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MKF3151 Exam Revision Topics covered in the this Exam Revision Notes: 1. Marketing alternatives that marketing practitioners might pursue 2. The multi factor that can be used as strategic tools for determining market segment attractiveness and deciding on which markets to enter 3. The main steps in a benchmarking process explanation and example. 4. The activities in a competitor analysis. 5. The range of strategic objectives categories put forward by Dann and Dann (2007) 6. The uses of qualitative and quantitative research in customer analysis? 7. The different research methods identified in Chapter 4 8. The criteria that a firm’s competitive positioning strategy should meet. 9. The positioning risks and errors that can occur when planning a competitive position. 10. The three main competitive positions a firm can hold and how they can do this. 11. The key components of cost leadership and differentiation 12. The range of competitive strategies that can be pursued by a company and what type of managers are suitable for each one. 13. The product life cycle models. 14. The issues and strategies involved in an evolving industry. 15. The forecasting methods identified in the model in the chapter 16. Three types of experimentation for forecasting demand that could be used by a company for a product 17. The ladder of customer relationship building. 18. Measuring, monitoring and evaluating customer satisfaction in an organisation 19. Understanding strategic customers management with the help of Customer Portfolio 20. The drivers for developing strategic alliances and networks 21. The four Ps of marketing as the basis for an internal marketing program 22. The possible problems that can be anticipated with an internal marketing program implementation within a firm 23. The three levels of dynamic marketing capabilities. 24. Brands as a power asset 25. The ways to critically evaluate brand portfolio. 26. Types of “new” products. 27. The new product development processes. 28. The meaning of a-priori research. 29. The stages of Maier and Saunders (1990) model for segmentation research. 30. Multi-dimensional positioning analysis.

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MKF3151 Exam Revision 1. marketing alternatives that marketing practitioners might pursue (Chapter 1) There are three marketing alternatives that marketing practitioners might pursue. • The product-push marketing, which refers to pushing existing product out to market and actively encouraging or persuading customers to buy the product. • The product-push marketing is suitable to grow the industry, to become the product leader, be more efficient and sustain profitability. In this case, customer is not a focus and it’s more about letting customers to know the benefits of the existing or newly invented products • The customer-led marketing, which refers to chasing customers, finding what they want and give it to them regardless the costs. Such as offering more choices, offering lower price deals, heavy promotion and aggressive sales targets. It is short term oriented, the firm might lose position in the industry through listening too closely to customers • The resource-based marketing, which refers to that marketing strategy is based on equal consideration of needs of market and the ability of the firm to serve the market. • It uses long term view to recognize centrality of customer, but also be selective of markets to serve to maximize resource utilization. It is more about the balance between what is needed in the market and what can be offered.

2. The multi factor that can be used as strategic tools for determining market segment attractiveness and deciding on which markets to enter (Chapter 10, p.244) There are multi factors can be used as strategic tools for determining market segment attractiveness and deciding on which markets to enter. The first is market factors. • Size of segment, which is useful for forecasting volume of sales and economies of scales in production and marketing. • Segment growth rate, when the market is growing, it would easier for the company to achieve sales growth, while declining markets would affect the sales volume. • Stage of industry evolution, the attractiveness of target markets would be different as at different stages in the industry’s evolution regarding their future potential, profitability and others. For example, the innovators would be more attractive when industry is at emerging stage but less attractive at mature stage and the majorities would more attractive when the industry is turning mature. • Predictability of market, if the market is more turbulent, it would be harder to predict the potential value of a segment • Price elasticity and sensitivity, if the market is with less price sensitivity which means the price elasticity of demand is low, the market is more attractive. • Bargaining power of customer, if the customers have strong bargaining power, the market segment would be less attractive because the company might have to give in to the customers. • Seasonality and cyclicality of demand, which refers to the fluctuation in demand would affect attractiveness, for example, ice cream would have a higher demand in summer comparing to winter. The second is economic and technology factors, which reflects broader economic characteristics of the market and the technology used, including: 2

MKF3151 Exam Revision • • • •

Barriers to entry. Barriers to exit. Bargaining power of suppliers. Level of technology utilization.

The third is Competitive factors. • Competitive intensity, which refers to the number of competitors in the market. • Quality of competition, which refers to the whether the competitors in the market are go competitors who are desired to serve the market or they are less predictable and volatile competitors which would make it more difficult for the company to operate I the market. • Threats of substitution, which refers to the status of substitution, if there is a high level of substitution and the customers have a lot of substitutes to choose, it might be less attractive. • Degree of product differentiation, which refers to whether the product you are introducing to the market is different from the existing ones. How different or unique is the product comparing to competitors’, or what would the key selling points be if there is no difference. The fourth is the general business environment. • Exposure to economic fluctuations, some market could be more vulnerable than the others. • Exposure to political and legal factors, • Degree of regulation or deregulation, which is out of organization’s control and would affect the organizational performance seriously, could be different from country to country. • Social acceptability and physical environment impact,

3. The main steps in a benchmarking process explanation and example. (Chapter 5, p.107) There are four steps in benchmarking process. Step 1 is deciding who to benchmark against, the industry leaders, the less players or benchmark against particular business activities. • For industry leaders, what their keys to success are, what they are doing that is different from others and what makes the differences to their operations. • For less players would be those new or smaller entrants in to the market, who are more focused firms with particular strengths, such as leading customer service, best at cost control. • For particular business activities, it could be procurement and purchases, use of technology to facilitate particular activities such as warehousing, order processing and tracking.

