Consumer behavior and marketing strategy Introduction European and international perspective
1. Introduction to Marketing Strategy
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Transcript of 1. Introduction to Marketing Strategy
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Importance of Marketing
Marketing is an integral component of any .
The sole purpose of marketing is therefore,to get more people to buy more of yourproduct, more often, for more money.
Strategy is Essential for Survival and Success of an Organization
Importance of Strategy
Ineffective Effective
Efficient
Strategy
Die(slowly)
Thrive
a c
t i c s
InefficientDie
(quickly) Survive
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Dimensions of StrategySuccessful companies either have a Productivity advantag e or they haveValue advantage or combination of both.
The productivity advantage gives a lower-cost profile and the valueadvanta e ives the roduct a differential lus over com etition.
Real UnitCost
V a
l u e
A d v a n
t a g e
L o w
H i g h
CommodityMarketing
NicheStrategy
CostLeadership
Cost & ValueLeadership
Cumulative output
The Experience Curve
Productivity AdvantageLow High
Strategic Direction
CLEARLY DEFINESTARGET CUSTOMERS
AND THEIR NEEDS
Characteristics of Strategy
STRATEGY
CREATES ACOMPETITIVEADVANTAGE
INCURS
ACCEPTABLE
DERIVEDTO ACHIEVE
INTERNALLYCONSISTENT
RISK
RESOURCE ANDMANAGERIALLY
SUPPORTABLE
OBJECTIVES
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Marketing Strategy
A process of achieving overall corporate objectives through properidentification of market opportunities and effective deployment of companys marketing assets.
Marketing Assets are defined as those assets of company that contributedirectly or indirectly to profitable sales, some of these are:
Brand Name Distribution Network Customer Loyalty
Supplier Relationship Customer Relationship
Technology Base
Strategic Marketing Planning
ANALYSIS: Where are we now?
How are we going to get there?
PLANNING: Where do we want to be?
IMPLEMENTATION:
CONTROL: How do we ensure arrival?
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Strategy Development Process
Corporate Mission
What Businesses are we in?What businesses can we be in?What businesses should we be in?
Marketing Strategy Market Penetration Market Development Product Development Diversification
Strategic Direction Cost Leadership eren a on Focus
Market Positioning Segmentation Strategy Marketing Mix Strategy
Corporate Mission Statement
A mission statement should:
be specific to have an impact on every individual in the business be focused on customer need satisfaction reflect the distinctive competence of the business recognize opportunities & threats in competitive environment be realistic and attainable be flexible
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Strategic Window
s s
a r k e t A t t r a c t
i v e n
Strategy
M
Business Position
Marketing Assets
Marketing Knowledge (skills, systems and information) Brands (strong brands often earn premium prices and can
be enduring cash generators) Customer Loyalty (loyal customers buy more, are cheaper
to serve, are less price sensitive and refer new customers) Strategic Relationships (channel partners provide access to
new products and markets)
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Investment in Marketing Assets
Whilst accountants do not measure intangible assets, the discrepancybetween market and book values shows that investors do.
Expenditures to develop marketing assets make sense if the sum of thediscounted cash flow they generate is positive.
Marketing Assets in Balance SheetAssets Liabilities
- Land- Buildings- Plant
- Shares- Loans- Overdrafts
Assets Liabilities
- Land- Buildings- Plant
- Shares- Loans- Overdrafts
- Vehiclesetc.
etc.
Rs. 200 million Rs. 200 million
- Vehiclesetc.
etc.
Rs. 200 million Rs. 1000 million
Assets LiabilitiesMarketing Assets - an
- Buildings- Plant- Vehicles- Goodwill
- Shares- Loans- Overdrafts
etc.
Rs. 1000 million Rs. 1000 million
Distribution Network Customer Loyalty Market Share Supplier Relationship Customer Relationship Technology Base
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Identifying Opportunities
MarketAnalysisLong-term trends, size, etc .
CustomerAnalysis
CompetitiveAnalysis
Environmental
Segments, buying processes, etc .
Relative strengths & weaknesses, etc .
Opportunities & treats, etc .Analysis
Identify Market
Opportunities
Asset Base Appraisal
Market AnalysisSize (Value, Volume): What is the market we serve?
Growth: Annual growth rate of the market, past history and future.
Diversity: Is the market served by few or many offerings?Is the market fragmented?
Channels: What is the upstream and downstream channel of distribution and supply? Where does the relative power lie?What is the strength of buyers and the strength of customers?
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Customer Analysis
Segmentation: Most markets are subdivided into smaller sectors based ondifferences between customers, either by their characteristics or by the waythey respond to market stimuli.
Buyer behaviour: Who are the customers and who are the consumers?What are the important buying criteria? Who makes the decisions? What arethe primary motivations for purchase? What are the principal benefits soughtfrom the product?
Sensitivity: How does the market react to price, to promotion, to service, toproduct quality etc. This information is necessary to understand the customersensitivity to the individual elements of the marketing mix.
Competitive AnalysisPotentialEntrants
Threat of new entrants
Barriers to entry economies of scale product differentiation capital requirement switching costs access to distribution channels cost disadvantages addition to scale government policy
Industry Competitors
Suppliers BuyersBargaining Power Bargaining Power
Powerful if large proportion of sellers sales large proportion of buyers costs
undifferentiated products
Powerful if few suppliers no substitutes
y experience
Intense rivalry if: numerous or similar sized competitors slow industry growth rate high fixed costs lack of differentiation diverse nature of competitors high strategic stakes high exit barriers
SubstitutesThreat of substituteProducts/Services
low buyer switching costs threat of backward integration sellers product not important to
quality of buyers product.
yof supplier group
supplier groups products aredifferentiated
threat of forward integration
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Environmental AnalysisGovernment: The legislative and regulatory framework within whichthe company operates affects most marketing decisions either directly or indirectly.Price controls, quality standards, advertising standards, competition policy willaffect the business.
Economy: Every business will have linkages with broader macro-economy.Interest rates impact not only costs but customers ability to buy. Exchange ratefluctuations have similar impact. Inflation, unemployment, taxation etc. are partof macroeconomic environment and must be considered while strategy development.
Society: Consumer movements on ecology, pollution, quality and service issues haveconsiderable impact on the companys business strategy and therefore must notbe ignored.
Technology: Rapid changes in technology is leading to shorter product life-cyclesand higher risks of failure. It is important to anticipate technology changes
to suitably modify companys marketing strategy.
Framework of Marketing-Conceptions
Nature of the three levels:
Objectives
Strategies
Increasingoperationalmeaning
Philosophy
Structure
MixProcess
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Marketing ConceptionsConception Level Visual Equivalent
1. Marketing-Objectives Place : Where do we want to go?
2. Marketing-Strategies Way : How do we get there?
3. Marketing-Mix Transport function : What do we have to do?
Environmental & Company AnalysisAnalysis of Environment
CompanyAnalysis
Where are we now?
Objectives
Merging
Crystallization Point
Where do we want to go?
Strategies
Mix
How do we get there?
What do we have to do?
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Marketing Conception Analysis Steps
1. Situation analysis (internal external)
2. Future developments the analysis of the company'senvironment
3. Chance-risk-analysis : end of the strategic analyzingprocess, point of crystallization