1. Strategic Marketing
Topic 2: Environmental and internal analysis: market information and intelligence

2. Structure C. WHERE DO WE WANT TO BE? B. WHERE ARE WE NOW?
A. INTRODUCTION
1. Overview and Strategy Blueprint
2. Marketing Strategy: Analysis &
perspectives
B. WHERE ARE WE NOW?
3. Environmental & Internal Analysis:
Market Information & Intelligence
C. WHERE DO WE WANT TO BE?
4. Strategic Marketing Decisions,
Choices & Mistakes
5. Segmentation, Targeting
& Positioning Strategies
6. Branding Strategies
7. Relational & Sustainability
Strategies
E. DID WE GET THERE?
14. Strategy Implementation, Control
& Metrics
D. HOW WILL WE GET THERE?
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution
11. Marketing Communications
12. E-Marketing Strategies
13. Social and Ethical Strategies

3. Learning Objectives
To review the three stages/areas of the Strategic Marketing Management Process (SMM)
To define the marketing environment and its components
To review the analytical models/frameworks that can be used in the strategic analysis stage
To outline the outcome of the strategic marketing analysis 3

4. Strategic analysis
Strategic analysis is concerned with understanding the strategic position of the organisation in terms of its external environment, internal resources and competencies, and the expectations and influence of stakeholders
Johnson and Scholes (2005) 4

5. WHERE ARE WE NOW? Environmental and Internal Analysis
What are the major trends and probable changes in the marketing environment?
Who are the main competitors, and how can we differentiate our company from competition?
Who are our target customers & what are their needs?
What competitive advantages and core competences do we have? 5

6. The marketing environment
Company
Microenvironment
Suppliers
Customers
Distributors
Competitors
Macroenvironment
Political/Legal
Environment
Technological
Social
Economic 6

7. Macro (remote) environment: PESTLE model
Political Factors
Political stability
Regime orientations
Government stability
Pressure groups
Trades union power
A framework that assists in analyzing the external (remote)
environment and identifying the existing opportunities & threats 7

8. Economic Factors Business Cycles ‘Interest rates Inflation rates
Investment levels
Unemployment
GNP trends
Patterns of owndership

9. PESTLE framework for environmental analysis
Socio-cultural Factors
Demographics
Lifestyles
Social mobility
Educational levels
Attitudes
Consumerism

10. PESTLE framework for environmental analysis
Technological Factors
Levels and focuses of government and industrial R & D expenditure
Speed of technology transfer
Product life cycles
Legal Factors
Legislative structures
Anti trust laws
Trade policies
Employment legislation
Foreign trade regulation

11. PESTLE framework for environmental analysis
Environment Factors
Sustainability legislation
Green issues
Energy supply

12. Environmental impact matrix: Macro (Remote) Environment
Factor
Impact of Factor
Potential opportunity or threat
Political/legal
Increased legislation on product liability
Mild threat (-1)
Economic
Recession in key overseas markets
Major threat (-4)
Technological
Little innovation likely from competitors
Neutral impact (0)
Socio-cultural
Increased awareness of environmental protection issues
Significant opportunity (+5)

13. ENVIRONMENTAL IMPACT MATRIX: Competitive Environment
Factor
Impact of Factor
Potential opportunity or threat
Competition
Intense rivalry in industry/market place
Critical threat (-5)
Buyers
Convergence of customer requirements worldwide
Significant opportunity (+5)
Suppliers
Few suppliers dominate the industry
Threat of new entrants
Industry barriers to entry low
Threat (-3)

14. Strategic analysis of the micro (competitive) environment
Industry definition based on brand competition – Ford competing with fiat, Toyota, Nissan, Honda and not Mercedes, BMW.
Industry definition based on product competition-
Ford competing against all automobile manufacturers.
Industry definition based on form competition-
Ford competition against not only car manufacturer but against all vehicles form like cycle, ship, trucks.
Industry definition based on generic competition-
Ford might compete against companies that sell major consumer durables, houses.

