MARKETING STRATEGY

Ilan Bijaoui

2006

ibii@netivision.net.il

FIVE P’S FOR STRATEGYHenry Mintzberg

PLAN-PLOY

Intended Course of Actions

Purpose

PATTERN

Consistency in Behavior

Realized

POSITION

Match Organization &

Environment

Egg McMuffin P change

PERSPECTIVE

Way of Perceiving the World

Mc Donald: quality,service, cleanliness & value

Candle night dining P change

Strategos: Art of the Army General

STRATEGY FOR CHANGEJames Brian Quinn

Goals-Objectives

What & When

Strategic Goals-Viability

Policies

Rules or Guidelines

Programmes

How, Sequences of Actions

Resources-Goals

Strategic Decisions

True Goals

A Strategy is a Pattern/Plan that Integrates an Organization’s Major Goals, Policies and Actions Sequences to a Cohesive whole

CRITERIA FOR EFFECTIVE STRATEGY-Quinn

Clear Objectives

Understood, Attainable

Initiative

Maintained

Concentration

Decisive

Flexibility Coordination

Committed

Leadership

Surprise

Speed, Secrecy

Intelligence

Secure Resources

Bases

Secure Operating

Points

THE CONCEPT OF CORPORATE STRATEGYKenneth R. Andrews

Formulation Implementation

Corporate

Strategy

Pattern

Opportunity & Risk

Resources

Values

Responsibility

Structure/ Relationship

Processes/Behaviour

Top Leadership

DEVELOPMENT OF ECONOM IC STRATEGY

OPPORTUNITIES & R ISKSId en ti f ica tion

In qu iryA sse ssm e n t o f R isk

ENVIRONM ENTALCONDITIONS-TRENDSG e og ra p hy , D e m o grap h y, C u ltu re ,

E con om y, T e chn o lo gy P o lit ic , L eg a l

CHOICE OFPRODUCTS & M ARKETS

E con om ic S tra te gyP rod u ct/C u sto m e r /P rom otion /P la ce /P r ice

CORPORATERESOURCES

S tren g ths & W e akn essesIn crea s in g C a pa b i li ty

DISTINCTIVECOM PETENCE

F u nc tio na l, F ina nc ia l,O rga n iza tion a lR e pu ta tio n , H isto ry

THE CORE COMPETENCE OF THE CORPORATION CK Perahalad G/ Hamel

COMPETENCIES

CORE PRODUCTS

BUSINESS UNITS

END PRODUCTS

NEC STRATEGYComputing & Communication Convergence

From Mainframe to Processing Components

Semiconductors

Alliances

END PRODUCTS

From Mechanical to Digital Communication

New Markets

SELECTED CORE COMPETENCIES/PRODUCTS

SONY• Miniaturization

CP: Elect. Components

EP: Television

3M• Sticky Tape

Magnetic tape, photographic film, coated abrasives

CANON

Comp.: Optics, Precision Mech.fine Chemicals

CP:Laser printer engine

EP: Laser Printer

HONDA

CP: Engines

EP: Scooters, Cars

CORE COMPETENCY IDENTIFICATION

IDENTIFY• Access to wide variety of

markets• Contribution to perceived

customer benefits• Difficult to imitate• Outsourcing and Core

Competency (GE-GTE-Motorola TV Color)

STRATEGIC ARCHITECTURE

• How long could preserve technology

• How central is the core competence for customers

• Future opportunities in other core competencies

PM 4.4 Natural and technological environments

NATURAL ENVIRONMENT

Energy costs Geography

TECHNOLOGICAL ENVIRONMENT

Raw materials Pollution

R&D spending, Patent protection, New development, Internet, Telecom.

