1 strategic marketing management dr. hesham o. dinana
TRANSCRIPT
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Strategic Marketing Management
Dr. Hesham O. Dinana
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Stage One
Where Are We Now?
Strategic Analysis
Stage Two
Where Do We Want To Be?Strategic Direction and Strategy
formulation
Stage Three
How Might We Get There?Strategic Choice
Stage Four
Which Way Is Best?Strategic Evaluation
Stage Five
How Can We Ensure Arrival?Strategic Implementation and Control
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Identify StrategicFramew ork
Assess Enterprise
Environment and Inte rnalCapabilities
Formulate Strategic Plan
Update PerformanceMeasure Score Cards
Monitor and EvaluatePerformance
Implemet Strategic Plan
Strategic Planning Process
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Stage One
Where Are We Now?Strategic and Marketing Analysis
Approaches to
Customer
Analysis
Approaches to
Competitor
Analysis
Segmental,
Productivity
&
Ratio
Analysis
Marketing
Auditing
&
SWOT
Analysis
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Stage Two
Where Do We Want To Be?Strategic Direction and Strategy
formulation
Market Segmentation,
Targeting
and
Positioning
Missions
and
Objectives
The
Formulation
of
Strategy
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Stage Three
How Might We Get There?Strategic Choice
The Distribution
Plan
The
Promotional
Plan
Pricing
Policies
and
Strategies
Product and
Service
Strategies
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Stage Four
Which Way Is Best?Strategic Evaluation
Criteria
of
Choice
Modeling
Approaches
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Stage Five
How Can We Ensure Arrival?
Strategic Implementation and Control
Problems
to
Overcome
Management
Control
Measurement
System
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Stage One
Where are We Now?
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Strengths and Weaknesses Analysis
Strengths
Performance Importance
Fundamental strength
Marginal
strength
Neutral
Marginal
weakness
Fundamental
weakness
High Medium Low
Marketing Factors
Financial Factors
Manufacturing Factors
Organizational Factors
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MARKERTING FACTORSMARKERTING FACTORS
1-relative market share 9-product quality 17-after sales services
2-reputation 10-programme of product
modification
18-manufacturing costs
3-previous performance
11-new product program
19-manufacturing flexibility
4-competitive stance 12-distribution costs 20-raw material advantage
5-customer base 13-dealer network 21-pricing
6-customer loyalty 14-dealer loyalty 22-advertising
7-breadth of product range
15-geographical coverage
23-unique selling propositions
8-depth of product range
16-sales force 24-structure of competition
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Financial FactorsFinancial Factors
25.25. Cost of capitalCost of capital
26.26. Availability of capitalAvailability of capital
27.27. ProfitabilityProfitability
28.28. Financial stabilityFinancial stability
29.29. MarginsMargins
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Manufacturing factorsManufacturing factors
30.30. Production facilitiesProduction facilities
31.31. Economies of scalesEconomies of scales
32.32. FlexibilityFlexibility
33.33. WorkforceWorkforce
34.34. Technical skillTechnical skill
35.35. Delivery capabilitiesDelivery capabilities
36.36. Supplier sourcing flexibilitySupplier sourcing flexibility
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Organizational factorsOrganizational factors
37.37. CultureCulture
38.38. LeadershipLeadership
39.39. Managerial capabilitiesManagerial capabilities
40.40. WorkforceWorkforce
41.41. FlexibilityFlexibility
42.42. Adaptability Adaptability
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The TOWS Matrix
Internal elements
External elements
Organizational strengths
Organizational weaknesses
Strategic options
Environmental opportunities (and risks)
SO: Strengths can be used to capitalize or build upon existing or emerging opportunities
WO : The strategies developed need to overcome organizational weaknesses if existing or emerging opportunities are to be exploited
Environmental threats
ST : Strengths in the organization can be used to minimize existing or emerging threats
WT : The strategies pursued must minimize or overcome weaknesses and as far as possible cope with threats
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The TOWS framework
Step 1. Prepare a profile of the enterprise which embraces (a) the type of business: (b) its geographic domain: (c) the competitive situation; and (d) the preoccupations and culture of the senior management team
Step 2 : Identify and evaluate the economic, social, political, demographic, products and technology, and market/competitive environments.
Step 3 : Prepare a forecast, make predictions and assess the future
Step 4 : Prepare a detailed strengths and weaknesses audit of (a) the management and organization; (b) operations; (c) finance, (d) marketing; and (e) the other parts of the organization.
