Strategic Marketing Past Paper 2024-2025 - IHEC

Strategic Marketing 5 – Market & Competition 2024-2025 Olivier Schunck [email protected] 21GE022 – Strategic Marketing - Module 5 1 SUMMARY FROM MODULE 4 (LAST WEEK) Task – Based on the video, align research methods by side 2...

Strategic Marketing 5 – Market & Competition 2024-2025 Olivier Schunck [email protected] 21GE022 – Strategic Marketing - Module 5 1 SUMMARY FROM MODULE 4 (LAST WEEK) Task – Based on the video, align research methods by side 21GE022 – Strategic Marketing - Module 5 Video 2 SUMMARY FROM MODULE 4 (LAST WEEK) Answer – Based on the video, align research methods by side 21GE022 – Strategic Marketing - Module 5 Video 3  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 21GEO22A – Strategic Marketing - Module 5 4  Today’s focus 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 21GEO22A – Strategic Marketing - Module 5 5  Video 21GEO22A – Strategic Marketing - Module 5 Task - Based on video & article what drives Nike’s challenges? 21GE022 – Strategic Marketing - Module 5 7  Answer - Based on video & article what drives Nike’s challenges? Key reasons mentioned by article/video Lifestyle franchises (Nike Airforce…) under pressure Digital (online & direct) down in North America Highly competitive market in China Non-footwear (apparel) is even more competitive Disregarded long-term partnerships (deep, collaborative, game-changing relationships…) Loss of these small-store relationships Prioritizing cost-cutting over innovation Lack of short-term on innovation pipeline CEO John Donahoe 2020-2024 Elliott Hill now takes over … 21GE022 – Strategic Marketing - Module 5 8 Answer - Based on video & article what drives Nike’s challenges? Selected competitor moves: New competitors and boutique brands enter the market such as On Running Hoka or Allbirds. Focusing on innovative design, niche segments and/or sustainability Stronger competition from regional players such as Li-Ning (~10% market share, Euromonitor) and Anta (~15%) in China 21GE022 – Strategic Marketing - Module 5 9 TASK – Driving product innovation for a sneaker business 1. Form groups of 2-5 students 2. Brainstorm one new product innovation (10 min) Group A + with use of Co-pilot (or GenAI) Group B + NO use of Co-pilot (or GenAI) Google, Bing allowed 21GE022 – Strategic Marketing - Module 5 10 Task – Describe your product innovation in a few words. 1. Form groups of 2-5 students 2. Brainstorm one new product innovation (10 min) Group A + with use of Co-pilot (or GenAI) Group B + NO use of Co-pilot (or GenAI) Google, Bing allowed 21GE022 – Strategic Marketing - Module 5 11 Insights – Some recent innovation work of Nike "What I really hope this project stirs up is a sense of unlimited potential.“ John Hoke, Nike, Chief Innovation Officer https://about.nike.com/en/ stories/nike-design- athlete-imagined- revolution 21GE022 – Strategic Marketing - Module 5 12 Competitive Strategy, Competitive Advantage and Innovation 21GE022 – Strategic Marketing - Module 5 Competition is everywhere… Concentrated markets Concentrated markets Concentrated markets 21GEO22A – Strategic Marketing - Module 5 Gaining competitive insights Competitive Intelligence systematically monitors competitors is key. Understand who your competitors are, both direct and indirect Identify competitors competitors (e.g. potential entrants from other industries) Determine competitors’ Assess the competitors’ goals, such as profitability, market share, and Objectives growth goals, to understand their motivations and strategies. Identify competitors’ Study the strategies competitors use, including their target markets, strategies positioning, marketing mix, and value propositions. Assessing Competitors’ Analyse competitors' strengths and weaknesses by looking at their Strengths and Weaknesses resources, capabilities, and past performance. Estimate competitors’ Predict how competitors might react to your strategic moves or market reactions changes, such as new products or pricing adjustments. Select competitors Decide which competitors to directly compete with and which to to Attack or Avoid avoid, considering factors like position and potential retaliation. Source: based on Philip Kotler’s “Principles of Marketing”, 1999 21GEO22A – Strategic Marketing - Module 5  Competitive Intelligence Approaches to adapt strategies in response to market changes SELECTED APPROACHES ONLY Dynamic Competitive War rooms simulations Scenario Planning Small team, full-time Examines how external factors Focus on replicating the Multidisciplinary e.g.: staff impact future outcomes complex intertwined real- from campaign, digital media, It’s a “what-if analysis”, mostly world business conditions analytics, operations & IT longer-term & broader Most often interactive and Full top executive sponsor- It explores a given scenario experiential, like a “game” ship to enable quick actions (e.g. “what if demand grows by Short-term, focused on Clear goal, set time horizon 15% next year?”) specific market event (e.g.: drive product share) It enables to prepare to adapt It is used to build decision- Adapting actions real-time strategies if change occurs making skills of marketers Source: McKinsey, “The new growth game: Beating the market with digital and analytics”, 2019 and other research. 