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MKF3151 Exam Revision Step 2 is to decide what aspects of business to benchmark. All aspects of the ‘value chain’ in a business are options for benchmarking. • Usually focus on ‘key factors for success’ such as processes that account for significant costs, processes that make a significant impact on customer satisfaction and aspects that show greatest room for improvement due to resource and time restraints.

Step 3 is collecting relevant data to enable processes and operations to be compared. Commercial secrecy may surround competitors’ data, making benchmarking more difficult, but there are three main sources could be used. • Published sources, which include company reports, technical reports, industry studies ad surveys commissioned by governments or industry associations. • Data sharing, which may take place in industry forums such as conferences, through direct, formal contacts or more informal contacts. • Direct interviews with customers, distributors, industry experts, former employees of competitors, regulators, government officers, etc.

Step 4 is comparison with own processes, which refers to compare and contrast the processes of the identifies ‘best in class’ with the firm’s own processes, to identify actions that need to be taken as a consequence, and the setting-up of processes to measure and monitor improvement. • Identify areas of your company that can benefit from the benchmarking exercise, what is good against benchmarks and what need to be improve. • Develop suitable targets for improvements that can be measure and monitored over the relevant period.

4. The activities in a competitor analysis. (Chapter 5, p.109) In a competitor analysis, the firm has to analysis what the competitors might do in the future, gauge their future intentions based on what are currently doing and what resources they have to use in the future. There are four dimensions of the activities. 1. Assessing competitors’ current and future objectives through inferring from observation of the strategies they are pursuing, together with pronouncements they made through company reports, press release etc., which might give clues to future directions of the company. • Goals can indicate where the company is intending to develop and in which markets, either by industry or internationally, major initiatives can be expected. It can be a guide to the intensity of competitor activity and rivalry. • The areas of expansion could indicate markets that are to be particularly competitive but may simultaneously signify companies not so committed. 2. Assessing the competitor’ current strategies, which involves identification of competitors’ target markets, strategic focus, supporting marketing mix, marketing organization. 4

MKF3151 Exam Revision

3. Assessing competitors’ resource profile, which involves looking at their strengths and weaknesses, there are five key competitors’ abilities to concentrate at. • Ability to conceive and design, refers to the ability to innovate which could be indicated from assessing technical resources, human resources and funding. • Ability to produce, including the production capacity and utilization, which could be signalled by physical resources (such as plant and equipment) and human resources (the skills and flexibility of the staff employed). • Ability to market, • Ability to finance, • ability to manage, 4. Predicting competitors’ future strategies, which provide a guide to how a competitor might behave when faced with various environmental and competitive changes. • Is the competitor satisfied with current position? • What likely moves or strategy shifts will the competitor make? • Where is the competitor vulnerable? • What will provoke the greatest and most effective retaliation by the competitor?

5. The range of strategic objectives categories put forward by Dann and Dann (2007) The first category is the marketing objectives at firm level and brand level. • Firm level marketing objectives use the marketing orientation and marketing processes to achieve overall growth and profitability at the firm level • Brand level marketing objectives The second category is the innovation objectives, which is for new product portfolio development plans. The third category is the operational objectives for manging costs, which can be at production level and marketing resource allocation level. The fourth is the financial objectives which are related to marketing department profitability level and economic value of the firm and is used to measure the profitability outcomes and shareholder value.

6. The uses of qualitative and quantitative research in customer analysis? (Chapter 4) The uses of qualitative research are • Provide insights into problem • Generating new ideas • Helping structure later research • Understanding the findings of large scale projects

The uses of quantitative research are: • To provide quantitative data on markets and customers • to determine customer behaviour • To determine customer opinions and perceptions 5

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Getting reactions to new ideas Hearing customer descriptions of things

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To provide data for segmentation of markets To determine customer requirements and expectations

7. The different research methods identified in Chapter 4 (Customer Analysis, p.91)

The research methods identified in chapter 4 are company records, tailor-made research and off-the-peg research.

