Strategic Marketing 2024-25 - PDF - IHEC

Strategic Marketing 2024- 2025 Olivier Schunck [email protected] 21GE022 – Strategic Marketing - Module 2a 1  Course Outline Marketing’s A brief history of Marketing Brand & Brand identity, trust and 1...

Strategic Marketing 2024- 2025 Olivier Schunck [email protected] 21GE022 – Strategic Marketing - Module 2a 1  Course Outline Marketing’s A brief history of Marketing Brand & Brand identity, trust and 1 6 Journey and where it stands today Purpose purpose-driven marketing Strategic Basics of Marketing Strategy Responsible Marketing in times of crisis: 2 7 Marketing explained, step-by-step Marketing Sustainable and Ethical Customer Customers’ behavior & needs Digital & Marketing strategy in the 3 8 Centricity and distinctive experiences Social Digital Era Research & Customer intelligence driven Emerging AI, Gen AI & emerging tech- 4 9 Insights by data/AI & human insights technology led Marketing Reinvention Market & Competitive advantage to Agile Resilient & agile marketing 5 10 Competition stand out and innovate Marketing operating models 21GE022 – Strategic Marketing - Module 2a 2  Today’s Focus - Module 2, first part Marketing’s A brief history of Marketing Brand & Brand identity, trust and 1 6 Journey and where it stands today Purpose purpose-driven marketing Strategic Basics of Marketing Strategy Responsible Marketing in times of crisis: 2 7 Marketing explained, step-by-step Marketing Sustainable and Ethical Customer Customers’ behavior & needs Digital & Marketing strategy in the 3 8 Centricity and distinctive experiences Social Digital Era Research & Customer intelligence driven Emerging AI, Gen AI & emerging tech- 4 9 Insights by data/AI & human insights technology led Marketing Reinvention Market & Competitive advantage to Agile Resilient & agile marketing 5 10 Competition stand out and innovate Marketing operating models 21GE022 – Strategic Marketing - Module 2a 3 Creating Value, Making Choices 21GE022 – Strategic Marketing - Module 2a  About Marketing …today, it’s about value creation ! 2024 “ Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ” Source: https://www.ama.org/the-definition-of-marketing-what-is-marketing/ 21GE022 – Strategic Marketing - Module 2a 7  About Marketing “Create, Communicate and Deliver Value to a Target Market at a Profit” — Philip Kotler Source: XXXXXXXXXXXXXXXXXXXXX Source: https://www.kotlermarketing.com/ and Koteler’s speech at London Business Forum 2008 21GE022 – Strategic Marketing - Module 2a 8  Creating Value for the Customer Do the perceived benefits outweigh the perceived costs? Perceived Perceived Perceived Customer Benefits Costs Value Functionality Price (monetary) In relation to Convenience Time customers’ Service Energy expectations Status Psychic (stress to use…) and/or Experience Risk (privacy…) competition Social values Societal costs etc. etc. Note: Not all purchase decisions are rational trade-offs. Some are emotional responses e.g., impulse buying Source: Kotler, “Principles of Marketing”; Byron Sharp “How Brands Grow” 21GE022 – Strategic Marketing - Module 2a 9 Creating Value for the Company By creating benefits for customers, firms can capture value in return Value based pricing * ___ Customer Perceived Value ___ Margin _____________Price_______________ Market share _____________ Cost_______________ * Other pricing strategies are possible e.g. ‘Cost plus’ pricing focuses on providing the product/service at the lowest possible cost plus a set mark-up. It emphasizes the perceived costs, especially the monetary ones, and typically prioritizes market share over margin. 21GE022 – Strategic Marketing - Module 2a 10 Creating Value for the Company Companies need to balance where to focus ACQUIRE GROW RETAIN Customer Lifetime new existing existing customers customers customers Value (CLV) = value of the entire stream Loyalty of purchases that a Volume Up/cross-sell or customer would make Lowering costs Repeat purchase over its lifetime * Customer Variation of Customer retention rate acquisition cost & customer revenue (opposite: churn), revenue & costs engagement * Note: Customers can also drive financial value indirectly e.g., by advocating for a brand. See later in the course: Net Promoter Score. 21GE022 – Strategic Marketing - Module 2a 11  Creating Value for the Society Companies preserve/enhance the well-being of customers and society. Societal Marketing Society Integrates issues around social and Human welfare & Planet environmental long-run interests into current commercial marketing strategy of a company Closely related to sustainable or responsible marketing Different from “NGO marketing” or “social marketing” that use commercial marketing methods to influence social Customer Company change e.g., anti-smoking campaign Wants, needs & Requirements aspirations (financial & other) Source: https://en.wikipedia.org/wiki/Societal_marketing; Kotler’s ”Principles of Marketing” 21GE022 – Strategic Marketing - Module 2a 12 Creating Value: Company examples 21GE022 – Strategic Marketing - Module 2a 13  Video Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 14  Choices are at the core of strategy “Strategy is an integrated set of choices uniquely positioning a company to create CHOICE 1 