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Subject management strategy

Chapter 1 market led strategies management

The marketing concepts and market orientation

1.1.1 Evolving definitions of marketing

Marketing is the process of planning and executing the conception pricing planning
distribution of ideas goods and services to create exchanges that satisfy individual and
organizational objectives.

Figure 1.1 mutually beneficial exchanges

Marketing involves the following:

 Culture : marketing may be expressed as the marketing concepts

 Strategy: as strategy marketing seeks to develop effective responses to changing
market environment by defining market segments, and developing and positioning
products offering for those target markets.
 Tactics: marketing as tactics is concerned with the day to day activities of products
managements pricing distribution and marketing communication such as advertising
personal selling publicity and sales promotion.
1.1.2 market orientation

Market orientation is an approach to business that prioritizes identifying the needs and
desires of consumers and creating products satisfy them.

Figure 1.2 components and context of market orientation

From this work a number of components and the context of marketing are proposed (see
figure 1.2)

 Customer orientation :
 Competitor orientation :
 Interfunctional coordination:
 Organizational culture:
 Long term creation of shareholder value :
The resource based view of marketing

The resource based view of marketing is a managerial framework used to determine

the strategic resources a firms can exploit to achieve sustainable competitive advantage.

Fig ure 1.3 marketing approaches

Three main alternative approaches are apparent (see figure 1.3)

 Product push marketing

 Customer led marketing
 Resource based marketing
Organizational stakeholders

Organizational stakeholders that has interest or concerns in an organization

Figure 1.4 organizational stakeholders

 Shareholders
 Employees
 Managers
  Customers
 Distribution
 Suppliers

1.3.1 the contribution of marketing to stakeholders objectives

There is increasing evidence that firms which do well in the marketplace also do well
in financially adding to the value of the firm for shareholders.

Figure 1.5 shows the effect of market oriented culture on firm activities and performances.

Figure 1.5 marketing and performance outcomes

Marketing fundamental

Figure 1.6 product and process improvements

The role of marketing in leading strategic managements

In order for strategic managaement to cope with the changing marketing environment
there is a need for it to become increasingly market led.

Figure 1.7 the role of marketing in the organization

1.5.1 identification of customer requirements

 The first critical task of marketing is to identify the requirements of customers and to
communicate them effectively throuhgout the organization.

1.5.2 deciding on the competitive positioning to be adopted

Recognizing that markets are heterogeneous and tyically made up of various market
segments each having different requirement from essentially similar offerings leads to the
need to decide clearly which target market or markets organization will seek to serve.

1.5.3 implementing the market strategy

The third and arguably the most difficult key task of marketing is to marshal all the
relevant organizational resources to plan and execute the delivery of customer satisfaction.
Chapter 2 strategic marketing planning

Figure 2.1 strategic fit

Defining the business purpose or mission

2.1.1 mission formulation and statements

Formulating the mission into a brief and concise statements that can be communicate
across the organization can help engender a sense of common purpose and also provide
guidelines for how decisions will be made and resource allocation prioritised in the future.

Figure 2.2 components of mission

1. Strategic intent: Hamel and Parahalad cite examples of strategis intent for Komatsu
( earthmoving equipment manufacturers) as being to encircle Catepillar
2. Values of the organisation: should be spelt out to set the ethical and moral tone to
guide operation
3. Distinctive competencies of the organization: should be articulated clearly starting
with differentiated the organisation from others of its kind
4. Market definition : in terms of major customers targets that the organisations seeks to
serve and the function or needs of those customer that will be served.
5. Positioned: in the marketplace
The marketing strategy process

Once the purpose of the organisation has been defined the marketing strategy can be
crafted to help achieve that purpose.

Figure 2.3 the marketing strategy process

Establishing the core strategy

2.3.1 Analysis of organizational resources

Any organization could create a long list of the resources has at its disposal.

The product portfolio

A key aspect of understanding an organization’s resources is to undertake a portfolio

analysis of the various offerings it has available on the market.

Figure 2.4 product types in the portfolio

portfolio planning

1. Development of business strategies and allocation of resources (both financial and

managerial).
2. Analyzing portfolio balance.

Figure 2.5 balancing the business portfolio

Figure 2.6 unbalanced present focused business portfolio

Figure 2.7 unbalanced future focused business portfolio

2.3.2 Analysis of the market served

An analysis of the markets in which the company operates, or wishes to operate, can
serve to throw into focus the opportunities and threats facing the company.

2.3.3 SWOT Analysis

The above analysis of organisational strength and weaknesses (essentially an internal

focus) can be brought together with the analysis of the market (an external focus) to creaate a
SWOT (strength weaknesses opportunities threats) analysis (see figure 2.8).

