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Fragrance November 2007 SMiP Case V1
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Your Objective To analyse To evaluate To make strategic Decisions
Product Development Launch Brand Position ©November 2007
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Audit Section
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The marketing information system (MkIS)
environment Marketing information system Marketing managers Developing information Target markets Marketing channels Competitors Publics Macro-environment forces Analysis Planning Implementation Organisation Control Assessing information needs Marketing intelligence Internal records Distributing information Marketing research Information analysis Marketing decisions and communications Source: Kotler et al ©November 2007
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Audit Size and Structure of Industry ©November 2007
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Understanding the structure of the market
Channels for communication & distribution Suppliers to industry Industry players Customers/ segments Competitor a Customer A Supplier I Channel 1 Customer B FIRM Channel 2 Own Label Supplier II Customer C Competitor b Adapted from Porter ©November 2007 32
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The organisation’s marketing environment
The economy Cultural forces Demography Suppliers Distributors & dealers The public The organisation Social factors Customers Competitors Legal structures Political structures Technology ©November 2007 33
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Audit Products Nature of Product Life Cycle Portfolio ©November 2007
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Understanding customers’ expectations
Where value is added Potential Augmented Expected Core What the customer buys (functions & benefits) What the customer expects ©November 2007
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Audit Segmentation Industry Consumer DMU ©November 2007
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Porter’s industry analysis: The 5 forces model
POTENTIAL ENTRANTS Barriers to entry Threat of rivalry Bargaining power Bargaining power SUPPLIERS INDUSTRY Competitive rivalry BUYERS Threat of substitution SUBSTITUTES Source: Porter ©November 2007 43
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Audit Distribution and Pricing ©November 2007
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Audit Major Players - Coty Review and revise SWOT
PIMS (Profit impact of market strategy) ©November 2007
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Audit Minor Player – Scents of Time Value Chain –next slide
Create SWOT ©November 2007
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at every level, core function - strong internal communications
SUPPORT ACTIVITIES FIRMS INFRASTRUCTURE - Customer focused, Marketing taken on and understood at every level, core function - strong internal communications HR MANAGEMENT - Retain technical and knowledge based employees and recruit marketing and sales experts - Project/consulting expertise TECHNOLOGY DEVELOPMENT - Technology leaders, continuous innovation, R&D focused towards buyers needs, strength in R&D relationships I.e. Research institutes PROCUREMENT - Combined buying power. INBOUND LOGISTICS Intranet JIT OPERATIONS Efficient production (closely monitored) OUTBOUND Order handling MARKETING AND SALES Customer/ segment research Investment in Branding Relationship marketing, Key Account management SERVICE Total systems solution Consultancy services Maintenance Outsourcing, facilities networks MARGIN ©November 2007 PRIMARY FUN CTIONS
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Benchmarking to compare with ‘best of breed’
Price Marketing Technology R&D investment Sales Interpretation: Outside the circle = better than average Inside the circle = below average Growth Quality Capacity utilisation ROI Management Manufacturing Integration ©November 2007 106
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Extended SWOT Strengths Weaknesses Opportunities Threats
Internal Review Strengths Weaknesses External Review Opportunities Using existing strengths to capitalise on opportunities Prevent weaknesses from damaging opportunities Threats Prevent Weaknesses from reinforcing threats Use existing strengths to limit impact of Threats ©November 2007
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Conclusion Critical Factors for Success in the Fragrance Industry
©November 2007
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Summary p39 It is clear that the fragrance industry has a significant global presence and a large part of its success is due to carefully targeted marketing. Advertising continues to play a central role in driving up sales in a crowded market place, where the rate of new product launches continues to increase. The European market is currently the largest in the world, but in due course, the growing markets of Asia-Pacific may eclipse Europe’s position in terms of turnover and sales. Competition is likely to intensify over the next decade and growth will be fostered by both innovative product development and intelligent marketing. ©November 2007
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Strategic Options
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Strategic choice DEVELOPMENT STRATEGIES GENERIC STRATEGIES ALTERNATIVE
DIRECTIONS ALTERNATIVE METHODS Internal development Acquisition Joint Cost leadership Differentiation Focus Do nothing Consolidation Market penetration Product development Market development Diversification Source: Johnson & Scholes ©November 2007
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Evaluating strategic options
Suitability Acceptability Feasibility Adapted from Johnson & Scholes Does it solve the problem? Is it acceptable to stakeholders? Can we deliver? Establishing the rationale Screening options and criteria Returns Risk Reactions by stakeholders Cash flow Break-even Resources Competencies ©November 2007
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Porters Strategies ©November 2007
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Developing a specific position
Positioning Perceptual map Associations for positioning (Kotler) Value proposition Customer benefit Unique Profitable Sustainable Branding Brand name strategies Brand values and personality Developing existing brands ©November 2007
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How will the organisation compete in a specific market/segment?
Strategies for pioneers –technical innovation Strategies for market leaders Strategies for market challengers- market knowledge Market Information Emerging Markets Strategies for market followers - copier Strategies for nichers – segments ©November 2007
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Geographic Choice p51+ Spain Eastern Europe Middle East Latin America
Africa China India ©November 2007
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Shell directional policy matrix
Prospects for sector profitability Unattractive Average Attractive Phased withdrawal Double or quit Weak Disinvest Phased withdrawal Custodial growth Try harder Business’ competitive capabilities Average Growth leader Cash generation Leader Strong ©November 2007
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In which markets/segments will the organisation compete?