sustainable advantage and superior value What is the relative to the competition.” winning CHOICE 2 aspiration ? Where to play? CHOICE 3 How CHOICE 4 to win? What core capabilities CHOICE 5 are needed? What manage- ment systems are required ? At the heart of strategy Source: “Playing to Win: How Strategy Really Works”, by AG Lafley and Roger Martin, 2013 21GE022 – Strategic Marketing - Module 2a 15  Making choices is at the core of strategy “…Choices” ▪ No single strategic solution ▪ It’s also about what NOT to do CHOICE 1 ▪ Avoid non-choices (= evidences) What is the winning CHOICE 2 aspiration ? Where to play? CHOICE 3 How CHOICE 4 to win? What core capabilities CHOICE 5 are needed? What manage- “Integrated set of… ment systems are required ? ▪ Pairs/iterations of choices ▪ Make choices simultaneous ▪ Choices are not independent Source: “Strategic Choices Need to Be Made Simultaneously, Not Sequentially”, HBR, Roger Martin, 2017 21GE022 – Strategic Marketing - Module 2a 16 Creating Value, Making Choices – What went wrong? 21GE022 – Strategic Marketing - Module 2a 17  In large corporation: Multiple levels of choices EXAMPLE Company strategy Corporate Corporate level Winning aspiration Where to play? How to win? Core Sector/BU strategy capabilities Mgmt Baby, Feminine & Winning systems Family Care Strategic group aspiration Where to play? How Category strategy to win? Core capabilities Mgmt Winning systems Diapers Individual business aspiration Where to play? How Brand-level strategy to win? Core capabilities Mgmt Winning systems Brand /function aspiration Where to play? How to win? Core capabilities Mgmt systems Source: “Strategic Choices Need to Be Made Simultaneously, Not Sequentially”, HBR, Roger Martin, 2017 21GE022 – Strategic Marketing - Module 2a 18 Defining Strategic Marketing 21GE022 – Strategic Marketing - Module 2a  What does Strategic Marketing mean? Strategic Marketing is an approach by which a firm effectively Creating differentiates itself from it's competitors by capitalizing on its Value strengths - both current and potential - to provide consistently better value to customers than its competitors. Strategic Marketing defines the company's mission, Making chooses a target market and positioning, determines the choices growth strategy, ensures a balanced product portfolio, and, if necessary, develops new products*. Source: “Marketing stratégique et opérationnel”, Jean-Jacques Lambin 21GE022 – Strategic Marketing - Module 2a 20 Innovation as driving force New ideas to create advantage can originate from two sources Innovation Market-driven Technology-driven Addresses unmet needs or Innovation originates from new existing issues technology/science advances Customer needs analysis Customer needs have to be guides product development cultivated afterwards 21GE022 – Strategic Marketing - Module 2a 21  Innovation as driving force Can we do it? INNOVATION Feasible Master of the possible MARKETING Desirable Viable Master of the valuable Is it profitable? Do people want it? Source: “Marketing stratégique et opérationnel”, Jean-Jacques Lambin 21GE022 – Strategic Marketing - Module 2a 22  “Business has only two functions – marketing and innovation.” — Peter Drucker Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 23 What does Strategic Marketing mean? Characteristics of Strategic Marketing Critical Success Factors Is anchored in a deep as-is/situation analysis to identify new opportunities Future-forward Value creation vision reinvention Exploits all available corporate resources and takes a holistic view, beyond just marketing. Proactive & Customer- Agile centric Focused on medium/long-term, on choices that have enduring impact. Clearly Hard choices articulated Covers a broad portfolio of products & services, of different maturity level. 21GE022 – Strategic Marketing - Module 2a 24 Importance of a Marketing Strategies Even though there are different types These components play a critical role of resulting marketing strategies, they for the marketing mix definition and typically all consist at least of: subsequent marketing plan execution Target Business ✓ Cascade business objectives Market Offering ✓ Provides direction Value ✓ Ensures coordination Competitive advantage opportunity ✓ Allocate limited resources efficiently Required Goals ✓ Ensures better control capabilities and KPIs 21GE022 – Strategic Marketing - Module 2a 25 Strategic Marketing vs Operational Marketing 21GE022 – Strategic Marketing - Module 2a 26  Strategic Marketing vs. Operational Marketing Disctinct, yet complementary Strategic Marketing Operational Marketing From situation analysis to strategy From strategy to execution Overall direction Concrete detailed goals Analysis-oriented Action-oriented Long range management Day-to-day management New opportunities Current opportunities Foresight Planning Product-market segments Marketing mix CEO-level, cross-functional Marketing function Goals, value potential/business case KPIs, budgets Source: “Marketing stratégique et opérationnel”, Jean-Jacques Lambin and other sources 21GE022 – Strategic Marketing - Module 2a 27 Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 28 Strategic Marketing: step-by-step process 21GE022 – Strategic Marketing - Module 2a Strategic Marketing process The strategic marketing process puts all the pieces together so that everything that is done contributes to creating value for the customers, the organizations , and society at large Rather than executing haphazard activities and ideas, it supports making a set of deliberate and integrated strategic choices as well as developing a realistic plan for action that weaves goals and tactics together based on the organization's distinct capabilities and according to set goals and metrics. 