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Marketing & Strategy “In peace prepare for war, in war prepare for peace. The art of war is of vital importance to the state.” 512 BC Structure 1. What is Strategy? 2. Strategic Analysis 3. Strategy Development 4. Strategy Implementation 1. What is Strategy? Carl von Clausewitz “Tactics is the art of using troops in battle; strategy is the art of using battles to win wars.” Helmuth Karl Bernhard Graf von Moltke “Strategy is the practical adaptation of the means placed at a general's disposal to the attainment of the object in view.” Michael E Porter “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” Porter (1996:64) Subhash C Jain „Strategy in a firm is a pattern of major objectives, purposes, or goals ... ... and essential policies and plans for achieving those goals... ..., stated in such way as to define ... ...what business the company is in or is to be in and the kind of company it is or is to be.“ (Jain 2004 p. 9) Marketing Strategy Marketing strategy deals essentially with the interplay of three forces: – the customer, the competition, and the corporation (strategic three Cs) Characteristics of good marketing strategy: – A clear market definition – A good match between corporate strengths and the needs of the market; – Superior performance in the key success factors of the business Based on the interplay of the three Cs, strategy requires three decisions: − Where to compete (market, segments, …)? − How to compete (means for competing)? − When to compete (timing)? (Jain 2004) Put differently … Strategy development is a question‐based process: – Where are we now? – Where would we like to go? – How do we get there? (Peter Edelmann, Senior Executive President Voith Turbo) 2. Strategic Analysis PESTEL Analysis What are the key issues we face in our business? Political Environment Economical Environment Social Environment Technological Environment Environmental Environment Legal Environment Example issues Political environment Economical environment • ecological/environmental issues • home economy situation • current legislation home market • home economy trends • future legislation • overseas economies and trends • European/international legislation • general taxation issues • regulatory bodies and processes • taxation specific to product/services • government policies • seasonality/weather issues • government term and change • market and trade cycles • trading policies • specific industry factors • funding, grants and initiatives • market routes and distribution trends • home market lobbying/pressure groups • customer/end‐user drivers • international pressure groups • interest and exchange rates • wars and conflict • international trade/monetary issues www.businessballs.com SWOT FIT matters: Internal strength and weaknesses need to match with external opportunities and risks (Kenneth Andrews) Weaknesses Strength Opportunities Risks Task: Keeping findings descriptive ; Investigating both internal AND external issues Example issues Strength Weaknesses • Advantages of proposition? • Disadvantages of proposition? • Capabilities? • Gaps in capabilities? • Competitive advantages? • Lack of competitive strength? • USP's (unique selling points)? • Reputation, presence and reach? • Resources, Assets, People? • Financials? • Experience, knowledge, data? • Own known vulnerabilities? • Financial reserves, likely returns? • Timescales, deadlines and pressures? • Marketing ‐ reach, distribution, awareness? • Cash flow, start‐up cash‐drain? • Innovative aspects? • Continuity, supply chain robustness? • Location and geographical? • Effects on core activities, distraction? • Price, value, quality? • Reliability of data, plan predictability? • Accreditations, qualifications, certifications? • Morale, commitment, leadership? • Processes, systems, IT, communications? • Accreditations, etc? • Cultural, attitudinal, behavioural? • Processes and systems, etc? • Management cover, succession? • Management cover, succession? www.businessballs.com Example issues Opportunities Threats • Market developments? • Political effects? • Competitors' vulnerabilities? • Legislative effects? • Industry or lifestyle trends? • Environmental effects? • Technology development and innovation? • IT developments? • Global influences? • Competitor intentions ‐ various? • New markets, vertical, horizontal? • Market demand? • Niche target markets? • New technologies, services, ideas? • Geographical, export, import? • Vital contracts and partners? • New USP's? • Sustaining internal capabilities? • Tactics ‐ surprise, major contracts, etc? • Obstacles faced? • Business and product development? • Insurmountable weaknesses? • Information and research? • Loss of key staff? • Partnerships, agencies, distribution? • Sustainable financial backing? • Volumes, production, economies? • Economy ‐ home, abroad? • Seasonal, weather, fashion influences? • Seasonality, weather effects? www.businessballs.com Competitor Intelligence • Who are your key competitors? • How do they perform? • What are there strengths and weaknesses? • What could be there strategy? • How could all of this impact your business? Stakeholder Analysis • Think of all of your stakeholder groups: – What do they expect from your company? 