Marketing Strategy2 Notes
-
Upload
mohamed-el-shalakany -
Category
Documents
-
view
229 -
download
0
Transcript of Marketing Strategy2 Notes
-
8/2/2019 Marketing Strategy2 Notes
1/29
Marketing
Strategy
andPlanning
All Chapters
All
ChaptersHello everyone. In this guide, I included all the chapters that are
required in only 15 pages! It includes very important topics that are
discussed both in lecture and revision. I came to the doctors office
yesterday, I asked him if the contents in revision lecture were
enough, he said and I quote YEA YEA THATS EVERYTHING and hetold me that whats more important is to apply the marketing
concepts (i.e give tons of examples). And the ability to relate
chapters with each other. The exam will be 3 questions, choose only
2. And one of the 3 questions is subdivided into 2 questions. So this
means that its possible for the exam to come from topics other
than discussed in revision, because he gave you the option to
choose questions. Thats why I believe that 2 of questions are from
the revision lecture, and the third is from outside revision lecture.
Dont forget to give examples and relate to other chapters!
Good luck
Prepared by
Feras
-
8/2/2019 Marketing Strategy2 Notes
2/29
Ch.1
What are different definitions for marketing?According to Felton According to Kotler According to Ferrel
A corporate state of mind
that exists on the
integration and co-
ordination of all the
marketing functions which,
in turn, are melded with all
other corporate functions,
for
the basic objective of
producing long-range
profits.
The marketing concept holds
that achieving organizational
goals depends on
determining
the needs and wants of
target markets and
delivering the desired
satisfactions more
Effectively and efficiently
than competitors do.
Marketing is the
process of planning
and executing the
conception, pricing,
planning and
distribution of ideas,
goods and services to
create exchanges that
satisfy individual and
organizational
objectives
What is the new marketing concept?1 Create customer focus throughout the business.
2 Listen to the customer.
3 Define and nurture the organizations distinct competencies.
4 Define marketing as market intelligence.
5 Target customers precisely.
6 Manage for profitability, not sales volume.
7 Make customer value the guiding star.
8 Let the customer define loyalty.
9 Measure and manage customer expectations.
10 Build customer relationships and loyalty.
11 Define the business as a service business.
12 Commit to continuous improvement and innovation.
-
8/2/2019 Marketing Strategy2 Notes
3/29
13 Manage culture along with strategy and structure.
14 Grow with partners and alliances.
15 Destroy marketing bureaucracy.
What is resource based marketing?An approach, where firms instead of only mainly focusing on the
market needs or mainly focusing on the capability of the organization. Instead
it focuses on both equally. Resource based marketing seeks a long term fit
between the requirements of the market and the abilities of the organization.The resource profile of the company must be continually developed to enable
it to compete and take advantage of opportunities. Where resources could be
having enough money, enough man power, skilled employees and so on
What is Corporate Strategy and marketing Strategy?A corporate strategy is the overall direction of a corporation and the ways in
which various business operations work together to achieve a certain goal. whereas
marketing strategy is an operational strategy which is related to product
identification,advertising,selling etc. corporate strategy set up the objectives
for the organization within the consideration of every single department not
only marketing section such as accounting, and Finance. Conventionally
corporate strategy is supposed to be determined before marketing strategy.
The marketing strategy should not oppose the corporate strategy.
-
8/2/2019 Marketing Strategy2 Notes
4/29
CH.2
Marketing Strategy ProcessThere are 3 levels for developing marketing strategy; the establishment of a
core strategy, the creation of
The companys competitive positioning, and the implementation of the
strategy.The establishment of an effective marketing strategy starts with a
detailed, and Creative, assessment both of the companys capabilities its
strengths and weak-nesses relative to the competition and the opportunities
and threats posed by the
Environment. On the basis of this analysis the core strategy of the company
will be selected, identifying marketing objectives and the broad focus for
achieving them. At the next level, market targets (both customers and
competitors) are selected and/or identified. At the same time the companys
differential advantage, or com-petitive edge, in serving the customer targets
better than the competition is defined. Taken together the identification of
targets and the definition of differential advantage constitute the creation of
the competitive positioning of the organization and its offerings. At the
implementation level a marketing organization capable of putting the strategy
into practice must be created
Establishing Core StrategyTo establish the core strategy requires a detailed analysis of both the
resources available and the market in which the organization will operate, both
within the context of achieving the overall business purpose or mission.
