Strategic Marketing

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Johan Reyneke 4 October 2021

Strategic Marketing BCO211

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Recap from last week

Todays lecture

Situation Analysis

The 5 C’s

Market analysis

Company Analysis

Industry Analysis

Macro environment analysis

Profitability and productivity analysis

Todays Lecture

Marketimg Audit10

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What is strategy?

- and why is it important?

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Strategy Definitions:

• “Strategy: a plan, method or series of actions designed to achieve a specific goal or effort.” – Wordsmyth Dictionary

• “Strategy is the direction and scope of an organization over the long term which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations.” – Gerry Johnson, Kevin Scholes and Richard Whittington

What is strategy?

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Marketing strategy role?

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Corporate Strategy

Marketing Strategy

Brand Strategy

Communication Strategy

PR Strategy

Media Strategy

ETC.

Sales Strategy HR Strategy IT Strategy ETC.

Business Strategy

Legal, financing, structure, corporate governance

How is the business going to compete (products, TM etc)

How does the functional part of the business contribute to the overarching strategies.

Tactics, processes, operational level

Levels of strategy has to flow seemlessly (and inform down) into each other and deliver back up the hierachy

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Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

—Sun Tzu,

Oncubanews.com

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“As a business discipline marketing is the art and science of creating value by designing and managing viable market offerings” (Chernev, 2019) • Function of a business like Finance, HR, IT, etc? • Customer centric business philosophy? • Moving products from a concept to customers? • Set of functions (4P’s) or a process? • Marketing is all of these, it is a valuable integrated function, skill and

expertise that flows through the company. We will see why throughout this course.

• Marketing = Sales ? • Marketing = Advertising

The role of marketing?

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“Marketing aims to create superior value for target customers in a way that enables the company and its collaborators to achieve its goals.”

(Chernev, 2019)

Identifying Value – Target market and competitive analysis

Designing Value – Product, brand, 4P’s

Communicating Value – Communication mix

Delivering Value – Distribution (Digital, retail, experience)

Creating valueJoe ❯😁

What forms can value take?

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• Strategy vs Tactics

• Strategy aims to define the target market and the value that the company will provide. Target market and value proposition are the two key components of strategy.

• Tactics are the attributes and the offering that will create the value in the market. The actual activities that will give life to the strategy.

Marketing strategy and tactics

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• Medium • Offer • Journey

Marketing Strategy

Target Market 1

Target Market 2

Target Market 3

Value Proposition 1

Value Proposition 2

Value Proposition 3

Tactics Tactics Tactics

• Medium • Offer • Journey

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Three types of markets

Business to Consumer (B2C) Markets where the offerings (products or services) are aimed directly at the end user.

Business to Business (B2B) Similar to B2C except the customer is a business.

Consumer to Consumer (C2C) Markets where companies / brands facilitate the interaction between customers.

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• Being able to choose the correct markets is vital for the success of the company.

• Important questions to ask when considering taret audience: • Who is the audience? • Why are they important? • What are their characteristics? • What do they think and do? • What influences their decisions?

• Target market history: • Henry Ford

Target Market

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• Two overarching aspects of target market selection involves NEEDS and PROFILE.

• Customer needs are the ”problems” customers have that you are hoping to solve with your product or service.

• Customer profile – who are they, what do they do, where do they do it, when do they do it and why do they do it.

• Demographics: - age, gender, income, occupation, education, religion, social class, household size, ethnicity, nationality.

• Geolocation: place of residence, place at this moment in time. • Psychographics: personality, values, attitudes, interests, lifestyle, • Behaviour: shopping habits, frequency of purchase, quantity of

purchase, price sensitivity, loyalty, social and leisure activities.

Target Market

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• The broad market players in the value exchange

• Value has to be created between all.

• It is important to note that this relationship needs to be seen in context of customer needs and not single markets e.g:

Blockbuster from 9,000 stores to closed doors.

• Share of wallet considerations.

Target Market

Customers

The Company

CompetitorsCollaborators

Context

The The 5-C’s framework, Chernev, 2020.

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• The Company • The customer (current/potential/third party) • The competitor (direct and indirect) • Collaborators (suppliers, manufacturers, distributors, service providers) • Context:

• Physical context (Natural resources, climate, geography etc) • Economic context (economic activity, inflation, interrest rates etc) • Regulatory context (laws, taxes, licence requirements import export tarrifs) • Technological context (Processes, skills, resources, design) • Sociocultural conext (religion, value system, lifestyles etc)

Target Market

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• Marketing positioning and value proposition (next week) • Situation analysis

– Market analysis – Marketing audit – Market measurement – Profitability and productivity analysis – Competitive environment

Todays lecture

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Marketing Planning Process Without understanding the market factors and the environment where you will operate in you will not be able to develop an effective and efficient strategy that aligns company resources with customer needs.

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Situation analysis

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• Situation anaylsis cosists of: – Market analysis – Marketing audit – Market measurement – Profitability and productivity analysis – Competive environment analysis

Situation analysis

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• Which factors would you consider when conducting a market analysis?

