Combined Topics - Strategic Marketing & Management

STRATEGIC MARKETING
TOPICS
1.
2.
3.
4.
5.
6.
7.
8.
Trends & Overview

Pilot Lecture
Macroenvironment Factors (+ SLEEPTIN)
Customers Analysis
Industry Analysis: competitors & Markets
(Porters Five Forces Framework).
Internal Vs. External Analysis
Managing the Marketing Strategy
Market Driven Strategy (A case of South
West Airline)
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elisante_gabriel@yahoo.com,
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Topics Continue
9. Porters Generic Strategies
10. Pricing Strategies and Selling
Process
11. Product Decisions (Ansoffs Matrix)
12. Any current issues in Strategic
Marketing, in Tanzanian Business
Environment.
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DETAILED PPT SLIDES

By
Prof. Elisante Gabriel (MCIM)
PhD (Finland), MSc (UK), PgD (CIM), ADBA,
Mech. Eng. (MTC)
elisante_gabriel@yahoo.com
Tel. +255-784-455499
www.olegabriel.com
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TRENDS & OVERVIEW

What is Strategic Marketing
Mgt?
This is a system approach of facilitating the

timely exchange of values within the
business relations while coping with a
network of complexities (Gabriel, 2006)
It is imperative for strategists to
understand that the heterogeneity of

customers should be managed carefully
while striving for SCA
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SIX COMMANDMENTS OF
STRATEGIC MARKETING
(By
Gabriel E. ,2003)
Create Superior performance

Sustain Superior performance
Understand your core business (Value NW)
Know your Competitor as you know
yourself
Make sure you are sophisticated
Understand your Internal and External
Target market and react to the feedback
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(A): BASIC CONCEPTS

What is Marketing ?
This is a social and managerial process by
which individuals and groups obtain their
needs through creating and exchanging
products and values with others.
There is always a consideration connected
to this exchange, which can be in a
material/kind form.
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WHAT IS BUSINESS?
This is a specific activity for specific
objectives, for specific people, to be
performed by specific people within a
specified period of TIME.
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Business Scope
Business is beyond just Creating,
Promoting, and delivering goods &

Services to consumers and Business.
Nowadays, Marketers are involved in
marketing ten types of entities:
goods, services, experiences, events,
persons, places, properties,
organizations, information, and ideas.
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What is Management ?
This is an art of coping with complexities
If compared to Leadership, they differ in
the sense that leadership tends to cope
with changes.
Leadership can either be: Autocratic,
Bureaucratic or Participatory
Sometimes a combination is the way
forward: no one is superior to another
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Why studying Strategic

Marketing Management ?
Changes in Market structure
Competition
Cultural dynamics
Micro & Macro Factors
Impact of Technology
Marginal Propensity to Save/Consume
Changes in Buyers Behavior
Heterogeinity
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Generic philosophies
(Concepts) in Marketing
The Production Concept (the oldest)
Consumers will prefer products that are
widely available and affordable
The Product Concept:

Consumers will favour those products that
offer the most quality, performance, or
innovative features (Fallacy & Myopia)
eg: GM:how can they know until they
see?..
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Selling Concept
Consumers and business if left alone, will
normally buy a small quantity of

Organizations products. For this very
reason, the Organization must undertake
an aggressive selling and promotion effort
- Buying inertia (resistance)
- The battery for effective selling to
stimulate more buying
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The Marketing Concept

The Organizational goals could be achieved
if the Company will be more effective than

competitors in creating, delivering, and
communicating customer value to its
chosen target markets
- Start and end with the customer
- Love the customer not the product
- Profits through customer satisfaction
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Four Pillars of the Marketing

Concept
Target Market
Customer needs
Integrated Marketing
Profitability
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Selling Vs Marketing
Concept
Theodore Levitt of Harvard University gave
this perceptive contrast:
Selling focuses on the needs of the seller;

Marketing on the needs of the buyer.
Selling is preoccupied with the sellers
need to convert his product in to cash;
Marketing with the idea of satisfying the
needs of the customer using synergy
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Societal Marketing Concept

The Organization should determine the
needs and interests of target markets

and serve them while maintaining
Consumers and society well-being
This philosophy considers the aspects of;
environment, resources, demographic
factors,Worldwide economic problems,
neglected Social services, etc
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TWO ADDITIONAL
CONCEPTS
Relationship Marketing
There is a need to maintain a good
relationship with your customers
than just saving them with
products. Mutual relationship
will increase success in business
than transactional.
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.
One-to-one Marketing
With the power of TECHNOLOGY in the
market, marketer can now serve him
and not them. A customer can be served
exactly according to his demand and
convenience (eg UPS & FEDEX). Find More
customers for products and more
products for customers (Ref. Don Peppers
Video Cassette)
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Analytical Models
BCG: Boston Consulting Group (USA)
This model has been developed by students
of Boston College in USA. The Company
classifies all its SBUs according to the
growth-Share Matrix. The BCG Matrix has
two axes. The vertical one represents
Market Growth rate (market attractiveness)
whereas the Horizontal one represents
Relative Market share (Market strength)
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Components of BCG
Problem Children/ Question Marks
These are low-share SBUs in high Growth
Markets. Management should think with
due care, which SBU to build and which to
phase out
Stars
These are both of High Growth rate and
Market share. They should be held carefully
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Cash Cows
These are of Low-growth with high Market
share. They need less investment to retain
them in the Market. The Management
should harvest cash from these SBUs and
pay for bills and support other SBUs
Dogs
These SBUs are of Low-growth and Low
Market-share. Low cash generation
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HIGH
STAR
(Hold)
LOW
Market Growth Rate
BCG MODEL
PROBLEM
CHILD
(Build)
CASH COW
DOG
(Harvest)
(Divest)
HIGH
LOW
Relative Market Share (% Competitor)
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Micro & Macro Environment

Micro
This is an internal environment. It entails
dynamic forces within the industry. These
factors include: Vendors, Competitors,
Customers
Macro
This is the general environment, which
sometimes is referred as external. It
includes the following factors; (SLEEP-TIN)
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SWOT Analysis
SW = Strength and Weakness (INTERNAL)
OT = Opportunities and Threats (EXTERNAL)
This analysis is also useful in assessing the
position of a product or SBU/SBA/SME. The
internal assessment deals with the
Organizational capability of the SBU,
including managerial competence. OT deals
with external variables (Eg. Mobile Vs Ear
disease, Alcohol/Pork Vs Faith)
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SYNERGY
This is a concept in Marketing
management, which outlines that,

system approach is more effective for
higher performance. The concept claims
that, the result of the combined efforts of
individuals (as a system) is greater than
when they perform the same separately.
Mathematically: 1+1 > 2. (TEAM WORK)
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Customer Vs Consumer
Customer
This is the one whom you interact with for the
service encounter, Moment of truth, Closing
the sale. This can be an individual or an
Organization (Eg Wholesalers are .)
Consumer
The one who uses/consumes the product in
the real sense (Eg a of a bar of chocolate)
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Finally
TYPES OF CUSTOMERS
Customers can be categorized in different

forms. They can;
Person Vs Non-Person = Consumer Vs
Organizational/Industrial/Institutional
New Vs Existing
In Consumer Market, for instance, Individuals
can represent nine types of customers.
These to include; Snobbish, timid, nervous, .
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MODULE 2
PILOT LECTURE ON
STRATEGIC MARKETING
..
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OBJECTIVES
The Primary objective is to acquire a
strategic knowledge about the

dynamics of the markets
To enable participants to make
strategic choices among the available
options
To enable participants to improve their
decision making process for business
growth and survival.
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The Concept & Trends

What is Strategic Marketing
Management?
Characteristics of markets and structures
Why studying Strategic Marketing
Management?
Challenges facing Strategists in the
marketing field
How does Strategic Marketing differs
from Marketing?
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An Overview
External Analysis (Outside the firm)
Internal analysis (Strengths &
Weaknesses). Any impact on strategy?