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies Competitive moves impact how firms go to market… Depending on the company’s position, a multitude of competitive strategies, including offensive moves to gain market share and defensive ones to protect current positions, can be considered. Example types of competitive moves: Market Leader Strategies: Market leaders can use aggressive marketing strategies, such as innovation and market expansion, to reinforce their position and fend off competitors. Market Challenger Strategies: Firms that are not the leaders often adopt strategies like frontal attacks (direct competition) or flanking attacks (targeting competitors' weak spots) Market (fast-) Follower Strategies: Followers may use strategies such as imitation or differentiation to capitalize on the leader's success while minimizing risk and investment. Market Niche Strategies: Niche players focus on specialized segments of the market where they can compete effectively, often by offering products/services tailored to specific needs. Source: based on Philip Kotler’s “Principles of Marketing”, 1999 21GEO22A – Strategic Marketing - Module 5 Competitive Strategies Market structures have an impact on competitive moves Concentrated markets Competitive markets Markets where a smaller Markets where numerous number of firms companies compete (oligopoly), or even just with one another to one (monopoly), account provide relatively similar for a very large share of goods and services the total market. to consumer. Increased competition Increased concentration 21GEO22A – Strategic Marketing - Module 5 Competitive Strategies Market structures have an impact on competitive moves Concentrated markets Competitive markets 48 ‘other’ carriers Mobile search engine global Delta US airlines American Airlines domestic Southwest United market shares, 2022 Alaska Airlines market JetBlue shares, Spirit 2023 Frontier Source: Statista.com Skywest Source: Statista.com Hawaiin Other 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies Market structures can evolve over time due to many factors Potential competition drivers: new entrants, regulations, entry/exit barriers, brand strength, fixed costs… Very Much more Again, more Competitive concentrated competitive concentrated Example: Mobile phone market over 30 years Source: www.visualcapitalist.com 21GEO22A – Strategic Marketing - Module 5 Competitive Advantage To stand out from other competitors, creating a clear advantage is critical. Competitive advantage refers to the factor(s) that permit one company to compete more effectively than Market share its industry peers. Profit margin It is referred to as ‘sustainable competitive advantage ’ Loyalty when the firm can maintain its advantage over competitors over time. Sustained growth Longer viability Examples: Higher quality, low cost, patent/trademark, geographic etc. location, better service… 21GEO22A – Strategic Marketing - Module 5 Competitive Advantage Creating advantage is key in any market, in any positioning. Concentrated markets Competitive markets Competitive advantage allows to: Competitive advantage allows to: Challenge dominant players: Capture market share: In smaller players can position crowded markets a firm can gain themselves on niche markets share through distinct features. Create a new market: New Survive market pressures: entrants can create new spaces, Maintaining position despite the avoiding dominant players intense rivalry. Sustain position: the dominant Build brand loyalty: distinct firm use size, resources, and factors drive brand recognition, influence to keep their lead trust and keeps customer longer etc… etc... 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies – Evolution (1985) Porter's Generic Strategies model – Main strategic options COMPETITIVE ADVANTAGE What makes the company ‘strong’? COSTS DIFFERENTIATION Cost Leadership Differentiation What parts are being targeted? BROAD Most competitive on cost in an entire Most distinctive, unique in eyes of market (through scale, efficiency…) customer (through quality, service…) MARKET SCOPE Cost Focus Differentiation Focus NARROW Focus Most competitive on costs targeted Most distinctive, unique on costs at a niche, specific segment targeted at a niche, specific segment Source: based on Michael Porter’s “Competitive Advantage”, 1985 (except for the examples)² 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies – Evolution (1995) A different classification of competitive marketing strategies INNOVATION ‘Best product’ Treacy & Wiersema modified Product Porter’s model into 3 Value leadership Disciplines that provide a competitive advantage create Product differentiation customer value: o Operational excellence o Product leadership Operational Customer competence responsiveness o Customer intimacy Operational Customer Companies should excel in one Excellence intimacy value discipline to stand out and ‘Best cost’ perform adequately in the other ‘Best solution’ EFFICIENCY EFFECTIVENESS two Source: “Discipline of Market Leaders” by Michael Treacy and Fred Wiersema, 1995 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies – Evolution (~1995-2005) Digital disruptors brought a new set of dynamics & players “The winner “Attacked by a “Compressing takes it all” thousand ants.” costs” RETAIL BANKING INDUSTRIAL Share of Shoppers (US) Future Value Analysis Operating Margin 70% Walmart GAFA Fintech Digital Digital 16% S&P 500 60% Leader Laggard