Transcript Chapter 6: Developing Product and Brand Strategy

The Strategic Management Planning
Process
Creating Customer Relationships & Value through
Marketing/Management Strategic Planning
2. Core Foundations (Mission, Vision, Values, Culture)
3. Scanning the Marketing Environment
4. SWOT Analysis
5. The Five Forces of Competition
6. The Value Proposition and the Marketing Mix
7. Product Differentiation and Market Diversification
8. Organizational Core Foundations (Mission, Vision,
values & Organizational Culture
9. Developing Successful Marketing and Organizational
Strategies
10. Assessing and Controlling Strategy and Business
Actions
11. The V.I.R.O Strategic Planning Framework
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Marketing Management
Planning is Important
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Marketing is everywhere
Customers have more information,
more choices, higher expectations,
more power, and more involvement
Stakeholders are looking for
companies to make a difference
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Marketing and the
Concept of “Value”
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AMA definition of Marketing:
“…the activity, set of institutions, and processes
for creating, communicating, delivering and
exchanging offerings that have value for
customers, clients, partners and society at large”
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Value is Key: Value is the difference between the
benefits received and the perceived total price
Comparative Perceived Benefit(s)
VALUE = _______________________________
Comparative Perceived Cost to Satisfy (“Price +”)
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Marketing Planning
Marketing Management planning is the structured
process of determining how to provide value to
customers, the organization, and key stakeholders
by:
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3.
Researching and analyzing the current situation
Developing and documenting the firm’s objectives,
strategies and programs (relative to mission, vision
and purpose) and
Implementing, evaluating, and controlling
marketing activities (ROMI)
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The Marketing Planning Process
1. Research
and
Analyze
4. Direction,
Objectives,
Marketing
Support
2. Understand
Markets and
Customers
5. Marketing
Strategies
and
Programs
3. Segmentation,
Targeting, and
Positioning
6. Metrics and
Implementation
Control
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Contents of The Marketing Plan
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VI.
VII.
VIII.
Executive Summary
Current Situation (“Problems to Solve”) (“What”)
Situation, Objectives & Issues (“What & Why”)
Target Market, Customer Analysis & Positioning
(“Who & Why”)
Marketing Strategy (“What” Actions)
Marketing Programs (“How & Why”)
Financial & Operational Plans (“How & Why”)
Metrics & Implementation Control (“Results”)
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The Diverse Forces Influencing
Business Activities
Other people, groups & forces interact w/ business to shape its activities:
a. The organization itself, whose mission and objectives determine what
business it is in and what goals it seeks
b. Management is responsible for establishing these goals & corporate
strategy to satisfy them
c. The marketing department works w/ other departments to develop
products and facilitate relationships with customers, shareholders,
suppliers, & other organizations
Environmental forces shape an organization’s activities & include
social/cultural technological, economic, competitive, ecological and
ethical/regulatory forces a. i.e. business is affected by and impacts
society and culture
b. The organization must strike a continual balance among competing
interests of customers, suppliers, channel partners, employees, &
shareholders
The Marketing Concept
Take a holistic view of business:
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Satisfy Market Needs/Wants: Identify problems and opportunities and
satisfy w/ product development & product management (NPD & PLC)
Know & Understand the Market(s): Choose & target appropriate
customers (segmentation, targeting & positioning/repositioning)
Communicate & Deliver Benefits: Position the offering & communicate
value effectively
Customer Relationship Management: Know your customer & manage
and interact effectively w/ those customers (CRM)
Control the Business Effort: Includes market development, ROMI,
SMART objectives & ensuring continuity of performance
(assessment/control)
Summary of factors that affect an
organization’s business program
Today’s Visionary Organizations and
Core Foundations
It is important to recognize the significance of core
foundations to effective and efficient strategic
planning
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Strategy and Visionary Organizations
An organization is a legal entity of people who
share a mission
Organizations develop offerings, which are
products, services, or ideas that create value for
both the organization and its customers.
Organizations that develop similar offerings,
when grouped together, create an industry, such
as the ice cream industry.
Organizations must clearly understand what
industry they compete within
Visionary organizations:
(1) establish a foundation, (2) set a direction, and
(3) create strategies to successfully develop & market offerings
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Core Foundations
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An organization’s foundation is its
philosophical reason for being— why it
exists
C.F. rarely change, regardless of
environment or latest strategy planning
fad
Successful visionary organizations use this
foundation to guide & inspire its
employees -core values, mission, and
organizational culture e.g. Deer Valley,
Intermountain Health Care, Medtronics
Can you think of others?
