Introduction to the

module

Marketing Strategy for

Management

MKT4010
Learning Outcomes

• Introductions
– Who am I
– Who are you
• Rules of Engagement
• What about MKT4010?
– Aims
– Structure
– Core texts
– Lectures and Seminars
– Assessment
 Who am I?

• Dr. Olga Mourouti

– Senior Lecturer in Marketing
• Education
– PhD Strategic Marketing
– MSc Quality Management
– BA Marketing
– PGDip CIM
– PGDipHE
• Professional Experience
– Brand Manager for Greece,
Bulgaria and Romania at
Visa Europe
– Purchasing Manager Retailing
– Assistant Marketing Manager
Retailing
 Who are you?
Percentage

These People Are Not

Here

Low Mean High

Academic
Ability
If you fail, it will almost certainly be because of
laziness, arrogance, or poor preparation
Rules of Engagement

• Things You ARE Allowed to Do?

– Ask questions
– Ask for clarification
– Contribute with your experience
• Late Entry Strategy
– You won’t get shouted at…
– …IF you QUICKLY find a seat
• Things You DO NOT Do
– Chat to your friends
– Leave your mobile phone on
–
 MKT 4010 Aims

•To provide you with a framework for analysing marketing

processes from a strategic and managerial perspective in a
diverse range of organisations
•To provide you with the skills and knowledge necessary to
develop and implement marketing strategies so that
organisations gain a competitive advantage in highly
volatile operating environments
•Detailed information on skills & knowledge on p. 3 of
module handbook
Structure of the Module

Strategic Analysis
External Analysis Internal Analysis
Customers Performance
Micro
Macro Marketing capabilities

Strategic Analysis Outputs

Opps / threats / strategic Strategic strengths / weaknesses /
uncertainties constraints / problems / uncertainties

Strategy Identification,
Selection, and Implementation
Identify business strategy alternatives
Select strategy / strategies
Implement the operating plan(s)
Review strategy / strategies
 Three Core Texts

•Aaker, D.A. and McLoughlin, D. (2007) Strategic

Market Management, European Edition, Wiley

•Baines, P., Fill, C. and

•Cravens, D. and Piercy, N.F. (2008) Strategic
Page., K. (2008) Marketing,
Marketing, 9th Edition, McGraw-Hill
Oxford University Press

Additional Reading and Oasis Plus Information on p. 5 of module handbook

Learning Methods

•Lectures (approx. 1,5 hours)

•Aim:
•To present and explain theoretical
concepts

•Seminars (approx. 1,5 hour)

•Aim:
•To allow you to present, debate and apply
concepts discussed in class.
•To provide you with feedback on your
work
•
• Lecture and Seminar programmes included in
module handbook (p. 9-12)
Assessment Scheme – p. 13 of module handbook

There are four elements of assessment for

this
module – 100% coursework:
1The Development of a Case Study (35%) –
presentation and written work
2Individual Portfolio (25%)
3Marketing report (30%)
4Reflective Overview (10%)
•Word limits apply
•Point (I) group work
•Points (ii) – (iv) individual
work
Assessment: Case study & Presentation – p. 13 module
handbook

•Group work
•groups will be formed during seminars
(week 2)
•3 persons per group maximum
•Groups to select ONE company in ONE
industry:
üCar
üCatering
üFashion
üComputer/Telecommunications
üAutomobile
üHealth and Beauty etc
Assessment: Case study & Presentation cont’d – p. 13 module
handbook

•You are required to:

•Deliver a 10 minute presentation + a
two page written summary (5%) –
weeks 7 & 8
•Write a 3500 words case study with two
accompanying questions and solutions
(30%) – 14th January 2011
•Notes:
üBoth Hard copy and electronic
submission of case study
üBriefing session/tips on Week’s 4
lecture
üFurther help on Week 5 and 10 seminars
Assessment – Individual Portfolio, p. 15 of Module
Handbook

•
•You will receive:
üA Portfolio of articles pertaining to the
Book/Ebook industry
•After conducting additional research, you are
required to:
üAnswer a series of pre-set questions
•Notes:
üSubmission Deadline: 11th March 2011
üBoth Hard copy and electronic
submission of case study
üBriefing session/tips on Week’s 10
lecture
üFurther help on Week’s 16 seminar
üPractice exercise to help familiarise
Assessment – Marketing Report, p. 16 of module
handbook

•
•For a company of your choice, you are required
to:
üWrite a marketing report in two phases
•Phase I:
üSituation Analysis (10% of overall
mark)
•Phase II:
üObjectives and Strategies (20% of
overall mark)
•Notes:
üSubmission Deadline: 4th May 2011
üBoth Hard copy and electronic
submission of case study
üBriefing session/tips on Week’s 19
 Assessment – Individual Reflective Overview, p. 17 of
module handbook

•You are required to:

•Complete a reflective account of your
entire learning
•Notes:
üBoth Hard copy and electronic
submission – 4th May 2011
üBriefing session/tips on Week’s 19
lecture
üFurther help on Week’s 22 seminar
•
Any Questions ?
 The Concept of
Marketing

Marketing Strategy for

Management

MKT4010
Lecture 1
Learning Outcomes

•To understand the importance of

marketing & marketing strategy
•To identify the dimensions of Marketing
Strategy
•To understand the Strategic Marketing
Process
 What is marketing?

Marketing Concept
The achievement of corporate
goals through meeting
and exceeding customer
needs better than the
competition

Customer Integrated Goal

Orientation Effort Achievement
Corporate activities are The belief that corporate
All staff accept the goals can be achieved
focused upon providing
responsibility for creating through customer
customer Value and
customer satisfaction satisfaction
Satisfaction
What is marketing?

