Welcome to Marketing Strategy

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Beatrice Elliott
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1 Welcome to Marketing Strategy

2 Class Dates & Times

3 Class Dates & Times

4 Class Website Questions: Put Marketing Strategy in the heading

6 Syllabus

7 Your Grade 50% from contrôle continu and your final project 50% from the final exam I do not know the date

8 Teams

9 Group 1

12 Group 2

15 Group 3

18 Group 4

21 What is Marketing? The process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment Customers the focal point of all marketing activities

22 What is Marketed?

23 What is Marketed? Services Products Events Experiences People Places Ideas

24 Key Customer Markets Consumer Business Global Non-profit

25 Consumer Market Consumer purchases made by individual decision makers or a decision-making unit (family)

26 Business Market B2B Focused on understanding business buying centers

27 Global Market Requires a global mindset Think Global, Act Local Global product customized to local tastes

28 Nonprofit Market Includes nonprofit, voluntary and government markets

29 The Marketing Mix

30 The 4Ps of the Marketing Mix The 4Ps of the Marketing Mix

31 The 7Ps of the Marketing Mix

33 Marketing Strategy

34 The Management Cycle

35 Stakeholder Theory An approach to business that incorporates all the interests of stakeholders in a business. It widens the view that a firm is responsible only to its owners Created by R. Edward Freeman (1984)

38 Stakeholder Analysis A technique you can use to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of your activity or project.

39 Stakeholder Analysis

40 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

41 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

42 Mission Statement & Objectives

43 Mission Statement A mission statement is: A broad statement of the company s purpose Explains the purpose of the organization Provides direction for the entire company

44 As a global eye care company, we will help consumers see, look, and feel better through innovative technology and design.

45 Apple, Inc. is focused on providing innovative products and solutions to consumer, SMB, education, enterprise, government and creative customers that greatly enhance their evolving digital lifestyles and work.

46 "To push the leading edge of aviation, taking huge challenges doing what others cannot do."

47 To make people happy.

48 Mission Statement Three Guiding Principles: 1. Success depends on customer satisfaction 2. Consumer-oriented perspective 3. Avoid short-sighted, narrow-minded thinking 48

49 Objectives

The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services

50 The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The Company's primary financial goals are to maximize earnings and cash flow, and to allocate capital profitably toward growth initiatives that will drive long-term shareholder value.

52 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

53 Levels of Company Strategy

54 SBU

55 Strategic Business Units Operates as a company within a company A SBU is organized around some common element such as. Industry Technology SBU Customer need Target Market

56 SBU 1 SBU 2 SBU 3 SBU 4 SBU 5

61 Marketing Strategies at the SBU LEVEL Marketing managers focus on two key aspects of SBU strategies: 1. Establish a competitive advantage Superior to or favorably different from competitors Examples include: price leadership, differentiation strategy 2. Plan growth strategies

62 Business-Level Strategies 1 2 3

63 Low-Cost Leadership Company has lower cost than the competitor Cutting Cost Low customer loyalty

64 Differentiation Products designed to be unique Quality Design Brand image

65 Focus Strategies Narrowly Defined Market Segment Low-cost leader Differentiating

66 Low-Cost Leadership Company has lower cost than the competitor Cutting Cost Low customer loyalty

67 Marketing Strategies at the SBU LEVEL Marketing managers focus on two key aspects of SBU strategies: 1. Establish a competitive advantage Superior to or favorably different from competitors Examples include: price leadership, differentiation strategy 2. Plan growth strategies

68 BCG Matrix

69 BCG Matrix Growth-Share Matrix Developed by the Boston Consulting Group in the 1970s Simple way to compare Market Growth vs. Market Share Offers a very useful 'map' of the organization's product (or service) strengths and weaknesses

71 STARS High growth, High market share Stars are leaders in business. They also require heavy investment to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share and the star will become a CASH COW.

