Ibrahim Sameer (MBA - Specialized in Finance, B.Com Specialized in Accounting & Marketing)

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1 Ibrahim Sameer (MBA - Specialized in Finance, B.Com Specialized in Accounting & Marketing)

2 STRATEGY AND PLANNING What is Planning?

3 STRATEGY AND PLANNING What is Planning? Philip Kotler said of planning that it was deciding in the present what to do in the future.

4 STRATEGY AND PLANNING Three levels of planning have been identified: Corporate or visionary Business Planning Functional Planning

5 STRATEGY AND PLANNING What is Corporate or visionary?

6 STRATEGY AND PLANNING What is Corporate or visionary? Corporate or visionary planning that provides a mission and structure for evaluating and allocating resources to business

7 STRATEGY AND PLANNING What is Business planning?

8 STRATEGY AND PLANNING What is Business planning? Business planning which involves long-range planning for positioning the company and its products to best serve its target markets

9 STRATEGY AND PLANNING What is Functional planning?

10 STRATEGY AND PLANNING What is Functional planning? Functional planning including marketing planning which is generally annual planning involving specific goals and plans over one year.

11 Strategic Planning for Marketing

12 Strategic Planning for Marketing What is Strategic Planning?

13 Strategic Planning for Marketing What is Strategic Planning? It is a long-term plans or higher level of planning.

14 CORPORATE STRATEGY Why do you think corporate strategies are formulated?

15 CORPORATE STRATEGY Why do you think corporate strategies are formulated? Strategies are formulated in order to response the various factors in the company's environment and these may come from both external and internal sources.

16 CORPORATE STRATEGY External Factors Nature of the competition and the products which are on offer in the marketplace. Political, economic, social and technological pressures. Needs and requirements of the buyers.

17 CORPORATE STRATEGY Internal Factors Corporate objectives Size and power of the company Availability of resources Expectations of stakeholders Nature of the firm's business (leader/follower) Managerial stance and attitude (aggressive/or not).

18 CORPORATE STRATEGY Any aspect of the internal and external environments can have an influence on strategy formulation.

19 Organizational Stance and Positioning We have just noted that the managerial stance and attitude can have a big influence on strategy formulation. Organizations can be categorized as being any one of the following:

20 Organizational Stance and Positioning Leaders These are innovative companies who are regularly first into the marketplace with new products. They tend to be powerful companies who will have major market shares and the benefit of abundant resources. They must adopt strategies which will:

21 Organizational Stance and Positioning protect their current market share by using the mix, or encourage current customers to use more, or attract and retain new users and/or customers, or redesign the product/service for new and existing users, or introduce new products to new markets.

22 Organizational Stance and Positioning Companies can carry out these strategies by adopting a stance of: innovation always being in front of the competition fortification activities aimed at keeping the competition down confrontation aggressive promotion, price wars harassment pressure on distributors, criticising competition.

23 Organizational Stance and Positioning Followers These are the companies who do not invest heavily in research and development (R & D) but "copy" what the leaders do. This type of company will never get the initial major market share, but they do not have to invest money in development or in making the target market "aware", as the leaders will have already done this.

24 Organizational Stance and Positioning Nichers These types of organization are those that are, to one extent or another, providing a "specialized" product offering. They will have some kind of USP (unique service proposition) which they can offer to their customers. Nichers can gain from being seen as "specialist" and can, consequently, often charge much higher prices for their product offerings. Niche markets can be very profitable, despite relatively low market share.

25 Attack Strategies Direct challenge (differential advantage) This is a high-risk strategy with a potentially high payoff. Because market leaders are in a very strong position a large financial investment as well as great determination, is required to pursue this strategy.

26 Attack Strategies Direct attack (distinctive competence) This strategy involves removing the leader's competitive advantage by means of an innovative product. It is a very effective method, provided the advantages are valued by the target market. communicated effectively. A classic example is Xerox, who took the copying market away from 3M by introducing a better process.

27 Attack Strategies Direct attack (market share) This is the process of taking over smaller firms in the marketplace in order to build up market share. The clever part with this strategy is the retention of customers from those businesses taken over.

28 Attack Strategies Flank attack In this strategy it is necessary to find a slot in the market which is not currently filled. Having discovered the gap it is essential to determine whether or not it is untenable. If it is not untenable then it can be used as a base from which to attack in order to build market presence and share.

29 Attack Strategies Encirclement This is an attempt to beat a competitor on every front. It is very expensive to stand, but also very expensive to fight. Japanese companies in the electronics market often pursued this strategy successfully by producing a constant stream of ever-better, ever-cheaper products until they achieved dominance.

30 Attack Strategies Bypass This is a method of indirect attack by broadening a resource base until the attacker is strategically prepared for actual confrontation. In 1971 Colgate was underdog to Proctor and Gamble; by 1976 it was well placed in 75% of its markets, and out of contact with P & G in the remainder.

