STRATEGIC MARKETING
TOPICS
1.
2.
3.
4.
5.
6.
7.
8.
Trends & Overview
Pilot Lecture
Macroenvironment Factors (+ SLEEPTIN)
Customer’s Analysis
Industry Analysis: competitors & Markets
(Porter’s Five Forces Framework).
Internal Vs. External Analysis
Managing the Marketing Strategy
Market Driven Strategy (A case of South West
Airline)
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1
Topics Continue …
9. Porter’s Generic Strategies
10. Pricing Strategies and Selling Process
11. Product Decisions (Ansoff’s Matrix)
12. Any current issues in Strategic
Marketing, in Tanzanian Business
Environment.
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DETAILED PPT SLIDES
By
Prof. Elisante Gabriel (MCIM)
PhD (Finland), MSc (UK), PgD (CIM), ADBA,
Mech. Eng. (MTC)
elisante_gabriel@yahoo.com
Tel. +255-784-455499
www.olegabriel.com
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TRENDS & OVERVIEW
What is Strategic Marketing Mgt?
• This is a system approach of facilitating the
timely exchange of values within the business
relations while coping with a network of
complexities (Gabriel, 2006)
• It is imperative for strategists to understand that
the heterogeneity of customers should be
managed carefully while striving for SCA
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SIX COMMANDMENTS OF STRATEGIC
MARKETING
(By Gabriel E. ,2003)
• Create Superior performance
• Sustain Superior performance
• Understand your core business (Value
NW)
• Know your Competitor as you know
yourself
• Make sure you are sophisticated
• Understand your
Internal and External
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Target market and
react to the feedback
5
(A): BASIC CONCEPTS
• What is Marketing ?
This is a social and managerial process by
which individuals and groups obtain their
needs through creating and exchanging
products and values with others.
There is always a consideration connected
to this exchange, which can be in a
material/kind form.
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WHAT IS BUSINESS?
This is a specific activity for specific
objectives, for specific people, to be
performed by specific people within a
specified period of TIME.
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Business Scope
• Business is beyond just Creating,
Promoting, and delivering goods &
Services to consumers and Business.
• Nowadays, Marketers are involved in
marketing ten types of entities:
– goods, services, experiences, events, persons,
places, properties, organizations, information,
and ideas.
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What is Management ?
• This is an art of coping with complexities
• If compared to Leadership, they differ in
the sense that leadership tends to cope
with changes.
• Leadership can either be: Autocratic,
Bureaucratic or Participatory
• Sometimes a combination is the way
forward: ‘no one is superior to another’
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Why studying Strategic
Marketing Management ?
• Changes in Market structure
• Competition
• Cultural dynamics
• Micro & Macro Factors
• Impact of Technology
• Marginal Propensity to Save/Consume
• Changes in Buyers’ Behavior
• Heterogeinity
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Generic philosophies (Concepts)
in Marketing
• The Production Concept (the oldest)
• Consumers will prefer products that are
widely available and affordable
• The Product Concept:
Consumers will favour those products that
offer the most quality, performance, or
innovative features (Fallacy & Myopia)
eg: GM:…how can they know …until they
see?..
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Selling Concept
• Consumers and business if left alone, will
normally buy a small quantity of
Organization’s products. For this very
reason, the Organization must undertake
an aggressive selling and promotion effort
• - Buying inertia (resistance)
• - The battery for effective selling to
stimulate more buying
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The Marketing Concept
• The Organizational goals could be
achieved if the Company will be more
effective than competitors in creating,
delivering, and communicating customer
value to its chosen target markets
• - Start and end with the customer
• - Love the customer not the product
• - Profits through customer
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satisfaction
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Four Pillars of the Marketing
Concept
• Target Market
• Customer needs
• Integrated Marketing
• Profitability
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Selling Vs Marketing Concept
• Theodore Levitt of Harvard University
gave this perceptive contrast:
• Selling focuses on the needs of the seller;
Marketing on the needs of the buyer.
Selling is preoccupied with the seller’s
need to convert his product in to cash;
Marketing with the idea of satisfying the
elisante_gabriel@yahoo.com,
needs
of
the
customer
using synergy
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Societal Marketing Concept
• The Organization should determine the
needs and interests of target markets and
serve them while maintaining
Consumer’s and society well-being
This philosophy considers the aspects of;
environment, resources, demographic
factors,Worldwide economic problems,
neglected Social services, etc
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TWO ADDITIONAL CONCEPTS
• Relationship Marketing
There is a need to maintain a good
relationship with your customers
than just saving them with products.
Mutual relationship will increase
success in business than
transactional.
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………….
• One-to-one Marketing
With the power of TECHNOLOGY in the
market, marketer can now serve ‘him’ and
not ‘them’. A customer can be served
exactly according to his demand and
convenience (eg UPS & FEDEX). Find More
customers for products and more products
for customers (Ref. Don Pepper’s Video
Cassette)
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Analytical Models
• BCG: Boston Consulting Group (USA)
This model has been developed by students
of Boston College in USA. The Company
classifies all its SBUs according to the
growth-Share Matrix. The BCG Matrix has
two axes. The vertical one represents
Market Growth rate (market
attractiveness) whereas the Horizontal one
represents Relative
Market share (Market
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strength)
Components of BCG
• Problem Children/ Question Marks
These are low-share SBUs in high Growth
Markets. Management should think with
due care, which SBU to build and which to
phase out
• Stars
These are both of High Growth rate and
Market share. They should be held
elisante_gabriel@yahoo.com,
carefully
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Cash Cows
These are of Low-growth with high Market
share. They need less investment to retain
them in the Market. The Management
should harvest cash from these SBUs and
pay for bills and support other SBUs
• Dogs
These SBUs are of Low-growth and Low
Market-share. Low cash generation
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BCG MODEL
STAR
(Hold)
PROBLEM
CHILD
(Build)
CASH COW
DOG
(Harvest)
(Divest)
HIGH
LOW
Relative Market Share (% Competitor)
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Micro & Macro Environment
• Micro
This is an internal environment. It entails
dynamic forces within the industry. These
factors include: Vendors, Competitors,
Customers
• Macro
This is the general environment, which
sometimes is referred as external. It
elisante_gabriel@yahoo.com,
includes
the
following
(SLEEP3/21/2016
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499
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SWOT Analysis
• SW = Strength and Weakness (INTERNAL)
• OT = Opportunities and Threats
(EXTERNAL)
This analysis is also useful in assessing the
position of a product or SBU/SBA/SME.
The internal assessment deals with the
Organizational capability of the SBU,
including managerial competence. OT
elisante_gabriel@yahoo.com,
deals
with
external
variables (Eg. Mobile
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SYNERGY
• This is a concept in Marketing
management, which outlines that, system
approach is more effective for higher
performance. The concept claims that, the
result of the combined efforts of
individuals (as a system) is greater than
when they perform the same separately.
• Mathematically: 1+1 > 2. (TEAM WORK)
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Customer Vs Consumer
• Customer
This is the one whom you interact with for
the service encounter, Moment of truth,
Closing the sale. This can be an individual
or an Organization (Eg Wholesalers are
………….)