Market analysis

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• Which factors would you consider when conducting a market analysis? • What are the two main spheres of influence in a market?

Market analysis

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Target Market

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• The 5 C’s model is important in market analysis and key in ensuring the company is able to add value to the customers.

Target Market

Customers

The Company

CompetitorsCollaborators

Context

The The 5-C’s framework, Chernev, 2020.

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• The customer (current/potential/third party) • Selecting the correct customer is NB because the aim of a company is to create

products/services that adds value to the customer. • Customer needs and profile = what value does the company need to create and

how can they communicate that to the customer. • The chosen target customers must be able to provide value to the company and

collaborators. • The company and collaborators need to create superior value in relation to the

competition.

Target Market

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Target Market

Customers

The Company

CompetitorsCollaborators

Context

The The 5-C’s framework, Chernev, 2020.

Value

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• The customer (current/potential/third party) • Selecting the correct customer is NB because the aim of a company is to create

products/services that adds value to the customer. • Customer needs and profile = what value does the company need to create and

how can they communicate that to the customer. • The chosen target customers must be able to provide value to the company and

collaborators. • The company and collaborators need to create superior value in relation to the

competition. • The choice of target customer drives all other components of the 5 C’s framework.

Target Market

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Target Market

Customers

The Company

CompetitorsCollaborators

Context

The The 5-C’s framework, Chernev, 2020.

Resources required to create value

Competitor set aiming fullfil the same needs

Collaborators required to create value

The effect of the context

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• The competitors (direct and indirect) • Knowledge of competitors are key to create supperior value • Competitor identification should be relative to customer needs and not industry. • This means competitors in one market can be collaborators in another market. • Is also means the product range within a company can compete with each other.

Target Market

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Target Market

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• Collaborators (suppliers, manufacturers, distributors, service providers) • Companies do not always have all the resources needed to compete or develop

value. • Often resources that would be costly and time consuming to develop will be

outsourced to collaborators. • Suppliers, manufacturors, distributors, R&D, service providers, external sales

force, advertising agencies, marketing research.

Target Market

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• The Company • Ability to create market value dictated by resources and objectives. • Objectives/goals: monetary, strategic, etc. • Resources enables value creation – collaborate or acquire.

Target Market

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• The Context: – Physical context (Natural resources, climate, geography etc) – Economic context (economic activity, inflation, interrest rates etc) – Regulatory context (laws, taxes, licence requirements import export tarrifs) – Technological context (Processes, skills, resources, design) – Sociocultural conext (religion, value system, lifestyles etc)

Target Market

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The Value Proposition

Company

CollaboratorCustomer

Competitors

Value

Va lue

Value

Va lue

Value

Cost and benefit calculation determines the value

Defining the value exchange, Chernev, 2020.

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The Value Proposition

Company

CollaboratorCustomer

Value exchange

Optimal Value Proposition

The 3 V market value principle, Chernev, 2020.

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”Whereas a company’s strategy determines its target market and the value it seeks to provide to relevant market participants, tactics determine the specific offering that will deliver the value outlined in the strategy.” Chernev, Alexander. Strategic Marketing Management - The Framework, 10th Edition (p. 21). Cerebellum Press. Kindle Edition.

The market offering

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The market offering

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7 attributes that define the market offering:

The market offering

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7 attributes that define the market offering: – Product – Service – Brand – Price – Incentive – Communication – Distribution

The market offering

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The market offering

Product

Service

Price

Incentive

Communication

Distribution

Brand

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7 attributes that define the market offering: – Product – Service – Brand – Price – Incentive – Communication – Distribution

The market offering

Designing value

Communicating value Delivering value

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7 attributes that define the market offering: – Product – Service – Brand – Price – Incentive – Communication – Distribution

The market offering

Product

Price

Promotion

Place

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Market Analysis

The Market Value Map, Chernev, 2020.

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• Different levels of analysis • Company – SWOT • Market – Market Value Map • Industry – Porters 5 Forces • Macro-environment - PESTEL

Situation Analysis

Macro - environment

Industry

Market

Company

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Company Analysis

WeaknessesStrenghts

ThreatsOpportunities

Internal controlable factors

External uncontrolable factors

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Market Analysis

The Market Value Map, Chernev, 2020.

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Industry and Competitor Analysis

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New entrants

Substitutes

Suppliers power Buyer powerRivalry

Rivalry amongst existing competitors

• Number of competitors • Diversity of competitors • Growth rate • Bariers to exit • Switching costs • Brand loyalty

Threat of new entrants • Econmies of scale • Capital investment • Access to distribution • Switching costs • Brand loyalty

Bargaining power of buyers • Number of buyers & sellers • Threat of backward

integration • Size of buyers • Price sensitivity • Product differentiation

Bargaining power of sellers • Number of buyers & sellers • Threat of forward integration • Size of sellers • Price sensitivity • Product differentiation

Threat of substitutes • Number of substitutes available • Buyer propensity to change • Price performance of substitute • Cost of substitution Porter’s 5 Competitive Forces

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• The attractiveness of an industry is affected by the level of competitiveness.

