Lecture 2: Marketing Tools and Implementation

Majid Aleem

Date: 29/09/2011

Pakistan has been ruled by dictators for half its history Political tug-of-war between civilians and soldiers still continues. The chief threat comes from outside parliament militants opposed to Pakistan pivotal role in the US-led war against terror. Efforts to combat militancy are being frustrated close ties between some militant groups and the state Inter Services Intelligence unit (As per international Community).

Core Scenario

Strengths  Condemned for testing a nuclear bomb in May 1998, Pakistan has since won Western acclaim for its leading role in the US-led war on terror. Washington has lifted sanctions and, in June 2004, President George W. Bush named Pakistan a major non-NATO ally .

Weaknesses  Civilian institutions are weak in Pakistan. Parliament, comprising the National Assembly and the Senate, has had its powers vastly reduced during President Pervez Musharraf era which still continues as it is  Poor relations with India and other neighbours. The two nuclear-armed neighbours have gone to war three times since they were partitioned after independence from colonial master Britain in 1947.

Opportunities
 Pakistan could build stronger civilian

institutions through meaningful democratic reform. However, we believe these are unlikely for the time being. Pakistani leaders with an opportunity to ease tension in the world s most dangerous nuclear flashpoint.

 Ongoing peace talks with India provide

Threats
 Escalating violence by militants opposed to

Pakistan's leading role in the US-led war on terror poses a key risk to stability.  Attacks on president and prime minister- a concern for international business community

Core Scenario Economy has strengthened considerably due,

firstly, to wide-ranging reforms aimed at reining in the government s budget deficit Assistance from foreign governments eager to reward Islamabad joining the US-led coalition against terror Huge losses due to natural disasters Rising Inflation

Strengths  A gradual tightening of monetary policy by the State Bank of Pakistan should moderate high inflationary pressures.

Weaknesses  As a result of the massive earthquake hitting Pakistan in October 2005, Floods in 2010 and 2011 economy suffering from very slow growth
 Subsidies to loss making, state-run

enterprises continue to stretch public finances

Opportunities
 The lapsing in January 2005 of the WTO s

Multifibre Agreement, which regulates the global textile trade, will provide Pakistan with an opportunity to boost exports.  The local textile industry is competitive enough to prosper in a free-trade environment.  BUT WILL IT BE POSSIBLE?
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Threats
 Pakistan s military-backed/dependent

government lacks legitimacy and may abandon economic reforms for fear of alienating public opinion.  Persistently high global oil prices pose a threat to Pakistan s balance of payments. Pakistan imports more than 50mn barrels of oil a year to satisfy local demand for fuel products and record-high prices have led to widening of the trade deficit.
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One of South Asia s most liberal foreign investment regimes. Pro-market reforms during the 1990s opened most sectors of the economy to foreign participation. One hundred percent foreign ownership is permitted in the manufacturing sector, though ownership restrictions remain in place in agriculture and services.

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Foreign firms are allowed to repatriate capital, profits and dividends. Security risks are the chief concern for investor with foreign-owned businesses targeted by anti-Western militants in recent attacks. Businesses must also contend with poor infrastructure, bureaucratic bottlenecks and widespread corruption. Ongoing reforms will help here.

Strengths  Pakistan has one of the most liberal foreign investment regimes in South Asia. One hundred percent foreign equity is permitted in the manufacturing and infrastructure sectors.
 Ongoing reform of Pakistan s trade regime

is reducing tariff barriers. Duty on capital goods, plant and machinery not manufactured locally was cut to just 5% from an earlier range of 5-25%.

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Weaknesses  Failing infrastructure, bureaucratic delays and widespread corruption are key concerns for investors looking to do business in Pakistan.
 Intellectual property rights are poorly

enforced. Pakistan, a leading producer of counterfeit goods, was one of 36 countries named on the Office of the US Trade Representative s Priority Watch List.

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Opportunities
 Pakistan is committed to selling off state-owned assets

and a series of firms are expected to going under the hammer in the coming years.

Threats
 Anti-western militants have targeted foreign-owned

businesses in recent attacks. A suicide bomber killed eleven French engineers employed by the Naval Construction Directorate in May 2002 as they boarded a bus in Karachi.