21GE022 – Strategic Marketing - Module 2a 30  Strategic Marketing process – high level 1. Overall 2. Situation 3. Marketing 4. Integrated 5. Execution Ambition Analysis Strategy Mktg program & Evaluation Set general Identify Make strategic Develop the Put strategy direction opportunities choices components into action Purpose External analysis Strategic options Marketing Mix Pilot Vision/Mission Internal analysis Segment, Target, Capability gaps Implementation Branding Position Plan / Budgets Organization Identify value Goals & Objectives potential Evaluation & Choice Objectives/KPIs Monitor/Evaluate 21GE022 – Strategic Marketing - Module 2a 31 Strategic Marketing: step-by-step process 21GE022 – Strategic Marketing - Module 2a  Strategic Marketing process – high level 1. Overall 2. Situation 3. Marketing 4. Integrated 5. Execution Ambition Analysis Strategy Mktg program & Evaluation Set general Identify Make strategic Develop the Put strategy direction opportunities choices components into action Purpose External analysis Strategic options Marketing Mix Pilot Vision/Mission Internal analysis Segment, Target, Capability gaps Implementation Branding Position Plan / Budgets Organization Identify value Goals & Objectives potential Evaluation & Choice Objectives/KPIs Monitor/Evaluate 21GE022 – Strategic Marketing - Module 2a 33 A multitude of Strategic Marketing Models …and many more… We will learn to use a selected set of them… 21GE022 – Strategic Marketing - Module 2a 34 Strategic Marketing: step-by-step process STEP 1 21GE022 – Strategic Marketing - Module 2a Our case study for this module 21GE022 – Strategic Marketing - Module 2a 36 21GE022 – Strategic Marketing - Module 2a 37 TASK - Find the company that commercializes ZYLA Discuss in groups and use any online source for researching 21GE022 – Strategic Marketing - Module 2a 38 21GE022 – Strategic Marketing - Module 2a 39 Town of SPA 21GE022 – Strategic Marketing - Module 2a 40 Town of SPA 21GE022 – Strategic Marketing - Module 2a 41  Spadel is Belgian-based company that produces and commercializes mineral water brands. It is market leader in in Belgium and the Netherlands “Spa rood” “Spa blauw” Interesting fact: In the Netherlands the brand name has become the product category name. When you want sparkling water you ask for “Spa rood”, for still water “Spa blauw”…but you may get a competitor’s brand (e.g. Sourcy) 21GE022 – Strategic Marketing - Module 2a 42  Strategic Marketing process – Step 1 1. Overall 2. Situation 3. Marketing 4. Integrated 5. Execution Ambition Analysis Strategy Mktg program & Evaluation Set general Identify Make strategic Develop the Put strategy direction opportunities choices components into action Purpose External analysis Strategic options Marketing Mix Pilot Vision/Mission Internal analysis Segment, Target, Capability gaps Implementation Branding Position Plan / Budgets Organization Identify value Goals & Objectives potential Evaluation & Choice Objectives/KPIs Monitor/Evaluate 21GE022 – Strategic Marketing - Module 2a 43  STEP 1 Purpose “[Purpose is ] An aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society.” Source: Havard Business Review, “The Business Case for Purpose”, 2015; Put purpose at the core of your strategy”, 2019 21GE022 – Strategic Marketing - Module 2a 44  STEP 1 Purpose What is a company's purpose? ▪ It answers the WHY? question: Why does the Steps to integrate the purpose: organization exist? Why are do what we do? ✓ Define the organization’s ▪ It goes beyond just achieving financial benefit purpose for the organization ✓ Bringing the purpose to life ▪ It seeks to have an impact in the world e.g. in corporate culture EXAMPLE ✓ Activate purpose in global strategy ✓ Activate purpose in marketing strategy Source: Havard Business Review, “The Business Case for Purpose”, 2015; Put purpose at the core of your strategy”, 2019 21GE022 – Strategic Marketing - Module 2a 45  STEP 1 Purpose A well-crafted purpose statement really matters. It sends a clear signal. A meaningful purpose statement is*: Societal: it explicit reference to the specific human, societal, or environmental problem(s) the firm seeks to address Authentic: it can be trusted that the purpose statement accurately and honestly reflects the organization’s true aims Believable: it makes clear that the organization can deploy resources and measure progress toward the stated purpose Relevant to beneficiaries: it contains a clear indication of which segments of society and the environment will benefit Engaging: it is inspiring and appealing to the heart as much as to the mind. It is memorable, short, clear and “punchy”. Source: * based on SABRE framework developed in Havard Business Review, “What makes a great purpose statement”, 