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:


• 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.


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



Stage Four

Which way is best?

Stage Five


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



Stage Four

Which way is best?

Stage Five


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

mktg 3-strategy 1

Documents