• Consumer
The one who uses/consumes the product in
elisante_gabriel@yahoo.com,
the
real
sense
(Eg
a of 499
a bar of chocolate)26
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TYPES OF CUSTOMERS
Finally
Customers can be categorized in different
forms. They can;
• Person Vs Non-Person = Consumer Vs
Organizational/Industrial/Institutional
• New Vs Existing
In Consumer Market, for instance,
Individuals can represent nine types of
customers. These to include; Snobbish,
elisante_gabriel@yahoo.com,
timid,
nervous,
. +255-784-455 499
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MODULE 2
PILOT LECTURE ON
STRATEGIC MARKETING
……………………………………………………..
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OBJECTIVES
• The Primary objective is to acquire a
strategic knowledge about the dynamics
of the markets
• To enable participants to make strategic
choices among the available options
• To enable participants to improve their
decision making process for business
growth and survival.
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The Concept & Trends
• What is Strategic Marketing Management?
• Characteristics of markets and structures
• Why studying Strategic Marketing
Management?
• Challenges facing Strategists in the
marketing field
• How does ‘Strategic Marketing’ differs
from ‘Marketing’?
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An Overview
• External Analysis (Outside the firm)
• Internal analysis (Strengths &
Weaknesses). Any impact on strategy?
• Mission Statement (Espirit de corp) and
Shared sense of mission for synergy.
• Strategic Choices Vs. General choices
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Competitors Analysis
• Knowing your competitors as you know
yourself
• Analysis of competitors: Strengths &
Weaknesses
• Is there any ‘loose brick’ in the value chain
of your competitor? Make sure you do not
have one on your side
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Market & Industry Analysis
• The impact of Market size & Potential
• Pareto effect (By Alfredo Pareto of Italy)
• Market growth and attractiveness: The link with
•
•
•
BCG
Cost structure (CoGs) = Material, Labour, OH;
Fixed and Variable costs. How to manage
Core competencies for success (Hamel &
Prahalad)
Porter’s Five Forces & Generic Strategies +
Video show
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Macro Environmental Factors
• Looking ‘beyond the wall’ not just across
• Do not be myopic, recall the ‘mouse-trap
fallacy’.
• From ‘PEST’ to ‘SLEEPTIN’.
• Do not be complacent. Manage the
dynamics of the market which are always
changing in a fascinating speed.
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Strategic Marketing Choices
• Make a strategic Strategy choice
• The new dimension of the definition of
•
•
•
Marketing (By Prof. ole Gabriel) – MNCs
The concept of Sustainable Competitive
Advantage
Alternative growth Strategies (By Igor Ansoff)
Corporate Strategic Choice (Does it know that
choices exist?)
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Managing the Marketing Strategy
• Implementation depends on; people,
structures, systems and more important,
culture!!!
• Strategic evaluations and control;
determine the variances and take the
corrective measure immediately (Do not
be like Africa bottling company). And…
• Sales Analysis, CBA and Marketing audit.
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Conclusion
• Strategic Marketing is important in order
to avoid generalisability. ‘Customers are
different and their differences are
different’ (Gabriel, 2004).
• Companies which will ignore strategic
Marketing are destined to fail, the
question is when and not whether…
• Strategic marketing will enhance TQM.
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THE END!
• Think Strategically,
act strategically, smile
strategically and walk
strategically!!!
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MODULE 3
MACRO-ENVIRONMENTAL FACTORS
3-1
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Environmental Analysis
• Any effort at environmental analysis must
be well-organized, systematic, and
supported by sufficient resources (e.g.,
people, financial, information).
• Environmental analysis should be an
ongoing effort.
• Environmental analysis empowers the
marketing manager because it
encourages both analysis and synthesis
of information.
3-2
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Data Versus Information
• Managers are more likely to be overwhelmed
with data rather than face a shortage.
• Data does not become informative until it is
transformed in a manner that makes it useful to
decision makers.
• Environmental analysis is valuable only to the
extent that it improves the quality of the
resulting plans and decisions.
• Perpetually analyzing data without making any
3-3
decisions is usually not worth the added
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expense.
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Three Key Environments
• Analysis of the external environment
(macroenvironmental) should include all the external
factors— competitive, economic, political, legal/
regulatory, technological, and sociocultural—that can
exert direct and indirect pressures on both domestic
and international marketing activities.
• The marketing manager should examine the customer
environment (5 W’s) to assess the current and future
situation with respect to customers in the firm's target
markets.
• Finally, a critical evaluation of the firm's current and
anticipated internal environment
(microenvironmental
) with respect to its objectives
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and performance, allocation
of resources, structural 42
Four Basic Types of Competition
Brand Competitors: market products that are similar in
features and benefits to the same customers at similar prices
Product Competitors: compete in the same product class,
but with products that are different in features, benefits, and
price
Generic Competitors: market very different products that
solve the same problem or satisfy the same basic need
Total Budget Competitors: compete for the limited
financial resources of the same customers
3-5
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Stages of Competitive Analysis
1) Identify all current and potential brand, product, generic, and total
budget competitors
2) Assess each key competitor in terms of relevant characteristics,
such as size, profitability, growth, objectives, strategies, etc.
3) Assess each key competitor’s strengths and weaknesses, as well as
the major competencies that each competitor possesses
4) Focus on each competitor’s marketing capabilities in terms of their
products, pricing, distribution, and promotion
5) Estimate each competitor’s most likely strategies and responses
under different environmental situations, as well as their reactions
to the organization’s own marketing efforts
3-6
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Economic Conditions
• A thorough examination of economic factors requires
marketing managers to gauge and anticipate the
general economic conditions of the nation, region,
state, and local area in which they operate.
• Economic factors to consider include inflation,
employment and income levels, interest rates, taxes,
trade restrictions and tariffs, current and future stages
of the business cycle (prosperity, stagnation, recession,
depression, and recovery), consumers' overall
impressions of the economy and their ability and
willingness to spend, and current and anticipated
spending patterns
of consumers in the firm's target
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Political Trends
• Many marketers view political factors as being
beyond their control and do little more than
adjust the firm's strategies to accommodate
changes in those factors.
• Other firms take a more proactive stance by
seeking to influence elected officials.
3-8
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Legal and Regulatory Factors
• The marketing manager should carefully
examine recent court decisions and recent
rulings of federal, state, local and selfregulatory trade agencies to determine their
effects on marketing activities.
• Companies that engage in international
marketing activities should also consider
changes in the trade agreements between
nations.
3-9
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Changes in Technology
• Many changes in technology assume a
frontstage presence in that they are most
noticeable to customers.
• Technological changes can also assume a
backstage presence when their advantages
are not necessarily apparent to consumers.
3-11
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Sociocultural Factors
• Sociocultural factors are those social and
cultural influences can cause changes in
attitudes, beliefs, norms, customs, and
lifestyles.
– There are many changes taking place in the
demographic makeup of the U.S. population.
– Changes in cultural values can also create
challenges and opportunities for marketers.