Mission Statement (Espirit de corp)
and Shared sense of mission for
synergy.
Strategic Choices Vs. General choices
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Competitors Analysis
Knowing your competitors as you
know yourself
Analysis of competitors: Strengths &
Weaknesses
Is there any loose brick in the value
chain of your competitor? Make sure
you do not have one on your side
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Market & Industry Analysis

The impact of Market size & Potential
Pareto effect (By Alfredo Pareto of Italy)
Market growth and attractiveness: The link
with BCG
Cost structure (CoGs) = Material, Labour, OH;
Fixed and Variable costs. How to manage
Core competencies for success (Hamel &
Prahalad)
Porters Five Forces & Generic Strategies +
Video show
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Macro Environmental
Factors
Looking beyond the wall not just across
Do not be myopic, recall the mousetrap fallacy.
From PEST to SLEEPTIN.
Do not be complacent. Manage the
dynamics of the market which are
always changing in a fascinating speed.
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Strategic Marketing Choices

Make a strategic Strategy choice
The new dimension of the definition of
Marketing (By Prof. ole Gabriel) MNCs

The concept of Sustainable Competitive
Advantage
Alternative growth Strategies (By Igor
Ansoff)
Corporate Strategic Choice (Does it know
that choices exist?)
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Managing the Marketing

Strategy
Implementation depends on; people,
structures, systems and more

important, culture!!!
Strategic evaluations and control;
determine the variances and take the
corrective measure immediately (Do not
be like Africa bottling company). And
Sales Analysis, CBA and Marketing audit.
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Conclusion
Strategic Marketing is important in
order to avoid generalisability.

Customers are different and their
differences are different (Gabriel,
2004).
Companies which will ignore strategic
Marketing are destined to fail, the
question is when and not whether
Strategic marketing will enhance TQM.
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THE END!
Think Strategically,
act strategically,
smile strategically
and walk
strategically!!!
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MODULE 3
MACRO-ENVIRONMENTAL FACTORS
3-1
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Environmental Analysis
Any effort at environmental analysis
3-2
must be well-organized, systematic,

and supported by sufficient
resources (e.g., people, financial,
information).
Environmental analysis should be an
ongoing effort.
Environmental analysis empowers
the marketing manager because it
encourages both analysis and
synthesis
of
information.
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Data Versus Information

Managers are more likely to be overwhelmed
with data rather than face a shortage.
Data does not become informative until it is
transformed in a manner that makes it useful

to decision makers.
Environmental analysis is valuable only to
the extent that it improves the quality of the

resulting plans and decisions.
Perpetually analyzing data without making
any decisions is usually not worth the added

expense.
3-3
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Three Key Environments

Analysis of the external environment
(macroenvironmental) should include all the

external factors competitive, economic, political,
legal/ regulatory, technological, and socioculturalthat
can exert direct and indirect pressures on both
domestic and international marketing activities.
The marketing manager should examine the
customer environment (5 Ws) to assess the current

and future situation with respect to customers in the
firm's target markets.
Finally, a critical evaluation of the firm's current and
anticipated internal environment

(microenvironmental) with respect to its objectives
and performance, allocation of resources, structural
3-4
characteristics,elisante_gabriel@yahoo.com,
and political and power struggles.
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Four Basic Types of Competition

Brand Competitors: market products that are similar in
features and benefits to the same customers at similar prices
Product Competitors: compete in the same product class,
but with products that are different in features, benefits, and
price
Generic Competitors: market very different products that
solve the same problem or satisfy the same basic need
Total Budget Competitors: compete for the limited
financial resources of the same customers
3-5
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Stages of Competitive Analysis

1) Identify all current and potential brand, product, generic, and total
budget competitors
2) Assess each key competitor in terms of relevant characteristics,
such as size, profitability, growth, objectives, strategies, etc.
3) Assess each key competitors strengths and weaknesses, as well as
the major competencies that each competitor possesses
4) Focus on each competitors marketing capabilities in terms of their
products, pricing, distribution, and promotion
5) Estimate each competitors most likely strategies and responses
under different environmental situations, as well as their reactions
to the organizations own marketing efforts
3-6
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Economic Conditions
A thorough examination of economic factors requires
marketing managers to gauge and anticipate the
general economic conditions of the nation, region,
state, and local area in which they operate.
Economic factors to consider include inflation,
3-7
employment and income levels, interest rates, taxes,

trade restrictions and tariffs, current and future
stages of the business cycle (prosperity, stagnation,
recession, depression, and recovery), consumers'
overall impressions of the economy and their ability
and willingness to spend, and current and
anticipated spending patterns of consumers in the
firm's target market.
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Political Trends
Many marketers view political factors as
being beyond their control and do little

more than adjust the firm's strategies to
accommodate changes in those factors.
Other firms take a more proactive stance

by seeking to influence elected officials.
3-8
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Legal and Regulatory Factors

The marketing manager should carefully
examine recent court decisions and recent

rulings of federal, state, local and selfregulatory trade agencies to determine their
effects on marketing activities.
Companies that engage in international
marketing activities should also consider

changes in the trade agreements between
nations.
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Changes in Technology
Many changes in technology assume a

frontstage presence in that they are
most noticeable to customers.
Technological changes can also assume

a backstage presence when their
advantages are not necessarily
apparent to consumers.
3-11
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Sociocultural Factors
Sociocultural factors are those social and

cultural influences can cause changes in
attitudes, beliefs, norms, customs, and
lifestyles.
There are many changes taking place in the

demographic makeup of the U.S. population.
Changes in cultural values can also create
challenges and opportunities for marketers.
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The Customer Environment

Information should be collected that identifies
The firm's current and potential customers
The prevailing needs of current and potential
customers
The basic features of the firm's and competitors'
products that are perceived as meeting customers'
needs
Anticipated changes in customers' needs
In assessing the firm's target markets, the
marketing manager should attempt to

understand all relevant buyer behavior and
product usage statistics.
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5-W Model
Who Are Our Current and Potential Customers?
What Do Our Customers Do with Our Products?
Where Do Our Customers Purchase Our Products?
When Do Our Customers Purchase Our Products?
Why (and How) Do Our Customers Select Our
Products?
Why Do Potential Customers Not Purchase Our

Products?
3-14
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Who Are Our Current and