3. Strategy Development Point of view • Developing good strategies: – Having managers understanding ‘the benefit of having a well‐ articulated, stable purpose, and the importance of discovering, understanding, documenting, and exploiting insights about how to create more value than other competitors do’ – Universal objectives (profitability, costs, turnover, sales, quality, etc. ) define what a company must do to survive – but do not automatically suggest unique strategies nor provide direction – The essence of why an organization exists does provide guidance to achieve these universal objectives (Campbell 1997 p 42) What business are we in and why? • Vision – long‐term, encouraging, aspiration for the future • Mission – purpose of the business • Values – attitudes, behaviours, character of organization to guide actions like an internal compass Planning Processes • Processes of developing good strategies are ‘much more messy, experimental, iterative; and driven from the bottom up’ than many planning processes suggest • Besides, if there were one best way –everyone could use it • However processes and frameworks do provide structure, help to systematize the basis and context for decision taking and document results along the way (Campbell 1997 p 46) “A good plan is not a neat document put in a folder after print – a good plan – that is a piece of paper, which has been crumpled up a hundred times, thrown into the corner, but taken again to get changed, modified, extended …” (Robert Grant, Lecturer UOW) Generic Strategies Competitive Advantage Differentiation Lower Cost Differentiation Cost Leadership Broad Target Scope Focus Niche Market Efficiency Narrow Target Competitive (Porter 1985) Core Marketing Strategies Operational Product Customer Excellence Leadership Intimacy Strategic Sharpen distribution Nurture ideas, translate Provide solutions and systems and provide them into products, and help customers run their Direction no‐hassle service market them skillfully business Organizational Has strong, central Acts in an ad hoc, Pushes empowerment authority and a finite organic, loosely knit, and close to customer Arrangement level of empowerment ever‐changing way contact Systems Maintain standard Reward individuals´ Measure the cost of operating procedures innovative capacity and providing service and of Support new product success maintaining custome loyalty Corporate Acts predictably and Experiments and thinks Is flexible and thinks believes „one size fits „out‐of‐the‐box“ „have it your way“ Culture all“ (Pearcy, Wiersema 1995) Market Strategies Current Markets New Markets Market Penetration Market Development Current Products Product Development Diversification New Products (Ansoff) How can we best compete? • Which customers and markets will we target? • What is the value proposition that distinguishes us? • What key processes give us competitive advantage? • What are the human capital capabilities required to excel at these key processes? • What are the technology enablers required for the strategy? (Kaplan 2008) Key Success Drivers • What factors are especially important to perform superior in our industry? Defining Strategic Business Units “An SBU is composed of a product or product lines having identifiable independence from other products or product lines in terms of competition, prices, substitutability of product, style/quality and impact of product withdrawal.” (Jain 2004 p. 18) - unique business mission, independent of other SBU’s - clearly definable set of competitors - able to carry out integrative planning relatively independently of other SBU’s -large enough to justify senior management attention but small enough to serve a useful focus for resource allocation (Jain 2004) Defining SBUs –Targeting Market Segments Customer Groups 4. Dimension: Level of Distribution Technologies Customer Functions Targeting: Which segments to go for? • Identifiability − Ability to identify and measure the relevant characteristics • Size − Sufficient number of buyers • Stability − Needs or factors do not change too rapidly • Accessibility − Ability to reach target segment in economical way • Responsiveness − Segment responds homogeneously to a specific marketing mix ‐> Meaningful ‐> Actionable ‐> Financially attractive
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