MARKETING STRATEGY
Ilan Bijaoui
2006
ibii@netivision.net.il
FIVE P’S FOR STRATEGY
Henry Mintzberg
Strategos: Art of the Army General
PLAN-PLOY
Intended Course of Actions
Purpose
POSITION
Match Organization &
Environment
Egg McMuffin P change
PATTERN
Consistency in Behavior
Realized
PERSPECTIVE
Way of Perceiving the World
Mc Donald: quality,service,
cleanliness & value
Candle night dining P change
STRATEGY FOR CHANGE
James Brian Quinn
A Strategy is a Pattern/Plan that Integrates an
Organization’s Major Goals, Policies and Actions Sequences
to a Cohesive whole
Goals-Objectives
What & When
Strategic Goals-Viability
Programmes
How, Sequences of Actions
Resources-Goals
Policies
Rules or Guidelines
Strategic Decisions
True Goals
CRITERIA FOR EFFECTIVE
STRATEGY-Quinn
Clear Objectives
Understood, Attainable
Flexibility
Surprise
Speed, Secrecy
Intelligence
Initiative
Maintained
Concentration
Decisive
Coordination
Committed
Leadership
Secure Resources
Bases
Secure Operating
Points
THE CONCEPT OF CORPORATE STRATEGY
Kenneth R. Andrews
Formulation
Implementation
Opportunity
& Risk
Structure/
Relationship
Resources
Corporate
Strategy
Values
Pattern
Responsibility
Processes/
Behaviour
Top
Leadership
DEVELOPMENT OF ECONOMIC STRATEGY
ENVIRONMENTAL
CONDITIONS-TRENDS
CHOICE OF
PRODUCTS & MARKETS
DISTINCTIVE
COMPETENCE
Geography, Demography, Culture,
Economy, Technology Politic, Legal
Economic Strategy
Product/Customer/Promotion/Place/Price
Functional, Financial,Organizational
Reputation, History
OPPORTUNITIES & RISKS
Identification
Inquiry
Assessment of Risk
CORPORATE
RESOURCES
Strengths & Weaknesses
Increasing Capability
THE CORE COMPETENCE OF THE
CORPORATION CK Perahalad G/ Hamel
END PRODUCTS
BUSINESS UNITS
CORE PRODUCTS
COMPETENCIES
NEC STRATEGY
Computing & Communication Convergence
END PRODUCTS
Alliances
Semiconductors
From Mechanical to
Digital
Communication
From Mainframe to
Processing Components
New Markets
SELECTED CORE COMPETENCIES/PRODUCTS
SONY
• Miniaturization
CP: Elect. Components
EP: Television
3M
• Sticky Tape
Magnetic tape, photographic
film, coated abrasives
CANON
HONDA
Comp.: Optics, Precision CP: Engines
Mech.fine Chemicals EP: Scooters, Cars
CP:Laser printer engine
EP: Laser Printer
CORE COMPETENCY IDENTIFICATION
•
•
•
•
IDENTIFY
Access to wide variety of
markets
Contribution to perceived
customer benefits
Difficult to imitate
Outsourcing and Core
Competency (GE-GTEMotorola TV Color)
STRATEGIC
ARCHITECTURE
• How long could preserve
technology
• How central is the core
competence for customers
• Future opportunities in
other core competencies
NATURAL ENVIRONMENT
Raw
materials
Energy costs
Pollution
Geography
Regulatory
TECHNOLOGICAL ENVIRONMENT
R&D spending, Patent protection, New development, Internet, Telecom.