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Step 5 : Identify the strategic choices facing the organization.
Step 6 : Make the strategic choices.
Step 7 : Prepare the contingency plans.
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Strategic Audit Characteristics
• Comprehensive• Systematic• Independent• Periodic
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Market Audit
MarketingEnvironment
MarketingFunctions
Task Environment
DistributionDistribution
PromoPromoPricePrice
Sales ForceSales ForceProductsProducts
MarketsMarkets
PRPRAgenciesAgencies
SuppliersSuppliers
DealersDealersCompetitorsCompetitors
Macro Environment
Economic/Economic/Demog.Demog.
EcologicalEcological
Techno.Techno.
Social/Social/CulturalCultural
Political/Political/LegalLegal
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The Strategic Audit
• The Environment Audit• The Strategy Audit• The Organization Audit • The Systems Audit • The Productivity Audit• The Functions Audit
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• The Environment Audit– The Macro Environment
• Political/Legal/Fiscal• Economic/Demographic• Social/Cultural• Technological• Ecological
– The Task Environment• Markets• Competitors• Distributors/Dealers• Suppliers• Advertising/PR Agencies
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• The Strategy Audit– The business Mission– Corporate & Marketing Objectives– Marketing Strategy
• The Organization Audit– Organization– Functional Efficiency
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• The Systems Audit– Information Systems– Planning Systems– Control Systems– New Product Systems
• The Productivity Audit– Profitability Analysis– Cost-effectiveness Analysis
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• The Functions Audit– Products– Price– Distribution– Sales Force– Advertising & Promotion
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Summary of Key Financial RatiosSummary of Key Financial Ratios
Profitability ratios
Liquidity ratios
Leverage ratios
Activity ratios
1. Inventory turnover
2. Fixed-assets turnover
3. Total-assets turnover
4. Account receivable turnover
5. Average collection period
1. Debt to assets ratio
2. Debt to equity ratio
3. Long-term debt to equity ratio
4. Times-interest-earned (or coverage ratios)
5. Fixed-charge coverage
1. Current ratio
2. Quick ratio (or acid-test ratio)
3. Cash ratio
4. Inventory to net working capital
1. Gross profit margin
2. Operating profit margin
3. Net profit margin (or return on sales)
4. Return on total assets
5. Return on stockholders’ equity (or return on net worth)
6. Return on common equity
7. Earnings per share
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The Functions Audit Products/service
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Stage TwoStage Two
Where Do We Want to Be?
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Vision
Vision is the art of seeing things invisible
Jonathan Swift
The Best Way to Predict the Future is to Invent it
Dennis Gabor
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Vision
Goals
Objectives
(sub-goals)
Strategies
Mission
1-Market segment scope
2-Industry scope
3-Technology scope
4-Vertical scope
5-Geographical scopeHow to
achieve
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Focus/Niche
DifferentiationCost
Leadership
Porter’s three generic strategiesPorter’s three generic strategies
Middle of The road
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Porter’s three generic Porter’s three generic strategiesstrategies
Type of strategies
Ways to achieve the strategy
Benefits Possible problems
Cost Leadership
Size and economies of scale GlobalizationRelocating to low-cost parts of the worldModification/simplification of designsGreater labour effectivenessGreater operating effectivenessStrategic alliancesNew source of supply
The ability to: outperform rivals erect barriers to entry resist the five forces
Vulnerability to even lower cost operatorsPossible price warsThe difficulty of sustaining it in the long term
Focus Concentration upon on or a small number of a strong and specialist reputation
A more detailed understanding of particular segmentsThe creation of barriers to entryA reputation for specializationThe ability to concentrate efforts
Limited opportunities for sector growthThe possibility of outgrowing the marketThe decline of the sectorA reputation for specialization which ultimately inhibits growth and development into other sectors
Differentiation The creation of strong brand identitiesThe consistent pursuit of pursuit of those factors which customers perceive to be importantHigh performance in one or more of a spectrum of activities
A distancing from others in the marketThe creation of a major competitive advantageFlexibility
The difficulties of sustaining the bases for differentiationPossibly higher costsThe difficulty of achieving true and meaningful differentiation
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Different Strategies
ExitExit
M&AM&A
Special Special AdvantageAdvantage
OrganizationOrganizationDesignDesign
ProductionProductionImprovementImprovement
MarketingMarketingMix positioningMix positioning
MarketMarkettargetingtargeting
New productNew product
PRINCIPLES OF DEFENSIVE MARKETING WARFAREPRINCIPLES OF DEFENSIVE MARKETING WARFARE
1. ONLY THE MARKET LEADER SHOULD CONSIDER PLAYING DEFENSE.2. THE BEST DEFENSIVE STRATEGY IS THE COURAGE TO ATTACK.3. STRONG COMPETITIVE MOVES SHOULD ALWAYS BE BLOCKED.