Potential Customers?
The manager should consider
demographic characteristics (gender, age, income, occupation,
education, ethnic background, family life cycle, etc.)
geographic characteristics (where customers live, density of
the target market, etc.)
psychographic characteristics (attitudes, opinions, interests,
motives, lifestyles, etc.) in defining the firm's target markets.
Depending on the type of products sold by the firm,
purchase influencers, such as children or spouses, may

be important as well.
For business-to-business marketers, the analysis

should focus on the decision-making unit (DMU).
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What Do Our Customers Do with

Our Products?
The "what" question entails an assessment of how
customers consume and dispose of the firm's
products.
Here the marketing manager might be interested in

identifying how often products are consumed (sometimes
called the usage rate)
differences between heavy and light users of products
whether complementary products are used during
consumption
what customers do with the firm's products after
consumption
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Where Do Our Customers

Purchase Our Products?
Until recently, most firms looked solely at traditional
channels of distribution, such as brokers,
wholesalers, and retailers.
Many other forms of distribution are available today,

most notably nonstore retailing, which includes
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vending machines
door-to-door selling
direct marketing through catalogs or infomercials
electronic merchandising through computers and
interactive television
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When Do Our Customers

Purchase Our Products?
The "when" question refers to any situational
influences that may cause customer purchasing

activity to vary over time, including the seasonality of
the firm's products and the variability in purchasing
activity caused by promotional events.
The "when" question also includes more subtle
influences that can affect purchasing behavior, such

as
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physical and social surroundings

time perceptions
the purchase task
time of day
time available to search for alternatives
what the purchase
is intended to accomplish.
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Why (and How) Do Our

Customers Select Our Products?
The "why" question involves identifying the basic needsatisfying benefits provided by the firm's products.
The potential benefits provided by the features of

competing products should also be analyzed.
It is also important to identify potential changes in
customers' current needs and the needs that customers

may have in the future.
The "how" part of this question refers to the means of
payment that customers use when making a purchase.
How can we practice CRM
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Why Do Potential Customers Not

Purchase the Organizations Products?
Noncustomers have a basic need that the product does not fulfill
The product does not match noncustomers lifestyles or image
Competing products have better features or benefits
The product is too expensive for some customers
Noncustomers may have high switching costs
Noncustomers are simply unaware of the products existence
Noncustomers have misconceptions about the product
Poor distribution makes the product hard to find
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Internal Environment
First, the marketing manager must periodically
assess the firm's current marketing goals,
objectives, and performance.
Second, the marketing manager should review

the current and anticipated levels of
organizational resources that can be used for
marketing purposes.
Finally, the marketing manager should review

3-21
current and anticipated structural issues that

could affect marketing
activities.
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Collecting Environmental Data &

Information
The marketing manager should invest time and
money to perform research to uncover data that is

pertinent to the development of the marketing plan.
This effort will always involve the collection of secondary
data, which is compiled inside or outside the organization
for some purpose other than the current analysis.
If the required data or information is not available, primary
data may have to be collected through marketing research.
Accessing secondary data sources is usually preferable as a
first option because they can be obtained more quickly and
at less cost than collecting primary data.
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Sources of Environmental Data

Internal sources may also be a good source of data on customer
needs, attitudes, and behavior. The organization's own records are

the best source of data on current objectives, performance, and
available resources.
The sheer volume of available information on the economy, our
population, and business activities is the major strength of most
government data sources.
The articles and research reports that are available in periodicals
and books provide a gamut of information about many
organizations, industries, and nations.
Commercial sources are almost always relevant to a specific issue
because they deal with the actual behaviors of customers in the
marketplace.
The best approach to secondary data collection is one that blends
data and information from a variety of sources.
If needed secondary data is not available, out of date, inaccurate or
unreliable, or irrelevant to the specific problem at hand, the
manager may haveelisante_gabriel@yahoo.com,
little choice but to collect primary data through
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Overcoming Problems in Data

Collection
One of the most common problems is an
incomplete or inaccurate assessment of the

situation for which data is being gathered to
address.
Another common difficulty is the expense of

collecting environmental data.
A third issue is the time it takes to collect

environmental data.
A final challenge is finding a way to organize the

vast amount of data and information that are
collected during the environmental analysis.
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CONCLUSION
The need of the correct information for scanning the
environment is vital
The need of SLEEP-TIN is necessary

The externalities are never static by dynamic AND
The Macro environmental components need to be
interlinked.
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MODULE 4:
CUSTOMERS ANALYSIS
Understand Who are your customers?
How to make value for them?
How to communicate the value to them?
Motivate them and meet their unmet needs
to delight them
Who affect and effect the buying decision?
How to retein your costomers?
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What We Need to Know

about Current and Potential
Customers
Who buys and uses the product

What customers buy and how they use it
Where customers buy
When customers buy
How customers choose
Why they prefer a product
How they respond to marketing programs
Will they buy it (again)?
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Who Buys and Uses the

Products
Initiator -who identifies the need for
product
Influencer -who has informational or
preference input to the decision
Decider who makes the final decision
through budget authorization
Purchaser who makes the actual
purchase
User
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Buying Roles and

Needs/Benefits Sought
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Categories for Describing

Consumers
(SEGMENTATION)
1.Demographic
2.Socioeconomic
3.Personality
4.Psychographics and values
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Major Segmentation Variables for

Business Markets
Demographic
Operating variables
Purchasing approaches
Situational factors
Personal characteristics
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Major Segmentation
Variables for Business
Markets:
Demographic
:
Industry
Which industries should we focus on?
Company size:
What size companies should we focus
on?
Location:
What geographic areas should we focus
on?
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Major Segmentation Variables

for Business Markets: Operating
Variables
Technology:
What customer technologies should we
focus on?
User/Nonuser status:
Should we focus on heavy, medium,

light users or nonusers?
Customer capabilities:
Should we focus on customers needing

many or few services?
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Business Markets: Purchasing
Approaches
Purchasing-function organizations:
Should we focus on companies with highly centralized or

decentralized purchasing organizations?
Power structure:
Should we focus on companies that are engineering

dominated, financially dominated, etc.?
Nature of existing relationships:
Should we focus on companies with which we have

strong relationships or simply go after the most
desirable companies?
General purchase policies:
Should we focus on companies that prefer leasing?

Service contracts? Systems purchases? Sealed bidding?
Purchasing criteria:
Should we focus on companies that are seeking quality?