72 CASH COWS Low growth, High market share They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.

73 DOGS Low growth, Low market share Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

75 QUESTION MARKS High growth, Low market share Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low).

76 QUESTION MARKS High growth, Low market share Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.

79 Ansoff Matrix

80 Ansoff Matrix Developed Igor Ansoff in 1957 Four Growth Strategies Market-Penetration Market-Development Product-Development Diversification

81 Ansoff Matrix

82 Ansoff Matrix

83 The Marketing Strategy

84 Components of Marketing Strategy Strategic marketing Operational marketing Situation analysis Marketing research Marketing strategy Marketing Mix 4Ps + 3 Diagnostic in relation to a specific market/issue Segmentation Targeting Positioning

85 7. Structure of Distribution 6. Geography and Infrastructure Foreign Environment (Uncontrollables) Domestic environment (Uncontrollables) 3. Economy 1. Competition 3. ECONOMY Environmental uncontrollables country market A (Controllables) 1. Competition Price Product 2. Technology 5. Political- Target Legal 7 Market Promotion Place or 2.Technology Distribution 4. Culture 5. Political- Legal 4. Culture Environmental uncontrollables country market B Environmental uncontrollables country market C

86 Situation Analysis Situation Analysis: two major components: Environmental scanning & monitoring External forces and trends are identified as opportunities and threats Forces include: sociocultural, demographic, economic, etc. Internal analysis Internal strengths and weaknesses are identified Key topics include: customers, suppliers

88 Strengths Very profitable organization 9000 cafes in almost 40 countries Opportunities New products and services that can be retailed in their cafes New Markets Weaknesses Only one main product Threats Rises in the cost of coffee and dairy products New beverage?

89 Strengths A powerful retail brand - #1 IT logistics system Opportunities Mergers, takeovers Emerging markets Weaknesses Is global, but has a presence in relatively few countries worldwide Threats Target for competition, since is #1 Political problems in countries it operates in

92 Porter s Five Forces

93 Porter s Five Forces Five competitive forces that shape every industry and every market. The intensity of competition The profitability and attractiveness of an industry.

94 Porter s Five Forces Five competitive forces that shape every industry and every market. The intensity of competition The profitability and attractiveness of an industry.

95 95

96 Rivary High - a threat of substitute products; and existing power of suppliers and buyers in the market.

97 Threat of New Entrants Barriers to Entry how easy is it to enter the market?

98 Substitutes Product-for-product substitution ( for mail, fax); is based on the substitution of need;

99 Buyer High few, large players in the market, as it is the case with retailers and grocery stores

100 Supplier High - Switching costs are high (switching from one Internet provider to another)

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103 High Moderate to High Low Low High

104 Rivary Moderate, but soon will be High P88 Kindle WePad Archos 9 JooJoo

105 Threat of New Entrants High - Even though it s normally low (high tech), it is high in this case because there are several new products coming to the market. HP Slate Lenovo IdeaPad U1 Hybrid Notion Ink Adam Entourage Edge

106 Substitutes High Since the ipad hasn t found a niche, one can substitute it with a MP3 Player Phone Netbook Laptop Book

107 Buyer Low Apple is a powerful brand and is an innovator. The ipad is a consumer product and rarely can the consumer influence the price of a mass-market product.

108 Supplier Low - Apple works with several different suppliers and has a strict regulation of whom it will work with. Therefore, the suppliers have limited bargaining power Simplo Technology Fox Conn Catcher Technologies Samsung

109 109

110 Value-Chain Analysis Divide company activities into primary and support activities and identify those that create value for customers Each activity is a source of either strength or weakness Insights gained are fed into the strategy formulation process

111 Value Chain Components

112 Value Chain Components

113 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

114 International Strategies

115 International Strategies 1. Multinational (Multidomestic) Strategy 2. Global Strategy 3. Transnational Strategy

116 International Strategies

Multidomestic Strategy Strategy and operating decisions are decentralized to strategic business units (SBU) in each country Products and services are tailored to local markets Business units in one

117 Multidomestic Strategy Strategy and operating decisions are decentralized to strategic business units (SBU) in each country Products and services are tailored to local markets Business units in one country are independent of each other Assumes markets differ by country or regions Focus on competition in each market Prominent strategy among European firms due to broad variety of cultures and markets in Europe

