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Strategic Marketing

Planning and Implementation


Dr. Prashant Mishra
prashant@iimcal.ac.in

If you dont have a competitive


advantage, dont compete
- Jack Welch,GE

The purpose of an enterprise is to


create and keep a customer.
- Theodore Leavitt

Where absolute superiority is not


attainable, you must produce a relative
one at the decisive point by making
skillful use of what you have.

- Karl von Clauseweitz,


On War, 1832

If you dont know where you are


going, you might end up
somewhere else.
- Casey Stengel

Market-Oriented Strategic
Planning
Objectives

Resources

Skills

Opportunities

Market-Oriented Strategic
Planning
Objectives

Resources

Profit
and
Growth
Skills

Opportunities

The Marketing Mix

Product
Strategy

Communications
Strategy

Customer
Price
Strategy

Channel
Strategy

The Value-Delivery Process


(a) Traditional physical process sequence
Make the product
Design Procure Make
product

Sell the product


Price Sell Advertise/
promote Distribute Service

(b) Value creation & delivery sequence


Choose the Value Provide the Value Communicate the Value

Strategic marketing

Tactical marketing

Strategy as an Integrated Pattern of Choices

Arena

Advantage

Access

Activities

Strategy as an Integrated Pattern of


Choices
Arena: the markets to serve and customer
segments to target
Advantage: The positioning theme that
differentiates the business from competitors
Access: The communication and distribution
channels used to reach the market
Activities:The appropriate scale and scope of
activities to be performed

A Framework for Analyzing Organizations


External Analysis

Internal Analysis
Strategy

People

Structure

Systems

Culture

Performance

A Business Strategy
Product-Market
Investment Decision

Product-market scope
Investment intensity
Resource allocation
over business units

Basis of SCAs
Assets/Competencies

Synergies
Functional Area Strategies

Product
Price
Distribution
Etc.

What is a Marketing Strategy?


A Marketing Strategy consists of a plan
identifying what basic goals and objectives will
be pursued and how they will be achieved in
the time available. A strategy entails
commitments to certain courses of action and
allocation of the resources necessary to
achieve the identified goals.

Elements of an Effective
Marketing Strategy

Clearly Defined Markets to be Served


Positioning for Differential Competitive
Advantage
Timing of Entry and Exit
Focus on Organizational Leverages
Clear Vision and Values
Flexibility
Functional Integration
Long term vs. Short Term Perspective

Factors Influencing Company


Marketing Marketing Strategy
intermediaries

Demographic/
economic
environment

Technical/
physical
environment
Product

Suppliers

Place

Target Price
customers

Publics

Promotion

Political/
legal
environment

Competitors

Social/
cultural
environment

Strategic-Planning, Implementation,
and Control Process
Planning
Corporate
planning

Implementation
Organizing

Division
planning
Business
planning
Product
planning

Control
Measuring
results
Diagnosing
results

Implementing
Taking
corrective
action

Why Strategic Market Management?

Precipitate consideration of strategic choices

Force a long-range view

Make visible the resource allocation decision

Aid strategic analysis and decision making

Provide a strategic management and control system

Provide both horizontal and vertical communication and


coordination systems

Help a business cope with change

Overview of Strategic
Market Management
External Analysis

Customer Analysis
Competitor Analysis
Market Analysis
Environmental
Analysis

Internal Analysis
Performance Analysis
Determinants of
Strategic option

Strategy Identification and Selection

The Strategic Marketing


Process
1. Identify and evaluate opportunities
2. Analyze market segments and select target markets
3. Plan a market position; develop marketing mix strategy
4. Prepare a formal marketing plan

The Strategic Marketing


Process
5. Execute the plan
6. Control efforts and evaluate the results

The Role of External Analysis


Strategic Decisions
Where to compete
How to compete

External

Bases of competition

Analysis
Identification
Analysis

Trends/future events
Threats/opportunities

Information-need areas

Strategic uncertainties

Scenario analysis

Figure 3.1

Strategic Uncertainties

Strategic Uncertainties
Will a major firm enter?
Will a tofu-based dessert
product be accepted?
Will a technology be
replaced?
Will the rupee strengthen
against an off-shore
currency?
Will computer-based
operations be feasible with
current technology?
How sensitive is the market
to price?

