strategy model types1

The MAANZ MXpress Program

Planning and Strategy Model TypesPart 1

Dr Brian Monger

Copyright January 2013. This Power Point program and the associated documents remain the intellectual property and the copyright of the author and of The Marketing Association of Australia and New Zealand Inc. These notes may be used only for personal study associated with in the above referenced course and not in any

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Marketing In Black and White 2

Dr. Brian Monger

• Brian Monger is the CEO of MAANZ International and a Professional marketer and consultant with over 40 years

experience.


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Strategic Planning

• Strategic planning = the “managerial process of developing andmaintaining a viable fit between the organisation’s objectives, skills,and resources and its changing market opportunities.”

• Two key elements of strategic planning are:

‐ The preparation of a SWOT analysis,‐ The establishment of strategic objectives.

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Elements of a solid business planning process

• The major elements of a business planning process include the following:

– Defining the value proposition– Framing the market opportunity– Detailing how to reach customers

– Developing an implementation plan– Evaluating potential external influences

– Articulating the revenue model– Calculating preliminary financial projections

– Establishing critical milestones– Summarizing the advantage

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Michael Porter on the Internet• ‘The key question is not whether to deploy

Internet technology – companies have no choice if they want to stay competitive – but

how to deploy it.’

Porter, M. (2001) Strategy and the Internet, Harvard Business Review,March 2001, 62–78.

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Influences on eMarketing strategy

Figure 1 Internal and external influences on Internet marketing strategy

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Overview of the eMarketing Planning Process

• How can information technologies assist marketers in building revenues and market share or lowering costs?

• How can firms identify a sustainable competitive advantage with the Internet when so little is understood about how to succeed?

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Overview of the eMarketing Planning Process

• The best firms have clear visions that they translate, through the marketing process, from eBusiness objectives and strategies into eMarketing goals and well‐executed

strategies and tactics for achieving those goals.

• This marketing process entails three steps:‐ Marketing plan creation, ‐ Plan implementation,

‐ Evaluation/corrective action.

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Creating an eMarketing Plan

• eMarketing plan: It is a guiding, dynamic document that links the firm’s eBusiness strategy (eBusiness model) with technology‐driven marketing strategies and lays out

details for plan implementation through marketing management.

• The eMarketing plan serves as a roadmap to guide the direction of the firm, allocate resources, and make tough decisions at critical junctures.

• There are two common types of eMarketing plans:‐ The napkin plan,‐ The venture capital plan.

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P

Legal - Ethical Technology Competition Other factors

E-Business Strategy/

Model

Performance Metrics

SWOT

E-Marketing Plan

E-Marketing Strategy

Implementation Marketing Mix/CRM

Markets

Internet E

S

Exhibit 3 - 1 E-Marketing Plan – Strategy Formulation and Implementation

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The Napkin Plan

• Dot‐com entrepreneurs were known to simply jot their ideas on a napkin over lunch and then run off to find financing.

• The big firm version of this is the just‐do‐it. An employee has an idea, and convinces management to just do it.

• These plans sometimes work and are sometimes even necessary but they are not recommended when substantial resources are involved. Sound planning and thoughtful implementation are needed for long‐term success in business.

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The Venture Capital eMarketing Plan

• Small to mid‐sized firms and entrepreneurs with start‐up ideas usually begin with anapkin plan without going through the entire traditional marketing planning process.

• BUT as the firm grows and needs capital, it has to put together a comprehensiveeMarketing plan.

• Where does an entrepreneur go for capital?‐ Sometimes bank loans,‐ Most of the time, it is equity financed,‐ Private funds (friends and family),‐ Angel investors,‐ Venture capitalists.

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• Investors are looking for a well‐composed business plan, and more importantly, a goodteam to implement it.

• The business plan should contain enough data and logic to prove that:

– The eBusiness idea is solid,

– The entrepreneur has some idea of how to run the business.

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• 9 questions that every business plan should answer:

1. Who is the new venture’s customer?

2. How does the customer make decisions about buying this product orservice?

3. To what degree is the value offer a compelling purchase for thecustomer?

4. How will the value offer be priced?

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• 9 questions that every business plan should answer:

5. How will the venture reach all the identified customer segments?6. How much does it cost (in time and resources) to acquire a customer?7. How much does it cost to produce and deliver the product or service?8. How much does it cost to support a customer?9. How easy is it to retain a customer?

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• VCs look for a way to get their money and profits out of the venture within afew years:‐ The golden exit plan is to go public and issue stock in an initial public offering

(IPO),‐ As soon as the stock price rises sufficiently, the VC cashes out and moves on to

another investment.

