Corporate, Business & Marketing Strategy

TOPIC : STRATEGIC MARKETING

Strategic Marketing Vidya Panicker

Reference Text 1. Strategic Marketing by Cravens & Piercy 2. Marketing Strategy by Boyd & Mullins https://www.inkling.com/read/marketing-rogerkerin-10th/chapter-2/the-strategic-marketingprocess

 Born on December 28, 1932, at Chorwad, Gujarat,

into a Modh family. At the age of 16, he moved to Aden, Yemen where he worked there as a gas-station attendant. He returned to India in 1958 with Rs 50,000 and set up a textile trading company. He built India's largest private sector company from a scratch. Over time, his empire spread over businesses like petrochemicals, telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets and logistics. He became the first Indian company to feature in Forbes 500 list. A poll conducted by The Times of India in 2000 voted

What is a Strategy ?
A strategy is a fundamental pattern of present and planned objectives, resource deployments and interactions of an organisation with markets, competitors and other environmental factors. A Strategy should specify : 1. What (objectives to be accomplished) 2. Where (on which industries and product markets to focus) 3. How (which resources and activities to allocate to each product market to meet environmental opportunities and threats and to gain a competitive advantage)

The Components of Strategy

A well developed strategy contains five components or sets issues of

1.

Scope the breadth of strategic domain, should reflect the firms mission or purpose of existence , firms strategic scope
Goals and Objectives - desired level of accomplishment on one or more dimensions of performance (volume growth, profit contribution, ROI) Resource Deployments Identification of a sustainable competitive advantage -

2.

3. 4.

The Hierarchy of Strategies

Environmental Factors Corporate Mission

Corporate Goals and Objectives

Corporate Development Strategy

Corporate Strategy
Development of Resources

Strategic Business Unit 1

SBU 2

SBU n

Business Strategy
Business Unit s Objectives Competitive Strategy Deployment of resources across product-markets and functions

Marketing Strategy for product market entry X

R&D strategy and plans

Human resource strategy and plans

Operations strategy and plans

Functional Strategy

Tactical marketing plan for product market entry X

 Strategic fit expresses the degree to which

an organization is matching its resources and capabilities with the opportunities in the external environment. For matching, the company has to have the actual resources and capabilities to execute and support the strategy. Strategic fit can be used actively to evaluate the current strategic situation of a company as well as opportunities such as M&A and divestments of organizational divisions. Strategic fit requires an internal focus on the firm which seeks to utilize the unique characteristics of the firms portfolio of resources and capabilities. A unique combination of resources and capabilities can eventually be developed into a competitive advantage which the company can profit from. A high degree of strategic fit may be the key to a successful merger, an efficient organization, synergy

 Resources relate to the inputs to production owned

by the company. Capabilities describe the accumulation of learning the company possesses. Resources can be classified both as tangible and intangible: Tangible: Financial (Cash, financial assets) Physical (Location, plant, machinery)

Intangible: Technology (Patents, copyrights) Human resources Reputation (Brands)

Several tools have been developed one can use in order to analyze the resources and capabilities of a company Eg. SWOT Cash flow Analysis Value Chain Analysis Benchmarking

 Corporate Strategy

Decisions about the organisations scope and resource deployments across its divisions or businesses
Business Level Strategy

How a business unit competes within its industry is the critical focus
Marketing Strategy

Focus is to effectively allocate and coordinate marketing resources and activities to accomplish the firms

Corporate, Business and Marketing Strategy

CORPORAT E STRATEGY
STRATEGIC DIRECTION & RESOURCE CONSTRAIN TS BUSINESS & MARKETING STRATEGY MARKET KNOWLEDGE, OPPORTUNITIE S & THREATS

 Amazon: Amazons vision and mission is to be earths

most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.
Apple: Apple is committed to bringing the best personal

computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.
Dell: Dells mission is to be the most successful computer

company in the world at delivering the best customer experience in markets we serve.
Facebook: Facebooks mission is to give people the

power to share and make the world more open and connected.

STRATEGIC MARKETING

https://www.inkling.com/read/marketing-roger-kerin-10th/chapter-2/thestrategic-marketing-process

Strategic marketing is demonstrated through the market driven strategies of successful organisations. Such organisations offer :
a. b.

c.
d.

e.

