00 Marketing Strategy Foundations

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Slide 1:

Strategic Marketing Management

What is Strategy?:

What is Strategy? A strategy is a fundamental pattern of Present and planned objectives Resource deployment Interactions of organizations with markets, competitors and environmental factors Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment , to meet the needs of markets and to fulfil stakeholder expectations

A Strategy should specify:

A Strategy should specify WHAT objectives are to be accomplished WHERE to focus (Industry, product-market) HOW to allocate resources

Components of Strategy:

Components of Strategy Scope (number and types of industries, product lines, market segments) Mission Goals & Objectives Resource Deployment Identification of Sustainable Competitive Advantage Synergy

Elements that define Strategy:

Elements that define Strategy

Hierarchy of Strategies:

Hierarchy of Strategies CORPORATE Co-ordinate activities of multiple business units BUSINESS- LEVEL Competencies, Generic Strategies, Market segments FUNCTIONAL Marketing strategies (4-Ps)

Strategic-Management Process Three Stages:

Strategic-Management Process Three Stages Strategy Formulation Implementation Strategy Evaluation

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Strategy Formulation Vision & Mission Alternative Strategies Long-Term Objectives Strengths & Weaknesses Opportunities & Threats Strategy Selection

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Ch. 1- 9 Strategy Implementation Motivate Employees Policies Annual Objectives Resource Allocation

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Ch. 1- 10 Strategy Evaluation Corrective Action Measure Performance Review External & Internal

Process of Formulating and Implementing Marketing Strategy:

Process of Formulating and Implementing Marketing Strategy Corporate Objectives & Strategy Business Level Objectives Market Opportunity Analysis forecast, mkt knowledge, customer analysis, STP Formulating strategies for specific situations New entry, growth, maturity, decline Leader, challenger, follower, niche Implementation & Control

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DEFINING THE ORGANIZATION’S BUSINESS, MISSION, AND GOALS

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Answers the question, “What business are we in?” An organization defines its business by: the type of customer served the specific needs to be satisfied the means or technology used to satisfy these customer needs BUSINESS SCOPE – (MISSION)

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Underscores the scope of an organization’s operations apparent in its business definition. Reflects management’s vision of what the organization seeks to do. Describes an organization’s purpose regarding its customers, products/services, markets, philosophy, and technology. Crystallizes management’s vision of the organization’s long-term direction and character. BUSINESS VISION Consists of a written statement that:

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Provides guidance in identifying, pursuing, and evaluating market-product opportunities. Inspires and challenges employees to do what is valued by the organization and its customers. Also applies to not-for-profit organizations. Provides direction for setting goals or objectives. Consists of a written statement that (continued) : BUSINESS VISION

Vision Statements:

Vision Statements Aditya Birla Group – to be a premium global conglomerate with a clear focus on each business Boeing – people working together as one global enterprise for aerospace leadership Heinz - to be "the world's premier food company, offering nutritious, superior tasting foods to people everywhere."

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BUSINESS VISION “Our strategic intent is to help people find better ways to do great work— by constantly leading in document technologies, products, and services that improve our customers’ work processes and business results.”

Unilever:

Unilever to make cleanliness commonplace, to lessen work for women, to foster health and contribute to personal attractiveness, so that life may be more enjoyable for the people who use our products

HUL:

HUL To meet the everyday needs of every Indian. We are committed to improving the quality of life of each and every India. Because ultimately, our future is closely linked to the future of every Indian home and the housewife who run them

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Google – Our mission is to organize the worlds information and make it universally accessible and useful Britannia – Our mission is to make every Indian a Britannia consumer Cadbury India – to attain leadership position in the confectionery and food-drinks market of India Reliance Industries – to become a major global player in the global petrochemicals business and simultaneously grow in other growth industries like energy, telecom and infrastructure

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Financial Convert the organization’s mission into tangible actions and results that are to be achieved within a specified time frame. Are divided into three major categories: Marketing Production BUSINESS GOALS OR OBJECTIVES

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Return on investment Return on sales Shareholder wealth Profit Cash flow Production Financial Marketing Market share Sales volume Marketing productivity Customer satisfaction Customer value creation Profit Customer lifetime value BUSINESS GOALS OR OBJECTIVES Manufacturing and service capacity Product and service quality

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IDENTIFYING AND FRAMING ORGANIZATIONAL GROWTH OPPORTUNITIES CHAPTER 1: FOUNDATIONS OF STRATEGIC MARKETING MANAGEMENT

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Situational Analysis Macro-environment - PEST Industry Analysis – Porters 5 forces Market Analysis, Consumer Analysis – Specific to the business Internal Analysis – Value Chain Analysis

Macro Environment (PEST):

Macro Environment (PEST) Political – Legal Environment changes in governance & regulation, political risks Economic environment Economic prospects Socio-cultural environment Trends in society, culture, lifestyle, population growth Technology environment Emerging technologies

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Level of population growth Age mix - pre-school,school-age,teens,young adult (25-40),middle(40-65),older 65 Education patterns- illiterate, highschool dropouts, highschool, degree, professnls Major proportion of population is young – softdrink, mobiles, motorbikes,ready-made garments Working couples – ready to cook, cooking range, chapati maker Population/Geographical shifts – Hyderabad, Gurgaon, Pune Changes in society /consumer, ethics – cultural constraints and family influence, conduct of business activities - VALUE