Core Values
… The fundamental, passionate, and enduring principles
of an organization that guide its conduct over time
1.
Developed by organization’s founders or senior
management - are consistent w/ their essential
beliefs & character
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Capture collective heart / soul of organization - serve
to inspire & motivate stakeholders
3.
Held by or communicated to stakeholders of an
organization - employees, shareholders, board of
directors, suppliers, distributors, creditors, unions,
government, local communities and customers
4.
Are timeless & should not change due to short-term
financial, operational or strategic concerns
5.
Guide the organization’s conduct
6.
Must be supported by the chief executive officer &
board of directors
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Need to be lived! Converted into Organization Culture
Values
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Both the Mission Statement and Vision Statement
“ reside in a sea of values”
That’s because a company’s values influence
“everything” for any statement, whether mission
or vision, to be embraced and acted upon, it
must reflect the values of your organization
Values describe what your management team
really cares about
What it holds dear. What “makes ‘em tick”
How would your managers respond to a trade-off
between product quality and profit? That’s really
a question of value
Mission
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Example: “Clayton Instruments Company designs
and manufactures highly reliable monitoring
equipment for use in harsh or unusual
environments within the process industries.”
Describes what business you’re in & who your customer
is
Has an internal and an external dimension
Internally, describes products company offers: e.g.
“highly reliable monitoring equipment” It also lists
functions the company performs: e.g “design and
manufacturing”
External dimension identifies the customer: “the process
industries.” It cites company’s “market position” - the
reason why customers would prefer to buy products and
services from the company. Specifically, company’s
products are “for use in harsh or unusual environments”
Mission
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Captures very essence of your enterprise - its
relationship w/ its customer
Developing your vision statement is the step which
moves your strategic planning process from the
present to the future
Your mission statement must “work” not only today
but for the intended life of your strategic plan of
which your mission statement is a part
Focus is a primary benefit of your mission/vision
statement
It should be broad enough to allow for diversity (new
products, new services, new markets) you require of
your business
It will be specific enough to provide the focus
necessary to the success of your business
Vision
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Strategy team develops compelling vision of the future
A vision employees will enthusiastically embrace - because
vision is worthy, and because it challenges them to grow
Compelling even audacious. It has to matter… not just to
your management team, but also to your employees
“To triple sales revenue next year,” doesn’t do it. For, who
cares? Only a few. To make a difference to customers, to
the community, to the world. To improve the lives of
human beings. That matters.
When Steve Jobs said, “An Apple on every desk,” well there
wasn’t then an Apple on every desk. In fact, there won’t
ever be an Apple on every desk. That’s OK. The vision can
be figurative, rather than literal (B.H.A.Gs)
It’s also important for management not just to speak the
vision, but to live it!
Decide how to communicate vision to employees - How to
nurture & support that vision every day, in every way. How
to empower employees to fulfill that vision (Zappos)
Organizational Culture
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An important corporate-level marketing
function is communicating its core
values and mission to its stakeholders
An organizational culture is the set of
values, ideas, attitudes, and norms of
behavior that is learned and shared
among the members of an organization
(Zappos, Starbucks, Marriott, IDEO, 3M
….)
Step 1: Research and Analyze
the Current Situation
The marketer and manager performs
both:
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External analysis (Environmental Factors),
and
Internal analysis (Controllable Factors)
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External Analysis –
Environmental Scan
Involves the understanding of :
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Demographic
Economic
Technological
Political-Legal
Ecological
Social-Cultural
Competitors
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Environmental scanning provides relevant
information about external business
environment
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Changes in the marketing environment are a source
of opportunities and threats to be exploited and/or
managed
Environmental scanning is process of continually
acquiring information on events occurring outside the
organization to identify and interpret potential trends
Environmental trends typically arise from five
sources: social, economic, technological, competitive,
and regulatory forces
An environmental scan may uncover and explain
trends that affect business in the future
ES information must be carefully directed & included
in SWOT or Situation Analysis.