Amazon Banks Banks 50% 50% 14% 49% 40% Target Asset-heavy 23% 12% industries 30% 20% Best Buy 10% -1% 10% Staples 2010 2016 2004 2015 OTHERS: LODGING, SOFTWARE… OTHERS: CONSUMER GOODS, INSURANCE… OTHERS: LIFE SCIENCES, TRANSPORTATION… Source: Accenture Research; % of Enterprise Value, June 2018 Source: “The Big Squeeze: How Compression Threatens Old Source: Kantar Retail, 2010-2016 “Maximizing Revenue Growth in Retail Banking”, 2018 Industries”, MITSloan, 2017 2017 EXAMPLE DISRUPTOR 21GEO22A – Strategic Marketing - Module 5 Competitive Strategies – Evolution (2005-2010) New strategic thinking emerged to address context evolution… Key features of preceding strategic models that have New Competitive Strategy driving a refresh and further evolution of thinking: thought leadership ✓ Rigidity: need to account for a much more dynamic nature of competitive environments ✓ Single strategy only: firms can combine strategies rather than sticking to just one. ✓ Clear industry limits: Digital has blurred industry boundaries, new players arise. ✓ Individual firm: strategies now often go beyond just one firm covering entire ecosystems of players ✓ Existing markets: Disrupted value chains, sharing economy & disintermediation create new markets 21GEO22A – Strategic Marketing - Module 5 Blue Ocean Strategy Creating New Markets 21GE022 – Strategic Marketing - Module 5  Blue Ocean Strategy How to create new market spaces? Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy - Defined Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy - Defined Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5 Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – Key differences Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – Value Innovation Value Innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. Value innovation places equal emphasis on value and innovation. Value without innovation tends to focus on value creation on an incremental scale, something that improves value but is not sufficient to make you stand out in the marketplace. Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – Four Action Framework To pursue differentiation and low cost simultaneously, Kim and Mauborgne created a set of tools. Example: the Four action framework and its related ERRC grid These 4 questions and 4 actions allow to systematically explore how to reconstruct buyer value elements across alternative industries to offer buyers an entirely new experience, while simultaneously keeping the cost structure low. Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – Marvel case Value Marvel's shift from targeting children to college students Innovation Shifting Target was a value innovation move. By focusing on a more mature Audience and intelligent demographic, Marvel captured an untapped market, creating a new value proposition for its audience. Human-First, Introducing characters that were portrayed as humans first Superhero-Second and superheroes second was a value innovation strategy. Characters This approach added depth and relatability to the characters, making them more appealing to the audience. Marvel's focus on storytelling, rather than relying solely on Emphasis on Hollywood stars, was a value innovation move. By prioritizing Storytelling compelling narratives and character development, Marvel differentiated itself from traditional blockbuster movies. Source: www.blueoceanstrategy.com and https://www.linkedin.com/pulse/understanding-basics-blue-ocean-strategy-via-brands-like-singh/ 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – Marvel case Four action framework Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – 3 tiers of Nonconsumers Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5 Video 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – citizenM case Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5  Blue Ocean Strategy – And many more… Source: www.blueoceanstrategy.com 21GEO22A – Strategic Marketing - Module 5 Case Study The e-Learning Market in 2021 Case Study: The e-Learning Market in 2021 Main players in the market E-learning market revenue estimated to grow towards 325 bn$ by 2025 (Forbes) Udemy Founded in 2010 by Eren Bali and Gagan Biyani. 204.000 Courses 71.000 Instructors 51 mio customers 1238 Employees 2021 Revenue: USD 518 Mio Net income: USD -80 Mio. Coursera Founded in 2012 by Stanford University professors Andrew Ng and Daphne Koller. 275 universities 5000+ courses 92 mio customers 1138 Employees. 2021 Revenue: USD 415 Mio Net income: USD 145 Mio. 21GEO22A – Strategic Marketing - Module 5 Case Study: The e-Learning Market in 2021 Different experiences Udemy experience Coursera experience 21GEO22A – Strategic Marketing - Module 5 Case Study: The e-Learning Market in 2021 Coursera & Udemy compared on key competitive factors 21GEO22A – Strategic Marketing - Module 5 Case Study: The e-Learning Market in 2021 Masterclass, another player, adopted a blue ocean strategy Masterclass Founded in 2014 by David Rogier & Aaron Rasmussen at Stanford University. 