2023 21GE022 – Strategic Marketing - Module 2a 46  STEP 1 Vision and Mission EXAMPLE Purpose Why does the organization exist? “To connect people to what’s important in their lives through friendly, reliable Why are do what we do? and low-cost air travel” Vision “To be the world’s most loved, Where the company is headed, what it wants most efficient, and most to become, in accordance with its purpose. profitable airline” Mission “Dedication to the highest quality The steps and actions to be taken to achieve of customer service delivered with the vision. The ‘What’ and ‘How’. a sense of warmth, friendliness, individual pride and company spirit Source: Purpose vs mission vs vision persuasive appeals and components in corporate statements, 2022 21GE022 – Strategic Marketing - Module 2a 47 STEP 1 Branding 21GE022 – Strategic Marketing - Module 2a 48 STEP 1 Branding It’s much more than just the logo ! Branding is the deliberate, continuous process of creating a strong, distinctive, positive perception of a company, its products and services in the customer’s mind by developing & combining various assets. 21GE022 – Strategic Marketing - Module 2a 49 21GE022 – Strategic Marketing - Module 2a 50  STEP 1 Goals & Objectives Setting them at the highest organization level is critical for success Strategic goals Strategic objectives Where a company wants to How your company plans to end up and define the achieve its goals based on the business strategy’s expected context of the organization. achievements. They are specific and They are broad and long-term measurable “Replace 50% of product “Develop a fully sustainable packaging with product offering.” biodegradable materials within the next two years.” Source: Purpose vs mission vs vision persuasive appeals and components in corporate statements, 2022 21GE022 – Strategic Marketing - Module 2a 51  STEP 1 Goals & Objectives They should entail specific characteristics: Strategic goals Where a company wants to end up and define the business strategy’s expected achievements. Source: Setting Business Goals & Objectives, Harvard Business School Online 21GE022 – Strategic Marketing - Module 2a 52  STEP 1 Goals & Objectives They should entail specific characteristics: SMART objectives Strategic objective How your company plans to achieve its goals based on the context of the organization. Concrete & With an It should be It should be It has a time- tangible – objective challenging meaningful line or even everyone measure of but achie- and connect a timing of knows what success all vable with to a strategic main mile- it looks like understand resources goal stones Source: Adapted from www.bitesizelearning.co.uk 21GE022 – Strategic Marketing - Module 2a 53  STEP 1 Goals & Objectives The balanced scorecard track goals and objectives effectively. It combines financial and non-financial variables along four dimensions. Develop a fully % of product Replace 50% of sustainable packaging using product packaging product offering biodegradable with biodegradable materials materials in 2 years Source: The Balanced Scorecard (Kaplan and Norton 1992) and Harvard Business School Online 21GE022 – Strategic Marketing - Module 2a 54 TASK - Find the purpose statement of Spadel Discuss in groups and use any online source for researching 21GE022 – Strategic Marketing - Module 2a 55 Source: https://www.spadel.com/en/media/3016/download (accessed via Google) 21GE022 – Strategic Marketing - Module 2a 56 Strategic Marketing: step-by-step process STEP 2 21GE022 – Strategic Marketing - Module 2a  Strategic Marketing process – Step 2 1. Overall 2. Situation 3. Marketing 4. Integrated 5. Execution Ambition Analysis Strategy Mktg program & Evaluation Set general Identify Make strategic Develop the Put strategy direction opportunities choices components into action Purpose External analysis Strategic options Marketing Mix Pilot Vision/Mission Internal analysis Segment, Target, Capability gaps Implementation Branding Position Plan / Budgets Organization Identify value Goals & Objectives potential Evaluation & Choice Objectives/KPIs Monitor/Evaluate 21GE022 – Strategic Marketing - Module 2a 58 STEP 2 Situation analysis ▪ The second step of the strategic marketing process is to evaluate internal and external factors that affect the business and market. ▪ The analysis will illuminate the strengths and the challenges the company is facing - either with internal resources or with external competition in the marketplace. ▪ Situation analysis provides a clear, objective view of the health of the business, the current and prospective customers, industry trends, and the company’s position in the marketplace. ▪ To identify customer-centric value opportunities, the situation analysis will focus in particular on spotting changing, unmet or latent needs of customer segments that can lead to creating new attractive value potentials in given product-markets. 