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Attitude of Indian consumer changing for foods clothing – industrialisation, women in labour force, literacy level Customer expect social obligations – better business practice, no cheating to customer, ethical advertising Changing societal values and preference – Car, mobile phones Cultural differences – product promotion Joint family – nuclear family Indian consumer – New life style, value system – satellite channels Consumerism

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SLEPT Politico-Legal Policy – Coca-cola made to leave India in 1977. 1993 came back LPG policies Legal – 1992 tanneries were closed in Kanpur by supreme court – Ganga, iron foundries – Taj Mahal Recycling laws Special interest group MACRO ENVIRONMENT

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SLEPT Economic Rise in standard of living in Rural belt – Rural disposable income Govt policies on development of infrastructure New technologies MNC’s entry into Indian untapped market MACRO ENVIRONMENT

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SLEPT Technology Computers Innovation Machine age - Digital age Hybrid cars – Gasoline and electric engine – Toxic emission less than 1/10 th of Japanese standard MACRO ENVIRONMENT Transistors x vacuum tube Xerography x carbon paper business Auto x rail/road T.V x newspaper

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Unmet or changing consumer needs. Unsatisfied buyer groups. New means or technologies for delivering value to prospective buyers. Sources of environmental opportunities : WHAT MIGHT WE DO?

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A distinctive competency describes an organization’s unique strengths or qualities, including skills, technologies, or resources that distinguish it from other organizations. WHAT DO WE DO BEST?

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Two criteria must be satisfied for a distinctive competency: Competitors cannot replicate the skill easily or without a sizeable investment in time, effort, and money. It should make a significant contribution to the benefits customers perceive, thereby providing them with superior value. WHAT DO WE DO BEST?

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GILLETTE: WHAT ARE ITS DISTINCTIVE COMPETENCIES?

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Success requirements are basic tasks that an organization must perform in a market or industry to compete successfully. WHAT MUST WE DO?

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SWOT analysis is a formal framework for identifying and framing organizational growth opportunities. S trengths W eaknesses Internal Capabilities O pportunities External Environment T hreats Organization Favorable Unfavorable - Type of Factor - SWOT ANALYSIS

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S trengths W eaknesses O pportunities T hreats What the organization is good at doing or some characteristic that gives it an important capability. What an organization lacks or does poorly relative to other organizations. Developments or conditions in the environment that have favorable implications for the organization. Pose dangers to the welfare of the organization. SWOT ANALYSIS

A strength could be::

A strength could be: Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service

A weakness could be::

A weakness could be: Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation.

An opportunity could be::

An opportunity could be: A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor.

A threat could be::

A threat could be: A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.

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SAMPLE SWOT ANALYSIS FRAMEWORK S trengths W eaknesses Internal Factors O pportunities External Factors T hreats Management Marketing Manufacturing R&D Finance Offerings Economic Competition Consumer Technology Legal/Regulatory Industry/Market Structure

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Which strengths represent distinctive competencies? Do they compare favorably with what are believed to be market or industry success requirements? Does a pattern emerge from the SWOT analysis? Which weaknesses disqualify the organization from pursuing certain opportunities? Questions to ask after a SWOT analysis: SWOT ANALYSIS

Bharti Airtel - Strengths :

Bharti Airtel - Strengths Bharti Airtel has more than 65 million customers (July 2008). It is the largest cellular provider in India, and also supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers. Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia - and Sing Tel, with whom they hold a strategic alliance. This means that the business has access to knowledge and technology from other parts of the telecommunications world. The company has covered the entire Indian nation with its network.

Bharti Airtel - Weaknesses:

Bharti Airtel - Weaknesses An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field. Until recently Airtel did not own its own towers, which was a particular strength of some of its competitors such as Hutchison Essar . Towers are important if your company wishes to provide wide coverage nationally. The fact that the Airtel has not pulled off a deal with South Africa's MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature.

Bharti Airtel - Opportunities:

Bharti Airtel - Opportunities The company possesses a customized version of the Google search engine which will enhance broadband services to customers. The tie-up with Google can only enhance the Airtel brand, and also provides advertising opportunities in Indian for Google.

Bharti Airtel - Opportunities:

Bharti Airtel - Opportunities Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions.

Bharti Airtel - Opportunities:

Bharti Airtel - Opportunities Despite being forced to outsource much of its technical operations in the early days, this allowed Airtel to work from its own blank sheet of paper, and to question industry approaches and practices - for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns.

Bharti Airtel - Opportunities:

Bharti Airtel - Opportunities The company is investing in its operation in 120,000 to 160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable - using its 'Matchbox' strategy. Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers. This new business will control more than 60% of India's network towers. IPTV is another potential new service that could underpin the company's long-term strategy.

Bharti – Airtel Threats:

Bharti – Airtel Threats Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5.6% stake in the Airtel business sold it back to Airtel , and instead invested in its rival Hutchison Essar . Knowledge and technology previously available to Airtel now moves into the hands of one of its competitors. The quickly changing pace of the global telecommunications industry could tempt Airtel to go along the acquisition trail which may make it vulnerable if the world goes into recession. Perhaps this was an impact upon the decision not to proceed with talks about the potential purchase of South Africa's MTN in May 2008. This opened the door for talks between Reliance Communication's Anil Ambani and MTN, allowing a competing Inidan industrialist to invest in the new emerging African telecommunications market. Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market.

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