PRINCIPLES OF OFFENSIVE MARKETING WARFAREPRINCIPLES OF OFFENSIVE MARKETING WARFARE
1. THE MAIN CONSIDERATION IS THE STRENGTH OF THE LEADER’SPOSITION2. FIND WEAKNESS IN THE LEADER’S STRENGTH AND ATTACK AT THAT POINT.3. LAUNCH THE ATTACK ON AS NARROW A FRONT AS POSSIBLE.
PRINCIPLES OF FLANKING MARKETING WARFAREPRINCIPLES OF FLANKING MARKETING WARFARE
1. A GOOD FLANKING MOVE MUST BE MADE INTO AN UNCONTESTED AREA.2. TACTICAL SURPRISE OUGHT TO BE AN IMPORTANT ELEMNT OF THE PLAN.3. THE PURSUIT IS AS CRITICAL AS THE ATTACK ITSELF.
PRINCIPLES OF GUERRILLA MARKETING WARFAREPRINCIPLES OF GUERRILLA MARKETING WARFARE
1. FIND A SEGMENT OF THE MARKET SMALL ENOUGH TO DEFEND.
2. NO MATTER HOW SUCCESSFUL YOU BECOME, NEVER ACT LIKE THE LEADER.
3. BE PREPARED TO BUGOUT AT A MOMENT’S NOTICE.
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Choosing a Specific Positioning
•Best quality•Best performance•Most reliable•Most durable•Safest•Fastest•Best value for the money•Least expensive•Most prestigious•Best designed or styled•Easiest to use•Most convenient
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Choosing a Value Positioning
• More for More.Example : Mont Blanc, Gucci apparel, Haagen-DazsExample : Mont Blanc, Gucci apparel, Haagen-Dazs
• More for the Same.Example: Lexus automobileExample: Lexus automobile
• The Same for Less.Example: Arrow shirts, Goodyear tires, Panasonic TVExample: Arrow shirts, Goodyear tires, Panasonic TV
• Less for Much Less.Example: VCRs offering fewer featuresExample: VCRs offering fewer features
• More for LessExample: Toys ‘R’ Us, Wal-Mart store Example: Toys ‘R’ Us, Wal-Mart store
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VALUE DISCIPLINESOPERATIONAL EXCELLENCE
PRODUCT LEADERSHIP
CUSTOMER INTIMANCY
Core Business Processes that….
Sharpen distribution systems and provide no hassle service
Nurture ideas, translate them into products, and market them skillfully
Provide solutions and help customers run their businesses
Structure that…. Has strong, central authority and a finite level of empowerment
Acts in an ad hoc, organic, Loosely knit, and ever-changing way
Pushes empowerment close to customer contact
Management System that….
Maintain standard operating procedures
Reward individuals’ innovative capacity and new product success
Measure the cost of providing service and of maintaining customer loyalty
Culture that… Acts predictably and believes “one size fits all”
Experiments and thinks “out-of-the-box”
Is flexible and thinks “have it your way”
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Pricing strategies
• Payment method (strategy)• Quantity discount (strategy)• Seasonal pricing effects
(strategy)• Channel pricing (strategy)
• Pricing Methods:• Cost plus (add profit % over the COGS)company
prospective• Market based (competitor prospective)Market based (competitor prospective)• Value based (customer prospective and not usually Value based (customer prospective and not usually
used in egypt as it is based on market research)used in egypt as it is based on market research)• Regulated price (done by governments)Regulated price (done by governments)
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Stage ThreeStage Three
How might We Get There?
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Product Change Options
We are More
Expensive
We are Cheaper
We are Better
We are Inferior
No Excuses•Value Engineering•Switch to Competitor’s Parts
•Closer Examination•Reconsider Price or Promotion•Value Engineering
•Leave it Alone•Cover it Up•Upgrade•No Change
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Product Component Model
• Repairand
maintenance
SUPPORT SERVICESCOMPONENT
CORECOMPONENT
• Installation
• Instructions
• Other related services
• Deliveries
• Warranty
• Spareparts
• Legal
• Trademark
• Brandname
• Legal
• Product platform
• Design features
• Functional features
• Legal
PACKAGINGCOMPONENT
• Price
• Quality
• Package
• Styling
© The McGraw-Hill Companies, Inc., 1999
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Nine Ways to Build Demand
Products
Existing Modified New
Existing Sell more of our existing products to our existing types of customers. (Market penetration)
Modify our current products and sell more of them to our existing customers. (Product modification)
Design new products that will appeal to our existing customers. (New product development)
Markets Modified
Enter and sell our products in other geographical areas. (Geographical expansion)
Offer and sell modified products to new geographical markets.
