Strategic marketing

Interaction between marketingand corporate strategy

Figure 20.1

Corporate versus marketing strategy

Corporate strategy:

• Allocation of resources within an organisation to achieve the business direction and scope specified within corporate objectives.

• Helps to control and co-ordinate the different areas of the organisation.

Marketing strategy:

• Defines target markets, direction and requirements in order to create a defensible position compatible with the overall corporate strategy.

Marketing plans and programmes

Marketing plan:

• Turning strategies into implementable actions.

• A detailed written statement specifying target markets, marketing programmes, responsibilities, time scales and resources to be used within the defined budgets.

Marketing programmes:

• Actions, often tactical, using marketing mix variables to gain advantage within target market.

• Means of implementing the marketing strategy.

• Normally detailed in the marketing plan.

Influences on marketing strategy

Figure 20.2

Strategic marketing analysis models

All of these models view products as:

• Manageable individual entities on an operational basis.

• A product portfolio (set of products each of which make a unique contribution to the corporate picture) on a strategic basis.

Analysis models

• Boston Box.

• GE matrix.

• Shell’s directional policy matrix.

The Boston Box

Figure 20.3

Boston Box

• Dog - holds a weak market share in a low growth market.

• Question mark - high market growth with low share.

• Star - a market leader in a growth market.

• Cash cow - as market growth starts to trail off, stars can become cash cows.

• War horses - market leaders, whose cash generating position under threat due to negative market growth.

• Dodos - low share of a declining market means that sales are dwindling away.

GE matrix

Figure 20.4

Shell’s directional policy matrix

Figure 20.5

Types of growth

Intensive growth:

• Market penetration.

• Market development.

• Product development.

Diversified growth

Integrative growth - backward, forward, horizontal.

No growth - harvesting, entrenchment, withdrawal.

Competitor analysis

A systematic attempt to identify and understand key elements of a competitor’s strategy in terms of objectives, strategies, resource allocation and implementation through the marketing mix.

Porter’s Five Forces Model

1. Bargaining power of suppliers.

2. Bargaining power of customers.

3. Threat of new entrants.

4. Threat of substitute products or services.

5. Rivalry among current competitors.

Concerns of an Org.’s competitive analysis

1. Who are our competitors?

2. How can our competitors be grouped meaningfully?

3. What are our competitors’ strengths and weaknesses?

4. What are our competitors’ objectives and strategies?

5. How are our competitors likely to react to changes in

the marketing environment?

Concerns of an Org.’s competitive analysis (1)

Competitor identification

1. Who are our competitors?

Similar specific-same product, technology and target market

Similar general-same product area, but different segments

e.g. Haagen daze vs. Wall’s

Different specific-same need satisfied by different means

e.g. Eurostar vs. British airway

Different general-competing for discretionary spend

e.g. holiday vs. new car

Concerns of an Org.’s competitive analysis (2)2. How can our competitors be grouped meaningfully?

Different characteristics for identifying Strategic groupings

Figure 20.8Source: Adapted from Wilson et al. (1992).

Concerns of an Org.’s competitive analysis (3)

3. What are competitive strengths and weaknesses

• Requires use of various information sources.

• Consider in terms of critical success factors:

e.g. manufacturing, technical and financial strength, relationships with supplier and customer, its market and segment, product range, its volume, cash and profits etc.

• Information can be used to plan and launch attack.

Concerns of an Org.’s competitive analysis (4)

4. What are our competitors’ objectives and strategies?

Objectives – related to cash generation, market share,

technological leadership, quality recognition

etc.

Find clues in product portfolio.

Strategy - related to its positioning, marketing mix etc.

Concerns of an Org.’s competitive analysis (5)

5. How are our competitors likely to react to changes in the

marketing environment?

Learn by experience

Not easy to predict its reaction due to: its cost structures,

relative market positions, product life cycle, industrial

position etc.

Concerns of an Org.’s competitive analysis (1)

1. Who are our competitors?

Similar specific-same product, technology and target market

Similar general-same product area, but different segments

e.g. Haagen daze vs. Wall’s

Different specific-same need satisfied by different means

e.g. Eurostar vs. British airway

Different general-competing for discretionary spend

e.g. holiday vs. new car

Useful information about competitors

Table 20.2Source: Wilson et al. (1992).

Generic strategies

Figure 20.9

Sources of differentiations

• Product – branding, innovation, quality, specification, design, image, patents;

• Price – price positions, price-value combinations

• Place – intensive, exclusive distributions

• Promotion – creativity, spending

• Service – strong trust with customer

Choice of generic strategy

• Fit between the demands of the strategy and the organisation’s capabilities and resources.

• The main competitor’s abilities on similar criteria.

• The key criteria for success in the market and their match with the organisation’s capabilities.

Competitive positions and strategy

Figure 20.10

Attacking and defending

• Aggressive strategies - frontal, flank, encirclement, bypass, and guerrilla attacks.

• Defence strategies - fixed position, mobile, flanking, contraction, counter offensive.

Attack strategies

Figure 20.11Source: Kotler and Singh (1981). Reproduced with permission of Thomson Media, Eleven Penn Plaza, New York, NY 10001

Defence strategies

Figure 20.12Source: Kotler and Singh (1981). Reproduced with permission of Thomson Media Eleven Penn Plaza, New York, NY 10001.

Co-operative and independent strategies

Many situations can also be characterised by peaceful coexistence and co-operative alliances between competitors.