Market/segment attractiveness Unattractive Average Attractive Strongly Avoid Possibilities avoid Avoid Possibilities Secondary targets Possibilities Secondary Prime targets targets Weak (Current & potential company strengths in serving segment) Competitive position Average Strong ©November 2007
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Competitors’ likely response profiles
4 Future Goals What drives the competitor? 1 Current Strategy How it is currently competing? COMPETITOR’S RESPONSE PROFILE Likely response point? Satisfied with current position? How expansionist? Likely moves or strategy shifts? Where most vulnerable? What will provoke retaliation? 2 Capabilities Strengths, weaknesses & level of awareness 3 Assumptions About itself and industry ©November 2007 47
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Strategic Plan
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Objectives Corporate and Marketing ©November 2007
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Product Type and Range Branding Packaging Design Portfolio management
©November 2007
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New Product Development p 49/50
New Scents Sources p41 and p 43+ Technical innovation Seasonal Style – ie Light Product extensions Licensing to Names Fragrance extension ©November 2007
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Promotion Comms Mix p47+ 50 Celebrity Positioning Timing
©November 2007
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Pricing Strategy Premium Mass market price
Promotional offers on new products- gift packs etc. (Airport duty free) Lower prices for light perfumes e.g. Dolce & Gabbana (blue packaging) ©November 2007
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Distribution Online Offline Agents, distributors Retail companies
Large supermarket chains- Walmart, Tesco Airports, cruise ships ©November 2007
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Measurement and Control
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improve and create value?
Balanced scorecard How do we look to stakeholders? Financial perspective How do customers see us? Goal Measure What must we excel at? Internal perspective Customer perspective Goal Measure Goal Measure Innovation & learning perspective Goal Measure Source: Harvard Business Review How can we continue to improve and create value? ©November 2007
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The marketing information system (MkIS)
environment Marketing information system Marketing managers Developing information Target markets Marketing channels Competitors Publics Macro-environment forces Analysis Planning Implementation Organisation Control Assessing information needs Marketing intelligence Internal records Distributing information Marketing research Information analysis Marketing decisions and communications Source: Kotler et al ©November 2007
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Control Control: Monitors and corrects current performance. Import for the Marketing department to monitor and control the effort. Performance can be monitored: 1. Market performance: Sales : Using the Mkis system to identify Key performance indicators: Measure Sales targets for each agent sales team have to generate X sales and measuring the retention rates for repeat business generated by the account management team. Measuring sales V targets Market share: against objectives set customer attitudes: Satisfaction surveys Loyalty: Need to Monitor changes in these over a specific time period e.g every month/ 6 months/ 12 months and relate these back to our original objectives. ©November 2007
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2. Financial Performance Turnover Targets Profit Targets
Return on Investment Must be careful that our marketing objectives and financial objectives do not conflict. For example our longer term Marketing objectives are not to the detriment of short term financial performance may arise. 3. Efficiency of Strategy can be monitored through a detailed evaluation of the elements of the Marketing Mix. We would benefit from regular, independent Marketing audited (McDonald, 1984, Brownlie, 1996). Should provide an objective, external evaluation of both the effectiveness and efficiency of our marketing operations. ©November 2007
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Responses to competitor product launches:
4. Contingency Planning Responses to competitor product launches: Poor Investment performances: if The company does not meet its performance targets: Marketing and financial what are the fall back options. Forecasting competitive reactions Scenario planning How do we know we have got there? Implement a control system to measure and monitor CRM Programme Targeted marketing campaigns: PR and marketing etc.. Measured by customer enquiries, and use of the web site Account managers and sales staff to be measured by sales performance Any control process should include a mechanism for taking corrective action. ©November 2007
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Marketing Control systems
Adjust Mktg Objectives Set Marketing Objectives Adjust Targets Set specific targets Management action Assign responsibility Measure Performance Evaluate performance against standards Review and take action as required Control systems can operate simple feedback loops. These pre-empt problems by anticipating the effect of inputs on overall performance e.g our objective to reinvest 12% of turnover on R&D would be assigned to the MD and performance would be evaluated against actual performance. The system can be adjusted by the relevant management action and objectives altered to reflect this, keeping the system flexible. ©November 2007
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Control of Marketing activity
Product Market Share Sales Sales by market NPD ROI Repeat purchases Price Profit margin Price comparisons Market very price sensitive ? Place Channel costs Channel volume Channel growth Delivery time Stock levels Promotion Media Coverage: PR, exhibitions Sales per person/agent Awareness levels Visits to the website and enquiries ©November 2007
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Effective Control systems
Involvement: Encouraging all members of staff to contribute in target setting. E.g getting the sales teams and account management teams and finance teams to aid in the setting of targets. Target Setting: Target material should be measurable and achievable, this needs to be communicated internally throughout the company: Internal briefings and newsletters. Effectiveness: Measurement should be accurate, valid and consistent Management by exception: Attention from management needs to be directed to areas of need if targets are not met. Action: Good control systems promote action and solve problems, therefore extra resources should be made available-contingency plans. ©November 2007
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Benchmarking Need to compare SoT UK ltd. Performance against competitors to maintain current position against forecasted position and implement continuous improvement (Learning organisation). Best Practice Performance standards ©November 2007
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