Positive Customer value Negative

Perceived Perceived
benefits sacrifice

•Product benefits •Monetary costs

•Service benefits •Time costs

•Relational benefits •Energy costs

•Image benefits •Psychological costs

 What is Marketing Strategy?

• Consists of:
– Analysis, strategy development and
implementation activities in:
– Developing a vision about the market(s) of
interest to the organisation, selecting
target market strategies, setting
objectives, and developing, implementing,
and managing the marketing program
positioning strategies designed to meet
the value requirements of the customers in
each target market
–
• (Cravens and Piercy, 2006: 29)
•

•
 Importance of Marketing Strategy

•Because it deals with the fundamental issues that affect the

•future of the organisation
•

• Marketing strategy...
– Centres around the customers of the organisation
– Involves the entire organisation
– Is likely to concern itself with the survival of the
organisation as a minimum objective, and
– The creation of value added as a maximum objective
•
• Two vital areas:
– Strategy is central to the development of sustainable
competitive advantage for the organisation...
– ...and is crucial to the on-going value added
•
•
 Main Elements
of Marketing Strategy….

The three dimensions of marketing strategy........

•

Context
Context:the
Context: theenvironment
environmentwithin
within
Content whichthe
which thestrategy
strategyisisoperating
operating
Content:the
Content: themain
mainactions
actionsofofthe
the
proposedstrategy
proposed strategy
Process:how
Process: howthethestrategy
strategywill
will
bedeveloped
be developedandandachieved
achieved

Process

Pettigrew and Whipp 1991

The Strategic Marketing Process..
 Situation Analysis…

Macro- Environment
As highlighted in
As highlighted in Lecture 4
Lecture 3
The Industry

Competitors
As highlighted in
Lecture 2
Internal
The
Internal
Environment
Firm
Environment

As highlighted in
Lecture 8
Consumers
As highlighted in
Lecture 6
 Designing Marketing Strategy

As highlighted in
Lecture 8

As highlighted in
Lecture 9

As highlighted in
Lecture 14
Target Markets

• Selecting Segments to Target

– Which segments are most attractive?
– Which segments can we best serve?
• How are these Targets Selected?
– Situation Analysis
• Existing Products
– Continue with existing target?
– Adapt/evolve product/marketing mix to
hit a new target?
–
–
Competitive Advantage

• The Critical Importance of Competitive Advantage

– Success depends on having (and being perceived
to have) an ability to do something better than
your competitors
• Examples
– Quality
– Speed
– Convenience
– Efficiency
– Availability
Growth Strategies…

Products/Services
Existing New

Product/Servic
Existing

Market e
Penetration Development
Markets

Market Diversificatio
Extension n
New
Marketing Program Development

4P’s
Marketing Program Development:
Branding

Brand Brand Service Brand

potential name potential
and
images

Core
Deliver product Guarantee
y s

Quality Packaging
and
design

Brand
potential
 The Service Offering…

Intangibility
Characteristics
of Services….. cannot be seen, felt, heard,
tasted or smelled prior to
purchase
Inseparability
production
and consumption
occur simultaneously Heterogeneity
difficult to achieve
Standardisation
Perishability
cannot be stored /
seasonality issues
 The Service Offering…
Therefore Our understanding of the 3 Ps…
“The extended Marketing Mix for
…Process a Service”
•Involvement of consumers, emphasises the process /
procedures of transaction / service delivery
•Operational factors affecting perceptions and
satisfaction
•Friendliness of staff, queuing systems
Stress
Physical Evidence
tangible
•Ambience / furnishings
cues
•Environment in which service is offered
People
•Selection, training and motivation / personnel /
customers
•Everyone is a marketer!!!
Summary

•Importance of Marketing Strategy

•Main Elements of Marketing Strategy
•The Strategic Marketing Process

Any
Questions?
 Competitor
Analysis

Marketing Strategy for

Management

MKT4010
Lecture 2
Lecture Outline

• Knowledge Refreshment
– Marketing Strategy
– Process of formulating it
• Competitor Analysis
– Identifying Competitors
– Understanding Competitors
Definition of Marketing Strategy

• Consists of:
– Analysis, strategy development and
implementation activities in:
– Developing a vision about the market(s) of
interest to the organisation, selecting
target market strategies, setting
objectives, and developing, implementing,
and managing the marketing program
positioning strategies designed to meet
the value requirements of the customers in
each target market
–
• (Cravens and Piercy, 2006: 29)
•

•
 Main Elements
of Marketing Strategy….

The three dimensions of marketing strategy........

•

Context
Context:the
Context: theenvironment
environmentwithin
within
Content whichthe
which thestrategy
strategyisisoperating
operating
Content:the
Content: themain
mainactions
actionsofofthe
the
proposedstrategy
proposed strategy
Process:how
Process: howthethestrategy
strategywill
will
bedeveloped
be developedandandachieved
achieved

Process

Pettigrew and Whipp 1991

The Strategic Marketing Process..
 Situation Analysis

Macro- Environment
As highlighted in Lecture
5 The Industry

Competitors

Internal
Internal
The
Environment
Environment
Firm
Micro-
Environment
Consumers
Key Factors for Success within
an Industry –
Micro Environment

Customers
The Competitive
Triangle

Company Competitors

(Inspired by Ohmae. Source:Adcock, et al 1995) p.191

What is competitor analysis?