Service? Price?
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Major Segmentation Variables

for Business Markets: Situational
Factors
Urgency:
Should we focus on companies that need
quick and sudden delivery or service?
Specific application:
Should we focus on certain applications of
our product rather than all applications?
Size of order:
Should we focus on large or small orders?
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Business Markets: Personal
Characteristics
Buyer-Seller similarity:
Should we focus on companies whose
people and values are similar to ours?
Attitudes toward risk:

Should we focus on risk-taking or risk
avoiding customers?
Loyalty:
Should we focus on companies that
show high loyalty to their suppliers?
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Sources of Customer Value

Economic:
The economic benefit a customer derives from

using a product
Functional:
Those aspects of a product that provide

functional or utilitarian benefits to customers
Psychological:
The image of the product, including how the

product feels and whether that feeling matches
the image the customer wants to project
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Measuring Brand Equity

1. Awareness:
Being aware of a brand is usually a requirement for its purchase and
tends to lead to more favorable opinions by reducing the risk
associated with a familiar option.
2. Associations:
Images related to overall quality as well as specific product attributes
and user characteristics affect the reaction to a brand.
3. Attitude:
Overall favorability toward a brand is a critical part of brand equity.
4. Attachment:
Loyalty to a brand is the strongest type of equity, and most beneficial
for sellers.
5. Activity:
The strongest fans of a brand become advocates.
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Manifestations of Customer
Price.
Value
Price is the companys assessment of the products value.
Price sensitivity.
A product with constant sales when prices increase generally is of

greater value than one for which demand slumps.
Satisfaction.
Survey-based satisfaction measures are standard practice in my

business.
Complaints and compliments.
The number of complaints or compliments the company receives

indicates the products value.
Word-of-mouth.
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Although often difficult to track, spoken and written comments

provide a useful subjective assessment of a products value.
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Manifestations of Customer
Value cont.
Margin/profit contribution.
Generally, higher margins indicates partially monopolistic

positions due to greater communicated value.
Dollar sales.
Total dollar sales provide an aggregate measure of the value of

a product as assessed by the market.
Competitive activity.
Competitive activity such as new-product introductions

indicates that the total gap between customer value and
company costs is sufficiently large to allow for profits even
when more companies divide the market.
Repeat purchase rate.
High loyalty indicates high brand value.
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Assessing the Value of the Product

Category
1. Determine the uses of the product
2. Estimate the importance of the uses
3. List competing products for the uses
4. Determine the relative effectiveness
of the product category in each
usage situation
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Desirable Criteria for

Segments
Sizeable
Identifiable
Reachable
Respond differently
Coherent
Stable
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Major Uses of Potential

Estimates
1.To make entry / exit decisions
2.To make resource level decisions
3.To make location and other
resource allocation decisions
4.To set objectives and evaluate
performance
5.As an input to forecasts
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Useful Sources for Potential

Estimates
Government Sources
Trade Associations
Private Companies
Financial and Industry Analysts
Popular Press
The Internet
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New or Growing Product

Potential
Relative Advantage
Is the new product superior in key benefits?

To what degree?
Compatibility
What level of change is required to understand

and use a new product?
For customers? Intermediaries? The company?
Risk
How great is the risk involved?

What is the probability someone will buy a new
product?
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Methods of Estimating Market

and Sales Potential
Analysis-Based Estimates
1. Determine the potential buyers or
users of the product
2. Determine how many are in each
potential group of buyers defined by
step 1
3. Estimate the purchasing or usage rate
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How Are Sales Forecasts

Used?
1.To answer what if questions
2.To help set budgets
3.To provide a basis for a monitoring
system
4.To aid in production planning
5.By financial analysts to value a
company
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Conclusion
The knowledge of customers is paramount
Understand what customers are buying
Why do they buy from you?
How do they make the buying decision
Make customers your part time marketers
Retain the customers as it is cheaper
thank new..AND
Integrate Technology in managing your
customers.
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COMPETITORS AND
MARKET ANAYSIS
Module 5
Opportunities, Threats, Industry
Competition, and Competitor
Analysis
.
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Components of the General Environment

Economic
Demographic
Sociocultural
Industry
Environment
Competitive
Environment
Political/
Legal
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Global
Technological
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SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
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The purpose of SWOT

Analysis
It is an easy-to-use tool for
developing an overview of a
companys strategic situation
It forms a basis for matching your
companys strategy to its situation
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SWOT is the starting

point
It provides an overview of the
strategic situation.
It provides the raw material to do
more extensive internal and
external analysis.
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Opportunities
An OPPORTUNITY is a chance for
firm growth or progress due to a

favorable juncture of circumstances
in the business environment.
Possible Opportunities:
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Emerging customer needs

Quality Improvements
Expanding global markets
Vertical Integration
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Threats
A THREAT is a factor in your
companys external environment that

poses a danger to its well-being.
Possible Threats:
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New entry by competitors

Changing demographics/shifting demand
Emergence of cheaper technologies
Regulatory requirements
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Opportunities and Threats

form a basis for EXTERNAL
analysis
By examining opportunities, you can
discover untapped markets, and new

products or technologies, or identify
potential avenues for diversification.
By examining threats, you can
identify unfavorable market shifts or
changes in technology, and create a
defensive posture aimed at
preserving your competitive position.
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The purpose of
Five-Forces Analysis
The five forces are environmental
forces that impact on a company s

ability to compete in a given market.
The purpose of five-forces analysis
is to diagnose the principal
competitive pressures in a market
and assess how strong and
important each one is.
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Porters Five Forces

Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
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Threat of New Entrants

Economies of Scale
Barriers to
Entry
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
Government Policy
Expected Retaliation
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Porters Five Forces

Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining Power of Suppliers

Suppliers are likely to be powerful if:
Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Supplier industry is dominated by a

few firms
Suppliers products have few substitutes
Buyer is not an important customer to
supplier
Suppliers product is an important
input to buyers product
Suppliers products are differentiated
Suppliers products have high
switching costs
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Supplier poses credible threat of

forward integration
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Porters Five Forces

Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining
Power of
Buyers
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Bargaining Power of Buyers

Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to sellers sales
Purchase accounts for a significant
fraction of suppliers sales
Products are undifferentiated
Buyers face few switching costs
Buyers industry earns low profits
Buyers compete
with the supplying
industry by:
* Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer presents a credible threat of

backward integration
Product unimportant to quality
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Buyer has full information
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Porters Five Forces

Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Bargaining
Power of
Buyers
Threat of
Substitute
Products
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Threat of Substitute Products

Keys to evaluate substitute products:
Products
with similar
function
limit the
prices firms
can charge
Products with improving

price/performance tradeoffs
relative to present industry
products
Example:
Electronic security systems in
place of security guards
Fax machines in place of
overnight mail delivery
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Porters Five Forces

Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
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Rivalry Among
Competing Firms
in Industry
Threat of
Substitute
Products
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Bargaining
Power of
Buyers
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Rivalry Among Existing Competitors

Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Increasing consumer warranties or service
Making new product introductions
Occurs when a firm is pressured or sees an opportunity

Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
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Rivalry Among Existing Competitors

Cutthroat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
High storage costs
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Lack of differentiation or switching costs

Capacity added in large increments
Diverse competitors
High strategic stakes
High exit barriers
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The Five Forces are

Unique to Your Industry
Five-Forces Analysis is a framework
for analyzing a particular industry.
Yet, the five forces affect all the other

businesses in that industry.
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Competitor Analysis
The follow-up to Industry Analysis is
effective analysis of a firms Competitors
Industry
Environment
Competitive
Environment
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Competitor Analysis
Assumptions
What assumptions do our
competitors hold about the future
of industry and themselves?
Current Strategy
Does our current strategy support
changes in the competitive
environment?
Future Objectives
How do our goals compare to our
competitors goals?
Capabilities
How do our capabilitieselisante_gabriel@yahoo.com,
compare
to our competitors?
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Response
What will our
competitors do in the
future?
Where do we have a
competitive
advantage?
How will this change
our relationship with
our competition?
108
Competitor Analysis
Future Objectives
How do our goals
compare to our
competitors
Where
will emphasis
goals? be
placed in the future?
What is the attitude
toward risk?
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What Drives the

competitor?
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Competitor Analysis
Future Objectives
How do our goals
compare to our
competitors
Where
will emphasis
goals?Strategy
be
Current
placed inHow
the future?
are we currently
What is the
attitude
competing?
toward risk?
Does this strategy
support changes in the
competitive structure?
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What is the competitor doing?

