Strategic Marketing PresentationChap002.ppt

Marketing

1. 1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
Strategic Marketing

2. Chapter 2
Markets and
Competitive
Space
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

3. 2-3
MARKETS AND COMPETITIVE SPACE
Markets and Strategies
Defining and Analyzing Product-Markets
Describing and Analyzing End-Users
Analyzing Competition
Market Size Estimation
Developing a Strategic Vision about the
Future

4. 2-4
MARKETS AND STRATEGIESMARKETS AND STRATEGIES
The Challenges ―The Challenges ―
Markets are increasingly complex, turbulent, and interrelated.Markets are increasingly complex, turbulent, and interrelated.
Importance of a broad view of the market.Importance of a broad view of the market.
Essential to develop a vision about how the market is likely to Essential to develop a vision about how the market is likely to
change in the future.change in the future.
Continuous Monitoring is Necessary to:Continuous Monitoring is Necessary to:
Find promising opportunitiesFind promising opportunities
Identify shifts in value requirementsIdentify shifts in value requirements
Understand competitors’ positioningUnderstand competitors’ positioning
Guide targeting and positioningGuide targeting and positioning
decisionsdecisions

5. 2-5
OPPORTUNITIES OUTSIDE THE COMPETITIVE BOX
The Competitive Box
Traditional
Competitors
New Types of
Competition
New
Business
Models
New
Customers
New
Customers
Conventional Value
Propositions
Existing Customer
Base
New Customer
Base(s)

6. 2-6
AN ARRAY OF CHALLENGES
Disruptive Innovation
Creating New Market Space
Fast Changing
Markets
Commoditization
Threats
Drivers of Changes
in Markets

7. 2-7
*Market changes often require altering Market changes often require altering
strategiesstrategies
*Forces of change create both market Forces of change create both market
opportunities and threatsopportunities and threats
*Inherent danger in faulty market sensingInherent danger in faulty market sensing
Markets Impact StrategiesMarkets Impact Strategies

8. 2-8
DEFINING AND ANALYZING PRODUCT-MARKETS
Determine the Boundaries and
Structure of the Product-Market
Form the
Product-Market
Describe and


Analyze End-
Users
Analyze
Competition
Forecast
Market Size and
Rate of Change

9. 2-9
Matching Needs with Product BenefitsMatching Needs with Product Benefits
*A product – market matches people with A product – market matches people with
needs to the product benefits that satisfy needs to the product benefits that satisfy
those needsthose needs
““A product – market is the set of products A product – market is the set of products
judged to be substitutes within those usage judged to be substitutes within those usage
situations in which similar patterns of situations in which similar patterns of
benefits are sought by groups of benefits are sought by groups of
customers.”*customers.”*
*Srivastava, et al. (1984) Journal of Marketing, Spring, 32.

10. 2-10
INNOVATION FEATUREINNOVATION FEATURE
*In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion In the period 1994 to 2004, Progressive Insurance increased sales from $1.3 billion
to $9.5 billion, and ranks high in the to $9.5 billion, and ranks high in the Business WeekBusiness Week Top 50 U.S. companies for Top 50 U.S. companies for
shareholder value creation.shareholder value creation.
*The company invents new ways of providing services to save customers time, The company invents new ways of providing services to save customers time,
money and irritation, while often lowering costs at the same time.money and irritation, while often lowering costs at the same time.
*Loss adjusters are sent to the road accidents rather than working at head office, Loss adjusters are sent to the road accidents rather than working at head office,
and they have the power to write checks on the spot.and they have the power to write checks on the spot.
*Progressive reduced the time needed to see a damaged automobile from seven Progressive reduced the time needed to see a damaged automobile from seven
days to nine hours.days to nine hours.
*Policy holders’ cars are repaired quicker, and the focus on this central customer Policy holders’ cars are repaired quicker, and the focus on this central customer
need has won much automobile insurance business for Progressive.need has won much automobile insurance business for Progressive.
*These initiatives also enable Progressive to reduce its own costs – the cost of These initiatives also enable Progressive to reduce its own costs – the cost of
storing a damaged automobile for a day is $28, about the same as the profit from a storing a damaged automobile for a day is $28, about the same as the profit from a
six-month policy.six-month policy.
Progressive Insurance:
Customer Needs at the Center of Strategy
Source: Adapted from Mitchell, Adrian (2004)”Heart of the Matter,” The Marketer, June 12, 14.

