Marketing Strategy for Management

MKT4010

Introduction to the module

• Introductions– Who am I– Who are you

• Rules of Engagement• What about MKT4010?

– Aims– Structure– Core texts– Lectures and Seminars– Assessment

Learning Outcomes

• Dr. Olga Mourouti– Senior Lecturer in Marketing

• Education– PhD Strategic Marketing– MSc Quality Management– BA Marketing– PGDip CIM– PGDipHE

• Professional Experience– Brand Manager for Greece, Bulgaria and

Romania at Visa Europe– Purchasing Manager Retailing– Assistant Marketing Manager Retailing

Who am I?

Academic Ability

Low HighMean

Per

cen

tage

These People Are Not Here

If you fail, it will almost certainly be because of laziness, arrogance, or poor preparation

Who are you?

• Things You ARE Allowed to Do?– Ask questions– Ask for clarification– Contribute with your experience

• Late Entry Strategy– You won’t get shouted at…– …IF you QUICKLY find a seat

• Things You DO NOT Do– Chat to your friends– Leave your mobile phone on

Rules of Engagement

MKT 4010 Aims

• To provide you with a framework for analysing marketing

processes from a strategic and managerial perspective in a

diverse range of organisations

• To provide you with the skills and knowledge necessary to

develop and implement marketing strategies so that

organisations gain a competitive advantage in highly

volatile operating environments

• Detailed information on skills & knowledge on p. 3 of

module handbook

Structure of the Module

Strategic Analysis

External Analysis Customers Micro

Macro

Internal Analysis Performance

Marketing capabilities

Strategic Analysis Outputs

Opps / threats / strategic uncertainties

Strategic strengths / weaknesses / constraints / problems / uncertainties

Strategy Identification, Selection, and Implementation

Identify business strategy alternatives Select strategy / strategies

Implement the operating plan(s) Review strategy / strategies

Three Core Texts

•Cravens, D. and Piercy, N.F. (2008) Strategic Marketing, 9th Edition, McGraw-Hill

•Aaker, D.A. and McLoughlin, D. (2007) Strategic Market Management, European Edition, Wiley

• Baines, P., Fill, C. and Page., K. (2008) Marketing, Oxford University Press

Additional Reading and Oasis Plus Information on p. 5 of module handbook

• Lectures (approx. 1,5 hours)• Aim:• To present and explain theoretical concepts

• Seminars (approx. 1,5 hour)• Aim:• To allow you to present, debate and apply

concepts discussed in class. • To provide you with feedback on your work

• Lecture and Seminar programmes included in module handbook (p. 9-12)

Learning Methods

There are four elements of assessment for this

module – 100% coursework:

(i) The Development of a Case Study (35%) – presentation and written work

(ii) Individual Portfolio (25%)

(iii) Marketing report (30%)

(iv) Reflective Overview (10%)

• Word limits apply

• Point (I) group work

• Points (ii) – (iv) individual work

Assessment Scheme – p. 13 of module handbook

• Group work • groups will be formed during seminars (week 2)

• 3 persons per group maximum• Groups to select ONE company in ONE industry:

Car

Catering

Fashion

Computer/Telecommunications

Automobile

Health and Beauty etc

Assessment: Case study & Presentation – p. 13 module

handbook

• You are required to:

• Deliver a 10 minute presentation + a two page written summary (5%) – weeks 7 & 8

• Write a 3500 words case study with two accompanying questions and solutions (30%) – 14th January 2011

• Notes: Both Hard copy and electronic submission of case study

Briefing session/tips on Week’s 4 lecture

Further help on Week 5 and 10 seminars

Assessment: Case study & Presentation cont’d – p. 13 module

handbook

Assessment – Individual Portfolio, p. 15 of Module

Handbook

• You will receive: A Portfolio of articles pertaining to the Book/Ebook industry

• After conducting additional research, you are required to: Answer a series of pre-set questions

• Notes: Submission Deadline: 11th March 2011 Both Hard copy and electronic submission of case study Briefing session/tips on Week’s 10 lecture Further help on Week’s 16 seminar Practice exercise to help familiarise with Portfolio requirements

– p.21 of module handbook

Assessment – Marketing Report, p. 16 of module

handbook

• For a company of your choice, you are required to: Write a marketing report in two phases

• Phase I: Situation Analysis (10% of overall mark)

• Phase II: Objectives and Strategies (20% of overall mark)

• Notes: Submission Deadline: 4th May 2011 Both Hard copy and electronic submission of case study Briefing session/tips on Week’s 19 lecture’s Further help on Week’s 22 seminar

Assessment – Individual Reflective Overview, p. 17 of

module handbook

• You are required to:

• Complete a reflective account of your entire learning

• Notes: Both Hard copy and electronic submission – 4th May 2011

Briefing session/tips on Week’s 19 lecture

Further help on Week’s 22 seminar

Any Questions ?

Marketing Strategy for Management

MKT4010

Lecture 1

The Concept of Marketing

• To understand the importance of marketing & marketing strategy

• To identify the dimensions of Marketing Strategy

• To understand the Strategic Marketing Process

Learning Outcomes

Marketing ConceptThe achievement of corporate

goals through meetingand exceeding customer

needs better than the competition

Customer Orientation

Corporate activities are focused upon providing

customer Value and Satisfaction

Integrated Effort

All staff accept theresponsibility for creating

customer satisfaction

Goal Achievement

The belief that corporate goals can be achieved

through customer satisfaction

What is marketing?