•‘The process of identifying key

competitors; assessing their
objectives, strengths, weaknesses,
and reaction patterns; and
selecting which competitors to
attack or avoid’
•

• Jobber
 Competitor Analysis

Identifying Understanding
Competitors Competitors
 Identifying Competitors

Product
Technically similar Form Technically
products/ Technically Competito similar products
dissimilar products rs

Potential Product
New Substitute
Entrants s

Products that solve Generic Technically

the problem or
eliminate it in a
Competito
rs
dissimilar
dissimilar way products
Identifying Competitors –
Customer Approaches

•Look at competitors from the customers’

•perspective

– Customer Choices
• What would you buy if Kit-Kat was not
available?
• What would be substituted for coffee if price is
increased?
• What other universities have you considered?
– Product Use Associations
• Identify list of use situations or applications
• Name all products appropriate for each use
Understanding
Competitors

Assess Assess Assess

competitors’
competitors’ competitors’
current and
future current capabilities
objectives strategy profile

Predict competitors’ future

strategies
Competitor Objectives…

Assess ØWhat are they trying to achieve?

competitors’
ØWhy are they trying to achieve it?
current and
future ØAre they satisfied with their
objectives achievements?

Key Indicators:
Stated goals Market assumptions
Ownership Investment priorities
Objective: Build
Market Share…

Frontal Flanking Encirclement

Attach Attack Attack

Comp Comp
etitor etitor Comp
etitor

Chall Chall Chall

enger enger enger
 Example - European Breakfast Cereals:
Cereal Partners

1990: buy Shredded Wheat, UK

Size: US$ 3bn Growth: 1991-96: extend UK range
+10% p.a (lower in UK but 1991: launch France , Spain, Portugal
larger market) Share: Options:
Kellogg’s 50-60% 1992: launch Italy
Head-on
against 1993: launch Germany etc
Kelloggs
Environment:

Options:
Purpose:
Flanking
Purpose
’20% Choice: Implementation:
via
Market Segment
Share’

Chosen strategies:
Resources: 1.Concentrate resources
Options: 2.Econs of scale
Totally new 3.Tackle country-by-country
breakfast
CP Resources: Brand format 4.Kelloggs flanking attack via
name, Grocery product innovation
networking, Unique
product range, Low cost 5.Acquire in UK
manufacture, Own label Lynch (2003) Corporate Strategy 3/ed
Competitor Strategies…

Assess ØWhat market targets are they pursuing?

competitors ØWhat is their strategic focus?
’ current ØWhat marketing mix do they use?
strategies
ØHow do they organise their marketing?

Key Indicators:
Advertising media and messages Price levels charged
New product introduction rates Distribution channels used
Recruitment advertisements
Competitor Capabilities…

ØMarketing culture?
Assess
competitors’ ØMarketing assets and competences?
capabilities ØProduction and operation competencies?
profile
ØFinancial resources?
ØHuman Resources?

Key Indicators:
Customer relationship strength Product availability
New product success rates Promotional expenditure
Quality of the people
Competitor Capabilities…

Key Success Factors Self: total 5 Competitor A: total 6

Financial strength -2 -1 0 1 2 -2 -1 0 1 2

Staying power -2 -1 0 1 2 -2 -1 0 1 2

Strong R&D -2 -1 0 1 2 -2 -1 0 1 2

Technological breadth -2 -1 0 1 2 -2 -1 0 1 2

Quick response capability -2 -1 0 1 2 -2 -1 0 1 2

European marketing -2 -1 0 1 2 -2 -1 0 1 2

Key Success Factors Competitor B: total 4 Competitor C: total -2

Financial strength -2 -1 0 1 2 -2 -1 0 1 2

Staying power -2 -1 0 1 2
-2 -1 0 1 2

Strong R&D -2 -1 0 1 2 -2 -1 0 1 2

Technological breadth -2 -1 0 1 2 -2 -1 0 1 2

Quick response capability -2 -1 0 1 2 -2 -1 0 1 2

European marketing -2 -1 0 1 2 -2 -1 0 1 2
Future Competitor Strategies…

ØWhat might the competition do?

Predict ØWhat under-utilised resources do they
competitors have?
’ future ØHow will they react to our actions?
strategies
ØWho are the competitors to attack?

Key Indicators:
Past strategies Past successes and failures
Past reactions Changes in ownership
Recent resource acquisitions
 Competitor Response Patterns

Aggressive
Appears random, response, often
decisions may be
c t Re by market leader
based on d i ta l ia
unknown criteria re
p le
n y tor
U ab

Respons
Responds only e
to moves it

Com
Sele

considers Categor

nt
significant y

p
c ti

l ace
ve

Hemmed- Passive response, competitor

in does not consider the move
Competitor feels
unable to respond important
 Who to attack?
• Weak Competitors
– Easier to attack
– Require fewer resources to
engage
– Failed attack not fatal
– Potential rewards
relatively low
• Strong Competitors
– Difficult to attack
– Firm must focus on the
attack
– Failed attacks can be
devastating
– Potential rewards very
high
–
• The Dynamic Environment
– Your competitors change
over time
– The weak may become
strong, and vice versa
• Do Unto Others…
– Your competitors are
analysing you and your
behaviour
– What are they planning to
do unto you?
•
Summary

• Competitor Analysis involves:

– Identifying Competitors
– Understanding Competitors
 Analysing the
Industry

Marketing Strategy for

Management

MKT4010
Lecture 3
The Strategic Marketing Process..
 Learning Outcomes…

Macro- Environment

As highlighted in this
lecture The Industry

Competitors
As highlighted in
Lecture 2
Internal
The
Internal
Environment
Firm
Environment
Micro-
Environment
Consumers
Learning Outcomes

• To understand the complex nature of the marketing

environment As highlighted in Lecture 2

• Explain and identify Key Factors for Success

Introduction

What is an Industry?
–A group of firms that market products that are
close substitutes for each other

We Speak of:
–The car industry
–The computer industry
–Definitions normally product based
…Some Dimensions of
Industry Analysis

Industry Size, Industry

Growth Profitability Distribution
Distributionsystems:
systems:
Analysis
Analysisshould
should
include:
include:
•What
•Whatare arethe
thealternative
alternative
distribution
distributionchannels?
channels?
Key
Distribution •What
Success •Whatare arethe
thetrends?
trends?
Systems •Who
Factors •Whohas hasthe
thepower
powerinin
the channel and
the channel and howhow
isisthat
thatlikely
likelyto
toshift?
shift?
 Market Size and Growth