Strategic Decisions
Investment in a product
market
Investment in a tofubased product
Investment in a
technology
Commitment to off-shore
manufacturing
Investment in a new
system
A strategy of maintaining
price parity

Customer Analysis
Segmentation
Customer Motivations
Unmet Needs

Competitor Analysis
Size, Growth
and Profitability

Strength and
Weaknesses

Exit Barriers

Image and
Positioning

Objectives and
Commitment

Competitor
Actions

Current and
Past strategies

Cost Structure

Organisation
and Culture

Market Analysis
The Dimensions are
Actual and Potential Market Size
Market Growth
Market Profitability
Cost Structure
Distribution Systems
Trends and Developments
Key Success Factors

Porters Five-Factor Model of


Market Profitability
Threat of
Potential
Entrants
Bargaining
Power of
Suppliers

Competition
Among Existing
Firms

Bargaining
Power of
Customers

Threat of
Substitute
Products
Figure 5.3

Source: Adapted from Michael E. Porter, Industry


Structure and Competitive Strategy: Keys to Profitability
Financial Analysis Journal,July-August 1980,p.33.

Risks of
High-Growth
Markets
Competitive Risk

Firm Limitations

Overcrowding

Resource constraints

Superior competitive entry

Distribution unavailable

Market Changes

Changing KSFs
New technology
Disappointing growth

Price instability

Environment Analysis
Technology
Government
Economics
Culture
Demographics

Internal Analysis

Performance Measures Reflecting


Long-Term Profitability

Customer Satisfaction/
Brand Loyalty

Product/Service Quality
Brand/Firm Associations

Current
Performance

Relative Cost
New Product Activity
Manager/employee
Capability and
Performance
Figure 7.1

Long
Term
Profits

Relative Cost vs. Relative Performance Strategic Implications


Change
Design
Manufacturing/Systems
Ignore

Inferior
Value Analysis
De-emphasize
Upgrade

More
Expensive

Value Analysis
Raise prices
Promote
Cost Reduction

Our Component is...

Less
Expensive
Figure 7.2

Superior
Value Analysis
Emphasize/promote
Leave it alone

Determinants of Strategic Options


and Choices
Past and Current Strategies
Strategic Problems
Organizational
Capabilities/Constraints
Financial Capabilities/Constraints
Strengths/Weaknesses

Figure 7.3

Strategic
Choices

Structuring Strategic Decisions


Organizational Strengths
and Weaknesses

Competitor Strengths
and Weaknesses

Strategic Decision
Strategic Investment
Functional Area Strategies
Sustainable Competitive Advantage

Market Needs,
Attractiveness, and
Key Success Factors
Figure 7.4

MARKET ATTRACTIVENESS
Low Medium High

Market Attractiveness: CompetitivePosition Portfolio Classification


Strong
5.00
5.00

BUSINESS STRENGTH
Medium
3.67

2.33

Weak

1.00

3.67

2.33

1.00
Invest/grow

Selectivity/earnings

Harvest/divest

Market Growth Rate

The Boston Consulting Groups


Growth-Share Matrix
20%18%16%14%12%10%8%6%4%2%0

Stars

Question marks

?2

Dogs

Cash cow

8
6
10x

7
4x

2x 1.5x

1x

.5x .4x .3x .2x .1x

Relative Market Share

Evaluating Ability to Compete

Organization
Growth
Share by segment
Customer loyalty
Margins

Distribution
Technology skills
Patents
Marketing
Flexibility

Evaluating Market
Attractiveness

Size
Growth
Customer
Satisfaction levels
Competition:
quantity, types,
effectiveness,
commitment

Price levels
Profitability
Technology
Governmental
regulations
Sensitivity to
economic trends

The Strategic-Planning Gap


Desired
sales

Diversification growth

Strategicplanning
gap

Sales

Integrative growth
Intensive growth
Current
portfolio

5
Time (years)

10

Growth Strategies
Present
Products

New
Products

Present
Markets

Market
Penetration

Product
Expansion

New
Markets

Market
Expansion

Diversification

Vertical Integration
Source: H. Igor Ansoff, Strategic Diversification , Harvard
Business Review, September-October 1957, pp.113-24

A successful differentiation
strategy should

Generate
Customer
Value

Provide
Perceived
Value

Be Difficult
to Copy

The Sustainable Competitive


Advantage
The Way You Compete
Product Strategy
Positioning Strategy
Manufacturing Strategy
Distribution Strategy, etc.
Basis of Competition
Assets and Competencies

SCA

Where You Compete


Product-market Selection
Whom You Compete Against
Competitor Selection
Figure 8.1

Characteristics of SCAs
Substantial

Sustainable
Leveraged

THANK YOU!