MARKETING STRATEGY AND PLANNING

Dilip S. Mutum PhD

Nottingham University Business School
dilip.mutum@nottingham.edu.my
twitter: @admutum

Learning Outcomes

To define strategy, strategic planning

and to understand the key concepts of
the marketing planning process.
To understand the differences between
strategic and tactical marketing
planning.
To understand the key concepts and
some strategic marketing analysis tools.

History of Lexus

http://youtu.be/MEbcA0NDOkg

Strategy

A strategy is a plan of action designed to

achieve certain defined objectives
Strategy is a plan that aims to give the enterprise
a competitive advantage over rivals.
Strategy is about understanding what you do,
Knowing what you want to become,
and most importantly
Focusing on how you plan to get there.

Strategy is indeed a process!!

Strategy

Strategies are developed at multiple

levels in the organizations corporate,
divisional, business unit, and
departmental. They form an
integrated plan for the organization as a
whole.
Corporate strategies are the sum of
business unit strategies plus any plans
for new business initiatives.

Strategic Planning
Strategic planning is the
process of developing and
maintaining a

strategic
fit between the

organizations goals and

Excellent Companies

In Search of Excellence (Tom Peters and

Robert Waterman,1982)
43 excellent companies
8 years later - only 6 excellent companies
left (Pascale, 1990)
Fixation with excellent tactics at the
expense of strategy

Pascale, R.T. (1990), Managing on the edge, New York:

Simon and Schuster, 352 pp

THE STRATEGY-TACTICS MATRIX

Strategydoing the right things
Tactics doing things right
Effective

Efficient

Thrive
1

Inefficient

Survive
3

Ineffective

Die-Quickly
2
Die-slowly
4

Strategic Planning

- External environment,
- Business unit goals
- Business unit strength &
weaknesses

Product/Market
Analysis

Strategic Planning, Implementation,

& Control Processes

The Marketing Planning Process, McDonald, 2007:49

KEY OUTPUTS

Mission Statement
Financial Summary
Market Overview
SWOT Analyses
Portfolio Summary
Assumptions
Marketing Objectives and Strategies
Three Year Forecasts and Budgets
One-Year Short Term Plan

Managing the Marketing Effort

Analysis
Marketing Analysis SWOT Analysis

Porters Generic Strategies

Overall Cost Leadership
The lowest production and distribution costs so they can
under price competitors and win market share

Differentiation
The business concentrates on achieving superior
performance in an important customer benefit areas valued
by a large part of the market

Focus
The business focuses on one or more narrow market segments, get to know
them intimately, and pursue either cost leadership or differentiation within
the target segment

Five Forces Determining Segment

Structural Attractiveness

Example

Mat Ramli is deciding whether to switch

career and become a farmer
He's always loved the countryside, and
wants to switch to a career where he's
his own boss.
He creates the following Five Forces
Analysis as he thinks the situation
through:

Porters Five Forces Buying a Farm

Threat of new entry
-Not too expensive to enter the
industry
-Experience needed, but training
easily available
-Some economies of scale
-No technology protection
-Low barriers to entry
New entry quite easy (-)

Supplier
Power

Supplier power
-Moderate number of suppliers
-Suppliers large
-Able to substitute
-Able to change
Neutral supplier power
Threat of
substitution
-Some cross-products
-Ability to import food
Some substitution (-)_

Threat
of New
entry

Competiti
ve
Rivalry

Threat of
substitutio
n

Competitive rivalry
-Vary many competitors
-Commodity products
-Low switching costs
-Low customer loyalty
-High costs of leaving
market
High competition (- -)

Buyer
Power
Buyer Power
-Few, large supermarkets
-Vary large orders
-Homogeneous product
-Extreme price sensitivity
-Ability to substitute
High buying power (- -)

Industry Concept of Competition

Number of sellers and degree of

differentiation
Entry, mobility, and exit barriers
Cost structure
Degree of vertical integration
Degree of globalization

Strategic Planning

All corporate headquarters undertake four

planning activities:
Defining the corporate mission.
Establishing strategic business units
(SBUs).
Assign resources to each SBU.
(attractiveness)

Assessing

growth opportunities.

(strategic fit )

Strategic Planning

The business portfolio is the collection

of businesses and products that make up
the company
Portfolio analysis is a major activity in
strategic planning whereby management
evaluates the products and businesses
that make up the company

Strategic Planning

Analyzing the Current Business Portfolio

Strategic business unit (SBU) is a

unit of the company that has a
separate mission and objectives
that can be planned separately
from other company businesses

Company division
Product line within a division
Single product or brand

Strategic Planning
Strategic planning is the
process of developing and
maintaining a strategic fit
between the organizations
goals and capabilities and

its changing marketing

opportunities.

Strategic Planning Assessing

Growth Opportunities

Assessing growth opportunities include planning

new businesses, downsizing and terminating
older businesses.
If there is a gap between future desired sales
and projected sales, corporate management will
need to develop /acquire new businesses to fill
in.
To release needed resources for other use, and
to reduce costs, companies must be carefully
prune, harvest or divest tired old businesses.