• Collect Data on Total Sales Levels

• Trade Associations/Trade Magazines/Government Data
• Estimate Market Growth
• Historic growth + Leading indicators of market sales
• More sales and profits if market grows
• Reduced sales and increased price pressure if market
declines
• Thus:
• Identify and Invest in growth contexts?
• Identify and disinvest in declining situations?
 Industry Profitability

• Industry profitability derives from an analysis of:

•

• Market structure - the number of firms and the degree of rivalry -

forms the basis of competitive development
• Market conduct - how firms behave towards each other - will then
influence strategy utilised
• Market performance – In terms of power, profitability, share in
market – Degree to which company is careful vs. takes
advantage
•

• Represented by Prof Michael Porter: Five-Forces Analysis

But such theories do not explain why two companies

in the same industry achieve widely differing results….
 Industry profitability:
Analysing Competitive Forces

Porters Five
Forces Model

Industry
rivalry
- current
competito
rs
Analysing Competitive Forces…

BargainingPower
Bargaining Powerof
of
BargainingPower
Bargaining Powerofof
Suppliers--Power
Suppliers Powerhigh:
high:
Buyers--Power
Buyers Powerhigh:
high:
•Fewsellers
•Few sellersmany
manybuyers
buyers
•Fewbuyers
•Few buyersmany
manysellers
sellers
•Standardisedproducts
products •Differentiatedproducts
•Differentiated products
•Standardised
•Buyersthreaten
•Buyers threatento
tointegrate
integrate •Suppliersthreaten
•Suppliers threatento
tointegrate
integrate
backwards
backwards forward
forward
•Supplierscannot
•Suppliers cannotintegrate
integrate •Buyerscannot
cannotintegrate
integrate
•Buyers
forward
forward backwards
backwards
•SwitchingCosts
•Switching Costsfor
forBuyers
Buyers
•SwitchingCosts
•Switching Costsfor
forSuppliers
Suppliers
•ProfitLevels
•Profit Levels
•Importanceof
•Importance ofCustomer
Customerto
to
•Importanceof
•Importance ofProduct
Productor
or
Supplier
Supplier
Serviceto
Service toBuyer
Buyer
•Levelof
•Level ofProduct
ProductDifferentiation
Differentiation
 Analysing Competitive Forces…
Threatof
Threat ofPotential
Potential
Entrants––Barriers
Entrants Barriersto
to CompetitiveRivalry
Competitive Rivalry
Entry
Entry •Structureof
•Structure of
Threatof
Threat ofSubstitutes
Substitutes
competition
competition
•Economiesof
•Economies ofscale
scale
•Buyer’swillingness
•Buyer’s willingnessto
to
•Structureof
•Structure ofcosts
costs substitute
•Capitalrequirements
•Capital requirements substitute
•Degreeof
•Degree of •Relativeprice
priceand
and
•Customerswitching
•Customer switching •Relative
costs differentiation
differentiation performanceof
performance of
costs substitute
•Strategicobjectives
objectives substitute
•Accessto
•Access todistribution
distribution •Strategic
•Switchingcosts
•Switching costs
•Expectedretaliation
retaliation •Exitbarriers
•Exit barriers
•Expected •Availability
•Availability
•Govtpolicy
policy •Rateof
•Rate ofgrowth
growth •Similarity
•Govt •Similarity
•Brandidentity
identity/ /strength
strength •Number/relativeSize
Size •Comparative
•Comparative
•Brand •Number/relative
•UniqueResources
Resources ofCompetitors
of Competitors –Price
–Price
•Unique
•Capacityin
inRelation
Relationto
to –Quality
–Quality
•Capacity
Demand –Branding
–Branding
Demand
Market Structure and
Concentration

Level of Profitability
Competition
HIGH No. of Firms

Influence on
MEDIUM Market

LOW
Level of
Competition
NONE
Perfect Imperfect Oligopoly Monopoly
Competition or
Monopolistic
Market Structure and
Concentration….

Intensity of competition in an industry

Measured by:
•

• Degree of concentration of companies in the industry

• Range of aggressive strategies of competitors in the market place
• Degree of concentration often summarised in the concentration ratio:
•

• “The percentage of industry ‘value added’ or ‘turnover’ controlled

by the largest four, five or eight firms in an industry: CR4, CR5
or CR8 respectively”
Example: Concentration Ratios
of UK Supermarkets

Leading Supermarkets &

Superstores by Turnover (£m)
2006/7 in the UK Top 4 Retailers’ Turnover £87685.2m
Tesco £42641.0
J. Sainsbury £17151.0
Asda Group £15667.2 Top 4 Firms: 87685.2
Wm Morrisons £12226.0 x 100 = 76.7
Marks & Spencer £ 8588.1 All Firms: 114191.9
Safeway £ 6270.6
Somerfield £ 4325.4
Waitrose £ 3497.3 CR4 = 77%
Iceland £ 1565.3
Aldi Stores £ 1318.3 Therefore, 4 firms account for 77%
Costcutters £ 497.2 of the Turnover between them
Budgens £ 444.5
Total £ 114191.9
Key Notes 2008
Key Factors for Success
within an Industry….