PM 4.4 Natural and technological environments
DEMOGRAPHIC ENVIRONMENT
Age
Family
Population
Education
ECONOMIC ENVIRONMENT
EconomicWages, Energy availability
GDP Interest Inflation , Unemployment
PM 4.3 Demographic and economic environments
FAMILY LIFE-CYCLE STAGES
Young
Middle-aged
Older
LIFESTYLE DIMENSIONS
Activities
Interests
PM 6.5 Family and lifestyle
Opinions
Demographics
POLITICAL ENVIRONMENT
Antitrust, Environment, Tax, Incentives, Foreign trade, Stability
CULTURAL ENVIRONMENT
Career expectations, consumer activism, Lifestyle
PM 4.5 Political and cultural environments
THE STRUCTURING OF ORGANIZATIONS
H. Mintzberg
Strategic Apex
Techno
Structure
Middle
Line
Operating Core
Ideology
Support
Staff
THE STRUCTURING OF ORGANIZATIONS
H. Mintzberg
Basic Parts
Operating Core
Producing
Strategy Apex
Manager
Middle line
Between Apex and
Operating
Techno structure
Analysts
Support staff
Internal services
Ideology
Coordinating Mechanisms
Mutual Adjustment
Direct Supervision
Coordination between
operator
Standardization of
Work Process
Programs Assembly
Instructions
Standardization of
Outputs
Standardization of
Norms
Set of beliefs
Standardization of
Skills
Body of knowledge
Configurations
Entrepreneurial
Direct supervision
Apex + Operating
core
Machine
Highly specialized
Larger Middle Line
Techno structure +
Support Staff
Professional
Standardization of
skills Operating core
Horizontal structure
(hospitals universities)
Diversified
Standardization of
Outputs. Independent
entities Middle Line
Balkanize
Innovation
Mutual Adjustmentdominated by experts
Adhocracy
Projects structure
Fuse experts
Missionary
S. of Norms
Ideology: sharing of
values and beliefs
Mass of non
specialized members
THE STRATEGIST H. Mintsberg
Frame of the Job
Perspectives Agenda Positions
Issues
Scheduling
Values
Experience Knowledge
Competencies Model
Style
Within
Core in Context
Outside
Inside
MANAGING LEVELS
Leading
Individual
Group
Unit
Linking
Gate Keeper
Doing Inside
Action
Doing Outside
People
Information
Conceiving
Controlling
System,
Structure
Directive
Communicating
MARKETING DEFINITION
The American Marketing Association
The Process of Planning & Executing
The Conception, Pricing, Promotion &
Distribution of Ideas, Goods & Services
To Create Exchange,
that Satisfy Individuals & Organizational
Goals
Kotler: Marketing managers seek to influence the
level, the timing, and composition of demand to
meet the organization’s objectives
Peter Drucker: The aim of marketing is to know
and understand the customer so well that the
product fits him and sells
VALUE BRIDGE
PRODUCT-PRICE
FIRM VALUE
MARKETING
Psychological Bridge
Physical Bridge
CUSTOMER
VALUE
MARKETING’S ROLES & GOALS
Roles
Corporate
Corporate strategy
Goals
Market Share
Customer, Competitive
Perspective
Business Unit
Products/markets
Strategic Marketing
Growth
Marketing Management Profitability
MARKETING STRATEGY –THREE C’s
Differentiate itself positively from its competitors, using its
relative corporate strengths to better satisfy customer’s needs
in a given environmental setting
Business Environment
Customers
Where to Compete?
How to Compete?
Corporation
Competition
When to Compete?
