Chapter 2 : Situation Analysis

Revised & Lectured by:

Mr. Eng Leaphea, MBA Marketing Lecturer, Human Resources University Marketing Manager, San International Limited Sales & Marketing Assistant Manager, Sun Advertising ( Freelance)

First Preparation by: Mr. SAING Sokhsophal, MBA

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Chapter Content
I. Market Targeting and Strategic Positioning II. Relationship Strategies III. Planning for New Products

I. Market Targeting and

1.1. Market Targeting Strategy
The market targeting decision identifies the people or organizations in a product-market toward which an organization directs its positioning strategy. Selecting good market targets is one of managements most demanding challenges. For example, should the organization attempt to serve all people who are willing and able to buy a particular good or service, or focus selectively on one or more subgroups? Study of the product-market, its buyers, the organizations capabilities and resources, and the structure of competition are necessary in order to make this decision.
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I. Market Targeting and

1.1. Market Targeting Strategy
1.1.1. Targeting Strategies
Targeting and positioning strategies consist of : (1) identifying and analyzing the segments in a product-market, (2) deciding which segment(s) to target, and (3) designing and implementing a positioning strategy for each target.
Many companies use some form of market segmentationMicro-segmentation (for more mature markets) or Macro-segmentation (for emerging markets).
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I. Market Targeting and

1.1. Market Targeting Strategy
1.1.2. Targeting Alternatives
The targeting decision indicates how many customer groups the organization will serve. Management may select one or a few segments or go after intensive coverage of the product-market by targeting most of the segments. A specific marketing effort is directed toward each target that management decides to serve. In certain product-markets, organizations may select strategies that offer buyers a variety of products. While there is diversity in needs and wants, buyers preferences are diffused, making it difficult to define
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I. Market Targeting and

1.1. Market Targeting Strategy
1.1.3. Factors Influencing Targeting Decisions
Market segment analysis helps to rank the overall attractiveness of the segments under consideration as market targets. These evaluations include analysis of customers, competitor positioning, and the financial and market attractiveness of the segments under consideration. An important factor in targeting is determining the value requirements important to the buyers in the segment. We use segment analysis information to evaluate both existing and potential market targets. 6

I. Market Targeting and

1.1. Market Targeting Strategy
1.1.3. Factors Influencing
Management needs to decide if the organization should target a single segment, selectively target a few segments, or target all or most of the segments in the product-market. The factors that influence the choice of the targeting strategy include: Stage of product-market maturity; Extent of diversity in preferences; Capabilities and resources; or Competitive advantage.
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I. Market Targeting and

1.2. Developing The Positioning Strategy
The positioning strategy places the marketing mix components into a coordinated set of actions designed to achieve the positioning objective(s). Developing the positioning strategy includes selecting the activities and results for which each marketing program component (product, price, distribution, promotion) will be responsible for, determining the amount to spend on each program component, and deciding how much to spend on the entire program.
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I. Market Targeting and

1.2. Developing The Positioning
1.2.1. Considerations about Targeting/Supporting Activities
A positioning strategy is usually centered on a single brand or a line of related products for a specific market target. Whether the strategy is brand-specific or broader in scope depends on such factors as the size of the product-market, characteristics of the product or service, the number of products involved, and product interrelationships in the consumers use situation. For example, the marketing program of Proctor & Gamble and Johnson & Johnson 9

I. Market Targeting and

1.2. Developing The Positioning
1.2.1. Considerations about Targeting/
position their various brands, whereas firms such as General Electric, Caterpillar, IBM, and Nike use the corporate name to position the product-line or product-portfolio. When serving several market targets, an umbrella strategy covering multiple targets may be used for some of the marketing program components. For example, advertising may be designed to appeal to more than a single target, or the same product may be targeted to different buyers through different distribution channels.
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I. Market Targeting and

1.2. Developing The Positioning
1.2.2. Marketing Program Decisions
Developing the positioning strategy requires integrating the product, distribution, price, and promotion strategies to focus them on a market target. Shaping this bundle of strategies is a major challenge to marketing decision makers. We will discuss them in detail in next Chapter 4.

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II. Relationship Strategies

Strategic relationships among suppliers, producers, distribution channel organizations, and customers (end-users of goods and services) occur for several reasons. The objective may be to gain access to markets, enhance value offerings, reduce the risks generated by rapid environmental change, share complementary skills, or obtain resources beyond those available to a single enterprise. These relationships are not recent innovations, but they are escalating in importance because of the environmental complexity and risks of a global economy,
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II. Relationship Strategies

and the skill and resource limitations of a single organization. Strategic alliances, joint ventures, and supplier-producer collaborations are examples of cooperative relationships between independent firms. Gaining competitive advantage increasingly demands cooperative relationships in order to access technology, expand resources, improve productivity and quality, and penetrate new markets. Marketing relationships are important avenues to building strong bonds with customers. The objective is to offer end-user customers superior value through collaboration of the org involved in the process. 13

