Marketing Strategy Revision Notes

Lecture 1 Marketing Strategy

Strategy Definitions

A fundamental pattern of present and planned objectives,

resource deployments and interactions of an organisation with
markets, competitors and other environmental factors (Kenn
1990)

A pattern in a stream of decisions (Mintzberg)

Features: Conditions of uncertainty, maintaining a position of

advantage, successive exploitation of known or emergent
possibilities, cycles

Hierarchy of Strategy (3)

Corporate strategy (which industry should we be in?)

Business strategy (what product/service markets should we be

in?)

Marketing strategy (target market, consumers, lines, branding

etc)

Market Driven v Driving Markets

Market driven: An orientation that is based on understanding

and reacting to the preferences and behaviours of players
within a given structure

Driving markets Influencing the structure of the market

and/or the behaviour of market players in a direction that
enhances the competitive position of the company

Mutually Beneficial Exchanges

Mutual satisfaction of both provider and customer

Provider goals (Survival, financial, social, spiritual, ecological)

> Offers of products, services

Customer goals (Solutions, benefits, altruism, well-being) >

Responses as purchases, support

Equilibrium between goals

Organisational Stakeholders

Many: customers, distributors, suppliers, employees,

managers etc

Marketing and Performance Outcomes

Market oriented culture >

Marketing resources (assets, capabilities) >>
Market performance (satisfaction, loyalty, share) >>>
Financial performance

Role of Marketing in the Organisation

Internal: Identify and communicate customer wants and

needs throughout the organisation

Determine the competitive positioning to match the needs

of the customers with company capabilities

Direct all resources to deliver customer satisfaction

***Marketing Strategy Process (Figure 1)***

Business purpose > Core strategy (environment, company) >

Competitive positioning (market target, comp. adv.) >
Implementation (control, organisation) > Marketing mix

Business Purpose

Mission statement helps to clarify objectives of the business,

may encourage investment

Provides employees with a greater understanding of the

objectives they should be striving for and be committed to

What business are we in? What business do we want to be in?

Strategic Intent: Vision of where the company wants to be

Company Values: Moral, ethical guidelines that must be

adhered to

Distinctive Competencies: Must be articulated, clearly stating

what differentiates the organisation from similar competitors

Market Definition: Customer targets to serve, wants and needs

Positioning: Unique and distinctive factors

Core Strategy (Envrionment and Organisation)

Statement of company objectives as well as the broad

strategies that will be used to achieve them

Requires detail analysis of environment as well as organisation

resources

Organisational Resources: (Distinctive resources, core

competencies and weaknesses v competitors) >
Product portfolio > today, tomorrow, yesterday breadwinners
+ developments and sleepers, ego and failures) > Balanced
portfolio that generates cash today as well as promised to
generate future cash

Envrionment (Markets served): Segmentation, opportunities,

SWOT

On the basis of the above, the company will look to define the
KFS

Core strategy e.g. Market expansion, geographic expansion,

share etc

Competitive Positioning (Market targets and comp. adv)

Statement of the market targets (where the company will

compete) and differential advantage (how the company will
compete)

Developed to achieve the objectives laid down by the core

strategy

Market Targets: Select targets most suitable to companys

strengths, while minimizing vulnerability of weaknesses

Choice criteria: Market attractiveness and companys

strengths in serving those markets

Attractiveness Features: Large size, growing, high contribution

margins, low rivalry, high entry and low exit barriers, low
vulnerability

Strength Features: High market share, fast growth, unique

offering, superior quality, good margins, exploitable assets,
efficiencies, new tech

Competitive Advantage: Can be created by any of the

company strengths or distinctive competencies relative to the
competition > When choosing how to create this advantage it
must consider the value that it will provide to the customer as
well as the imitability of competitors

Cost leadership requires EOS and a higher market share,

generally [Risks: Tech change, imitation, differentiation]

Differentiation creates a market based advantage, can charge

premium prices [Risks: Cost, imitation]

Simultaneous possible with tech. and large market share

(BOSS)

Implementation & Marketing Mix (Control and Organisation)

Marketing Mix: Product, price, promotion, distribution >

Synergy

Organisation: Of marketing effort and employees > Functional,

product and brand management, skill set

Control: Monitor market (metrics) and financial (ROI,

Contribution)

Lecture 2/3 - External Envrionment

*Marketing Environment*

Macro: PESTLE

Micro: Customers, suppliers, distributors, competitors,

company

Macro - *PESTLE Analysis*

What are the key drivers and in which direction are they
changing?