-
8/2/2019 Marketing Strategy2 Notes
5/29
For analysis of markets served, it helps focus on opportunities and threats for a
company that come from both the customers and competitors (ch.4, ch.5),
market segmentation helps provide insights into customer requirements. In
computers, for example, there are several ways in which the total market couldbe segmented. A simple, product-based segmentation is between mainframe,
mini-computers and PCs. IBM has long dominated the mainframe market.
Recognizing the difficulties in tackling such a giant head-on, competitors
sensibly focused their efforts on the minicomputer market.
Competitive PositioningPositioning has come to mean the process by which marketers try to
create an image or identity in the minds of their target market for its product,
brand, or organization. Positioning is done to achieve objectives of core
strategy.
How to achieve competitive positioning?First is choosing target market. An attractive market would be a large market,
growing, its contribution margins are high. Competitive rivalry is low, there is
high entry and low exist barriers, and the market is not vulnerable to
uncontrollable events.
Second is by differential advantage, which can be created with companys
strength or distinctive competencies differential advantage could be through
cost leadership or differentiation (Ch,11 Generic Routes).
CH.3
http://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Product_%28business%29 -
8/2/2019 Marketing Strategy2 Notes
6/29
External AnalysisPEST analysis is a management tool used for external environment analysis. By
analyzing Political, Economic, Social, Technological factors that might affect a
company. In order to react correctly to the changes that occurs.
Political Economic Social Technological
Involves the
actions of the
government in
economy. Such as
tax policy, labor
law. Some laws
may prevent
production of
certain goods.
Includes changes
interest and
exchange rate,
inflation. Where
interest rate
affects the cost
of capital of a
company. And
exchange rates
affect the cost of
exporting and
price of
importing goods.
Includes the
changes
population
growth rate, age
distribution,
population health
or education, as
well as trends in
social factor
affect the
demand for a
product, same
way for changes
in fashion.
The rate of
technological
changes
determines the
barriers of entry,
for example its so
difficult to start a
company like
Vodafone, mobile
and etisalat.
Impact of
reduction in
communication
costs, for example
people use skype
to call people
internationally
rather than use
traditional and
expensive call
through a phone.
-
8/2/2019 Marketing Strategy2 Notes
7/29
Five Forces of competitionPorters five forces of competition is a strategic tool used to analyze the
attractiveness of an industry structure.Entry of
Competitors
Threat of
substitutes
Bargaining
power of
buyer
Bargaining
power of
supplier
Rivalry among
existing
players
How difficult
it is for new
entrants to
compete,
what barriersexist in the
industry? For
example
barriers for
entry of
making a
restaurant is
low. Patentsand branding
fall into this
category
The chance
that a
product can
be
substituted,especially
when
substitute is
cheaper. For
example
email had an
impact an
postal service,
Buyers are
people who
create
demand in an
industry. Howstrong is the
position of
buyers? The
bargaining
power is
higher when
there are
standardizedproducts and
many sellers.
Buyers can
work together
to order large
Suppliers
supply raw
materials for
the industry.
If there arefew suppliers
then their
bargaining
power is
high.
Sometimes
conflicts
occurbetween
suppliers and
a company,
thats why for
example KFC
Is there
strong
competition
among
existingplayers, is
there a
certain player
who is
dominant? Or
all players are
equal in size
and strength?If cost of exist
is high , this
would result
more rivalry
-
8/2/2019 Marketing Strategy2 Notes
8/29
volumes to
squeeze a
companys
profit margin
has its own
farms. To
avoid issues
for supplying.
Space Matrix (Strategic Position and action evaluation matrix)A management tool that focuses of strategy formulation especially as
related to competitive advantage. The outcome of this matrix is 1 out of 4
quadrants, each suggests a different strategy.
1- Aggressive(if space matrix for a company advices it should followaggressive tactics, this means that company has a strong competitive
position in market, and it should develop market penetration,
product development, acquisitions, and so on.)
2- Conservative( are Companies in mature market, they should seek todefend their existing product to ensure a continued ash flow and in
the mean time they should seek new market opportunities)
3- Defensive(are vulnerable companies, they need to foster resourcesby operating efficiently and be prepared to retreat from competitive
markets)
4- Competitive(are companies in an attractive industry but they needmore financial resources to maintain their competitive position)
To determine the outcome shown in space matrix for a firm, an analysis is done for 2
external (environmental stability, industry strength) and 2 internal (financial strength,
competitive advantage) strategic dimensions
1- Financial strength analysis includes the return on investment,liquidity of a company, cash flow, working capital
-
8/2/2019 Marketing Strategy2 Notes
9/29
2- Competitive advantage includes the speed of innovation, productquality, and customer loyalty.