11. 2-11
Product – Market Boundaries and StructureProduct – Market Boundaries and Structure
*Determining Product-Market StructureDetermining Product-Market Structure
1.1.Start with the generic need satisfied by Start with the generic need satisfied by
the product category of interest to the product category of interest to
managementmanagement
2.2.Identify the product categories (types) that Identify the product categories (types) that
can satisfy the generic needcan satisfy the generic need
3.3.Form the specific product – markets within Form the specific product – markets within
the generic product – marketthe generic product – market

12. 2-12
SUPER
MARKETS
MICROWAVE
OVENS
CONVENIENCE
STORES
TRADITIONAL
RESTAURANTS
Illustrative Fast-Food Product-Market Structure
FAST-FOOD
MARKET

13. 2-13
Extent of Market ComplexityExtent of Market Complexity
*Three characteristics of markets:Three characteristics of markets:
*1. Functions or uses of the product 1. Functions or uses of the product
*2. The enabling technology of the product2. The enabling technology of the product
*3. Customer segments in the product-3. Customer segments in the product-
marketmarket

14. 2-14
Illustrative Product – Market StructureIllustrative Product – Market Structure
•Generic Product
Class
•Product Type
•Variant A
Regular
•Variant B
•Brands
Food and beverages
for breakfast meal
Cereals
Ready to eat
Natural
Pre-sweetened
Life
Nutritional
Special KProduct 19

15. 2-15
DEFINING AND ANALYZING MARKETSDEFINING AND ANALYZING MARKETS
Define Product-Market Boundaries and Structures
Identify and Describe End-Users
Analyze Industry and Value Added Chain
Evaluate Key Competitors
Forecast Market Size
and Growth Trends

16. 2-16
Identifying and
Describing Buyers
How
Buyers
Make
Choices
Building
Customer
Profiles
Environmental
Influences
DESCRIBING
AND
ANALYZING
END-USERS

17. 2-17
Identifying and Describing End-UsersIdentifying and Describing End-Users
*Illustrative buyer characteristics in consumer Illustrative buyer characteristics in consumer
markets:markets:
 Family size, age, income, geographical Family size, age, income, geographical
location, sex, and occupation location, sex, and occupation
*Illustrative factors in organizational markets:Illustrative factors in organizational markets:
Type of industryType of industry
Company sizeCompany size
Location Location
Type of productsType of products

18. 2-18
How Buyers Make ChoicesHow Buyers Make Choices
BUYING DECISION PROCESS:BUYING DECISION PROCESS:
1.1.Problem recognitionProblem recognition
2.2.Information searchInformation search
3.3.Alternative evaluationAlternative evaluation
4.4.Purchase decisionPurchase decision
5.5.Post-purchase behaviorPost-purchase behavior

19. 2-19
Environmental InfluencesEnvironmental Influences
*External factors influencing buyers’ External factors influencing buyers’
needs and wants: needs and wants:
Government, social change, economic Government, social change, economic
shifts, technology etc.shifts, technology etc.
*These factors are often non-controllable These factors are often non-controllable
but can have a major impact on but can have a major impact on
purchasing decisionspurchasing decisions

20. 2-20
Building Customer ProfilesBuilding Customer Profiles
*Start with generic product – marketStart with generic product – market
*Move next to product- type and variant Move next to product- type and variant
profiles >> profiles >> increasinglyincreasingly more more
specificspecific
*Customer profiles guide decision Customer profiles guide decision
making (e.g. targeting, positioning, making (e.g. targeting, positioning,
market segmentation etc.)market segmentation etc.)