Timely, focused information is an important business
function and source of value creation, profitability &
competiveness
Organizational Structure and
Environmental Scan
Internal Analysis
Marketers also assess the firm’s
capabilities and the strategies of
competitors in order to:
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Build on strengths, and
Exploit competitors’ weaknesses and
resolve or respond to their our perceived
weaknesses
All relative to strategic priorities
& plan objectives
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Scan & SWOT
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The combination of an Environmental Scan and a
S.W.O.T. Analysis is called SITUATION ANALYSIS
Scans & SWOTS are targeted i.e. don’t scan the
broader external environment “willy-nilly” – ask
‘how external factors and forces in the environment
beyond the company impact specific challenges
(opportunities or situations)
Equally S.W.O.T.S are also typically narrowed to
areas of business strategy under consideration e.g.
a new product launch, JV, market segmentation
etc. pricing, channel distribution
Product Differentiation – Product
Side Analysis
Boston Consulting Group’s (BCG) uses business portfolio
analysis to quantify performance measures & growth targets
to analyze firm’s SBUs as though they were a collection of
separate investments
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To determine whether SBU or offering is appealing to
receive a cash infusion & at what level
Can be applied at product line, individual product (offering)
brand level or strategic business unit (SBU) level
Many large U. S. firms use BCG’s BPA
Position each SBUs on growth-share matrix
Vertical axis is market growth rate - Annual rate of growth
of SBU’s industry
Horizontal axis is relative market share Sales of SBU
divided by sales of largest firm in the industry or some
other measure
SETTING STRATEGIC DIRECTION
WHERE DO WE WANT TO GO?
 Business
(BCG)
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Portfolio Analysis
High
Stars
Cash Cows
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Question Marks
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Dogs
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Market Growth Rate
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Low
 High
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Low
Relative Market Share
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BCG Growth Share Matrix
Quadrant names based amount of cash generated or strategic importance:
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Cash Cows (lower left)
Large amounts of cash
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Have share of slow-growth markets
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Provides cash to cover firm’s overheads
2. Stars (upper left)
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High share of high-growth market - need extra cash to finance future
growth
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Likely to become cash cows when their growth slows
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3. Question Marks or Problem Children (upper right)
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Low share of high-growth markets
Require lots of cash to maintain or increase market share
Management must choose which SBUs to invest in and phase out the rest
4. Dogs (lower right)
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Low share of slow-growth markets
May generate enough cash to sustain themselves but do not hold promise
of becoming winners for firm
Must consider dropping dogs unless relationships w/ other SBUs
competition, or potential strategic alliances exist that benefit the firm
SBUs often start as question marks & go counterclockwise to become
stars, then cash cows, and finally dogs - idea of Product Life Cycle
Management must decide strategic roles for SBU based on market
conditions, strategy & overall cash needs
BCG business portfolio analysis for Kodak’s
consumer SBUs for 2003 (solid circle) and 2011
(hollow circle)
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Kodak digital
picture frame
Kodak digital
photo printer
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Kodak digital
camera
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Kodak film sales: US,
Canada, & W. Europe
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Diversification Analysis –
Market Side
The search for growth opportunities from current and new
markets & from current and new products
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Market-Product Grid Analysis shows need to view growth
opportunities in terms of markets and products
For any market there is both a current product (what the
firm now sells) and a new or modified product (something
the firm might sell in the future)
For any product there is both a current market (existing
customers) and a new or modified market (potential
customers)
Diversification Analysis
See four market-product strategies (see Ben & Jerry’s SWOT in slides
coming up):
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Market Penetration: Increase sales of present products in existing
markets
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No change in basic product line or the market served. Increase
sales to existing customers by selling:
– More of the product through better promotion or distribution or
– The same amount of the product at a higher price
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Market Development: Sell existing products to new markets. Risk
= if the firm has no experience selling in the new market
Product Development: Sell a new product to existing markets.
Risk = customers may not see a clear connection between a
company’s expertise in one offering transferring to another
Diversification: Develop new products & sell them in new markets.
Can be high-risk strategy if company has neither previous
production nor marketing experience on which to draw – need to
overcome these considerations w/ strategic plan & program
Other Analyses*
Other areas that are analyzed for their impact
on marketing management strategy include
(Porter’s Five Competitive Forces):
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Level of rivalry among organizations in an
Industry
The potential for an entry into the industry
The power of large suppliers
The power of large customers (80:20 rule)
The threat of substitute products
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Step 2: Understand Markets
and Customers
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Ultimate consumers & business partners
Comprehensive understanding is desired
We are really constructing business
arguments (what to do, how & why?):
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Buying habits & behaviors?