What can the competitor do?
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Competitor Analysis
Future Objectives
What does the competitor believe

about itself and the industry?
How do our goals

compare to our
competitors
Where
will emphasis
goals? Strategy
be
Current
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does thisDo
strategy
we assume the future
support changes
in the
will be volatile?
competition
structure?
What
assumptions do our
competitors hold about the
industry and themselves?
Are we assuming stable
competitive conditions?
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Competitor Analysis
Future Objectives
What are the competitors

capabilities?
How do our goals

compare to our
competitors
Where
will emphasis
goals? Strategy
be
Current
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
competitors
hold about the
Capabilities
What are my competitors
Are we operating under
strengths and weaknesses?
a status quo?
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How do our capabilities

compare
to our
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competitors?
112
Competitor Analysis
Response
Future Objectives
How do our goals
compare to our
competitors
Where
will emphasis
goals? Strategy
be
Current
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
competitors
Capabilities
hold about the
What are my competitors
Are we operating
strengths under
and weaknesses?
a status quo?
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How do our capabilities

compare
to our
+255-784-455 499
competitors?
What will our competitors

do in the future?
Where do we have a
competitive advantage?
How will this change our
relationship with our
competition?
113
Conclusion
Know your competitors as you know
yourself
Create and sustain your competitive
Advantage
The Market size matters! Take the
advantage of it. AND
The Key success Factors will give you
the core competencies hence a
competitive Advantage
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Module 6
INTERNAL Vs. External
Analysis
Mission
Vision
Values
SWOT Analysis
Strategic Planning
Does it work? Is it worth it?
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Sustainability of a
Competitive Advantage
Sustainability of a competitive advantage
is a function of:
the rate of core-competence obsolescence due

to environmental changes
the availability of substitutes for the core
competence
the imitability of the core competence
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External and Internal

Analyses
Environment
al
ob
nt
Gl
me
on
vir
En
Competitor
Environment
Technological
Po
l iti
cal
En
/Le
vir
onm gal
ent
Industry
Environment
al
ner c
Ge
mi
ono
Ec
Ge
n
De
mo eral
gra
ph
ic
Sociocultural
By studying the external

environment, firms identify
what they might choose to do
Opportunities and threats
General
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Analyses
Analyses
By studying the internal

environment, firms identify
what they can do
Unique resources,
capabilities, and core
competencies
(sustainable competitive
advantage)
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Challenge of Internal
Analysis
How do we effectively manage current
core competencies while simultaneously

developing new ones?
How do we assemble bundles of
resources, capabilities and core
competencies to create value for
customers?
How do we learn to change rapidly?
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Three Conditions Affecting

Managerial Decisions About
Resources, Capabilities, and
Uncertainty
regarding characteristics of the
Core
Competencies
general and the industry environments,

competitors actions, and customers preferences
Complexity regarding the interrelated causes
shaping a firms environments and perceptions of

the environments
Intraorganizational Conflicts among
people making managerial decisions and those

affected by them
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Components of
Internal Analysis
Core
Competencies
Discovering Core
Competencies
Strategic
Competitiveness
Competitive
Advantage
Capabilities
Resources
Tangible
Intangible
Four Criteria
of Sustainable
Advantages
Valuable
Rare
Costly to Imitate
Nonsubstitutable
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Value
Chain
Analysis
Outsource
121
Discovering Core
Competencies
Resources
Tangible
Intangible
Resources are what a firm has

to work with--its assets-including its people and the
value of its brand name
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Resources represent inputs into

a firms production process...
such as capital equipment, skills
of employees, brand names,
finances and talented managers
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Discovering Core
Competencies
Resources
Tangible
Intangible
Tangible Resources
Financial
Physical
Human resources
Organizational
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Intangible Resources
Technological
Innovation
Reputation
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Discovering Core
Competencies
Capabilities
Capabilities become important when they are combined

in unique combinations which create core competencies
which have strategic value and can lead to competitive
advantage
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Discovering Core
Competencies
Capabilities
Capabilities are what a firm does, and represent the firms

capacity or ability to integrate individual firm resources to
achieve a desired objective
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Discovering Core
Competencies
Core
Competencies
Core competencies are resources and capabilities that serve

as a source of competitive advantage over rivals
Core competencies distinguish a company competitively
and make it distinctive
McKinsey and Co. recommends using three to four
competencies
when
framing
strategic
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Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Valuable: Capabilities that help a firm neutralize threats or

exploit opportunities
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Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Rare: Capabilities that are not possessed by many others
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Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Costly to imitate: capabilities that other firms cannot

develop easily, usually due to
Unique historical conditions
Causal ambiguity
Social complexity
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Discovering Core
Competencies
Four Criteria
of Sustainable
Advantages
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Nonsubstitutable: capabilities that do not have strategic

equivalents
Invisible to competitors
Firm specific knowledge
Trust-based working relationships between managers
and nonmanagerial
personnel
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Core Competence as a
Strategic Capability
Core Competence
A strategic
capability
Resources
Inputs to a firms
production process
The source of
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Capability
An integration of a
team of resources
Does it satisfy the

criteria of sustainable
competitive
advantage?
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Yes
No
Capability
A nonstrategic
team or resource
131
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ar
gin
Service
Procurement
Human Resource Mgmt.
Firm Infrastructure
Support Activities
a
M
in
g
r
Technological Development
The Basic
Value Chain
Marketing & Sales

Outbound Logistics
Operations
Inbound Logistics
Primary Activities
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Outsourcing
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Service
Procurement
Technological Development
Human Resource Mgmt.
Firm Infrastructure
Usually this is
because the specialty
supplier can provide
these functions more
efficiently
M
ar
gin
gin
r
a
M
Support Activities
Outsourcing is the
purchase of some or
all of a valuecreating activity
from an external
supplier
Marketing & Sales

Outbound Logistics
Operations
Inbound Logistics
Primary Activities
133
133
Strategic Rationales for

Outsourcing
Improve Business Focus
lets company focus on broader business issues

by having outside experts handle various
operational details
Provide Access to World-Class Capabilities

the specialized resources of outsourcing
providers makes world-class capabilities
available to firms in a wide range of
applications
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Strategic Rationales for

