BMM600: Marketing Management

with
Geoff Parkes

Week 2
The Marketing Strategy Process
Discussion

Applying strategic marketing thinking: What is marketing

strategy?
How does it fit with overall firm strategy?
Developing a coherent and successful marketing strategy
Implications for implementation of chosen marketing
strategies
Why firms fail when it comes to marketing strategy
implementation?
 Microsoft and its Business Ecosystem (Source: Company data)

DOMAIN Number of firms

Systems integrators 7,752

Development services companies 5,747

Campus resellers 4,743

Independent software vendors 3,817

Trainers 2,717

Breadth value-resellers 2,580

Small specialty firms 2,252

Top value-added resellers 2,156

Hosting service providers 1,379

Internet service providers 1,253

Business consultants 938

Software support companies 675

Outbound hardware firms 653

Consumer electronics companies 467

Unsegmented resellers 290

Media stores 238

Mass merchants 220

Outbound software firms 160

Computer superstores 51

Application service provider aggregators 50

E-tailers 46

Office superstores 13

General aggregators(7); Warehouse club stores (7); Niche specialty stores (6); Sub-distributors (6) 26

Applications integrators (5); Microsoft direct resellers (2); Microsoft direct outlets (1); Network equipment providers (1); Network service providers (1)
10
Marketing strategy process
Strategic marketing Product marketing Operation

Corporate Product-market Estimate

objectives objectives results

Marketing Strategic
audit Organise
focus

SWOT Core
strategy Implement
analysis

SWOT Marketing
Track
balance mix
Strategic Marketing Triangle
Market
Environment

it'

'Fi
'F

t'
Strategy Organisation

'Fit'
Strategic Marketing Planning:
The Basic Questions
■
WHERE are we now?

■
HOW did we get here?

■
WHERE do we want to go?

■
WHERE might we go?

■
WHERE must we go?

■
HOW do we get there?
The marketing audit
Know:
■
In business ■
In battle
–
Your company –
Your forces
–
Your competition –
Your opposition
–
The market –
The battle ground
–
The business and –
The climate
economic environment
 The Marketing Environment

Publics Intermediaries

Competitors Customers
Suppliers Company
Micro environmental forces

Macro environmental forces

Political Economic

Socio-demographic Technological

Legal Natural
Environment Analysis
Macro: Changes taking place in the broader environment?
Micro: Trends
Eg Customers Current? Future?
What do they want & need?
Competitors Who/what do/will we compete with?

Key Success
Factors What it takes to win in this business?
Opportunities What might we do?
Threats What must we do?
Company/Organisation Analysis

Skills: What are our distinctive

competencies?
Assets: What exploitable
strengths do we have?
Liabilities: What baggage do we
carry?
What makes a
resource
valuable?
Resource Advantage

Contribute to Providing
Value for Customers

SCA Hard for

Unique to Competitors to
the Firm Acquire or Imitate
 Wal-Mart: Ecosystem Edge
Global procurement 0.5% Benefits
Centralized buying 2% attributed
Optimized product mix 2% to
Distribution efficiencies 2% ecosystem

Other operating efficiencies 2% management

Information sharing 6%
Lower shrinkage rates 0.5%
Preferred real estate rental rates 2%
Lower labour costs 5%
Wal-Mart’s total margin advantage in retail groceries 22%

More than half of Wal-Mart’s cost advantage derived from how the company manages its ecosystem of
business partners..by sharing information, Wal-Mart is better able to match supply and demand across
the entire ecosystem, raising productivity and responsiveness for itself – and for its partners.
Source: M. Iansiti, HBR, March 2004.
 S.W.O.T. analysis
■
Draws from the audit Good indicators Danger signals

■
It concentrated on a few key
issues
Strength Weakness
■
Strengths and weakness are key
factors for success (KFS) in the
industry.
■
Opportunities and threats Opportunity Threats
external to the company. Based on
the planning assumptions.
 S W
Balancing the SWOT O T
S &W O&T Action

strong opportunity ?

strong threat ?

weakness opportunity ?

weakness threat ?
Managing the assumptions
Certainty Importance Action

high high ?

low high ?

high low ?

low low ?
Strategic Objectives
• What are our goals?
• How can they be quantified in terms of:

Profitability & Financial Returns?

