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• The process of developing and maintaining a fit between a compan y’s goals and
capabilities and its changing marketing opportunities
• It involves:
– Defining company vision/mission
– Specifying objectives
– Designing portfolio of products/businesses
– Coordinating functional strategies
Business
Businessunit
unit strategy
strategy
••Mission
Mission
••Business
Businessgoals
goals
••Competencies
Competencies
Functional strategy
Human
Finance Marketing
resources
1
Components of Strategy
• Scope
• Breadth of strategic domain: number and types of industries, product lines, market
segments. Reflects company mission and strategic intent (vs. Strategic fit)
• MCI... Core business (long distance), Contiguous business (fastest growing sector -
communications related products: wireless paging, Internet, local service), Content
(invested $2 billion in News Corp): Vision of Bert Roberts, Chai rman
• MMM
• PCL
• EllisDon
• Mattamy
Components of Strategy
• Goals and Objectives
• Desired level of accomplishment on one or more performance dimen sions and the
growth vector
• Resource deployments
• Allocation of human, financial and other resources across businesses, markets, etc.
• Identification of a sustainable competitive advantage
• What are the distinctive competencies or strengths relative to competitors?
• MMM
• PCL
• EllisDon
• Mattamy
• Synergy
• Improving overall efficiency and effectiveness by exploiting syn ergies across
businesses and product markets
2
Market Oriented Vision / Missions
PRODUCT-ORIENTED MARKET-ORIENTED
VISION/MISSION VISION/MISSION
COMPANY STATEMENTS STATEMENTS
PRODUCT-ORIENTED MARKET-ORIENTED
VISION/MISSION VISION/MISSION
COMPANY STATEMENTS STATEMENTS
MMM
PCL
EllisDon
Mattamy
3
The Strategic Marketing Process:
3. Marketing programs
•Industry
•IndustryStructure
Structure
Analysis
Analysis(entry/exit
(entry/exit
barriers,
barriers, buyers,sellers,
buyers, sellers,
substitutes)
substitutes)
•Competitor
•CompetitorResponse
Response
Profiles
Profiles(capabilities,
(capabilities, Company
current
current and futureactions)
and future actions)
•Economic
•EconomicAnalysis
Analysis
(costs,
(costs,break -even,
break -even,
profitability)
profitability)
•Company
•CompanyFit Fit
(strengths,
(strengths,weaknesses,
weaknesses,
resources, culture,
resources, culture,
goals)
goals)
Competitors
4
Company considerations
• History / Culture
• Resources
• Existing portfolio
• Existing customer base
– characteristics, esp. vis a vis future market
– loyalty
• Experience
– with markets
– with marketing
Business Objectives
• Maximize profits
• Survival
• Social responsibility
5
SWOT Analysis
Favorable Unfavorable
Strengths: Weaknesses:
Internal
Opportunities: Threats:
External
Opportunities Threats
6
Strengths and Weaknesses Checklist…do
this for every competitor
Performance Importance
Seriousness
High 1 2 High 1 2
Low 3 4 Low 3 4
Opportunities Threats
1. ___________________ 1. ___________________
2. ___________________ 2. ___________________
3. ___________________ 3. ___________________
4. ___________________ 4. ___________________
7
Designing the Business Portfolio
2. Identify SBUs
• Has own manager who is responsible for strategic planning and profit
• Examples?
8
3. Evaluate your Current Portfolio
9
Strategies Associated with the BCG Matrix
• Marketing/product strategy:
Build
Hold
Harvest
Divest
10
General Electric’s stoplight strategy chart
Green band = “Go” signal = Build Yellow band = “Caution” signal = Hold
ss
Market attractiveness
ne
High
ss
ve
ne
cti
ve
ra
cti
att
ra
att
all
er
ov
gh
all
Medium
Hi
er
ov
ess
Red band =
en
tiv
“Stop” signal = Divest
ac
ttr
B A
ll a
m
Low era
iu
ov
ed
M
w
Lo
Competitive Analysis
• Market structure
– Leader
– Follower
– Nicher
• Defining competition
– Industry Based Definition
– Market Based Definition
• Substitutes
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Porter’s Five Forces
Barriers to
Potential
Entrants
Intensity of
Bargaining Competitive Bargaining
Power of Rivalry & Power of
Suppliers Barriers to Buyers
Exit
Substitutes
in Other
Industries
External environment
12
Agenda for Competitor Analysis
• Introduction
• Competitive Analysis
– Strengths and Weaknesses
– Behaviors
13
Competitive Analysis
Future Goals
– Product portfolio
– Share or profit
– Product Differentiation or Cost
Leadership
14
Step 3: Marketing Programs
Marketing
MarketingMix
Mix
Place
Product Channels
Product Variety Coverage
Quality Target
TargetMarket
Market Assortments
Design Locations
Features Inventory
Price
Brand Name Transport
List Price Promotion
Packaging
Discounts Sales Promotion
Sizes
Allowances Advertising
Services
Payment Sales Force
Warranties Period Public Relations
Returns Credit Terms Direct Marketing
Marketing strategy Presents the broad marketing approach that will be used
(4 P’s) to achieve the plan’s objectives.
15
Ansoff Product-Market Expansion Grid
Potential
Entrants
Threat of
new entrants
Industry
Bargaining power Competitors Bargaining power
of suppliers of customers
Suppliers Customers
Rivalry among
existing firms
Threat of
substitute offerings
Substitutes
16
Existing Rivalry More Intense If:
• Barriers to entry
– Economies of scale
– Brand loyalties
– Capital requirements
– Switching costs independent of loyalties
– Access to distribution
– Cost disadvantages independent of scale
• Market Attractiveness
17
Expected Reactions of Firms
• If prevailing prices exceed the entry deterring price, entry will occur
18
Bargaining Power of Customers
19
Customer or Competitor Orientation?
• Which is better?
Narrow
Differentiation
Target Cost Focus
Focus
20
Market Life Cycle
Low High
Cost-to-serve
21
Changing the added value
• Questions to ask :
• What is your added value?
• How can you increase value by changing supply, buyers, suppliers, complementors, or
substitutors in your value net?
• What is the value added by other players? Should you be increasi ng or decreasing their
added values?
• Which rules are helping you? Which ones are hurting you? Rules can be for pricing,
advertising, product variety, satisfaction, etc.
• What kinds of contracts are you willing to write with your buyer s and suppliers? Do
you want Match Competition Clauses? What does this do for you?
• Do you have the power to change the rules? Does someone else have the power to
overturn them?
• Can you signal your commitment credibly
22
Changing tactics
Changing tactics
Appear Appear
Tough Soft
23
The Strategy Game
• Fishbowl. This exercise brings everybody with an ax to grind on a given issue together in one room,
with advocates of certain points of view in the center of the
• Red team / blue team. assign managers to teams representing major competitors and have them plan
the strategies they would use to beat us.
• Future mapping. This is a fancy name for a way of looking at different scenarios for the future. We
look at several alternative futures, or "end states," for our bu siness, assign a probability to each
one, and identify the forces that will determine whether that scenario will happen.
24
Strategic choices for share leaders
Fortress /
Confrontation Position Contraction /
Competitor Strategy defense Strategic
or potential
competitor withdrawal
Proactive /
Leader
Reactive
Market
Expansion
25
Flanker strategy
Confrontation strategy
26
Market expansion strategy
Contraction strategy
27
Strategic objectives for followers
Leapfrog strategy
Flanking attack
Target
Guerrilla competitor Challenger
attacks
Frontal
Attack
Encirclement strategy
28
Who should a follower attack?
Frontal attack
29
Leapfrog
Flank attack
30
Encirclement
Guerrilla attack
31
Rubbermaid’s growth strategy
1. Corporate objective is to increase sales, earnings, and EPS 15% a year, while achieving a 20% return
on shareholders’ equity
2. Pay approx. 30% of current year earnings as dividends to shar eholders while using the remainder to
fund future growth
3. Each year, 30% of sales are projected to come from new products introduced over the past 5 years. It is
planned to enter an entirely new market every 12 to 18 months
4. The objective for customers and consumers is to offer the best value possible. Highest quality
products at a reasonable price, a continuous flow of new products, and exceptional service to
customers
5. Treat all constituents fairly and consider the interests of associates as individuals
6. Aim to be an environmentally responsible corporate citizen
• Incremental growth
• Focus on growth within the company’s businesses that was responsive to customer needs and in turn,
provided value to these customers
• Leap growth
• High visibility and high vulnerability
• Win big or lose big
32
Rubbermaid’s incremental growth strategy
• To increase the value of Rubbermaid’s existing products. The key to this growth area was in
providing value to dealers, distributors, and consumers. The ke y to value is providing quality, low
cost and service
• To upscale existing products to meet today’s consumer and new design preferences. Upscaling
includes introducing new colors to existing lines
• To extend existing lines to capitalize on product successes, increase retail shelf space, and boost
sales volume
• To expand Rubbermaid’s international business as a significant growth opportunity during the
1990s
33
Implications
Value axis
High 1
B
A
2
Price 3
C D
4
Low
Power axis
Low High
Cost-to-serve
Growth markets
34
Marketing strategies for mature markets
35
Marketing strategies for mature markets
• Conditions of demand
– speed of decline, certainty of decline, existence of pockets of enduring demand,
extent of product differentiation in market, price stability
• Exit barriers
– reinvestment requirements, amount of excess capacity, age of assets, resale
market for assets, extent of facilities shares with other SBUs, extent of vertical
integration, number of single product competitors
• Divestment or liquidation
• Strategies for remaining competitors
• Harvesting
• Maintenance
• Profitable survivor
• Niche
36
Problem
Strategic issues
• Shakeout
• declining growth rate
• potential for overestimating future demand, hence over capacity
• competition intensifies as volume increases needed to cover fixed costs
• weaker businesses fail, withdraw or acquired
• Maturity
• volume stabilizes
• replacement sales dominate
• continued satisfaction and loyalty of existing customers key
• not all segments and all brands reach maturity simultaneously
• possibility of extending life via new uses, applications or creative marketing
• Decline
• divest, liquidate or hang-on?
• consolidation
37
Shakeout
• Excess capacity
• Distribution problems
38
Strategies to beat the commodity magnet
• Pro-active strategies
• Value-added strategy
• Process innovation strategy
• Reactive strategies
• Market focus strategy
• Service innovation strategy
• Strategic Alliances
• Global Companies
– International Firm
• Take our domestic practices overseas
– Multinational firm
• Customize strategies to each market
– Global firm
• Standardize strategy globally
39
Global Market Entry Strategies
• Exporting
• Licensing
• Joint Venture
• Direct Investment
40
The NewProd Scoring Model
Customer Measurement
Opportunity 1. Qualitative measurement to identify
Definition issues
2. Quantitative measurement for input
to models
Summary of Customer
Refinement
Perception Product Features
• Marketing
• R&D Preference Segments
• Engineering
• Production
Choice
“What-if” Forecasts
1. Aggregate Individuals
Evaluation 2. Awareness & Availability
41