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Strategic Marketing, 3 rd edition

Strategic Marketing, 3 rd edition. Chapter 4: Strategic marketing decisions, choices, and mistakes. Structure. A. INTRODUCTION 1. Overview and Strategy Blueprint 2. Marketing Strategy: Analysis & Perspectives. B. WHERE ARE WE NOW? 3. Environmental & Internal Analysis:

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Strategic Marketing, 3 rd edition

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  1. Strategic Marketing, 3rd edition Chapter 4: Strategic marketing decisions, choices, and mistakes

  2. Structure A. INTRODUCTION 1. Overview and Strategy Blueprint 2. Marketing Strategy: Analysis & Perspectives B. WHERE ARE WE NOW? 3. Environmental & Internal Analysis: Market Information & Intelligence C. WHERE DO WE WANT TO BE? 4. Strategic Marketing Decisions, Choices & Mistakes 5. Segmentation, Targeting & PositioningStrategies 6. Branding Strategies 7. Relational & Sustainability Strategies E. DID WE GET THERE? 14. Strategy Implementation, Control & Metrics D. HOW WILL WE GET THERE? 8. Product Innovation & Development Strategies 9. Service Marketing Strategies 10. Pricing& Distribution Strategies 11. Marketing Communications Strategies 12. International Marketing Strategies 13. Social and Ethical Strategies

  3. Learning Objectives • To define ‘strategic choice’ • To outline strategic decisions taken at the corporate, SBU and functional levels • To review the strategic marketing decisions including products to offer, markets to target and competitive position strategies • To review the analytical models and frameworks that can be used by organisations to make their strategic choices for the future

  4. Strategic choice involves generating a well-justified set of interrelated strategic alternatives and choose from them the ones that will contribute to the achievement of the corporate overall goals and strategic objectives

  5. Where do we want to be?Strategic Decisions • Strategic decisions at corporate level • Mission statement, • Directional strategy (Growth, Stability, Retrenchment) • Resource allocation • Strategic decisions at SBU level • Choosing Generic Strategy; cost leadership, differentiation & focus • Marketing-related strategic decisions • Products to offer • Market segments to target • Positioning strategy • Competitive stance to take

  6. Corporate Level

  7. Defining the Business Purpose or Mission • Business mission answers the question: Why a company exists? • The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment. • Hence, a clear thoughtful mission statement provides a shared sense of purpose, direction to the company and its employees. Furthermore, it helps the company come up with the right strategies to fulfill the mission. A presentation by Varqa Shamsi Bahar

  8. Components of a Mission • Strategic intent: signifies the vision of where the organization wants to be in the foreseeable future. • Company Values: signifies the company’s ethical and moral principles in pursuing their business operations. It is what creates an organizational culture. A presentation by Varqa Shamsi Bahar

  9. Corporate Level: Mission Statement Google’s mission is to provide data Google’s mission is to organize the world’s information and make it universally accessible and useful

  10. Corporate Level: Directional strategy • Growth strategies: expand the corporation’s activities • Stability strategies: no change to the existing activities • Retrenchment strategies: reduce the corporation’s level of activities

  11. Directional (grand) strategies

  12. Growth strategies Concentration: • Vertical integration is the act of expanding into new operations for the purpose of decreasing a firm's reliability on other firms in the process of production and distribution. • Horizontal integration is the act of integrating other infrastructures, assets and companies of the same industry or in the same level of production.

  13. Growth strategies Diversification • Concentric diversification involves adding new products or services that are related to your current offerings -- either because they appeal to the same market or because they can be offered without much investment in new resources (or both.) • Conglomerate: In business, a conglomerate is a company involved in multiple lines of business that have little relationship to one another.

  14. Growth strategies: Advantages • Concentric diversity aims for synergy • Concentric diversification can also provide a gainful use for excess capacity • With conglomerate diversification, the advantage is the diversification itself -- spreading the market risk across more sectors

  15. Growth strategies: Disadvantages • With conglomerate diversity, there's no guarantee that the businesses will be a good fit. • Dangers of concentric diversity include line overextension -- diluting the value of your brand by trying to do too much. • With both types of diversification, there is always the possibility that the diversification will just be a poor investment -- you'll misread the market and end up offering something that customers don't want (at least from you.)

  16. Stability strategies Pause/Proceed with Caution No Change Profit

  17. Retrenchment strategies: Turnaround • Turnaround: This strategy is recommended when despite the industry having high appeal, a company actually has trouble coping up with business • This strategy emphasizes on improving efficiency and operational implementation • The company makes efforts aimed at reducing costs, by means of job cuts and spending on things that are considered less necessary

  18. Retrenchment strategies: Captive company • Captive company: Some of the activities of certain parts of the company that are less attractive from a business point of view, are reduced. The tied up resources are moved to other functions that are more attractive

  19. Retrenchment strategies: Divestment and Liquidation • Sell out/ divestment • Bankruptcy/ liquidation

  20. #3 Resource allocation: BCG matrix Corporate level Star Businesses Question Mark Businesses ? High Movement of cash Desired movement of business over time Market growth Cow Businesses Dog Businesses Low High Low Market share

  21. BCG strategies • Stars: Build and grow • Hold/harvest: Cash cows • Investment: Children problem/ Question • Divestment: Dogs

  22. General electric model Business Position Strong Medium Weak Most attractive: Investment for Growth Least attractive: Harvesting/Divesting Medium attractiveness: Selectivity

  23. SBU Level

  24. SBU Level: Generic competitive strategy • Generic strategy can be viewed as building defences against the competitive forces or finding a position in the market where the forces are the weakest

  25. Porter’s generic strategies COMPETITIVE ADVANTAGE Uniqueness perceived by customer Low cost position Cost Leadership Differentiation Industry-wide STRATEGIC TARGET Differentiation focus Cost focus Specific segment

  26. Generic competitive strategies • Cost leadership • Differentiation • Cost focus • Focused differentiation

  27. Generic competitive strategies: cost leadership • Low cost competitive strategy aimed at broad mass market. • Requires aggressive construction of efficient-scale facilities, vigorous pursuit of cost reduction, tight cost and overhead control, and cost minimization in R&D, service, sales force advertising. • Cost leadership is not the same as setting low prices • Defence against rivals • Greater bargaining power with suppliers • Barrier to entry

  28. Generic competitive strategies: Differentiation • Involves the creation of a significantly differentiated offering, for which the company charges a premium. Associated with design, brand image, technology, dealer network, or customer service. • Brand loyalty lowers customers’ sensitivity to price, and so it’s a viable strategy for earning above average returns • Buyers’ loyalty serves as entry barrier

  29. Generic competitive strategies: Cost focus • Cost focus: low-cost strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche, to the exclusion of others. The company seeks cost advantage in its target segment. Company that focuses its efforts can serve its narrow strategic target more efficiently than can its competitors

  30. Generic competitive strategies • Focused differentiation: concentrates on a particular buyer group, product line group, or geographic market. Target segments have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. A company that focuses its efforts can serve its narrow strategic target more effectively than competitors

  31. Bowman's strategy clock

  32. Bowman's strategy clock Maids

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