1. PowerPoint Presentation by Sixit Bhatta Marketing Environment, Deriving Marketing Strategies Session 2

2. Session-1 Revisited  Marketing.  Marketing Philosophies: Different Marketing Concepts.  Holistic Marketing –Relationship Marketing –Internal Marketing –Performance Marketing. –Integrated Marketing (4Ps)

3. 4P’s of Marketing  Marketing Mix Product Features, Designs, Quality, Brand, Sizes, services, Warranty, Product Variety. Price Discounts, Incentives, List price, Credit Terms, Payment method. Promotion Sales Promotion, Advertising, Sales force, PR. Place Distribution Channel, Location, Transport

4. Steps in Marketing Management 1.Analyzing Marketing Opportunity. 2.Selecting Target Markets, Developing Marketing Strategies. 3.Developing Marketing Mix (4Ps) 4.Managing the Marketing Effort

5. Marketing Environment Analysis EnvironmentExternalCustomersCompetitorsMarket External Environment Internal Performance, Resources

6. Why Environmental Analysis Develop Marketing Strategies and Plans Strengths and Weaknesses Opportunities and Threats

7. External Environment Customers Motivations Unmet Needs Segments Competitor Performance. Brand Cost Structure Strengths and Weaknesses Current and Past Strategies Market Profitability Size Trends KSF

8. External Environment Industry Environment Porters Five Forces Threats of New Entrants. Power of Suppliers. Power of Buyers. Product Substitutes Intensity of Rivalry General Environment Demographic Economic Socio-cultural Global Technological Politico-Legal

9. Threats of New Entrants  Barriers to Entry:  Economies of scale  Product differentiation  Capital requirements  Access to distribution channels  Cost disadvantages independent of scale  Government policy  Expected retaliation

10. Bargaining Power of Suppliers Bargaining power of suppliers is high when  it is dominated by a few large companies  satisfactory substitute products are not available to industry firms  industry firms are not a significant customer for the supplier group  suppliers’ goods are critical to buyers’ marketplace success  effectiveness of suppliers’ products has created high switching costs  suppliers are a credible threat to integrate forward into the buyers’ industry

11. Bargaining Power of Buyers Buyers are powerful when  they purchase a large portion of an industry’s total output  the sales of the product being purchased account for a significant portion of the seller’s annual revenues  they could easily switch to another product  the industry’s products are undifferentiated or standardized.  Buyers pose a credible threat of backward integration

12. Product Substitutes Product Substitute are a great threat when:  customers face few switching costs  substitute product’s price is lower  substitute product’s quality and performance capabilities are equal to or greater than those of the competing product

13. Intensity of Rivalry Intensity is high when  are numerous or equally balanced  experience slow industry growth  have high fixed costs or high storage costs  lack differentiation or low switching costs  experience high strategic stakes  have high exit barriers

14. General Environment  Demographic Environment –Population Size (China/ India big markets) –Age Structure (70% of Nepalese population is below 35 years) –Geographic Distribution and Population density. –Ethnicity mix (India/ US as a market) –Family Composition (DINK, Nuclear families, Joint Families) –Birth Rates.

15. General Environment  Economic Environment –What are the interest rates/ Inflation rates. –Unemployment level –Economic growth –Currency conditions (Exports/ Imports)

16. General Environment Socio-cultural environment –Social values-Traditions, religion, values –Workforce diversity- more women in Nepal have joined workforce. –Concerns about environment. –Cultural Shifts. Cocooning Fantasy adventure (Bungee, Theme parties) Pleasure revenge (cigars, tatoos etc.) Small Indulgences (rewarding luxuries) Down-aging (symbols of youth) Being alive (healthy eating, organic products, gym) 99 lives

17. General Environment  Global Environment –Important Political Events (US presidential election, Sept 11) –Newly Industrialized countries. –Global Economy (Recession, boom)

18. General Environment Technological Environment –Product Innovations –Communication Technologies (Mobile, Internet) Landline Vs Mobile Phones. Cable Television Vs. Satellite. Banking Software. Laptop Vs. Desktop. Digital Cameras

19. General Environment  Politico-Legal –Deregulation. –Taxation –Measures towards Piracy –Security –Labor Laws

20. Internal Environment Internal Analysis Financial Sales & Market Share ProfitabilityNon Financial Customer Satisfaction/ Brand Loyalty Product Quality Brand/ Firm Associations New Product Activity Human Resources Business Portfolio Analysis

22. SWOT What the Organization is good at What are the capabilities Strengths What the organization lacks What does the organization do poorly Weaknesses Developments or conditions in the environment that have favorable implications to organization. Opportunities Pose dangers to the organizations. Threats

23. Deriving Marketing Strategies Business Vision Environmental Analysis Marketing Strategies Marketing Plans

24. Deriving Strategies Product- Market Investment Strategies Growth Directions Investment Strategies Strategic Alternatives Internal Analysis External Analysis Functional Area Strategies Bases for SCA

25. Product Market Investment Strategies- Growth Diversification Market Development Market Development Market Penetration Market Penetration Product Development Product Development Existing products New products Existing markets New markets Integration

26. Product Market Investment Strategies- Growth Market Penetration Increase Market Share Increase product usage Increase the frequency Increase the quantity Find new application for the current users Market Development Expand geographically Target new segments Product Development Add Product Features Develop new generation of products. Diversification Diversity into new product and new market. Related or Unrelated products Vertical Integration a. Forward b. Backward

27. Investment Strategies Build ShareHold HarvestDivest

28. Functional Area Strategies

29. Building Sustainable Competitive Advantage  Assets  Competencies –Sony ( Miniaturization) –Honda (Engines) –NEC (Semi conductors) –Canon (Fine Optics) –Southwest Airline (Operations) –McDonalds (standard products, same quality of services)