Product benefits

Service benefits

Relational benefits

Image benefits

Monetary costs

Time costs

Energy costs

Psychological costs

Customer value

Perceived benefits

Perceived sacrifice

Positive Negative

What is marketing?

• Consists of:– Analysis, strategy development and

implementation activities in:– Developing a vision about the market(s) of

interest to the organisation, selecting target market strategies, setting objectives, and developing, implementing, and managing the marketing program positioning strategies designed to meet the value requirements of the customers in each target market

(Cravens and Piercy, 2006: 29)

What is Marketing Strategy?

Because it deals with the fundamental issues that affect the

future of the organisation

• Marketing strategy...– Centres around the customers of the organisation– Involves the entire organisation– Is likely to concern itself with the survival of the

organisation as a minimum objective, and – The creation of value added as a maximum objective

• Two vital areas:

– Strategy is central to the development of sustainable competitive advantage for the organisation...

– ...and is crucial to the on-going value added

Importance of Marketing Strategy

The three dimensions of marketing strategy........

Context

Content

Process

Pettigrew and Whipp 1991

Context: the environment within

which the strategy is operating

Content: the main actions of the

proposed strategy

Process: how the strategy will

be developed and achieved

Context: the environment within

which the strategy is operating

Content: the main actions of the

proposed strategy

Process: how the strategy will

be developed and achieved

Main Elements of Marketing Strategy….

The Strategic Marketing Process..

InternalEnvironment

InternalEnvironment

Competitors

Consumers

Macro- Environment

The Industry

The Firm

As highlighted in Lecture 2

Situation Analysis…

As highlighted in Lecture 3

As highlighted in Lecture 8

As highlighted in Lecture 4

As highlighted in Lecture 6

TargetMarkets

Growth Strategies

CompetitiveAdvantage

Designing Marketing Strategy

As highlighted in Lecture 14

As highlighted in Lecture 8

As highlighted in Lecture 9

• Selecting Segments to Target– Which segments are most attractive?– Which segments can we best serve?

• How are these Targets Selected?– Situation Analysis

• Existing Products– Continue with existing target?– Adapt/evolve product/marketing mix to hit a

new target?

Target Markets

• The Critical Importance of Competitive Advantage– Success depends on having (and being perceived to

have) an ability to do something better than your competitors

• Examples– Quality– Speed– Convenience– Efficiency– Availability

Competitive Advantage

Market Penetration

DiversificationMarket

Extension

Product/Service Development

Products/ServicesM

ark

ets

Exi

stin

gN

ew

Existing New

Growth Strategies…

4P’s

Marketing Program Development

Quality anddesign

Packaging

Core product

Brand potential

Brand potential

Brand potential

Delivery

Brand name andimages

Service

Guarantees

Marketing Program Development: Branding

Intangibilitycannot be seen, felt, heard,tasted or smelled prior to

purchaseInseparability

production

and consumption

occur simultaneously

Characteristics of Services…..

Heterogeneity

difficult to achieve

Standardisation

Perishability

cannot be stored /

seasonality issues

The Service Offering…

Therefore…

Process

• Involvement of consumers, emphasises the process /

procedures of transaction / service delivery

• Operational factors affecting perceptions and satisfaction

• Friendliness of staff, queuing systems

Physical Evidence

• Ambience / furnishings

• Environment in which service is offered

People

• Selection, training and motivation / personnel /

customers

• Everyone is a marketer!!!

Our understanding of the 3 Ps… “The extended Marketing Mix for

a Service”

Stresstangible

cues

The Service Offering…

• Importance of Marketing Strategy

• Main Elements of Marketing Strategy

• The Strategic Marketing Process

Summary

Any Questions?

Marketing Strategy for Management

MKT4010

Lecture 2

Competitor Analysis

• Knowledge Refreshment– Marketing Strategy– Process of formulating it

• Competitor Analysis– Identifying Competitors– Understanding Competitors

Lecture Outline

• Consists of:– Analysis, strategy development and

implementation activities in:– Developing a vision about the market(s) of

interest to the organisation, selecting target market strategies, setting objectives, and developing, implementing, and managing the marketing program positioning strategies designed to meet the value requirements of the customers in each target market

(Cravens and Piercy, 2006: 29)

Definition of Marketing Strategy

The three dimensions of marketing strategy........

Context

Content

Process

Pettigrew and Whipp 1991

Context: the environment within

which the strategy is operating

Content: the main actions of the

proposed strategy

Process: how the strategy will

be developed and achieved

Context: the environment within

which the strategy is operating

Content: the main actions of the

proposed strategy

Process: how the strategy will

be developed and achieved

Main Elements of Marketing Strategy….

The Strategic Marketing Process..

InternalEnvironment

InternalEnvironment

Competitors

Consumers

Macro- Environment

The Industry

The Firm

Situation Analysis

Micro- Environment

As highlighted in Lecture 5

Customers

CompetitorsCompany

(Inspired by Ohmae. Source:Adcock, et al 1995) p.191

The Competitive

Triangle

Key Factors for Success within an Industry – Micro

Environment

‘The process of identifying key competitors; assessing their objectives, strengths, weaknesses, and reaction patterns; and selecting which competitors to attack or avoid’

Jobber

What is competitor analysis?

Competitor AnalysisIdentifying

CompetitorsUnderstanding

Competitors

The competitive Arena

Customer Approaches

Competitor Analysis

CompetingProducts

Generic

Competitors

Product

Form

Competitors

Potential

New

Entrants

Product

Substitutes

Technically similar products

Technically dissimilar products

Products that solve the problem or eliminate it in a dissimilar way

Technically similar products/ Technically dissimilar products

Identifying Competitors

Look at competitors from the customers’

perspective– Customer Choices

• What would you buy if Kit-Kat was not available?• What would be substituted for coffee if price is

increased? • What other universities have you considered?

