-Strategic Marketing Lecture Notes
Strategic Marketing Lecture Notes J.K
1- STRATEGY ANALYSIS Lecture 2 – Business Scope and the Remote Environment -
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The role of insights in strategic analysis – requires creative imagination Business scope determines your playing field – the domain of interest for the strategy to be developed The key concepts and tools for external analysis (remote environment) – constantly changing and can have huge impacts on businesses Insight It is the intuitive understanding/ underlying truth Usually not obvious nor evident, comes from connecting multiple findings, requires a leap of interpretation and thinking Imaginative, and creative It’s all about finding value
Situation analysis External environment -----> Internal environment 1) Identify the potential drivers of change 2) Determine the impact of these forces to make assumptions 3) How our organization is positioned to compete
1. Business Scope i) Specification of the organization’s mission and vision statement - unique purpose of an organization ii) Product definition – product: physical thing we sell or the need and want we satisfy iii) Product categories targeted by our organization and our products/brands competing in those categories iv) Competitors and their products/brands competing in our product categories v) Identification of market segments to be targeted vi) Time and area boundaries 2. External Analysis - Remote environment PEST (impacts of industry and firm) What is at stake? What are the macro factors that are impacting the industry and the firm? - Analysis (identify trends – current situation & likely scenarios in the future)
2
Strategic Marketing Lecture Notes J.K
Strategic gap = sales objective between market reality and sales objective = challenge! Sales/ profits
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Short-term objective Increase sales productivity/ achieve a specific task i.e. increase margins/sales/market share by x, introduce new product reaching a penetration of x, achieve x-level of trial Long-term objective Build strong brands – sustain competitive advantage (loyalty) Marketing Strategies (3 strategies & Segmentation Target Positioning STP & 4Ps) Develop alternatives and evaluation them to choose the best Good alternatives are realistic and reasonable and MECE (mutually exclusive, comprehensively exhaustive) Each alternative is made up of a combination of generic, competitive and product-market strategy, might target different segments, and have different position High-Level strategies – Generic Strategies Michael Porter’s Generic Options Cannot be both, you have to choose one and focus on it
- Monopolies may survive in unsustainable - Break-through is consumers’ heaven - Cost Leadership competes on price, aims to increase sales volume - Differentiation competes on uniqueness, increase margin/profit% - Focus competes on targeting most profitable segment, increase margin/profit% 11
Strategic Marketing Lecture Notes J.K
Lecture 7 - Product Strategies (4Ps) -
Strategies for the product line (groups of related products) Strategies for individual products (tangible) & brands (intangible) Strategies for new product development/ innovation – pioneer/ follower Levels of product strategy decisions
Product Line Strategies - A product class, a group of related products Depth = variation within each product item vs. Width = number of product items i.e. compact digital cameras 1) Product Mix – company’s entire portfolio of products, may be across different units 2) Product line – a product class, group of related products (i.e. cameras) 3) Individual product item/brand Product line - Upward stretch – add items to the higher end of the market extension - Downward stretch – add items to the lower end Adding new items in - Two way – add items to both ends the same product - Same level – add items at similar price/ quality point category Product line pruning Decision making on extending/ pruning
Removing items from the product line Depends on the type of generic strategy pursued, competitive situation, stage in PLC, consumer needs, macro-level opportunities, financial consideration
Brand leveraging Using existing brand name for the intro of new product in a different product category i.e. LV clothing and jewelry Advantages - Reduce cost of launching new product - Works best when brand name has value, well-known and relevant for new product category i.e. Uncle Toby’s oats and yoghurt bar
Disadvantages - It can damage the core value of the original brand and weaken brand equity of the leading brand (Gucci) - Old brand doesn’t help the new product because category might be too far and new product fails
Multi-brand Strategies
Family/ umbrella brand Strategies 19
Strategic Marketing Lecture Notes J.K
Lecture 8 - Pricing Strategies (4Ps) -
Methods of pricing Comprehensive approach to developing pricing strategy Strategies for adapting your prices for promotions and as responses to competitor price attacks Methods of Pricing Best solution: Mixed method – taking into account both external and internal factors (use situation analysis as an input, including objectives, high-level strategy, STP INTERNAL Cost plus - Solely based on internal costs (price to cover debt) - Internal costs are marked up by a certain %, i.e. if it costs 150 to produce an iPod you mark up by 72% and consumers pay 259 Pro: Simple Con: does not take into account external market forces Target - A specific return rate on investment is targeted (need to make 15% pricing ROI over 2 years) - Then it’s calculated how much margin we need (at a given cost level) Pro: Simple Con: still based on internal and leave out external factors EXTERNAL Competition - Deciding how much to charge depending on what the competitors based charge i.e. IKEA Head on pricing – Charge exactly the same price as competitor sets price Differential pricing – Decision to lower/ increase the price to compete 30%-50% Pro: intuitive appeal about how consumers might think lower Con: might disregard competitor’s internal cost structures (some competitors might have higher efficiencies to lower price) Consumer - Charge as much as the market will bear – start with charging a certain demand price, adjust as you go along based - Use microeconomic info (price vs. quantity demand) Auction - Prices are determined by bidding customers based Pro: Real-time price discovery Con: may alienate consumers Value based - Takes into account the exchange value (economic/perceptual) (More B-B) consumers get from using the product, -i.e. light - Often expressed as savings, in terms of costs that are not apparent for bulb the consumer at first Pro: good way to sell your pricing Con: data for calculations on what represents value may not always be available Developing Pricing Strategy THINGS TO CONSIDER Remote Regulate economic climate: environment Horizontal price fixing – colluding with competitors to set $ (Economic, Vertical – resale price maintenance, dictating to channel partners at social, minimum price
