STRATEGIC

MARKETING
MANAGEMENT
CORPORATE PLANNING
CORPORATE PLANNING
CORPORATE PLANNING
 COMPANY MISSION
Mission characteristics:
 a) limited no. of goals
 b) stress on company policies and values
 c) defines competitive sphere: industry, products
 and
applications
 d)long-term orientation
 e) short, memorable, meaningful
n
PLANNING AND CONTROL
ROLE OF CORPORATE
PLANNING
PLANNING AND CONTROL
 STRUCTURE OF FLOWS IN A
MODERN EXCHANGE ECONOMY
Resources Resources
Money Resource markets

Taxes, Services,
goods money
Services,
money Taxes
Manufacturer Consumer
markets markets
Government Services
Taxes, markets
goods

Services, Taxes,
money goods
Money Money
Intermediary markets 9
 EVOLUTION OF
MARKETING
1.PRODUCTION CONCEPT
2.PRODUCT CONCEPT
3.SELLING CONCEPT
4.MARKETING CONCEPT
5.CUSTOMER CONCEPT
6.SOCIETAL MARKETING
CONCEPT

10
 TWO VIEWS OF THE VALUE DELIVERY
PROCESS
TRADITIONAL PHYSICAL PROCESS SEQUENCE

Make the product Sell the product

Design
product Procure make Advertise/ Service
Price Sell Promote Distribute

VALUE CREATION AND DELIVERY SEQUENCE

Choose the value Provide the value Communicate the value

Customer
Segment- Market Value Product Pricin Distrib
ation selection/ positioning develop- Service g Sourcing uting
focus develop- Sales Sales Advert-
ment Servici
ment ng force promotion ising-
Making

11
 HOLISTIC MARKETING
Senior
DIMENSIONS
a r k e t i ng Management Products & Services
M
e p a rtment Other Departments
D
Communications Channels

Internal Marketing Integrated Marketing

Holistic Marketing

Socially Responsible Relationship Marketing

Marketing

Customers Partners
Ethics Environment Channel
Legal Community
12
 Competitive Advantage through The Generic Value
Chain
Firm Infrastructure
Support Activities

M
Human resources Management

ar
gin
Technology Development

Procurement

Inbound Operations Outbound Marketing

in
Service

g
Logistics Logistics and Sales

ar
M
13
 A HOLISTIC MARKETING
FRAMEWORK
Customer Focus Core Competencies Collaborative Network

Value Cognitive Competency Resource

Exploration space space space

Business
Value Customer Business partners
creation benefits domain

Value Customer Internal Business

Delivery relationship Resource Partner
management management management

14
 THE RESOURCE ADVANTAGE
FRAMEWORK

Societal Resources Societal Institutions

Resources Market Position

Financial
Performance
Comparative Advantage *Comparative Advantage
* Superior
Parity *Parity
* Parity
Comparative Disadvantage *Comparative Disadvantage
*Inferior

Competitors- Consumers Public Policy
15
Suppliers
 COMPETITIVE POSITION
MATRIX
 Relative Resource-Based Value
 LOWER PARITY SUPERIOR

 LOWER Indeter- Competitive Competitive

 minate Advantage Advantage


Relative Competitive Parity Competitive

Response PARITY Disadvantage Advantage
 Costs
 Competitive Competitive Indeterminate
 HIGHER Disadvantage Disadvantage
16
 FOUR COMPANY ORIENTATIONS
SALES MARKET DRIVEN CUSTOMER MARKET
DRIVEN DRIVEN DRIVING

MARKETING Mass Differentiated Relationship Revolutionary

STRATEGY Marketing Marketing Marketing Marketing

Destroy
SEGMENTATION Undifferen- Market Segments Custoomer Industry
STRATEGY Tiated Segments Segmenta-
tion

MARKET
RESEARCH
Forward
Focus Market-testing Market Sensing Customer Sensing Sensing

R& D Voice of the Seeing

Listen to Voice of the Market customer Differently
 FOURSALESCOMPANY
DRIVEN MARKET
DRIVEN
ORIENTATIONS
CUSTOMER MARKET
DRIVEN DRIVING