3- Environmental Stability involves inflation rate, Technologicaladvancements, demand and elasticity, Taxation condition (VerySimilar to PEST)
4- Industry analysis involves barriers to entry, growth potential ofindustry.
Advantage MatrixIs a strategy model created by a famous consulting firm known as BCG. Thismodel looks at 2 factors, the number of different approaches to competitive
advantage available, and the potential size of competitive advantage. This
model gives a good feeling about best strategy and the likely profits, but it
doesnt show any feel for the cash flow.
The results of this model are one of four categories:
1- Stalemate(few advantages available, and they are small) (example : textilebusiness, shipbuilding)(strategies involved is reducing factor costs, bymoving to areas/countries where costs are low)
2- Volume(few advantages but they are large) (there are high economies ofscale, which allows organizations to become the volume and cost
leader.)(Examples: Volume cars, software, electronics)
3- Fragmented(many advantages but are small)(organizations gain benefitfrom differentiation)(example: restaurants)(therefore innovation strategies
work well in this category)4- Specialized(many advantages that can be large)(business gain benefits
from economies of scale and differentiation, its main strategies are focus,
and segment leadership.(examples: branded food)
-
8/2/2019 Marketing Strategy2 Notes
10/29
Ch.4
The more information a company has about customers, the better they canserve them, there are key questions for understanding customers; what are
their choice criteria? Why do they buy a certain product? Where do they buy
it? And son on
Marketing researchCommercial research organizations will conduct studies for clients that cost at
least 2000 sterling pounds, depending on the research,
o The starting point for gathering marketing data is through the effectiveuse ofcompanys records. The data obtained can be used for
marketing decisions. The value of data relies on how well it was
collected in the first place; therefore its best to collect data on a routine
and detailed basis .company records includes sales records and
accounts records. Where sales records could be used to determine or
identify the product life cycle. Sales records should be kept by customer
customer type, product, product line, sales territory, detailed time of
purchase. Therefore aqueduct sales records should reveal frequencies of
purchase. TESO, a British super market (something like awlad ragab, but
100x better XD) uses its loyalty card (club card) in order to build profile
of its customers, and know how they think.
o Second step is to design a tailor made research, which could bequantitative research or qualitative research.
1- Qualitative is researchbased on opinion and judgment, such asunstructured, semi structured in depth interviewing , group
discussions among 7-9 respondents along with a group leader to
ensure that discussion does not deviate from its purpose.
Qualitative research helps provide insights to the problem,
generate more ideas, hear customer description of things, getting
reactions to new ideas.
-
8/2/2019 Marketing Strategy2 Notes
11/29
2- Quantitative researchincludes surveys, observation, andExperiments. Surveys could be 3 types: personal interview (face to
face), Telephone Interview, and postal surveys by sending self-
completion questionnaire to respondents. (we took it indissertation , so relate to it). Survey helps determine customer
behavior, determine requirements and expectations, determine
customers opinions, provide data for segmentation of markets.
Observation would be useful when respondents seem unwilling to
give answers (observation example: observing shopper behavior
in malls). Experimentation can be carried on field on in labs. for
example test market(field) for a new product in a limitedgeographic area and test their reactions before officially
launching it.for example Cadbury flake made a marketing test,
results were good at first until suddenly sales dropped because
customers found that the product is too messy. Overall
experimentation helps estimating market potential, establish
causation, test elements of strategy, test customer reactions to
alternative strategies.
o Off the Peg:research involves tapping into existing researchservices, and using existing data. There are 3 types of off peg
research according to crouch, first is research of very large body of
already published data (aka desk/secondary research), second is
research using available data from regular market surveys from
syndicated research, third is use of research instruments such asomnibus surveys.
CH 5
-
8/2/2019 Marketing Strategy2 Notes
12/29
Competitor analysis is an assessment of the strength and weakness of currentand potential competitors. It provides offensive and defensive strategic
context. (Ch.11). basically companies should know what customers want or
care about or whats important to them, such as price, quality, and safety. Andbased on these information we compare against competitors who best deliver
these criteria.