– Product Use Associations• Identify list of use situations or applications• Name all products appropriate for each use

Identifying Competitors – Customer Approaches

Assess competitors’ current and

future objectives

Assess competitors’

current strategy

Assess competitors’ capabilities

profile

Predict competitors’ future strategies

Understanding Competitors

Assess competitors’ current and future objectives

What are they trying to achieve?

Why are they trying to achieve it?

Are they satisfied with their achievements?

Key Indicators:Stated goals Market assumptions

Ownership Investment priorities

Competitor Objectives…

Competitor

Challenger

Frontal Attach

Competitor

FlankingAttack

Challenger

Competitor

Challenger

EncirclementAttack

Objective: Build Market Share…

Purpose Choice:

Size: US$ 3bn Growth: +10% p.a (lower in UK but larger market) Share: Kellogg’s 50-60% Head-on

against Kelloggs

Flanking via Segment

Totally new breakfast

formatCP Resources: Brand name, Grocery networking, Unique product range, Low cost manufacture, Own label

’20% Market Share’

Chosen strategies:

1. Concentrate resources

2. Econs of scale

3. Tackle country-by-country

4. Kelloggs flanking attack via product innovation

5. Acquire in UK

Example - European Breakfast Cereals: Cereal Partners

1990: buy Shredded Wheat, UK

1991-96: extend UK range

1991: launch France , Spain, Portugal

1992: launch Italy

1993: launch Germany etc

Environment:

Resources:

Purpose:

Implementation:

Options:

Options:

Options:

Lynch (2003) Corporate Strategy 3/ed

Assess competitors’ current strategies

What market targets are they pursuing?

What is their strategic focus?

What marketing mix do they use?

How do they organise their marketing?

Key Indicators:Advertising media and messages Price levels charged

New product introduction rates Distribution channels used

Recruitment advertisements

Competitor Strategies…

Assess competitors’ capabilities profile

Marketing culture?

Marketing assets and competences?

Production and operation competencies?

Financial resources?

Human Resources?

Key Indicators:

Customer relationship strength Product availability

New product success rates Promotional expenditure

Quality of the people

Competitor Capabilities…

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

-2 -1 0 1 2

Financial strength

Staying power

Strong R&D

Technological breadth

Quick response capability

European marketing

Financial strength

Staying power

Strong R&D

Technological breadth

Quick response capability

European marketing

Self: total 5 Competitor A: total 6

Competitor B: total 4 Competitor C: total -2

Key Success Factors

Key Success Factors

Competitor Capabilities…

Predict competitors’ future strategies

What might the competition do?

What under-utilised resources do they have?

How will they react to our actions?

Who are the competitors to attack?

Key Indicators:Past strategies Past successes and failures

Past reactions Changes in ownership

Recent resource acquisitions

Future Competitor Strategies…

Response

Category

Hemmed-inC

ompl

acen

tSelective

Unpredict

able Retaliatory

Aggressive response, often by market leader

Passive response, competitor does not consider the move important

Competitor feels unable to respond

Responds only to moves it considers significant

Appears random, decisions may be based on unknown criteria

Competitor Response Patterns

• Weak Competitors– Easier to attack– Require fewer resources to

engage– Failed attack not fatal– Potential rewards relatively

low• Strong Competitors

– Difficult to attack– Firm must focus on the attack– Failed attacks can be

devastating– Potential rewards very high

• The Dynamic Environment– Your competitors change over

time– The weak may become strong,

and vice versa• Do Unto Others…

– Your competitors are analysing you and your behaviour

– What are they planning to do unto you?

Who to attack?

• Competitor Analysis involves:– Identifying Competitors– Understanding Competitors

Summary

Marketing Strategy for Management

MKT4010

Lecture 3

Analysing the Industry

The Strategic Marketing Process..

InternalEnvironment

InternalEnvironment

Competitors

Consumers

Macro- Environment

The Industry

The Firm

Micro- Environment

As highlighted in this lecture

As highlighted in Lecture 2

Learning Outcomes…

• To understand the complex nature of the marketing environment

• Explain and identify Key Factors for Success

Learning Outcomes

As highlighted in Lecture 2

What is an Industry?– A group of firms that market products that are

close substitutes for each other

We Speak of:– The car industry– The computer industry– Definitions normally product based

Introduction

DistributionSystems

KeySuccessFactors

Industry Size,Growth

IndustryProfitability

…Some Dimensions of Industry Analysis

Distribution systems: Analysis should include:

• What are the alternative distribution channels?

• What are the trends?• Who has the power in

the channel and how is that likely to shift?

Distribution systems: Analysis should include:

• What are the alternative distribution channels?

• What are the trends?• Who has the power in

the channel and how is that likely to shift?

Collect Data on Total Sales Levels

– Trade Associations/Trade Magazines/Government Data

Estimate Market Growth

– Historic growth + Leading indicators of market sales

– More sales and profits if market grows

– Reduced sales and increased price pressure if market declines

Thus:

– Identify and Invest in growth contexts?

– Identify and disinvest in declining situations?

Collect Data on Total Sales Levels

– Trade Associations/Trade Magazines/Government Data

Estimate Market Growth

– Historic growth + Leading indicators of market sales

– More sales and profits if market grows

– Reduced sales and increased price pressure if market declines

Thus:

– Identify and Invest in growth contexts?