Political (National and international governments, tariffs,

elections, peace/war, uprising, trade areas)

Economic (Economy, globalisation, IR, inflation, currency, tax,

fiscal, cycle, development, confidence)

Socio-cultural (Demography, lifestyle, ethnicity, gender,

equality, unemployment, grey market, youth market,

increased power, choice, frugality, green)

Technological (Shorter commercialistion time for new

inventions, rate of change, Moores law, shorter product life
cycles, R&D, Internet, mobile, innovative marketing tech and
metrics, AI, computer integration)

Legal (Regulation, compliance)

Envrionment (Conscientious consumers, climate change,

energy costs, raw materials)

Globalisation of Markets

Farley 1997: Many markets are becoming global in nature,

products more available and consumers more aware >
Gigantic scale > EoS
[Eval: Markets actually becoming more fragmented]

Marketing Strategies for Macro-Environments

Global positioning focus on core competencies on a global

scale
Master brand consistent brand identity that links all parts of
business
End user focus
World class service as standard
Mass customisation scale economies but still personalization

*Porters 5 Forces Industry Competition*

Rivalry Among Existing Firms

- Industry competition is roughly evenly balanced
- During periods of low market growth
- High exit barriers
- High FC
- Low product differentiation

Threat of New Entrants

- Low entry cost
- Ease of using existing / new distribution channels
- Low competitive retaliation expected
- Low differentiation
- Gaps in the market

Threat of Substitutes
- Making existing technology redundant
- Incremental product improvement

Bargaining Power of Suppliers

- More concentrated than buyers
- High cost of switching
- Suppliers offerings are highly differentiated

Bargaining Power of Buyers

- More concentrated than suppliers
- Readily available alternative sources of supply
- Low switching costs
- Internet > Ease of search, choice and comparison

Greater competition when: Little differentiation, low industry

growth, high FC, high supplier switching costs, low buyer
switching cost, low entry barriers, high exit barriers

Targets of Competitor Analysis

Strategic Group: Who are they key direct competitors?

Industry competition: Who is able and motivated to overcome

entry barriers to the strategic group?

New entrants or substitutes: Who is seeking to diversify or

implement new skills to capture demand?

Components of Competitor Analysis

Assess competitors current and future objectives

- What are they trying to achieve?
- Why are they trying to achieve it?
- Are they satisfied with their achievements?
Key: States goals, market assumptions, investments

Assess competitors current strategy

- What target markets?
- What is their strategic focus?
- What marketing mix?
- How do they organise their marketing?
Key: Ad media, messages, new product introduction rates,

recruitment ads, price level, distribution channels

Assess competitors resource profile

- Marketing culture?
- Marketing assets and capabilities?
- Production and operation capabilities?
- Financial resources?
Key: Customer relationship strength, new product success
rates, quality of people, product availability, cost of promotion

Predict competitors future strategies

- What might they do?
- What under-utilised resources do they have?
- How will they react to our actions?
Key: Past strategies, past reactions recent acquisitions,
ownership

*Product Life Cycle (PLC) Figure 2*

Insightful tool into an industrys competitive environment

PLCs follow predictable patterns or phases
Market conditions, opportunities and challenges vary over the
life cycle
Strategies must adapt over the life cycle

Introduction Stage

Product is launched into the market and generally sales are

slow to pick up as customers and distribution have to be found
and convinced
If the product is new to the world it will face little or no
competition and the company will face a pioneer advantage
Key: How quickly until competitors launch an alternative?