21. 2-21
ANALYZING COMPETITION
1.1. Define the Competitive
Arena for the Generic,
Specific, and Variant
Product Markets
2. Identify
and
Describe
Key
Competitors

4. Identify
and
Evaluate
Potential
Competitors
3. Evaluate
Key
Competitors
PRODUCT-
MARKET
STRUCTURE
AND
MARKET
SEGMENTS

22. 2-22
Examples of Levels of CompetitionExamples of Levels of Competition
Diet-Rite
Cola
Diet Pepsi
Diet
Coke
Product from
competition:
diet colas
Regular
colas
Diet lemon
limes
Lemon
limes
Fruit
flavored
colas
Product category
competition:
soft drinks
Bottle
water
Wine
Beer
Coffee
Juices
Generic competition:
beverages
Baseball
cards
Fast
Food
Video
Games
Ice
Cream
Budget competition:
food & entertainment

23. 2-23
Industry AnalysisIndustry Analysis
*Industry size, growth, and composition Industry size, growth, and composition
*Typical marketing practicesTypical marketing practices
*Industry changes that are anticipated (e.g. Industry changes that are anticipated (e.g.
consolidation trends)consolidation trends)
*Industry strengths and weaknessesIndustry strengths and weaknesses
*Strategic alliances among competitorsStrategic alliances among competitors

24. 2-24
Defining Industry Structure & Defining Industry Structure &
CharacteristicsCharacteristics
Industry Form
Industry
Environment
Competitive
Forces
Value
Added
Chain
SUPPLIERS
PRODUCERS
WHOLESALERS/
DISTRIBUTORS
RETAILERS/DEALERS
CONSUMER/
ORGANIZATIONAL END
USERS

25. 2-25
Competitive ForcesCompetitive Forces
1.1.Rivalry among existing firms.Rivalry among existing firms.
2.2.Threat of new entrants.Threat of new entrants.
3.3.Threat of substitute products.Threat of substitute products.
4.4.Bargaining power of suppliers.Bargaining power of suppliers.
5.5.Bargaining power of buyers.Bargaining power of buyers.
Source: Michael E. Porter, Competitive Advantage, Free Press, 1985, 5.

26. 2-26
Key Competitor AnalysisKey Competitor Analysis
*Business scope and objectivesBusiness scope and objectives
*Management experience, capabilities, and Management experience, capabilities, and
weaknessesweaknesses
*Market position and trendsMarket position and trends
*Market target(s) and customer baseMarket target(s) and customer base
*Marketing program positioning strategyMarketing program positioning strategy
*Financial, technical, and operating capabilitiesFinancial, technical, and operating capabilities
*Key competitive advantages (e.g., access to Key competitive advantages (e.g., access to
resources, patents)resources, patents)

27. 2-27
Extent of
Market Coverage
Customer
Satisfaction
Current
Capabilities
Past
Performance
Competitor
Evaluation

28. 2-28
MARKET SIZE ESTIMATIONMARKET SIZE ESTIMATION
Unrealized
Potential
Company
Sales
Forecast
Industry
Sales
Forecast
Market Potential
Estimate
Product-Market Forecast
Relationships
(area denotes sales in $’s)

29. 2-29
0
100
200
300
400
500
600
700
800
900
Sales (in 1000s
of units)
2003 2004 2005 2006 2007 2008 20092010
Market
Potential
Sales Forecast
Company XYZ
Sales Forecast
Product-Market Forecast Relationships for Industrial Painting Product-Market Forecast Relationships for Industrial Painting
UnitsUnits

30. 2-30
DEVELOPING A STRATEGIC VISION ABOUT THE FUTUREDEVELOPING A STRATEGIC VISION ABOUT THE FUTURE
Industry Boundaries Blurring and EvolvingIndustry Boundaries Blurring and Evolving
Competitive Structure and Players ChangingCompetitive Structure and Players Changing
Value Migration PathsValue Migration Paths
Product Versus Business Design Product Versus Business Design
CompetitionCompetition
Firms are Collaborating to Influence Industry Firms are Collaborating to Influence Industry
StandardsStandards
Source: C. K. Prahalad, Journal of Marketing, Aug. 1995, vi.