• All VCs’ investments are not successful. But if even one out of 20 is anAmazon.com, the risk was well worth the reward.

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Step 2—Link eBusiness with eMarketing Strategy

• Marketers need to:

1 Review the marketing and eBusiness plans,

2 Conduct a strategic planning to help achieve the firm’s eBusiness goals+ define potential revenue streams,

3 Create supporting eMarketing strategy for the eBusiness goals:

A Tier one strategy: marketers design segmentation, targeting,differentiation, and positioning strategies,

B Tier two strategy deals with the 4P’s and relationship management bycreating strategies around the offer (product), value (pricing), distribution(place), and communication (promotion),

4 Further, marketers design customer and partner relationship strategies(CRM/PRM).

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Segmentation

Targeting

Value

Differentiation

CRM/PRM

Positioning

Communication

Distribution

Offer

E-MarketingStrategyTier 2

tasks

Tier 1tasks

Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers

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Tier One eMarketing Strategic Planning: Segmenting & targeting

• Market opportunity analysis (MOA):

• The demand analysis = market segmentation analyses to describe and evaluate the potential profitability, sustainability, accessibility, and size of various potential

segments.•

• The segment analysis in the B2C market with demographic characteristics, geographic location, selected psychographic, and past behavior toward the

descriptors help firms identify potentially attractive markets.

Allows the firm to select its target market and understand its characteristics, behavior, and desires in the firm’s product category.

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Tier One eMarketing Strategic Planning: Segmenting & targeting

• Tools:• ‐ Traditional segmentation analyses.

• Analyzes of customer bases using cookies, database analyses, and other techniques,• Supply analysis: forecasts segment profitability + finds competitive advantages,

• Study of competition to find the firm own performance advantages.: strengths and weaknesses, eMarketing initiatives, …

• Identify future industry changes.

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Tier One eMarketing Strategic Planning: Identifying brand differentiation variables

and positioning strategies

• The understanding of the competition + the target(s) Differentiation of the products to provide benefits perceived as important by the target.

• The positioning statement: the desired image for the brand relative to the competition.

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Tier Two eMarketing Strategic Planning

• The two Tiers are elaborated in an interative process:

• It is difficult to know what the brand position should be without understanding the offer that comprises the brand promise.

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Stages in Internet development

Figure 3 A simple framework for Internet marketing strategy development

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Strategy development process

Figure 4 A ten-step strategic marketing planning processSource: McDonald, 1999

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Dynamic strategy model

Figure 5 Dynamic eBusiness strategy modelSource: Adapted from description in Kalakota and Robinson (2000)

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eBusiness strategy model1. Web presence 2. E-commerce 3. Integrated

e-commerce4. eBusiness

Services available Brochureware or interaction with product catalogues and customer

service

Transactional e-commerce on buy-side or sell-side. Systems

often not integrated

Buy and sell-side integrated with ERP or legacy systems. Personalisation of services

Full integration between all internal organisational

processes and elements of the value network

Organisational scope Departments acting independently, e.g. marketing department, IS

department

Co-ordination through steering committee or e-

commerce manager

Cross-organisational Across the enterprise and beyond (extraprise)

Transformation Technological infrastructure Technology and new responsibilities identified for

e-commerce

Internal business processes and firm structure

Change to eBusiness culture, linking of business processes

with partners

Strategy Limited Sell-side e-commerce strategy, not well integrated with

business strategy

E-commerce strategy integrated with business

strategy using a value-chain approach

eBusiness strategy incorporated as part of

business strategy

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Stage models(Quelch and Klein (1996))

Figure 6 Levels of web site development in: (a) the information to transaction model and (b) the transaction to information model of Quelch and Klein (1996)

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How Does a Firm Develop an Online Offering?

single product category

several product categories

Identifyscope of offering

problem recognition

information search

evaluation of alternatives

purchase decision

satisfaction

Loyalty

Disposal

Identify customerdecision process

purchase-decision cycle

egg diagram

Map offering tocustomer decision process

Online Offering

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What Is a Successful Resource System?

• Modifications to the activity system logic for the online marketplace

– Shift from physical world to virtual and back to physical world

– Shift from a supply‐side focus to a demand‐side focus

– Shift from activities to capabilities– Shift from single to multifirm systems

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Specifying a Resource System• Step 1: Identify core benefits in the value cluster

• Step 2: Identify capabilities that relate to each benefit• Step 3: Link resources to each capabilities

• Step 4: Identify to what degree the firm can deliver each capability• Step 5: Identify partners who can complete capabilities

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Criteria to Assess the Quality of a Resource System

• Uniqueness of the system• Links between capabilities and benefits• Links among capabilities in the system

• Links among resources• Links between virtual world and physical

world business systems• Sustainable advantage

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A Six‐Step eMarketing Plan Step Tasks Situation analysis Review the firm’s environmental and SWOT analyses.

