STRATEGIC MARKETING & PLANNING

Markets increasingly complex & competitive challenge for Marketing/ Brand Managers; Reasons: 1. Rapid technological changes & 2. Diversity of buyer preferences. Broad view of market needed to develop strategy not narrow focus based on current products/ segments only.

The Telecom Example!!! Telecom has allowed a virtual world to emerge one in which time & distance are no longer barriers to doing business or communicating.

Changing markets need strategy adaptations!

Digital technology eliminated Polaroid Cameras! What factors drive change? Deregulation Globalization/ Global capacity/ Global competition Mergers & acquisition Changing customer expectations/preferences Changing lifestyles

Value Migration is the shifting of value creating forces. Three types of Value Migration: 1. Between industries (e.g. from airline to entertainment). 2. Between companies (e.g. Coral WordPerfect to Microsoft). 3. Between business designs within a company (e.g. IBM: mainframe to solutions & system integration).

Customers migrate or shift from older products to new looking for more value; Value migration affects brand & companies. Value migration ALSO highlights need for constant learning & implementing strategy changes.

Product benefits create markets & brands.

Brands are attempts to match benefits with customers needs, better than competition. competing brand grows Influence of

stronger if a product can be substituted.

1. Generic level: products satisfying a

broad category of need compete. 2. Product type: products in same or similar category (minimal differentiation) compete. most 3. Product variants: compete directly. 4. Shared budget: compete indirectly.

Movies on DVD Bottle water Regular colas Beer Fruit flavored colas Diet-Rite Cola Diet Coke Diet Pepsi Lemon limes Wine Diet lemon limes Video Games Ice Cream

Fast Food

Category: Diet Colas

Juices

Category: Soft drinks

Coffee

Generic competition: Beverages Budget competition: food & entertainment

There are three consideration: 1. Depth of analysis a company desires: the deeper we go to discover new segments, the bigger the market becomes. 2. Changing composition of market: effect of new technology, new arrivals, new needs created/ satisfied. 3. Extent of complexity of market: different technologies, product functions or usage, & customer segments using the product.

FMCG companies use differentiation or low-cost strategies in order to develop & maintain competitive advantage but find it difficult, if not impossible.

WHY?
Competitors overcome differentiation through innovation & cost reduction through better systems & technology.

 TWO BASES:
1. By analyzing the industry (looking at

the descriptor profile);

2. By analyzing the value chain (that

links together organizations in a valueadded system, extending from suppliers to end users).

 Basis: Horizontal comparison with

similar types of firms;

1. Characteristics & trends (sales volume,

growth trend, profitability);

2. Operating practices (products mix,

systems, services, barriers to entry, geographical spread).

How is this done.?

1) Identifying companies,

2) Studying structures,
3) Identifying reach whether domestic or

international; 4) Identifying market practices (conformist/ non-conformist); 5) Determine strengths & weaknesses, & 6) Identify strategic alliances.

 How? Reviewing: 1. Suppliers/ distribution channels; 2. Extent of vertical integration

practiced; 3. Type of relationships between companies - transactional or collaborative; 4. Extent/ quality of outsourcing: 100% in case of Nike & Sara Lee (food, beverage, apparel); 5. Information/ feedback mechanism.

Different competitive forces are present in the value-added chain. Michael Porters FIVE COMPETITIVE FORCES clearly outline these

 Porters FIVE competitive forces: 1. Rivalry among existing firms: intense

competition could lead to higher standards (Coke & Pepsi); 2. Threat of new entrants: entry & exit barriers; 3. Threat of substitutes: alternative technologies can wipe out or endanger established companies (Encyclopedia Britannica/ Kodak/ Polaroid);

4. Suppliers bargaining power: raw

materials, finished goods;

5. Bargaining power of buyers (e.g.

Supermarket chains).

 Rapid expansion in competitive

intelligence gathering seen in the last 10 to 15 years;

Major global companies like Microsoft,

IBM, Motorola, Procter & Gamble, and General Electric have strong intelligence units.

1. Business scope & objectives;

2. Quality of management -

3. 4. 5.

6.

experience, capabilities & weaknesses; Market position & trends; Market target(s) and customer base; Marketing program positioning strategies; Key competitive advantages (e.g. access to resources, patents.)

 Key competitor: organization(s)

targeting the same market target (same products or same segment within a market).
Example: Airlines compete on routes Emirates, Qatar Airways, PIA.

Companies across industries (in a

sector) satisfying the same need or want, also compete: Airlines compete against
Train Services & Inter-City luxury

coaches!

 Evaluation considers strengths &

weaknesses of competitor on the basis of:

Scope of market coverage Customer value propositio ns

Distinctive capabilities

Past performan ce

1. Market coverage: focus on market

segments & relative market share;

2. Past performance: to reveal

competitors strength & track record of delivery; assess how well competitors meet customer value requirements;

3. Customer value proposition: to

4. Distinctive capabilities: quality & state

of competitiveness.

 HOW can a competitors future action

be anticipated?
Based on current strategy? Current actions only a weak indicator

of future threat.
Is there a solution????

 Swatch, in 1995, met an aggressive

competitor in Timex but failed to respond.

Timex launched a large selection of

watches & also obtained licenses for Nautica, Joe Boxer & Timberland brands.
As sales continued to slide, Swatch

ended up spending 12 times their normal budget to regain market share.

 New competitors come from four major

sources: 1. Related product markets; 2. Companies with related technologies; 3. Companies targeting similar customer groups; 4. Companies with similar products, operating in other geographical regions.

 Markets do not follow clearly defined

& predictable paths; Organizations need to invest time & effort to analyze the forces of change. Question: What influences/ discontinuities in the market can totally transform it? a. Customer trends; b. Environmental changes; c. Economic factors.