3-12
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The Customer Environment
• Information should be collected that identifies
– The firm's current and potential customers
– The prevailing needs of current and potential
customers
– The basic features of the firm's and competitors'
products that are perceived as meeting customers'
needs
– Anticipated changes in customers' needs
• In assessing the firm's target markets, the
3-13
marketing manager should attempt to
understand allelisante_gabriel@yahoo.com,
relevant buyer behavior and
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5-W Model
• Who Are Our Current and Potential
Customers?
• What Do Our Customers Do with Our
Products?
• Where Do Our Customers Purchase Our
Products?
• When Do Our Customers Purchase Our
Products?
• Why (and How) Do Our Customers Select Our
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Who Are Our Current and Potential
Customers?
• The manager should consider
– demographic characteristics (gender, age, income, occupation,
education, ethnic background, family life cycle, etc.)
– geographic characteristics (where customers live, density of
the target market, etc.)
– psychographic characteristics (attitudes, opinions, interests,
motives, lifestyles, etc.) in defining the firm's target markets.
• Depending on the type of products sold by the firm,
purchase influencers, such as children or spouses, may
be important as well.
• For business-to-business marketers, the analysis
3-15
should focus onelisante_gabriel@yahoo.com,
the decision-making unit (DMU).
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What Do Our Customers Do with Our
Products?
• The "what" question entails an assessment of how
customers consume and dispose of the firm's
products.
• Here the marketing manager might be interested in
– identifying how often products are consumed (sometimes
called the usage rate)
– differences between heavy and light users of products
– whether complementary products are used during
consumption
– what customers do with the firm's products after
consumption
3-16
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Where Do Our Customers Purchase
Our Products?
• Until recently, most firms looked solely at traditional
channels of distribution, such as brokers, wholesalers,
and retailers.
• Many other forms of distribution are available today,
most notably nonstore retailing, which includes
–
–
–
–
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vending machines
door-to-door selling
direct marketing through catalogs or infomercials
electronic merchandising through computers and interactive
television
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When Do Our Customers Purchase
Our Products?
• The "when" question refers to any situational
influences that may cause customer purchasing activity
to vary over time, including the seasonality of the
firm's products and the variability in purchasing activity
caused by promotional events.
• The "when" question also includes more subtle
influences that can affect purchasing behavior, such as
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–
–
–
–
–
–
physical and social surroundings
time perceptions
the purchase task
time of day
time available to search for alternatives
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what the purchase
is intended to accomplish.
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Why (and How) Do Our Customers
Select Our Products?
• The "why" question involves identifying the basic needsatisfying benefits provided by the firm's products.
• The potential benefits provided by the features of
competing products should also be analyzed.
• It is also important to identify potential changes in
customers' current needs and the needs that customers
may have in the future.
• The "how" part of this question refers to the means of
payment that customers use when making a purchase.
• How can we practice CRM
3-19
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Why Do Potential Customers Not
Purchase the Organization’s Products?
• Noncustomers have a basic need that the product does not fulfill
• The product does not match noncustomers’ lifestyles or image
• Competing products have better features or benefits
• The product is too expensive for some customers
• Noncustomers may have high switching costs
• Noncustomers are simply unaware of the product’s existence
• Noncustomers have misconceptions about the product
• Poor distribution makes the product hard to find
3-20
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Internal Environment
• First, the marketing manager must periodically
assess the firm's current marketing goals,
objectives, and performance.
• Second, the marketing manager should review
the current and anticipated levels of
organizational resources that can be used for
marketing purposes.
• Finally, the marketing manager should review
3-21
current and anticipated
structural issues that
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could affect marketing activities.
Collecting Environmental Data &
Information
• The marketing manager should invest time and
money to perform research to uncover data that
is pertinent to the development of the marketing
plan.
– This effort will always involve the collection of
secondary data, which is compiled inside or outside
the organization for some purpose other than the
current analysis.
– If the required data or information is not available,
primary data may have to be collected through
marketing research.
– Accessing secondary
data sources is usually preferable
elisante_gabriel@yahoo.com,
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59
as a first option +255-784-455
because 499
they can be obtained more
Sources of Environmental Data
• Internal sources may also be a good source of data on customer
needs, attitudes, and behavior. The organization's own records
are the best source of data on current objectives, performance,
and available resources.
• The sheer volume of available information on the economy, our
population, and business activities is the major strength of most
government data sources.
• The articles and research reports that are available in periodicals
and books provide a gamut of information about many
organizations, industries, and nations.
• Commercial sources are almost always relevant to a specific issue
because they deal with the actual behaviors of customers in the
marketplace.
• The best approach to secondary data collection is one that blends
data and information from a variety of sources.
elisante_gabriel@yahoo.com,
• If needed secondary
data is not available, out of date, inaccurate
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60
or unreliable, or irrelevant to the specific problem at hand, the
Overcoming Problems in Data
Collection
• One of the most common problems is an
incomplete or inaccurate assessment of the
situation for which data is being gathered to
address.
• Another common difficulty is the expense of
collecting environmental data.
• A third issue is the time it takes to collect
environmental data.
• A final challenge is finding a way to organize
3-24
elisante_gabriel@yahoo.com,
the
vast
amount
of data499and information that61
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CONCLUSION
• The need of the correct information for scanning
the environment is vital
• The need of SLEEP-TIN is necessary
• The externalities are never static by dynamic
AND…
• The Macro environmental
components need to
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be interlinked.
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MODULE 4:
CUSTOMERS’ ANALYSIS
Understand Who are your customers?
How to make value for them?
How to communicate the value to them?
Motivate them and meet their unmet needs to
delight them
Who affect and effect the buying decision?
How to retein your costomers?
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What We Need to Know
about Current and Potential Customers
•
•
Who buys and uses the product
What customers buy and how they use
it
• Where customers buy
• When customers buy
• How customers choose
• Why they prefer a product
• How they respond
to marketing
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programs
64
Who Buys and Uses the
Products
• Initiator -who identifies the need for
product
• Influencer -who has informational or
preference input to the decision
• Decider –who makes the final decision
through budget authorization
• Purchaser –who makes the actual
purchase
• User
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Buying Roles and Needs/Benefits
Sought
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Categories for Describing
Consumers
(SEGMENTATION)
1. Demographic
2. Socioeconomic
3. Personality
4. Psychographics and values
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Major Segmentation Variables for
Business Markets
• Demographic
• Operating variables
• Purchasing approaches
• Situational factors
• Personal characteristics
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Major Segmentation Variables
for Business Markets:
•Industry: Demographic
–Which industries should we focus on?
•Company size:
–What size companies should we focus on?
•Location:
–What geographic areas should we focus on?
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Major Segmentation Variables for
Business Markets: Operating
Variables
•Technology:
–What customer technologies should we
focus on?
•User/Nonuser status:
–Should we focus on heavy, medium, light
users or nonusers?
•Customer capabilities:
–Should we focus on customers needing
many or few services?
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Major Segmentation Variables for
Business Markets: Purchasing
Approaches
• Purchasing-function organizations:
– Should we focus on companies with highly centralized or
decentralized purchasing organizations?
