Implications –
Organisation?
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Don’t see it, too busy..
(© Banksy)
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Ignore it (© Banksy)
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Wonder what to do about it (© Banksy)
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Charles Darwin
“It is not the strongest of
the species that survives,
nor the most intelligent, but
the one most responsive to
change”
Charles Robert Darwin (1809–1882)
He wrote: On the Origin of Species,
The Descent of Man,
and Selection in Relation to Sex,
The Expression of the Emotions
in Man and Animals.
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Jack Welch
“When the rate of
change inside the
company is exceeded
by the rate of change
outside the company,
the end is near”
John Francis "Jack" Welch, Jr. (1935-) is an American chemical engineer, business
executive, and author. He was Chairman and CEO of General Electric between 1981
and 2001. During his tenure at GE, the company's value rose 4000% and was the
most valuable company in the world for a time. In 2006 Welch's net worth was
estimated at $720 million.
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Implications – Strategy?
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John Howard
"You can't fatten
the pig on
market day."
1939- ) Australian politician and the
25th Prime Minister of Australia.
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72
Edward Abby
“Growth for
the sake of
growth is the
ideology of
the cancer
cell”
Edward Paul Abbey (1927– 1989) was an
American author and essayist noted for his
advocacy of environmental issues, criticism
of public land policies, and anarchist
political views.
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73
Henry Mintzberg
“Setting oneself on a predetermined
course in unknown waters is the
perfect way to sail straight into an
iceberg.”
Professor Henry Mintzberg, OC, OQ,
FRSC (born in Montreal, 1939) is an
internationally renowned academic
and author on business and
management.
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74
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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75
Case Task
• What is your target market for the future
– Where will you be investing the future of your organisation?
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76
Strategy & Marketing
DAY 2
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77
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
DAY 2
MARKETING
2.1
Product
2.2
Price
2.3
Place
2.4
Promotion
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78
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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79
What is ‘Marketing’?
• "Marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating, offering and
exchanging products of value with others“ Philip Kotler
• “The process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create
exchanges to satisfy individual and organizational objectives” AMA
• The act or process of buying and selling in a market. The commercial
functions involved in transferring goods from producer to consumer.
Answers.com
• “The point of Marketing is to make Selling unnecessary”
Drucker
• “Marketing is the management process responsible for identifying,
anticipating and satisfying customer requirements profitably.”
CIM(UK)
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80
Marketing
“Marketing’s contribution to business success in manufacturing,
provision of services, distribution or retailing activities lies in its
commitment to detailed analysis of future opportunities to meet
customer needs and a wholly professional approach to selling to
well-defined market segments, those products and services that
deliver the sought after benefits.
“Achieving revenue budgets and sales
forecasts are a function of how good our
intelligence services are, how well suited
our strategies are and how well we are led”
Malcolm MacDonald
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81
Fifield’s Preface to REAL Marketing
• What is the point of Marketing?