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1- STRATEGY ANALYSIS Lecture 2 – Business Scope and the Remote Environment -
-
The role of insights in strategic analysis – requires creative imagination Business scope determines your playing field – the domain of interest for the strategy to be developed The key concepts and tools for external analysis (remote environment) – constantly changing and can have huge impacts on businesses Insight It is the intuitive understanding/ underlying truth Usually not obvious nor evident, comes from connecting multiple findings, requires a leap of interpretation and thinking Imaginative, and creative It’s all about finding value
Situation analysis External environment -----> Internal environment 1) Identify the potential drivers of change 2) Determine the impact of these forces to make assumptions 3) How our organization is positioned to compete
1. Business Scope i) Specification of the organization’s mission and vision statement - unique purpose of an organization ii) Product definition – product: physical thing we sell or the need and want we satisfy iii) Product categories targeted by our organization and our products/brands competing in those categories iv) Competitors and their products/brands competing in our product categories v) Identification of market segments to be targeted vi) Time and area boundaries 2. External Analysis - Remote environment PEST (impacts of industry and firm) What is at stake? What are the macro factors that are impacting the industry and the firm? - Analysis (identify trends – current situation & likely scenarios in the future)
2
Strategic Marketing Lecture Notes J.K
Strategic gap = sales objective between market reality and sales objective = challenge! Sales/ profits
-
-
Short-term objective Increase sales productivity/ achieve a specific task i.e. increase margins/sales/market share by x, introduce new product reaching a penetration of x, achieve x-level of trial Long-term objective Build strong brands – sustain competitive advantage (loyalty) Marketing Strategies (3 strategies & Segmentation Target Positioning STP & 4Ps) Develop alternatives and evaluation them to choose the best Good alternatives are realistic and reasonable and MECE (mutually exclusive, comprehensively exhaustive) Each alternative is made up of a combination of generic, competitive and product-market strategy, might target different segments, and have different position High-Level strategies – Generic Strategies Michael Porter’s Generic Options Cannot be both, you have to choose one and focus on it
- Monopolies may survive in unsustainable - Break-through is consumers’ heaven - Cost Leadership competes on price, aims to increase sales volume - Differentiation competes on uniqueness, increase margin/profit% - Focus competes on targeting most profitable segment, increase margin/profit% 11
Strategic Marketing Lecture Notes J.K
Lecture 7 - Product Strategies (4Ps) -
Strategies for the product line (groups of related products) Strategies for individual products (tangible) & brands (intangible) Strategies for new product development/ innovation – pioneer/ follower Levels of product strategy decisions
Product Line Strategies - A product class, a group of related products Depth = variation within each product item vs. Width = number of product items i.e. compact digital cameras 1) Product Mix – company’s entire portfolio of products, may be across different units 2) Product line – a product class, group of related products (i.e. cameras) 3) Individual product item/brand Product line - Upward stretch – add items to the higher end of the market extension - Downward stretch – add items to the lower end Adding new items in - Two way – add items to both ends the same product - Same level – add items at similar price/ quality point category Product line pruning Decision making on extending/ pruning
Removing items from the product line Depends on the type of generic strategy pursued, competitive situation, stage in PLC, consumer needs, macro-level opportunities, financial consideration
Brand leveraging Using existing brand name for the intro of new product in a different product category i.e. LV clothing and jewelry Advantages - Reduce cost of launching new product - Works best when brand name has value, well-known and relevant for new product category i.e. Uncle Toby’s oats and yoghurt bar
Disadvantages - It can damage the core value of the original brand and weaken brand equity of the leading brand (Gucci) - Old brand doesn’t help the new product because category might be too far and new product fails
Multi-brand Strategies
Family/ umbrella brand Strategies 19
Strategic Marketing Lecture Notes J.K
Lecture 8 - Pricing Strategies (4Ps) -
Methods of pricing Comprehensive approach to developing pricing strategy Strategies for adapting your prices for promotions and as responses to competitor price attacks Methods of Pricing Best solution: Mixed method – taking into account both external and internal factors (use situation analysis as an input, including objectives, high-level strategy, STP INTERNAL Cost plus - Solely based on internal costs (price to cover debt) - Internal costs are marked up by a certain %, i.e. if it costs 150 to produce an iPod you mark up by 72% and consumers pay 259 Pro: Simple Con: does not take into account external market forces Target - A specific return rate on investment is targeted (need to make 15% pricing ROI over 2 years) - Then it’s calculated how much margin we need (at a given cost level) Pro: Simple Con: still based on internal and leave out external factors EXTERNAL Competition - Deciding how much to charge depending on what the competitors based charge i.e. IKEA Head on pricing – Charge exactly the same price as competitor sets price Differential pricing – Decision to lower/ increase the price to compete 30%-50% Pro: intuitive appeal about how consumers might think lower Con: might disregard competitor’s internal cost structures (some competitors might have higher efficiencies to lower price) Consumer - Charge as much as the market will bear – start with charging a certain demand price, adjust as you go along based - Use microeconomic info (price vs. quantity demand) Auction - Prices are determined by bidding customers based Pro: Real-time price discovery Con: may alienate consumers Value based - Takes into account the exchange value (economic/perceptual) (More B-B) consumers get from using the product, -i.e. light - Often expressed as savings, in terms of costs that are not apparent for bulb the consumer at first Pro: good way to sell your pricing Con: data for calculations on what represents value may not always be available Developing Pricing Strategy THINGS TO CONSIDER Remote Regulate economic climate: environment Horizontal price fixing – colluding with competitors to set $ (Economic, Vertical – resale price maintenance, dictating to channel partners at social, minimum price
24