Growth Stage

Rapid increase in sales as product starts to attract new

customers and potentially repeat purchases
It is at this stage that competitors evaluate product market
and profit potential + evaluate potential competitive moves

Maturity Stage

Rate of growth slows down significantly

Lasts longer than other stages and is the most challenging
one
Severe competition, market fragmentation and declining
profits due to over-capacity in the industry
Search for untapped niches and potential price wars > Weak
competition will exist > Remaining companies will have high
market share
May lead to increased substitutes

Decline Stage

Slow or rapid decline in sakes

May be due to better solutions, changing tastes, increased
competition domestically or international

*SPACE Analysis*

Strategic Position and Action Evaluation

Extends environmental analysis beyond the consideration of

turbulence to look at industry strength and relate this to the
competitive advantage and financial strength of the company

The company is rated on each of the four dimension to give a

competitive profile

Each quadrant represents a different posture

Competitive Posture: Competitive advantage and an attractive

industry [Eval: Companys financial strength is insufficient to
balance the environmental instability it faces > Need to raise
more capital]

Aggressive Posture: Significant advantages but are likely to

face threats from competition
[Eval: Excessive finances may allow acquisitions to occur]

Conservative Posture: Typical for mature markets where the

lack of need for investment has generated financial surpluses

[LR vulnerability due to lack of opportunities > Defend

existing products]

Defensive Posture: Very vulnerable > Divest and retreat >

Only a matter of time

Lecture 4 Internal Analysis

*Consider the relationship*

Assets > Capabilities > Sustainable competitive advantage

Organisational Resource Base

Resource Based View (RBV) >

Dynamic capabilities >>

Marketing assets >>>

Dynamic marketing capabilities >>>

Resource portfolio

Resource Based View of the firm (RBV)

High performance strategy is dependent primarily on

historically developed resource endowments (Grant 2005)
Resources may be strengths or a weakness
Factors owned or controlled
Assets, capabilities, processed attributed
Capabilities = Synergy between assets

Dynamic Capabilities

Capacity of an organisation to purposefully create, extend or

modify its resource base
- Firms must change within changing environments
- Coordination as well as learning

Marketing Assets

The resource endowments the firm has built or acquired over

time
Valuable, Rare, Inimitable Non-substitutable (VRIN)

Customer Based Assets

- Relationships with customers
- Company name > Helps identify product benefits
- Reputation > Difficult to build
- Brands, country of origin > Major assets
- Market domination > Coverage, distribution

Internal Support Assets

- Cost advantages (New tech, efficiency, EoS, experience,
price)
- Information systems (Informed company, customisation)
- Technical skills (Tech increases leads to falling costs and
rising quality)

- Production expertise (Quality)

- Copyrights and patents
- Franchises and licenses

Supply Chain Assets

- Distribution control > Helps to block competition
- Pockets of strength > Concentrating efforts geographically
- Distribution uniqueness > Reach target in a novel, unique
way
- Distribution network and relationships > Ensures availability
- Supplier network and relationships > Discounts, preference

Alliance Based Assets

- Access to markets
- Access to management skills
- Shared technology
- Exclusivity

Marketing Capabilities

Deploy marketing assets with synergy

Product and service management: Marshaling all resources to

deliver customer value, synergy

Distribution and logistics: Timely, efficient, rapid, Internet

Pricing and tendering: Costs, competition, elasticity

Advertising, promotion and selling: MARCOMs

Dynamic Marketing Capabilities

Ability to create new marketing resources or capabilities to

identify and respond to change > Sustain competitive
advantage

ABSORPTIVE
- Market sensing: External environment research, company
analysis
- Learning: LR competitive advantage, continuous

ADAPTIVE
- Targeting/Positioning
- CRM > Acquire and retain customers

Capacity of an organisation to purposefully create, extend or

modify ORB

Marketing Resources as the Foundation for Differentiation

Distinct resources of the company that are resistant to

competitor imitation > Sustainable competitive advantage

Key characteristics
- Enable superior value for customers
- Resistant to duplication
- Value can be appropriated by company

Example marketing resources: Brand reputation, customer

relationships, distribution networks
- Many are intangible in nature
- Duplication can be prevented through isolating mechanisms
> Complex combination of resources used etc.

3 Value Creating Disciplines OE, PL & CI

Every business acquires capabilities that enable it to move its

products through the value chain

Only a few of these capabilities need to be superior to

competition > These are distinctive capabilities that support
a value proposition that is valuable to customers and hard for
competitors to imitate

Each discipline excels at meeting the distinctive needs of one

customer type, each of which requires different resource
capabilities

Operational Excellence Providing middle of the market

products at the best price and with the lowest inconvenience
(Aldi, McDonalds)

Product Leadership Offering products that push the

boundaries of product and service performance (Intel, Nike)
(Market sensing, innovation, experimentation)

Customer Intimacy Delivering what specific customers

want in cultivated relationships > Flexibility, LR CRM,
customisation

*The Resource Portfolio* - Figure 3

*Developing and Exploiting Resources* - Figure 4

*Product/Service types in Portfolio* - Figure 5

*Product Life Cycle* - Figure 6 (Covered earlier)

Lecture 5 SWOT, SCA and Core Strategy

SWOT Analysis

Strengths (Int): What are we good at, relative to competitors?