• To be able to charge the highest
possible price for your product or service
• How do you do that? • Seek out and add Customer Value By:
1. Being easy to choose
“Differentiation”
The better you do
these, in a constantly
changing environment,
the higher your prices
will go
2. Treat customers as individuals
“Segmentation”
3. Giving them a REAL reason to come
“Branding”
4. Ensure the organisation delivers
“Alignment”
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82
Market Share
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
83
Sales Share
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
84
Profit Share
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
85
Other
Stakeholders’
requirements
Shareholder
Value
Long Term
Financial
Objective
Strengths and
Weaknesses
Competitive
opportunities
Resource/
Performance Audit
Competitor
analysis
Vision
Personal values of
key implementers
Leadership
Mission
Customer and
market orientation
External
Focus
Environment
Audit
Industry
analysis
Opportunities
And Threats
Structural
opportunities
The Business
Objective
Competitive
Strategy
The Marketing
Objective
(Marketing Strategy)
SCORPIO ©
Organisation
Structure &
Culture
Segmentation
Finance
Objective/Strategy
The Business
Strategy
Sustainable
Competitive
Advantage
Industry
or
Market
The
Customer
& Targeting
Offerings
H. Resource
Objective/Strategy
Product
Policy
Place
(distribution)
Policy
(Feedback & Control)
Price
Policy
The Marketing Plans,
Programmes & Implementation
Positioning
& Branding
Customer
Retention
IT
Objective/Strategy
Promotion
Policy
Operations
Objective/Strategy
© Fifield 2007
(Feedback & Control)
The Customer
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86
The Marketing mix (Neil Borden)
Branding
Product
Planning
Promotions
Servicing
Pricing
THE
TARGET
MARKET
Packaging
Fact finding
&
Analysis
Physical
Handling
Distribution
channels
Personal
Selling
Advertising
Display
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
87
The Marketing mix (4P’s)
Product
Price
THE
TARGET
MARKET
Place
Promotion
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
88
The Marketing mix (7P’s)
People
Product
Price
THE
TARGET
MARKET
Place
Promotion
Process
Physical
Evidence
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89
The Marketing mix (11P’s)
People
Product
Price
THE
TARGET
MARKET
Privacy
Place
Personal
(Social
Networks)
Personal
Interests
Promotion
Process
Physical
Evidence
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
Public
Commentary
90
The Marketing mix (4C’s)
Cost
(to the user)
Customer
Needs & Wants
THE
TARGET
MARKET
Convenience
Communication
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
91
The Marketing mix (5P’s)
Product
Price
THE
TARGET
MARKET
Place
Promotion
Position
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92
The Marketing mix (make-your-ownP’s)
P
Product
Price
THE
TARGET
MARKET
Place
Promotion
P
P
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93
The Marketing mix (4P’s)
Product
Quality
Sizes
Features Services
Options Returns
Style
Warranties
Brand
Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
THE
TARGET
MARKET
List price Discounts
Allowances Rates
Credit
Changes
Communications
Opportunity Cost
Payment period
Promotion
Message
Media
Above/Below-the-line
Advertising
Direct
Publicity
PR
Personal Selling WOM
Promotion Internet
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
94
Case Task
• What is your target market for the future
– Where will you be investing the future of your organisation?
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95
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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96
The Marketing mix (4P’s)
Product
Quality
Sizes
Features Services
Options Returns
Style
Warranties
Brand
Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
THE
TARGET
MARKET
List price Discounts
Allowances Rates
Credit
Changes
Communications
Opportunity Cost
Payment period
Promotion
Message
Media
Above/Below-the-line
Advertising
Direct
Publicity
PR
Personal Selling WOM
Promotion Internet
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97
Products and/or markets?
•Product features
•Product sales
•Technical
excellence
•Product service
•Rational
solutions
•Product
profitability
‘PUSH’
Strategy
The
Great
Debate:
•Customer
needs/wants
•Customer
satisfactions
•Customer
expectations
•Customer service
•Emotional
solutions
•Customer and/or
segment
profitability
‘PULL’
Strategy
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98
Levitt on the product
“A product is
what a product
does”
Theodore Levitt (1925-2006), American
economist and professor at Harvard Business
School. Editor of the Harvard Business Review
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99
What-it-is (features) or What-it-does? (benefits)
Are you selling a 6mm drill
A Telephone?
Or a 6mm hole?
Or Identity?
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100
– A service is..