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Strengths

            

3-4 years of strong growth Resilience against shock and extra ordinary jerks Rise in per capita income for US $ 503 in 2002 to US $ 847 in 2006 Robust Consumer spending Substantial increase in private sector credit Balance between fiscal deficit and growth Medium Term Development Framework Maintenance of external and domestic debt within limits Reach to Global Capital Markets Geo political situation post 9/11 Stable exchange rate Higher foreign direct investment Reduction in poverty level

Weaknesses

            

Credibility of statistics Sharp increase in prices of food items Incompatible contributions of various sectors of economy in tax revenue. Inefficiency in utilisation of development expenditure High administrative costs Perception gap between economic manager and people at large Quality of governance Record trade deficit Concentration of export in restricted items and markets High cost of doing business Lack of focus on agriculture sector Political instability Shortage of skilled workforce Energy crisis Poor HDI indicators

PAKISTAN ECONOMY
Opportunities

 

Threats

      

Capacity constraints in Indian IT sector Recent investment in IT sector BPOs potential Telecom and Media revolution Geo political situation Foreign Direct Investment Investment in education and health

      

Political uncertainty Issues in Balochistan and Northern Areas Worsening of situation on Western borders Anti Pakistan attitude in Afghanistan Level of corruption Broadening gap between Rich and Poor Social unrest

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Strengths
3-4 years of strong growth Resilience against shock and extra ordinary jerks Rise in per capita income for US $ 503 in 2002 to US $ 847 in 2006 Robust Consumer spending Substantial increase in private sector credit Balance between fiscal deficit and growth Medium Term Development Framework Maintenance of external and domestic debt within limits Reach to Global Capital Markets Geo political situation post 9/11 Stable exchange rate Higher foreign direct investment Reduction in poverty level


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Weaknesses
of statistics Sharp increase in prices of food items Incompatible contributions of various sectors of economy in tax revenue. Inefficiency in utilization of development expenditure High administrative costs Perception gap between economic manager and people at large Quality of governance Record trade deficit Concentration of export in restricted items and markets High cost of doing business Lack of focus on agriculture sector Political instability Shortage of s killed workforce Energy crisis Poor HDI indicators
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Credibility

Opportunities


Capacity constraints in Indian IT sector Recent investment in IT sector BPOs potential Telecom and Media revolution Geo political situation Foreign Direct Investment Investment in education and health

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Threats
Political uncertainty Issues in Balochistan and Northern Areas Worsening of situation on Western borders Anti Pakistan attitude in Afghanistan Level of corruption Broadening gap between Rich and Poor Social unrest


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Hierarchy of goals and objectives

Organizational Goals and Objectives Marketing Goals and Objectives Marketing Mix Goals and Objectives Marketing Mix Element Goals and Objectives

What business are you in?

Mission statement Statement of marketing strategy Indicates product, market scope Shows growth factor Shows differential advantage Shows management orientation

Marketing Strategy Development

Recognize and evaluate an opportunity Market size and potential Key competitors Choose target market Develop Objectives for each opportunity Develop Marketing Mix Strategy for each opportunity Choose Marketing mix elements

Opportunity Evaluation
Review of Requirements for Market Size Review of Relevant Competitive Set

Target Market Selection

Introduction to Market Segmentation Review of the Strategic Options Equivalent Behaviors as the Critical Variable

Structure of Marketing Mix Strategies

Are all Mix elements equally important? Product as the key Example using Product Life Cycle

Generic Marketing Strategies

 Cost Leadership
Lower costs of production and distribution

 Product Differentiation
Unique product or brand

 Focus
Focus on customer needs in a few segments

Product Strategies
Product Mix Strategies
Market penetration versus market skimming
High Quality Medium OverPricing Hit and Run High Average Quality Shoddy Goods Medium Price Bargain Premium Goods Penetration Super Bargain

Low

Cheap Goods Low

Product Strategies
Product Market Growth Strategies

Old

Market Penetration Product Development

(increase usage)

(new uses)

Markets Market Development Diversification

New

(new users)

(new users, new uses)

Old

New

Products

Market Position Strategies

Market Follower Strategies
 Conscious Parallelism

Similar products, prices Avoid unprofitable segments

 Market Niche

Specialize in a very small group of customers Concentrated segmentation strategy

Market Position Strategies

Market Leader Strategies

 Increase Size of Total Market

Product-Market Growth Strategies  Protect Market Share  Fortification Assortment of brands, sizes Innovation Best defense is a good offense Counteroffensive  Increase Market Share BCG Antitrust constraints

Market Position Strategies Market Challenger Strategies  Frontal Attack Out-innovate leader Tough to do, easier to defend  Flanking/Bypass Attack Attack where leader is not looking Find a new market segment

  

Market Challenger Strategies Price Discount Strategy Buyers are sensitive to price Works if leader does not cut price Cheaper Goods Strategy Lower quality but much lower price Vulnerable to still cheaper goods Prestige Goods Strategy Increase both quality and price

Market Challenger Strategies

Cheaper Goods Strategy Lower quality but much lower price Vulnerable to still cheaper goods
 Prestige Goods Strategy

Increase both quality and price

Encirclement Flanking Defense

Preemptive Defense

Attacker (smaller)

Frontal

Defender
(bigger)

Contraction Defense

Attack Counteroffensive Guerilla Attack

Position Defense
Mobile Defense

Flank Attack

Bypass

Write a review of the article top ten barriers to marketing planning according to the guidelines provided in the course outline. Due next week in class

Prepare a report regarding the product/service you chose during this lecture for Marketing Strategy Elements and discuss these elements in context of that product/service Due next week in class