8. The criteria that a firm’s competitive positioning strategy should meet. (Chapter 8, p.185) The criteria for a firm’s competitive positioning strategy are: • Be important to a significant number of customers • Be distinctive or pre-emptive that the differences cannot be easily imitated or performed better by others • Be superior, the difference should provide a superior way for customers to obtain the benefit in question • Be communicable, the difference should be capable of being communicated to customers and understood by them • Be affordable for the target consumers to pay for the difference • Be profitable, the difference will command a price adequate to make it profitable for the company 6

MKF3151 Exam Revision 9. The positioning risks and errors that can occur when planning a competitive position. (Chapter 8, p.186)

The major positioning errors that can be undermine a company’s marketing strategy are: • Under-positioning, when customers have only vague ideas about a company or its products, and do not perceive anything special about it, the product becomes an ‘alsoran’ • Over-positioning, when customers have too narrow an understanding of the company, product or brand • Confused positioning, frequent changes and contradictory messages may simply confuse customers about a company’s positioning • Doubtful positioning, the claims made for the company, product or brand may simply not be accepted, whether or not they are true

10. The three main competitive positions a firm can hold and how they can do this. (Chapter 8, p.208)

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MKF3151 Exam Revision There are three main competitive positions a firm can hold regarding market segment attractiveness and organizational resource strength: • First is the best prospects where the firm focus on the best segments that are most attractive and fit well with organizational resources • The second one is poor prospects, where the firm focus on unattractive segments that fit well with organizational resources. Sometimes the firm already have the resources even though the segment is not attractive, there is no point wasting the resources, the firm could try to make the segment more attractive and try to fully capitalize or utilize the resources. • The third one is build strengths first, where the firm focus on attractive markets but with poor fit with organizational resources. When the market is very attractive, the firm could target on it even though it does not have enough resources. The firm could acquire resources from other sources through teaming up other firms, outsourcing those the firm is not good at to specialized firms and focus on its strengths. Competitive Positions & Strategies Market leader Has the largest market share in the industry

Largest market share, tends to lead other firms in price changes, new product introductions, distribution coverage and promotion spending. • Do this to make sure their market share while expanding A market leader need not be admired by others in the industry (Microsoft, Wal-Mart, McDonalds??) Focus from lesser companies on market leader may be: • To challenge, to imitate or to avoid So it is not easy being the leader – have to be vigilant • need good environmental scanning and collecting / interpreting market and competitor intelligence • The challenger always looking for opportunities to move up by challenging leader’s strength or taking advantage of weakness Expand total market: Market leader gains most when total market is expanded. • Market leader can (by being innovative and well resourced) develop new users, new uses and more usage of product. Protect market share: prevent or fix weaknesses, fulfil value promises to consumers/stakeholders, price/quality maintenance. • Best defence - is good offence & best response is continuous innovation • E.g. successful challenge with Apple iPod to Sony’s Walkman products Expanding market share: depending on size of market - 1% increase can be highly significant revenue. (E.g. US digital camera market 1% increase = $68billion. Profitability rises with increasing market share.) • Some market leaders believe they need to be brand 1 or 2 in an industry or get out! • Depending on industry - firm profitability increases as it gains market share relative to competitors in the served market.

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MKF3151 Exam Revision •

But beware because this is not automatic – sometimes the cost of achieving are too high (keep an eye on RBV).

Market challenger The runner up firm, is fighting hard to increase its market share in the industry

Can attack the leader and other competitors in an aggressive bid for more market share. Must define which competitors to challenge and the strategic objective • what is hoped to be gained: i.e. to become market leader or to obtain more market share by reducing leaders market share Challenger may also challenge similar size or smaller firms in the industry to increase market share. Must choose opponents carefully and have a clearly defined and attainable objective for their attack.

Market follower A runner up firm that wants to hold its share in an industry without 'rocking the boat' A good competitor

Not all runner up companies want to challenge/attack leaders. Retaliation can be disastrous. Easy for leaders to match any price/product challenges. Price wars hard to win against leaders. Market followers have advantages – can learn from leaders’ / challengers’ experiences in NPD markets, copy or improve on their marketing strategies with less investment. Follower are not wimps – they must know how to hold their customers and win share of new customers, i.e. have distinctive advantages to their target markets. Unfortunately – often targeted by Challengers.

Market nicher A firm that serves small segments that other firms have overlooked/decid ed where not suitable for them

Does not pursue whole market – but identifies profitable segments within segments. Often smaller firms with limited resources (RBV) Knows its target market’s needs very well and has good mark-ups in price due to good added-value (mass marketer achieves high volume, nicher achieves high margins). Strategies can focus on specialisation – serving one type of “end user”, or serve a given customer size group – often small to mid size groups neglected by the major firms. Niche may be high quality/high price, or may be service niche (offering a service no other firms do) Niching is risky – segment may dwindle – or grow to size that is attractive to other competitors. Can consider multiple niching to deal with this. Again, need to think of defence of competitive position against others who may wish to niche in your niche segment.

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MKF3151 Exam Revision 11. The key components of cost leadership and differentiation (Chapter 11, p.266, p.269) The key elements of cost leadership are: • Economies of scale, which steam from doing things more efficiently or differently in volume • Experience and leaning effects, which refers to increases in efficienc...