• Power structure:
– Should we focus on companies that are engineering
dominated, financially dominated, etc.?
• Nature of existing relationships:
– Should we focus on companies with which we have strong
relationships or simply go after the most desirable companies?
• General purchase policies:
– Should we focus on companies that prefer leasing? Service
contracts? Systems purchases? Sealed bidding?
• Purchasing criteria:
– Should we focus on companies that are seeking quality?
Service? Price?
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Major Segmentation Variables for
Business Markets: Situational Factors
•Urgency:
–Should we focus on companies that need
quick and sudden delivery or service?
•Specific application:
–Should we focus on certain applications of
our product rather than all applications?
•Size of order:
–Should we focus on large or small orders?
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Major Segmentation Variables for
Business Markets: Personal
Characteristics
•Buyer-Seller similarity:
–Should we focus on companies whose
people and values are similar to ours?
•Attitudes toward risk:
–Should we focus on risk-taking or risk
avoiding customers?
•Loyalty:
–Should we focus on companies that show
high loyalty to their suppliers?
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Sources of Customer Value
• Economic:
– The economic benefit a customer derives from using a
product
• Functional:
– Those aspects of a product that provide functional or
utilitarian benefits to customers
• Psychological:
– The image of the product, including how the product
“feels” and whether that feeling matches the image the
customer wants to project
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Measuring Brand Equity
1. Awareness:
Being aware of a brand is usually a requirement for its
purchase and tends to lead to more favorable opinions by
reducing the risk associated with a familiar option.
2. Associations:
Images related to overall quality as well as specific product
attributes and user characteristics affect the reaction to a
brand.
3. Attitude:
Overall favorability toward a brand is a critical part of brand
equity.
4. Attachment:
Loyalty to a brand is the strongest type of equity, and most
beneficial for sellers.
5. Activity:
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The strongest
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fans +255-784-455
of a brand499
become
advocates.
75
Manifestations of Customer
• Price.
Value
–
•
Price is the company’s assessment of the product’s value.
Price sensitivity.
–
•
A product with constant sales when prices increase
generally is of greater value than one for which demand
slumps.
Satisfaction.
–
•
Survey-based satisfaction measures are standard practice in
my business.
Complaints and compliments.
–
•
The number of complaints or compliments the company
receives indicates the product’s value.
Word-of-mouth.
–
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Although often difficult to track, spoken and written
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comments provide
a useful subjective assessment of a
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product’s value.
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Manifestations of Customer Value
cont.
•
Margin/profit contribution.
–
•
Generally, higher margins indicates partially monopolistic
positions due to greater communicated value.
Dollar sales.
–
•
Total dollar sales provide an aggregate measure of the
value of a product as assessed by the market.
Competitive activity.
–
•
Competitive activity such as new-product introductions
indicates that the total gap between customer value and
company costs is sufficiently large to allow for profits even
when more companies divide the market.
Repeat purchase rate.
–
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High loyalty indicates
high brand value.
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Assessing the Value of the Product
Category
1.
2.
3.
4.
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Determine the uses of the product
Estimate the importance of the uses
List competing products for the uses
Determine the relative effectiveness of
the product category in each usage
situation
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Desirable Criteria for Segments
• Sizeable
• Identifiable
• Reachable
• Respond differently
• Coherent
• Stable
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Major Uses of Potential
Estimates
1. To make entry / exit decisions
2. To make resource level decisions
3. To make location and other resource
allocation decisions
4. To set objectives and evaluate
performance
5. As an input to forecasts
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Useful Sources for Potential
Estimates
• Government Sources
• Trade Associations
• Private Companies
• Financial and Industry Analysts
• Popular Press
• The Internet
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New or Growing Product
Potential
• Relative Advantage
– Is the new product superior in key benefits?
– To what degree?
• Compatibility
– What level of change is required to understand and
use a new product?
– For customers? Intermediaries? The company?
• Risk
– How great is the risk involved?
– What is the probability someone will buy a new
product?
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Methods of Estimating Market and
Sales Potential
• Analysis-Based Estimates
1. Determine the potential buyers or users of
the product
2. Determine how many are in each potential
group of buyers defined by step 1
3. Estimate the purchasing or usage rate
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How Are Sales Forecasts Used?
1. To answer “what if” questions
2. To help set budgets
3. To provide a basis for a monitoring
system
4. To aid in production planning
5. By financial analysts to value a
company
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Conclusion
•
•
•
•
•
•
•
The knowledge of customers is paramount
Understand what customers are buying
Why do they buy from you?
How do they make the buying decision
Make customers your part time marketers
Retain the customers as it is cheaper thank
new…..AND
Integrate Technology in managing your
customers.
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COMPETITORS AND
MARKET ANAYSIS
Module 5
Opportunities, Threats, Industry
Competition, and Competitor Analysis
……………………………………….
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Components of the General Environment
Economic
Demographic
Sociocultural
Industry
Environment
Competitive
Environment
Political/
Legal
Global
Technological
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SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
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The purpose of SWOT
Analysis
• It is an easy-to-use tool for developing
an overview of a company’s strategic
situation
– It forms a basis for matching your
company’s strategy to its situation
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SWOT is the starting point
• It provides an overview of the strategic
situation.
• It provides the “raw material” to do
more extensive internal and external
analysis.
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Opportunities
• An OPPORTUNITY is a chance for firm
growth or progress due to a favorable
juncture of circumstances in the
business environment.
• Possible Opportunities:
– Emerging customer needs
– Quality Improvements
– Expanding global markets
– Vertical Integration
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Threats
• A THREAT is a factor in your company’s
external environment that poses a
danger to its well-being.
• Possible Threats:
– New entry by competitors
– Changing demographics/shifting demand
– Emergence of cheaper technologies
– Regulatory requirements
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Opportunities and Threats
form a basis for EXTERNAL
analysis
• By examining opportunities, you can
discover untapped markets, and new
products or technologies, or identify
potential avenues for diversification.
• By examining threats, you can identify
unfavorable market shifts or changes in
technology, and create a defensive
posture aimed at preserving your
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position.
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The purpose of
Five-Forces Analysis
• The five forces are environmental forces
that impact on a company’s ability to
compete in a given market.
• The purpose of five-forces analysis is to
diagnose the principal competitive
pressures in a market and assess how
strong and important each one is.