Who?, What?, Where?, When?, Why?, How?
Are buying patterns changing? Why?
What can we do about these things?
How should we act/react? Why/ How?
& When?
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Implications
All business is essentially a “problem-solving” activity
(five finger hand model):
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Who are our existing / potential customers?
What are their current / future needs?
How can we satisfy these needs?
Can we offer a product/ service that the customer would
value?
 Can we effectively communicate with our customers?
 Can we deliver a competitive product of service?
Why should customers buy from us?
SWOT Analysis
Internal
 Strengths
 Weaknesses
External
 Opportunities
 Threats
e.g. Ben & Jerry’s SWOT
Next two slides show four cells internal versus external
factors (the rows) and favorable versus unfavorable
factors (the columns) to summarize strengths,
weaknesses, opportunities, and threats:
SWOT Analysis:
 Build on a strength: Find distribution efficiencies with
Unilever’s existing ice cream brands
 Correct a weakness: Recruit experienced managers
from other consumer products firms to help stimulate
growth
 Exploit an opportunity: Develop a new line of low-fat
frozen yogurts to respond to consumer health
concerns
 Avoid a disaster-laden threat: Focus on less risky
international markets, such as Canada and Mexico
Four alternative market-product strategies for Ben &
Jerry’s to expand sales revenues using
diversification analysis
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Ben & Jerry’s SWOT analysis that serves as the
basis for management actions regarding growth
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Step 3: Plan Segmentation,
Targeting, and Positioning
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Purpose of segmentation: To group
customers with similar needs, wants,
behavior, or attitudes who will respond
similarly to marketing mix program
Targeting: The selection of specific
segments for marketing
Positioning: A competitively distinctive
place (position) in the mind of the targeted
customers – marketing communication
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Needs & Wants
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A need occurs when a person feels physiologically deprived of basic
necessities, such as food, clothing, and shelter
A want is a felt need that is shaped by a person’s knowledge, culture &
personality
Marketing does not create the need for a product but does shape a
person’s wants (official party line)
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Does marketing persuade consumers to buy the “wrong” products?
Marketing does try to influence what consumers buy?
When should the government and society step in to protect consumers?
What role should company decision-makers play?
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Discuss Ethics (fifth finger of the ‘Five Finger Model’)
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Markets
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Potential consumers make up a market, which is people w/ both the
desire and the ability to buy a specific product category
Organization B2B markets where organizations are buyers
& sellers & consumer markets where individual ultimate
consumers make up market segments
People & organizations aware of their unmet needs may
have a desire for a product but they must also have the
ability to buy … authority, time, and money
Since an organization does not have the resources to
satisfy the needs of all consumers, it focuses on the needs
of its target market—one or more specific groups of
potential consumers toward which an organization directs
its marketing program
Step 4: Plan Direction, Objectives, and
Marketing Management Support
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Goals: Long-term targets
Objectives: Shorter-term targets
Targets – Measurable short term
Sustainable Marketing
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Balancing long-term goals with short-term
objectives and budget realities
Responsible to key stakeholders & to the
larger society
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Strategy
Strategy is organization’s long-term course of action
designed to deliver a unique customer experience
while achieving its goals:
1. All organizations set a strategic direction
2. Marketing helps to set a strategic direction and to
move the organization there
Successful organizations must be visionary—anticipating
and responding quickly and effectively to future events.
Visionary organizations: (Redbox, IDEO, Marriott,
Starbucks):
