Download - Mktg 3-Strategy 1
MARKETING STRATEGY
© Jon Twomey
Chartered Marketer 2010
HWLC MBA
Primary readings
Kotler, P., Armstrong, G., Wong, V. and Saunders, J. (2008). Principles of Marketing, Fifth European Edition, Prentice Hall:
Chapter 9 Market segmentation, targeting & positioning (STP) – pages 407- 447 Chapter 13 Marketing services – pages 593 – 627 Chapter 14 Pricing – pages 635 - 679
Jobber & Fahy Chapter 5 – pages 111- 136 - Market segmentation, targeting & positioning (STP) Chapter 7 Services marketing pages 171 – 192 Chapter 8 Pricing strategy pages 193 - 221
Ranchhod & Gurau Chapter 2 - Opening up analysis & positioning. pages 53- 78
Palmer P. (2008), Principles of Services Marketing, Fifth Edition, McGraw-Hill:
Learning outcomes
By the end of this session you will be able to: appreciate the importance of organisation mission/vision
statements develop SMART objectives describe market segmentation methods, explain the key
targeting selection criteria, design unique positioning statements identify strategic options using appropriate models, select and
justify your choices understand the barriers to implementation appreciate the importance of measurement/control
The Planning Cycle
Stage One
Where are we now?
Stage Two
Where do we want to be?Stage Three
How might we get there?
Stage Four
Which way is best?
Stage Five
How can we ensure arrival?
Traditional market thinking
The rational model of planning
Structure of a plan Advantages of formal
systems Criticisms of strategic
planning
Marketing Plan – Structure (Overview)
Introduction – Organisation overview and context Your Scoping statement
SITUATION ANALYSIS - Marketing audit (FEPSOS) SWOT & key issues arising
STRATEGY MISSION (& Vision) OBJECTIVES – Corporate, Marketing, eMarketing
MARKETING STRATEGY - Segmentation Targeting Positioning (STP)Marketing Strategy Models & Themes
MARKETING PROGRAMMES – Integrated marketing mix
IMPLEMENTATION - MARKETING BUDGET / RESOURCES EVALUATION & CONTROL (KPI’S)
CONTINGENCY PLAN
References/bibliography -1 page Appendices – max 5 pages
Marketing Plan – Structure (Inview)
SITUATION ANALYSIS (Marketing audit) FEPSOS: functions, environment - micro (inc. Customers - e Impact & buying behaviour, Compétition – Porter’s
five forces etc. below) & Macro (STEEPLE/PESTEL), productivity, systems, organisation, strategy. Marketing Effectiveness Rating (MER),
SWOT Analysis, Key issues
OBJECTIVES MISSION (& Vision) – CORPORATE OBJ. – SMART Organisational goals (qual. & quant.) - Balanced Scorecard MARKETING OBJ.’ – SMART customer focused goals (qual. & quant.) eMarketing Objectives – SMART – The 5 S’s
MARKETING STRATEGY - STP Segmentation – attractiveness & method used. Targeting – key customers, their needs (other stakeholders). Positioning – how to differentiate
MARKETING STRATEGY – Models & methods (as appropriate) Strategic Alternatives (application of models) e.g.. Ansoff, Shell, GE, ADL Generic Strategies (Porter), Competitive Strategy (Kotler & Singh) International - Mkt Entry, Standardise/Adapt, Harrell & Kiefer, Porter’s , Key themes – e.g. Branding, Innovation, e-Business, value chain
MARKETING PROGRAMMES – Integrated mix – implementation schedule Marketing Research, Product/Service - NPD – total product concept, innovation. Price – customer value.
Promotion – integrated communication - push, pull, profile. Place – distribution, service levels. People – orientation, culture, change, internal marketing. Process – information systems/technology – eMarketing. Physical Evidence – support brand image related to vision & position
MARKETING BUDGET / RESOURCES Marketing spend required, timings, people - marketing staff/agency requirements
EVALUATION & CONTROL - Use of key performance indicators (KPI’S) derived from objectives, research, MKIS, eSystems
CONTINGENCY PLANS
STRUCTURE & PRESENTATION – contents, logic, flow, references, appendices
Definition of Mission
Tells you what the company is now It concentrates on present It defines the customer(s), critical processes
and it informs you about the desired level of performance
It may include an expression of a company's history, managerial preferences, environmental concerns, available resources, and distinctive competencies to serve selected publics
Guides decision making & strategic planning.AMA
Definition of Vision
Explains the “purpose” of the
organisation (answers the ‘why’ of the
mission)
It outlines what a company wants to be
It concentrates on future It is a source of inspiration
Provides clear decision-making criteria.