• Assets and competences that provide the basis for

• competing successfully
•

• Include:
• Strategic Necessities
• Not necessarily providing a competitive
advantage
• Absence leads to disadvantage
• Strategic Strengths
• Superior assets and competences
• Provide competitive advantage
• Points to consider:
• Which are the most critical now?
• Which will be more critical in the future?
 Conclusion

• Know your industry and competitors: structure / conduct /

performance
• Building on key resources can provide organisation with sustainable
competitive advantage
• Strategic development should be based on sound external analysis

Any
Questions?
 Environmental
Analysis and Strategic
Uncertainty

Marketing Strategy for

Management

MKT4010
Lecture 4
Aims

•By the end of this session you will

• Be able to differentiate between the components of
the marketing (business) environment
• Understand the role of environmental analysis in
marketing strategy
• Consider the marketing implications of these
components
The Strategic Marketing Process..
 Learning Outcomes…

Macro- Environment

As highlighted in this
lecture The Industry

Competitors
As highlighted in
Lecture 2
Internal
The
Internal
Environment
Firm
Environment
Micro-
Environment
Consumers
Frameworks of the Macro-environment:
PEST/STEP/STEEPLE Analysis

Technological/Product Innovation

Social/Cultural
Economic

Legal Firm

Political
Environmental

Education/Training/Employment

•What environmental factors are affecting the organisation?

•Which of these are the most important at the present time? In the next few years?
 Models of the Environment…
Socio-cultural Environment
•Demographic Change
Political and Economic Environment
•Economic growth rates
•Inflation Rates
•Foreign trade regulations

•Changing life-styles and living •Interest rates, consumer and business

confidence
patterns
•Taxation policy
•Multi-ethnic societies •Employment and unemployment

•The Grey Market •Income distribution

•The Youth Market Technological, Environmental

and Legal Environment

•New discoveries/developments
•Waste disposal
•Competition law
•Product Safety
•Energy Consumption
•Health and Safety Law
•Environmental Laws
 Models of the Environment…

Society Changes…
Social Class

Social change and its •In most societies, divisions exist

effects on organisations
between groups of people in
•Many goods and services are no terms of their access to
longer considered socially and privileges and status
culturally relevant – e.g. formal •As the size of each class changes,
clothing
so market segments, which are
•New opportunities emerge for made up of people who are
businesses – e.g. Islamic compliant similar in some important
products / services
respects, also change
•Two way effect - businesses and new
technology affect social and cultural •Is a “classless” society a myth or
environment (e.g. microwave reality?
ovens / e-business / e-commerce /
mobile technology)
 Models of the Environment…

Cultural Changes…

The Cultural Cultural

Environment Convergence?

•A culture's values are •Are cultures converging

expressed in a complex in their in their
set of beliefs, customs values and attitudes?
and symbols which help •Or do multi-cultural
to identify individuals as societies lead to a
growing need for
members of one
cultural identity?
particular culture rather I.e The notion of
than another Britishness
•Distinguish between •What is the significance
"core" and "secondary" of “Mecca Cola”?
cultural values
 Models of the Environment…

Lifestyle Changes…

Values, Attitudes and Lifestyles

•Values are deep seated sets of beliefs

•Attitudes may be more open to change
•Attitudes may eventually be translated
into behaviour - a lifestyle
•Attitudes and lifestyle may say more
about a person's consumption
patterns than class, status etc
•Even supermarket sandwiches reflect
differences in lifestyles
•Compare buyers of Chunky BLT with
buyers of Mediterranean Vegetable
Panini
Models of the Environment…

Lifestyle Changes…
Waistline Vs Bottomline….
 Models of the Environment…

Demography
Geographical Distribution
Reasons why businesses should
study changing demographic •In the UK, drift from north to
structures: south-east
–Helps to predict the size of •Drift from towns to rural areas
the market that a product •More recently, many people
is likely to face have moved
–Demographic trends have •What are the implications for:
supply side implications –patterns of demand?
–Implications for public –availability of workforce?
sector service
–Demographic change can
influence the nature of
family life and
communities
Models of the Environment…

Changes in UK Population

Population change can be attributed to three main factors:

–the birth rate
–the death rate
–the difference between inward and outward migration
 What does the future
Illustrations of the
hold? ‘three rings’ model of
the environment

1. What if Turkey joined the EU? 3

2. What if a major American firm 2
entered our European 1
markets?
3. What if a break in production
prevents us fulfilling
customer orders?
…what about?

Technology Trends
•To what extent are existing technologies maturing?
•What technological developments or trends could affect the industry?

Government/Economic Trends
•What changes in regulation are possible? What will their impact be?
What are the political risks?
•What are the economic prospects and inflation outlets for the countries in
which the firm operates?
Strategic Uncertainties…

Specific unknown outcomes that can affect a company’s strategic decisions.

Examples:
–Alfa Romeo:
•What will the sales profile of sports cars be in upcoming
years?
–British Airways
•How will the economy evolve?
–Ski operator
•How will the weather be in 15 years?

•Response:
• Uncertainty reduction
– Information acquisition
– Level of resources depend on outcome of Impact
Analysis
• Uncertainty modelling
– Scenario Analysis
Strategic Uncertainties…

Impact Analysis
Immediacy

Low High

Monitor and
Analyse; Analyse In-
High

Contingent depth; Develop

Strategies Strategy
Considered
Impact

Monitor and
Low

Monitor
Analyse
Strategic Uncertainties…

Scenario Analysis

• A process that creates a plausible set of alternative “stories”

about the future for elements of the business environment that
are:
– “strategically” very important
– beyond your ability to control
– often beyond your ability to predict what will happen
• Improved decision-making by allowing more complete
consideration of outcomes and implications

Therefore…

Relate
Scenarios Estimate
Identify to Scenario
Scenario Existing or Probabilitie
Proposed s
Strategies
Strategic Uncertainties…
Scenario Analysis
Example: British Airways
• British Airways might attempt to
forecast several possible
scenarios for the economy
– Scenario I: Rapid growth
– Scenario II: Moderate
growth
– Scenario III: Slow growth
– Scenario IV: Decline
Scenario IV – Decline in the UK
economy
Implications:
•People will have less disposable
income, hence will not be
travelling as frequently
•Airlines will reduce their
capacity, number of flights and
destinations in line with the
declining demand for their
services
•Increased competition among
airlines for a declining market.
•Demand to further shift to No-
frills airlines
Summary