Superior customer value Possess distinctive capabilities Respond rapidly to diversity and change in market place Develop innovation cultures Recognise global business challenges much earlier than competitors

Strategic Marketing Process

It is a process whereby an organisation allocates

its marketing mix resources to reach its target market. This process is divided into 3 phases : - planning - implementation - control / evaluation phase The strategic marketing process is central to the formation of a marketing plan. The marketing plan is a roadmap for the marketing activities of an organisation for a specified period of time, eg. 1 year or 5 years.

For gaining Competitive Advantage several initiatives are to be taken by the firm for achieving customer objectives :
A well designed marketing strategy Should develop core processes NPD, CRM, Value /

SCM and business strategy implementation Cross functional teams to manage the core processes Forging effective relationships and networks with customers, suppliers, value chain members and competitors Understanding customers, competitors, market environment Active involvement of entire organisation to manage market knowledge
contd

 Continually learn from customers, competitors etc.

to be able to maintain a competitive edge Use the internet and www, corporate intranets and advanced communication systems to enhance customer and supplier relationship Active involvement of the management and entire organisation for considering and practicing ethical

THE STRATEGIC MARKETING PROCESS

The Planning Phase Step 1 (Situation analysis SWOT & Five Forces) Identifying trends in the firms industry Analysing the firms competitors (competitor analysis) Assessing the firm itself (SWOT of the firm) Researching the firms present and prospective customers

Step 2 Market product focus and Goal setting Set market and product goals (STPD strategies) Select target markets Find points of difference (USP of the product / characteristics of a product that make it superior to competitive substitutes. ) Position the product Step 1 & 2 together constitute Market Opportunity Analysis Market segmentation : segments which have common needs and

 Market Opportunity Analysis

- Understanding Market Opportunities (macro environmental factors / PESTLE), demographics, competitors (Porters five forces) - Measuring market opportunities (Statistical / Quantitative methods, Observation based forecasting , Surveys or focus groups - buyers intention / sales force opinion, Analogy, experienced judgment / intuition, Experimental market tests, Internet Interest groups) - Market Segmentation, Targeting and Positioning Decisions

Step 3 : Marketing program

1. Product strategy 2. Price strategy 3. Promotion strategy 4. Place strategy

The Implementation Phase

Obtaining resources - growth requires investment - corporate leadership to decide options for growth and sources of funds. b. Designing the marketing organisation - a marketing program needs a marketing organisation to implement it.
a.

Organisation of a typical manufacturing firm showing a breakdown of the marketing department President

VP Information systems

VP R&D Dept.

VP Manufacturing Dept.

VP Marketing Dept.

VP Accounting & Finance Dept.

VP HR Dept.

Manager Product Planning

Manager Marketing Research

Manager Sales

Manager Advertising & Promotion

Sales Regions & Representatives

c.

Developing schedules - developing appropriate schedules - determining specific deadlines for the creation and execution of marketing activities.
Executing the marketing program - requires detailing regarding marketing strategies and marketing tactics - marketing strategies specified by a target market and a specific marketing program to achieve it - marketing tactics daily operational decisions

d.

The Evaluation Phase

(1) compare the results of the marketing program with the goals in the written plans to identify deviations and (2) act on these deviations a. correcting negative deviations b. exploiting positive ones

Market Driven Strategy

Components of Market Orientation:

customer orientation competitor focus cross-functional coordination

InterFunctional Coordination

Customer Orientation

Competitor Focus

Market Orientation

Market Driven Strategy Logic : Market and the customers that form the market should be the starting point in business strategy formulation.

Characteristics of market driven strategy

Becoming market oriented

Achieving superior performance

Determining distinctive capabilities

Matching customer value requirements to capabilities

Companies that display market driven characteristics Dell Inc., Louis Vuitton, Southwest Airlines, Tesco PLC., Walmart & Zara

Becoming market oriented

Market orientation helps mgmt to identify customers whose

value requirements provide the best match with the firms distinctive capabilities. It is a business perspective that makes customer the focal point of companys operations. A business is market oriented when its culture is systematically and entirely committed to the continuous creation of superior customer value. Achieving market orientation involves use of superior organisational skills in understanding and satisfying customers.