31 Attack Strategies Guerrilla Small competitors who are unable to attack a big competitor on a broad front can hit them aggressively in areas where they know they will be slow to respond. Although this strategy is unlikely to defeat a market leader, it can enable the smaller firm to take a substantial profit from the market.

32 Defence Strategies Position defence No company can remain static, since others will be trying to increase their own market share. Product innovation is necessary in order to remain tenable and maintain market position, even with well established products. An entrenched market leader will need to pursue promotional innovation to keep its product in front of the eyes of its customers. This is likely to give the leader massive cost advantages and help it to defend even a sustained attack.

33 Defence Strategies Pre-emptive defence Attack is often the best means of defence, and an attack on a potential challenger can distract them through their need to defend themselves. It might be described as "getting your retaliation in first", and is a strategy successfully pursued by a number of wellknown companies.

34 Defence Strategies Counter-offensive This involves carrying out an aggressive response to an attack in order to protect market share. For example Cadbury's attacked Mars they were immediately faced with an overwhelming counter-offensive.

35 Defence Strategies Mobile defence This involves a company keeping on the move through innovation, market expansion and diversification into new marketplaces. This type of entrepreneurial strategy is pursued even when there is no apparent attacker in sight. Richard Branson's expansion of Virgin from records to air travel to trains, etc. is a good example of this type of strategy.

36 Defence Strategies Flanking defence In this strategy companies which are under attack may try to match the products of an attacking competitor. However, this can misfire, as the American motor companies found when they tried to compete against imports of smaller foreign cars by producing similar-sized ones of their own. The strategy failed because the foreign designs were proven, whereas the Americans were working in an area unknown to them, and hence their designs were not as good.

37 MARKETING STRATEGIES The marketing strategy is the means of achieving the corporate objectives. As such it lays down longer-term goals and targets for the marketing personnel to follow.

38 Types of Marketing Strategy There are three basic marketing strategies which any company can follow: Undifferentiated marketing Differentiated marketing Concentrated marketing.

39 Types of Marketing Strategy What is Undifferentiated marketing

40 Types of Marketing Strategy What is Undifferentiated marketing? Undifferentiated marketing treats all buyers as a homogeneous group. Another term for undifferentiated marketing is mass marketing. Rather than producing different marketing strategies for different segments of society, or even different products for different groups, undifferentiated marketing attempts to reach all potential buyers using one marketing strategy. Eg: Coca Cola

41 Types of Marketing Strategy

42 Types of Marketing Strategy What is Differentiated marketing?

43 Types of Marketing Strategy What is Differentiated marketing? Differentiated Marketing also called as multi segment marketing is wherein a company attempts to appeal to two or more clearly defined market segments with a specific product and unique marketing strategy tailored to each separate segment. For example Maruti-Suzuki use differentiated marketing to attract all segments.

44 Types of Marketing Strategy

45 Types of Marketing Strategy What is Concentrated marketing?

46 Types of Marketing Strategy What is Concentrated marketing? Here the total marketing effort is aimed at one market segment. This strategy is really aimed at the exploitation of a limited market area and tends to be used by those companies who have highly specialised products. For example Volkswagen makes cars only for the small car segment.

47 Types of Marketing Strategy

48 CORPORATE OBJECTIVES What is corporate objectives?

49 CORPORATE OBJECTIVES What is corporate objectives? Corporate objectives relate to the entire organisation and are essentially longer term and broad in their coverage.

50 CORPORATE OBJECTIVES Objectives should be SMART Specific Measurable Achievable Realistic Timed

51 CORPORATE OBJECTIVES Objectives are of two type: Quantitative Quantitative objectives (in terms of numbers) can relate to money, percentages, periods of time, output figures, etc. Examples are: "To achieve 5% year-on-year growth in profit after tax for the next five years."

52 CORPORATE OBJECTIVES Objectives are of two type: Qualitative Qualitative objectives can relate to service levels to be achieved, image, position, ethics, etc.

53 MARKETING OBJECTIVES Marketing objectives can be expressed in either qualitative or quantitative terms, e.g. "To increase market share by 5% each year for the next five years." "To be recognised as the leading supplier of pre-packed meals to the airline industry by the end of 1999."

54 MARKETING OBJECTIVES What is the main purpose of marketing objectives?

55 MARKETING OBJECTIVES What is the main purpose of marketing objectives? The main purpose of marketing objectives is to achieve the corporate objective(s).

56 Defining Marketing Objectives Gultinan and Paul (1988) argued that six objectives should be given consideration: market share growth market share maintenance cash flow maximisation sustaining profitability harvesting establishing an initial market position.

