HWLC MBA

MARKETING STRATEGY
Jon Twomey Chartered Marketer 2010

Primary readings
Kotler, P., Armstrong, G., Wong, V. and Saunders, J. (2008). Principles of Marketing, Fifth European Edition, Prentice Hall: Chapter 9 Market segmentation, targeting & positioning (STP) pages 407- 447 Chapter 13 Marketing services pages 593 627 Chapter 14 Pricing pages 635 - 679 Jobber & Fahy Chapter 5 pages 111- 136 - Market segmentation, targeting & positioning (STP) Chapter 7 Services marketing pages 171 192 Chapter 8 Pricing strategy pages 193 - 221 Ranchhod & Gurau Chapter 2 - Opening up analysis & positioning. pages 53- 78 Palmer P. (2008), Principles of Services Marketing, Fifth Edition, McGraw-Hill:

Learning outcomes
By the end of this session you will be able to: appreciate the importance of organisation mission/vision statements develop SMART objectives describe market segmentation methods, explain the key targeting selection criteria, design unique positioning statements identify strategic options using appropriate models, select and justify your choices understand the barriers to implementation appreciate the importance of measurement/control

The P

Traditional market thinking

The rational model of planning Structure of a plan Advantages of formal systems Criticisms of strategic planning

Marketing Plan Structure (Overview)

Introduction Organisation overview and context Your Scoping statement SITUATION ANALYSIS - Marketing audit (FEPSOS) SWOT & key issues arising STRATEGY MISSION (& Vision)

OBJECTIVES Corporate, Marketing, eMarketing

MARKETING STRATEGY - Segmentation Targeting Positioning (STP) Marketing Strategy Models & Themes MARKETING PROGRAMMES Integrated marketing mix IMPLEMENTATION - MARKETING BUDGET / RESOURCES EVALUATION & CONTROL (KPIS) CONTINGENCY PLAN References/bibliography -1 page Appendices max 5 pages

Marketing Plan Structure (Inview)

SITUATION ANALYSIS (Marketing audit) FEPSOS: functions, environment - micro (inc. Customers - e Impact & buying behaviour, Comptition Porters five forces etc. below) & Macro (STEEPLE/PESTEL), productivity, systems, organisation, strategy. Marketing Effectiveness Rating (MER), SWOT Analysis, Key issues OBJECTIVES MISSION (& Vision) CORPORATE OBJ. SMART Organisational goals (qual. & quant.) - Balanced Scorecard MARKETING OBJ. SMART customer focused goals (qual. & quant.) eMarketing Objectives SMART The 5 Ss MARKETING STRATEGY - STP Segmentation attractiveness & method used. Targeting key customers, their needs (other stakeholders). Positioning how to differentiate MARKETING STRATEGY Models & methods (as appropriate) Strategic Alternatives (application of models) e.g.. Ansoff, Shell, GE, ADL Generic Strategies (Porter), Competitive Strategy (Kotler & Singh) International - Mkt Entry, Standardise/Adapt, Harrell & Kiefer, Porters , Key themes e.g. Branding, Innovation, e-Business, value chain MARKETING PROGRAMMES Integrated mix implementation schedule Marketing Research, Product/Service - NPD total product concept, innovation. Price customer value. Promotion integrated communication - push, pull, profile. Place distribution, service levels. People orientation, culture, change, internal marketing. Process information systems/technology eMarketing. Physical Evidence support brand image related to vision & position MARKETING BUDGET / RESOURCES Marketing spend required, timings, people - marketing staff/agency requirements EVALUATION & CONTROL - Use of key performance indicators (KPIS) derived from objectives, research, MKIS, eSystems CONTINGENCY PLANS STRUCTURE & PRESENTATION contents, logic, flow, references, appendices

Definition of Mission

Tells you what the company is now It concentrates on present It defines the customer(s), critical processes and it informs you about the desired level of performance It may include an expression of a company's history, managerial preferences, environmental concerns, available resources, and distinctive competencies to serve selected publics

Guides decision making & strategic planning.

AMA

Definition of Vision
Explains the purpose of the organisation (answers the why of the mission)

It outlines what a company wants to be It concentrates on future It is a source of inspiration

Provides clear decision-making criteria. AMA

Mission/vision - test

1. Role or Contribution Profit (specify) or Service or Opportunity-seeker 2. Business Definition Defined in terms of the benefits you provide or the needs you satisfy, rather than in terms of what you do or what you make. Also related to chosen markets as appropriate.
Irwin.R : include : Key Market, Contribution and Distinction.

3. Distinctive competence What essential skills, capabilities, resources underpin whatever success has been achieved to date (include use of technology) ? (Note : These factors should not apply equally to a competitor, otherwise there is no distinctive quality about them). 4. Indications for the future What the company will do What the company might do What the company will never do.

Examples
Courtyard by Marriott

Davidson.H (Vision & values)

To provide economy- and quality-minded travellers with a premier, moderate-priced lodging facility which is consistently perceived as clean, comfortable, well-maintained and attractive, staffed by friendly, attractive and efficient people.