Design new products for prospects in new geographic areas.
New Sell our existing products to new types of customers. (Segment invasion)
Offer and sell modified products to new types of customers.
Design new products to sell to new types of customers. (Diversification)
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Using the Consumption Chain to Find New OpportunitiesUsing the Consumption Chain to Find New Opportunities
1. How do people become aware of their need for your products or service?
2. How do consumers find your offering?
3. How do consumers make their final selections?
4. How do consumers order and purchase your product or service?
5. How is your product or service delivered?
6. What happens when your product or service is delivered?
7. How is your product installed?
8. How is your product or service paid for?
9. How is your product stored?
10. How is your product moved around?
11. What is the customer really using your product for?
12. What do customers need help with when they use your product?
13. What about returns or exchanges?
14. How is your product repaired or serviced?
15. What happens when your product is disposed of or no longer used?
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Advertising Sales Promotion Public Relations
Sales Force
Direct Marketing
Print and broadcast ads
Contests, games, sweep
Press kits Sales presentations
Catalogs
Packaging-outer Stakes, lotteries Speeches Sales meetings
Mailings
Packaging inserts Premiums and gifts Seminars Incentive programs
Telemarketing
Motion pictures Sampling Annual reports Samples Electronic shopping
Brochures and booklets
Fairs and trade shows
Charitable donations
Fairs and trade shows
TV shopping
Posters and leaflets Exhibits Sponsorships Fax mail
Directories Demonstrations Publications E-mail
Reprints of ads Coupons Community relations
Voice
Billboards Rebates Lobbying
Display signs Low-interest financing
Identity media
Point-of-purchase Entertainment Company magazine
Displays Trade-in-allowances Events
Audio-visual material Continuity programs
Symbols and logos Tie-ins
Videotapes
Examples of Different Promotion Tools
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Advertising Objectives - AIDA
Awareness/Attention
Interest,
Desire, or
Action
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Advertising Objectives - AIDAAdvertising Objectives - AIDA
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P = publications
E = events
N = news
C = community
I = identity media
L = lobbying activity
S = social responsibility
Public Relations
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Channel & Partner Management Channel Design
Traditional Distribution Channel Alternatives
Broker /Agent
Wholesaler WholesalerManufactu-rer's Branch
Broker /Agent
Retailer Own Store Retailer Retailer Retailer BrokerIndustrial Distributor
Industrial Distributor
Consumer Consumer Consumer Consumer Consumer Consumer Industrial Industrial Industrial IndustrialSegment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Segment 1 Segment 2 Segment 3 Segment 4
Manufacturer /Vendor
End Users
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Decision area 1Formulating the channel strategy
Decision area 2Designing the channel structure
Decision area 3Selecting the channel members
Decision area 4Motivating the channel members
Decision area 5Coordinating channel strategy with the
marketing mix
Decision area 6Evaluating the channel member
performance
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Stage FourStage FourWhich Way is Best?
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GE Evaluation Criteria
• Alternative strategies should be evaluated based on their impact on the following:1. Financial Results2. Market Position3. Productivity4. Product leadership5. Employee Attitude6. Personnel Development7. Community Impact8. S/T vs L/T
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Stage FiveStage FiveHow to Ensure Arrival?
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For aGiven set of Goals and strategy
IsLeadershipSuitable?
Are there procedures for implementing monitoring and
evaluating ?
Are Functional
PoliciesAppropriate?
AreCorporate and
FunctionalResources
appropriate?
Can Leadership
BecomeSuitable?
Can cultureBecomeCapable?
Is newSuitable
LeadershipObtainable
?
CanAppropriate
Resources be madeAvailable?
CanOrganizational
Structure becomeAppropriate?
Implementstrategy
Amend
Goals and
strategy
Install
procedures
IsCulture
Suitable?
IsOrganizational
StructureAppropriate?
Can Functional
Policies becomeAppropriate?
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Measurement Score Cards
• Financial Score Card• Marketing Score Card• Stakeholder Score Card