Outsourcing
Accelerate Business Re-Engineering

Benefits
achieves re-engineering benefits more quickly

by having outsiders--who have already achieved
world-class standards--take over process
Share Risks
reduces investment requirements and makes
firm more flexible, dynamic and better able to
adapt to changing opportunities
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Core Competencies:
Cautions and Reminders
Never take for granted that core
competencies will continue to provide a

source of competitive advantage
All core competencies have the potential
to become core rigidities
Core rigidities are former core
competencies that now generate inertia
and stifle innovation
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Applying it to your
Career/Organization
What is your core competence?
Where does leadership fit?
Is it really as complicated as theory
makes it sound e.g., small
business?
Where do core competences
originate?
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CONCLUSION
Internal analysis and External are
somehow interrelated
Resource base and capabilities are
necessary for a stable internal
environment, AND
Good management team is the best
starting point to give a signal of
internal capability/core compenetcies
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Module 7
MANAGING THE MARKETING
STRATEGIES
Dr. Elisante ole Gabriel
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CORPORATE STRATEGY
Deciding the Scope
and Purpose of
the Business
Business
Objectives
Actions and
Resources for
Achieving
Objectives
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CHARACTERISTICS OF SUCCESSFUL
STRATEGY
Unique competitive position for the
company.
Activities tailored to strategy.
Clear trade-offs and choices vis-vis competitors.
Competitive advantage arises from
fit across activities.
Sustainability comes from the
activity system not the parts.
Operational effectiveness a given.
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ORGANIZATIONAL CHANGE
Vertical
Disaggregation
Internal
Redesign
New
Organizational
Forms
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CORPORATE STRATEGY COMPONENTS

Managements long-term vision
for the corporation

Objectives
Assets, skills, and capabilities
Businesses in which the
corporation competes
Structure, systems, and processes
Creation of value
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MARKETING STRATEGY PROCESS

Situation
Analysis
Implementing
and Managing
Marketing
Strategy
Designing
Marketing
Strategy
Marketing
Program
Development
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SITUATION ANALYSIS
Market
Vision, Structure,
and Analysis
Continuous
Learning
About
Markets
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Segmenting
Markets
145
Designing MarketDriven Strategies
Market Targeting
and Strategic
Positioning
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Relationship
Strategies
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Planning
for New
Products
146
Positioning Strategy Development

Product
strategy
Positioning
strategy
Promotion
strategy
Market
target
Distribution
strategy
Price
strategy
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Designing Effective
Market-Driven
Organizations
Implementing and
Managing Market-Driven
Strategy
Strategy
Implementation
and Control
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I.
MARKETING PLAN
Strategic Situation
Summary
OUTLINE
Summarize the key points from your situation

analysis (market
analysis, segments, industry/competition) in
order to recount the
major events and provide information to better
understand the
strategies outlined in the marketing plan.
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II.
Market-Targets and Objectives
The market target may be defined demographically (key

characteristics
only), geographically, or in social/economic terms.
Each market target should have needs and wants that differ to some degree
from other targets. These differences may be with respect to types of
products purchased, use situation, frequency of purchase, and other
variations that indicate a need to alter the positioning strategy to fit the
needs and wants of each target. An objective is a quantified goal
identifying what is expected when. It specifies the end results expected.
The objectives should be written for each target market. Objectives should
also be included for the following program components: (1) product, (2)
price, (3) distribution, (4) promotion (salesforce, advertising,
sales promotion, and public relations), and (5) technical services.
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III. Positioning Statements

Write statements that describe how you want each market target
to perceive each product relative to competition. State the core
concept used to position the product (brand) in the eyes and
mind of the targeted buyer. The positioning statement should
describe: (1) What criteria or benefits the customer considers
when buying a product along with the level of importance, (2)
What we offer that differentiates our product from competition,
and (3) The limitations of competitive products.
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IV.
A.
Market Mix Strategy for Each Market Target

Product Strategy
Identify how each product fits the market target. Other issues
that may be addressed would be new product suggestions,
adjustments in the mix of existing products, and product
deletion candidates.
B.
Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced,
etc.) should be identified along with a cost/benefit analysis if
applicable. Identify what role you want price to play, i.e.,
increase share, maintenance, etc.
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C.
Distribution Strategy
Describe specific distribution strategies for each market target.

Issues to be addressed are intensity of distribution (market
coverage), how distribution will be accomplished, and
assistance provided to distributors. The role of the sales force
in distribution strategy should also be considered.
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D.
Promotion Strategy
Promotion strategy is used to initiate and maintain a flow of

communication between the company and the market target.
To assist in developing the communications program, the
attributes or benefits of our product should be identified for
each market target.
How our product differs from
competition (competitive advantage) should be listed. The
sales forces responsibilities in fulfilling the market plan must
be integrated into the promotion strategy. Strategies should
be listed for
(1) personal selling, (2) advertising, (3) sales promotion,
and(4) public relations.
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E.
Marketing Research
Describe the market research problem and the kind of
information needed. Include a statement which addresses
why this information is needed. The specific market
research
strategies can be written once the above two
steps have been followed.
V.
Coordination with Other Business Functions

Indicate other departments/functions that have
responsibilities for implementing the marketing plan.
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VI.
Sales Forecasts and Budgets
VII.
Contingency Plans
Indicate how your plans should be modified if events
should occur that
are different from those assumed
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in the plan.
155
Module 8
Market Driven Strategy
A Case of SWA)
Dr. Elisante ole Gabriel
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SOUTHWEST AIRLINES
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Point-to-Point Strategy
On-Time Service
High Aircraft Utilization
Market-Oriented Culture
Low Operating Expenses
Lowest debt to capital ration of
the major airlines.
Low Fares
No Connections with other airlines.
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Characteristics of Market-Driven Strategies
MarketOrientation
Leveraging of
Distinctive
Capabilities
Superior
Performance
Customer
Value/
Capabilities
Match
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BECOMING MARKET ORIENTED

Effective
Market Sensing
Processes
Cross-Functional
Analysis of
Information
Shared Diagnosis
and Coordinated
Action
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Delivery of
Superior Customer
Value
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Components of Organizational Capabilities

Skills
(cross-functional
teams)
Accumulated
knowledge
(new product experience)
Organizational
Processes
(new product
development)
Coordination
of Activities
(communication)
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Superior
Customer
Value
Assets
(brand image)
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Disproportionate (higher)
contribution to superior
customer value
Compelling
Logic of Distinctive
Capabilities
Provides value to
customers on a more
cost-effective basis
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D
DESIRABLE
ESIRABLE
C
CAPABILITIES
APABILITIES
Superior to
the
Competition
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Difficult to
Duplicate
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Applicable to
Multiple
Competitive
Situations
162
TYPES OF CAPABILITIES
Outside-In
Processes
Inside-Out
Processes
Spanning
Processes
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Customer
Delivered Value
Benefits
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Costs
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Creating Value for Customers

Product
Services
Employees
Image
Benefits
Value
(gain/loss)
Monetary Costs
Time
Psychic and physic
costs
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Costs
(Sacrifices)
165
Finally
Market Sensing
Capabilities
MARKETDRIVEN
STRATEGIES
Customer Linking
Capabilities
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Module 9: GENERIC STRATEGIES