Changes in the environment have

led to an increase in customer dynamics and
related marketing opportunities

Any
Questions?
 Internal Analysis,
SWOT Analysis &
Objectives

Marketing Strategy for

Management

MKT4001
Lecture 5
Aims

• Internal Analysis
• SWOT analysis
– Strengths
– Weaknesses
– Opportunities
– Threats
• Setting objectives and strategies to
achieve them
Internal Analysis

Is:
•

• An assessment of the performance

and activities of the business in light of
environmental developments
 Internal Analysis

Assessment of Marketing Capabilities…

Marketing
Strategic
Operating Mix Marketing Marketing
Issues
Results Effectivene Structures Systems
Analysis
ss
Informatio
Organisati
Sales Product n
on
Systems Objectives
Market Planning Segments
Price Training
Share Systems Competitive
Internal Advantage
Profit Control
Promotion Communicati
Margins on Systems Positioning
Distributio Portfolio
Costs Analysis
n
 Portfolio Analysis

•Basic Logic dictates that many companies are involved with products in
many industries
•Each market will bring its own strategic opportunities and problems e.g.
the attraction of a fast growing market, difficulties of having only a
small marketing share
•Assuming that the two most important factors in such an analysis are:
1.Marketing Growth
2.Market Share
•These factors can be plotted in a Matrix against competitors aiding the
exploration of this strategic issue (Boston Consultancy Group Matrix -
BCG)

Also read: Jobber 2007 – pg 396 - 400

Product Portfolio Analysis…

BCG Matrix – Example…

High 12%
Per Annum 12% Star Question Mark

BMP 2
Hunter 200
8%
Tiger 520 BMP 5
Market
Growth
Rate % 5%
Cash Cow Dog

3%
Gazelle
300
BMP 3
Low: 0%
Starting at
x10 x5 x1 x0.5 x0.1
0% Per Annum
Relative Market Share
 SWOT Analysis

•What is a SWOT Internal

Analysis? (Controllable)
– A structured
approach to
evaluating the Strengths Weaknesses
strategic
position of a
business
Opportunitie
– Identifies Threats
s
strengths,
weaknesses, Lectures
opportunities 3/4 External
and threats (Uncontrollable)
•What does a SWOT

•Analysis do?

– Synthesises the
situation
SWOT Analysis:
Conversion / Matching
Strategies

StrengthsConversion
Weaknesses
Strategies
Strategies
Matching

Conversion Threats
Opportunities
Strategies
Strategic Objectives

Objective is Objective is
to increase to maintain
sales and market share
market
share Build Hold

Objective is to Harves
Divest
maximise t
profits whilst Objective is
sales and to drop or sell
market share the product
are falling
Build…

• When is a Build Objective Attractive?

– Growth markets
– In mature markets where there are exploitable
competitive weaknesses
– Exploitable corporate strengths
• Examples
– Rapidly growing MP3 player market means that all
companies have growing sales
– Cadbury’s chocolate bars Vs Rowntree Macintosh
‘Yorkie’
– Casio built on expertise in microelectronics to move
from calculators to watches, M&S used the trust in
its brand to launch financial services
How to achieve a Build Objective…

Bypass Attack
Flanking Attack
Gue
rrilla
Frontal
Alpha Attack
Beta Atta
ck
Encircleme
nt
Hold…

• When is a Hold Objective Attractive?

– A market leader in a mature or declining
market
– The ‘cash cow’ position
– In a growth market where the costs
incurred by trying to build market share
outweigh the benefits
• Examples
– T-Mobile and mobile phone services
•
How to achieve a Hold Objective…Defence strategies

Flanking
Pre-emptive Defence
defence

Defence
Position
Alpha Withdrawal
Counter- Beta
offensive

Mobile
Defence
Harvest…

• When is a Harvest Objective Attractive?

– Second-rate products in mature or declining
markets
– Core of loyal customers
– Resources can be better used elsewhere
• What Happens?
– Eliminating R&D spending
– Reducing promotional budgets
– Rationalisation of product line
– Possibly increase price
Divest…

• The Organisation Sells or Shuts Down an SBU

– Poor performance
– Bad fit with rest of organisation
– Tempting offer from a potential buyer
• Strategic Focus
– Getting out as quickly and cheaply as possible
– Be careful about relationships with other products
and services
Objectives…

Objectives should…..

• Be SMART
– Specific
– Measurable
– Actionable
– Realistic
– Time bound
–
• Example:
– L’Oreal:
• To increase market share by 3% (from
15%) in the male cosmetics market by
January 2009
Conclusion

• Importance of identifying Marketing

capabilities
• SWOT analysis
• Setting objectives and strategies to
achieve them
 Analysing Consumers’ Needs,
Expectations and Buying Patterns

Marketing Strategy for

Management

MKT4010
Lecture 6
Aims

•To understand the process arising from the simple act of

buying a product or service
•To identify the key factors that influence the buying
decision process
•The characteristics of organisational buying, who buys and
how
•To provide a framework for understanding how marketers
can influence the buying decision process
 Consumer Behaviour

A Simple Black
Box Model….

Marketing Other stimuli Buyer’s black Buyer’s

Stimuli box responses

Product Product choice

Economic Buyer Brand choice
Buyer
Price Technological Dealer choice
Characteristics decision
Place Political Cultural process Purchase timing
Promotion Purchase amount
 Consumer Behaviour
Dimensions of Consumer
Behaviour: The Key
Questions

Where
do
they
buy? What
Who are
buys their
and for choice
Custom Criteria
whom? ers ?

When
How do
do
they
they
buy?
buy?
 Consumer Behaviour

Who Buys?