Government
Private Non-Profit
Business &
Professional
Legal
Educational
Health
Military
Employment
Credit
Communications
Transportation
Information
services, etc
Art & Music Groups
Leisure Facilities
Charities
Churches
Foundations
Colleges, etc
Airlines
Banking
Insurance
Hotels
Management
consultants
Solicitors
Architects
Advertising Agencies
Market Research, etc
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101
The Service Product
“A service is any activity or benefit that one party can offer
to another that is essentially intangible and does not result
in the ownership of anything. Its production may or may
not be tied to a physical product”
[Kotler]
Characteristics of services:
1
2
3
4
5
Intangibility
Inseparability
Heterogeneity
Perishability
Ownership
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102
The Augmented Product Concept
The Support
Services
component
The Core
component
The Packaging
component
Emotional Benefits
Additional Benefits
Tangible
Benefits or
‘Knowhow’
eg. functions
eg. design
eg. Service, trust,
prestige
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103
The Product/Service Life Cycle
Introduction
Supply;
• Can’t make
enough
• Little formal
infrastructure
• Higher costs
Demand:
• Innovators
• Early adopters
• Higher Price
• Higher Risk
• Little awareness
• ‘New’
Growth
Push
Maturity
to
• Growing
availability
• Growing
Competition
Demand:
• Growing
awareness
• Reducing Prices
• Early majority
• Emerging
standard design
Decline
Pull!
•
•
•
•
•
•
•
•
•
•
No new buyers
Repeat purchase
Can get boring
Best marketing?
Customer focus
Market Segmentation
(S) critical
Consolidation
Fewer BIG players
More NICHE players
Can last a looong time
• Failing demand
• Falling profits or
debts
• Fewer
customers
• Death, or
• Rejuvenation
• Possible repositioning
“Consolidation”
The ‘Chasm’
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104
Case Task
• What Product/Service does your strategy require?
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105
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
106
The Marketing mix (4P’s)
Product
Quality
Sizes
Features Services
Options Returns
Style
Warranties
Brand
Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
THE
TARGET
MARKET
List price Discounts
Allowances Rates
Credit
Changes
Communications
Opportunity Cost
Payment period
Promotion
Message
Media
Above/Below-the-line
Advertising
Direct
Publicity
PR
Personal Selling WOM
Promotion Internet
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
107
An important word about Price
In any developed market,
90% of customers would
prefer to buy on nonprice reasons and pay
some level of premium
price for perceived
additional value
10% will always buy the
cheapest – because they
don’t care about the
category
In an undeveloped market,
a proportion of customers
will prefer to pay premium
price for additional value
A proportion appears to
want the cheapest but
have latent needs that
have not yet been
identified and exploited
Still, 10% will always buy
the cheapest
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108
108
Approaches to Pricing
1. ‘Cost Plus’ pricing
2. ‘Market’ pricing
 Cost informs the price
 Customers inform price
 Cost informs the profit available
Why is this important????????????
PRICE IS THE ONLY SOURCE
OF REVENUE IN THE
MARKETING MIX!
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109
Why industrial (B2B) companies lose customers
Percentage of lost customers
80
68%
60
40
20
1
Death
3
Relocation
5
Develop
New
Relationships
9
Lower
Price
14
Company
Product
Dissatisfaction Indifference
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110
Understanding Profit Drivers
Profit
Revenues
Sales Volume
(Units)
1 million
Cost
=
Price €100
Variable Cost
Variable cost
per unit = €60
Fixed Cost
€30 million
Sales Volume
1 million
What is the profit impact if each of
the 4 levers improves by 10%?
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111
Understanding Profit Drivers (2)
An increase in price has a greater impact on profit than an increase in
volume or decrease in costs.
10% improve
in:
Profit Driver
Old
New
Profit
Old
New
Profit
% Change
Variable cost
per item
€60
€54
€10
€16
60%
Sales Volume
€1m
€1.1m
€10
€14
40%
Fixed costs
€30m
€27m
€10
€13
30%
Price
€100
€110
€10
€20
100%
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112
Role of price
• What clients of “Engineering, Procurement & Construction” (EPC) want
(2006)
1
Employees are knowledgeable & experienced in our industry
2
Provide quality engineering appropriate to our needs
3
Meeting schedule commitments
4
Meeting cost expectations & commitments
5
Deliver value for the money
6
Providing schedules that meet our needs
7
Provide quality fabrication and construction that meets our needs
8
Being able to perform the work wherever we need it done
9
Pricing for services & technologies
10
Having local employees with knowledge of local customs/regulations
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113
The race to the bottom
Marketing should NOT be about:
• Selling as much as possible
• Building market share – at any
cost
• Chasing any sales revenue
available
• Cutting the price to stay in the
“race”
• Unless you want to kill the
company!