Regulatory

Economic

PM 4.3 Demographic and economic environments

ECONOMIC ENVIRONMENT

Age

DEMOGRAPHIC ENVIRONMENT

PopulationFamily Education

GDP Interest Inflation , Unemployment Wages, Energy availability

PM 6.5 Family and lifestyle

Activities

LIFESTYLE DIMENSIONS

Interests Demographics

FAMILY LIFE-CYCLE STAGES

OlderMiddle-agedYoung

Opinions

PM 4.5 Political and cultural environments

POLITICAL ENVIRONMENT

CULTURAL ENVIRONMENT

Antitrust, Environment, Tax, Incentives, Foreign trade, Stability

Career expectations, consumer activism, Lifestyle

THE STRUCTURING OF ORGANIZATIONSH. Mintzberg

Strategic Apex

Operating Core

Middle

LineSupport Staff

Techno Structure

Ideology

THE STRUCTURING OF ORGANIZATIONSH. 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

Coordination between operator

Direct SupervisionStandardization of Work Process

Programs Assembly Instructions

Standardization of Outputs

Standardization of Skills

Body of knowledge

Standardization of Norms

Set of beliefs

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 Adjustment-dominated 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 Positions Agenda

Issues Scheduling Values

Style

Experience Knowledge

Competencies Model

Inside

OutsideWithin

Core in Context

MANAGING LEVELS

Action

People

Information ControllingSystem, StructureDirectiveCommunicating

Leading Individual Group Unit Linking Gate Keeper

Doing Inside

Doing Outside

Conceiving

MARKETING DEFINITIONThe 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

FIRM VALUE CUSTOMER

PRODUCT-PRICE

MARKETING VALUE

Psychological Bridge

Physical Bridge

MARKETING’S ROLES & GOALS

Corporate

Business Unit

Products/markets

Corporate strategy

Strategic Marketing

Marketing Management

Roles Goals

Market Share

Growth

Profitability

Customer, Competitive Perspective

MARKETING STRATEGY –THREE C’s

Customers

Competition Corporation

Where to Compete? How to Compete?

When to Compete?

Business Environment

Differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer’s needs in a given environmental setting

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 PLAN-MARKETING 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

Strategic Marketing

The business to be in

Marketing Management

Stresses running a business

Time

Orientation

Decision process

Nature of job

Leadership

Orientation

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

Entrants

Suppliers Industry Buyers

Competitors

Substitutes

Threats

Threats

Bargaining Power Bargaining Power

PM 12.6 Market challenger strategies

ATTACK STRATEGIES

BypassFlanking

Guerrilla

Encirclement

Frontal

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, StoresGas stations, saving associations, banks

Customer Functions: cash, deposit,bill, check, transactions

Technologies: ATM, System, Teller

Source: Abell D F Hammond J. Strategic Market Planning Englewood Cliffs NJ Prentice Hall 1979. p9

MARKET ORIENTED DEFINITIONS

Product OrientedMarket Oriented

Revlon CosmeticsLifestyle, Self-expression

Walt DisneyMovies, Parks Fantasies Entertainment

XeroxOffice MachinesBusiness more Productive

Nike Sportive shoesSportive Leisure

SEGMENTATION

Category• Private• Professional/Industry• Public

Impact Factors:• Geography• Demography, Cycle• Culture, Life style • Economy

Behavior:• Benefit• User• Usage• Brand loyalty

MARKET COVERAGEM1 M2 M3 M1 M2 M3 M1 M2 M3

P1

P2

P3

P1

P2

P3

X

X

X

X

X X X

X X X

X X X

X X X

X X X

X

PM 10.4 Positioning strategies

POSITIONING STRATEGIES UsersAgainst competition

Brands Activities

PersonalitiesOrigin

Usage

Benefits

Product attributes

Product class

Not competition

Disaster

Success

BCG STRATEGY IMPLICATIONS

InvestmentEarningCash FlowStrategy

StarsCapacity expansion

Low to High

Negative CF

Increase Mkt Share

Cash CowsCapacity maintenance

HighPositive CF

Maintain share

Question Marks

High R&DNegative to low

Negative CF

Share or withdraw

DogsDeplete capacity

High to low

Positive CF

Withdraw

GENERAL ELECTRIC GRIDIndustry Attractiveness

Low

Medium

High

Business Strength

Strong Average Weak

Question marks

Profit Producers

Winners

Losers

Porter’s generic strategies approach:

Overall cost leadership, differentiation, focus

Market share

Steel Industry

Restaurant Specialized machinery