GILETTE’S MACH3 MARKET STRATEGY
• Where (Market): All USA
• How (Means): Premium Product 35% more expensive than
SensorExcel
• When (Timing): before Mr Zein (CEO) retires
• Competition: Atra, SensorExcel, Shick
• Customer: MUS$ 750 in research, 35 patents Global
product
• Philip Morris and Miller Beer (Corporate strength)
• TI and digital watches (Competition strength)
• Goodyear: focus on tire (strategic decision)
FUTURE OF STRATEGIC MARKETING
•
•
•
•
•
•
•
•
•
Market Share
Deregulation
Acquisitions, mergers Columbia, Coca Cola
Channel Structure
Overseas companies
Fragmentation of Markets: : cars – segments
Early entrants
Customer’s requests: Quality and Price not enough
Demographic Shifts
STRATEGIC MARKET PLANMARKETING PLAN
A Strategic Market Plan is a plan of all
aspects of an organization’s strategy in the
market place
A Marketing Plan deals with the delineation
of target segments and the four P’s
Source: Abell D F Hammond J. Strategic Market Planning Englewood Cliffs NJ Prentice Hall
1979. p9
STRATEGIC MARKETING -MARKETING
MANAGEMENT
Time
Orientation
Decision process
Nature of job
Leadership
Orientation
Strategic Marketing
The business to be in
Marketing Management
Stresses running a business
Long Range
Inductive-Intuitive
Bottom up
Creativity
Proactive
Opportunistic
Throw constraints
Current
Deductive analytical
Top down
Experience maturity
Reactive
Deterministic
Optimize within constraints
Source: Subhash C. Jain Marketing Planning & Strategy South Western College
Publishing 2000
DEFINITION OF COMPETITION
• Natural Competition: Evolution by Adaptation
• Strategic Competition: Understand competitive
interaction, predict consequences, available
resources, predict risk and return, make the
commitment
SOURCES OF COMPETITION
•
•
•
•
•
Customer Need
Existing Industry
New Industry
Product line
Type of the Firm
COMPETITIVE INTELLIGENCE
• Defensive Intelligence: protect business
• Passive Intelligence: Ad hoc information for a
specific purpose
• Offensive Intelligence: identify new opportunities
• Sources: Public (advertising, publications,
speeches)Trade Professionals(Customers, Patents),
Government, Investors
FORCES DRIVING INDUSTRY COMPETITION
Potential
Threats
Entrants
Bargaining Power
Bargaining Power
Suppliers
Industry
Competitors
Substitutes
Threats
Buyers
Encirclement
Flanking
Bypass
Frontal
Guerrilla
ATTACK STRATEGIES
PM 12.6 Market challenger strategies
HOW TO DEFINE A MARKET?
•
•
•
•
•
Product characteristics
Needs characteristics (Use)
Private/Owner brand
Regional sales
Boundaries: technology (material, energy);
customer function, customer group (category)
DEFINING MARKET BOUNDARIES
Personal Financial Transactions
Customer Groups:
Airports, Stores
Gas stations, saving
associations, banks
Technologies:
ATM, System,
Teller
Customer Functions:
cash, deposit,bill,
check, transactions
Source: Abell D F Hammond J. Strategic Market Planning Englewood Cliffs NJ Prentice Hall
1979. p9
MARKET ORIENTED
DEFINITIONS
Product Oriented
Revlon
Cosmetics
Walt Disney
Movies, Parks
Xerox
Office Machines
Nike
Sportive shoes
Market Oriented
Lifestyle,
Self-expression
Fantasies
Entertainment
Business more
Productive
Sportive Leisure
SEGMENTATION
Category
• Private
• Professional/Industry
• Public
Behavior:
• Benefit
• User
• Usage
• Brand loyalty
Impact Factors:
• Geography
• Demography, Cycle
• Culture, Life style
• Economy
MARKET COVERAGE
P1
M1 M2 M3
M1 M2 M3
X
X
P2
X
P3
X
P1 X
X
X
X
P2
P3
M1 M2 M3
X
X
X
X
X
X
X
X
X
X
X
X
Product
attributes
Product class
Benefits
Not competition
Against
competition
Usage
POSITIONING STRATEGIES
Brands
Activities
Origin
PM 10.4 Positioning strategies
Personalities
Users
Disaster
Success
BCG STRATEGY IMPLICATIONS
Investment
Earning
Cash Flow Strategy
Capacity
expansion
Low to
High
Negative
CF
Increase
Mkt Share
Cash Cows Capacity
High
maintenance
Positive
CF
Maintain
share
Question
Marks
High R&D
Negative
to low
Negative
CF
Share or
withdraw
Dogs
Deplete
capacity
High to
low
Positive
CF
Withdraw
Stars
GENERAL ELECTRIC GRID
Industry
Attractiveness Strong
High
Average
Weak
Question
marks
Winners
Medium
Low
Profit
Producers
Losers
Business Strength
Restaurant
Specialized machinery
Market
share
Steel
Industry
Porter’s generic strategies approach:
Overall cost leadership, differentiation, focus