– Identify and disinvest in declining situations?

Market Size and Growth

Industry profitability derives from an analysis of:

• Market structure - the number of firms and the degree of rivalry - forms the basis of competitive development

• Market conduct - how firms behave towards each other - will then influence strategy utilised

• Market performance – In terms of power, profitability, share in market – Degree to which company is careful vs. takes advantage

Represented by Prof Michael Porter: Five-Forces Analysis

Industry Profitability

But such theories do not explain why two companies in the same industry achieve widely differing results….

Industry rivalry

- current competitors

Bargaining power of suppliers

Bargaining power of buyers /

customers

Threat of substitutes

Threat of new

entrants

Porters Five Forces Model

Industry profitability: Analysing Competitive Forces

Analysing Competitive Forces…

Bargaining Power of

Buyers - Power high:

• Few buyers many sellers

• Standardised products

• Buyers threaten to integrate

backwards

• Suppliers cannot integrate

forward

• Switching Costs for Buyers

• Profit Levels

• Importance of Product or

Service to Buyer

Bargaining Power of

Buyers - Power high:

• Few buyers many sellers

• Standardised products

• Buyers threaten to integrate

backwards

• Suppliers cannot integrate

forward

• Switching Costs for Buyers

• Profit Levels

• Importance of Product or

Service to Buyer

Bargaining Power of

Suppliers - Power high:

• Few sellers many buyers

• Differentiated products

• Suppliers threaten to integrate forward

• Buyers cannot integrate backwards

• Switching Costs for Suppliers

• Importance of Customer to Supplier

• Level of Product Differentiation

Bargaining Power of

Suppliers - Power high:

• Few sellers many buyers

• Differentiated products

• Suppliers threaten to integrate forward

• Buyers cannot integrate backwards

• Switching Costs for Suppliers

• Importance of Customer to Supplier

• Level of Product Differentiation

Threat of Potential

Entrants – Barriers to

Entry

• Economies of scale

• Capital requirements

• Customer switching costs

• Access to distribution

• Expected retaliation

• Govt policy

• Brand identity / strength

• Unique Resources

Threat of Potential

Entrants – Barriers to

Entry

• Economies of scale

• Capital requirements

• Customer switching costs

• Access to distribution

• Expected retaliation

• Govt policy

• Brand identity / strength

• Unique Resources

Analysing Competitive Forces…

Competitive Rivalry

• Structure of competition

• Structure of costs

• Degree of differentiation

• Strategic objectives

• Exit barriers

• Rate of growth

• Number/relative Size of Competitors

• Capacity in Relation to Demand

Competitive Rivalry

• Structure of competition

• Structure of costs

• Degree of differentiation

• Strategic objectives

• Exit barriers

• Rate of growth

• Number/relative Size of Competitors

• Capacity in Relation to Demand

Threat of Substitutes

• Buyer’s willingness to substitute

• Relative price and performance of substitute

• Switching costs• Availability• Similarity• Comparative

– Price– Quality– Branding

Threat of Substitutes

• Buyer’s willingness to substitute

• Relative price and performance of substitute

• Switching costs• Availability• Similarity• Comparative

– Price– Quality– Branding

Level of Competition

HIGH

MEDIUM

LOW

NONE Perfect Imperfect Oligopoly MonopolyCompetition or

Monopolistic

No. of Firms

Profitability

Level of Competition

Influence on Market

Market Structure and Concentration

Measured by:• Degree of concentration of companies in the industry• Range of aggressive strategies of competitors in the market place• Degree of concentration often summarised in the concentration ratio:

“The percentage of industry ‘value added’ or ‘turnover’ controlled by the largest four, five or eight firms in an industry: CR4, CR5

or CR8 respectively”

Market Structure and Concentration….

Intensity of competition in an industry

Leading Supermarkets &

Superstores by Turnover (£m)

2006/7 in the UKTesco £42641.0J. Sainsbury £17151.0Asda Group £15667.2Wm Morrisons £12226.0Marks & Spencer £ 8588.1Safeway £ 6270.6Somerfield £ 4325.4Waitrose £ 3497.3Iceland £ 1565.3Aldi Stores £ 1318.3Costcutters £ 497.2Budgens £ 444.5

Total £ 114191.9

Key Notes 2008

Example: Concentration Ratios of UK Supermarkets

Top 4 Retailers’ Turnover £87685.2m

Top 4 Firms: 87685.2

x 100 = 76.7

All Firms: 114191.9

CR4 = 77%

Therefore, 4 firms account for 77% of the Turnover between them

Assets and competences that provide the basis for

competing successfully

Include:– Strategic Necessities

• Not necessarily providing a competitive advantage• Absence leads to disadvantage

– Strategic Strengths • Superior assets and competences• Provide competitive advantage

Points to consider:– Which are the most critical now?– Which will be more critical in the future?

Key Factors for Success within an Industry….

• Know your industry and competitors: structure / conduct /

performance

• Building on key resources can provide organisation with

sustainable competitive advantage

• Strategic development should be based on sound external

analysis

Conclusion

Any Questions?

MKT4010

Lecture 4

Environmental Analysis and Strategic

Uncertainty

Marketing Strategy for Management

By the end of this session you will

• Be able to differentiate between the components of the marketing (business) environment

• Understand the role of environmental analysis in marketing strategy

• Consider the marketing implications of these components

Aims

The Strategic Marketing Process..