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
114
Case Task
• What Pricing Approach does your strategy require?
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
115
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
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116
The Marketing mix (4P’s)
Product
Quality
Sizes
Features Services
Options Returns
Style
Warranties
Brand
Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
THE
TARGET
MARKET
List price Discounts
Allowances Rates
Credit
Changes
Communications
Opportunity Cost
Payment period
Promotion
Message
Media
Above/Below-the-line
Advertising
Direct
Publicity
PR
Personal Selling WOM
Promotion Internet
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
117
The distribution channel is ...
"The route along which a product and its title (ie the rights of
ownership) flow from production to consumption"
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118
Channel Configurations
Originating manufacturer/Service provider
Agent
OEM
Direct
OEM
Post
Phone
Online
F2F
Wholesaler
Sub
Contractor
Retailer
Specialist
Direct
Mail
Distributor
VAR
Prime
Contractor
End Buyer/User
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
119
Why use intermediaries?
• Specialisation
• Division of labour
• Provide assortment by gathering supplies together from
number of manufacturers - “honest broking”
• Breaking bulk so as to meet scale of need of customers - and
buying in bulk on behalf of customers
• Reduce “contactual costs”
• Geographical proximity and local knowledge
• Adding value (eg customisation, service, installation)
• Theoretically cash received quicker up the chain
• Running “interference” - for their customers and their
suppliers
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120
Reducing “contactual” costs or channel geometry
4 Manufacturers contact
4 retailers directly
M
M
M
M
4 Manufacturers distribute
through a wholesaler
M
M
M
M
R
R
W
R
R
R
R
No. of contacts = 4 x 4 = 16
R
R
No. of contacts = 4 + 4 = 8
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121
Increasing Retailer concentration
M
M
M
M
M
M
M
M
W
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
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122
Battle for control
"Let's say I have a new product. Sainsbury and Tesco have
over 50% of the London market: London is so important
that, if they won't accept my product, it simply isn't worth
launching."
- Major Food Manufacturer
"I account for 25% of your business. You account for less that
5% of mine. Let's talk terms."
- Retail Buyer to Major Household Products Manufacturer
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123
Who ‘owns’ the customer owns the margins
‘Push’
Producer
‘Pull’
(sales)
Communication
(marketing)
Intermediary
Consumer/
End User
Brand Franchise!
Information
= Margin
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124
Your choice
Originating manufacturer/Service provider
Agent
OEM
Direct
OEM
Post
Phone
Online
F2F
Wholesaler
Sub
Contractor
Retailer
Specialist
Direct
Mail
Distributor
VAR
Prime
Contractor
End Buyer/User
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
125
Case Task
• What Place/Distribution/Route to market solutions does
your strategy require?
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
126
Agenda
DAY 1
STRATEGY
1.1
What is Strategy?
1.2
The critical importance of Customers
1.3
What business?
1.4
What is the Objective?
1.5
What is the Strategy?
1.6
The Future…..
DAY 2
MARKETING
2.1
Target Market
2.2
Product
2.3
Price
2.4
Place
2.5
Promotion
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
127
The Marketing mix (4P’s)
Product
Quality
Sizes
Features Services
Options Returns
Style
Warranties
Brand
Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
THE
TARGET
MARKET
List price Discounts
Allowances Rates
Credit
Changes
Communications
Opportunity Cost
Payment period
Promotion
Message
Media
Above/Below-the-line
Advertising
Direct
Publicity
PR
Personal Selling WOM
Promotion Internet
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
128
Which half ?
"I know that half my
advertising budget
is wasted, but I’m
not sure which half."
