topic 1 internal environment

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Develop and Implement Marketing Strategies

Topic One: Introduction to Marketing and Environmental Analysis

SITXMPR502



OverviewAt the end of this topic, you should be able to:

Identify and confirm core activities, customer base, business values and current business direction

Identify and analyse information on current and past marketing and its effectiveness

Review performance information from all areas of the business to identify strengths, weaknesses and critical success factors

Identify any underperforming products and services and analyse and report on reasons for under performing

Record and report information according to organisation requirements


Key definitions: Strategy

Strategy: A plan of action designed to achieve overall long-term or overall aim.

Strategic planning: Is the managerial decision process that matches the companys resources and capabilities to its market opportunities for long-term growth.

Marketing Strategy: A plan of action for identifying and analysing a target market and developing a marketing mix to meet the needs of that market

Tactics: The day to day operational activities (tactics) that are undertaken to fulfil the strategic plan.


Introduction to Marketing and Marketing Terms

The following slides will take you through the main definitions for the marketing process as an introduction. We will go more in depth in later topics.


‘Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational goals.’

What is marketing?

American Marketing Association definition


What is a Marketing Objective?

• A statement of what is to be achieved through marketing activity.

• Objectives should be SMART

• Specific

• Measurable

• Achievable

• Realistic

• Timely


Marketing orientation


The marketing concept

The idea that the social and economic justification for an organisation’s existence is the satisfaction of customer wants and needs, while meeting organisational objectives.


The marketing concept

Focusing on customer wants and needs can be a source of competitive advantage through: creating customer value

maintaining customer satisfaction

building long-term relationships.


The marketing processOrganisation mission

Market opportunity

analysis

Marketing strategy

Target market

selection

Marketing objectives

Marketing mix

•product•distribution•promotion•price

Implementation

Evaluation

Environ-

mental

scan


A unique blend ofproduct

Pplace (distribution)

promotion

pricing strategies.

Designed to produce mutually satisfying exchanges with a target market.

This is commonly referred to as the 4P’s and this will be examined in depth in the marketing plan.

The marketing mix


Why is marketing important to an organisation?

It:

• is how the organisation talks to their consumer

• can add value to the product with both tangible and intangible benefits does tangible and intangible need to be explained.

• can enable new products to be communicated and build brand awareness.

• enables a company to compete in the market.

• shows a product/company competitive advantage.

Not for profit organisations need marketing to build awareness for their cause.


Introducing consumer needs and wants

One of the greatest needs and challenges of any business is to understand and develop marketing strategies, which best suits, their products, and services. Modern marketing programs are established, around the “marketing concept,” which directs managers to focus their efforts on identifying and satisfying customers’ needs.

The success of a business or organisation is the ability to attract and maintain satisfied customers. Marketing begins and ends with a focus on the customer, who is the most important person in the process.

If there are no customers, guests or visitors eagerly wishing to use your product then your tourism or hospitality business will cease to exist. This should in turn lead to the business or organisation making a profit.


Needs and wants defined (Kotler)

A human need is a state of deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belonging, and esteem. These needs are not created by society or by marketers. They exist in the very texture of human biology and the human condition. e.g. A hotel if you are on holiday would be a human need

Wants are desires for specific satisfiers of needs. Although people’s needs are few, their wants are many. They are continually shaped and reshaped by social forces and institutions, including churches, schools, families and business corporations. e.g. to stay in a 5 star hotel

Demands are wants for specific products that are backed by an ability and willingness to buy them. Companies must measure not only how many people want their product but, more importantly, how many would actually be willing and able to buy it.


Sales orientated marketing vs Customer orientated marketingSales orientated:

the idea of mass marketing is to mass-produce, mass distribute, and mass promote one product to all buyers. Traditionally, this was the best way for businesses to operate, as it was cheaper for a company to produce one item repeatedly, rather than producing an item with many different variations, or a whole range of different items. Mass production was economic for organisations; however, it did not cater for the variety or specificity often required by customers.

Henry Ford, the founder of the motor vehicle giant Ford, strongly endorsed the mass production philosophy. When asked about the lack of choice for customers, Ford stated that customers could have any colour car they want, 'as long as it is black!' In summary, sales oriented marketing focuses on the needs of organisations, rather than the needs of customers.


Sales orientated marketing vs Customer orientated marketingCustomer Orientated:

Gradually organisations began to recognise a major flaw in mass marketing: not every customer needs or wants the same thing. Although mass production is a cheap mode of production, it does not necessarily equate to high profits. Mass produced items only appeal to a limited audience and hence have smaller sales levels and smaller profits. On the other hand, if products or services come in a number of varieties, and cater to a variety of different customer needs and wants, then sales levels will be higher. e.g Think of the different style of airlines you can fly Jetstar compared to Qantas and what they offer

Organisations began to take a completely new approach to business. With the shift to customer oriented marketing, organisations began to research the needs and wants of their customers prior to production. This research determined what the customers required, and the appropriate goods or services produced


The internal environment

• The internal environment is the controllable elements within the organisation that influences how well it operates.