21GE022 – Strategic Marketing - Module 2a 59 STEP 2 Situation analysis Many frameworks exists. Here the most common ones: Focus External Internal Evaluates the broader external macro-environment PESTEL in which a firm operates along 5 factors: Political, framework Economic, Social, Technological, Environmental, Legal Assesses the key external influences to understand Porter’s Five Forces the firm’s specific industry, its micro-environment, along five distinct dimensions 5C analysis It includes an internal analysis as well as an exploration Company, Customers, Climate Competitors, Collaborators, of external factors SWOT analysis Strengths and weaknesses are internal factors, under Strengths, Weaknesses, the company’s control. Opportunities and threats are Opportunities, Threats external factors. 21GE022 – Strategic Marketing - Module 2a 60  Video Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 61 STEP 2 Situation analysis PESTEL framework Pestel is to understand the broad macro-environment In situation analysis, you can also conduct a PESTEL analysis which is a detailed version of the climate section of a 5C analysis. This method provides a comprehensive analysis of external factors that could affect your company. What is a PESTEL Analysis? A PESTEL analysis is a strategic framework commonly used to evaluate the business environment in which a firm operates. Traditionally, the framework was referred to as a PEST analysis, which was an acronym for Political, Economic, Social, and Technological; in more recent history, the framework was extended to include Environmental and Legal factors as well. 21GE022 – Strategic Marketing - Module 2a 62 STEP 2 Situation analysis PESTEL framework - Political Political Factors Broadly speaking, political factors are those driven by government actions and policies. They include, but are not limited to, considerations like: Elections results Corporate taxation Other fiscal policy initiatives Free trade disputes Antitrust and other anti-competition issues, … Political Factors example: a multinational company closes several facilities in a higher tax jurisdiction in order to relocate operations somewhere with lower tax rates and/or greater state funding and grant opportunities. 21GE022 – Strategic Marketing - Module 2a 63 STEP 2 Situation analysis PESTEL framework - Economic Economic Factors Economic factors relate to the broader economy and tend to be expressly financial in nature. They include: Interest rates Employment rates Exchange rates, Inflation , … Many analysts in the financial services sector tend to overweight economic factors in their analysis since they’re more easily quantified and modelled than some of the other factors Economic Factors example: a rise in the inflation rate of any economy would affect the way companies price their products and services. Besides, it would also affect the purchasing power of a consumer and may result in a change in demand/supply 21GE022 – Strategic Marketing - Module 2a 64 STEP 2 Situation analysis PESTEL framework - Social Social Factors Social factors tend to be more difficult to quantify than economic ones. They refer to shifts or evolutions in the ways that stakeholders approach life and leisure, which in turn can impact commercial activity. Examples of social factors include: Demographic considerations Culture & subculture Lifestyle trends Consumer beliefs, … Social factors can have an outsized impact on entire industries as we know them. Consider how trends towards healthier and more active lifestyles changes some markets. Social Factor Example: Post-pandemic, company’s management have had to seriously re- evaluate hiring, onboarding, and training practices after an overwhelming number of employees indicated a preference for a hybrid, work-from-home (WFH) model. 21GE022 – Strategic Marketing - Module 2a 65 STEP 2 Situation analysis PESTEL framework - Technological Technological Factors Technological factors cover any impacts driven by digital & IT-based technologies (e.g. AI, cloud,…) and science-based technology (e.g., biotechnology…). They may impact an organization or its industry in terms of costs, competitive advantage are the way to compete. They include, but are not limited to: Science advances leading to new product development Automation (robotics, generative AI…) Technology infrastructure (like 5G, IoT, etc.), Cyber security, … The speed and scale of technological disruption in the present business environment are unprecedented, and it has had a devastating impact on many traditional businesses – think Uber upending the transportation industry or the advent of e-commerce in retail Technological Factor Example: A management team must weigh the practical, the financial & legal implications of transitioning from on-site physical servers to a cloud-based data storage solution. 21GE022 – Strategic Marketing - Module 2a 66 STEP 2 Situation analysis PESTEL framework - Environmental Environmental Factors Environmental factors emerged as a sensible addition to the original PEST framework as the business community began to recognize that changes to our physical environment can present material risks and opportunities for organizations. Examples are: Carbon footprint Climate change impacts, including physical and transition risks Increased incidences of extreme weather events… Environmental factors overlap considerably with those typically identified in an ESG (Environmental, Social, and Governance) analysis. In fact, it’s widely believed that the addition of environmental factors evolved from focus on ESG and CSR (Corporate Social Responsibility) Environmental Factor example: Management at a publicly traded firm must re-evaluate internal record keeping and reporting tools in order to track greenhouse gas emissions after the stock exchange announced mandatory climate and ESG disclosure for all listed companies. 21GE022 – Strategic Marketing - Module 2a 67 STEP 2 Situation analysis PESTEL framework - Legal Legal Factors Legal factors are those that emerge from changes to the regulatory environment, which may affect the broader economy, certain industries, or even individual businesses within a specific sector. They include, but are not limited to: Industry regulation Employment and consumer protection laws Protection of IP (Intellectual Property), GDPR (Global Data Regulation, EU AI Act… Regulation can serve as a headwind or a tailwind for operators. For example: it may increase capital requirements for financial institutions (headwind) or it may protect incumbent companies in a particular industry from new entrants (tailwind) Legal Factors example : consumer law is designed to protect consumers from fraudulent companies or practices, and preserve their rights in the marketplace such as for example having to provide detailed information about products on packaging for food & beverage. 21GE022 – Strategic Marketing - Module 2a 68 TASK - Develop the ‘PESTEL Legal factors’ for ZYLA’s launch Discuss in groups and use any online source for researching 21GE022 – Strategic Marketing - Module 2a 69 TASK - Develop the ‘PESTEL Legal factors’ for ZYLA’s launch Discuss in groups and use any online source for researching Possible answer: Selected main legal aspects to further investigate are areas such as: Regulatory Compliance (EU/local), Labelling Requirements, Advertising Standards, Intellectual Property, Consumer Protection Laws, Health and Safety Regulations, Environmental Laws, Employment Laws, etc. In the case of the energy drink market the recent legislations and/or health advice around limitations/warnings of ingredients used in beverages (such as caffeine) and other consumer protection laws are important ones to research as part of the situation analysis. 21GE022 – Strategic Marketing - Module 2a 70  STEP 2 Situation analysis Porter’s Five Forces Substitute products: The extent to which there is competition from substitute products Suppliers: The ability of Buyer/Customer power: The suppliers to increase the extent to which buyers are able costs of inputs raises costs to put pressure on the price of or otherwise limit the the good – potentially due to resources a firm needs. their size or importance. Competitive rivalry: The extent to Threat of new entrants: The ability of which firms already in the industry new firms to enter the industry – compete away the industry profits potentially increasing the levels of – potentially through undercutting competition within an industry over time. one another. 21GE022 – Strategic Marketing - Module 2a 71 STEP 2 Situation analysis Porter’s Five Forces Threat of new entrants The ability of new firms to enter the industry – potentially increasing the levels of competition within an industry over time. Selected factors influencing: Economies of scale Product differentiation Barriers of entry / capital required Regulations Switching costs for customers Access to distribution channels Technology protection 21GE022 – Strategic Marketing - Module 2a 72 STEP 2 Situation analysis Porter’s Five Forces Competitive rivalry The extent to which firms already in the industry compete away the industry profits – potentially through undercutting one another. Selected factors influencing: Number of competitors Industry growth Level of differentiation Exit barriers (stay competing due to constraints) Fixed costs Brand identity 21GE022 – Strategic Marketing - Module 2a 73 STEP 2 Situation analysis Porter’s Five Forces Supplier power The ability of suppliers to increase the costs of inputs raises costs or otherwise limit the resources a firm needs. Selected factors influencing: Number of suppliers Uniqueness of suppliers Switching costs (or time) Forward integration (suppliers becoming direct competitors) Industry integration (supplier and firms are tightly intertwined) 21GE022 – Strategic Marketing - Module 2a 74 STEP 2 Situation analysis Porter’s Five Forces Buyer/Customer power The extent to which buyers are able to put pressure on the price of the good – potentially due to their size or importance. Selected factors influencing: Number of buyers Purchase size Switching costs Price sensitivity Informed buyers Customer empowerment 21GE022 – Strategic Marketing - Module 2a 75 STEP 2 Situation analysis Porter’s Five Forces Substitute products The extent to which there is competition from substitute products or services, as customers can easily replace existing ones. Selected factors influencing: Number of substitutes available Relative price performance Customer willingness to switch Perceived similarities Relative price performance 21GE022 – Strategic Marketing - Module 2a 76 TASK – Research potential substitute threats for Zyla Discuss in groups and use any online source for researching 21GE022 – Strategic Marketing - Module 2a 77 TASK – Research potential substitute threats for Zyla Discuss in groups and use any online source for researching Possible answer: Substitutes for energy drinks in general … for natural low calorie energy drinks Coffee Natural Juices Tea Smoothies Sports drink Functional Waters (e.g. vitamin- Other soft drinks infused waters) etc. Herbal Teas/Infusions etc. 21GE022 – Strategic Marketing - Module 2a 78  TASK – Research potential substitute threats for Zyla Discuss in groups and use any online source for researching Could this become a potential substitute? Source: XXXXXXXXXXXXXXXXXXXXX Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 79 STEP 2 Situation analysis 5C analysis Selected questions Company: What is the strategy of the company? How successful are your product lines? What is your image in the marketplace? How effectively are you achieving your goals? How does your company’s culture affect your performance? Customers: Who is your audience and what is the market size? How much is your customer base growing? What motivates customers to buy your product or service? What are overall sales trends and how is the buying process changing? Competitors: Who are your direct, indirect, and future competitors? What are their products and market shares? How are they positioned in the market? What are their strengths and weaknesses? Collaborators: Who are your suppliers, distributors, partners, and agencies? How can they help you grow your business? How does the stability of their business affect the success of your business? Context/Climate: What are the governmental policies and regulations that affect the market? What macroeconomic factors are at play? What trends influence customers? What is the impact of technology on the demand for your product or how could it give you an advantage over your competitors? 21GE022 – Strategic Marketing - Module 2a 80  STEP 2 Situation analysis SWOT analysis Source: Townscript 21GE022 – Strategic Marketing - Module 2a 81 STEP 2 Situation analysis Selected underlying analysis methods for internal factors Financial analysis / Capability Maturity Competitor Balanced scorecards Models benchmarking Assesses key financial (e.g. Assesses the maturity of the Assesses the organization’s sales, profitability, acquisition organization along pre-defined performance (financial, non- cost, MROI…) and non- set of capabilities financial, capabilities…) financial metrics (e.g. Assessment usually covers a against other competitors customer satisfaction…) pre-defined description of the different maturity levels (e.g. from basic to pioneering) 21GE022 – Strategic Marketing - Module 2a 82 STEP 2 Situation analysis Selected underlying analysis methods for external factors Industry trends, Market Customer Research & Insights sizing and growth (cf. dedicated course module) Research agencies & internal intelligence teams To be customer-centric, the situation analysis needs can provide industry evolutions to focus specifically on the following: A key aspect is to evaluate the potential market o Identify trends in customer behaviors, needs size and demand for a product or service. (including latent) and preferences o Assess customer potential (e.g. high-value Total Addressable Market Entire potential market independent of customers…) and growth opportunities whether the company can reach & serve it All people seeking hair care services in a city o Develop market segmentation, identifying high- level target groups based on given characteristics Serviceable Addressable Market The potential market the company is able to reach & serve it Those seeking high-end hair care services Serviceable Obtainable Market The share that the company aims to capture Given the focus on organic hair treatment the company can go after 15% of the market 21GE022 – Strategic Marketing - Module 2a 83 Strategic Marketing: step-by-step process STEP 3 21GE022 – Strategic Marketing - Module 2a  Strategic Marketing process – Step 3 1. Overall 2. Situation 3. Marketing 4. Integrated 5. Execution Ambition Analysis Strategy Mktg program & Evaluation Set general Identify Make strategic Develop the Put strategy direction opportunities choices components into action Purpose External analysis Strategic options Marketing Mix Pilot Vision/Mission Internal analysis Segment, Target, Capability gaps Implementation Branding Position Plan / Budgets Organization Identify value Goals & Objectives potential Evaluation & Choice Objectives/KPIs Monitor/Evaluate 21GE022 – Strategic Marketing - Module 2a 85  STEP 3 Marketing Strategy The Ansoff Matrix Based on Igor Ansoff’s ‘Strategies for Diversification’, 1957. 