1. Specifies its foundation (the ‘why’).
2. Sets a direction (the ‘what’).
3. Formulates strategies (the ‘how’)
Step 5: Develop Marketing Management
Strategies and Programs
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Consistent with the firm’s overall direction,
goals & strategies
Utilizing the tools of the “marketing mix”,
enhanced by service (CRM) & technology
e.g. Increasing use of “three screens”: TV, cell phone,
and computer
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Includes the development of strategic alliances with
suppliers, partners, & channel partners
Always remember ‘why’ are we doing things & the
importance of ‘how much’ does it cost & ROMI
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Primary Marketing Tools
The primary tools for marketing,
referred to as the “Marketing Mix”
Build them into a Strategic Plan:
4 P’s
4 C’s
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Product or Consumer Needs & Wants
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Price or Cost to Satisfy
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Promotion or Communication
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Place (Channels) or Convenience
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Product
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Tangible good or an intangible service
Must be considered in a holistic fashion
Branding must also be considered
Consider the product attributes & key
points of difference
Consider perceived ‘value’ & how
customer needs/wants are satisfied
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Pricing
Based upon a number of factors:
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How customers perceive the value of the
offering (demand side)
Positioning
Product costs (cost side)
Competitive forces (competition side)
The value the organization expects to gain
(profit side)
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Channel
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How, when, and where to make the goods
and services available to customers
Requires effective relationships w/ channel
partners
Seek value added: logistical, transactional,
facilitating
Utilities: Time, Place, Form & Possession
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Promotion
Involves the following activities:
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Advertising
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Public Relations
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Sales Promotion
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Personal Selling
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Direct Marketing
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Use of the Internet
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VIRO Framework
Michael Porter
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See strategic planning not as lists of concepts
and process steps
See as useful structure thinking about realworld business situations, especially those
involving entrepreneurship/change
management
VIRO = Tool for strategic analysis to integrate
business frameworks & activities - combines
environmental scan w/ SWOT situation
analysis to guide actions, problem solving and
decision-making:
(1) “Positioning Perspective” &
(2) “Resource View”
V.I.R.O.
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We can ask four questions about a resource or
capability to determine its competitive potential:
VALUE: Does a resource enable a firm to exploit
an environmental opportunity and/or neutralize
an environmental threat?
RARITY: Is a resource currently controlled by
only a small number of competing firms?
IMITABILITY: Do firms w/out a resource face a
cost disadvantage in obtaining or developing it?
ORGANIZATION: Are a firm’s policies and
procedures organized to support the
exploitation of its valuable rare, and costly-toimitate resources?
Benefits of the V.I.R.O.
Decision-Making Framework to aid
analyzing case and business situations
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Overcomes problem of seeing concepts,
models and principles as fragmented and
disconnected (rote memorization not real
understanding)
VIRO connects ideas together for real
business strategic understanding
VIRO allows us to discuss the formulation
and implementation of strategy
simultaneously within collections of business
principles studied across chapters and
courses
Step 6: Plan Metrics and
Implementation Control
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Metrics: Numerical measures of performance-related
activities & outcomes – individual ratios
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Return on marketing investment (ROMI)
Market share or other measures of competitiveness
Cost per customer acquired or other measures of costs of doing
business
% Change in Revenues, COGS or Net Profits (target choice of
ratios/measures based on organizational ends (examples of
measured ratios)
Marketing Dashboards: Display of several individual
metrics used to ‘paint performance picture’ & ROMI
Marketing Control: Measuring interim performance against
metrics, diagnosing any performance issues & making
changes as needed
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Conclusions and Key Points
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Preparing for marketing management
strategic planning
Support strategies: Customer service
and customer relationship
management
Support strategies: Internal marketing
and alignment w/ strategic planning
Guiding principles for effective efficient
marketing management
Key Takeaways – Internal and
External
Preparing for Marketing
Management Planning
Marketers must develop a number of
professional and organizational
strengths, including:
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Knowledge of markets and customers
Core competencies
Strategic relationships
Customer Relationship MGT
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Support Strategies:
Customer Service
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Reinforces positive perceptions
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Helps differentiate from competitors
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Enhances business through reputation &
referral
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Excellent service helps retain loyal
customers
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Poor service alienates otherwise loyal
customers
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Support Strategies:
Internal Marketing
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Focuses all employees on serving customers
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Builds support for the marketing plan
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Enhances execution of the marketing plan
throughout the organization
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Guiding Principles for Effective
Marketing Management Planning
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Anticipate Change
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Differentiate Offerings & Company
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Engage Everyone – build organizational culture
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Seek Alliances
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Make Marketing Meaningful - ROMI and
build value, profits & competitiveness
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Key Takeaways – Internal
Factors
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As you work remember “what is the cost of
not doing something?” as well as “what is
the cost of doing something”
What human, informational & supply
resources can I count on for success?
What critical elements could make a
difference between good or poor marketing
performance?
What strengths and weaknesses exist? What
can we exploit and what do we need to
overcome?
Key Takeaways – External
Factors
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What are the most important demographic,
socio-cultural, economic, technological and
legal/regulatory factors affecting my brand
and customer? situation?
What are the latest competitive trends and
which require immediate marketing
attention?a
How quickly are changes occurring
What risks would my organization be willing
to accept when dealing w/ these opportunities
and threats?