15. A Model of Industry Analysis
Define industry structure and characteristics
Identify and analyze strategic groups
Identify and describe key competitors
Evaluate Key competitors
Anticipate actions by competitors
Identify new competitors
Product – market structure and market segments

16. Analysis of internal environment
Two models to use:
Resource audit
financial resources,
human resources,
physical resources,
intangible resources
Porter’s Value Chain Model:
Help analysing Firm’s Competitive Advantage and Core Competencies 16

17. Porters Five forces model

18. Competitor analysis Identifying the company's competitors
Understanding competitors objectives
Identifying competitors strategies
Assessing competitors strengths and weaknesses
Estimating competitors reactions
Selecting competitors to attack and those to avoid.

19. Types of competitors The laid back The selective competitor-
competitor-does not react quickly or strongly to a given assault.
The selective competitor-
might react to certain types of assault and not others.
The Tiger competitor-
react swiftly and strongly to any assaults
The stochastic competitor-
Does not exhibit a predictable reaction pattern.

20. A Resource Based approach to strategy analysis
Identify and classify the firm resources. Appraise strengths and weaknesses relative to competitors. Identify the opportunities for better utilization
Select strategy which best exploits the firms resources and capabilities relative to external opportunities
Strategy
Appraise the rent-generating potential of resources and capabilities in terms of : a) their potential for sustainable competitive advantage and b) the appropriability of their returns
5. Identify resources gaps which need to be filled.
Invest in replenishing, augmenting and upgrading the firm’s resource base.
Competitive Advantage
Identify the firm capabilities: what can the firm do more effectively than its rivals? Identify the resources inputs to each capability, and the complexity of each capability
Capabilities
Resources

21. VALUE CHAIN ANALYSIS: Identifying Competitive Advantage
Competitive advantage will arise through:
Providing buyer value comparable to competitors but performing value chain activities more efficiently – cost based advantage
and / or
Performing value chain activities in unique ways that create greater buyer value than competitors and hence command a premium price – differentiation based advantage 21

22. Value Chain Model

23. STRATEGIC CAPABILITY PROFILE Resource Audit
Internal area
Resource/competence
Evaluation
Physical resources
New facilities incorporating latest technology
Major strength (+4)
Human resources
Highly trained technical staff
Top scientists recruited
Minor strength (+2)
Financial resources
High gearing
Mild weakness (-2)

24. STRATEGIC CAPABILITY PROFILE Value Chain Activities
Internal Area
Resource/competence
Evaluation
Intangibles
Strong corporate image in the marketplace
Well-established brand names
Significant strength (+5)
Significant strength (+4)
Inbound logistics/procurement
Over-reliance on a limited no. of suppliers
Significant weakness (-4)
Outbound logistics
Ineffective warehouse automation
Weakness (-3)
Human resource management
High levels of absenteeism/poor industrial relations record

25. Strategic fit
‘Strategic Fit’ is the effective match and management of the environmental opportunities and threats while taking into account the organisation strengths and weaknesses 25

26. SWOT analysis
Integrates the internal and external environmental analysis
Not just a list of SWOT variables!
SWOT/TOWS Matrix can be helpful
SWOT/TOWS analysis is the alternative ways in which an organisation can use its specific strengths to capitalise on opportunities or to minimise threats and invest in available opportunities to overcome its weaknesses 26

27. SWOT / TOWS Matrix

28. SWOT (TOWS) matrix 28

29. Conclusion
Strategic marketing management (SMM) process covers 3 areas; strategic analysis, strategic choice and strategy implementation
Strategic analysis involves the collection and analysis of relevant types of information about the environmental forces and trends, and organisational resources and capabilities
External (macro) environment can be analysed using PESTLE model, while the micro environment could be examined using Porter Five forces model. The internal environment can be assessed using various models, most notably is the ‘value chain’ approach
The effectiveness of any marketing intelligence system is dependent on the frequency of collecting, interpreting, and disseminating the information required about the marketing environment & competition
SWOT analysis is an important foundation for producing realistic and meaningful strategic recommendations for the firm’s future directions 29