• Factors that influence the organisation:

• Employees: Relates to their performance, skills, levels, training and current and future availability

• Corporate Culture: made up of values, norms and beliefs that influence the behaviour of everyone in the organisation. For example, corporate culture may dictate whether new ideas are welcomed or discouraged, the importance of ethical behaviour and even the appropriate dress for work. Think of what Richard Branson who started Virgin corporate culture would have been like

• Corporate Social Responsibility: Company's consideration on its impact on society and how it is perceived in the marketplace

• Customers: An organisation must examine their customers buying behaviour relating to benefits sought, customer motivation, the buying process, frequency of purchase and how needs change over time.


Resources to examine the internal environment

Businesses can use a number of tools to examine their internal and external business environment. Some of these include:

SWOT Analysis

GE Matrix

BCG Growth Share Matrix

These are examined in the slides below.


SWOT analysis

• An assessment of an organisations strengths, weaknesses, opportunities and threats.

• Strengths and weaknesses are internal factors and are directly controllable by marketers.

• Strengths refer to competitive advantages or core competencies

• Weaknesses refer to any limitations that a company faces in developing or implementing marketing strategy

• Opportunities and threats are external factors that exist independently of the organisation and therefore represent issues to be considered by all organisations

• Opportunities refer to favourable conditions in the environment that could produce rewards for the organisation

• Threats refer to conditions or barriers that may prevent the organisation from reaching its objectives.


SWOT analysis


SWOT explained

SWOT is a great tool to use to show both internal and external influences and can be used to either:

• Identify areas for improvement

• Identify opportunities to take advantage of

• Can be used for a new product such as a new hotel or tourist attraction e.g. Wet and Wild in Sydney

• Can be used to identify how we are performing in relation to our competitors e.g. Virgin and Qantas or Flight Centre and Helloworld

View this example

• http://marketingteacher.com/swot/starbucks-swot.html

http://marketingteacher.com/swot/starbucks-swot.html


BCG Growth Share Matrix

The BCG (Boston Consulting Group) model focuses on determining the potential of a company's existing successful Strategic Business Units to generate cash that the company can then use to invest in other businesses.


BCG Growth Share Matrix examined

Question marks:

These are the problem child

Most businesses start as question marks

They will absorb great amount of cash if market share remains unchanged

Question marks can become any of the other quadrants

Investment should be high for this quadrant

http://www.slideshare.net/9579764806/bcg-matrix-with-example





Stars:

The leader in the business

Require heavy investment

Leads to large amount of cash generation

Attempts need to be made to hold the market share



Cash Cow:

Foundation of the company and were previous stars

They generate more cash than required

They try to invest as little cash as possible to extract high returns

Industry is mature not declining



Dogs:

Cash traps

Business is in a declining stage

High cost – low quality


Examples: BCG Growth Share Matrix

Star: Ipad

Question Mark: Energy Drinks (Mother), a new hotel in an tourist area with other hotels on the same street

Cash Cow: Woolworths, specific flight routes e.g. Sydney to Bali

Dog: Video player and DVD Stores (Video Ezy), Sega World in 1998 -2001 in Sydney


Why use BCG Matrix?• To understand which products within the company to invest in both cash and

resource allocation

• Profile products as well as competitors

• Understand the stage of the product life cycle of various products

Benefits:

• Quick and easy – simple to understand

Limitations

• Only uses two dimensions

• Difficult to get market share data

• High market share does not always mean profits


GE Matrix-Generic Strategy OptionsThe Matrix is a 9 quadrant matrix used to identify the positions of businesses according to market/industry attractiveness and business strengths/competitive position.


How to use the matrix?

This matrix matches the industry to the business. It uses both internal and industry data (or sometimes common sense) to map out the results.

First, look at the attractiveness of the industry take the airline industry as an example Is the industry/market highly competitive or are there gaps in the market? Is there an opportunity for a high profit product to be introduced? Is there a large cost to enter this market?

Next you must match your business and its internal strengths. Imagine you have just opened up a new hotel. For example, do you have the staff to provide a service in this industry – not just in number but in skills? What is the current state of the business? Does it have good equity?


3. GE/Mckinsey Matrix (3/3)

Limitations of GE/Mckinsey Matrix

Like many tools that businesses use, there are some limitations due to the lack of information potentially available. There are also some specific limitations:

Core competencies of the business are not represented and taken into account

Interactions between various business units is not identified and this could be a strength of the business


Portfolio tools/resources offer certain advantages

Portfolio tools have some very real limitations

It encourages top management to evaluate each of the corporation’s businesses individually and to set objectives and allocate resources for each It stimulates the use of externally oriented data to supplement management’s judgment It raises the issue of cash flow availability for use in expansion and growth Its graphic depiction facilitates communication

It is not easy to define market segments It suggests the use of standard strategies that can miss opportunities or be impractical It provides an illusion of scientific rigor when in reality positions are based on subjective judgments It is not always clear what makes an industry attractive or what stage a product is at in its lifecycle


References

Marketing, Core Concepts and Applications 2nd Asia Pacific Edition; Elliot, Rundle-Thiele, Waller, Paladino; Wiley, 2008

Real Marketing, The People, The Choices; Soloman, Saupin, Hughes, Chitty, Marshall, Stuart; Pearson, 2012

http://knol.google.com/k/the-marketing-concept-kotler#The_Marketing_Concept

http://knol.google.com/k/the-marketing-concept-kotler#The_Marketing_Concept

topic 1 internal environment

Education

marketing concept

past marketing

marketing terms

marketing orientation

marketing activity

marketing strategies

strategy strategy

market tactics