Five Roles identified(Blackwell et al., 2000)

•

• Initiator (begins process)

• Influencer (persuades others)
• Decider (Power/funds)
• Buyer (conducts transaction)
• User (actual consumer/user of product)
 How do they Buy?

•
Problem recognition

•
Information search
•

Evaluation of alternatives
•

Purchase decision

Post purchase behaviour

Engel-Kollat-Blackwell,
1968
 Consumer Behaviour
Evaluation of Alternatives
and Purchase

• Reduce the awareness set (solutions) to

a smaller set of brands
•

•
Produce an evoked set: a shortlist of brands
• for careful evaluation

Rank the evoked set through an application

of criteria
 Consumer Behaviour
Choice Criteria used when
evaluating Alternatives

Criteria
Technical Economic Social Personal

Reliability
Durability Price
Status
Performance Value for
Social Self-image
Style/looks money
belonging Morals
Comfort Running costs
Convention Emotions
Delivery Residual value
Fashion
Convenience Life style costs
Taste
 Consumer Behaviour
Post-Purchase Evaluation

Actual
Performance
? Expected
Performance

Cognitive Dissonance
Higher when:
Expensive product
Many Alternatives
Irrevocable Decision

Marketing
Implications: Cognitive
Reinforce wisdom Dissonance
of decision
Solve problem at root
Influences on Consumer
Behaviour
 Consumer Behaviour

The Buying
Situation
Extende
d
Problem
Solving

L
s
i
o
m vl
deti
gni
P
P
r
o
or
melb mel b
l
v s
o aH
gni
b
l auti
 Consumer Behaviour
Personal/Psychological Factors

• Influences
– values, attitudes, beliefs, opinions, perception
– motivation, concept of ‘Self’

•The subconscious (Freud)

–marketing and the subconscious
•Hierarchy of needs (Maslow)
–physiological, safety, security, status, self-
becoming needs
•Demography
 Consumer Behaviour
Social Factors

Roles and family

Male head of
household?
Changing family
structures
Reference groups
Strong identification
Opinion leaders
Social Classes Similar social
rank
Common behaviour
Affects product
quality/quantity
Culture and Sub-culture Values, generational
Organisational Buying – Some
Characteristics

ll La
a
Sm ber tr a rge
m
nu f ns r
ac
O
m e rs ns tio
u sto
c
Organis/
nal

invo
Eco

p re
Tech

purchas

e
nom

Mo
l
crite

o
v
es
n

p
e
ical
i

le
c/

d
a ri

Lengthy
negotiations
 Organisational
Behaviour
Who buys

Users Final users

Influencers
specifications
and alternatives
Buying Centre

Buyers
Select suppliers and
negotiate terms Deciders
Choose products and suppliers

Gatekeepers Control flow of information

Organisational Decision Making

Performance Feedback and Evaluation

Summary

•The black box model

•Factors influencing the buying process
•Difference between consumer buying behaviour
and organisational buying behaviour
•The buying decision making process

•Note: Surgery seminar session next week: Final

Clarification on DVD case studies
Any
Questions?
 Strategic Market
Segmentation

Marketing Strategy for

Management

MKT4010
Lecture 7
Aims

•To define the term segmentation and to explain why it is a key

concept in marketing
•Explain the process of market segmentation
•Discuss how to segment:
–Consumer markets
–Business Markets
•Understand the requirements for effective segmentation
Mass Market
What is Segmentation?

The process of identifying individuals or

organisations with similar characteristics
that have significant implications for the
determination of marketing strategy
Jobber (2004:210)
Market Segments
 Benefits of Segmenting...

Target
market
selection

Market Tailored
Differenti
segmentation marketing
ation
mix

Opportunit
ies
and
Source: After Jobber, D. (2004); Principles threats
and Practice of Marketing, McGraw-Hill
 Segmenting Consumer Markets

Consumer segmentation

Behavioural Psychographic Profile

Benefits
Benefitssought
sought Lifestyle
Lifestyle Demographic
Demographic

Purchase
Purchaseoccasion
occasion Personality
Personality

Purchase
Purchasebehaviour
behaviour Geographic
Geographic

Usage
Usage
What is a Base for Segmentation?
A variable by which people can be divided
into groups of ‘similar customers’

Source: Jobber, D. (2004); Principles and Practice of Marketing, McGraw-Hill

Segmenting Consumer Markets…

• Behaviour
– past, existing, Psychographic
potential •Personality types e.g.
customers
–introverted, extroverted
– heavy users
– brand switchers –high achiever, low
achiever
– value-sensitive
users –security, social, status,
– complimentary self-fulfilling needs
product users •Value, attitudes, life styles (Vals)
– end use users –go-getters, quietly-
– benefits sought comfortable, middle-of-
the roaders, spiritualists
–environmentalist,
business-woman, live-
for-today
•Social class
–Upper/middle/lower class
Segmenting Consumer Markets…

• Geographic
– region, district, town, city, country, continent
• Demographic
– population growth, movements, dispersion,
• Socioeconomic
– social class: A, B, C1, C2, D, E
– age, gender, family unit, income, education,
occupation, religion, ethnic group, nationality
 Segmenting Business
Markets - B2B

Situatio
Product nal Density
Usage
Attitude
s and
Needs Beliefs
By and
Location Preferen Customer
ces Size
Public ,
Private
Not for
Profit
Usage Purchase
Rates Behaviou Industry
r Classifi
cation
 Requirements for
Effective Segmentation

Identifiable Actionable
Segments Segments

Response
Difference
s

Cost/ Stability
Benefits of Over
Segm/tion Time
 Segmentation Attractiveness
and Compatibility

Internal Compatibility

High Low

Attractive Attractive
High segments segments
that match with but with poor match
company with company
Market capabilities capabilities
Segment
Attractiveness
Unattractive Unattractive
segments segments
but with that do not
Low match to match with
company company
capabilities capabilities
Selecting a Market to Segment