Otis Elevators To provide any customer a means of moving people and things up, down and sideways over short distances with higher reliability than any similar enterprise in the world.

All objectives must be SMART

Sustainable Measurable Actionable/Agreed Realistic Timed/Targeted

Nb. perhaps use a mixture of qualitative & quantitative objectives - ensure that all have a date and are measurable

Corporate objectives

Concerned with the whole organisation / business, and are the key factors for success. Profitability (e.g. ROCE increase) Growth (sales ) Cash flow Survival (breakeven) Etc.

Corporate objectives
Using the Balanced Scorecard - Kaplan & Norton

Customer concerns such as service quality, cost, response times Internal measures such as staff productivity and range of skills Financial measures such as revenue, profitability and costs Learning and growth/innovation measures such as rate of new product development, availability of staff training

Marketing Objectives

Usually relate to products (services) or markets (customers): market share sales revenue / volume (units sold) brand awareness / preference time to market / NPD speed customer satisfaction /churn / loyalty etc.

eMarketing Objectives

Sell Serve Save Speak Sizzle

Smith and Chaffey eMarketing Excellence

Marketing strategy

One of the principal purposes of marketing strategy is for you to be able to choose the customers, and hence the markets, you wish to deal with
McDonald.M 1998

Overview of the Segmentation process

Segmentation improves organisational effectiveness by: identifying meaningful & actionable opportunities and finding customers and targeting them with specific offers and messages

What happens if you fail to segment properly?

Poor segmentation usually leads to poor marketing, as often, the only option left is to compete on price! Marketers need to find the best fit between their product and the chosen customer group. (to maximise customer value in the product and so build customer loyalty)

Consumer example Health & Leisure clubs UK

Markets can be segmented on many different ways. The UK Health& Leisure market can be Segmented by preferred time of use e.g.: Daytime users - young mums with children, and older retired people Evening users - people who keep fit after day at work

Leisure clubs tailor their facilities to cater for the needs of these different segments e.g.: Crche facilities during the day Different styles of music played Higher prices in the evenings as bigger demand and higher use of facilities

Consumer example: NIVEA Sun Brand

Demographics Men prefer convenience; Women enjoy more luxurious products, adults with children value protection. The two main aspects of attitudes relate to: Usage occasion - holiday, outdoor sports, gardening, working etc. Benefit sought - protection the primary benefit but preferred delivery will vary e.g. convenience is important to men so they choose spray-on

Segment criteria = MASHA

An effective segment approach must satisfy the following conditions:

Measurable Size, purchasing power and profiles can be measured Accessible - Segments can be reached Substantial - Large enough to be worthwhile Homogenous - Uniqueness of response Actionable - Programs developed to attract and serve the segments

Deciding which segments to target depends on how attractive they are and how well your brand (company) can serve them (your competence)

A B C

Note: size of circle indicates volume/value of segment

23 Galenica Group

Consumer Segmentation

Geographic Climate, country, region, Demographic Age, sex, race, family life cycle Geodemographic e.g. :ACORN. MOSAIC Psychographic- attitudes, interests & opinions Behavioural- benefits, occasion

Organistional Segmentation

Segment by Size of organisation Location Industry sector End use

Then identify DMU structure Decision process Buy class Type of purchasing Organisation innovation level Purchasing strategy

Targeting

Positioning explained

Positioning a brand means emphasising its distinctiveness, based on characteristics relevant to the potential/ actual customer. To start this process, answer the following questions about your brand:
What is the brand for? Who is the brand for? When (& where) is the brand for? Who is the brand competing directly with?
27 Galenica Group

Brand Positioning using Points of Difference

Consumer example

Often, the people responsible for positioning brands have concentrated on points of difference the benefits that set each brand apart from the competition.

Tide is differentiates on whitening power BMW differentiates on superior handling adverts now tell us that they build not only cars, but joy

Such points of differentiation are, in many cases, what consumers remember about a brand

Points of Difference may not be enough

But points of difference alone are not enough to Sustain a brand against competitors. Marketers also need to understand:

the frame of reference within which their brands work and address the features/benefits that their brand has in common (points of parity) with competitors

Frame of Reference

A customers frame of reference is made up of their emotional and physical needs, and the Dynamics of the situation (e.g. time and place) in which those needs occur.

The frame of reference sets the parameters for a customers consideration set the brands they will choose from.

Points of Parity

Fast food - like McDonalds (Point of parity) Or Tasty & Healthy food - unlike McDonalds (points of difference)
Subways executives saw taste as key element of the fast-food frame of reference and believe that taste is more important than healthfulness to core fast-food customers.

Positioning Statement
Component parts - Template

Template of Positioning Statement

For:
TEMPLATE

<..which Target customer..> Do: < The Behavioural Objective (what you want them to do) >

Because our product is the:

<.. Summary statement (the point of difference within the frame of reference).> <..Customer benefits..>

that will:

Because:

< ..Reason to believe..> ..