STRATEGIC CHOICE
In pursuing competitive advantage, a
company also has to choose its scope
whether it will target a particular segment
or go for a broad market. These choices
define four basic approaches to
competitive advantage choices a company
makes determines ,generic strategies as
Porter calls them.
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Strategic Target (Scope)
GENERIC STRATEGIES (By M Porter)
La Quinta Inns
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Ivory Soap
Broad
Cost
Focus
Cost
American Airlines
Broad
Differentiation
Focus
Differentiation
Cray Research, Inc
Strategic
Advantage
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168
STUCK-IN-THE MIDDLE
Failure to make a choice means that a company is
stuck - in - the middle, with no advantage. The
result is poor performance.
In illustrating the concept of Generic strategies,
Porter used four superior performing companies
that follow each of the generic strategies. Ivory
Soap is a broadly targeted, low cost producer, La
Quinta Inns is a cost focuser; American Airlines
is a broad differentiator, and Cray Research, Inc.,
is a focused differentiator. The Companies and the
strategies are indicated on the Fig. above.
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169
Cost Leadership
(First dimension)
A cost strategy begins with a good product that is
acceptable in quality and features. Instead of a
unique product, the company following the cost
strategy seeks advantage by opening up a
sustainable cost gap over its competitors. It
does so by managing the areas in the business
that are critical to cost. This leads to superior
margins, provided prices are at or near the
industry average.
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170
Porter uses Procter & Gambles Ivory Soap to

illustrate the basic principles of positioning and
to discuss the overall cost leadership strategy.
Ivorys strategies changed since it was first
introduced. Porter shows how Ivory moved from
being a differentiator to being a basic soap
providing good value. Ivorys shift in strategy
illustrates both why a strategy may have to
change as well as some principles of competing
as a cost leader.
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171
Cost Leadership
(2nd Dimension)
Companies can also achieve cost advantage by focusing
on a particular target segment where they can be more
efficient than broadly targeted competitions. Companies
in this position achieve advantage by dedicating
themselves to serving the needs of a particular segment,
and no more. Porter shows how La Quinta Inns has
created a strategy around a particular target customer
the traveling salesperson and how this dedication
satisfies the customers needs but allows La Quinta to be
very low cost.
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Lessons from La Quinta

1. A focused
strategy begins with choosing a

particular target segment with unusual or
distinctive needs.
2. A focused strategy dedicates everything to
serving the target segment exclusively.
3. Despite temptations, a focused strategy
forgoes the opportunity to serve other
segments, or offer other products or services.
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4. A cost focus strategy depends on finding a

target segment that has a lower level of needs
than most of the market.
5.Cost advantage requires investment.
6. Low cost must become part of the companys
culture if this strategy is to be successfully
implemented.
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174
Porter interviewed Mr. Chuck Knight, CEO of

Emerson Electric Company, Emerson is the
company most identified in the United States
with being a low-cost competitor. They
discuss how Emerson goes about succeeding
as the best-cost producer.
Chuck Knight lists six points that have been
critical to Emersons success:
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175
1. You cant be the best-cost producer without

having a high-quality product.
2. Know the competitors costs.
3. Be receptive to change and be willing to go
after productivity in your plants.
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4. Devise a formalized cost-reduction program.

5. Make all employees a part of the cost-reduction
plan by communicating the plan to them
strongly.
6. Commit capital to reduce long-run costs.
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Summary of:
Cost Leadership
1.Cost leadership starts with a good

product.
2.A cost leader is willing to make some
choices to be low cost.
3.Successful cost leaders draw their
advantage from many sources
throughout the business.
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4. Cost leaders pay intense regular attention to

their competitors cost positions.
5. Cost leaders build low cost into the culture of
their organizations.
6. Cost leaders constantly manage costs down.
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Differentiation
(1st Dimension)
The differentiation strategy starts by
identifying needs that the buyer thinks
are valuable. The differentiator then
sets out to meet these needs better
than any other competitor, and is willing
to bear extra costs if necessary to do
so. The differentiator seeks to
command premium price, which leads
to superior performance
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180
Provided the premium exceeds the extra costs

of being unique. To illustrate his points, Porter
discusses two companies American Airline
and Cray Research, Inc that successfully
use differentiation strategies.
American Airline serves a wide range of
travelers (business vacation, personal) and
seeks to be the differentiated airline.
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181
Lessons from American Airlines

1. Any differentiator starts with the problem of
creating value for buyers successful.
Differentiators find areas of value that the buyer
views as most important.
2.Successful differentiators not only create value,
they also communicate their uniqueness to
consumers through incredible ways.
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182
3.Differentiators must be willing to bear the

cost of being unique. Differentiators must,
however, minimize the added costs of
uniqueness.
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183
4. In the pursuit of differentiation there is a tradeoff between cost and differentiation. Successful
air differentiators are clear about how theyre
going to make it.
5. To sustain differentiation, a company must be a
moving target and constantly invent new buyer
value.
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184
Differentiation
(2nd Dimension)
Another route to differentiation is through a focus
strategy; that is, choosing a narrow target and
concentrating on serving its needs better than
more broadly targeted competitors.
Cray Research, Inc, which manufactures only
supercomputers, is a good example of a
company that targets a specific product segment
dedicates itself to providing uniquely high
performance.
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185
Lessons from Cray Research

1. Differentiation starts with creating value for the
customer that justifies a premium price.
2. Differentiation involves more than just a physical
product. Helping the customer to use the
product is as important as selling it.
3. To be successful, a differentiation strategy must be
communicated both internally and externally.
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186
4.To sustain differentiation, a company must

become a moving target by improving
performance and constantly seeking
innovation.
5. The differentiation focus strategy requires
that the company isolate a segment that has
more extensive needs in market.
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187
6. The focuser dedicates itself to (and bets

everything on) its particular target
segment(s).
7. A focused differentiator, like a focused
low-cost competitor, must avoid the
tendency to blur its focus in pursuit of
incremental business.
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Overall Lessons about positioning

This is based on several examples of the
Companies which Porter visited in connection to
this lesson.
1. Successful strategy must concern itself with
industry structure as well as positioning.
2. Successful strategists select positions that are
different from their competitors.
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189
3. Strategy involves making choices and tradeoffs, and taking risks. These are the flip-slides of
advantage.
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The Process of Developing Strategy

In this final segment Porter discusses
some of the practical problems of
developing and carrying out a strategy.
Important issues are how to organize
an effective planning process, how to
communicate its results, and how to
measure performance.
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191
Lessons for Effective Strategy

Development
1. To develop strategy effectively, a company
needs a formal strategic planning process.
2. A multi-functional team is the best unit to
develop a strategy. It can take the holistic
approach and make the complex trade-offs
essential in formulating effective strategies
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192
3. To be successful, a strategy needs to

be communicated, both internally and
externally.
4. It takes time to change and
communicate a strategy. A strategy
should be changed infrequently and
must be followed consistently.
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193
5. Financial results are a misleading indication of

strategic health.
6.To gauge strategic health, companies have to
create measure of underlying advantage, such
as customer surveys, studies of cost position,
and studies of how products are performing
relative to competition. Customer satisfaction
ought to be the best yardstick.
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194
FINALLY
7. A strategist must continually probe and test a
strategy for the need to change.
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195
The end
Create,
Communicate
and Sustain
your superior
performance
for PREMIUM
PRICES!!!!
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196
Module 10
PRICING STRATEGIES &
SALES
.
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197
How Price Fits into Marketing Program

Positioning Strategy
Target
market and
objectives
Product
strategy
Marketing program
positioning strategy
Distribution
strategy
Price
strategy
Promotion
strategy
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198
PRICING SITUATIONS
New product pricing
Life cycle pricing
Positioning strategy change
Countering competitive threats
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199
Pricing Strategy for New

and Existing Products
Set Pricing
Objectives
Analyze the
Pricing Situation
Select Pricing
Strategy
Determine Specific
Prices and Policies
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200
Factors Impacting the Pricing