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Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
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Threat of New Entrants
Economies of Scale
Barriers to
Entry
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
Government Policy
Expected Retaliation
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Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining Power of Suppliers
Suppliers are likely to be powerful if:
Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Supplier industry is dominated by a
few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to
supplier
Suppliers’ product is an important
input to buyers’ product
Suppliers’ products are differentiated
Suppliers’ products have high
switching costs
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Supplier poses credible threat of
forward integration
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Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining
Power of
Buyers
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Bargaining Power of Buyers
Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to seller’s sales
Purchase accounts for a significant
fraction of supplier’s sales
Products are undifferentiated
Buyers face few switching costs
Buyers’ industry earns low profits
Buyers compete
with the supplying
industry by:
* Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer presents a credible threat of
backward integration
Product unimportant to quality
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Buyer has full information
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100
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining
Power of
Buyers
Threat of
Substitute
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Products
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Threat of Substitute Products
Keys to evaluate substitute products:
Products
with similar
function
limit the
prices firms
can charge
Products with improving
price/performance tradeoffs
relative to present industry
products
Example:
Electronic security systems in
place of security guards
Fax machines in place of
overnight mail delivery
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Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Rivalry Among
Competing Firms
in Industry
Threat of
Substitute
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Products
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Bargaining
Power of
Buyers
103
Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Increasing consumer warranties or service
Making new product introductions
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
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Rivalry Among Existing Competitors
Cutthroat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
High storage costs
Lack of differentiation or switching costs
Capacity added in large increments
Diverse competitors
High strategic stakes
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High exit barriers
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105
The Five Forces are Unique
to Your Industry
• Five-Forces Analysis is a framework for
analyzing a particular industry.
– Yet, the five forces affect all the other
businesses in that industry.
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Competitor Analysis
The follow-up to Industry Analysis is
effective analysis of a firm’s Competitors
Industry
Environment
Competitive
Environment
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Competitor Analysis
Assumptions
What assumptions do our
competitors hold about the future
of industry and themselves?
Current Strategy
Does our current strategy support
changes in the competitive
environment?
Future Objectives
How do our goals compare to our
competitors’ goals?
Capabilities
How do our capabilities compare
elisante_gabriel@yahoo.com,
to
our
competitors?
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+255-784-455 499
Response
What will our
competitors do in the
future?
Where do we have a
competitive
advantage?
How will this change
our relationship with
our competition?
108
Competitor Analysis
Future Objectives
What Drives the competitor?
How do our goals compare
to our competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
toward risk?
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Competitor Analysis
Future Objectives
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed inHow
the future?
are we currently
What is the
attitude
competing?
toward risk?
Does this strategy
support changes in the
competitive structure?
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What is the competitor doing?
What can the competitor do?
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Competitor Analysis
Future Objectives
What does the competitor believe
about itself and the industry?
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does thisDo
strategy
we assume the future
support changes
in the
will be volatile?
competition
structure?
What
assumptions do our
competitors hold about the
industry and themselves?
Are we assuming stable
competitive conditions?
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111
Competitor Analysis
Future Objectives
What are the competitor’s
capabilities?
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
we assume the future
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
competitors
hold about the
Capabilities
industry and themselves?
What are my competitors’
Are we operating under
strengths and weaknesses?
a status quo?
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How do our capabilities
compare
to our
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competitors?
112
Competitor Analysis
Response
Future Objectives
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
we assume the future
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
Capabilities
competitors
hold about the
industry and themselves?
What are my competitors’
Are we operating
strengths under
and weaknesses?
a status quo?
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How do our capabilities
compare
to our
elisante_gabriel@yahoo.com,
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competitors?
What will our competitors
do in the future?
Where do we have a
competitive advantage?
How will this change our
relationship with our
competition?
113
Conclusion
• Know your competitors as you know
yourself
• Create and sustain your competitive
Advantage
• The Market size matters! Take the
advantage of it. AND…
• The Key success Factors will give you the
core competencies hence a competitive
Advantage
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Module 6
INTERNAL Vs. External
Analysis
Mission
Vision
Values
SWOT Analysis
Strategic Planning
Does it work? Is it worth it?
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Sustainability of a Competitive
Advantage
• Sustainability of a competitive advantage is a
function of:
– the rate of core-competence obsolescence due to
environmental changes
– the availability of substitutes for the core competence
– the imitability of the core competence
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External and Internal Analyses
Environment
Sociocultural
Industry
Environment
By studying the external
environment, firms identify
what they might choose to do
Opportunities and threats
Competitor
Environment
Technological
General
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117
External
and
Internal
Analyses
External and Internal Analyses
By studying the internal
environment, firms identify
what they can do
Unique resources,
capabilities, and core
competencies
(sustainable competitive
advantage)
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Challenge of Internal Analysis
• How do we effectively manage current core
•
•
competencies while simultaneously developing
new ones?
How do we assemble bundles of resources,
capabilities and core competencies to create
value for customers?
How do we learn to change rapidly?
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Three Conditions Affecting
Managerial Decisions About
Resources, Capabilities, and Core
Competencies
• Uncertainty regarding characteristics of the general
and the industry environments, competitors’ actions, and
customers’ preferences
• Complexity regarding the interrelated causes shaping
a firm’s environments and perceptions of the
environments
• Intraorganizational Conflicts among people
making managerial decisions and those affected by them
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Components of
Internal Analysis
Core
Competencies
Discovering Core
Competencies
Strategic
Competitiveness
Competitive
Advantage
Capabilities
Resources
• Tangible
• Intangible
Four Criteria
of Sustainable
Advantages
• Valuable
• Rare
• Costly to Imitate
• Nonsubstitutable
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Value
Chain
Analysis
• Outsource
121
Discovering Core
Competencies
Resources
• Tangible
• Intangible
Resources are what a firm has
to work with--its assets-including its people and the
value of its brand name
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Resources represent inputs into
a firm’s production process...
such as capital equipment, skills
of employees, brand names,
finances and talented managers
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Discovering Core
Competencies
Resources
• Tangible
• Intangible
Tangible Resources
• Financial
• Physical
• Human resources
• Organizational
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Intangible Resources
• Technological
• Innovation
• Reputation
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Discovering Core
Competencies
Capabilities
Capabilities become important when they are combined
in unique combinations which create core competencies
which have strategic value and can lead to competitive
advantage
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Discovering Core
Competencies
Capabilities
Capabilities are what a firm does, and represent the firm’s
capacity or ability to integrate individual firm resources to
achieve a desired objective
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Discovering Core
Competencies
Core
Competencies
Core competencies are resources and capabilities that serve
as a source of competitive advantage over rivals
Core competencies distinguish a company competitively
and make it distinctive
McKinsey and Co. recommends using three to four
elisante_gabriel@yahoo.com,
competencies
when
framing
strategic actions
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126
Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
•
•
•
•
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Valuable: Capabilities that help a firm neutralize threats or
exploit opportunities
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Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
•
•
•
•
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Rare: Capabilities that are not possessed by many others
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128
Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
•
•
•
•
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Costly to imitate: capabilities that other firms cannot
develop easily, usually due to
• Unique historical conditions
• Causal ambiguity
• Social complexity
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129
Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
•
•
•
•
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Nonsubstitutable: capabilities that do not have strategic
equivalents
• Invisible to competitors
• Firm specific knowledge
• Trust-based working relationships between managers
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and nonmanagerial
personnel
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Core Competence as a
Strategic Capability
Core Competence
• A strategic
capability
Resources
• Inputs to a firm’s
production process
The source of
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Capability
• An integration of a
team of resources
Does it satisfy the
criteria of sustainable
competitive
advantage?
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Yes
No
Capability
• A nonstrategic
team or resource
131
Service
Marketing & Sales
Procurement
Technological Development
Human Resource Mgmt.
Firm Infrastructure
Support Activities
The Basic
Value Chain
Outbound Logistics
Operations
Inbound Logistics
Primary Activities
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Service
Procurement
Technological Development
Human Resource Mgmt.