AMA
Mission/vision - test
1. Role or Contribution Profit (specify) or Service or Opportunity-seeker
2. Business DefinitionDefined in terms of the benefits youprovide or the needs you satisfy, ratherthan in terms of what you do or what you make. Also related to chosenmarkets as appropriate.
Irwin.R : include : Key Market, Contribution and Distinction.
3. Distinctive competenceWhat essential skills, capabilities,resources underpin whatever successhas been achieved to date (include useof technology) ?
(Note : These factors should not applyequally to a competitor, otherwise there isno distinctive quality about them).
4. Indications for the future What the company will do What the company might do What the company will never do.
Examples Davidson.H (Vision & values)
Courtyard by Marriott
To provide economy- and quality-minded travellers with a premier, moderate-priced lodging facility which is consistently perceived as clean, comfortable, well-maintained and attractive, staffed by friendly, attractive and efficient people.
Otis Elevators
To provide any customer a means of moving people and things up, down and sideways over short distances with higher reliability than any similar enterprise in the world.
All objectives must be SMART
Sustainable Measurable Actionable/Agreed Realistic Timed/Targeted
Nb. perhaps use a mixture of qualitative & quantitative objectives - ensure that all have a date and are measurable
Corporate objectives
Concerned with the whole organisation / business, and are the key factors for success.
• Profitability (e.g. ROCE increase) • Growth (sales )• Cash flow• Survival (breakeven)• Etc.
Corporate objectives Using the Balanced Scorecard - Kaplan & Norton
Customer concerns such as service quality, cost, response times Internal measures such as staff productivity and range of skills Financial measures such as revenue, profitability and costs Learning and growth/innovation measures such as rate of new
product development, availability of staff training
Marketing Objectives
Usually relate to products (services) or markets (customers):
• market share• sales revenue / volume (units sold)• brand awareness / preference• time to market / NPD speed• customer satisfaction /churn / loyalty• etc.
eMarketing Objectives
Sell Serve Save Speak Sizzle
Smith and Chaffey
eMarketing Excellence
Marketing strategy
‘“One of the principal purposes of marketing strategy is
for you to be able to choose the customers, and hence
the markets, you wish to deal with”
McDonald.M 1998
Overview of the Segmentation process
Segmentation improves organisational effectiveness by:
• identifying meaningful & actionable opportunities and
• finding customers and
• targeting them with specific offers and messages
What happens if you fail to segment properly?
Poor segmentation usually leads to poor marketing, as often, the only option left is to compete on price!
Marketers need to find the best fit between their product and the chosen customer group.
(to maximise customer value in the product and so build customer loyalty)
Poor segmentation usually leads to poor marketing, as often, the only option left is to compete on price!
Marketers need to find the best fit between their product and the chosen customer group.
(to maximise customer value in the product and so build customer loyalty)
Consumer example – Health & Leisure clubs UK
Markets can be segmented on many different ways.
The UK Health& Leisure market can be Segmented by preferred time of use e.g.:
Daytime users - young mums with children, and older retired people Evening users - people who keep fit after day at work
Leisure clubs tailor their facilities to cater for the needs of these different segments e.g.: Crèche facilities during the day Different styles of music played Higher prices in the evenings as bigger demand and higher use of facilities
Consumer example: NIVEA Sun Brand
Demographics – Men prefer convenience; Women enjoy more luxurious products, adults with children value protection.
The two main aspects of attitudes relate to:
• Usage occasion - holiday, outdoor sports, gardening, working etc. • Benefit sought - protection the primary benefit but preferred delivery will vary e.g. convenience is important to men so they choose spray-on
Demographics – Men prefer convenience; Women enjoy more luxurious products, adults with children value protection.
