Chapter Six Marketing Strategy

6-2 LEARNING OBJECTIVES Describe the key elements of a business strategy Understand how to conduct a situational analysis (SWOT) Understand how to conduct a competitive analysis:

6-3 Why a Strategy? We need a plan to - state what we want to achieve and become.

6-4 ELEMENTS OF A BUSINESS STRATEGY A business strategy must address: The product markets to be served The resources that must be committed The objectives and plans needed for each functional area A business strategy can exhibit different levels of detail & analysis and can focus on horizons 2 to 20 years out: -The 2-year minimum indicates the long range of strategy -The 20-year upper limit recognizes that the difficulty of anticipating the future increases dramatically as the time horizon becomes longer.

6-5 Critical Elements in a Business Strategic Plan Determining the product market to serve (What markets do we serve with what products) Determining the level of commitment to provide resources (What level of investment in the product market are we willing to make) Determining the objectives and plans for each functional area (What are the detailed aims and action plans) 1 2 3

6-6 Product/Market Relationships – 4 basic growth strategies 1.Market penetration – existing products are heavily promoted to gain a larger share of current markets 2.Product development – seek growth by bringing new products to existing markets 3.Market development – takes current products to new markets 4.Diversification – the most risky strategy, seeks growth by serving new markets with new products

6-7 DEVELOPING STRATEGY 1.The Process for Strategies Discuss the key elements of the strategy process Discuss the drawbacks of all models 2.Situation Analysis What is a SWOT analysis What constitutes an effective SWOT analysis What is the MOST difficult tasks the firm faces in a SWOT analysis 3.The Mission Relate the role of strategy vis-à-vis the firm’s mission statement and its tactics 4.Strategic Spectroscopy Wants-Gets Grid Conceptual Map Value Chain Analysis

6-8 1.Define mission 2.Develop statement of operating principles and values 3.Define vision 4.Define goals Strategic planning foundation Track 1 Environmental scanning Strategy development Track 2 5.Define planning assumptions & implications: Develop consensus re: environment (customer/market, competition, suppliers, etc.) 6.Define total market & most attractive segments 7.Define leadership requirements, assess long-term strengths & weaknesses in attractive segments 8.Select segments and define corporate & segment strategy Business strategy Gap analysis Strategy integration and capability development Track 3 9.Define capability gaps by assessing strengths/ weaknesses against current capabilities & specific competitors in selected segments 10.Formulate strategies that yield competitive advantage 11.Appraise, test & reconcile strategy with functional plans/ needs 12.Modify goals if required, set functional and business objectives Strategy integration capability development

6-9 The Process for Strategies The key elements of the strategic process 1.The purpose of the enterprise 2.A situational analysis 3.A competitive analysis 4.Strategies, objectives, budgets and plans for strategy execution Drawbacks of the planning models: All planning models overstate the linearity and mechanistic flavor of the process; there is no a formula or rigid mechanism for the process.

6-10 Situational Analysis What is a SWOT analysis –SWOT analysis is a major component of the situational analysis; –A self-assessment framework for examining the Strengths, Weakness, Opportunities and Threats; –Strengths and weaknesses are internal to the firm; opportunities and threats are external to the firm; –Understanding SWOT factors by studying customer surveys, industry studies, focus groups and segmentation analysis. What constitutes an effective SWOT analysis – be honest; be broad; consider multiple time horizons; represents the perceptions of several individuals or groups What is the MOST difficult tasks the firm faces in a SWOT analysis – get detailed, accurate, and timely information needed; evaluate the firm’s actions and prospects honestly

6-11 Strategic Spectroscopy Wants-Gets Grid –Derives from survey data asking customers (1) to rate the company’s products on different functional attributes; (2) to indicate the degree to which each attribute is important Conceptual Map – Provides a way to visualize the relationships between abstract variables and one, or more tangible variables – Provides a means to get the mind around important, but intangible performance influencers Value Chain analysis – Compares the estimated value-added chain of two products from the same industry

6-12 HIGH IMPORTANCE Assistance in cost control OVERACHIEVEMENT UNDERACHIEVEMENT Consistent product quality and appearance Reliable delivery Sales support Fast order cycle Lead generation Access to top management HIGH PERFORMANCE Wants-Gets Grid

6-13 The Business to Business Marketplace--Now Highly Customized Pure Commodity The Business to Business Marketplace--Future Highly Customized Pure Commodity Percent of all products Conceptual Map

6-14 Share of user $ ManufacturersSpecialtyDealersUsers wholesalers %50% ManufacturersDistributorsUsers60%50% 2100% Total spending by users$10mm$15mm Value Chain Analysis

6-15 Threat of substitutes Bargaining power of suppliers Struggles between industry rivals Bargaining power of customers Threat of potential entrants FIVE FORCES OF COMPETITION

6-16 Market disruption Identifying and creating oppor- tunities for temporary advantage through understanding Stakeholder satisfaction strategic soothsaying Vision for disruption Directed at identifying new ways to serve existing customers better or new customers that no one else serves now Capability for disruption Sustaining the momentum by developing flexible capacities for: Shifting the rules Signaling Simultaneous & sequential strategic thrusts Speed Surprise Seizing initiative to gain advantage by that can be applied across many actions to build a series of temporary advantageous with actions that shape, mold, or influence the direction of nature of the competitors’ responses Tactics for disruption