• What does increased level of competition mean to a company?

Industry and Competitor Analysis

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• Threat of New Entrants • The lower he barriers to entry the more likely it is that new competitors

will enter the market. (How easy is it to enter the market?) • To protect their markets companies try to create barriers to entry:

– Economies of scale – Capital requirements – Switching costs – Access to distribution – Expected retaliation

Industry and Competitor Analysis

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• Supplier power • The higher the bargaining power of suppliers the more costly the goods. • High supplier power when:

– Many buyers and not many suppliers – Differentiated and valued products – Suppliers threaten to forward integrate – There is no threat of buyers integrating backwards – Industry is not key for supplier

• Can be reduced by finding new sources, integrating backwards, design standardized components.

Industry and Competitor Analysis

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• Threat of substitutes • The higher the threat of substitutes the more competitive an industry

would be. • Substitute threats depend on:

– Buyers willingness to substitute – Relative price and performance of substitutes – Cost of switching

Industry and Competitor Analysis

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• Bargaining power of buyers • The larger the buyer the more bargaining power (Carrefour) • Buyer bargaining power is high when:

– Few buyers and many sellers – Products are standardized – Buyers threaten to integrate backward – Sellers don’t threaten to integrate forward

Industry and Competitor Analysis

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• Industry competitors • The intensity of rivalry depends on:

– Structure of the competition • More when many small competitors or a few equal sized competitors

– Structure of costs • High fixed costs could force price reduction

– Degree of differentiation • The more differentiation of products the less rivalry

– Switching costs • Higher switching costs reduces rivalry (product knowledge, investment etc)

– Strategic objectives • High growth = high competition

– Exit barriers • The higher the exit barriers the higher the rivalry.

Industry and Competitor Analysis

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• Political • Economic • Social / Cultural • Technology • Environmental • Legal

Macro environment analysis

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• Political and Legal • Government nationalisation of industries and the expropriation of property and

private sector assets, including inadequate protection of intellectual property rights.

• Unfair competition from the public sector • Government intervention in business operations and activities. • Unexpected imposition of discriminatory taxation and barriers to international

trade and industry investment • Unexpected imposition or tightening of foreign exchange controls. • National hostilities and military intervention.

Macro environment analysis

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• Economic • GDP & GNP • GDP & GNP per capita

• Others: • Income levels within a country • Levels of disposable income • Levels of saving • Unemployment • Stock market indices, such as movements in the ALSI (CAC40, FTSE100, etc).

Macro environment analysis

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• Social and cultural • Social values, beliefs, attitudes, traditions, lifestyles etc. • Products need to be created to cater for emerging markets • Products need to be adapted for changing markets. • Single parent households. • Women in the workplace – higher household income, female lifestyle. • Change in educational demographics • Increase in dual income families • Increase in health and wellness awareness • Change in age distribution • Recreational habits change. (due to?)

Macro environment analysis

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• Technology • Product innovations • Internet access • Fixed line and cellular telephony

• Not only about technological advancement but what opportunities technology can afford an organisation

Macro environment analysis

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• Environmental • Organisations much more focused on environmental effects both inside out and

outside in.

• Environmental legal implications

Macro environment analysis

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• Different levels of analysis • Company – SWOT • Market – Market Value Map • Industry – Porters 5 Forces • Macro-environment - PESTEL

Situation Analysis

Macro - environment

Industry

Market

Company

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Marketing Audit

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• The marketing audit is a comprehensive, systematic, analysis, evaluation and the interpretation of the business marketing environment, both internal and external, its goals, objectives, strategies and principles, to ascertain the problem areas and opportunities and to recommend a plan of action to enhance the business’ marketing performance.

(Kotler, Keller, 2007.)

Marketing Audit

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• Determine how the current marketing strategy and tactics are delivering on the business objectives.

• Which tactics delivered (i.t.o, objectives, profit, productivity) • Has the market changed. • Requires analysis of marketing strategy in relation to the business

objectives. • Macro-environment analysis (PESTEL) • Micro – environment analysis (5 C’s, Porter’s 5 Forces) • Internal analysis – productivity, profitability

Marketing Audit

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• Necessary to consider the brand in the market and how it affects performance.

• Tropicana

Marketing Audit

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• Necessary to consider the brand in the market and how it affects performance.

• Tropicana

Marketing Audit

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Example of design impact on perception

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• Necessary to consider the brand in the market and how it affects performance.

• Tropicana • Brand positioning includes pack, identity, positioning line.

Marketing Audit

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Example of design impact on perception

The Logo Company

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Example of design impact on perception

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Example of design impact on perception

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Profitability and productivity analysis

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• Marketing profitability analysis measures the contribution of marketing efforts (strategies and tactics) to the profit of the company.

• Marketing productivity analysis measures the sales and market share impact that the strategies and tactics have had.

Profitability and productivity analysis

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• Formating marketing strategies and programs • Developing a value proposition • Developing a competitve advantage

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