The two main aspects of attitudes relate to:
• Usage occasion - holiday, outdoor sports, gardening, working etc. • Benefit sought - protection the primary benefit but preferred delivery will vary e.g. convenience is important to men so they choose spray-on
Segment criteria = MASHA
An effective segment approach must satisfy the following conditions:
Measurable – Size, purchasing power and profiles can be measured
Accessible - Segments can be reached
Substantial - Large enough to be worthwhile
Homogenous - Uniqueness of response
Actionable - Programs developed to attract and serve the segments
23 © Galenica Group
Deciding which segments to target depends on how attractive they are and how well your brand (company) can serve them (your competence)
Brand (or Company) competence
High Medium Low
Segm
ent
attr
activ
enes
s
High
Medium
Low
150 100 50 0
500
250
0
A
B C
Note: size of circle indicates volume/value of segment
Consumer Segmentation
Geographic Climate, country, region,
Demographic Age, sex, race, family life cycle
Geodemographic e.g. :ACORN. MOSAIC
Psychographic- attitudes, interests & opinions Behavioural- benefits, occasion
Organistional Segmentation
Segment by Size of organisation Location Industry sector End use
Then identify… DMU structure Decision process Buy class Type of purchasing Organisation innovation
level Purchasing strategy
Targeting
Positioning explained
Positioning a brand means emphasising its distinctiveness, based on
characteristics relevant to the potential/ actual customer.
To start this process, answer the following questions about your brand:
27 © Galenica Group
• What is the brand for?
• Who is the brand for?
• When (& where) is the brand for?
• Who is the brand competing directly with?
Brand Positioning using “Points of Difference”Consumer example
Often, the people responsible for positioning brands have
concentrated on “points of difference” — the benefits
that set each brand apart from the competition.
Tide is differentiates on “whitening” power BMW differentiates on superior handling – adverts
now tell us that they “build not only cars, but joy”
Such points of differentiation are, in many cases, what
consumers remember about a brand
Points of Difference may not be enough
But points of difference alone are not enough to
Sustain a brand against competitors.
Marketers also need to understand:
the frame of reference within which their brands work and
address the features/benefits that their brand has in common (points of parity) with competitors
Frame of Reference
A customer’s frame of reference is made up of
their emotional and physical needs, and the
Dynamics of the situation (e.g. time and place) in
which those needs occur.
The frame of reference sets the parameters for a customer’s “consideration set” – the brands theywill choose from.
Points of Parity
Fast food - like McDonalds (Point of parity)
Or
Tasty & Healthy food - unlike McDonalds (points of difference)
Subway’s executives saw taste as key element of the fast-food frame of reference and believe that taste is more important than healthfulness to core fast-food customers.
32 © Galenica Group
Positioning Statement Component parts - Template
Template of Positioning Statement
For:
Because our product is the:
that will:
Because:
Do:
<..which Target customer..>
<.. Summary statement ((the point of difference within the
frame of reference).>
<..Customer benefits..>
< ..< ..Reason to believe..>
< The Behavioural Objective (what you want them to do) >
TE
MP
LA
TE
Positioning influences all your brand activities
Brand Positioning
Marketing Mix
Resource Allocation
New IndicationsPackaging
Strategic Focus
LifecycleMgt.
Media Strategy
Positioning & Messaging
Positioning enables the creation of a compelling and distinct “offer” by linking brand attributes and the benefits that the customer gains from using it.
Messages can then be developed for the brand that will be most likely to trigger the specific desired behaviour for the target customer segment.
We need our customers to appreciate why they should choose us!
The Planning Cycle
Stage One
Where are we now?
Stage Two
Where do we want to be?Stage Three
How might we get there?
Stage Four
Which way is best?
Stage Five
How can we ensure arrival?