- People, expertise range, systems, brand

Weaknesses (Int): What are we bad at, relative to

competitors?
- Age of firm, culture

Opportunities (Ext): What changes are creating new opp. for

us?
- Cloud computing, network speed, regulation

Threats (Ext): What emerging dangers must we avoid or

counter?
- Tax changes, wider offering by competitors

Routes to Competitive Advantage Figure 7

Towards differentiation (Vertical) > High valued uniqueness

Towards cost leadership (Horizontal) Low relative delivered

cost

Differentiation creates a market advantage

Cost leadership creates a financial advantage

Achieve both for SCA

Advantage Creating Resources *VRIN*

Provide value for customers: May be direct (tech, services) or

indirect (cost control)

Hard to imitate: Legal, complexity, causal identity (culture,

specialist)

Unique to the firm: Distinctive competencies (CRM, Team

members)

*Resource Imitability Ladder*

Easy to imitate unskilled workforce, undifferentiated

products
Cost to imitate physical capacity, plant, machinery
Difficult to imitate brand image, reputation, loyalty,
motivation
Cannot be imitated copyrights, patens, unique locations

*SPACE Analysis* - Covered earlier

Company Dimensions financial strength, ROI, leverage,

liquidity, capital, cash flow, exit barriers, risk

Industry Dimensions environmental stability, tech. changes,

rate of inflation, demand, price range, entry barriers, comp
pressures, PeD

Competitive Advantage market share, product quality, PLC,

loyalty, tech, vertical integration

Industry Strength growth potential, profit potential, financial

stability, tech, resource utilisation, capital intensity,
productivity

Generic Business Strategies ANSOFF Figure 8

Product / market growth matrix

*Generic Business Strategies Cost Leadership (Porter

1980)*

EoS most effective (DoS, optimum scale)

Experience efficiency through learning

Capacity Utilisation unit costs, ROI

Linkages high quality could lead to lower service costs

Integration forward and backward

Timing first mover advantages

Policy Choices product choice

Location materials, geography, labour

*Generic Business Strategies Differentiation (Porter 1980)*

Product packaging, quality, branding, service

Promotional wider mix of Marcomms, IMC

Brand positioning, emotional appeal

Distribution Internet, routes, network, coverage

Pricing low, premium

Red Ocean v Blue Ocean Strategies

Competing in existing market v Create uncontested market

Beat the competition

irrelevant

Exploit existing demand

demand

v Create and capture new

Make value cost trade-off

v Break value cost trade-off

Both: Align the whole system of a firms activities with its

strategic choice of differentiation or low cost

v Make the competition

*Generating Strategic Options*

Macro factor > Micro factor > Internal resources > Strategic >
Objective

*Evaluation of Strategies SAFe Criteria*

Suitability does the proposed strategy address the key

opportunities and threats the organisation faces?

Acceptability does the proposed strategy meet the

expectations of the stakeholders?

Feasibility would the proposed strategy work in practice, do

we have the finances, people and resources?

Sustaining Competitive Advantage

Unique and valued products

Clear definition of market targets
Enhanced customer linkages
Established brand and credibility

Lecture 6 Segmentation, Target Markets and Positioning

Positioning Definition

The act of designing the companys offering and image so

that they occupy a meaningful and distinct position in the
target customers mind

Segmentation Definition

Dividing the market into groups of similar customers

*Segmentation and Positioning Stages*

Market segmentation > Choice of target markets > Positioning

Customer Characteristics

Demographic (gender, age, geographic, subculture)

Socio-economic (income, occupation, education, class)
Psychographic
Census / ACORN

Life cycle

*Segment Criteria*

Need to be:
Measurable
Adequate size
Profit potential
Accessible
Homogenous within
Heterogeneous across
Unique in response to market stimuli

Factors Affecting Market Segment Attractiveness

PESTLE and PORTER

Segment Attractiveness + Organisational Resources

Ideal: Attractive segments that match organisational

resources

Evaluating market targets Current and potential company

strengths in serving the segment

Current position: share, exploitable resources, unique offerings

Economic and tech: relative cost, capacity utilisation, tech

available

Capability profile: management strength, marketing,

forward/backward int.