Competitive benchmarkingis a process of measuring your companysstrategies and operations against best in class companies both inside and
outside your own industry in order to identify the best practices that can be
adopted to improve the performance. There are 4 steps for benchmarking
1-Identify who to benchmark against(industry leaders are obvious firms tocompare with) (Xenon wanted to improve its order processing so it
benchmarked against LL beans)
2- Identify aspects of business to bench mark(all aspects of business acrossthe complete value chain are candidates, the initial focus would be on the
processes that account for cost, customer satisfaction)
3- Collect data relevant to enable processes(from public sources likecompany reports. And data sharing which takes place in conferences. anddata interview from customers, industry experts)
4- Comparison with own process(final stage, where a comparison is madebetween a firms own process against the identified best in class to identify
the actions needed to take place)
Components of Competitor analysis
-
8/2/2019 Marketing Strategy2 Notes
13/29
1- Asses competitors current & future objectives(understanding what thecompetitor is setting out to achieve, can give a clue on the direction to be
taken and aggressiveness with which it will pursue that direction)
a-
What are they trying to achieve?b- Why are they trying to achieve it?c- Are they satisfied with their achievements?
2- Asses competitors current strategy(this can identify opportunities andthreats rising from competitors)
a- What target market are they pursuing?b- What is their strategic focus? (their competitive advantage) (Ch.2)c-
What marketing mix do they use? (4Ps)
d- How do they organize their marketing?3- Asses competitors resource profile(the assets and capabilities of
competitors , gives us an idea of what they are currently able to do)
a- How is their financial resource?b- How is their production and operation capability?c- How is their marketing assets? (Ch.6)
4-Predict competitors future strategy(by combining the above analysis, wecould predict the firms actions in the future)
a- How will competitors react to our actions?b- What underutilized resources do they have?
CH 6
Companys resources and capabilities must change regularly to fit with marketneeds.
Companys should create value to customers by either having a productleadership, developing customer intimacy, or having operational excellence
(trying to be better in what they do)
-
8/2/2019 Marketing Strategy2 Notes
14/29
Resources could be tangible such as: money, vehicles, shops, equipment They could be intangible like: brand, skills, experience. Companies must make use the best of their resources to create a competitive
advantage, RBV (Resource Based View) is a management tool used to determine the
strategic resources available to the company. It explains its ability to deliver
competitive advantage; basically it is a reality check is it possible to create
things with current resources?
Dynamic Capabilities: the capacity for an organization to create, extend ormodify its resource base. This view recognizes that as markets change, and
become more globally integrated, more forms of competition emerge, newtechnologies are employed, and thus firms cannot rest on their existing
capabilities alone. Some researchers suggested that dynamic capabilities are
idiosyncratic and highly dependable on the specific firm market context.
Creating Marketing assets: are resources, normally intangible, that can beused to take advantage. A variety of company properties can be converted
into marketing assets.
1-Customer based assets:are assets valued by current or potentialcustomers, such as the reputation of the company, like SONY, they have
high reputation for quality. Another thing is country of origin like the
Coffee where Colombia is the best country that has premium coffee
beans.
2- Supply Chain Assets. Involves the manner in which a product/service isconveyed to the customer. It includes distribution network for example
Vodafone where you can pay bills for several places in Cairo. Thedelivery leads time such as McDonalds as they claim to have fastest
delivery in Egypt.
3- Internal marketingsupport assets, such as cost advantages where usingup to date technology and achieving better capacity utilization can be
-
8/2/2019 Marketing Strategy2 Notes
15/29
translated into lower prices for products. Information system is another
asset that keep the company informed about its customers and
competitors
4-Alliance based marketing assets: where assets could be held by a firmor through an alliance or partnership. Such as exclusivity where
partnerships create monopolistic conditions just like the relationship
between McDonalds and coca cola as it denies access to outlets for
other cola producers.
Developing marketing capabilities are the processes that deploy marketingassets. They are the ability to implement marketing mix activities such as
promotions, price deals. One of main operational marketing capabilities are:1- Product and service managements: marshaling all resources to deliver
customer value. For example Mercedes cars are positioned as luxury
vehicle.
2- Advertising and promotion:it includes sponsorship, the same waylarge companies sponsor football team. Managing communication
process and campaigns are important marketing capabilities.