William Hesketh Lever, 1st Viscount
Leverhulme (1851 –1925) was an
English Industrialist, philanthropist and
colonialist. He established a soap
manufacturing company called Lever
Brothers (now part of Unilever) with his
brother James
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129
Value or Volume?
2006 data (UK):
• Number of messages seen per day = +/-3500
– = 4/minute in a waking day
“EyeContact” glasses:
• 90 minute London shopping trip
• 250 messages recorded
– 100 brands
– 70 formats
• Prompted recall = 130
– Customer interested
• Unprompted recall = 1
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130
The Future of Advertising?
A recent paper titled "The
Future of Advertising is Now"
by Christopher Vollmer et al,
attempts to solve Lord
Leverhulme’s dilemma, at
least for the automobile
industry.
Clearly, his lordship’s
assessment remains
remarkably accurate, as this
chart from the paper shows.
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131
Promotion can affect….
1.Attention
2.Interest
3.Desire
4.Action
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
132
Promotional objectives
n
o
,
n
t
o
i
o
t
n
o
n
m
a
o
c
r
,
P
n
w
o
ti s
l
l
se
Promotion may be used to achieve the following:
1. To build awareness and interest in the service or product and
the service organisation
2. To differentiate the product/service offer and the organisation
from competitors
3. To communicate and portray the benefits of the
products/services available
4. To build and maintain the overall image and reputation of the
providing organisation
5. To persuade customers to buy or use the product/service
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133
Promotion by objectives
1
2
3
4
Promotional objectives
The target audience
The message
The media:
advertising
sales promotion
publicity
personal selling
public relations
5 Budgets
6 Testing and Control
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134
The promotional mix
Newspapers and Magazines
Trade and Professional Press
Television and Radio
Cinema
---------------------------------------------------------Exhibitions
Direct Mail
Public Relations
Point of Sale
Digital/Internet
Packaging
Sales Promotion
Personal Selling
Indirect
Company Image
The Service Product
Pricing
Word of Mouth
“The Line” separates the
mass media from the
more targeted
In services, personal
selling may be
indistinguishable from
service delivery
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135
The fundamental proposition
1
2
Who is the one person
you want to talk to?
What is the one thing
you want to say to
them?
The
4
Questions
4
How do you want them
to feel as a result?
3
Why should they
believe you?
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
136
Case Task
• What Promotional policy does your strategy require?
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
137
FINAL Case Task
• From 0 to 10
• How confident would you be of investing your entire pension
over the next 40 years in the outcome of your plans?
Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
138
Reading List
1. “Principles of Marketing: European Edition” - Kotler, Saunders & Armstrong,
FT Prentice Hall 2004
2. “Mercator : Théorie et pratique du marketing”, Lendrevie, Levy & Lindon
2006
3.
4.
5.
6.
7.
8.
9.
10.
11.
“Marketing Strategy” 3rd Edition - P Fifield, Elsevier 2007
“Marketing Strategy Masterclass” – P Fifield, Elsevier 2008
“Collected Essays in Marketing Strategy” P Fifield, Fifield, 2006
“The Marketing Imagination” - T Levitt, Free Press, 1998
“Market-led Strategic Change” – N Piercy, Butterworth Heinemann, 2010
“Marketing Briefs” – S Dibb & L Simkin, Butterworth Heinemann 2004
“Marketing Plans” – M MacDonald, Butterworth Heinemann 2002
“Marketing Management and Strategy ” – P Doyle, FT Prentice Hall, 2006
“Marketing Research: An Applied Approach” – D Birks & N Malhotra, FT
Prentice Hall 2005
12. “Essentials of Marketing Research” - T Proctor, FT Prentice Hall, 2003
13. “International Marketing” – V Terpstra, South Western College Pub, 2001
14. “Marketing across cultures” - JC Usenier & J Lee, FT Prentice Hall 2005
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139
Strategy & Marketing
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140