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Strategy
The set of decisions and actions that result in the formulation and implementation of plans design
to achieve a company's objective
Marketing Strategy
A marketing strategy is a process to allow a company to focus limited resources on the best
opportunities to increase sales and thereby achieve a sustainable competitive advantage.
business goals: these are the highest-level objectives of the business, or mission statement.
marketing strategy: the high-level rules that will govern what marketing efforts you focus on.
marketing mix: plans for Product, Pricing, Place (Distribution), and Promotion.
marketing plan, which will describe the specific, detailed marketing activities that you plan on
engaging in to achieve the marketing strategies and business goals.
3 level of strategy:
Strategy components:
Scope Goals and objectives
- Product quality
- Distribution setup
- Technology elements
- Market development
- Manufacturing process
- Strategic Capabilities necessary to compete in the marketplace:
- Capability Description
- Differentiation Strategies
-
Market Share Leader The largest
Vision: Vision refers to an image or a concept. Its the ability to anticipate possible future events
and developments with imagination and wisdom. Vision in management literature, may be
defined as a mental image of a business manager for possible and desirable future of an
organization. It may also be defined as a strong belief of a manager about the specific course of
action for the business organization. To put it simply, vision refers to where an organization
wants to be in the future.
Objectives: Objective in general indicates a place where you want to reach. In organizational
literature it means the aim which an organization tries to achieve. Objectives are generally in
plural form. Objectives are predetermined; they provide clear direction to the activities and
results to be obtained from the planning process. Objectives must be SMART (Specific,
measurable, achievable, realistic and timely). Objectives must be clearly defined, so that the
works become goal-oriented and the unproductive and unsystematic tasks can be avoided.
Goals: A Goal is simply something that somebody wants to achieve. The synonyms of goal
are: aim, ambition, purpose, target and objective. Simply speaking, goal refers to the purpose
towards which the efforts are made or endeavors are directed. Goal has a timeframe which is
generally long term. So, its a long term plan.
Maturity
Market modification
Product modification
Do nothing
Marketing mix modification
Decline stage
The growing importance of CRM integrate all the information about customer into single
location provide opportunity to learn about customer need and actual behavior
Micro
segmentation,
mass
customization,
variety seeking
I. Positioning Strategies:
Market leadership, although often associated with size, is in reality a more complex concept and
should instead be seen in terms of an organizations ability to determine the nature and bases of
competition within the market.
Firms with a slightly smaller market share can adopt one of two stances.
1. They may choose to adopt an aggressive stance and attack other firms, including the
market leader, in an attempt to gain share and perhaps dominance (market challengers),
2. They may adopt a less aggressive stance in order to maintain the status quo (market
followers).
Market Nichers
Virtually every industry has a series of small firms that survive, and indeed often prosper, by
choosing to specialize in parts of the market that are too limited in size and potential to be of
real interest to larger firms.
Market Leader Strategies:
Defense strategies
Market Challenger Strategies:
Imitator , copies some features - e.g. car manufacturers imitate the style of one another
Adapter, improves on leader - e.g. many Japanese firms are excellent adapters initially before
developing into challengers and eventually leaders
Market-Nicher Strategies:
Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no
interest to the larger firms
McKinseys 7s Model:
OFFENSIVE MOVES
Defensive Moves
Market Growth Rate
BCG Matrix
BCG matrix is used to evaluate the strategic position of the brand portfolio and its potential. It
classifies business portfolio into four categories based on (industry attractiveness) growth rate of
that industry and (competitive position) relative market share.
Relative market share - One of the dimensions used to evaluate business portfolio is relative
market share. Higher corporate market share results in higher cash returns. This is because a firm
that produces more, benefits from higher economies of scale.
Market growth rate - High market growth rate means higher earnings and sometimes profits
but it also consumes lots of cash, which is used as investment to stimulate further growth.
Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its
money, because stars are expected to become cash cows and generate positive cash flows. Yet,
not all stars become cash flows. This is especially true in rapidly changing industries, where new
innovative products can soon be outcompeted by new technological advancements, so a star
instead of becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market
development, product development
Dogs hold low market share compared to competitors and operate in a slowly growing market. In
general, they are not worth investing in because they generate low or negative cash returns. But
this is not always the truth. Some dogs may be profitable for long period of time, they may
provide synergies for other brands or SBUs. Therefore, it is always important to perform deeper
analysis of each brand or SBU to make sure they are not worth investing in or have to be
divested.
Strategic choices: Retrenchment and liquidation
Cash cows are the most profitable brands and should be milked to provide as much cash as
possible. The cash gained from cows should be invested into stars to support their further
growth. According to growth-share matrix, corporate should not invest into cash cows to induce
growth but only to support them so they can maintain their current market share. Again, this is
not always the truth. Cash cows are usually large corporations or SBUs that are capable of
innovating new products or processes, which may become new stars. If there would be no
support for cash cows, they would not be capable of such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment
Question marks are the brands that require much closer consideration. They hold low market
share in fast growing markets consuming large amount of cash and incurring losses. It has
potential to gain market share and become a star, which would later become cash cow. Question
marks do not always succeed and even after large amount of investments they struggle to gain
market share and eventually become dogs. Therefore, they require very close consideration to
decide if they are worth investing in or not.