PRICE MGMT. Cost plus

(Perceived
contd.) Value Bundling/ New Price Points
Unbundling
Sell Image Customer
SALES MGMT. Sell products Sell Solutions Education

Product/ Channel
CHANNEL Product/ Market fit Multiplex Reconfiguration
MGMT. channel fit Systems
Broadcast for Exploit ‘buzz
BRAND MGMT. Product Brand equity Dialogue for network”
Superiority Corporate
Equity
Tactical Weapon Overwhelm
CUSTOMER Expense Strategic Expectations
SERVICE Incremental Weapon
innovations Radical
PRODUCT New products Integrating Innovation
DEVELPMENT Product/
Service
 Noodles Story
 Category: Rs.1,000 cr; +/_ % : 20%;Penetr.: 40%
 1.Nestle: * category creator
 * positioning: convenience and taste; taste-
and-health; “mein aur meri Maggi”
 * 90% market-share
 2. HUL: * Knorr-soupy noodles
 * Positioning : fun
 *attempt to create and own a sub-category
‘soupy noodles’– extend ‘health and convenience’
position of Knorr soups beyond cities




19



 Noodles Story
 3.GSK : 1.Extension of Horlicks brand
 2 Positioning: Nutrition.
4. Capital Foods
 1.Wai Wai , 2. Ching’s Secret
 2.Concentration on North-East and East
 3. Ching’s secret aimed at 16-
26;collegians
 4.Spicier;uses Facebook
.


20
 WHY COMPETITION?
n COMPETITION PROVIDES
 -- ADEQUATE VARIETY OF PRODUCTS
 -- ECONOMIC OPPORTUNITY
 -- SOCIAL MOBILITY
 --PRODUCTIVE ECONOMY
 -- REWARDS TO INNOVATORS
 -- LOW SEARCH COSTS
 -- DIFFUSION OF GAINS OFPROGRESS
 -- HIGH AND STABLE EMPLOYMENT
 -- BUSINESS FREEDOM
 -- ELIMINATION OF PROCESS INEFFICIENCIES
 21
 AIM OF COMPETITION
n INCENTIVE FOR INNOVATION EXISTS
IF COSTS OF INNOVATION
RECOVERED BEFORE
NEUTRALISATION COMPLETED
n COMPETITION AIMS AT PARITY /
SUPERIOR PERFORMANCE
COMPARED TO COMPETITOR AND IN
THE PROCESS AIMS AT MARKET
POSITION OF COMPETITIVE
ADVANTAGE
n COMPETITION AIMS AT WINNING
 HOW DO BUSINESSES
COMPETE?
BUSINESS STRATEGIES ARE PRIMARILY
CONCERNED WITH ALLOCATING RESOURCES
ACROSS FUNCTIONAL ACTIVITIES AND
PRODUCT MARKETS TO GIVE THE UNIT A
SUSTAINABLE ADVANTAGE OVER ITS
COMPETITORS
PURPOSE : SUPERIOR FINANCIAL

PERFORMANCE
FIRMS/SBUs PURSUE A SINGLE COMPETITIVE

STRATEGY BEST SUITED TO THEIR MARKET

ENVIRONMENTS AND COMPETITIVE
STRENGTHS
 SOURCES OF DIFFERENTIAL
ADVANTAGE ( ALDERSON )

MARKET SEGMENTATION
SELECTION OF APPEALS

TRANSVECTION ( DISTRIBUTION)

PRODUCT IMPROVEMENT

PROCESS IMPROVEMENT

PRODUCT INNOVATION

24
TYPES OF COMPETITION
( Clark’s Theory)

 COMPETITION IS DYNAMIC
DEFENSIVE COMPETITION : DIFFUSES INNOVATIONS
AND NEUTRALISES THESE ADVANTAGES
AGGRESSIVE COMPETITION: LINKED TO ‘CREATIVE

