SME BUSINESSLINK SEMINAR PRESENTATION

HIGH MARKETING THAT BRINGS RESULTS –

2011

INTRODUCTIONGODFREY J. DUBE - MBA, MA Mkt, BBA Mkt, PGDipM, PGDMS, PGCM, Grad Dip MKT, CSM, CGLI, MCIM, MZIM, DBA Fellow,

President Marketers Association of Zimbabwe, MBCPhone 0775 502 173 , 0772 402 466, email godfreyjdube@yahoo.co.ukLecturer- MBA marketing NTU, CIM, WUA, ZIM.

INTRODUCTION

• Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others”

• Doyle (2002:36)

INTRODUCTIONDelivering Value requires :• Understanding customers (their entire purchase and

consumption experience) + predicting future needs & wants

• Understanding and exploiting sources of competitive advantage to be better than the Competition

• Understanding own organisation; costs, operations, profitability

= A market oriented or customer-centricbusiness

INTRODUCTION

Traditional View of Marketing•The right product•At the right price•At the right place•With the right communications support

Based upon the 4Ps of the Marketing Mix…

INTRODUCTION

• Marketing Concept =Customer Orientation + Integrated Effort + Goal Achievement

Achievement of corporate goals through meeting and exceeding customer needs better than the competition

– Customer OrientationActivities focused on providing customer satisfaction

– Integrated EffortAll staff accept responsibility for creating customer satisfaction

– Goal AchievementBelief that corporate goals can be achieved via customer satisfaction

Jobber,1995)

IntroductionMarket Orientation Defined

"the organizational culture that most effectivelyand efficiently creates the necessary behavioursfor the creation of superior value for buyers and,thus, continuous superior performance for thebusiness"

Narver & Slater (1990:20)

Strategic Marketing

Marketing Strategy 1:Analysis, Objectives &

Strategic Choices

May 2011

STRATEGIC MARKETING• Strategic Marketing“… is concerned with adapting the organization to a

changing environment. Organisations succeed when they meet the needs of customers more effectively thancompetitors. The problem is that the needs of customers change, new technologies appear and competitors generally get better. As a result, successful companiesdecline if they do not continually change and adapt.”

Doyle (2002:92)

STRATEGIC MARKETINGThe Marketing Planning Process• Business mission• Marketing audit• SWOT analysis• Marketing objectives• Core strategy• Competitive advantage• Marketing mix decisions• Organisation and implementation• Control

Clarifying the Mission

Hooley, Cox & Adams (1992)

• POLITICAL/LEGAL– Regulation/deregulation– (Ideology, motivation) & stability– Attitudes towards competition, social responsibility,

environmental matters, customer protection– Legislation on the organisation, employment & wages,

profits, marketing tactics

Employment law, advertisingcontrols etc..

Futurepolicy?

Level of control?shape

MACRO-ENVIRONMENT

• TECHNOLOGICAL– Rate of change– Protection of innovation– Availability of technology

• ECONOMIC– Income & wealth (PDI)– Employment– Growth & demand– Interest & exchange rates

Personal DisposableIncome

All these affect PDI

The Internet isa good example

MACRO-ENVIRONMENT (2)

• SOCIAL– Culture– Demographics– Family & social patterns– Psychographics (Lifestyle, AIO)

• PHYSICAL– Social costs of consumption– Natural forces– Environment

All impact onnature ofdemande.g. needs

Social Responsibility

e.g. seasonality

MACRO-ENVIRONMENT (3)

MICRO ENVIRONMENT• Market

– size, growth rates, trends– market structure, critical success factors

• Customers– customer profile, choice criteria, when, where, how they buy,

benefits sought – buyer behaviour – influences (buying situation, personal and

social influences), involvement, trends– how they rate us against our competition (on product, price,

promotion & distribution)

• Competitors– actual/potential competitors, strengths/weaknesses– size, market share, profitability– entry barriers to new competitors, trends

Purchase importance(perceived risk)

CSFs - what it takes to besuccessful in this market

• Distributors– channel attractiveness, distribution decision

making unit, process, choice criteria– strengths and weaknesses, power changes– physical distribution methods, trends

• Suppliers– who they are, location– strengths and weaknesses, power changes,

trends

MICRO ENVIRONMENT (2)

• Operating results audit– sales, market share, profit margins, costs

• Strategy audit– appropriateness of marketing objectives– market segmentation– competitive advantage– core competences and resources– positioning– portfolio analysis

INTERNAL ENVIRONMENT

• Marketing mix audit– effectiveness of operational marketing

• Marketing structures audit– marketing organisation– marketing training– intra- and inter-departmental communications