3-Distribution:the ability to employ existing channels or develop newmethods. The logistics can be critical issue. For example amazon has
the ability to accurately and consistently deliver goods bought online
to customers though agents like FedEx
4- Pricing:it is a difficult decision, because if prices are high the salescan be low and firm may not be able to survive. (Ch.12 Price
Consideration)
Dynamic Marketing Capabilities the ability to create new resources inchanging markets, to respond to change. there are 3 types:
-
8/2/2019 Marketing Strategy2 Notes
16/29
1- Absorptive capabilities:are processes that enable firms to recognize thevalue of new information from the market. The capacity for understanding
whats happening in external environment with respect to demand,
customers, and competitors are essential to design a strategy in changingmarket. In addition to that, learning process enable firms to have long
term competitive advantage and essential for surviving in dynamic
environment.
2- Adaptive Capabilities:centre on the firms ability to identify and capitalizeon emergence marketing opportunities. Alternative opportunities could be
identified could be done if company has market target and market
positioning capabilities,3- Innovative marketing capabilities:the ability to innovate and develop the
next generation of goods. It requires a good R&D department.
CH 8
Market Segmentation: how marketers divide the market into groups of similarcustomers, where there are important differences between those groups.
Segmentation is important because the resources rely on it, if a company
does not have enough resources (money, capital), the it should not serve a
large segment.
After segmentation comes choice of target markets (evaluating theattractiveness of different market segments, parts of segments, and choosing
which should be targets for our marketing.
After Choice of Target Market Comes Positioning the essential principle ofcompetitive positioning is that it is concerned with how customers in different
-
8/2/2019 Marketing Strategy2 Notes
17/29
parts of the market perceive the competing companies (in UK the major
grocery retailing include Tesco, and Asda. Positioning is based on those
identities) or products/services (positioning applies to the level of product) or
brands (positioning is most frequently discussed in terms of brand identitiessuch as coca cola vs. Pepsi)
Segmenting in consumer markets vs. Segmenting in Business marketsSegmenting in consumer market Segmenting in business market
Three variables are used in segmenting:
1- Customer backgroundwhichincludes the Gender (m/f), Age,
geographic location (some
companies want to market only
locally), subculture (based on racial,
ethnic religious similarity), the
income levels of people, peoples
occupations (manager? Skilled
worker? Unemployed?), their social
class(upper, middle lower class),
lifestyle of people (involves 3
elements, 1- activity like sports,
hobbies, 2- interaction with other
like self-perception, 3- opinions
about political, technological,
environmental issues. ), family life
cycle (single? Couple with no
children? Old married couple? )
2- Customer attitudeby studyingperception and preferences
(focusing on identifying segments of
respondents who view products in a
similar way) and examining the
benefits sought by customers (it
could be applied in banking, where
Three variables are used in
segmenting:
1- Company Backgroundincludes industry type,
company size (small
companies have different
needs than larger ones,
size has a significant
impact (thats what she said: D sorry I
had to say it xD), on issues like
average order size.),
customer location (has
an impact on sales,
distribution costs. Product
preferences may differ by
location internationally).
2- Attitudesegmentingbusiness on the basis of
benefits being sought by
the purchasers, for
example the urgency for
of a customers need to
keep a plant in operation
may change both
purchase process and
criteria used.
-
8/2/2019 Marketing Strategy2 Notes
18/29
people seek higher interest rates).
The drawbacks of this technique it
that it requires costly primary
research and complicated data
analysis techniques.
3- Customer Behavior by studyingpurchase behavior (Volkswagen
used loyalty to segment customers
into: first time buyers and
replacement buyers), study the use
of elasticity (of response change in
marketing mix variables is a basis for
segmentations however there could
be methodological problems when
identifying responsiveness to
change) , Communication Behavior
(markets could be segments based
on information seeking behavior,
where information seekers is an
attractive segment for companies
who base their strategies on
promotional material with heavy
information content)
3- Behavioral businessgoods market can be
segmented by buyer-
seller similarity
(comparability in
technology and size are
good ways to distinguish
between customers),
buyer risk perception
(the personal style of the
individual, self-confidence
may provide leverage),
the product volume
(identifying the major
purchasers for products
through volume
purchased can be useful,
in paint market for
example the ultimate
product use dictates the
type of paint and its
properties and is a basic
method for segmentation)
Benefits of Segmenting market1- A useful approach for smaller companies. It allows target market to be
matched with competencies (ch.6 RBV)
2- Identifies gaps in the market (unserved segments) which can serve astarget for new product development
3- In declining market, it is possible to identify certain segments that aregrowing
-
8/2/2019 Marketing Strategy2 Notes
19/29
4- Allows marketer to match product/service closer to needs of targetmarket, thus improving the competitive position.