57 Defining Marketing Objectives Ansoff (1968) marketing objectives:

58 Factors Influencing Marketing Objectives Marketing objectives is influence by external and internal environment for example: The external environment: a rapidly changing environment government legislation different patterns of population or buying behaviour recessionary economics, etc.

59 Factors Influencing Marketing Objectives The internal environment: unrealistic corporate objectives poor planning skills lack of resources lack of knowledge of the market environment, etc.

60 Factors Influencing Marketing Objectives Maintaining the Competitive Edge Every company that is in business must do something better than its competitors at least in the opinion of a number of customers. So what can the marketing manager do to maintain the competitive edge?

61 Factors Influencing Marketing Objectives Product/Service Quality There are what can be considered "normal" standards in every product, and there can be grades of quality, so you must position your products in the appropriate grade.

62 Factors Influencing Marketing Objectives Availability There is so little to choose between some products that if one is not available immediately, the consumer will choose a different one. That means your products have to be widely distributed if they are to be highly competitive.

63 Factors Influencing Marketing Objectives Price Price matters most where there are few product features which are obviously better than those of competing products. You can get a competitive edge by making a special offer of some sort (such as three for the price of two)

64 Factors Influencing Marketing Objectives Promotion If you tell people your products are the best, and you can show examples that "prove" the claim, some people will believe you and others will test your claim.

65 Factors Influencing Marketing Objectives People Employees play an important role in adding value to a product and in particular a service. The performance of employees will have either an indirect effect (for a product) or a direct effect (for a service, or service element of a product) and therefore, it is important for organisations to be able to train and motivate their employees to deliver excellent customer service.

66 Factors Influencing Marketing Objectives Processes Processes are a set of activities that are linked together to either produce a product or deliver a service. Value and competitive advantage can often be achieved by excellent or innovative processes, both internally within the organisation and throughout the whole value chain. Managers need to be aware of those processes that add the most perceived value from a customer's point of view.

67 Factors Influencing Marketing Objectives Physical Evidence Physical evidence most applies to the delivery of services. Services are intangible and are consumed at the point of delivery, therefore, organisations will need to look for ways of making services more tangible for customers.

68 Benefits of Marketing Objectives They give a clear direction to the personnel involved: Everyone involved knows exactly what is expected of them and how they are supposed to be working. They can create unity: A common goal unites people in all circumstances, particularly when the goal is seen as being worthwhile.

69 Benefits of Marketing Objectives They allow for measurement of achievement Because the objectives specify targets and time scales, monitoring can be carried out to check progress. They can reduce risk: If all personnel know what it is they are working towards, there will be less risk of "mavericks

70 Benefits of Marketing Objectives They can improve decision-making: Managers at lower levels will be able to make day-to-day decisions based on their knowledge of the objectives and the progress made in achieving them.

71 Problems in Formulating Marketing Objectives Fear of Failure: If previous objectives were not achieved, planners may be reluctant to define new objectives and will not strive to achieve. Apathy: If the personnel in the company are demotivated for some reason, they will not be interested in any new objectives as they will see them as "just another ploy to get us to work harder".

72 Problems in Formulating Marketing Objectives Organisational Culture: A lack of marketing orientation in an organisation can prevent objectives from being formulated. Lack of Knowledge: Perhaps the biggest problem in formulating marketing objectives.

73 MODELS FOR FORMULATING MARKETING STRATEGIES To achieve marketing objectives, strategies must be formulated for each section of the marketing function or individual SBU.

74 MODELS FOR FORMULATING MARKETING STRATEGIES Ansoff Matrix

75 MODELS FOR FORMULATING MARKETING STRATEGIES Porter's Generic Strategy Model

76 MODELS FOR FORMULATING MARKETING STRATEGIES Cost Leadership: Following this strategy means that the company aims to produce in large quantities, at the lowest cost possible and sell at lower prices. Differentiation: This strategy involves offeringsome unique selling (service) proposition(usp) that the competition do not have. Focus: The company aims at very select market sectors and will be charging higher prices or offer special USPs.

77 MODELS FOR FORMULATING MARKETING STRATEGIES Boston Consultancy Group Matrix (BCG)

78 MODELS FOR FORMULATING MARKETING STRATEGIES Build (for Question Marks) to increase share, even if it means giving up short-term profit Hold (for strong Cash Cows) to preserve share Harvest (for weak Cash Cows where the future is dim or for Question Marks and Dogs) to increase short-term cash flow regardless of long-term effects Divest (Dogs and Question Marks draining resources) to sell off, liquidate or delete an SBU or a product.

79 Q & A

- define a market oriented mission - Setting company s objectives and goals

- define a market oriented mission - Setting company s objectives and goals 1. Creating and capturing customer value WHAT IS MARKETING - Marketing defined - Marketing Process UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS - Customer needs wants and demands - Market offerings: