MARKETING MANAGEMENT ENVIRONMENT

By :Pooja (02)

Chitra (06) Rashmi (14) Sunil (15) Jagannath (17)

Competitive Strategies

• Strategies that strongly position the company against competitor and give the company strongest possible strategic advantage.

Competitive Strategies helps in:1. Building profitable customer relationships 2. Gaining competitive advantage3. Analyzing their competitors

Competitive Strategies

• No company can follow only one strategy. For example, Johnson & Johnson uses one

marketing strategy for its common product such as BAND-AID & Johnson’s baby products; and different marketing strategy for its High Tech healthcare products such as Vicryl Plus, antibacterial surgical sutures or NeuFlex finger joint implants.

Porter Competitive Model

Intra-Industry Rivalry

Strategic Business Unit

BargainingPower

of Buyers

Bargaining Power

of Suppliers

Substitute Products

and Services

PotentialNew Entrants

Source: Michael E. Porter“Forces Governing Competition in IndustryHarvard Business Review, Mar.-Apr. 1979

Threat of New Entrants

• Profitability in the Industry attracts new players• Existence of large consumer base • Government policies on entry of global firms• Existing and potential incentives for the Industry• Role of technology and Innovations

Bargaining Power of Suppliers• Powerful suppliers – Concentrated, significant

switching costs and produce highly customized products.

• Examples (Rolls Royce, GE, etc. for the aircrafts)• Weak Suppliers – Many competitive suppliers

(Ancillary goods) • Examples: Automobiles, crops, textile

Bargaining Power of Buyers

• Two situations can be visualized• Powerful buyers – Products are standardized, buy

significant proportion • Examples: Indian Railways (electrical fans, catering),

AMUL • Weak Buyers – Fragmented, significant buyer switching

costs• Examples: Small Scale Industries

Threat of Substitutes

• Availability of close substitutes• Prices of substitutes• Threat for new substitutes• Examples

– TV, DTH– Bottles and cans

Barriers to Entry and Exit

• Its related to threats of substitutes• Easy to enter – common technology, low branding, low

scale of operations, access to distribution channels• Difficult to enter – High brand pull, technology is

patented and restricted distribution channels• Easy to exit – assets are saleable, low exit costs,

independent business• Difficult to exit – high exit costs (insurance,

infrastructure like power), specialized assets and inter-related business

Intra-Industry Rivalry

• Top 10 firms in different decades• Some firms vanish from the Industry• Intense price-wars• Examples

– Mobile tariff reductions– Air fares

BCG Matrix

• Portfolio planning model-Strategic Business Units based on market growth and market share

• Dogs – low market share and low growth rate• Question Marks – growing rapidly but low market share-

problem child• Stars – high growth rates, consume large cash • Cash Cows – generate more cash than they consume

BCG Growth Share Matrix

General Electric

Annual market growth rate Overall market size Historical profit margin Current size of market Market structure Market rivalry Demand variability Global opportunities

Market Attractiveness

Current market share Brand image Brand equity Production capacity Corporate image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness

Business Strength

Strategies

Invest to Build• Challenge for leadership• Build selectively on strength

Protect Position• Invest to grow• Effort on maintaining strength

Build Selectively• Invest in most attractive segment• Build up ability to counter competition• Emphasize profitability by raising productivity

Strategies

Protect & Refocus• Manage for current earning• Defend strength

Selectivity for Earning• Protect existing program• Investments in profitable segments

Build Selectively • Specialize around limited strength• Seek ways to overcome weaknesses• Withdraw if indication of sustainable

growth are lacking

Strategies

Manage for Earnings• Protect position in profitable segment• Upgrade product line• Minimize investment

Limited Expansion for Harvest• Look for ways to expand

without high risk

Harvest • Sell at time that will maximize cash value• Cut fixed costs and avoid investment

meanwhile

Hindustan Unilever Ltd.

Indian Tobacco Company

Nirma Ltd

Nestlé India Dabur India Ltd Henkel Spic

Cadbury India Modi Revlon

Godfrey Phillips

BU

SIN

ESS

AT

TR

AC

TIV

NE

SS

BUSINESS STRENGTH

HIG

H

MED

IUM

LOW

STRONG MEDIUM LOW

FMCG INDUSTRIES

EXPLANATION……

• HUL is leader in the market is has high business strength and high

industry attractiveness .