Strategic Planning

Problems with Matrix Approaches

Difficulty in defining SBUs and

measuring market share and growth
Time consuming
Expensive
Focus on current businesses, not future
planning

The Strategic Planning Gap - Assessing

Growth Opportunities

Integrative - horizontal, backward and forward integration - Identify opportunities within current business,
build/acquire businesses related to current business
Diversification - identify opportunities to add businesses unrelated to current businesses.

Strategic Planning Intensive Growth

Developing Strategies for Growth and Downsizing

Product/market expansion grid is a

tool for identifying company growth
opportunities through
market penetration
market development
product development or
diversification

Jaguar XE

JLR Sales first 8 months 2013

Source: JLR Media Centre (10 Sept. 2013) (

http://newsroom.jaguarlandrover.com/en-in/jlr-corp/news/2013/0
9/jlr_record_sales_performance_in_august_100913/
)

Ansoffs Product-Market

Expansion Grid (Intensive Growth)

Strategic Planning

Market penetration is a growth

strategy increasing sales to
current market segments
without changing the product
(new stores/branches, get people to
shop more often (improvement in prices,
communication mix, selection of menu,
etc)

Market development is a growth

strategy that identifies and
develops new market segments
for current products (overseas
market, demographic profile)

Strategic Planning

Product development is a growth

strategy that offers new or modified
products to existing market
segments (bank, new menu)
Diversification is a growth strategy
through starting up or acquiring
businesses outside the companys
current products and markets Virgin
group of Companies

Victorinox Adapts

More than 130 years old company

Core product: Swiss Army Knife
Post 9/11 and aircraft bans
Sales drop by 30%
What did Victorinox do?
Adapt products without knife blades with USB
memory sticks, etc.
Diversified into new product categories: watches,
luggage and fashion
Moved into new markets: Russia, India and China

Categories of Marketing Alliances

Product
Alliances
Product or
or Service
ServiceCredit
Alliances
card
Promotional
Promotional Alliances
Alliances
Visa and Olympic
Logistics
Logistics Alliances
Alliances
3PL & Businesses
Pricing
Pricing Collaborations
Collaborations
Travel web hotel, car rental,
admission ticket etc

Hypothetical Market Structure

37

Strategies for Market Leaders

37

1. Expanding the Total Market

New
customers
-those who might use it but do not
-those who have never used it
-those who live elsewhere

More usage

increase the amount, level, frequency of product consumption

rough packaging or product redesign, larger packages increase
he amount consumer use at one time (impulse buying)
creasing frequency of consumption
to identify additional opportunities to use the brand in the same way
to identify completely new and different way to use the brand

NCH

Expanding the market: New Customers

39

Mango Carrot, Sweet Greens and

Strawberry Smoothies / Kale

2. Protecting Current Market Share

40

Offensive Strategy - Proactive marketing

Responsive anticipation
Creative anticipation

Proactive companies create new offers to

serve market
Have a vision of the future and of
investing in it
Defensive Marketing 6 strategies

Market Challenger - Pepsi buys Gatorade in a

Bypass Strategy

Bypass attack diversify into

unrelated products
- New geographical market
- Leapfrogging into new technologies

Market-Follower Strategies
Counterfeit
er
Duplicate
the
leaders
product
and
packages
Cloner
Emulates the and sells it
on the
leaders
black
product,
market
name and
packaging
with slight

Adapter
The adapter
takes the
leaders
product and
adapts or
improve
them

Imitator
The imitator
copies
some things
from the
leader but
differentiate

Market Nicher Strategies

43

Aims to be leader in a small market

(niche)
Target small profitable segments
Achieve high margins
Nicher tasks

Create niches
Expand niches
Protect niches

Market Nicher Strategies

Niche Specialist Roles

End-User
Specialist
Vertical-Level
Specialist
Customer-Size
Specialist
Specific-Customer
Specialist
Geographic
Specialist

Product-Line Specialist

Job-Shop Specialist

Quality-Price Specialist

Service-Specialist

Channel Specialist

Brand Leadership

Consumer Insights: Dulux

Paint is not consumer friendly
Dont think of paint not until we have to paint
our house
We choose the color but painter will decide the
brand

Low involvement, no interaction, not thrill about

shopping for paint
recommend by contractor, painter
boring functional value (cold hard facts) fungus
free, color doesnt fade

Nippon - Brand Leadership

Nippon - What Color Are You

Bre
a
dow k
n
the
min
ds e
t

Target 25 years and above (young adults)

show happy, easy to paint, icon (blobby),
fashionable to paint more often
a new need : odorless, spotless, solar reflect
(product names reflect the benefits)
Contemporary, fun, engaging (website),
modern, colorful
Nippon Paint Superheroes

Brand presence, intense brand

engagement
Educate through advertisement
Manage to charge premium price

Thanks

www.dilipmutum.com