Sales and Market Share?
Customer Satisfaction & Retention?
Employee Satisfaction?
Resource Utilisation?
Strategic Focus

How we will achieve our objectives?

What are the main components of our strategy?

Strategic Focus
IMPROVE
PERFORMANC
E

EXPAND IMPROVE
VOLUME PROFITABILITY

Identify main elements of the business strategy

 Strategic Focus
Reduce capital cost
Reduce costs Reduce fixed cost

Reduce variable cost

Improve Profitability
Change product mix

Increase margins Increase price

Add value
Improve Performance
Win competitors cust.

Increase market share Acquisition/Alliances

Increase usage rate

Increase Volume
New segments
Expand market New markets

Innovation
Product-Market Expansion
markets Existing products New products

Market Product
Existing

Penetration Development
markets

Market
New

Diversification
Development
In a downturn……….
Critical priorities
Communicate key objectives
Force hard Choices
Accelerate necessary Changes
Seize window of opportunity – Value Creation > Cost of resources
Harness Creativity

“Major change efforts are difficult in the best of times, and many executives
worry that a downturn will halt future progress, or reverse any gains made
to date. Indeed, ..managers too often scurry from fighting one fire to the
next and thereby lose sight of the longer transformation effort.
Downturns provide an ideal opportunity to renew a sense of urgency,
justify unpopular decisi9ons and overcome complacency or resistance to
change.”
[D Sull, FT, 23/01/09)
Core Marketing Strategy

■
Customer targets – who to serve? what to offer?

■
Competitor targets – who we compete with?

■
Positioning – reason for customer to prefer doing
business with us?
Creating and Keeping Customers

■
Offer customer value

■
Create and sustain a differential advantage

■
Market targeting
Competitor Targeting: Marketing Strategies
for Competitive Advantage
■
Market leader

■
Market challenger

■
Market follower

■
Market nicher

Competitive advantage depends on

industry position.
Routes to Competitive Advantage

Cost Focus

Stuck in
the middle

Differentiation
“Reckitt Bensicker has shrugged off the economic malaise that is
starting to worry consumer goods rivals by promising to EXPAND SALES
at twice the rate of the market this year and increase net income
by 8-10 per cent.

Bart Becht CEO of R-B said that Reckitt would increase sales by 4 per cent
in 2009 and was winning market share in spite of …
shoppers ditching branded lines in favour of cheaper supermarket goods.”

One analyst highlights 3 reasons for R-B’s success:

 Focus (household products, healthcare)

 Innovation and Marketing
 Cost cutting
 Culture of entrepreneurship and accountability

[E Rigby & M Urry, FT 12/02/09]

Marketing Mix

Offering What bundle of product and services?

Price How will we cost our offerings?

What (and how) will we charge for it?

Promotions How will we communicate our

offerings to the target customers?

Distribution How will we physically get our

offerings to where consumers
want to purchase or use
them?
 Organisation
Staff What combination of people/skills?
Systems What systems (e.g knowledge, IT) needed to
deliver the offerings to our
customers?
Processes What processes required to ensure delivery?

Style What culture to support our marketing

goals and activities?

Structure What’s the most appropriate organisational

structure for implementing the
marketing activities?
Feedback & Control

Evaluation How successful are we vs

plan? Others?
What metrics will we use?
 Business Orientation and Success Rate (1992)
Success Rate (%)
100 J 15%
A 54% Quality Marketeers
B 31% Balanced Orientation
Mature Marketeers J 46% J 59%
75
Marketing Orientation A 36% A 18%
B 18% B 23%
Innovators
50 Product Orientation

Aggressive Pushers
Product Makers
Sales Orientation Price Promoters
Production Orientation
Financial Orientation
J 18%
25 J 22% J 31%
A 53%
A 14% A 31%
B 29%
B 64% B 38%

(Saunders and Wong, 1993)

 Business Orientation & Survival Rate
1992
SUCCESS FAILURES

SURVIVORS Balanced orientation (91%) Innovation-led

Marketing orientation (92%) (91%)
Financial orientation (86%)
2002

FAILURES Production orientation

(62%)
Sales orientation (65%)

(Saunders and Wong, 2003)

What Type of Company will
survive in Today’s
Environment?
Summary
• Marketing Stratgey Process
• Marketing Audit
• Resource Advantage
• Strategic Focus – the key elements of
business strategy
• Product-Market Led Expansion
• Routes to Competitive Advantage