• Marketing systems audit– marketing information systems (MIS)– marketing planning system– marketing control system

INTERNAL ENVIRONMENT (2)e.g. how well are brands built & maintained?

i.e. the overall framework

e.g. structure

The Marketing Audit

should aid evaluation by doing the following:

• describe current events• gather information that might affect marketing strategy• explore opportunities (and improve marketing strategy)• create database to aid evaluation of goals/ objectives

(Kotler - in Dibb et al, 1994)

• Operating results audit– sales, market share, profit margins, costs

• Strategy audit– appropriateness of marketing objectives– market segmentation– competitive advantage– core competences and resources– positioning– portfolio analysis

Internal marketing audit

• Marketing mix audit– effectiveness of operational marketing

• Marketing structures audit– marketing organisation– marketing training– intra- and inter-departmental communications

• Marketing systems audit– marketing information systems (MIS)– marketing planning system– marketing control system

Internal marketing audit (2)e.g. how well are brands built & maintained?

i.e. the overall framework

e.g. structure

Situation analysis then allows organisation to consider…

1) Likelihood of change in the marketplace?

2) The drivers of change?

3) Likely response of main rivals? What would their approach do to their overall positioning?

4) What response can organisation make realistically? How to develop weaknesses, turn into strengths, threats into opportunities?

SWOT

• Strengths• Weaknesses• 0pportunities • Threats

Objectives

Consider:-• Are they compatible?• Are they consistent?• Nature of business• Organizational culture

• Are they SMART?– Specific– Measurable– Achievable – Realistic – Timely

• More detailed than the mission statement• Derived from the mission or strategic vision

Objective setting (general vs specific)

• Optimise sales

• Gain a foothold in the Zambian market

• Ensure target market is aware of product/service Increase sales by 5% per annum in 2011 and 2012

Achieve 2% market share of target market in Zambia by end of 2011/12

Increase awareness from 5% to 7.5% of target market in Harare by the end of 2011/12

Marketing strategies• means by which marketing objectives achieved• strategic choice:

– understanding the bases upon which strategies are built, – generating options for evaluation and selection

• focus: – definition of target markets, – competitive advantage, – future direction,– marketing mix decisions for each market segment

Jobber (2006)

Generic Strategies

COSTLEADERSHIP DIFFERENTIATION

FOCUS

Low Cost Differentiation

Industry

wide (broad

)Singlesegment (narrow)

SOURCE OF COMPETITIVE ADVANTAGE

COM

PETI

TIV

ESC

OPE

Ansoff’s Growth Matrix

PresentProduct

New

Present

NewMar

ket Market

penetration

Marketdevelopment

Productdevelopment

Diversification

Growth Strategy• MARKET PENETRATION There are four main ways of increasing sales of

existing products to existing customers

Gaining more purchase and usage from existing types of customers

Update your services more frequently in order to stimulate extra sale

Increase advertising expenditureIntroduce new sales promotionsReduce prices

Growth Strategy

• MARKET PENETRATION Cont,Gain customers from competitorsReduced price incentivesIntroductory offersSales force incentivesRecruit sales/marketing people from

competitors

Growth Strategy• MARKET PENETRATION Cont,Convert non-usersPersuade distributors to stock more productsIncrease distributorsHave direct salesReduce loss of customers to competitors Build barriers restrict new rivals from entering

marketEnter a segment the rival has ignored

Growth Strategy

• MARKET DEVELOPMENTNew market segments

New distribution channels

New geographical areas

Growth Strategy• PRODUCT DEVELOPMENT Product modificationChange the product slightly to meet the different

needs of segments of existing customersDifferent quality levelsChange the product more drasticallyEntirely new productsNew product development (NPD)

Growth Strategy• DIVERSIFICATION New products for new markets Mergers/integration and acquisitions Horizontal Integration By a similar business or competitor Vertical integration Buy backwards or forward into the supplier or distributors Concentric Diversification Buy another business with technical or marketing

synergies Conglomerate Diversification Completely new/fresh challenge

Marketing Mix: Operational Marketing

MARKETING MIX

Marketing Elements – The 7Ps • Product• Price• Promotion – Personal selling, Sales promotion,

Advertising, publicity• Place

• People• Physical Evidence• Process

MARKETING MIX• Product ; A product (goods or services) in anything that

satisfies a need or want. It is not a ‘thing’ with features but a package of benefits

• Price; The price elements of the marketing mix is the only one which brings in revenue and price is influenced by many factors

