Chapter 5: marketing strategy

1. The strategic context

- The organization (resources, skills, capabilities)
- The target customers
- The firm’s competitors
- Wider external environment
 analyse the context well = competitive advantage
- Understanding and managing these 4 elements to develop a coherent strategic
marketing plan through which offerings have a greater chance of success
2. Framework
- Vision
· Organization’s future
· Statement about what an organization wants to become
- Mission
· Purpose of the company
· What the organization wants to achieve in the long term
· Applies to all the parts of an organization
· Answer to basic questions
 What business are we in
 Who are our customers
 What are we in business for
 What sort of business are we
· Good mission statements
 Realistic
o Realistic goals
o Limited number of goals  not focus on too many things at
the same time
 Specific
o Fit your company and no other
o Not too broad not too vague (otherwise it fails to provide
sufficient guidelines)
 Based on unique and distinctive competence
o What doe we want to excel at
o How do we differentiate ourselves from competitors
 Motivating
o Something to believe in
o Reason you want to work at that company
o Important work of positive contribution to others
 Market oriented (not product oriented)
· Importance of a mission
 People don’t buy what you do but why you do it
 Goal is not doing business with everybody but doing business with the
people who believe what you believe
 Golden circle
o Step 1 is build in the neocortex = analytical
o Step 2 and 3 are build in the limbic brain = feeling and decision
(controls behavior)
  What they do = everyone knows
 How they do it = fewer people know
 Why they do it = even fewer  why does the organization exists
- Organizational values
· Acceptable interpersonal and operating standards of behavior
· Govern and guide the behavior of individuals within the organization
· Invisible hand  people know what is expected in the company
- Organizational goals
· The desired outcomes of the organization’s various activities
· These may be articulated in terms of profit, market share, return on
investment, number of customer served,…
· Translate mission into strategic goals
· Marketing related goals: SMART objectives
 Specific: put in numbers
 Measurable: at the end of a period you have to evaluate if the goals
are being met
 Attainable: realistic
 Relevant: in line with vision and mission
 Timely: deadlines, otherwise not motivating
 Consistent
- Organizational strategy = corporate strategy
· The means by which the resources of the organization are matched with
the needs of the environment in which the organization decides to
operate
· Bringing together all the departments into a coherent strategic plan that
supports and accomplishes the organization’s goals in the most effective
way
- Linking marketing and corporate strategies
· Setting the right mission and corporate goals (strategic context)
· Reviewing the current situation or context
· Formulate strategy
· Allocation of resources necessary to implement and monitor the plan
 marketing strategy should support the overall corporate strategy
3. Strategic marketing planning activities
- Not linear
- 3 broad activities
· Strategic market analysis
 Develop knowledge
 Understand the marketplace
· Strategic marketing goals
 What should the market strategy achieve
· Strategic market action
 How goals are to be achieved
· Implementation
3.1 Strategic market analysis
o Development of knowledge
o External environment: PESTLE and environmental scanning
 o Performance environment: 5 Forces model
o Internal environment
 bring together this information
3.1.1 SWOT analysis
 Internal source (porters 5 forces model)
 Strength: something an organization
is good at doing, something that
gives particular credibility and
market advantage
 Weakness: something an
organization lacks or performs in an
inferior way in comparison with
others
 External source (PESTLE)
 Opportunities: the potential to
advance the organization by
developing and satisfying an
unfulfilled market need
 Threats: something that may
destabilize or reduce the potential
performance of the organization
 Outcome = series of decisions that help the
company to develop and formulate strategy
and goals (only the keys)
 Weakness = addressed  converted into
strengths
 Threats  nullified
3.2 Strategic marketing goals
o What should the marketing strategy achieve
o 4 main strategy goals
 Niche
o When firms operate in a market dominated by a
major competitor
o Financial sources are limited
o Strongly differentiated product offering
 Hold
o Prevent and fend off attack from aggressive
competitors
o Market leaders
o Strive for the most market share
 Divest
o When offerings continue to incur losses and
generate negative cash flows
o Selling of the offering or withdrawing from the
market
 Harvest
o Firms/offering enter the decline phase
 o Maximize short term profits and stimulate
positive cash flows
o New offerings
 Growth
o Intensive growth = concentrating activities on
markets and offerings that are familiar
o Integrative growth = continues to work with
same offering and same markets but start to
perform activities in the value chain previously
undertaken by others
o Growth through diversification = new value
chain activities, new offerings, new markets
o 4 growth strategies through Ansoff’s matrix
Present New products
products
Present Market Product
markets penetration (vb. development
lowering prices, (new products
add new in the market
shapes,…) you are already
in)
New Market Diversification
markets development
(you start
adding more
markets,
segment or
geographically)
3.3 Strategic marketing action
o Way of achieving the goals
o Competitive advantage
 The prolonged benefit of implementing some unique
value creating strategy not simultaneously being
implemented by any current or potential competitors
along with the inability to duplicate the benefits of this
strategy
 Significant edge over its competitors
 How to achieve competitive advantage
 Step 1: Identify competitors
 Direct competitors
o Same market
o Same service or product
 Indirect competitors
o Similar benefits or services
o Different industry
o Could be substitute products
 Brands to look out for
 o Outside
o Can become indirect competitors
 Competitive analysis
 How similar are they
 Why should customers choose us above
the competitors
 …
o Generic strategies (porter)  you need to focus on 1
 Sustainable competitive advantages
 Lowest cost producer
 Differentiate the offering until it is of superior
value to the customer
 Broad or narrow markets
Target scope Advantage
Low cost Product uniqueness