CH 10
Factors to determine market segment attractiveness1- Market Factors :includes the size of the segment (high volume markets
offer greater potential for sales expansion), Segment growth rate (cola
market has declined in some western areas, so its less attractive),
predictability( the more predictable the market, the less prone it is to
turbulence) , bargaining power of supplier (when buyers have the higher
power, the segment is less attractive)
2- Economic and Technical Factors:includes barriers to entry(markets thathave substantial barriers to entry like technology and high switching costs
is attractive for incumbents, & unattractive for aspirants),barriers to exist
(if it is high, it will be less attractive because companies can be locked into
uneconomic positions) bargaining power of supplier (if there is
monopoly in supply, market is less attractive)
3- Competitive factors: includes competitive intensity (is market dominatedby one monopoly? or few oligopoly like mobinil, Vodafone or
none?aka perfect competition, which requires many small players, with
standardized products) , threat of substitution (the increasing rate of
technology will make it more probable that the products will be become
substituted)
4- General Business Environmentincludes exposure to economicfluctuations (some markets are more vulnerable than other, in new
Zealand, the wool export industry was badly affected in 1990s), exposure
to political and legal factors ( the more prone to political, legal factors,
the less attractive, unless those factors affect companies positively),
-
8/2/2019 Marketing Strategy2 Notes
20/29
Degree of regulation (less regulated market, results more freedom in its
actions, however the more regulation can be beneficial for some , for
example, the protection of European car manufactures from Japanese car
imports by quota)
Determining Current and Potential Strength now we reached to a point wherewe want to know how can the resources, capabilities, competencies can be
deployed in a certain market/segment. We should divide the this evaluation
into 3 issues
1- Current Market Positionincludes the relative market share (higher share= better performance in serving customer needs, the market share alsocan confer an advantage in further penetrating the marking such as high
share brands), Exploitable marketing resources (in target markets,
where marketing assets have potential for further exploitation, the
company has potential strength from which to build), Unique
products/services ( superior products has a potential for stronger
competitive position)
2-Economic and Technological Positionincludes relative cost decision(low relative production costs, trough technological leadership, gives the
financial edge to a company in a certain market), Technological
position(matching technology to customers requirements is important)
3- Capacity profileincludes management strength (the more skilled theworking staff are, the more opportunities can be exploited, the skills of
managers is important for service organizations like consultancy
companies), Forward and backwards integration (the level of control ofsupply of raw materials backward integration and the level of control
in distribution channels forward can affect the strength of a company
in serving a target)
-
8/2/2019 Marketing Strategy2 Notes
21/29
Ch. 11
Using organizational resources to create a sustainable competitive advantagethe characteristics of resources should be
1- Contribution to creating customer value (value creation maybe directthrough better service, brand reputation, and could be done indirectly like
effective cost controlling systems.)The value of resource in creating
customer value should be assessed relative to the resources of
competitors, for example a strong brand name like Nike may convey more
value to customers than a less known sporting brand.2- Uniqueness (for an advantage to be sustainable, the rarity of resources
used must be sustained over time)
3- Inimitability (even if resource are unique, there is chance that they can beimitated or substituted) there are some resources that cant be imitated
like unique location , some resources are hard to imitate like customer
loyalty , other resources are easy to imitate like unskilled workforce,
machinery)
Generic Routes to competitive advantage Porter has identified 2 main routesin creating a competitive advantage
Cost leadership Differentiation
There are several factors that affect
organizational costs, the factors are
known as costs drivers
1- Economies of Scale (singlemost effective cost driver, it
refers to the cost advantages
that an enterprise obtains due
Several factors affect differentiation
are known as uniqueness drivers,
they are:
1- Product Differentiation productscan be seen at 4 levels; 1- core
offer (the differentiation here
can be by developing new ways
-
8/2/2019 Marketing Strategy2 Notes
22/29
to expansion. It makes the
average cost per unit decrease
as output increase. It affects
the manufacturing sector more
than the service sector.
Sources f it can be from bulk
buying of materials through
long term contract or
spreading the cost of
advertising over greater range
of output in media markets)
2- Experience further costreductions could be done by
hiring experienced staff and be
enhanced with training.
