marketing and business strategy
TRANSCRIPT
Marketing and Business Strategy Enterprise & Project Management
Please note that these slides are not intended as a substitute
to reading the recommended text for this course.
PESTEL
Five Forces
SWOT
Corporate Marketing Strategy
Marketing Plan
Data Collection / Market Segmentation
Objectives
1
Firm is trying to identify:
– Environmental factors that may pose a threat to organizational objectives
– Environmental factors that may offer an opportunity based on organizational capabilities
Environmental Analysis
2
Macro Industry Internal
Creating Strategic Fit to Leverage Internal Strengths
3
PESTEL
4
The General Environment: Segments and Elements
5
PESTEL – Airline Example
6
What are the industry’s dominant economic traits?
What competitive forces are at work in the industry and how strong are they?
What are the drivers of change - impact?
Which companies are in the strongest /weakest competitive positions?
Who is likely to make a competitive move next?
How attractive is the industry in terms of above – average profitability?
The Industry Environment
7
Porter’s 5 Forces
8
Deals with the firm’s external environment.
– Specifically its industry and the up- and down-stream industries.
Buyers are those that pay the focal firm for its services, not end users or consumers.
Sellers are those that sell goods and services to the focal firm, not the firm itself.
Porter 5 Forces Model – Summary
9
Create effective links with consumers and suppliers.
– e.g. Improving your supply chain and locking in customers.
Build barriers to new entrants and substitutes.
Basic Objectives
10
Industry rivalry increases when:
– There are numerous or equally balanced competitors.
– Industry growth slows or declines.
– There are high fixed costs or high storage costs.
– There is a lack of differentiation opportunities or low switching costs.
– When high exit barriers prevent competitors from leaving the industry.
Intensity of Rivalry Among Competitors
11
It has large, concentrated buying power that enables it to gain volume discounts and/or special terms or services.
What it is buying is standard or undifferentiated and there are multiple alternative sources.
The product is unimportant to the quality of the buyers’ products or services.
A Buyer Has Power If:
12
Its product is unique or at least differentiated.
It provides benefits through geographic proximity to its customers.
A long time working relationship provides unique capabilities.
A Supplier Has Power If:
13
Strong, established brands.
Proprietary product differences.
Limited or restrained access to distribution.
Large capital expenditure requirements.
Government policy.
Possible barriers to Entry
14
Buyer propensity to substitute.
Relative price/performance of substitutes.
Substitute Threats
15
Better Image
16
Five Forces – Apple Example
17
Five Forces – The Body Shop
18
1. New entrants
Are there any barriers for new entrants into the market?
High capital requirements – sunk costs • Access to distribution channels • Excess capacity
High switching costs for customers • Brand image/preference • Regulation
2. Bargaining power of buyers
What bargaining power do buyers have?
High or low profit margins • Low switching costs
Undifferentiated products / services • Backward integrate
3. Substitute products or services
How easily could XXX product / service be substituted for another type of product or service?
What new technologies might make XXX product / service redundant?
4. Bargaining power of suppliers
What bargaining powers do suppliers have?
Absence of substitutes • Switching costs • Can they forward integrate
Value of suppliers component to your product / service • Difficult to switch supplier
5. Rivalry among existing competitors
What rivalry currently exists between competitors?
– Slow industry growth •
– Pricing strategies - Competing by out spending on advertising on innovation is not considered highly rivalrous - Competing by cutting prices is considered highly rivalrous
Important slide for Exam Prep
19
Interpreting Industry Analyses
Intense rivalry among competitors
Strong threats from substitute products
Suppliers and buyers have strong positions
Low entry barriers
Unattractive Industry with
Low Profit Potential
20
Interpreting Industry Analyses
Suppliers and buyers have weak positions
Few threats from substitute products
Moderate rivalry among competitors
High entry barriers
Attractive Industry with
High Profit Potential
21
Gathering and interpreting information about all of the companies that the firm competes against.
Understanding the firm’s competitor environment complements the insights provided by studying the general and industry environments.
Competitor Analysis
22
S W O T
SWOT Ananlysi
23
SWOT is a business or strategic planning
technique used to summarise the key
components of your strategic environments.
Strengths
Weaknesses
Opportunities
Threats
What is SWOT?
24
INTERNAL
EXTERNAL
Strengths - internal attributes and resources that support a successful outcome.
Weaknesses - internal attributes resources that work against a successful outcome.
Opportunities - external factors the project can capitalize on or use to its advantage.
Threats - external factors that could jeopardize the project.
SWOT analysis examines four elements…
25
Characteristics of the business or a
team that give it an advantage over
others in the industry.
Positive tangible and intangible
attributes, internal to an organization.
Beneficial aspects of the organization
or the capabilities of an organization,
which includes human competencies,
process capabilities, financial
resources, products and services,
customer goodwill and brand loyalty.
Examples - Well-known brand name,
Lower costs [raw materials or
processes], Superior management
talent, Better marketing skills, Good
distribution skills, Committed
employees.
What is SWOT Analysis – Strengths?
26
Characteristics that place
the firm at a disadvantage
relative to others. Detract the organization from its
ability to attain the core goal and
influence its growth.
Weaknesses are the factors
which do not meet the standards
we feel they should meet.
However, sometimes
weaknesses are controllable.
They must be minimized and
eliminated.