• Promotion: Promotion is the element of the marketing mix over which the marketing department generally has most control- Advertising, sales promotion, personal selling, direct marketing and merchandising

• Place; Place deals with how the product is distributed and how it reaches its customers

MARKETING MIX• People. The attitude of staff, appearance,

internal relations, behaviour, accessibility of people, B2B contacts

• Process. Systems, production and operations, process of product/service delivery

• Physical Evidence. (S) Buildings, furnishings, lay-outs, goods associated with the service like carrier bags, tickets and brochures, ambience – the environment or atmosphere (P) packaging, store location, accessibility, merchandising, ins-tore display, point of sale materials, brochures, leaflets all below the line support

PLC strategies

Product

Price

Distribution

Advertising

Sales Promotion

Offer a basic product

Use cost-plus

Build selective distribution

Build product awareness among

early adopters, dealers

Use heavy sales promotion to entice trial

Offer product extensions,

service, warranty

Price to penetrate market

Build intensive distribution

Build awareness and interest in the

mass market

Reduce to take advantage of

heavy consumer demand

Diversify brands and models

Price to match or beat competitors

Build more intensive

distribution

Stress brand differences and

benefits

Increase to encourage brand

switching

Phase out weak items

Cut price

Go selective:phase out

unprofitable outlets

Reduce to level needed to retain hardcore loyals

Reduce to minimal level

Pricing Approaches

Cost-based pricing:

cost-plus (in manufacturing) and mark-up (in retailing)

Competitor-based pricing:

skimming; penetration pricing; predatory pricing

Customer-based pricing:

demand pricing; psychological pricing; discounting; product-mix pricing

Non-market-based pricing

Market-based pricing

Customer-based pricing

• Demand pricing (focuses on customer responsiveness to different price levels)

• Psychological pricing (relationship between price and quality perception)

• Discounted pricing (cash, seasonal, trade-in allowances, segmented)

• Product-mix pricing

Channels of distribution

Producer Consumer

Producer Retailer Consumer

Producer Wholesaler Retailer Consumer

Producer Agent Wholesaler Retailer Consumer

Promotion -marketing communications

Implementation & Control

Defining Implementation

“Marketing strategy concerns the issues of what should happen and why it should happen.

Implementation focuses on actions: who is responsible for various activities, how the strategy should be carried out, where things will happen and when actions will take place.”

Jobber (1998)

Key Issues

• IMPLEMENTATION– Success is dependent on the ability to translate a

marketing strategy into a series of practical & actionable steps (tactics)

• CONTROL– Success is maintained by continually monitoring

progress to ensure that the plan still fits the prevailing market conditions

Effective implementation

• Success is dependent on the ability to translate a marketing strategy into a series of practical & actionable steps (tactics)

• “THE ABILITY TO DO THINGS”– Capabilities, core competences in key functional area(s)

• “THE ABILITY TO GET THINGS DONE”– Having the required resources (resource allocation)– Support of key decision makers in the organisation – Interrelationships i.e. SBU-corporate relations– Cooperation of departments needed to implement the plan (e.g.

R&D and production)– Commitment of “front-line” individuals and departments (e.g.

marketing, sales and distribution)

Factors for the success of implementation

• Leadership• Marketing-oriented culture• Supportive, effective structure• Internal marketing• Resources• Evaluation and control procedures

Internal Marketing• Deals with internal customers - an important

stakeholder group

• Provides communication to help employees identify with corporate objectives - the common goal

• Marketing techniques can help to motivate staff and increase level of ‘involvement’

• Should precede external marketing

“A coordinated set of activities and policies designed to build employee relationships within the organisation and reinforce internal commitment to the marketing plan and to good customer service.”

Burk-Wood (2003)

“If the staff won’t buy it why should the customer?”

Barnes (1989)

“40% of customers stated that poor service was the main reason for switching to the competition.”

Blume (1988)

Internal Marketing

Why do we need it?

Internal Marketing can help by:• Focusing on the customer• Building employee knowledge• Encouraging cooperation & commitment to the

plan• Boosting pride in performance

Internal Marketing to Support Implementation

Wider conception of IM• It is NOT simply the application of marketing

concepts within the organisation• It should NOT be seen as a specialist function,

but should converge with, for e.g.:– HR development– strategic management – quality management– corporate communications

• It should be seen as an integrative process of internal relationship management

• To effect change, must involve many levels and departments in development of IM plan

Praise reward

promote advise

train discipline

Marketing Control SystemDecide marketing

objectives

Set performance standards

Locateresponsibility

Evaluate performance against standards

Take corrective/supportive action

Alter standards

Alter objectives