Level of Illustrative Need/Want

• • Product
• Competition • Definition Competitors Satisfied
• •

Health & Consumer Enhancement

• Generic •

•
• Beauty Product of Health & Beauty
•
• Aids Companies
•
•
•
• Product Gillette, Shaving
• Shaving
• Type • Equipment Remington, Bic
• •

• •

Product
•
•
• Electric Braun, Electric
• Variant • Razors Panasonic Shaving
Approaches to Forming
Market Segments

IDENTIFIERS CUSTOMER
OF CUSTOMER RESPONSE
GROUPS PROFILE

E Characteristics
E Use Situation

E
of People and
Organizations

E
E Buyers Needs
and Preferences

E
Example Segmentation: Gasoline Buyers

Road Higher-income, middle-aged men, drive 16% of

Warriors 25-50000 miles a year buy premium with a credit buyers
card… purchase sandwiches and drinks from the
convenience store… will sometimes use carwash

True Men and women with moderate to high 16% of

Blues incomes, loyal to a brand and sometimes a buyers
particular station …frequently buy premium,
pay in cash

Generation Upwardly mobile men and women - half under 27% of

F3 (Fuel, 25 years of age - constantly on the go … drive buyers
Food & Fast) a lot
snack heavily from the convenience store

Homebodies Usually housewives who shuttle children 21% of

around during the day and use whatever gas buyers
station is based on town or on route of travel

Price Not loyal to brand or station and rarely buy 20% of

Shoppers premium … frequently on tight budgets. buyers
Summary

•Identify segmentation variables and

segment the market
•Develop profiles of resulting
segments

Any
Questions?
 Market Targeting and
Positioning

Contemporary Marketing
Strategy

MKT4001
Lecture 8
Aims

• Explain the concepts of market targeting

and positioning
• Explore different targeting alternatives
and the factors influencing them
• Discuss the options involved in strategic
positioning
Targeting

What is Targeting?

• Selecting one or more segments as a focus for

the company’s offering or communications
• Jobber (2004)
 Targeting…

Target Market Strategies

Undifferentiated Company
Marketing Market
Marketing Mix

Marketing Mix
Segment 1
1
Differentiated Marketing Mix
Segment 2
Marketing 2
Marketing Mix
Segment 3
3

Segment 1
Concentrated Company
Marketing Segment 2
Marketing Mix
Segment 3

Source: Jobber, D. (2004); Principles and Practice of Marketing, McGraw-Hill

Targeting…

Choosing a Targeting Strategy

Segment Product/Market
Attractiveness Maturity

Diversity in Targeting Organisational

Buyers’ Strategy Capabilities
Preferences Resources

Opportunities for
Industry
Competitive
Structure
Advantage
 Targeting…

Target Market Strategies

Segment Attractiveness Lecture 7

• Collect Data on:

– Current sales value
– Market growth
– Profitability
• Review
– Competitors – Concentration and dependency on
market? Strengths and weaknesses?
– Customers – Power?, levels of satisfaction?
– Supplier power – raw materials, labour
– Buyer power – high or low?
 Targeting…

Types of Market Environments

(based on the stage of product/market maturity)

Sales

Sales
and
Profits
Profits

Emerging Growth Maturity Decline

Life-Cycle Stage/Time
Targeting…
Emerging Markets
•Buyer Diversity
• Segmentation limited due to
similarity of buyers’
preferences
•Industry Structure
• Typically small new
organizations
• Limited access to resources
•Capabilities and Resources
• Unique benefit (differentiation)
strategy rather than low-
cost
• First-mover advantage
•Targeting Strategy
• Single target or a few broad
segments
Growth Markets
Buyer Diversity
•Segments should exist
Industry Structure
•Numerous competitors
Capabilities and Resources
•Survival requires aggressiveness by firms
seeking large market positions
•Otherwise select one or a few market
segments
Targeting Strategy
•Three possible strategies
1.Extensive market coverage by
firms with established
businesses in related markets
2.Selective targeting by firms with
diversified product portfolios
3.Very focused targeting strategies
by small organisations
 Targeting…

Declining Markets
Mature Markets
•Buyer Diversity Buyer Diversity
• Segments should exist •Changes in consumer tastes;
•Industry Structure Brand loyals remain
• Intense competition for market Industry Structure
share •Typically organisations exit
• Emphasis on cost and service, and •Reduction of product depth
pressures on profits
Capabilities and Resources
•Capabilities and Resources
•A harvest strategy with emphasis
• Management’s objectives: cost
on productivity
reduction, selective targeting,
product differentiation Targeting Strategy
•Targeting Strategy •Focus on those targets to boost
• Firms pursuing extensive targeting profit margins
strategies may decide to exit
from certain segments
• Retained targets may be prioritised
Positioning

What is Positioning?

The face of the Business Strategy. It specifies

how the business aspires to be perceived
relative to its competitors and markets.
Aaker and McLoughlin (2006)
Positioning…

Strategic Position Options

Product
Attribut
es/
Quality
Functio
nal
Benefits
Competi
Origin tors

Emotio
nal Experi
Benefit ence
s
Positioning - Example..

Source: Lilien & Rangaswamy, 1999

Developing and Selecting Strategic Options

• Resonate with the target market

– Strategic position needs to create a difference – Value of
emotions?
• Differentiate from competitors
– Important
– Distinctive
– Superior
– Communicable
– Affordable
• Reflect the culture, strategy and capabilities of business
 Summary

Segment Target Position

•Identify •Evaluate •Identify possible
segmentation attractiveness positioning
variables and of each concepts for
segment the segment each target
market segment
•Select the target
•Develop profiles segment(s) •Select, develop and
of resulting communicate
segments the chosen
positioning
concept

Lecture 7
Any
Questions?