Usually this is
because the specialty
supplier can provide
these functions more
efficiently
Firm Infrastructure
Outsourcing is the
purchase of some or
all of a valuecreating activity
from an external
supplier
Support Activities
Outsourcing
Marketing & Sales
Outbound Logistics
Operations
Inbound Logistics
Primary Activities
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Strategic Rationales for
Outsourcing
• Improve Business Focus
– lets company focus on broader business issues by
having outside experts handle various operational
details
• Provide Access to World-Class Capabilities
– the specialized resources of outsourcing providers
makes world-class capabilities available to firms in a
wide range of applications
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Strategic Rationales for
Outsourcing
• Accelerate Business Re-Engineering Benefits
– achieves re-engineering benefits more quickly by
having outsiders--who have already achieved worldclass standards--take over process
• Share Risks
– reduces investment requirements and makes firm
more flexible, dynamic and better able to adapt to
changing opportunities
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Core Competencies: Cautions
and Reminders
• Never take for granted that core competencies
•
•
will continue to provide a source of competitive
advantage
All core competencies have the potential to
become core rigidities
Core rigidities are former core competencies that
now generate inertia and stifle innovation
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Applying it to your
Career/Organization
• What is your core competence?
• Where does leadership fit?
• Is it really as complicated as theory makes
it sound – e.g., small business?
• Where do core competences originate?
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CONCLUSION
• Internal analysis and External are
somehow interrelated
• Resource base and capabilities are
necessary for a stable internal
environment, AND
• Good management team is the best
starting point to give a signal of internal
capability/core compenetcies
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Module 7
MANAGING THE MARKETING
STRATEGIES
Dr. Elisante ole Gabriel
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CORPORATE STRATEGY
Deciding the Scope
and Purpose of
the Business
Business
Objectives
Actions and
Resources for
Achieving
Objectives
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CHARACTERISTICS OF SUCCESSFUL STRATEGY
Unique competitive position for the
company.
Activities tailored to strategy.
Clear trade-offs and choices vis-àvis competitors.
Competitive advantage arises from fit
across activities.
Sustainability comes from the activity
system not the parts.
Operational effectiveness a given.
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ORGANIZATIONAL CHANGE
Vertical
Disaggregation
Internal
Redesign
New
Organizational
Forms
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CORPORATE STRATEGY COMPONENTS
Management’s long-term vision for
the corporation
Objectives
Assets, skills, and capabilities
Businesses in which the corporation
competes
Structure, systems, and processes
Creation of value
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MARKETING STRATEGY PROCESS
Situation
Analysis
Implementing
and Managing
Marketing
Strategy
Designing
Marketing
Strategy
Marketing
Program
Development
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SITUATION ANALYSIS
Market
Vision, Structure,
and Analysis
Continuous
Learning
About
Markets
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Segmenting
Markets
145
Designing MarketDriven Strategies
Market Targeting
and Strategic
Positioning
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Relationship
Strategies
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Planning
for New
Products
146
Positioning Strategy Development
Product
strategy
Positioning
strategy
Promotion
strategy
Market
target
Distribution
strategy
Price
strategy
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Designing Effective
Market-Driven
Organizations
Implementing and
Managing Market-Driven
Strategy
Strategy
Implementation
and Control
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MARKETING PLAN OUTLINE
I.
Strategic Situation Summary
Summarize the key points from your situation
analysis (market
analysis, segments, industry/competition) in order to
recount the
major events and provide information to better
understand the
strategies outlined in the marketing plan.
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II. Market-Targets and Objectives
The market target may be defined demographically (key
characteristics
only),
geographically,
or
in
social/economic
terms.
Each market target should have needs and wants that differ to some degree
from other targets. These differences may be with respect to types of
products purchased, use situation, frequency of purchase, and other
variations that indicate a need to alter the positioning strategy to fit the
needs and wants of each target. An objective is a quantified goal
identifying what is expected when. It specifies the end results expected.
The objectives should be written for each target market. Objectives should
also be included for the following program components: (1) product, (2)
price, (3) distribution, (4) promotion (salesforce, advertising,
sales promotion, and public relations), and (5) technical services.
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III. Positioning Statements
Write statements that describe how you want each market target
to perceive each product relative to competition. State the core
concept used to position the product (brand) in the eyes and
mind of the targeted buyer. The positioning statement should
describe: (1) What criteria or benefits the customer considers
when buying a product along with the level of importance, (2)
What we offer that differentiates our product from competition,
and (3) The limitations of competitive products.
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IV.
A.
Market Mix Strategy for Each Market Target
Product Strategy
Identify how each product fits the market target. Other issues
that may be addressed would be new product suggestions,
adjustments in the mix of existing products, and product
deletion candidates.
B.
Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced,
etc.) should be identified along with a cost/benefit analysis if
applicable. Identify what role you want price to play, i.e.,
increase share, maintenance, etc.
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C.
Distribution Strategy
Describe specific distribution strategies for each market target.
Issues to be addressed are intensity of distribution (market
coverage), how distribution will be accomplished, and
assistance provided to distributors. The role of the sales force
in distribution strategy should also be considered.
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D.
Promotion Strategy
Promotion strategy is used to initiate and maintain a flow of
communication between the company and the market target.
To assist in developing the communications program, the
attributes or benefits of our product should be identified for
each market target.
How our product differs from
competition (competitive advantage) should be listed. The
sales force’s responsibilities in fulfilling the market plan must
be integrated into the promotion strategy. Strategies should
be listed for
(1) personal selling, (2) advertising, (3) sales promotion,
and(4) public relations.
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E.
Marketing Research
Describe the market research problem and the kind of
information needed. Include a statement which addresses
why this information is needed. The specific market
research
strategies can be written once the above two
steps have been followed.
V.
Coordination with Other Business Functions
Indicate other departments/functions that have
responsibilities for implementing the marketing plan.
VI.
Sales Forecasts and Budgets
VII.
Contingency Plans
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Indicate how your plans should be modified if events
should occur that
are different from those assumed
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in the plan.
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Module 8
Market Driven Strategy
A Case of SWA)
Dr. Elisante ole Gabriel
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SOUTHWEST AIRLINES
Point-to-Point Strategy
On-Time Service
High Aircraft Utilization
Market-Oriented Culture
Low Operating Expenses
Lowest debt to capital ration of
the major airlines.