Broad (industry wide) Cost leadership strategy Differentiation strategy 

 adapting lower cost create offerings that are
structure valued by particular
Earn higher margins and segments of customers
charge similar prices or
charge cheaper prices
and sell higher volumes
Vb. colruyt Vb. Apple
Narrow (market segment) Focus strategy (low cost) Focus strategy
Pinpoint sub markets (differentiation)
and seek out unfulfilled
market needs Pinpoint sub markets and
seek out unfulfilled market
needs
o Value disciplines (Wiersma  you need a minimum of the 3)
 Product leadership = best product
 Differentiation strategy
 Operational excellence = best total costs
 Cost leadership strategy
 Customer intimacy = best total solution
 Best total solution for specific market group
 Focus strategy
Industry Operational Product Customer
excellence leadership intimacy

Airlines Ryanair, easy Emirates Singapore

jet airlines
 Groceries Aldi, Lidl Specialty Delhaize
stores
Cars Kia Mercedes Land rover

Computer Dell Apple Dell

s
 If 2 are combined you always need a focus aspect
o Competitive positioning
Type Characteristics Prime strategies Defend position

Market leader Largest share of the market Attack the market Regular innovation
Shape nature of Create new users Larger ranges
competition Increase frequency of use Price cutting and
discounts
Increased promotion
Market challenger Aspire to the leadership Attack the market leader Special offers and
position Pricing limited editions
Seek market share New product attributes Superior competitive
Sharp increase in advertising advantages
spend
Market follower Low market share Me too strategy
No threat to the market Avoid hostile attacks on rivals
leader Copy the market leader and
provide good quality products
that are well differentiated
Focus on differentiation and
profits, not market share
Market nicher Specialist High level of specialization
Select small segments Geography
within the target markets Proposition
that larger companies fail Service
to exploit Customer group
Provide tight fit between
market needs and
organization’s resources

o Networks, cooperation and relationships

 To develop collaborative inter-organizational
relationships it is necessary to consider an
organization’s whole system or network of
stakeholder relationships
 Networks hold together partly through an elaborate
pattern of interdependence and reciprocity
 Customer value can be increased
 Grow together in a way that is profitable for all
partners
o Platform strategies
  Pipeline effect = conventional strategy: linear value
chain approach which considers successive supplier
participants to add value as a product moves along the
chain
 Platform strategy = business model that creates value
by facilitating exchanges between two or more
interdependent groups, usually consumers and
producers  platform does not own means of
production but creates means of connection.
 Strength of platform economy lies in its ability to
eliminate trade barriers by using increased
information sharing between different players and
circulation of data to its advantage
 Deeper than networks and partnerships
3.4 implementation
o action phase of the strategic marketing process
o actually doing it
o 4 elements that impact the implementation
 Structure and type of marketing function
 How we organize ourselves to undertake the
task of marketing  effect on effectiveness
 Organizational culture
 Degree to which a marketing orientation
prevails across an organization
 Role of marketing
 Not only people in the marketing department
 Available financial resources
 Striving for resources that are necessary to
satisfy the goals
 Marketing budget indicating how much is to be
spent on marketing activities and when
 Marketing metrics
 Methods to control and evaluate its
performance
 Key performance indicators (KPI)
 selection depends on relevance to what is
being measured
 Return on marketing (investment)
o Zie pagina 52
 Profit/profitability
o Main KPI
o How much cash there is left in
the business when expenses are
subtracted from revenues
generated
 Sales
 o Sales value = how many units are
sold * average unit price
o Sales volume = how many units
are sold
 Operating margin
o Dividing operating income by net
sales
o Return on sales
 Awareness
o Brand awareness
o Customer may be aware but does
not mean he will buy the brand
o Good metric for measuring if
marketing communications is
having required impact
 Market share
o Determining a company’s
performance within the
marketplace
o Measured relative to the market
leader
o Relative market share (%)
 Number of new products
 Relative price
o Price of a company’s offering can
be indicative of how much it is
valued in the market place
 Customer satisfaction
o Measuring levels of service
quality
 Customer advocacy
o Measuring with Net Promoter
Score
o How likely a customer would
recommend a firm to a friend or
a colleague
o Promotors = extremely likely to
recommend (9-10)
o Passively satisfied = likely to
recommend (7-8)
o Detractors = unlikely to
recommend (0-6)
o NPS = promotors (%) – detractors
(%)
o High NPS = high loyalty
 Distribution
 o Extend to which offering is
distributed within the
marketplace
3.5 Marketing planning
Executive summary A brief one page summary of
key points and outcomes
Overall objectives Mission and corporate goals
Product and market background Short summary of the product
and market to clarify
understanding about target
markets,…
Marketing analysis Insight itno the market,
customers and competition
Marketing audit + SWOT
Marketing strategies The markets to be targeted
Marketing goals Desired outcomes of the
strategy
Marketing programmes Marketing mix for each target
market segment
Implementation
Supporting documentation Vb. full PESTLE and SWOT
analysis,…