InternalEnvironment

InternalEnvironment

Competitors

Consumers

Macro- Environment

The Industry

The Firm

Micro- Environment

As highlighted in this lecture

As highlighted in Lecture 2

Learning Outcomes…

Firm

Social/Cultural

Technological/Product Innovation

Economic

Education/Training/Employment

Political

Legal

Environmental

Frameworks of the Macro-environment: PEST/STEP/STEEPLE Analysis

• What environmental factors are affecting the organisation?

• Which of these are the most important at the present time? In the next few years?

Socio-cultural Environment

• Demographic Change

• Changing life-styles and living

patterns

• Multi-ethnic societies

• The Grey Market

• The Youth Market

Political and Economic Environment

• Economic growth rates

• Inflation Rates

• Foreign trade regulations

• Interest rates, consumer and business confidence

• Taxation policy

• Employment and unemployment

• Income distribution

Technological, Environmental

and Legal Environment

• New discoveries/developments

• Waste disposal

• Competition law

• Product Safety

• Energy Consumption

• Health and Safety Law

• Environmental Laws

Models of the Environment…

Social change and its effects on organisations

• Many goods and services are no longer considered socially and culturally relevant – e.g. formal clothing

• New opportunities emerge for businesses – e.g. Islamic compliant products / services

• Two way effect - businesses and new technology affect social and cultural environment (e.g. microwave ovens / e-business / e-commerce / mobile technology)

Social Class

• In most societies, divisions exist between groups of people in terms of their access to privileges and status

• As the size of each class changes, so market segments, which are made up of people who are similar in some important respects, also change

• Is a “classless” society a myth or reality?

Society Changes…

Models of the Environment…

The Cultural Environment

• A culture's values are

expressed in a complex

set of beliefs, customs

and symbols which help

to identify individuals as

members of one

particular culture rather

than another

• Distinguish between

"core" and "secondary"

cultural values

• Are cultures converging in their in their values and attitudes?

• Or do multi-cultural societies lead to a growing need for cultural identity? I.e The notion of Britishness

• What is the significance of “Mecca Cola”?

Cultural Convergence?

Cultural Changes…

Models of the Environment…

Values, Attitudes and Lifestyles

• Values are deep seated sets of beliefs

• Attitudes may be more open to change

• Attitudes may eventually be translated into behaviour - a lifestyle

• Attitudes and lifestyle may say more about a person's consumption patterns than class, status etc

• Even supermarket sandwiches reflect differences in lifestyles

• Compare buyers of Chunky BLT with buyers of Mediterranean Vegetable Panini

Lifestyle Changes…

Models of the Environment…

Waistline Vs Bottomline….Lifestyle Changes…

Models of the Environment…

Demography

Reasons why businesses should

study changing demographic

structures:– Helps to predict the size of

the market that a product is likely to face

– Demographic trends have supply side implications

– Implications for public sector service

– Demographic change can influence the nature of family life and communities

Geographical Distribution

• In the UK, drift from north to south-east

• Drift from towns to rural areas• More recently, many people

have moved • What are the implications for:

– patterns of demand?– availability of workforce?

Models of the Environment…

Changes in UK Population

Population change can be attributed to three main factors:– the birth rate– the death rate– the difference between inward and outward migration

Models of the Environment…

1. What if Turkey joined the EU?2. What if a major American firm

entered our European markets?3. What if a break in production

prevents us fulfilling customer orders?

321

Illustrations of the ‘three rings’ model of

the environment

What does the future hold?

Technology Trends• To what extent are existing technologies maturing?• What technological developments or trends could affect the industry?

Government/Economic Trends• What changes in regulation are possible? What will their impact be?

What are the political risks?• What are the economic prospects and inflation outlets for the

countries in which the firm operates?

…what about?

Response: Uncertainty reduction– Information acquisition– Level of resources depend on outcome of Impact AnalysisUncertainty modelling– Scenario Analysis

Strategic Uncertainties…

Specific unknown outcomes that can affect a company’s strategic decisions.

Examples:– Alfa Romeo:

• What will the sales profile of sports cars be in upcoming years?– British Airways

• How will the economy evolve?– Ski operator

• How will the weather be in 15 years?

Immediacy

Lo

wH

igh

Low High

Monitor and Analyse;

Contingent Strategies

Considered

Analyse In-depth; Develop

Strategy

MonitorMonitor and

Analyse

Impact Analysis

Strategic Uncertainties…

Impact

• A process that creates a plausible set of alternative “stories” about the future for elements of the business environment that are:– “strategically” very important– beyond your ability to control– often beyond your ability to predict what will happen

• Improved decision-making by allowing more complete consideration of outcomes and implications

Strategic Uncertainties…

Scenario Analysis

Identify Scenario

Relate Scenarios to Existing or Proposed Strategies

EstimateScenario

Probabilities

Therefore…

• British Airways might attempt to forecast several possible scenarios for the economy – Scenario I: Rapid growth– Scenario II: Moderate growth– Scenario III: Slow growth– Scenario IV: Decline

Strategic Uncertainties…

Scenario Analysis

Example: British Airways

Scenario IV – Decline in the UK

economy

Implications:• People will have less

disposable income, hence will not be travelling as frequently

• Airlines will reduce their capacity, number of flights and destinations in line with the declining demand for their services

• Increased competition among airlines for a declining market.

• Demand to further shift to No-frills airlines

Changes in the environment have

led to an increase in customer dynamics and

related marketing opportunities

Summary

Any Questions?