Basic Positioning Options

Low price
- Customers: price sensitive, standard indifferent
- Strategic focus: internal efficiency
- Resource requirements: effective cost control, internal
monitoring

Premium quality
- Customers: demanding, discerning, less price sensitive
- Strategic focus: quality control, image management

- Resource requirements: market sensing, brand image

Superior service
- Customers: service sensitive, less price sensitive
- Strategic focus: CRM
- Resource requirements: RATER

Innovation
- Customers: adventurous, early adopters
- Strategic focus: first to market, continuous improvement
- Resource requirements: identify gaps, creative, R&D, rapid
products

Differentiated
- Customers: selected benefit, segments
- Strategic focus: segment leadership
- Resource requirements: sensing, segmentation, creativity

*Perceptual Positioning Maps* - Figure 9

High up and high right!!! (Just like a normal graph!)

Quality v Personalisation

Quality v Price

Can be used to illustrate future positioning aims

Positioning Risks and Errors

Must be credible, believable, consistent and not too

broad/narrow

Differentiation Criteria for Basis of Positioning

Important, Distinctive, Pre-emptive, Superior, Communicable,

Affordable, Profitable

*The Positioning Statement*

For (target customer) who (needs, opportunity), the (product

name) is a (product category) that (statement of USP). Unlike
(primary competitors), our product (distinctive differentiation).

Lecture 7 Competing through: Marketing Mix + Innovation

*What is digital marketing?*

The use of digital technologies to create an integrated,

targeted and measurable communications mix which helps to
acquire and retain customers while building deeper
relationships with them

Targeted bespoke recommendations and choices

Measurable metrics, click through, heat, ROI, conversions etc

Relationships continuous communication, feedback,

engagement etc

*Digital Marketing Mix*

Product (Individual, customized, digital) (Innovation,

differentiation, augmented, life cycle)

Price (Dynamic, transparent, flexible) (Production cost,

value, competitors, PeD)

Promotion (Instantaneous, permission-based, interactive)

Place (Internet, new channels, global, virtual)

>>> Evaluation and performance control

The impact of digital marketing on the traditional marketing
mix is huge
E.g. radical change to prices, dynamic pricing in the aviation
industry not possible before the Internet

*Digital Promotional Tools*

Online advertising and Search Engine Marketing (SEM)

- Optimisation for search listings, SEO, affiliate marketing

SEM helps distinguish between natural search and optimized

search rankings > back links, tags, mentions, adwords

Online video and interactive ads (rich media)

Social media advertising

*Types of Social Media Activity*

Social Community Internet, sharing, socializing, conversing

Social Publishing Editorial, commercial, UGC

Social Entertainment Games, music, art

Social Commerce CRM, service, retail, human resources

[Eval: one of the most powerful marketing tools but absolutely

no control over it]

*Mobile Marketing*

The creation and delivery of MarComm messages through

mobile devices

Advantages cost effective, targeted, personalised,

interactive, personal, time-flexible, immediate, measurable,
updatable, gateway to other channels

Communications Market

Rapidly changing > Move to mobile and Internet > Less focus
on published content and T.V

*5 Is of Digital Marketing*

Identification (customer specifics)

Individualism (tailored for lifetime purchases)

Interaction (dialogue to learn about customer needs)

Integration (knowledge of customers throughout company)

Integrity (develop trust through non-intrusive marketing)

*Competing Through Innovation*

Pressures and spurs to innovation to ensure survival profit and

growth:
- Exploit new technology
- Intensive competition
- New customer targets
- Changing needs and tastes
- Shorter product life cycles
- New assets and capabilities

Changing customer behaviour is the core driver of innovation

Not just marginal product changes > Quest to create superior

value
*Can we plan Innovation?*

Innovation can fundamentally and radically change industries

(cloud, biotech)

Willingness to cannibalise

Innovation and Marketing Strategy

I) Proactive Cannibalism
- Value innovation
- Big ideas
- Innovation networks
- Globalisation

II) Disruptive Innovation

- Predicting industry change
- New business models
- Innovative company
- Radical innovation