Achieving market orientation

Involves use of superior organisational skills in

understanding and satisfying customers. Demands ethical behaviour Requires the involvement and support of the entire work force Recognizing rapidly changing customer needs, wants Requires increase in the rate of product innovation Requires building competitive advantage Requires participation by everyone in the organisation (internal marketing)

Characteristics of market orientation

Customer focus

(marketing concept , market orientation) Competitor intelligence (failure to identify threats serious consequences) Cross functional co-ordination ( all divisions of the organisation work to create an overall synergy for creating customer value.)
Performance implications : Research finding have found a positive relationship between market orientation and superior performance.

Identifying an organisations distinctive capabilities is a vital part of market driven strategy. Distinctive capabilities are complex bundles of skills and accumulated knowledge , exercised through organisational processes, that enable firms to co-ordinate activities and make use of their assets.

CLASSIFYING CAPABILITIES
EXTERNAL EMPHASIS INTERNAL EMPHASIS Inside-Out Process

Outside-In Process

Spanning Processes
Market sensing Customer linking Channel bonding Technology Monitoring Customer order fulfilment Pricing Purchasing Customer service delivery New product/ service development Strategy development Financial Management Cost control Technology Development Integrated Logistics Manufacturing / transformation processes Human Resources Management Environmental Health and Safety

 Understanding the organisations distinctive capabilities and

how they relate to customers value requirements are important considerations in marketing strategy design
Distinctive capabilities perform three functions

a. Enable firms to enter new markets b. Provides significant value to customers in a cost effective manner. c. Creates market entry barriers to potential competitors

How can distinctive capabilities be identified ?

An organisation has various capabilities

A firm has to decide which capability it has to emphasize upon

The firm has to evaluate the existing capabilities The choices are not always apparent and the firm may have to

add to or develop new capabilities to make certain capabilities distinctive The three characteristics for identifying distinctive capabilities - Applicable to multiple competitive situations - Difficult to duplicate - Superior to competition

Differences between Production Oriented and Market-Oriented Organisation

Pricing based on perceived benefits provided

Broad product line Credit- a necessary evil

Company sells what it can make

Focus on product improvement Marketing Orientation Focus on identifying new opportunities Company makes what it can sell Credit- a tool to attract customers Narrow product line Emphasis on product benefits Promotion based on product features and quality Pricing based on production and distribution costs Production Orientation

Recent developments affecting the strategic role in marketing :

Globalization Increased importance of service

Information Technology
Relationships across functions and firms

Learning Outcome
Strategy in action

Strategy and its elements

Hierarchy of strategies the three levels Marketing orientation Strategic Marketing

The Marketing Plan

A marketing plan is a written document detailing the current situation with respect to customers, competitors, and the external environment and providing guidelines for objectives , marketing actions, and resource allocations over the planning period for either an existing or proposed product or service.

Contents of a Marketing Plan

Executive Summary Current Situation and Trends Performance review Key issues Objectives

Marketing Strategy
Action Plans Projected profit and loss statement

Controls
Contingency Plans

Executive Summary

Presents a short overview of the issues, objectives, strategy and actions incorporated in the plan and their expected outcomes for quick management review.

Current situation & trends

Summarises relevant background information on the market, competition and the macro-environment and trends therein including the size and growth rates for the overall market and key segments

Performance review

Examines the past performance of the product and the elements

(for existing product only)

of its marketing program (eg. Distribution, promotions etc.)

Key issues

Identifies the main opportunities and threats to the product that the plan must deal with in the coming year and the relative strengths and weaknesses of the product and business units that must be taken into account in facing those issues.

Objectives

Specifies the goals to be accomplished in terms of sales volume, market share and profit

Marketing strategy

Summarizes the overall strategic approach that will be used to meet the plans objectives

Action plans

Most critical section of the annual plan for helping to ensure effective implementation and co-ordination of activities across functional departments. It specifies : The target market, What actions are to be taken w.r.t. 4 P's Who is responsible for each action, When the action will be engaged in How much will be the budget for each action

Projected Profit and Loss statement

Presents the expected financial payoff from the plan

Controls

Discusses how the plans progress will be monitored

Contingency plans

Describes actions to be taken if specific threats or opportunities materialise during the planning period

 Marketing Strategy by

Mullins, Boyd, Walker Pg. 25 to 28 Pg. 303 to 305

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