MKT4001

Lecture 5

Internal Analysis, SWOT Analysis & Objectives

Marketing Strategy for Management

• Internal Analysis• SWOT analysis

– Strengths– Weaknesses– Opportunities– Threats

• Setting objectives and strategies to achieve them

Aims

Is:

An assessment of the performance and activities of the business in light of environmental developments

Internal Analysis

OperatingResults

StrategicIssues

Analysis

MarketingMix

Effectiveness

Marketing Structures

MarketingSystems

Sales

Market Share

Profit Margins

Costs

Product

Price

Promotion

Distribution

Organisation

Training

InternalCommunication

InformationSystems

PlanningSystems

Control Systems

ObjectivesSegments

Competitive Advantage

Positioning

PortfolioAnalysis

Internal Analysis

Assessment of Marketing Capabilities…

• Basic Logic dictates that many companies are involved with products in many industries

• Each market will bring its own strategic opportunities and problems e.g. the attraction of a fast growing market, difficulties of having only a small marketing share

• Assuming that the two most important factors in such an analysis are:

1. Marketing Growth

2. Market Share

• These factors can be plotted in a Matrix against competitors aiding the exploration of this strategic issue (Boston Consultancy Group Matrix - BCG)

Portfolio Analysis

Also read: Jobber 2007 – pg 396 - 400

Star Question Mark

Cash Cow Dog

x10 x5 x1 x0.5 x0.1 Relative Market Share

Market Growth Rate %

Gazelle 300

Hunter 200

Tiger 520

BMP 3

BMP 2

BMP 5

12%

8%

5%

3%

0%

High 12%

Per Annum

Low:

Starting at

0% Per Annum

Product Portfolio Analysis…

BCG Matrix – Example…

What is a SWOT Analysis?– A structured

approach to evaluating the strategic position of a business

– Identifies strengths, weaknesses, opportunities and threats

What does a SWOT

Analysis do?– Synthesises the

situation analysis

SWOT Analysis

Strengths Weaknesses

Opportunities Threats

Internal (Controllable)

External (Uncontrollable)

Lectures 3/4

Strengths Weaknesses

Opportunities Threats

ConversionStrategies

ConversionStrategies

Mat

chin

gS

trat

egie

s

SWOT Analysis: Conversion / Matching Strategies

Build Hold

Harvest Divest

Objective is to increase sales and market share

Objective is to maintain market share

Objective is to maximise profits whilst sales and market share are falling

Objective is to drop or sell the product

Strategic Objectives

• When is a Build Objective Attractive?– Growth markets – In mature markets where there are exploitable

competitive weaknesses– Exploitable corporate strengths

• Examples– Rapidly growing MP3 player market means that all

companies have growing sales– Cadbury’s chocolate bars Vs Rowntree Macintosh

‘Yorkie’– Casio built on expertise in microelectronics to move from

calculators to watches, M&S used the trust in its brand to launch financial services

Build…

How to achieve a Build Objective…

BetaAlpha

Encirclement

Frontal Attack

Flanking Attack

Bypass Attack

Guerrilla

Attack

• When is a Hold Objective Attractive?– A market leader in a mature or declining

market– The ‘cash cow’ position– In a growth market where the costs incurred

by trying to build market share outweigh the benefits

• Examples– T-Mobile and mobile phone services

Hold…

Pre-emptive defence

WithdrawalAlphaBeta

FlankingDefence

Position

Defence

Mobile Defence

Counter-offensive

How to achieve a Hold Objective…Defence strategies

• When is a Harvest Objective Attractive?– Second-rate products in mature or declining

markets– Core of loyal customers– Resources can be better used elsewhere

• What Happens?– Eliminating R&D spending– Reducing promotional budgets– Rationalisation of product line– Possibly increase price

Harvest…

• The Organisation Sells or Shuts Down an SBU– Poor performance

– Bad fit with rest of organisation

– Tempting offer from a potential buyer

• Strategic Focus– Getting out as quickly and cheaply as possible

– Be careful about relationships with other products

and services

Divest…

• Be SMART– Specific– Measurable– Actionable– Realistic– Time bound

• Example:– L’Oreal:

• To increase market share by 3% (from 15%) in the male cosmetics market by January 2009

Objectives should…..

Objectives…

• Importance of identifying Marketing capabilities

• SWOT analysis• Setting objectives and strategies to

achieve them

Conclusion

MKT4010

Lecture 6

Analysing Consumers’ Needs, Expectations and Buying Patterns

Marketing Strategy for Management

• To understand the process arising from the simple act of buying a product or service

• To identify the key factors that influence the buying decision process

• The characteristics of organisational buying, who buys and how

• To provide a framework for understanding how marketers can influence the buying decision process

Aims

Product

Price

Place

Promotion

Economic Technological

Political Cultural

Other stimuliMarketing Stimuli

Buyer’s black box

Buyer

CharacteristicsBuyer

decision process

Buyer’s responses

Product choice Brand choice Dealer choice Purchase timing Purchase amount

Consumer Behaviour

A Simple Black Box Model….

Who buys and forwhom?

How dothey buy?

When dothey buy?

What are their choice

Criteria?

Where do they buy?

Customers

Dimensions of Consumer Behaviour: The Key

Questions

Consumer Behaviour

Five Roles identified(Blackwell et al., 2000)• Initiator (begins process)• Influencer (persuades others)• Decider (Power/funds)• Buyer (conducts transaction)• User (actual consumer/user of product)

Who Buys?