III) Innovation Strategy

- Success and failure
- New product planning
- Product development process
- Speed of innovation
- Organising for innovation

IV) New Products

*Willingness to Cannibalise*

Firms must prepare to give up the old and embrace the new
Use new tools to solve new problems
Firms must cannibalise before there is nothing left of value to
cannibalise

Examples of Disruptive Innovations

Amazon (bookstores), E-bay (auction houses)

*Two Types of Disruptive Innovations*

Low End address over-served customers with a lower cost

business model

New Market compete against non consumption

*Innovators Dilemma*

Continue investing in sustaining innovations (better products

in established markets)

- May provide profits now but what about the future?

OR

Invest in new, disruptive innovations

- May provide future profits, but can we be certain if they
will/when?

Characteristics of Innovations that Accelerate Diffusion

Superior value
Compatibility with existing processes
Low complexity for ease of understanding
Divisibility to facilitate trial
Communicability

*Roadblocks to Innovation*

Perceptual difficulty identifying the problem, or info to solve

problem

Intellectual - intellectual capabilities are limited

Emotional freedom of exploring new ideas and

communicating them

Environmental imposed by our immediate social/physical

envrionment

Cultural stuck in tradition

Lecture 8 Competing through Superior Service + Driving

Markets
Good-Services Spectrum

Relatively pure product packaged goods

Hybrid fast food

Relatively pure service Education

*3S Model of Customer Service*

Strategy Part of corporate strategy and competitive

positioning. Communicated throughout the organisation, a
clear demonstration of the companys commitment

Staff Recognition of importance, recruitment, training and

empowerment

Systems Measurement of performance, feedback, support

the delivery of info that customers want

Must balance the level/quality of service with impact of

service on customer outcomes. Therefore avoiding overservicing costs and under-servicing risks.

SERVQUAL and RATER

*Relationship Marketing Ladder*

Customer Catching (emphasis on winning new customers):

- Prospect (marketing to catch prospect)
- Customer (repeat buyer, identity)
- Client (positive feelings)

Customer Keeping (emphasis on developing and enhancing)

- Supporter (loyalty)
- Advocate (recommends)
- Partner (mutual working)

*Cornerstones of Relationship Marketing*

Sound reasons on both sides for relationship

Mutual trust and respect
Employee motivation and commitment

*Assessing Customer Satisfaction*

Match customer expectations with customer experiences, the

difference is the satisfaction gap

RATER

Reliability
Assurance
Tangibles
Empathy
Responsiveness

*Quality Gap Analysis*

Offer specification Delivered offer (production gap)

Delivered offer Customer evaluation of offer (perceptual gap)

Customer evaluation Customer expectations (satisfaction

gap)

Supplier side: Market intelligence gap + Design gap

*Market Driven v Driving Markets*

Market Driven: An orientation that is based on understanding

and reacting to the preferences and behaviours of players
within a given market structure

Driving Markets: Influencing the structure of the market

and/or the behaviour of market players in a direction that
enhances the competitive position of the business

Market Driven (Kohli and Jaworski 1990):

*Intelligence Generation*
- Not simply understanding customers verbalized needs and
preferences but understanding the exogenous factors that influence
these needs
- Future needs, who are the consumers
*Intelligence Dissemination*
- Linking different departments
- Formal and informal
*Responsiveness*
- Selecting target markets
- Product development to address current/latent needs
- Production, distribution and communication to address needs
Market Driven (Narver and Slater 1990):
*Customer Orientation*
- Understanding customer preferences and how they develop over
time
- Focus on the whole chain of customers
*Competitor Orientation*
- Existing and potential
*Inter-functional Coordination*
- Synergy
Driving Markets (Jaworski and Kohli 2000):
Change the structure
Deconstruction
- Eliminating players through competitor mergers and acquisitions
- Supplier integrations
Construction
- Building a new modified set of players
- Adding complementary products
Changing Functions
- Virgin example
*Modifying Market Behaviour*
Directly
- Build customer constraints (Ikea), Remove customer constraints
(Expedia)

- Build competitor constraints (Regulation up), Remove (Regulation

down)
Indirectly
- Create new customer preferences, Reverse existing preferences
- Create new competitor preferences, Reverse existing preferences
*Need for a Balanced Approach* (SR market driven) (LR drive
markets)