Factors influencing strategic choice
Relative size and market position Existence of competitive advantage Company history Perceptions of risk Stakeholders’ expectations Organisational culture Customers and competitors
Strategies for GrowthAnsoff Matrix
Market development
Existing
Market penetration
Product development
Diversification
New
New
Exi
stin
g
MA
RK
ET
S
PRODUCTS
Porter’s generic strategies
Broad cost leadership Narrow cost leadership
Broad differentiation Narrow differentiation
(focus/niche’)
‘Offensive Marketing’ Davidson.H
Categorises strategic direction according to market position as follows:
market leaders market challengers market followers market nichers
Competitive warfare adapted by Jon Twomey from Kotler & Singh
TIMEFRAME
Short Medium Long
STRATEGY
Follow
Challenge
Defend
Offensive strategies
Attacker Defender
Bypass Attack
Flanking attack
Frontal attack
Encirclement attack
GuerrillaAttack
Developed by Kotler & Singh
Defence strategies
AttackerDefender
Pre-emptivedefence
Counter-offensivedefence
Flanking defence
Positiondefence
Contractiondefence
Mobiledefence
Developed by Kotler & Singh
Davidson’s 8Approaches to developing sustainable competitive advantage
• Superior product benefit• Perceived advantage• Low-cost operations• Legal advantage• Superior contacts• Superior knowledge• Scale advantages• Offensive advantages
Source: Prof.H.Davidson, 1987Offensive Marketing
Market GrowthGE Strategic Business Planning Grid
Business Strengths
Strong Medium Weak
Low
M
ediu
m
Hig
h
Invest for g
rowth
Manage selectively fo
r earnings
Harvest/
withdra
wMar
ket
Att
ract
iven
ess
Shell Directional Policy Matrix
Prospects for sector profitability
Str
ong
Ave
rage
Wea
k
Bu
sin
ess’
co
mp
etit
ive
cap
abil
itie
s
Disinvest Phased withdrawal Double or quit
Phased withdrawal Custodial growth Try harder
Cash generation Growth leader Leader
Low Medium High
4 – Implementation & Control
The Planning Cycle
Stage One
Where are we now?
Stage Two
Where do we want to be?Stage Three
How might we get there?
Stage Four
Which way is best?
Stage Five
How can we ensure arrival?
Why is implementation so important?
“It is not enough to produce a great plan and expect
other people to go away and make it happen.
Implementation is not something we bolt-on at the end
of generating strategy - implementation IS strategy.”
Piercy.N 2000
Making implementation happen
Screen strategies for implementation problems EARLY isolate and evaluate implementation problems identify and evaluate key players ensure internal marketing is effective
The control process
goal setting (what do we want to achieve?) performance measurement
(what is happening?) quantity, quality, cost etc.
performance diagnosis (why is it happening?) corrective action (what should we do about it?)
environmental changes internal problems
Measuring marketing outcomes* *
Measuring outcomes must start with having SMART objectives for your business at the outset of your marketing plan
Lack of clear objectives will make measurement impossible
Measuring progressKey performance indicators derived from balanced scorecard objectives
Customer concerns such as service quality, cost, response times
Internal measures such as staff productivity and range of skills Financial measures such as revenue, profitability and costs Learning and growth/innovation measures such as rate of new
product development, availability of staff training
Summary
appreciate the importance of organisation mission/vision statements
develop SMART objectives describe market segmentation methods, explain the key
targeting selection criteria, design unique positioning statements identify strategic options using appropriate models, select and
justify your choices Understand the barriers to implementation Appreciate the importance of measurement/control
Other potential sources
Marketing Plans: Malcolm McDonald The Marketing Plan in Colour: Malcolm McDonald, Peter Morris Marketing Communications: Chris Fill Marketing Research, An Integrated Approach: Alan Wilson Marketing: Concepts and Strategies: Dibb et al Value-based Marketing: Peter Doyle On Competition (A Harvard Business Review Book): Michael E. Porter Competitive Advantage of Nations (Macmillan Business): Michael E. Porter Strategic Marketing Management: C. Gilligan, R. Wilson eMarketing Excellence (eMarketing Essentials): D. Chaffey & P.R. Smith Marketing the E-Business: Lisa Harris & Charles Dennis Internet Marketing: D.Chaffey, R.Mayer, K.Johnston, F. Ellis-Chadwick
Plus: Ambler, T. (2000) ‘Marketing and the Bottom Line’ FT Prentice Hall Davison, H. (1997) ‘Even more Offensive Marketing’, Penguin Kaplan, R. and Norton, D. (1996) ‘The balanced scorecard: Translating strategy into action’ Harvard Business
School Press Piercy (2000) ‘Market-Led Strategic Change’ 2nd Edition, Butterworth Heinemann Porter (2001) ‘the impact of the Internet on industry structure’ Harvard Business Review