Strategic choices: Market penetration, market development, product development, divestiture
GE Matrix
GE-McKinsey matrix is a strategy tool that offers a systematic approach for the multi business
corporation to prioritize its investments among its business units.
Industry attractiveness indicates how hard or easy it will be for a company to compete in the
market and earn profits. The more profitable the industry is the more attractive it becomes.
Industry attractiveness consists of many factors growth rate, Industry size, trend of prize, macro
environment factors and so on.
Along the X axis, the matrix measures how strong, in terms of competition, a particular business
unit is against its rivals. Following factors determine the competitive strength of a business unit:
Total market share, brand strength, customer loyalty, product differentiation and so on.
Invest/Grow box. Companies should invest into the business units that fall into these boxes as
they promise the highest returns in the future. These business units will require a lot of cash
because theyll be operating in growing industries and will have to maintain or grow their market
share. It is essential to provide as much resources as possible for BUs so there would be no
constraints for them to grow. The investments should be provided for R&D, advertising,
acquisitions and to increase the production capacity to meet the demand in the future.
Selectivity/Earnings box. You should invest into these BUs only if you have the money left
over the investments in invest/grow business units group and if you believe that BUs will
generate cash in the future. These business units are often considered last as theres a lot of
uncertainty with them. The general rule should be to invest in business units which operate in
huge markets and there are not many dominant players in the market, so the investments would
help to easily win larger market share.
Harvest/Divest box. These are units in an unattractive industry with no sustainable competitive
advantage. They are not able to achieve any advantage and perform under expectations. If the
company has surplus cash, then there can be investment in those units who manage to make
enough cash to break even and there is some strategic advantage to keeping them around. If this
is not the case, then the units should be divested and liquidated.
New product development is a process which is designed to develop, test and consider the
viability of products which are new to the market in order to ensure the Growth or survival of the
organisation.
Types of NPD:
Innovative product
Cost reduction
Success factors
Operating Philosophy
Organization Structure
Management Style
NPD process
Idea Generation
Idea Screening
Business Analysis
Test marketing
Commercialization
1. Global competition
2. Time
3. Market potential
4. Technological change
5. Distribution
6. New features
7. Price
8. Critical unmet needs
9. Promotion
Promotional Mix:
Advertising
Sales promotion
Public relations
Personal selling
Direct marketing
Integrated marketing communication calls for recognizing all contact points where the customer
may encounter the company and its brands.
Percentage-of-sales method
Competitive-parity method
Objective-and-task method
3. Design a message
4. Choose media
6. Collect feedback
PR tools:
Publications, events, sponsorships, news, speeches, public service activities,
identity media
Corporate governance is the system of rules, practices and processes by which a company is
directed and controlled. Corporate governance essentially involves balancing the interests of a
company's many stakeholders, such as shareholders, management, customers, suppliers,
financiers, government and the community.
Assignment Questions:
2.Analyse extent to which organisations vision and mission support the market
orientations.
Ans-
Peter Drucker stated that mission statements of firms answer what is our business?
What should it be for the enterprise as a -conceived mission statement defines the
fundamental, unique purpose that sets a company apart from other firms of its type and
identifies the scope products (including services) offered and markets served.
The mission statement is generally viewed as important to the long-term interests and
survival of the firm. The Mission Statement is crucial for developing strategic plan and
represents its organizational existence. Mission statement answers two basic questions
that the stakeholders might ask about a company: identity of company, differences from
the others and what the company does. Vision describes what the organization would
like to become. Also, strong visions have been described as inspiring, and greater levels
of optimism, confidence and the importance of followers' contribution, and the intrinsic
rewards associated with company achievement. Vision statements and aspirations and
are intended to capture the heart and mind of each vision tends to be enduring while its
mission can change in light of changing environmental conditions. A vision statement
tends to be relatively short and concise, making it easily remembered.
3. Access and explain the critical success factor will have the greatest impact on
the successful implementation of plan
Engagement
Communication
Innovation
Project Management
culture
marketing strategies.
5. What does the term strategy mean in the context of channel
management?
A channel strategy is a vendor's plan for moving a product or a service through the
chain of commerce
to the end customer
The vendor may maintain its own sales force to close deals with customers or sell
its products or
services through an e-commerce website. Direct selling via catalogue represents
another possibility,
although this business has been largely subsumed by e-commerce.
Vendors can also pursue sales via indirect channels involving one or more
intermediaries. Indirect
sales models include retail, which can involve selling through a brick-and-mortar
business or an online
e-tailing company
When devising a channel strategy, a vendor must make decisions about which
channel or channels to
use and the types of partners it will seek to cultivate.
The appropriate strategy can vary from one product or service to another. A
vendor that builds a
channel strategy around both direct and indirect sales channels must take care to
avoid channel
conflict.