II. Relationship Strategies

2.1. Types of Organizational Relationships
The types of relationships that may be formed by a firm are supplier and buyer (vertical), lateral (horizontal) and internal relationships. A useful way to examine organizational relationships is to consider whether the tie between firms is vertical or horizontal (government, nonprofit organizations, competitors). We will first look at vertical relationships among organizations, then strategic alliances and joint ventures, and finally internal relationships (business units, functional departments, employees).
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.1. Customer-Supplier Relationships
Moving products through various stages in the valueadded process often involves linking suppliers, manufacturers, distributors, and consumer and business end-users of goods and services into vertical channels. The suppliers and buyers of a vast array of raw materials, parts and components, equipment, and services (e.g., consulting, maintenance) are linked together in vertical channels of distribution.
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.2. Distribution Channel Relationships
Vertical relationships also occur between producers and marketing intermediaries (e.g., wholesalers and retailers). These value-chain relationships provide the producer access to consumer and organizational endusers. A strong collaborative relationship exists in a vertical marketing system (VMS). These systems are managed by one of the channel members such as a retailer, distributor, or producer.
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.3. End-user Customer Relationships
The driving force underlying strategic relationships with end-users is that a company may enhance its ability to satisfy customers and cope with a rapidly changing business environment through partnering. Relationship marketing starts with the customer understanding needs and wants and how to satisfy requirements and preferences. The importance of understanding customers needs and wants encourages developing long-term collaborative relationships.
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.4. Strategic Alliances
A strategic alliance between two organizations is an agreement to cooperate to achieve one or more common strategic objectives. The relationship is horizontal in scope; that is, it is between companies at the same level in the value chain. While the term alliance is sometimes used to designate supplier-producer partnerships, it is used here to identify collaborative relationships between companies that are competitors or in related industries. The alliance relationship is intended to be long-term and strategically important to both parties.
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.5. Joint Ventures
Joint Ventures are agreements between two or more firms to establish a separate entity. These relationships may be used to develop a new market opportunity, access an international market, share costs and financial risks, gain a share of local manufacturing profits, or acquire knowledge or technology for the core business. While joint ventures are similar to strategic alliances, a venture results in the creation of a new organization. Environmental turbulence and risk set the rationale for the venture more than a major skill/resource gap, although both pressures may be present. 19

II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.6. Internal Partnering
Internal partnerships may occur between business units, functional departments, and individual employees. The intent is to encourage and facilitate cross-functional cooperation rather than specialization. Key internal processes such as new product development benefit from cross-functional cooperation in areas such as research and development, marketing, purchasing, finance, and operations working together to identify, evaluate, develop, and commercialize new product concepts.
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II. Relationship Strategies

2.1. Types of Organizational Relationships
2.1.6. Internal Partnering (Contd)
Several guidelines for developing effective internal relationships follow: 1. Demonstrate management support. 2. Start with a pilot team. 3. Keep the teams small and together. 4. Link the teams to the strategy. 5. Seek complementary skills for the team. 6. Educate and train. 7. Address the issue of team leadership. 8. Motivate and reward team performance.

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II. Relationship Strategies

2. Developing Effective Relationships between Organizations
We know that forming and managing effective collaborative partnerships between independent organizations is complex, so we need to look further into the process of developing effective relationships. The objective of the relationship is first considered, followed by a discussion of several relationship management guidelines.

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II. Relationship Strategies

2. Developing Effective Relationships between Organizations
2.1. Objective of the Relationship
We will look at possible strategic objectives of relationships. In some situations, collaborative action may be an option rather than a requirement. - Identifying and obtaining new technologies and competences. - Developing new markets and building market position. - Market selectivity strategies. -Restructuring and cost-reduction strategies. 23

II. Relationship Strategies

2. Developing Effective Relationships between Organizations
2.2. Relationship Management Guidelines
- Planning - Trust and Self-Interest - Conflicts - Leadership Structure - Flexibility - Cultural Differences - Technology Transfer - Learning from Partners Strengths

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III. Planning for New Products

New products are the center of attention in most companies because of the obvious contribution of products to the survival and prosperity of the enterprise. Planning for new products is an essential and demanding core process in all org. New products, when matched to customer needs, help an organization to strengthen its position in existing product-markets and move into new product-markets.
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III. Planning for New Products

3.1. Product Planning as a Customer Satisfaction Process
New product introductions can be classified according to (1) newness to the market and (2) newness to the company, resulting in six categories of new products: 1. New-to-the-world products 2. New product lines 3. Additions to existing product lines 4. Improvements in and/or revisions to existing products 5. Repositioning 6. Cost reductions
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III. Planning for New Products

3.2. Steps in New Product Planning
A new product does not have to be a high-technology breakthrough to be successful but it must provide customer satisfaction. Developing successful new products requires systematic planning to coordinate the many decisions, activities, and functions necessary to move a new product idea to commercial success. The major stages in the planning process are shown in Exhibit 3-1. We examine each stage to see what is involved, how the stages depend on each other, and the importance of inter-functional coordination of new product planning.
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III. Planning for New Products

3.2. Steps in New Product Planning
Exhibit 3-1: New Product Planning Process
Customer needs analysis
Marketing Strategy

Idea Generation

Screening and Evaluation Business Analysis

Development

Product Development Commercialization

Testing

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