150+ Instructors & classes 400 Employees Latest market valuation: USD 2,75 Bn Mid 2021 21GEO22A – Strategic Marketing - Module 5 Case Study: The e-Learning Market in 2021 Masterclass creates a new experience 21GEO22A – Strategic Marketing - Module 5 Case Study: The e-Learning Market in 2021 Applying ERRC to what Masterclass did to create a new market Marketing Strategy components Celebrity Endorsements Content Marketing Social Media Engagement Affiliate Marketing 21GEO22A – Strategic Marketing - Module 5 Business model innovation 21GE022 – Strategic Marketing - Module 5 Business Model Generation A book for visionaries, game changers, and challengers striving to defy outmoded business models and design tomorrow’s enterprises… … written by Alexander Osterwalder and Yves Pigneur...and co-created by an amazing crowd of 470 practitioners from 45 countries 21GEO22A – Strategic Marketing - Module 5  Business Model Generation Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Video 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Canvas Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #1 Example: Telecom Provider Example: Proximus Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5 Task – For unbundled business, what implications for Marketing? 21GE022 – Strategic Marketing - Module 5 Video 64  Business Model Generation – Key Pattern #1 Impacts for Marketing Tailored marketing: Each business requires a distinct marketing approach Brand positioning: Marketing has to clearly differentiate value propositions for each unbundled part of the firm Cross-selling opportunities: Marketing should emphasize cross-promotion between the unbundled units Clear messaging: E.g., for infrastructure businesses, marketing often highlights operational efficiency and reliability etc. Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #2 Example: Online retail Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #2 Impacts for Marketing Niche targeting: Shift from mass marketing to specialized campaigns targeting long-tail SEO/content marketing: Optimizing for search engines and content to discover niche products. Personalization: Campaigns can be more personalized, catering to the specific preferences of small groups. etc. Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #3 Example User (web search) Third-party Advertisers website owners (business) (publisher) Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur See also: https://fourweekmba.com/google-business-model/ 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #3 Impacts for Marketing Customer segment differentiation: Marketing strategies must target multiple, distinct customer groups Building trust: Marketing needs to emphasize trust and safety, critical to getting all sides onto the platform. Network effects: Marketing should encourage user growth through referrals, word of mouth, and viral marketing campaigns etc. Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #4 Example ‘Freemium’ ‘Bait & Hook’ Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #4 Impacts for Marketing Viral growth tactics: Marketing leverages social sharing and viral loops to increase the user base Conversion optimization: Marketing focuses on converting free users to paid customers through targeted campaigns/offers Ad-supported marketing: The free model can also rely on ads; marketing then needs to focus on advertisers etc. Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Business Model Generation – Key Pattern #5 Example Started early 2000, P&G was delivering more than 50% of the company’s innovation through external collaboration ten year later Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5 Task – For open business models, what implications for Marketing? Example Started early 2000, P&G was delivering more than 50% of the company’s innovation through external collaboration ten year later 21GE022 – Strategic Marketing - Module 5 Video 73  Business Model Generation – Key Pattern #5 Impacts for Marketing Co-creation marketing: Engage external partners and/or customers in the innovation co-creation process. Crowdsourcing campaigns: Use marketing to attract ideas and innovations from external sources (e.g., open contests). Leverage external endorsements: Use the credibility of external contributors to increase trust and attract new customers. etc. Source: “Business Model Generation”, by Alexander Osterwalder and Yves Pigneur 21GEO22A – Strategic Marketing - Module 5  Competitive Strategies – Summary New strategic thinking complements previous frameworks… REINVENTION ▪ Blue Ocean strategies Using disruptive innovation to create ▪ Business model New entirely new markets generation ▪ etc. Customers & Markets Incremental ADJACENT Extending existing business to related new business areas ▪ Ansoff Matrix Existing CORE ▪ BCG Growth Matrix Enhancing existing portfolio for existing ▪ Porter’s generic strategies customers ▪ etc. Existing Incremental New Products & Services 21GEO22A – Strategic Marketing - Module 5  Thank You! Do you have questions or would like to share your feedback? [email protected] 21GE022 – Strategic Marketing - Module 5 Links to videos in this presentation Nike’s challenges https://www.youtube.com/watch?v=QJIa09NpXew Blue Ocean, Red Ocean explained https://www.youtube.com/watch?v=5Xd5lvyWMe8 Marvel case study https://www.youtube.com/watch?v=wJ2a9H3sSSo Cirque du Soleil case study https://www.youtube.com/watch?v=sYdaa02CS5E Ninitendo case study (ad + explanation) https://www.youtube.com/watch?v=hLOccBorPsA and https://www.youtube.com/watch?v=IbEldi2WveA CitizenM case study https://www.youtube.com/watch?v=coP6KoHMUHI Business Model Generation https://www.youtube.com/watch?v=RpFiL-1TVLw 21GEO22A – Strategic Marketing - Module 5 77