118 SBU 1 SBU 2 SBU 3 SBU 4 SBU 5

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120 P&G Multidomestic Strategy UK Neth. France Germany Italy

121 P&G Multidomestic Strategy USA

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124 Global Strategy Products are standardized across national markets Decisions regarding business-level strategies are centralized in the home office Strategic business units (SBU) are assumed to be interdependent Emphasizes economies of scale Often lacks responsiveness to local markets Requires resource sharing and coordination across borders (hard to manage)

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126 Economies of Scale (Les économies d'échelles) The increase in output from Q to Q 2 causes a decrease in the average cost of each unit from C to C 1.

127 Transnational Strategy Seeks to achieve both global efficiency and local responsiveness Difficult to achieve because of simultaneous requirements: Strong central control and coordination to achieve efficiency Decentralization to achieve local market responsiveness Must pursue organizational learning to achieve competitive advantage

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131 Standarization versus Adaptation Arabic read right to left Chinese delicious/happiness The faces of Coca-Cola around the world

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134 McDonald s Global Marketing Marketing Mix Element Standardization Product Promotion Place Price Big Mac Brand name Advertising slogan I m Loving It Free-standing Big Mac is $3.10 in U.S. and Turkey Localized McAloo Tikka potato burger (India) Slang Macca s (Australia) MakDo (Philippines) McJoy magazine, Hawaii Surfing Hula promotion (Japan) Home delivery (India) Swiss rail system dining cars $5.21 (Switzerland) $1.31(China)

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136 WORKING TIME REQUIRED TO BUY A BIG MAC

137 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

138 Market Selection

139 Market Segmentation Represents an effort to identify and categorize groups of customers and countries according to common characteristics 7-139

140 Analyzing Market Segments Consumer Market (B2C) vs. Organizational Markets (B2B) Market segment Portion of a larger market Market segmentation Dividing the mass market into smaller groups with similar characteristics that are likely to become the target market Target market The specific group(s) the organization directs its marketing mix towards 140

141 Global Market Segmentation Demographics Psychographics Behavioral characteristics Benefits sought 7-141

142 Targeting The process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond Focus on the segments that can be reached most effectively, efficiently, and profitably 7-142

143 Positioning How consumers perceive a brand relative to its competition

144 Positioning Locating a brand in consumers minds over and against competitors in terms of attributes and benefits that the brand does and does not offer Attribute or benefit Quality and price Use or user Competition 7-144

145 Positioning Strategies Global consumer culture positioning Identifies the brand as a symbol of a particular global culture or segment High-touch and high-tech products Foreign consumer culture positioning Associates the brand s users, use occasions, or product origins with a foreign country or culture 7-145

146 Positioning Strategies

147 Positioning Strategies Local consumer culture positioning Identifies with local cultural meanings Consumed by local people Locally produced for local people Used frequently for food, personal, and household nondurables Ex: Budweiser is identified with America

148 The Marketing Mix

149 The 4Ps of the Marketing Mix The 4Ps of the Marketing Mix

150 The 7Ps of the Marketing Mix

151 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

152 Foreign Market-Entry Strategies

153 Foreign Market-Entry Strategies

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155 Which Strategy Should Be Used? It depends on Vision Attitude toward risk Available investment capital How much control is desired

156 Exporting Company sells its products directly to buyers in a target market Sales representatives Distributors Agents Export Management Companies Export Trading Companies

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158 Exporting Advantages Simple Low risk Disadvantages Low profit Trade barriers Difficult when home currency is strong

159 Licensing Practice of one company that owns the property (licensor) grants another firm (licensee) the right to use that property for a specified period of time.