DESTRUCTION’ ( Schumpeter); CREATES INNOVATION

AND DIFFERENTIAL ADVANTAGES
 INCENTIVE FOR INNOVATION EXISTS IF
COSTS OF INNOVATION RECOVERED
BEFORE NEUTRALISATION
COMPLETED

25

COMPETITION DEFINED BY
MARKET COVERAGE
KINDS OF COMPETITION

• Monopoly
• Oligopoly
• Pure competition
• Monopolistic Competition
1.
COMPETITION DEFINED BY
MARKET-POSITION

MARKET LEADER
MARKET CHALLENGER

MARKET FOLLOWER

MARKET NICHER
COMPETITION DEFINED BY
STRATEGY


(MILES & SNOW TYPOLOGY)



n PROSPECTOR : first in the mkt

n ANALYSER: strong core business;growth
through differentation/low-cost strategy
n DEFENDER: big player, never the first;
differentiator or low-cost player to defend
n REACTOR
DEFINING MARKETS
AND CUSTOMERS
MARKET SIZE AND GROWTH
CUSTOMER SGMTS.
* DEMOGRAPHICS
* BENEFITS EXPECTED
* BRAND LOYALTY
* PRODUCT- EXPERIENCE

29
CUSTOMER BASED MEASURES OF
COMPETITION

30
COMPETITOR ANALYSIS

31
COMPETITOR ANALYSIS

FACTORS TAKEN INTO ACCOUNT IN



ANALYSING COMPETITORS:


Ø Share of Market
Ø Share of Mind
Ø Share of Heart
32
DIMENSIONS OF COMPETITIVE
STRATEGIES

33
 UNDERSTANDING THE
COMPETITION

n Consumers targeted
n Strategies adopted : product differentiation,
cost-leadership, niche operations
n Operations: reach, size, tech-savviness, degree
of automation
n Consumer perceptions: friendly, economical,
flexible, innovative, proactive, efficient,
swift
n Marketing -mix
n 34
 COMPETITIVE STRATEGY

 MARKET LEADER


 DEFEND MARKET EXPAND MARKET EXPAND SHARE

SHARE OF
MARKET


 New Products New

Users
 Positioning
 Improve Prod.quality New Uses
 customer satis
 . Innovation Greater Increased
35
 market exposure use
 COMPETITIVE STRATEGY

 MARKET CHALLENGER
 Frontal ----- all elements of the marketing –mix:
 price discount, cheaper goods,
 prestige goods, proliferation,
 innovation, mfg. costs, promotion
Flanking---- attack the leader’s weak spot

Encirclement -- sudden attack on several fronts

Bypass --- new products, new markets, new tech.

Guerilla --- sustained short attacks

 36
COMPETITIVE STRATEGY

37
 GROWTH STRATEGIES

INTENSIVE
 INTEGRATIVE DIVERSIFICATION

*Mkt. Penetration * Backward *

Concentric
*Prod. Dvlpment. Integration *
Horizontal
*Mkt. Dvlpment. * Forward *
Conglomerate
 Integration
 * Horizontal
 Integration


38
STRATEGIES AVAILABLE

 PRODUCT -DIFFERENTIATION


 COST -LEADERSHIP


 NICHE-MARKETS

39
Concept of ‘Red Ocean’

40
DNA of ‘Blue Ocean’

41
Concept of ‘Blue Ocean’

42
Changing Environment

43
Need for Blue Ocean Strategy

44
 Red Ocean vs. Blue Ocean
Red Ocean Strategy
 Blue Ocean Strategy


E Compete in existing E Create uncontested

market space market space
E Beat the competition E Make competition
E Exploit existing irrelevant
demand E Capture new demand
E Make value-cost trade- E Break value-cost trade-
off off
E Differentiation OR low E Differentiation AND low
cost cost

45
Four Actions Framework

46
1. Study Non-Customers

47
First Tier of Non-Customers

48
 Second Tier of Non-Customers
 They refuse to use our offerings
They know the products, but do not see
value for them
Since, unacceptable or unaffordable
Needs ignored or fulfilled elsewhere.

49
Third Tier of Non-Customers

50
 How To Identify Who Our Target
Customers Are?
n

n Remember , Either You Decide Who

Your Target Customer Is Or Your
Business Will Be Like A Ship
Sailing Fast In No Direction
n

n Look At Your Customer Base . Find

The 20 % Which Represents The
80 % Of Your Profits . What Do
Those Have In Common?
51
How To Identify Who Our Target
Customers Are?

52
 How To Identify Who Our Target Customers
Are?
n
n Based On Your Current Resources &
Business Assets Or Expertise , Can
The Target Customer Base You Are
Targeting Support The Goals You
Have Set For Your Business?
n
n Survey Your Existing Base , And Ask
Them More Questions , To Better
Identify What They Have In Common ,
And What Their Unfulfilled Needs
Are .
53
How To Identify Who Our Target
Customers Are?

54
 The Customer Pyramid
Most Profitable What segment spends more
Customer with us over time, cost less to
maintain, spreads positive
Platinum word of mouth?

Gold

Iron

Least Profitable Lead

Customer
What Segment cost us in time, effort and money
yet does not provide the return we want? What
55
segment is difficult to do business with?
 The increasing
importance
Relationship having individualized
Marketing Influence
customer data
consumers

Loyalty
Programs Reward Consumers

Business Satisfy Consumers

Excellence
56
 Customer types by
expected value
Expected Future Value to the Firm
High Low

Premium Uneconomical
Historical High
Value to
Firm
Low Prospect Undesirable

57
 PRODUCT
MANAGEMENT
LEVELS OF COMPETITION

--PRODUCT FORM
-- PRODUCT CATEGORY
--GENERIC COMPETITION
( SUBSTITUTES)
-- BUDGET COMPETITION

-- BY CUSTOMER SEGMENTS
58
 PRODUCT MANAGEMENT
 COMPETITION LEVELS AND
PROD.MGMT.TASKS


FORM: BRAND LEVEL COMPETITION

CATEGORY: ADVANTAGES OF PROD.FORM

GENERIC: SUPERIORITY OF PRODUCT CATEGORY

BUDGET : IMPORTANCE OF MEETING SPECIFIC NEED

59
 PRODUCT LIFE CYCLE
 Sales


 I G M D


 Time

60
 PLC vs. BLC


PLC STAGE
 BLC STAGE Rapid Slow Nil/Negative
 Growth Growth Growth


 NewEntrant *Establish *Niche *Reassess

 brand; nil/low product with entry rationale
 contribution costs vs.benefits


Growing * R&D *distance *Capitalise on

Brands *Plan for from others; inherent strengths
 long-term submarket *plan early exit


Established/ *Revive * Harvest & *Milk and plan

Old brand interest phase early exit 61
 *Revitalise out
 Four Actions Framework


 REDUCE
 well below industry standard


 ELIMINATE New Value Curve CREATE



 RAISE
 well above industry standard

 A HOLISTIC MARKETING
FRAMEWORK
Customer Focus Core Competencies Collaborative Network

Value Cognitive Competency Resource

Exploration space space space

Business
Value Customer Business partners
creation benefits domain

Value Customer Internal Business

Delivery relationship Resource Partner
management management management
 FROM THE FOUR P’s
TO THE FOUR C’s
The Seller’s View The Buyer’s View
1.Product 1. Customer
Solution
2.Price 2. Customer Cost
3.Place 3. Convenience
4.Promotion 4. Communication
 DIMENSIONS OF COMPETITIVE
STRATEGIES
SCOPE
GOALS AND OBJECTIVES

 * ADAPTABILITY
 * EFFECTIVENESS
 * EFFICIENCY
qRESOURCE DEPLOYMENT
qCOMPETITIVE ADVANTAGE
qSYNERGY

STRATEGIC FACTORS ASSOCIATED
WITH HIGHER PROFITABILITY

•High market share

•Low relative costs
•High perceived quality
•Low capital intensity
•Intermediate level of vertical
integration
ANALYSING THE
INDUSTRY
*CLUTTER IN THE MKT.
*MAJOR PLAYERS AND THE
SEGMENTS THEY DOMINATE
* DIFFERENTIATION IN TERMS OF:
*PRODUCT
*COST ADVANTAGES
* ECONOMIES OF SCALE
*DISTRIBUTION CHANNELS
*BRAND IMAGE
ANALYSING THE
INDUSTRY (Contd.)

* CAPITAL REQUIREMENTS
* GOVT.POLICIES
* TECHNOLOGY :
current; available; cost; impact
ANALYSING COMPETITION

PORTER’S MODEL


 POTENTIAL
 ENTRANTS


 SUPPLIERS INDUSTRY BUYER

 RIVALRY


 SUBSTITUTES

 FACTORS GOVERNING
COMPETITION
n

n EXIT /ENTRY BARRIERS

n COST STRUCTURE
n DEGREE OF VERTICAL
 INTEGRATION
n DEGREE OF GLOBALISATION
n
CLASSIFICATION OF COMPETITORS

n Strong vs. Weak

n

n Close vs. Distant

n

n Good vs. Bad

COMPETITIVE
POSITION
KINDS OF COMPETITION

• Monopoly
• Oligopoly
• Pure competition
• Monopolistic Competition
1.
COMPETITIVE STRATEGY
Competitive Position

• Market Leader
• Market Challenger
• Market Followers
• Market Nichers
 COMPETITIVE STRATEGY

Advantage
Target Low Cost Product Uniqueness
Broad Cost Leadership Differentiation

Narrow Low Cost Focus

COMPETITIVE STRATEGY
FACTORS GOVERNING COMPETITION

•Exit / entry Barriers

•Cost Structure
•Degree of Vertical Integration
•Degree of Globalisation
COMPETITIVE STRATEGY
CLASIFICATION OF COMPETITORS

•Strong Vs. Weak

•Close Vs Distant

•Good Vs. Bad

•
LIMITATIONS IN SETTING
GOALS
n GOOD PERFORMANCE ON ONE
DIMENSION(E.G. SUCCESSFUL NEW
PRODUCTS/ SHARE GROWTH)
USUALLY IMPLIES POOR
PERFORMANCE ON ANOTHER
(COSTS,ROI) AT LEAST IN THE SHORT
TERM.
n IN THE LONG TERM, CHOSEN
STRATEGY SHOULD GENERATE
DISCOUNTED CASH FLOWS GREATER
THAN COST OF CAPITAL =>
INCREASE SHAREHOLDER VALUE
DIFFERENCES IN GOALS AND OBJECTIVES
( MEASURES OF FINANCIAL
PERFORMANCE)
 FINANCIAL ASPECTS OF
MARKETING MANAGEMENT
SOME DEFINITIONS
• Variable costs: costs that fluctuate in direct
proportion to the output volume of goods
produced. ( COG + Selling expenses)
• Fixed Costs: Expenses that do not fluctuate with
output but become progressively smaller per unit
of output with increased volume.
( Programmed costs + committed costs)
•
•
 SOME DEFINITIONS ( Contd.)
n Relevant costs : Future costs that vary with different
marketing alternatives
n Sunk costs: Past costs that do not effect future
decisions
n Gross Margin: Sales revenue – COG

n Trade Margin: Unit sales price –unit cost at each

level of a marketing channel. Usually expressed as
% of selling price.
n Contribution: Sales revenue – variable costs
( contribution to fixed costs and profits)
 SOME DEFINITIONS ( Contd.)
n Break-even point: the sales volume at which total
revenue = total costs ( fixed + variable)
n Break-even analysis: Helps assess an organisation’s
profit goals and risks involved in various actions
n Requires info. on :*estimated unit variable costs
 * total fixed costs
 * selling price per unit
n Unit break-even volume : total fixed costs/
 ( selling price – variable costs) per unit



SOME DEFINITIONS ( Contd.)
n Liquidity: the organisation’s ability to meet
short –term financial obligations
n