3- Location (geographic locationsto take advantage of lower
distribution, assembly, raw
materials cost
4- Policy Choices Decisionsregarding product or product
line affect the cost. However
the general rule is to reduce
cost but not to significantly
affect valued uniqueness and
invest in technology to achieve
low cost process automation
of delivering the basic benefits)
2- the expected offer (
differentiation here can be done
by improvements in features like
warranties, packaging) 3-
augmented offer (differentiation
here could be new benefits not
normally offered like credit
facilities) 4- potential offer (
anything else used to
differentiate from competitors)
2- Distribution (by having differentnetworks or coverage of a
market , like shopping by phone
through TV based catalogues)
3- Price differentiation (lower pricesis a differentiation that is
appropriate for companies who
have cost advantage)
4- Promotional (using differentmessage with normal media
advertising. For example most
beer ads are promoted by
showing a group of people
having fun. However Heineken
ads added humor to the ads
and a caption in its ad.
Sustaining a Competitive Advantage The most important way in creatingdefensible positions are:
-
8/2/2019 Marketing Strategy2 Notes
23/29
1- Unique and valued Products (which stems from employing superiortechnology, utilizing superior raw materials . however unique products
do not stay forever, therefore companies should innovate continually)
2-
Clear definition of target markets to keep the products valued,monitoring of customers, understanding who they are, and how to
access them are required.
3- Enhanced customer Linkages (by creating closer bonds with customersthrough enhanced service , creating switching costs makes it less likely
to shop around for other sources of supply)
4- Established Brand Credibility (Brand reputation are among the mostdefensible assets a company assets, thats why customers all over theworld prefer Nike, Mercedes, SONY, Rolex. As they want to buy the
maker not the product.
Offensive and Defensive strategiesOffensive Defensive
Includes but not limited to:
1- Frontal Attacka direct attack,meeting competitors with the
same product line, price,
promotion. It focuses on
attacking the competitors
strength, therefore this is very
risky.
2- Flanking Attackattacking theweak points in the
competitors defense. It is
achieved by attacking
geographic areas where the
competitor is under
Includes but not limited to:
1- Position Defensestatic defenseof current position, retaining
current product markets by
increasing barriers to copy and
entry. This can be achieved
using differentiation.
2- MobileDefence it is achievedby continually updating
companys offering to the
market place, same way Persil
in UK was successful by
constant attempts to keep the
product line with changing
-
8/2/2019 Marketing Strategy2 Notes
24/29
presented. customer requirements
CH 12
Product choice Criteria to understand why people choose certain productsover other, 2 main sets should be distinguished the rational & overt and
Emotional & Covert
o Emotional reasonscould be purchasing goods based on thereassurance that a well-known brand can bring. Or choosing a
product because it fits the life style of a customer, or it expresses
his/her identity, that why some people spend thousands of dollars
on a Rolex. Some people only fly by planes even if the trip is very
short because they feel that its not in their nature to travel by car
like normal people. More in depth quantitiave and projective
research is used to uncover the emotional & covert motivations
o Rationalis when customers makes comparison of perceivedbenefits, for example people might consider traveling by car rather
than a plane, due to comparison of costs involved). Quantitate
market research is used to uncover the rational decisions.
o However most purchases are combination of rational andemotional , the balance between the 2 will vary among brands,
-
8/2/2019 Marketing Strategy2 Notes
25/29
thats why marketers need to understand that balance for their
market,
Diffusion of Innovation the rate of diffusion in any innovation depend on anumber of factors:
1- Relative advantage of innovation over previous solutions2- The comparability of innovation with existing values3- A lack of complexity in innovation4- Divisibility to facilitate trial5-
The communicability of advantages of innovation.
According to roger there are 5 adopter groups:
1- Innovatorsthe first to adopt a new technology or product, theyare technology enthusiasts, they wish to be up to date, however
some innovations fail because they are technology driven and not
meeting the real needs of a customer. (relate to CH 1 marketing
Concepts)
2- Early Adoptersare similar to innovators, but often demonstrate amore visionary reason for adopting new technology. For example
Jeff Bezos at Amazon.com saw the use of internet as a new way
for retailing books and other products.
3- Early Majorityare more pragmatic than early adopters, they aremore likely to see the incremental possibilities for improvement.