Examples - Limited financial
resources, Limited distribution,
Higher costs, Out-of-date
products / technology, Weak
market image, Poor marketing
skills, Limited management skills.
What is SWOT Analysis – Weaknesses?
27
Chances to make greater profits in the
environment - External attractive factors
that represent the reason for an
organization to exist & develop. Arise when an organization can take
benefit of conditions in its
environment to plan and execute
strategies that enable it to become
more profitable.
Organization should be careful and
recognize the opportunities and
grasp them whenever they arise.
Opportunities may arise from market,
competition, industry/government
and technology.
Examples - Rapid market growth,
Changing customer needs/tastes,
New uses for product discovered,
Economic boom, Sales decline for
a substitute product .
What is SWOT Analysis – Opportunities?
28
SWOT ANALYSIS - THREAT
!
External elements in the
environment that could cause
trouble for the business - External
factors, beyond an organization’s
control, which could place the
organization’s mission or operation
at risk.
Arise when conditions in external
environment jeopardize the
reliability and profitability of the
organization’s business.
Examples - Entry of foreign
competitors, Changing customer
needs/tastes, Rival firms, adopt
new strategies, Increased
government regulation, Economic
downturn.
What is SWOT Analysis – Threats?
29
How to conduct SWOT Analysis?
30
WEAKNESSES
• High training costs due to high turnover. • Not much variation in seasonal products • Quality concerns due to franchised operations. • Focus on burgers / fried foods not on healthier options for their customers.
• Community oriented • Global operations all over the world • Cultural diversity in the foods • Excellent location • Assembly line operations.
STRENGTHS
INTERNAL
• Marketing strategies that entice people from small children to adults. • Lawsuits for offering unhealthy foods. • The vast amount of fast food restaurants that are open as competition.. • Down turn in economy affecting the ability to eat that much.
THREATS
• Opening more joint ventures. • Being more responsive to healthier options. • Expanding on the advertising on being more socially responsible • Expansions of business into newly developed parts of the world.
OPPORTUNITIES
EXTERNAL
McDonalds – SWOT (Fictional)
31
Three Levels of Business Planning
32
CORPORATE MARKETING
Set Objectives Increase profits by X%
Specific to market / product; X% increase
Internal Appraisal Review effectiveness of operations
Marketing audit
External Appraisal Review PESTEL Review factors that impact the customer
Gaps Desired v Forecasted objectives – How should the gap be closed
Marketing will focus on growth
Strategy Actual strategies to close the gap – diversify, new markets
Target markets, assign marketing resources
Corporate and Marketing Strategy
33
To summarize marketplace knowledge
To show what marketing will accomplish
To detail marketing strategies, activities
To show how progress will be measured
To explain implementation control
What is a marketing plan for?
34
Executive summary, table of contents
Current situation (with SWOT)
Objectives and issues analysis
Target market
Marketing strategy and programs
Financial plans
Implementation controls
Marketing plan contents
35
Examine external environment
Assess internal capabilities
Understand competitors’ strategies
Analyze stakeholders’ influence
Market Research - Researching the current situation
36
Define the Problem
Develop Hypothesis
Collect the Data
Analyse the Data
Report Findings
Learn about markets and customers
Examine needs, wants, attitudes
Research buying behaviors
Identify segments, decide which to target
Create competitively distinctive position in the minds of targeted customers
Understanding markets/customers
37
Determine strategic direction
Set objectives
Plan customer service support
Plan internal marketing support
Understanding markets/customers
38
Surveys / Questionnaires
Experimentation
Observation
Focus groups
In-depth interviews
Projective techniques – word association
Online research – Survey Monkey
Scanner data - Tesco
Data Collection - Primary Research Methods
39
This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups.
All members in a group have similar factors that influence their demand for the particular product.
Market segmentation: Definition
40
Geographic — The city size, urban/ suburban/ rural population distribution and climate.
Demographic — The distribution of a population’s age, sex, income, stage in family cycle and ethnic background.
Psychographic — Personalities, lifestyles, social class including activities, interests and opinions (AIO).
Behaviour towards products.
– Benefits desired or sought.
– Product usage rate.
Bases for segmentation
41
Segmentation enables marketers to:
– Identify and satisfy specific benefits sought by particular groups.
– Divide the market into segments by separating marketing programs.
– Select target market.
– Action the market segmentation plan.
Benefits of segmentation
42
The process involves:
– Identifying the needs and wants of customers.
– Identifying the different characteristics between market segments.
– Estimating the market potential.
Market segmentation process
43
The characteristics used to categorise customers must be measurable and the data obtainable.
The segment itself must be accessible through existing marketing institutions with a minimum of cost and waste.
A segment must be large enough to be profitable.
Conditions for effective segmentation
44
The target market should be compatible with an organisation’s goals and image.
The marketing opportunity presented by the segment must match the company’s resources.
The business must generate a profit if it is to continue its existence.
Target market strategies
45
Segment 1
Segment 2
Segment 3
Company marketing
mix
Segment 1
Segment 2
Segment 3
Company marketing
mix
Company mix 1
Company mix 2
Company mix 3
Market
A. Undifferentiated marketing (Aggregation)
B. Differentiated marketing (Single segment)
C. Concentrated marketing (Multiple segments)
Market coverage strategies
46
Appeal to
‘All’
Think
Coca
Cola /
Cars
Shoes,
B&P lines