Low Fares
No Connections with other
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Characteristics of Market-Driven Strategies
MarketOrientation
Leveraging of
Distinctive
Capabilities
Superior
Performance
Customer
Value/
Capabilities
Match
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BECOMING MARKET ORIENTED
Effective
Market Sensing
Processes
Cross-Functional
Analysis of
Information
Shared Diagnosis
and Coordinated
Action
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Delivery of
Superior Customer
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Components of Organizational Capabilities
Skills
(cross-functional
teams)
Accumulated
knowledge
(new product experience)
Organizational
Processes
(new product
development)
Coordination
of Activities
(communication)
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Superior
Customer
Value
Assets
(brand image)
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Disproportionate (higher)
contribution to superior
customer value
Compelling
Logic of Distinctive
Capabilities
Provides value to
customers on a more
cost-effective basis
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DESIRABLE
CAPABILITIES
Superior to
the
Competition
Difficult to
Duplicate
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Applicable to
Multiple
Competitive
Situations
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TYPES OF CAPABILITIES
Outside-In
Processes
Inside-Out
Processes
Spanning
Processes
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Customer
Delivered Value
Benefits
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Costs
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Creating Value for Customers
Product
Services
Employees
Image
Benefits
Value
(gain/loss)
Monetary Costs
Time
Psychic and physic
costs
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Costs
(Sacrifices)
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Finally
Market Sensing
Capabilities
MARKETDRIVEN
STRATEGIES
Customer Linking
Capabilities
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Module 9: GENERIC STRATEGIES
STRATEGIC CHOICE
In pursuing competitive advantage, a
company also has to choose its scope –
whether it will target a particular segment
or go for a broad market. These choices
define four basic approaches to
competitive advantage choices a company
makes determines ,“generic strategies” as
Porter calls them.
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GENERIC STRATEGIES (By M Porter)
Ivory Soap
Broad
Cost
Focus
Cost
La Quinta Inns
American Airlines
Broad
Differentiation
Focus
Differentiation
Cray Research, Inc
Strategic
Advantage
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STUCK-IN-THE MIDDLE
Failure to make a choice means that a company
is stuck - in - the middle, with no advantage.
The result is poor performance.
In illustrating the concept of Generic
strategies, Porter used four superior
performing companies that follow each of the
generic strategies. Ivory Soap is a broadly
targeted, low cost producer, La Quinta Inns
is a cost focuser; American Airlines is a
broad differentiator, and Cray Research,
Inc., is a focused differentiator. The Companies and
elisante_gabriel@yahoo.com,
the
strategies
are
indicated
on the Fig. above.
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Cost Leadership
(First dimension)
A cost strategy begins with a good product that is
acceptable in quality and features. Instead of a
unique product, the company following the cost
strategy seeks advantage by opening up a
sustainable cost gap over its competitors. It does
so by managing the areas in the business that
are critical to cost. This leads to superior
margins, provided prices are at or near the
industry average.
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Porter uses Procter & Gambles Ivory Soap to
illustrate the basic principles of positioning and
to discuss the overall cost leadership strategy.
Ivory’s strategies changed since it was first
introduced. Porter shows how Ivory moved from
being a differentiator to being a basic soap
providing good value. Ivory’s shift in strategy
illustrates both why a strategy may have to
change as well as some principles of competing
as a cost leader.
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Cost Leadership
(2nd Dimension)
Companies can also achieve cost advantage by focusing
on a particular target segment where they can be more
efficient than broadly targeted competitions. Companies
in this position achieve advantage by dedicating
themselves to serving the needs of a particular segment,
and no more. Porter shows how La Quinta Inns has
created a strategy around a particular target customer –
the traveling salesperson – and how this dedication
satisfies the customer’s needs but allows La Quinta to be
very low cost.
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Lessons from La Quinta
1. A
focused strategy begins with choosing a
particular target segment with unusual or
distinctive needs.
2. A focused strategy dedicates everything to
serving the target segment exclusively.
3. Despite temptations, a focused strategy
forgoes the opportunity to serve other
segments, or offer other products or services.
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4. A cost focus strategy depends on finding a
target segment that has a lower level of needs
than most of the market.
5.Cost advantage requires investment.
6. Low cost must become part of the company’s
culture if this strategy is to be successfully
implemented.
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Porter interviewed Mr. Chuck Knight, CEO of
Emerson Electric Company, Emerson is the
company most identified in the United States
with being a low-cost competitor. They
discuss how Emerson goes about succeeding
as the “best-cost producer”.
Chuck Knight lists six points that have been
critical to Emerson’s success:
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1. You can’t be the best-cost producer without
having a high-quality product.
2. Know the competitors’ costs.
3. Be receptive to change and be willing to go
after productivity in your plants.
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4. Devise a formalized cost-reduction program.
5. Make all employees a part of the cost-reduction
plan by communicating the plan to them
strongly.
6. Commit capital to reduce long-run costs.
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Summary of:
Cost Leadership
1.Cost leadership starts with a good
product.
2.A cost leader is willing to make some
choices to be low cost.
3.Successful cost leaders draw their
advantage from many sources
throughout the business.
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4. Cost leaders pay intense regular attention to
their competitors cost positions.
5. Cost leaders build low cost into the culture of
their organizations.
6. Cost leaders constantly manage costs down.
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Differentiation
(1st Dimension)
The differentiation strategy starts by
identifying needs that the buyer thinks
are valuable. The differentiator then
sets out to meet these needs better
than any other competitor, and is willing
to bear extra costs if necessary to do
so. The differentiator seeks to command
premium price, which leads to superior
performance
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Provided the premium exceeds the extra costs
of being unique. To illustrate his points,
Porter discusses two companies – American
Airline and Cray Research, Inc – that
successfully use differentiation strategies.
American Airline serves a wide range of
travelers (business vacation, personal) and
seeks to be the differentiated airline.
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Lessons from American Airlines
1. Any differentiator starts with the problem of
creating value for buyers successful.
Differentiators find areas of value that the buyer
views as most important.
2.Successful differentiators not only create value,
they also communicate their uniqueness to
consumers through incredible ways.
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3.Differentiators must be willing to bear the
cost of being unique. Differentiators must,
however, minimize the added costs of
uniqueness.
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4. In the pursuit of differentiation there is a tradeoff between cost and differentiation. Successful
air differentiators are clear about how they’re
going to make it.
5. To sustain differentiation, a company must be a
moving target and constantly invent new buyer
value.
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Differentiation
(2nd Dimension)
Another route to differentiation is through a focus
strategy; that is, choosing a narrow target and
concentrating on serving its needs better than
more broadly targeted competitors.
Cray Research, Inc, which manufactures only
supercomputers, is a good example of a
company that targets a specific product segment
dedicates itself to providing uniquely high
performance.
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Lessons from Cray Research
1. Differentiation starts with creating value for the
customer that justifies a premium price.
2. Differentiation involves more than just a physical
product. Helping the customer to use the
product is as important as selling it.
3. To be successful, a differentiation strategy must be
communicated both internally and externally.
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4.To sustain differentiation, a company must
become a moving target by improving
performance and constantly seeking
innovation.
5. The differentiation focus strategy requires
that the company isolate a segment that has
more extensive needs in market.
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6. The focuser dedicates itself to (and bets
everything on) its particular target
segment(s).
7. A focused differentiator, like a focused
low-cost competitor, must avoid the
tendency to blur its focus in pursuit of
incremental business.
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Overall Lessons about positioning
This is based on several examples of the
Companies which Porter visited in connection to
this lesson.
1. Successful strategy must concern itself with
industry structure as well as positioning.
2. Successful strategists select positions that are
different from their competitors.
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3. Strategy involves making choices and tradeoffs, and taking risks. These are the flip-slides of
advantage.