• ITC has medium business strength and high industry attractiveness.

So it can invest more to become a leader.

• Nestle India has strong business strength and medium industry

attractiveness. So it can invest more to become a leader.

• Godfrey Phillips has low business strength and low industry

attractiveness. So it can divest.

• Cadbury India has strong business strength and low industry

attractiveness. So it can invest more to have stable in market.

VALS FrameworkVALS is actually a proprietary term of SRI international. The term was developed by Social scientist and futurist Arnold Mitchell on different classes of people.

VALS Framework

1. Innovators-sophisticated, high self esteem, upscale and image is important

2. Thinkers- conservative, practical, income allows many choices, look for value

3. Achievers- Goal oriented lifestyle, image is very important

4. Experiences- Like “cool stuff”, like excitement and variety spend high proportion of income on fashion

VALS Framework

5. Believers- conservative, like familiar and establish brand

6. Strivers- trendy and fun loving, money defines success, concern about the opinion of others

7. Makers- Practical people, do it yourself, unimpressed by material possession, prefer value to luxury

8. Survivors- Few resources, buy at a discount, very modest market, little motivation to buy

Values, Attitudes and Life-Styles (VALS)

• Vals which is also known as values attitude and lifestyle• Its one of the primary ways to perform psychographic segmentation. • VALS was based on the work of two psychologists:

– Abraham Maslow's hierarchy of human needs – David Riesman's concept of social character.

• All terms areIntangible inert nature of the consumer

• If you know what your consumer is thinking kind of promotions /communications will attract him mosthow determining his vals

• VALS is different for different people.• Example:

Sec A dining out in top class restaurants, wearing only branded clothes, buying the best cars out thereMiddle class be more wary of spending money and would rather concentrate on savings

• How does VALS affect a marketer?• Example: Banker

high income lifestyle sell them investment options, also a term for high income individuals known as HNI (high networth individuals)

low income lifestyle more likely to be targeted for savings

• Resources – Included resources available to an individual such as income, education, intelligence, emotional support, etc.

• Primary motivation – Which determined what actually drives the individual. Is it knowledge, the desire to achieve something or is it to be social.

• Innovators– top of the vals framework. – high income and high resource individuals– independence is very important– have their own individual taste in things – motivated in achieving the finer things in life.

• Buy BMW, Luxury watches, Alien ware

• Thinkers – have high resources and are motivated by their knowledge– are rational decision making consumers – are well informed about their surroundings– are likely to accept any social change because of their knowledge level.

• well educated professional, buy branded products, renowned books

• Believers – more social in nature– lower resources – likely to accept innovation on their own– are the best class of word of mouth consumers

• Old brands like BATA

• Achievers – motivated by achievements– want to excel at their job as well in their family– more likely to purchase a brand which has shown its success over time– are said to be high resource consumers but good switchers

• Buy Honda, i-pad etc

• Strivers – trendy & fun loving– low resource consumer group– wants to reach some achievement are known as STRIVERS– customers do not have the resources to be an achiever– have values similar to an achiever– if a striver can gain the necessary resources such as a high income or social status

then he can move on to becoming an achiever• Buy lottery ticket, playboy etc

• Experiencers – high resources but also need a mode of self expression are known as

Experiencers– it consists of people who want to experience being different e.g. young adults– class of consumers is filled up with early adopters who spend heavily on food,

clothing and other youthful products and services• Buy designer jeans, branded & stylish sport shoes

• Makers – are practical, responsible, self-sufficient – are consumers who also want self expression– are limited by the number of resources they have– would be more focused towards building a better family rather than going out

and actually spending higher amount of money– making themselves into better individuals and families becomes a form of self

expression for the Makers• Buy comfortable chairs, cushions, basic t-shirts

• Survivors – least resources least likely to adopt any innovation– not likely to change their course of action regularly into brand loyal customers

• Old age pension earners living alone for whom the basic necessities are important and they are least likely to concentrate on anything else

• Buy milk, bread

• Conclusion:– Thus the vals framework can be used primarily to

classify consumers based on their values, attitudes and lifestyle

– Once the classification has been done, you know which types of customers you want to target

– Depending on your target customers vals, you can make up your marketing strategy and your promotional message such that it hits your audience at the right spot.

Thank You