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162 Licensing Company owning intangible property (licensor) grants another firm (licensee) the right to use it for a specified time Advantages + Finance expansion + Reduce risk + Reduce counterfeits + Upgrade technologies Disadvantages Restrict licensor s future Reduce global consistency Lend strategic property

163 Franchising One company (the franchiser) provides another company (the franchisee) with the property and other assistance over an extended period of time

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166 Franchising Company (franchiser) supplies another (franchisee) with intangible property over an extended period Advantages + Low cost and low risk + Rapid expansion + Local knowledge Disadvantages Cumbersome Lost flexibility

167 Contract Manufacturing Production of goods by one firm, under the label or brand of another firm. Outsourcing

168 Himjal Beverages

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175 Contract Manufacturing (CM) & Subcontracting (SC) CM Production of goods by one firm, under the label or brand of another firm. SC - The practice of assigning part of the obligations and tasks under a contract to another party

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177 Investment Entry Joint Venture Strategic Alliances Wholly Owned Subsidiary

178 Joint Venture Separate company created and jointly owned by two or more independent companies to achieve a common business objective.

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182 Joint Venture Separate company created and jointly owned by two or more independent entities to achieve a common business objective Advantages Reduce risk level Penetrate markets Access channels Protect interests Disadvantages Partner conflict Lose control

183 Strategic Alliance Two or more companies cooperate (but do not form a separate company) to achieve the strategic goal of each

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competitors strengths Gain channel access

188 Strategic Alliance Entities cooperate (but do not form a separate company) to achieve strategic goals of each Advantages Share project cost Tap competitors strengths Gain channel access Protect interests Disadvantages Create competitor Partner conflict

189 Education Trium ( Partners: NYU (US); LSE (UK); HEC Paris (France) 16 month program leading to single jointly-awarded MBA Six intensive modules held in London, Paris, New York (2), and two locations depending on business issues 189

190 Direct Investment Wholly-owned subsidiary Facility entirely owned and controlled by a single parent company Build Buy

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192 Mission Statement & Objectives SBU & Situation Analysis Culture, values and technology Part 1 Company capabilities Analysing competitors Environment Political economy & created advantage Public policy, risk & regulation Part 2 Consumer products Industrial products Product and brand strategies Market Selection Services Brand Part 3 Exporting Strategic alliances Market entry Acquisitions and FDI Strategic market entry Part 4 Distribution Pricing Operations and performance Selling and negotiations Assessing performance

193 Distribution

194 International firm Distributor in foreign market Customer/ user in foreign market International firm Wholly owned sales subsidiary Distributor in foreign market Customer/ user in foreign market International border

195 Home Country International Market Firm Regional distribution centre Retailer End-user/ Customer Wholesaler Trading Company Buying Organisation Sales Subsidiary Export Agent Distributor/ Importer

196 Pricing

197 Factors influencing price escalation in international markets Taxes, tariffs & administrative costs Varying currency values Inflation Price escalation Intermediary margins Exchange rate fluctuations Transportation costs Source: Cateora, P. R. and Ghauri, P. N. (1999) International Marketing, European Edition, McGraw Hill Publishing Company, London

198 Range of feasible prices Upper price limit Competitor s price Absorption cost Range of feasible prices Lower price limit Marginal Cost

199 Selling

200 Selecting the international sales team Composition of Sales team Expatriates Host country people Third country sales people Advantages Product knowledge High service levels More control Market knowledge Language skills Cultural sensitivity Quick response time May be economical Language skills Cultural sensitivity Regional sales coverage May be economical Disadvantages Highest cost High training costs Ineffective Lack product knowledge May not be loyal Identity problems Career moves in jeopardy Lack product knowledge May not be loyal

201 Assessing Performance

202 International marketing performance and control International marketing activities Performance standards Cost analysis Evaluation of international marketing performance Sales performance analysis in each country International marketing planning and control Corrective action/ re-alignment Marketing performance analysis

Introduction to. Global Marketing. and The Global Economic Environment. Global Marketing. Chapter 1

Introduction to. Global Marketing. and The Global Economic Environment. Global Marketing. Chapter 1 Introduction to Global Marketing and The Global Economic Environment Global Marketing Chapter 1 1 Introduction Global vs. Regular Marketing Scope of activities are outside the homecountry market 1-2 Global