Figure 2.8 SWOT Analysis

Figure 2.9 SWOT Strategic implication

2.3.4 core strategy

On the basis of the above analysis the company seeks to define the key factors for
success (KFS, sometimes termed criminal success factors) in its particular markets.

Expand the markets

Market expansion can be achieved through attraction of new users to the products or
service, identifying new uses for the product developing new product and services are
simulate the markets.

Figure 2.10 strategies focus

 Increase share

Increasing market shar, especially in mature markets, usually comes at the expense of
existing competition.

Improving profitability

With existing level or even reduced levels of sales profitability can be improved
through improving margins.

Creation of the competitive postioning

The competitive positioning of the company is a statements of market targets, IE

where the company will compete, and differential advantage, or how the company will
compete.

2.4.1 markets targets

While the discussion of core strategy required an analysis of customers and

competitors to identify potential opportunities and threats competitive positioning selects
those targets most suited to utilising the company’s strength and minimising vulnerability due
to weaknesses.

2.4.2 differential advantage

 A differential advantage can be created out of any of the company’s strength or
distinctive competencies relative to the competition.

Figure 2.11 routes to competitive advantage

Implementation

Once the core strategy and the competitive positioning have been selected the task of
marketing management is to implement those decision through marketing efforts.

2.5,1 marketing mix

The marketing mix of products price promotion and distribution is the means by
which the company translates its strategy from a statement of intent to efforts in the
marketplace.

2.5.2 organisation
 Under a functional organization the marketing department consists of specialist in the
various marketing activities reporting to a marketing coordinator (manager or director).

2.5.3 control

Ambler report the most important marketing metrics used by companies are:

1. Relative perceived quality

2. Loyalty/retention
3. Total number customer
4. Customer satisfaction
5. Relative price
6. Market share
7. Perceived quality
8. Complaints
9. Awareness
10. Distribution/ availability

Chapter 3 the changing market environment

A framework for macroenvironment analysis

The leading candidates is a change in the nature of change from continous (but
incremental) to discontinous because when discountinous change makes customer requests
unpredictable strategies leverage shifts from efficiency to flexibility and responsiveness and
to investment that enables a firm to sense unanticipated change earlier and coordinate an
unprecendented response to it faster.

Figure 3.1 pest analysis of the macroenvironment

The economic and political environment

In attempt to bolster their economies government adopted massive fiscal stimulus

packages and reduced interest rates to record low levels.

Figure 3.2 demand for MBA programmes and economic cycle

Figure 3.3 the economic and political environment

Figure 3.4 social and cultural environment

The social and cultural environment

 Demographic change
The western demographic time bomb has started to have an impact on diverse
businesse.
 The grey market
In the developed West the over 60s age group currently makes up around 23 percent
of the population and is predicted to rise to nearer one third by 2050 (and projected to
grow by 56 percent between 2015 and 2030 worldwide).
  The youth market
At the other end of the spectrum the youth market has also become more affluent and
poses new opportunities for markets.
 Multi ethnics societies
Many Western societies are becoming increasingly multi ethnics.
 Changing living patterns and lifestyle
There has also been an increase in single person household predicted by Euromonitors
to be the fastest growing household profile worldwide, not just in the West between
2014 and 2030.

3.3.1 social cultural and environmental pressures on organisation

. Customers are becomig increasingly demanding of the products and services they buy

The techonological environment

The latter part of the twentieth century saw technological change and development
impact on virtually every industry sector.

3.4.1 Technological pressures on organization

Technology continous to develop at a bewildering pace, affecting not just the high-
tech industries such as telecommunication and personal computers but also other industries
that makes use of the new technologies.

Changes in marketing infrastructure and practices

In many markets increased level of competition, both domenstic and international are
reaching unprecedented levels.

3.5.1 globalization of markets

Technology has made product more available and potential consumers more aware of
them.

3.5.2 the role of marketing

 The role of marketing in the modern corporation has been subject to for reaching
reappraisal.

New strategies for changing macroenvironment

In reaction to the above a number of cirtical issues are emerging for marketing
management and theory.

3.6.1 Marketing strategies

However to suggests that firms need to develop new strategies as times changes may
not go far enough.

Sheth challenged conventional marketing thinking along the following lines:

 Global positioning :
 The master brand :
 The integrated enterprise and end user focus:
 Best in class processes:
 Mass customisation:
 Breakthrough technology:

Figure 3.5 the shift in strategy for delivering shareholder value

The five forces model of industry competition

The five forces model is not merely of use to commercial organizations.

Figure 3.6 five forces driving competition

3.7.1 Rivalry among existing companies

A prime sources of competition in any industry is among the existing incumbents.

This rivalry is likely to be most intense where a number of conditions prevail:

 Where the competition in the industry are roughly evenly balanced

 During periods of low market growth
 Where exit barriers are high
 Where product differentiation is low
 Where fixed costs are relatively high
3.7.2 The threats of market entry

A number of conditions make market entry more likely. Entry barriers can be low
where the following hold:

 Costs of entry are low

 Existing or new distribution channels are open to use
 Little competitive retaliation is anticipated
 Differentiation is low
 There are gaps in the markets

3.7.3 The threat of substitutes

New entrants may use the existing technology of the industry or they may attempt to
revolutionise the market through leapfrogging.

Substitution can increase competitiveness of an industry for a number of reasons:

 By making existing technologies redundant:

 By incremental product improvement :

3.7.4 Bargaining power of suppliers

Suppliers tend to have more bargaining power where the following hold:

 Suppliers aare more concentrated than buyers :

 Cost of switching suppliers are high :
 Suppliers offering are highly differentiated :

3.7.5 bargaining power of buyers

Buyers tend to be more powerful in the supply chain where the following is ture

 They are more concerned than sellers

 There are readily available alternative sources of supply
 Buyers switching cost are low

3.7.6 competitiveness drivers

 Taken together these five forces offer a useful framework for assessing the factors
likely to drive competition.

The Product life cycle

Its premises are that:

 All products have a limited lifespan until a better solution to the customer’s problems
comes along.
 Life cycle of products follow more or less predictable patterns or phases ( see figure
3.7)
 Market condition opportunities and challenges vary over the life cycle.
 Strategies need to adapt over the life cycle.

Figure 3.7 the product life cycle

Figure 3.8 airbus A380’s development costs were E11 bn

Figure 3.9 sales of ipods

Figure 3.10 US car sales

Strategic groups

A strategic group is composed of firms within an industry following similar strategies

aimed at similar customers or customer group.

Figure 3.11 map of strategic group in the US automobile market

Industry evolution and forecasting

The critical issues to be addresse within an industry depend on its evolutionary stage.
Figure 3.12 industry evolution

Environmental stability

A limitation of Porter’s Industry Evolution Model is the rigid association of

technological and marketing uncertainty with only the emerging stage of an industry.

Figure 3.13 Environmental turbulence

Space analysis

Space (strategic position and action evaluation) analysis extends environmental

analysis beyond the consideration of turbulence to look at industry strength and relates this
to the competitive advantage and financial strength of a company.

Figure 3.14 space analysis

The advantage matrix

Once strategic group within a market have been identified it becomes apparent that
the group have differing levels of probalility.

Chapter 4 customer analysis

What we need to know about customer

4.1.1 information on current customer

The answer is not always abvious as there may be many actors in the purchase and
use of particular product or service.

Figure 4.1 who is the customer?

The roles are as follows:

1. The initiaor: This is the individual ( or individuals) who initiates the search for a
solution to the customer’s problem.
2. The influencer: Influencer are all those individuals who may have some influence
on the purchase decision.
3. The decider: Taking into account the views of initiators and influencers some
individual will actually make the decision as to which product or service to purchase.
4. The purchaser: The purchaser is the individual who actually buys the product or
service.
5. The user: Finally comes the end user of the product or service the individual who
consumes the offer.

Figure 4.2 understanding customers-the key question

4.1.2 Information on future customers

The above issues have been concerned with today’s customers.

Marketing research
 The use of marketing research service by a variety of organization, from commercial
firm to political parties, has increased dramatically in recent years.

4.2.1 company records

An obvious but often under-utilised, starting point for gathering marketing data is
through the effective use of the company’s own records.

Figure 4.3 marketing research methods

4.2.2 Off the peg research

 Much basic information such as market sizes and growth rates, broad social and
economic trends customer firms and competitor firms is already available in some form or
another. Crouch and Housden (2003) classify three main types off the peg research:

1. Research using the very large body of already published data, usually termed
secondary or desk research.
2. Research using data available from regular market survey of sydicated research.
3. Research in which the method of data collection is shared, but the data are not.

Secondary desk research

Secondary data vary dramatically in quality, both from country to country and from
supplier to supplier within a particular country.

Primary research

Primary or field research is undertaken where the secondary sources cannot provide
the detail of information required to solve a particular problem or to sufficiently aid the
decision making.

Syndicated research

Syndicated research occurs where a group of research buyers share the costs and the
finding of research among themselves .

Shared research

The final type of research to be classified as off the peg is research where some of the
costs and fieldwork are shared by a number of companies but the result are not.

4.2.3 Tailor made research

 Tailor made research in contrast to off the peg, provides the organization undertaking
the research the flexibility to design the research to exactly match the needs of the client
company.

Quantitative research

Quantitative research techniques includes surveys, observation methods and

experimnetation of one type or another.

Figure 4.4 uses of qualitative research

Figure 4.5 uses of survey

Figure 4.6 uses of experimental

The marketing research process
 A typical segmentation and positioning research project might combine the use of
several of the techniques described above to investigate a particular market.

Figure 4.7 stages in a comprehensive marketing research project

Problem definition

Typically a series of discussion between marketing research personnel ( internal or

external to the company) and marketing decision markers are necessary to ensure that the
research project is tackling the correct issues.

Exploratory research

As a part of problem definition and a starting point in the research process itself
exploratory research will be used to identify information gaps and specify the needs for
further research.

Quantitative research

Such a quantitative study might ask respondent to evaluate competing products on a

series of attributes that have been identified as important during the qualitative research.

Analysis and interpretation

Following data collection statistical techniques and models can be employed to turn
the data generated into meaningful information to help with the segmentation.

Organizing customer information

 Information is organized within the company through the marketing information
system (MIS).

Figure 4.8 Marketing decision support system

Raw data

The data are stored in various forms (EG on paper in peoples heads on computer).

Statistical techniques

The processes available to synthesise and summarise the raw data are called statistics.

Market models

A model is a representation of the real world.

Managerial interface

If the information system is to be of value to the marketing decision marketing

decision maker, they must have access to that system such a way as to facilitate and
encourage easy use.

Marketing decision support system

Implementation of MDSS in marketing has,however, been slower than peredicted but

with the advent of PC’s and user friendly programs and increased storage and programming
capabilities allowing for almost instant management information the use of decision support
system in marketing is now well established.

Chapter 5 competitor analysis

Competitive benchmarking

Competitive benchmarking is the process of measuring your company’s strategies and

operation againsts best in class companies both inside and outside your own industry (Swain
1993).

5.1.1 Identifying who to benchmark againsts

Industry leaders are obvious firms to compare your own activities againsts
5.1.2 Identifying what aspects of business to benchmark

All aspects of business across the complete value chain (see below) are candidates
for benchmarking.

5.1.3 Collecting relevant data to enable processes and operation to be compared

Data on one’s own operation may be relatively easily available but where
competitors are benchmarked commercial secrecy may make access to relevant data
difficult.

5.1.4 Comparison with own processes

The final stage in the benchmarking process is to compare and contrast the
processes of the identified best in class organization with the firm’s own processes to
identify aaction that need to be taken as a consequences and the setting up of processes to
measure and monitor improvements

The dimension of competitors analysis

 In the medium term the focus of competitor analysis must be firms within the same
strategic groups as the company concerned.

Figure 5.2 the components of competitor analysis

Lehmann and Winer (1991) suggests four main stages in competitor analysis Figure 5.2

1. Assesing competitor current and future objective

understanding what the competitor is setting out to achieve can give clues as to the
direction it will take and the aggressiveness with which it will pursue that direction.
2. Assessing the competitor current strategies
By understanding the strategies used by competitors in pursuit of their goals and
objectives the firm can identify opportunities and threats arising from competitors.
3. Assessing competitors resources
The asset and capability profile of competitors shows what they are currently able to
do.
4. Predicting competitors future strategies
By combining the above analyses the firm can begin to answer perhaps the most
fundamental question in competitor analysis:

5.2.1 Assesing competitor current and future objectives

Understanding the goals or objectives of competitors can give guidance to strategy

development on three levels ( see figure 5.3).

5.2.2 Assessing competitor current strategies and activities

Assessing the current strategy involves asking the basic question: what exactly is the
competitor doing at the moment? (see figure 5.4)

5.2.3 Assessing competitor capability profiles

 The above discussion has highlighted what the competitor is seeking to achieve and
what it is doing now.

Figure 5.6 competitor resources

Lehmann and Winer (1991) suggests concentrating the analysis under five key competitor
abilities

1. Ability to conceive and design

Assessing the ability of a competitor to innovate will help the firm to predict the
likehood of new product being brought to market, or of new technologies being
employed to leapfrog existing product.
2. Ability to produce
In manufacturing industries this will include production capacity and utilisation, while
in service industries capacity to deliver the service will be critical.
3. Ability to market
Despite strong innovation and production abilities a competitor may be relatively
weak at marketing its products or service to customer.
4. Ability to finance
Financial resources act as a constraint in any organization.
5. Ability to manage
The characteristic of key managers can send clear messages on strategic intention.
5.2.4 predicting competitor future strategies
the ultimate aim of competitor analysis is to determine competitors response
profile that is a guide to how a competitor might behave when faced with various
environmental and competitive changes.

choosing good competitors

when a company chooses to enter a market it also chooses its competitor

it has been said that the inability of commanders to obtain and use military
intelligence is one of the major reason for display of military incompetence.