Consumer Behaviour

Problem recognition

Evaluation of alternatives

Information search

Purchase decision

Post purchase behaviour

Engel-Kollat-Blackwell, 1968

How do they Buy?

Reduce the awareness set (solutions) to

a smaller set of brands

Produce an evoked set: a shortlist of brands for careful evaluation

Rank the evoked set through an application

of criteria

Evaluation of Alternatives and Purchase

Consumer Behaviour

Criteria

Technical Economic Social Personal

ReliabilityDurability

PerformanceStyle/looks

ComfortDelivery

ConvenienceTaste

PriceValue for moneyRunning costsResidual valueLife style costs

StatusSocial belonging

ConventionFashion

Self-imageMorals

Emotions

Choice Criteria used when evaluating Alternatives

Consumer Behaviour

Actual Performance ? Expected

Performance

MarketingImplications:

Reinforce wisdomof decision

Solve problem at root

CognitiveDissonance

Cognitive Dissonance Higher when:

Expensive productMany Alternatives

Irrevocable Decision

Post-Purchase EvaluationConsumer Behaviour

Psychological

PersonalSocialB

uyin

g

situ

atio

n

Influences on Consumer Behaviour

Extended

Problem

SolvingHabitualProblemsolving

Limited

Problem

solving

The Buying Situation

Consumer Behaviour

• Influences– values, attitudes, beliefs, opinions, perception– motivation, concept of ‘Self’

• The subconscious (Freud)– marketing and the subconscious

• Hierarchy of needs (Maslow)– physiological, safety, security, status, self-

becoming needs• Demography

Personal/Psychological FactorsConsumer Behaviour

Reference groups

Roles and family

Social Classes

Male head of household?

Changing family structures

Strong identification

Opinion leaders

Similar social rank

Common behaviourAffects product quality/quantity

Culture and Sub-culture Values, generational

Social FactorsConsumer Behaviour

Organis/nal

purchases

Lengthy

negotiations

Mor

e pe

ople

invo

lved

Econom

ic/

Technical

criteria

Small number

Of

customers

Largertransactions

Organisational Buying – Some Characteristics

Buying Centre

Users Final users

BuyersSelect suppliers and

negotiate terms

Influencersspecifications

and alternatives

DecidersChoose products and suppliers

Gatekeepers Control flow of information

Who buys

Organisational Behaviour

Recognition of Need

Determination of Specification and Quantity

Search for Potential Sources

Acquisition and Analysis of Proposals

Evaluation of Proposals – Selection of Suppliers

Selection of an Order Rountine

Performance Feedback and Evaluation

Organisational Decision Making

• The black box model

• Factors influencing the buying process

• Difference between consumer buying behaviour and organisational buying behaviour

• The buying decision making process

• Note: Surgery seminar session next week:

Final Clarification on DVD case studies

Summary

Any Questions?

MKT4010

Lecture 7

Strategic Market Segmentation

Marketing Strategy for Management

Aims

• To define the term segmentation and to explain why it is a key concept in marketing

• Explain the process of market segmentation• Discuss how to segment:

– Consumer markets– Business Markets

• Understand the requirements for effective segmentation

Mass Market

The process of identifying individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy

Jobber (2004:210)

What is Segmentation?

Market Segments

Opportunities and threats

Market segmentation

Tailored marketing mix

Differentiation

Target

market

selection

Source: After Jobber, D. (2004); Principles and Practice of Marketing, McGraw-Hill

Benefits of Segmenting...

Consumer segmentation

Behavioural

Benefits soughtBenefits sought

Purchase occasionPurchase occasion

Purchase behaviourPurchase behaviour

UsageUsage

LifestyleLifestyle

PersonalityPersonality

DemographicDemographic

GeographicGeographic

Psychographic Profile

What is a Base for Segmentation?A variable by which people can be divided

into groups of ‘similar customers’

Source: Jobber, D. (2004); Principles and Practice of Marketing, McGraw-Hill

Segmenting Consumer Markets

• Behaviour– past, existing, potential

customers– heavy users– brand switchers– value-sensitive users– complimentary product

users– end use users– benefits sought

Segmenting Consumer Markets…

Psychographic• Personality types e.g.

– introverted, extroverted– high achiever, low achiever– security, social, status, self-

fulfilling needs• Value, attitudes, life styles (Vals)

– go-getters, quietly-comfortable, middle-of-the roaders, spiritualists

– environmentalist, business-woman, live-for-today

• Social class– Upper/middle/lower class

• Geographic

– region, district, town, city, country, continent

• Demographic

– population growth, movements, dispersion,

• Socioeconomic

– social class: A, B, C1, C2, D, E

– age, gender, family unit, income, education, occupation, religion, ethnic group, nationality

Segmenting Consumer Markets…

Segmenting Business Markets - B2B

ProductUsage

UsageRates

By Location CustomerSize

IndustryClassification

Density

Public, PrivateNot for Profit

Situational

Attitudes andBeliefs

Needs and Preferences

Purchase Behaviour

IdentifiableSegments

Cost/Benefits of Segm/tion

StabilityOver Time

ActionableSegments

ResponseDifferences

Requirements for Effective Segmentation

Attractive segments

that match withcompany

capabilities

Unattractive segments

that do not match withcompany

capabilities

Unattractive segments

but with match tocompany

capabilities

Attractive segments

but with poor matchwith company

capabilities

Internal Compatibility

High Low

Segmentation Attractiveness and Compatibility

Market Segment

Attractiveness

High

Low

Level ofCompetition

Generic

ProductType

ProductVariant

Product Definition

Health &Beauty

Aids

ShavingEquipment

ElectricRazors

IllustrativeCompetitors

ConsumerProduct

Companies

Gillette, Remington, Bic

Braun,Panasonic

Need/WantSatisfied

Enhancement of Health & Beauty

Shaving

ElectricShaving

Selecting a Market to Segment

IDENTIFIERS OF CUSTOMER

GROUPS

CUSTOMER RESPONSEPROFILE

E Characteristics of People and

Organizations

E Use Situation

E Buyers Needs and Preferences

E Purchase Behavior and Loyalty

Approaches to Forming Market Segments

RoadWarriors

TrueBlues

GenerationF3 (Fuel,Food & Fast)