Review the existing marketing plan and any other informationthat can be obtained about the company and its brands.

Review the firm’s e-business objectives, strategies, andperformance metrics.

Link e-business withe-marketing strategy

Identify revenue streams suggested by e-business modelsTier 1• Perform Marketing Opportunity Analysis to identify

target stakeholders.Specify brand differentiation variables.Select positioning strategy.Tier 2Design the offer, value, distribution, communication, andmarket/partner relationship management strategies.

Objectives Identify general goals.Select target specific goals.

Implementation plan Design e-marketing mix tactics.• product/service offering• pricing/valuation• distribution/supply chain• integrated communication mixDesign relationship management tactics.Design information gathering tactics.Design organizational structures for implementing the plan.

Budget Forecast revenues.Evaluate costs to reach goals.

Evaluation plan Identify appropriate performance metrics.Exhibit 3 - 1 Marketing Plan Process

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Step 1—Situation Analysis

• Planning for eMarketing does not mean starting from scratch but working with existing business, eBusiness, and marketing plans is an excellent place to start.

Opportunities Threats• Hispanic markets growing and

untapped in our industry.• Save postage costs through e-mail

marketing.

Pending security law means costly softwareupgrades.Competitor X is aggressively using e-commerce.

Strengths Weaknesses1. Strong customer service department.2. Excellent Web site and database

system.

1. Low tech corporate culture2. Seasonal business: peak is summer

months.E-business Goal: Initiate e-commerce in within one year.Metric: Generate $500,000 in revenues from e-commerce during the first year.

Exhibit 3 - 1 SWOT, Objective, and Metric Example from E-Business Plan

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Step 1—Situation Analysis

• The organizational eBusiness plan: SWOT analysis => eBusiness strategy.

• The marketing plan: gathers information about the firm’s products, the markets currently served,and so forth.

• The distribution plan: identifies areas where the products are currently sold and suggestsgeographic gaps that might be receptive to e‐commerce.

• Promotion plan information: gives clues about how the Internet fits with the firm’s currentadvertising, sales promotion, and other marketing communications.

• The firm and brand positioning in the marketplace: Internet planners must decide how closelyWeb site content and promotion will follow current positioning strategies.

• The marketer moves to strategy formulation.

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Environment, Strategy, and Performance (ESP)

• Business environment: legal, technological, competitive, market‐related, and otherenvironmental factors external to the firm = Opportunities and Threats,

• SWOT analyses = Strengths and Weaknesses,

• eBusiness strategies + eBusiness models + eMarketing plans = Help the firm accomplish its overall goals,

• Determine the success of the strategies and plans by measuring results.

= Performance metrics, specific measures designed to evaluate the effectiveness and efficiency of the eBusiness and eMarketing

operations.

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P

Legal - Ethical Technology Competition Other factors

E-Business Strategy/

Model

Performance Metrics

SWOT

E-Marketing Plan

E-Marketing Strategy

Implementation Marketing Mix/CRM

Markets

Internet E

S

Exhibit 1 - 1 E-Marketing in Context: the ESP Model

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Assessing demand

• Need to assess:1. Access to Internet

2. Proportion of customers influenced by channel

3. Proportion of customers who buy direct

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Porter’s five forces

Power ofsuppliers

Bargainingpowers ofcustomers

Extent of rivalrybetween

competitors

Threat ofsubsitutes

Threat of newentrants

The business

Figure 7

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Example objectives• Achieve 10 per cent online revenue contribution within two years;

• achieve first or second position in category penetration in the countries within which we operate (this is effectively online market share and can be measured through visitor rankings

such as Hitwise (Chapter 2) or better by online revenue share;• cost reduction of 10 per cent in marketing communications within two years;

• increase retention of customers by 10 per cent;• increase by 20 per cent within one year the number of sales arising from a certain target

market, e.g. 18–25‐year‐olds;• create value‐added customer services not available currently;

• improve customer service by providing a response to a query within two hours, 24 hours per day, seven days a week;

• all other objectives to be achieved profitably giving a return on investment in a three year period.

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Marketing‐led design objectives• Customer acquisition– Proposition, recruitment offer

• Conversion– Engage first time visitors

– Clear call‐to‐action• Customer retention

– Content and offers should encourage repeat visitors• Service quality

• Branding– To reassure

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Risk/reward analysis

Figure 8 Example of risk–reward analysis

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MAANZ MXPress Program