Situation
Customer Price
Sensitivity
Legal and Ethical
Constraints
Analyzing the
Pricing Situation
Product
Costs
Competitors
Likely Responses
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201
Buyers Perceptions of Value Offering

of Brands A-E
Perceived
Value
Superior Value Zone

D
A
B
E
C
Inferior Value Zone
Perceived Price
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Guide to Cost Analysis

Determine cost
structure
Analyze cost and

volume relationships
Analyze competitive
advantage
Estimate the effect

of experience on costs
Determine the extent

of control over costs
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203
Determinants of Pricing Flexibility

Demand
Competition
Demand-Cost Gap
Legal and
Ethical
Influences
Costs
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STRATEGIC APPROACHES
Above
Competition
Skim strategy
Neutral strategy
(same as competition)
Penetration strategy
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Below
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Competition
205
Illustrative Price Strategies

Active
strategy
Lowactive
strategy
Low
relative
price
Highactive
strategy
Highpassive
strategy
Lowpassive
strategy
High
relative
price
Passive
strategy
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206
Basis of Determining Specific

Prices
Cost
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Demand
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Finally
Competition
207
Module 11
PRODUCT DECISIONS
(Ansoffs Matrix)
Product and Service
Classification System
The Product Life Cycle
Introduction to product matrices
Boston Matrix (Growth/Share)
Ansoffs Matrix (Product/Market)
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Product and Service

Classification System
Convenience goods - little effort,
relatively inexpensive
Shopping goods - e.g white goods,
equipment, more expensive, infrequent
Speciality goods - extensive search e.g
Jewellery, gourmet food
Unsought goods - e.g. Buying a shirt
just after seeing it.
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The Product Life Cycle (PLC) Model

Maturity
Development
Decline
Decline
Growth
Few:
trial of
early
adopters
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Growing adopters:
trial of
product/service
Growing selectivity
of purchase
Entry of
competitors
May be many
Saturation of
users
Repeat purchase
reliance
Fight to maintain
share
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Drop-off
in usage
Exit of some
competitors
210
The Boston Matrix (Growth/Share Matrix)

Market Share
High
1. Stars
Market
Growth
Low
2. Cash Cows
3. Question
Mark (Problem
Child)
4. Dogs
High
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Low
211
The Boston Matrix - Chocolate Bars

Market Share
High
FUSE
Maverick
Miniature Heroes
Market
Growth
Low
KIT KAT
MARS BAR
TOPIC
BOUNTY
High
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Low
212
New Products Existing Products
Ansoffs Matrix (Product/Market Matrix)
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Existing Markets
Market
Penetration
Product Development
New Markets
Market Development
Diversification
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New Products Existing Products
Ansoffs Matrix (Product/Market Matrix)
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Existing Markets
New Markets
E.g. Realignments
of the marketing
mix
E.g. Geographical
expansion
Same outlets and

sales strategy
- new product
Diversification related or unrelated
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Products Decisions
Product and Service
Classification System?
The Product Life Cycle stages?
Growth/Share?
Product/Market? Ansoffs
Matrix
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215
Module 12
STRATEGY IMPLEMENTATION
& CONTROL
Implementation is the process that
turns a marketing plan into specific

tasks to be performed and ensures
that they ultimately accomplish the
plans objectives.
If the implementation process is not
well thought-out and managed, the
plan will not succeed.
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Factors in Implementation
On-time and accurate performance by
marketing staff, agencies and vendors

(the organization staff must deliver their
services according to the specifications in
the plan)
Clear delineation of responsibilities of
various elements of the implementation
process (each task must be accomplished
and naming the individual responsible)
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Factors Cont
Communication of the plans objectives,
strategies, and tactics throughout the

bank (it is important that all areas of the
bank be aware of the banks marketing
efforts).
Cooperation of all areas affected by
implementation (the individual who chairs
the task force must effectively steer the
group toward the desired end).
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Factors Cont
Monitoring of results (having a
system in place for monitoring the

implementation process and its
progress toward achievement of the
plans goals) = PROGRESSIVE
EVALUATION
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STRATEGY CONTROL
The control process involves continuous
monitoring and evaluation of the
strategic plan as well as feedback
necessary to ensure that the plan has
been assigned and communicated to
the right people in the right way.
Adequate monitoring system will help
to trace the causes of problems and
take corrective actions.
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FINALLY
STRATEGY CONTROL
Plans may derail because of the changes in
the operational environment (competition,
technology, social, economic, political or
legal factors)
Or some situation within the firm (lack of
cooperation at the operating level):
Therefore
Problems should be viewed as
opportunities for learning, growth, and
improvement.
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Total Concluding Summary

It is imperative for any marketer to
understand the role of strategy in Business

Strategy is se of unified Coherent and
integrated set of ideas
There are long and short term strategies
Customer are not and will never buy
products but values
Understand the mission of an organisation
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Summary Cont..
You need to analyse your customers in
order to be customer driven

Industry analysis is important to determine
the attractiveness of an industry
Market driven strategies are more
sustainable .. AND
Product decision are necessary in order to
make proper choice of the strategy
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THE END !!!

Companies which
will ignore strategic

Marketing have no
room in competition
Always understand
your competitors as
you understand
yourself.
THANK YOU!!
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Combined Topics - Strategic Marketing &amp; Management

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STRATEGIC MARKETING

Trends & Overview

DETAILED PPT SLIDES

TRENDS & OVERVIEW

This is a system approach of facilitating the

It is imperative for strategists to

understand that the heterogeneity of

Create Superior performance

(A): BASIC CONCEPTS

Promoting, and delivering goods &

Why studying Strategic

The Product Concept:

normally buy a small quantity of

The Marketing Concept

if the Company will be more effective than

Four Pillars of the Marketing

Selling focuses on the needs of the seller;

Societal Marketing Concept

needs and interests of target markets

Market Growth Rate

Micro & Macro Environment

management, which outlines that,

Customers can be categorized in different

strategic knowledge about the

The Concept & Trends

Weaknesses). Any impact on strategy?

Market & Industry Analysis

Strategic Marketing Choices

Marketing (By Prof. ole Gabriel) MNCs

Managing the Marketing

structures, systems and more

order to avoid generalisability.

Any effort at environmental analysis

must be well-organized, systematic,

Data Versus Information

Data does not become informative until it is

transformed in a manner that makes it useful

Environmental analysis is valuable only to

the extent that it improves the quality of the

Perpetually analyzing data without making

any decisions is usually not worth the added

Three Key Environments

(macroenvironmental) should include all the

The marketing manager should examine the

customer environment (5 Ws) to assess the current

Finally, a critical evaluation of the firm's current and

anticipated internal environment

Four Basic Types of Competition

Stages of Competitive Analysis

Economic factors to consider include inflation,

employment and income levels, interest rates, taxes,

Many marketers view political factors as

being beyond their control and do little

Other firms take a more proactive stance

Legal and Regulatory Factors

examine recent court decisions and recent

Companies that engage in international

marketing activities should also consider

Many changes in technology assume a

Technological changes can also assume

Sociocultural factors are those social and

There are many changes taking place in the

The Customer Environment

In assessing the firm's target markets, the

Combined Topics - Strategic Marketing & Management

Combined Topics - Strategic Marketing & Management