They are efficiency driven for example, using internet technology
to improve an aspect of supply chain efficiency.
-
8/2/2019 Marketing Strategy2 Notes
26/29
4- Late majorityare conservatives who often adopt technology,because others in market have done so, and fear being left
behind.
5-Laggardsare scepticswho dont really see the potential for newtechnology, and will attempt to resist adoption.
Pricing Consideration: the factors that need to be taken into account forsetting price levels are:
1- Production costs(simplest pricing method used, the less theproduction costs, the less the prices, thus sufficient quantities are sold,
and a given level of profitability is ensured.)
2- Competitor price level(if 2 product having similar characteristics, thechoice determinant for customers would be price, thus firms may
either set price higher than competitor (signal for superior quality) or
setting price the same as competitor or lower to attract customers)
3- Price Elasticitywhich is the responsiveness in demand when priceschange. It is calculated by the percentage of change in demand
divided by percentage of change in price. If demand is elastic (percent
change in demand is higher than percent change in price) and the
company increases the price, the quantity will fall significantly thus the
total revenue would fall even though the price was higher. Inelastic
demand means that the percentage of change In price is lower, thus if
companies increase the price, the quantity of purchased products will
decrease a little but overall the revenue will go higher.
-
8/2/2019 Marketing Strategy2 Notes
27/29
4- Corporate objectives(does the company want to harvest? Or maximizeprofit? Which would indicate marginal cost pricing. Relate this to CH.1
in corporate strategy.
The Use of extended marketing Mix (additional 3ps)People Processes Physical Evidence
Refer to the employees of
a company. There are
certain strategies in for
staffing.
1- Job design anddescription:by
having a clear idea
of job role and
tasks needed to be
done
2- Selection:selectingthe best candidate
for a job. In
nightclubs, if a
bouncer needed to
be hired then the
job description will
be the ability to
defend himself and
others and keep
trouble outside the
night club
3- Training:even ifemployee is very
skilled, additional
training is
Refers to the systems
involved in delivering the
product/service
CRM (customer
relationship management)
cover all methods used by
companies to manage
their relationships with
customers. An effective
CRM system should help
organizations to acquire
customers, build closer
relationships with them,
provide better customer
service
Refers to elements within
store.
For example when you go
to Pull and Bear, the
Clothing store that has a
branch in City Stars. Unlike
traditional clothing stores,
Pull and Bear deliberately
plays music inside the
store that is of interest for
customers of their target
segment, also the effect of
lighting on the mood.
-
8/2/2019 Marketing Strategy2 Notes
28/29
important as well
to ensure skills are
maintained and
enhanced.
4- Appraisal:monitoring and
giving feedback to
staff on their
performance. In
order to avoid
certain mistakes.
CH 13
What are the Pressures and Spurs (Stimuli) for Innovation Basically what arethe reasons to innovate?
o They include the Internal Pressures to exploit existing and newtechnologies, with the desire to use organizational resources, assets and
capabilities as effectively as possible.
o External Pressures include the push from intense competition,increasingly demanding customers, and the technological drive of
shortening product life Cycle
The new product development process1- Idea Generation(finding novel ideas that come out of inspiration . a
company may facilitate the generation of new ideas by creating an
environment that will induce and facilitate creativity)
2- Screening(selecting the best idea) screening could be based on initialscreen where new idea may hit a legal, technical, marketing barrier.
Another way of screening is formalized screening, where new ideas are
-
8/2/2019 Marketing Strategy2 Notes
29/29
evaluated logically and within a systematic structure, and it is less
impressionistic than initial screening.
3- Business analysis(considers the attractiveness of the market for theproposed idea)(evaluating if sales, cost, and profit projections satisfy thecompanys objectives)
4- Product development(at this stage R&D convert the idea into a physicalproduct)(developing a product prototype is in this stage)
5- Market testingTechniques used are simulated sale using carefully selectedcustomers and a full test market in one or more regions of a country. It is
useful for forecasting new product sales, and tests effectiveness of
marketing plan6- Commercialization(most new products fail because marketing launch
strategy was poorly executed)
Want more things to study? You are too smart? Dont think the content is not
enough?
Difference between radical, rational, robust strategies Components of market orientation Strategic fit Strategic focus Industry evolution Environmental turbulence Choosing good competitors Resource portfolio Alternative marketing strategy Product life cycle and how to integrate the 4ps in it Causes of new product failure