Homebodies

PriceShoppers

Higher-income, middle-aged men, drive 25-50000 miles a year buy premium with a credit card… purchase sandwiches and drinks from the convenience store… will sometimes use carwash

16% ofbuyers

Men and women with moderate to high incomes, loyal to a brand and sometimes a particular station …frequently buy premium, pay in cash

16% ofbuyers

Upwardly mobile men and women - half under 25 years of age - constantly on the go … drive a lotsnack heavily from the convenience store

27% ofbuyers

Usually housewives who shuttle children around during the day and use whatever gas station is based on town or on route of travel

21% ofbuyers

Not loyal to brand or station and rarely buy premium … frequently on tight budgets.

20% ofbuyers

Example Segmentation: Gasoline Buyers

Summary

• Identify segmentation variables and segment the market

• Develop profiles of resulting segments

Any Questions?

MKT4001

Lecture 8

Contemporary Marketing Strategy

Market Targeting and Positioning

• Explain the concepts of market targeting and positioning

• Explore different targeting alternatives and the factors influencing them

• Discuss the options involved in strategic positioning

Aims

Selecting one or more segments as a focus for the company’s offering or communications

Jobber (2004)

What is Targeting?

Targeting

Market

Segment 1

Segment 2

Segment 3

CompanyMarketing

Mix

Marketing Mix 1

Marketing Mix 2

Marketing Mix 3

CompanyMarketing

Mix

Undifferentiated

Marketing

Concentrated

Marketing

Differentiated

Marketing

Segment 1

Segment 2

Segment 3

Source: Jobber, D. (2004); Principles and Practice of Marketing, McGraw-Hill

Target Market Strategies

Targeting…

TargetingStrategy

Product/MarketMaturity

Diversity inBuyers’

Preferences

SegmentAttractiveness

IndustryStructure

Opportunities for CompetitiveAdvantage

OrganisationalCapabilitiesResources

Targeting…

Choosing a Targeting Strategy

• Collect Data on:– Current sales value– Market growth– Profitability

• Review– Competitors – Concentration and dependency on market?

Strengths and weaknesses?– Customers – Power?, levels of satisfaction?– Supplier power – raw materials, labour– Buyer power – high or low?

Target Market Strategies

Targeting…

Segment Attractiveness Lecture 7

Sales

Profits

Life-Cycle Stage/Time

Growth Maturity DeclineEmerging

Types of Market Environments (based on the stage of product/market maturity)

Targeting…

Sales and

Profits

Buyer Diversity• Segmentation limited due to

similarity of buyers’ preferences

Industry Structure• Typically small new

organizations• Limited access to resources

Capabilities and Resources• Unique benefit (differentiation)

strategy rather than low-cost• First-mover advantage

Targeting Strategy• Single target or a few broad

segments

Emerging Markets

Buyer Diversity• Segments should exist

Industry Structure• Numerous competitors

Capabilities and Resources• Survival requires aggressiveness by

firms seeking large market positions• Otherwise select one or a few market

segments

Targeting Strategy• Three possible strategies

1. Extensive market coverage by firms with established businesses in related markets

2. Selective targeting by firms with diversified product portfolios

3. Very focused targeting strategies by small organisations

Targeting… Growth Markets

Buyer Diversity• Segments should exist

Industry Structure• Intense competition for market

share• Emphasis on cost and service, and

pressures on profits

Capabilities and Resources• Management’s objectives: cost

reduction, selective targeting, product differentiation

Targeting Strategy• Firms pursuing extensive targeting

strategies may decide to exit from certain segments

• Retained targets may be prioritised

Targeting…

Mature Markets

Buyer Diversity• Changes in consumer tastes;

Brand loyals remain

Industry Structure• Typically organisations exit• Reduction of product depth

Capabilities and Resources• A harvest strategy with

emphasis on productivity

Targeting Strategy• Focus on those targets to

boost profit margins

Declining Markets

Positioning

What is Positioning?

The face of the Business Strategy. It specifies how the business aspires to be perceived relative to its competitors and markets.

Aaker and McLoughlin (2006)

EmotionalBenefits

Experience

Quality

ProductAttributes/FunctionalBenefits

OptionsOrigin Competitors

Positioning…

Strategic Position Options

Source: Lilien & Rangaswamy, 1999

Positioning - Example..

• Resonate with the target market– Strategic position needs to create a difference – Value of

emotions?• Differentiate from competitors

– Important– Distinctive– Superior– Communicable– Affordable

• Reflect the culture, strategy and capabilities of business

Developing and Selecting Strategic Options

Summary

• Identify possible positioning concepts for each target segment

• Select, develop and communicate the chosen positioning concept

Position• Identify

segmentation variables and segment the market

• Develop profiles of resulting segments

Segment• Evaluate

attractiveness of each segment

• Select the target segment(s)

Target

Any Questions?

Lecture 7