32 Galenica Group

Positioning influences all your brand activities

Media Strategy Lifecycle Mgt. Strategic Focus Brand Positioning Resource Allocation

Marketing Mix

Packaging

New Indications

Positioning & Messaging

Positioning enables the creation of a compelling and distinct offer by linking brand attributes and the benefits that the customer gains from using it. Messages can then be developed for the brand that will be most likely to trigger the specific desired behaviour for the target customer segment.
We need our customers to appreciate why they should choose us!

Factors influencing strategic choice

Relative size and market position Existence of competitive advantage Company history Perceptions of risk Stakeholders expectations Organisational culture Customers and competitors

Strategies for Growth

Ansoff Matrix
PRODUCTS Existing New

Existing

MARKETS

Market penetration

Product development

New

Market development

Diversification

Porters generic strategies

Broad cost leadership Narrow cost leadership Broad differentiation Narrow differentiation (focus/niche)

Offensive Marketing Davidson.H

Categorises strategic direction according to market position as follows: market leaders market challengers market followers market nichers

Competitive warfare
adapted by Jon Twomey from Kotler & Singh
TIMEFRAME
Short Medium Long

S T R A T E G Y

Follow

Challenge

Defend

Offensive strategies
Bypass Attack Flanking attack Guerrilla Attack

Attacker

Frontal attack

Defender

Encirclement attack
Developed by Kotler & Singh

Defence strategies
Flanking defence

Attacker

Pre-emptive defence Counter-offensive defence

Position defence

Defender
Mobile defence

Contraction defence

Developed by Kotler & Singh

Davidsons 8
Approaches to developing sustainable competitive advantage

Superior product benefit

Perceived advantage Low-cost operations Legal advantage Superior contacts Superior knowledge Scale advantages Offensive advantages
Source: Prof.H.Davidson, 1987 Offensive Marketing

Market Growth
GE Strategic Business Planning Grid Business Strengths Strong Medium Weak

Market Attractiveness

Medium

In

t fo s ve

h wt o gr r

High

Low

a an M

se e

v c ti le

el y

fo

a re

g ni n

ar H

s t/ ve

w ra d ith w

Shell Directional Policy Matrix

Prospects for sector profitability
Disinvest Phased withdrawal Double or quit

Business competitive capabilities

Weak
Phased withdrawal

Custodial growth

Try harder

Average
Cash generation

Growth leader

Leader

Strong

Low

Medium

High

4 Implementation & Control

Why is implementation so important?

It is not enough to produce a great plan and expect other people to go away and make it happen. Implementation is not something we bolt-on at the end of generating strategy - implementation IS strategy.
Piercy.N 2000

Making implementation happen

Screen strategies for implementation problems EARLY isolate and evaluate implementation problems identify and evaluate key players ensure internal marketing is effective

The control process

goal setting (what do we want to achieve?) performance measurement (what is happening?) quantity, quality, cost etc. performance diagnosis (why is it happening?) corrective action (what should we do about it?) environmental changes internal problems

Measuring marketing outcomes*

Measuring outcomes must start with having SMART objectives for your business at the outset of your marketing plan Lack of clear objectives will make measurement impossible

Measuring progress
Key performance indicators derived from balanced scorecard objectives

Customer concerns such as service quality, cost, response times Internal measures such as staff productivity and range of skills Financial measures such as revenue, profitability and costs Learning and growth/innovation measures such as rate of new product development, availability of staff training

Summary

appreciate the importance of organisation mission/vision statements develop SMART objectives describe market segmentation methods, explain the key targeting selection criteria, design unique positioning statements identify strategic options using appropriate models, select and justify your choices Understand the barriers to implementation Appreciate the importance of measurement/control

Other potential sources

Marketing Plans: Malcolm McDonald The Marketing Plan in Colour: Malcolm McDonald, Peter Morris Marketing Communications: Chris Fill Marketing Research, An Integrated Approach: Alan Wilson Marketing: Concepts and Strategies: Dibb et al Value-based Marketing: Peter Doyle On Competition (A Harvard Business Review Book): Michael E. Porter Competitive Advantage of Nations (Macmillan Business): Michael E. Porter Strategic Marketing Management: C. Gilligan, R. Wilson eMarketing Excellence (eMarketing Essentials): D. Chaffey & P.R. Smith Marketing the E-Business: Lisa Harris & Charles Dennis Internet Marketing: D.Chaffey, R.Mayer, K.Johnston, F. Ellis-Chadwick

Plus:

Ambler, T. (2000) Marketing and the Bottom Line FT Prentice Hall Davison, H. (1997) Even more Offensive Marketing, Penguin Kaplan, R. and Norton, D. (1996) The balanced scorecard: Translating strategy into action Harvard Business School Press Piercy (2000) Market-Led Strategic Change 2nd Edition, Butterworth Heinemann Porter (2001) the impact of the Internet on industry structure Harvard Business Review