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The Process of Developing Strategy
In this final segment Porter discusses
some of the practical problems of
developing and carrying out a strategy.
Important issues are how to organize an
effective planning process, how to
communicate its results, and how to
measure performance.
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Lessons for Effective Strategy
Development
1. To develop strategy effectively, a company
needs a formal strategic planning process.
2. A multi-functional team is the best unit to
develop a strategy. It can take the holistic
approach and make the complex trade-offs
essential in formulating effective strategies
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3. To be successful, a strategy needs to
be communicated, both internally and
externally.
4. It takes time to change and
communicate a strategy. A strategy
should be changed infrequently and
must be followed consistently.
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5. Financial results are a misleading indication of
strategic health.
6.To gauge strategic health, companies have to
create measure of underlying advantage, such
as customer surveys, studies of cost position,
and studies of how products are performing
relative to competition. Customer satisfaction
ought to be the best yardstick.
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FINALLY
7. A strategist must continually probe and test a
strategy for the need to change.
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The end
• Create,
Communicate
and Sustain your
superior
performance for
PREMIUM
PRICES!!!!
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Module 10
PRICING STRATEGIES & SALES
………………………………….
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How Price Fits into Marketing Program
Positioning Strategy
Target
market and
objectives
Product
strategy
Marketing program
positioning strategy
Distribution
strategy
Price
strategy
Promotion
strategy
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PRICING SITUATIONS
New product pricing
Life cycle pricing
Positioning strategy change
Countering competitive threats
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Pricing Strategy for New
and Existing Products
Set Pricing
Objectives
Analyze the
Pricing Situation
Select Pricing
Strategy
Determine Specific
Prices and Policies
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Factors Impacting the Pricing
Situation
Customer Price
Sensitivity
Legal and Ethical
Constraints
Analyzing the
Pricing Situation
Product
Costs
Competitors’ Likely
Responses
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Buyers’ Perceptions of Value Offerings
of Brands A-E
Perceived
Value
Superior Value Zone
D
A
B
E
C
Inferior Value Zone
Perceived Price
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Guide to Cost Analysis
A
Determine cost
structure
Analyze cost and
volume relationships
B
Analyze competitive
advantage
C
Estimate the effect
of experience on costs
D
Determine the extent
of control over costs
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E
203
Determinants of Pricing Flexibility
Demand
Competition
Demand-Cost Gap
Legal and
Ethical
Influences
Costs
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STRATEGIC APPROACHES
Above
Competition
Skim strategy
Neutral strategy
(same as competition)
Penetration strategy
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Below
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Competition
205
Illustrative Price Strategies
Active
strategy
Lowactive
strategy
Low
relative
price
Highactive
strategy
Highpassive
strategy
Lowpassive
strategy
High
relative
price
Passive
strategy
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Basis of Determining Specific
Prices
Cost
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Demand
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Finally
Competition
207
Module 11
PRODUCT DECISIONS
(Ansoff’s Matrix)
• Product and Service Classification
System
• The Product Life Cycle
• Introduction to product matrices
• Boston Matrix (Growth/Share)
• Ansoff’s Matrix (Product/Market)
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Product and Service
Classification System
• Convenience goods - little effort, relatively
inexpensive
• Shopping goods - e.g ‘white goods’,
equipment, more expensive, infrequent
• Speciality goods - extensive search e.g
Jewellery, gourmet food
• Unsought goods - e.g. Buying a shirt just
after seeing it.
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The Product Life Cycle (PLC) Model
Maturity
Development
Decline
Decline
Growth
Few:
trial of
early
adopters
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Growing adopters:
trial of
product/service
Growing selectivity
of purchase
Entry of
competitors
May be many
Saturation of
users
Repeat purchase
reliance
Fight to maintain
share
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Drop-off
in usage
Exit of some
competitors
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The Boston Matrix (Growth/Share Matrix)
Market Share
High
1. Stars
Market
Growth
Low
2. Cash Cows
3. Question
Mark (Problem
Child)
4. Dogs
High
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Low
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The Boston Matrix - Chocolate Bars
Market Share
High
FUSE
Maverick
Miniature Heroes
Market
Growth
Low
KIT KAT
MARS BAR
TOPIC
BOUNTY
High
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Low
212
Ansoff’s Matrix (Product/Market Matrix)
Existing Markets
New Products
Market Penetration
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Product Development
New Markets
Market Development
Diversification
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Ansoff’s Matrix (Product/Market Matrix)
New Products
Existing Markets
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New Markets
E.g. Realignments
of the marketing
mix
E.g. Geographical
expansion
Same outlets and
sales strategy
- new product
Diversification related or unrelated
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Products Decisions
• Product and Service Classification
System?
• The Product Life Cycle stages?
• Growth/Share?
• Product/Market? – Ansoff’s Matrix
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Module 12
STRATEGY IMPLEMENTATION &
CONTROL
• Implementation is the process that turns a
marketing plan into specific tasks to be
performed and ensures that they
ultimately accomplish the plan’s
objectives.
• If the implementation process is not well
thought-out and managed, the plan will
not succeed.
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Factors in Implementation
• On-time and accurate performance by
marketing staff, agencies and vendors
(the organization staff must deliver their
services according to the specifications in
the plan)
• Clear delineation of responsibilities of
various elements of the implementation
process (each task must be accomplished
and naming the
individual responsible)
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Factors Cont …
• Communication of the plan’s objectives,
strategies, and tactics throughout the
bank (it is important that all areas of the
bank be aware of the bank’s marketing
efforts).
• Cooperation of all areas affected by
implementation (the individual who chairs
the task force must effectively steer the
group toward elisante_gabriel@yahoo.com,
the desired end).
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Factors Cont …
• Monitoring of results (having a system in
place for monitoring the implementation
process and its progress toward
achievement of the plan’s goals) =
PROGRESSIVE EVALUATION
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STRATEGY CONTROL
• The control process involves continuous
monitoring and evaluation of the strategic
plan as well as feedback necessary to
ensure that the plan has been assigned
and communicated to the right people in
the right way.
• Adequate monitoring system will help to
trace the causes of problems and take
corrective actions.
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FINALLY
STRATEGY CONTROL
• Plans may derail because of the changes
in the operational environment
(competition, technology, social,
economic, political or legal factors)
• Or some situation within the firm (lack of
cooperation at the operating level):
Therefore
• Problems should be viewed as
opportunities for learning, growth, and
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Total Concluding Summary
• It is imperative for any marketer to understand
•
•
•
•
the role of strategy in Business
Strategy is se of unified Coherent and integrated
set of ideas
There are long and short term strategies
Customer are not and will never buy products
but values
Understand the mission of an organisation
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Summary Cont..
• You need to analyse your customers in order to
•
•
•
be customer driven
Industry analysis is important to determine the
attractiveness of an industry
Market driven strategies are more sustainable ..
AND
Product decision are necessary in order to make
proper choice of the strategy
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THE END !!!
• Companies which will
•
•
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ignore strategic
Marketing have no
room in competition
Always understand
your competitors as
you understand
yourself.
THANK YOU!!
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