21GE022 – Strategic Marketing - Module 2a 86 STEP 3 Marketing Strategy The Ansoff Matrix ❑ The Ansoff Matrix, often called the Product/Market Expansion Grid, is a two-by-two framework used by management teams and the analyst community to help plan and evaluate growth initiatives. In particular, the tool helps stakeholders conceptualize the level of risk associated with different growth strategies. ❑ The Ansoff Matrix is a fundamental framework taught by business schools worldwide. It is a simple and intuitive way to visualize the levers a management team can pull when considering growth opportunities. It features Products and Markets on the two axis. ❑ The concept of markets within the Ansoff framework can mean different things. For example, it could be a jurisdiction or geography (i.e., the North American market); it could also mean customer segments (i.e., target market/demographic). ❑ The Matrix is used to evaluate the relative attractiveness of growth strategies that leverage both existing products and markets vs. new ones, as well as the level of risk associated with each. 21GE022 – Strategic Marketing - Module 2a 87  STEP 3 Marketing Strategy The Ansoff Matrix Market Penetration – The concept of increasing sales of existing products into an existing market Market Development – Focuses on selling existing products into new markets Product Development – Focuses on introducing new products to an existing market Diversification – The concept of entering a new market with altogether new products Based on Igor Ansoff’s ‘Strategies for Diversification’, 1957. 21GE022 – Strategic Marketing - Module 2a 88 STEP 3 Marketing Strategy The Ansoff Matrix Market Penetration The least risky, in relative terms, is market penetration. When employing a market penetration strategy, management seeks to sell more of its existing products into markets that they’re familiar with and where they have existing relationships. Typical execution strategies include: Increasing marketing efforts or streamlining distribution processes Decreasing prices to attract new customers within the market segment Acquiring a competitor in the same market Example: Consider a consumer-packaged goods business that sells into grocery chains. It may seek greater penetration by amending pricing for a large chain to secure incremental shelf space not just for packaged food products but also for several lines of its pet food products, too. 21GE022 – Strategic Marketing - Module 2a 89 STEP 3 Marketing Strategy The Ansoff Matrix Market development A market development strategy is the next least risky because it does not require significant investment in R&D or product development. Rather, it allows a management team to leverage existing products and take them to a different market. Approaches include: Catering to a different customer segment or target demographic Entering a new domestic market (regional expansion) Entering into a foreign market (international expansion) Example: Lululemon decided to aggressively expand into the Asia Pacific market to sell its already very popular athleisure products. While building an advertising and logistics infrastructure in a foreign market inherently presents risks, it’s made less risky by virtue of the fact that they’re selling a product with a proven roadmap. 21GE022 – Strategic Marketing - Module 2a 90 STEP 3 Marketing Strategy The Ansoff Matrix Product development A business that firmly has the ears of a particular market or target audience may look to expand its share of wallet from that customer base. Think of it as a play on brand loyalty, which may be achieved in a variety of ways, including: Investing in R&D to develop an altogether new product(s). Acquiring the rights to produce and sell another firm’s product(s). Creating a new offering by branding a white-label product that’s produced by a 3rd party. Example: A beauty brand that produces and sells hair care products that are popular among women aged 28-35. To capitalize on the brand’s popularity and loyalty with this demographic, they invest heavily in the production of a new line of hair care products, hoping that the existing target market will adopt it. 21GE022 – Strategic Marketing - Module 2a 91 STEP 3 Marketing Strategy The Ansoff Matrix Diversification In relative terms, a diversification strategy is generally the highest risk endeavor; after all, both product development and market development are required. While it is the highest risk strategy, it can reap huge rewards – either by achieving altogether new revenue opportunities or by reducing a firm’s reliance on a single product/market fit (for whatever reason). There are generally two types of diversification strategies that a management team might consider: Related Diversification – Where there are potential synergies that can be realized between the existing business and the new product/market. Unrelated Diversification – Where it’s unlikely that any real synergies will be realized between the existing business and the new product/market 21GE022 – Strategic Marketing - Module 2a 92 Source: XXXXXXXXXXXXXXXXXXXXX 21GE022 – Strategic Marketing - Module 2a 93 TASK – Fill the Ansoff Matrix for Apple and its products Discuss in groups and use any online source for researching 21GE022 – Strategic Marketing - Module 2a 94 TASK – Fill the Ansoff Matrix for Apple and its products Possible answer: 21GE022 – Strategic Marketing - Module 2a 95 End of the first part of this module 21GE022 – Strategic Marketing - Module 2a  Thank You! Do you have questions or would like to share your feedback? [email protected] 21GE022 – Strategic Marketing - Module 2a Links to videos in this presentation Playing to Win - A.G. Lafley (0:00 > 7:40) https://www.youtube.com/watch?v=FlurK3LeTpg A Plan is Not a Strategy - Roger Martin (9:31) https://www.youtube.com/watch?v=iuYlGRnC7J8 PESTEL analysis (2:14) https://www.youtube.com/watch?v=noSF-R1JfGk 21GE022 – Strategic Marketing - Module 2a 98