Channel partners will soon become disgruntled if a vendor's direct sales force
competes with them
for customer business. Thus, a channel strategy may involve market segmentation
For example, a vendor could target only large enterprises with its direct sales
force, while reserving
small and mid-sized businesses for its channel partners.
Channel Segmentation
With ever-increasing pressures around managing the cost of sales, around
increasing the level of
service provided to customers as well as around competing fiercely with rivals for a
dwindling
number of potential clients, companies need to dive head-first into channel
segmentation
A few years ago, a prime example of this was realized when an international
software vendor
utilized channel segmentation as the basis for boosting its partner program
The objective was to optimize the performance of its over 250,000 partners the
result? The
company realized an over 300% increase in return on marketing investments
(compared to preprogram
performance)
The approach is not limited to retailers, with companies that have a reliance on
brick and mortar
investing in channel segmentation (banks, for example, 64% of which, according to
a recent Asian
Banker survey, have plans for segmenting branches) as well
distortion which enters into both the message and the channel?
Distractionsi.e., noisecan disrupt the flow of information between any of these five
stages. That is to say, issues in communication pertaining to distraction could affect the
sender, the message itself, the channel it is being sent through, or the recipient of that
message.
Communicative Interference
Every organization faces certain barriers to communication. Shannon and Weaver
argue there are three particular layers of communication problems:
Technical: How accurately can the message be transmitted? Semantic: How
precisely can the meaning be conveyed? Efficacy-related: How effectively does the
received meaning affect behaviour?
These layers relate to a variety of types of noise that can interfere with communication.
Environmental Noise
Environmental noise is noise that physically disrupts communication, such as very loud
speakers at a party or the sounds from a construction site next to a classroom.
Physiological-Impairment Noise
Physical conditions such as deafness or blindness can impede effective communication
and interfere with messages being clearly and accurately received.
Semantic Noise
Semantic noise refers to when a speaker and a listener have different interpretations of
the meanings of certain words. For example, the word "weed" can be interpreted as an
undesirable plant in a yard or as a euphemism for marijuana.
Syntactical Noise
Communication can be disrupted by mistakes in grammar, such as an abrupt change in
verb tense during a sentence.
Organizational Noise
Poorly structured messages can also be a barrier. For example, a receiver who is given
unclear, badly worded directions may be unable to figure out how to reach their
destination.
Cultural Noise
Making stereotypical assumptions, such as unwittingly offending a non-Christian person
by wishing them a "Merry Christmas," can also detract from communication. Because of
this, it is important that each side of a conversation understands the culture of the other
party.
Psychological Noise
Certain attitudes can also make communication difficult. For instance, significant anger
or sadness may cause someone to lose focus on the present moment.
By acknowledging and adjusting to noise, a communicator can make it more likely that
their message will be received as intended.
7. Suggest some of the kinds of objectives that might be set for marketing
(a) complementary
9. Discuss the value of the Internet as a vehicle for marketing goods and
services.
Convenience
Reach
Cost
Personalization
Relationships
Social
Lower operational cost
Tracking results
Demographic targeting
Global Marketing
Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses,
opportunities, threats in the industry and then go ahead which would give one a competitive
advantage.
1. Cost Leadership
Here, the objective of the firm is to become the lowest cost producer in the industry and is achieved
by producing in large scale which enables the firm to attain economies of scale. High capacity
utilization, good bargaining power, high technology implementation are some of factors necessary
to achieve cost leadership. e.g Micromax phones
2. Differentiation leadership
Under this strategy, firm maintains unique features of its products in the market thus creating a
differentiating factor. With this differentiation leadership, firms target to achieve market leadership.
And firms charge a premium price for the products (due to high value added features). Superior
brand and quality, major distribution channels, consistent promotional support etc. are the
attributes of such products.E.g. BMW, Apple
3. Cost focus
Under this strategy, firm concentrates on specific market segments and keeps its products low
priced in those segments. Such strategy helps firm to satisfy sufficient consumers and gain
popularity. E.g. Sonata watches
4. Differentiation focus
Under this strategy, firm aims to differentiate itself from one or two competitors, again in specific
segments only. This type of differentiation is made to meet demands of border customers who
refrain from purchasing competitors products only due to missing of small features. It is a clear
niche marketing strategy. E.g. Titan watches
Without following anyone of above mentioned competitive strategies, it becomes very difficult for
firms to sustain in competitive industry.
There can be several examples based on the four parameters given by Michael Porter. Some
examples are given below:
1. Cost leadership: Micromax smart phones and mobile phones are giving good quality products at
an affordable price which contain all the features which a premium phone like Apple or Samsung
offers
2. Differentiation leadership: BMW offers cars which are different from other car brands. BMW cars
are more technologically advanced, have better features and have got personalized services
3. Cost focus: Sonata watches are focused towards giving wrist watches at a low cost as compared to
competitors like Rolex, Titan, Omega etc
4. Differentiation focus: Titan watches concentrates on premium segment which includes jewels in
its watches.