Unit 1 - Introduction (Strategic Marketing) 2020-2021 PDF

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Unit 1 - Introduction (Strategic Marketing) 2020-2021 - notes...

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STRATEGIC MANAGEMENT U1.INTRODUCTION 1.1 Strategic vs. Operational Marketing What is marketing? Dr. Phillip Kotler defines marketing: - Marketing is the process by which an organization relates creatively, productively, and profitably to the marketplace - Marketing is the art of creating and satisfying customers at a profit - Marketing is getting the right goods and services to the right people at the right places at the right time at the right price with the right commuications and promotion What is strategy? Set of ideas aimed at achieving a competitive advantage sustainable over time and defensible against its competitors. In order to do it, the company needs to adapt its resources and capabilities, in order to meet the objetives of the multiple stakeholders of the market The value of the competitive advantage To have a competitive advantage is to have certain “different” attributes or characteristics that give the brand/product/service superiority over its immediate competitors. Advantageous positions: - Superior value to the consumers - Relative lower cost Results: - Satisfaction - Loyalty - Market share - Profitability Investment of the benefits in the maintenance and development of the competitive advantage lead to sources of advantage: - Superior skills - Superior resources Theory says that: Strategic vs. Operational marketing Strategic marketing: - Focused on the ANALYSIS - Search for new OPPORTUNITIES - DINAMIC environment - PROACTIVE behavior Operational marketing: - Focused on ACTION - Develop the existent OPPORTUNITIES - STABLE environment - REACTIVE behavior A good strategic marketing is analysing, understand and detecting the situation through market research, psychology, sociology, trends, R&D etc, design a strategy with a marketing plan and finally acting through marketing execution. After that, there needs to be a good control, learning, adapting, being flexible and changing. How it is in reality? We have different plans during the year: - Q1: analysis & preparation - Q2: strategic plan —> plan for the next 3 years, less detailed, more strategic vision - Q3: marketing plan —> focused in the following year, much more detailed, include a very relevant part about commercial strategy

- Q4: budget —> detail about next year sales by product, channel as well as expenditures - Q5: execution/changes —> when implementing we check, control and adapt. Live plans! Examples Strategic Plan: - Sustainability plan - Innovative channel strategy with a stronger part of e-commerce - Modernizing and updating the BRAND PROMISE - Internationalize Marketing Plan: - What parts of sustainability we will apply and how to communicate it - What do we need internally to be able to develop e-commerce - Which will be the key message that will embody the updated BRAND PROMISE & how we are going to communicate in digital and other media - Which steps we are going to do in the internationalization Brands are always adapting and changing to survive. However, there are old brands that are still successful despite enormous changes in society - such as Barbie. 1.2 Situation analysis Where we are now? How to find a gap or defend it in the market? The key aspects in strategic marketing: - To gain a competitive advantage that the company is able to maintain and defend over time - Count with the appropriated resources and capabilities - Be able to satisfy all the stakeholders The advantage has to be truly effective - to do so, a competitive advantage should be:

- Unique - Relevant over time - Superior to its main competitors

It should not be easily copied, and it should be perceived by the potential customer as offering a special value. How to find this advantage? —> Situation analysis

What is the market? In what market does the firm participate? Who are its competitors? Is the market growing or declining, and how do these dynamics relate to customer needs, wants, expectations, and requirements?

Internal analysis of the company: - Position in the market - Key benefits - Previous actions and their outcomes - Resources and capabilities analysis External analysis: - MACRO (PESTEL) - MICRO (PORTER) - Consumers - Clients - Other publics

We only show the areas that are relevant for our brands and companies - no need to show the whole analysis. We share also the relevant changes that affect our activity. Total market evolution Total market evolution is very relevant, key questions: - Is our market growing, stable or declining? - Are differences by segments/types inside the market? - Are there differences by brand types or channels? 5 Forces from PORTER Competition in the industry The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company. Suppliers and buyers seek out a company’s competition if they are able to offer a better deal or lower prices. Conversely, when competitive rivalry is low, a company has greater power to charge higher prices and set the terms of deals to achieve higher sales and profits. Potential of New Entrants into an Industry The less time and money it costs for a competitor to enter a company’s market and be an effective competitor, the more an established company’s position could be significantly weakened. An industry with strong barriers to entry is ideal for existing companies within that industry since the company would be able to charge higher prices and negotiate better terms. (Types of barriers: technology, cost of creating the brand, legal requirements, long processes of adoption…) Power of Suppliers It is affected by the number of suppliers of key inputs of a good or service, how unique these inputs are, and how much it would cost a company to switch to another supplier. The fewer suppliers to an industry, the more a company would depend on a supplier. As a result, the supplier has more power and can drive up input costs and push for other advantages in trade. On the other hand, when there are many suppliers or low switching costs between rival suppliers, a company can keep its input costs lower and enhance its profits.

Power of Customers The ability that customers have to drive prices lower or their level of power is one of the five forces. It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to find new customers or markets for its output. A smaller and more powerful client base means that each customer has more power to negotiate for lower prices and better deals. A company that has many, smaller, independent customers will have an easier time charging higher prices to increase profitability. Threat of Substitutes Substitute goods or services that can be used in place of a company’s products or services pose a threat. Companies that produce goods or services for which there are no close substitutes will have more power to increase prices and lock in favorable terms. When close substitutes are available, customers will have the option to forgo buying a company’s product, and a company’s power can be weakened. Competitors Is there a clear range of competitors? If not, who is fulfilling the need to users nowadays, how they are resolving the problem? Who/what consumers contract/buy for a similar need? According to what you know you have to start to research all the companies/brands that are offering something similar to you (in the area where you are going to operate) and also in other similar places because you can learn something about them (benchmarking). Once you have the list of competitors, you have to leave it open in order to confirm the list with real consumers-buyers, sometimes is not easy to define who are the competitors because they are different according to consumers’ vision. From producers vision: a competitoris a company/brand similar to yours. From consumers vision: a competitor is a company/brand that is solving the same or similar consumer need that yours is doing. Which consumers (segments and/or occasions) does the product serve? What needs does the product meet? Who else and what else (competitors; alternative products) could meet those same needs? How to evaluate competitors?

What is Benchmarking? For business but specially for innovation benchmarking is very important. Internal benchmarking: previous launches/experiences that were successful and from where we can set good practices and adequate objectives. Competitive benchmarking: competitors in the same area where we should look to compare, stablish in which areas we should be better or different. International or other categories benchmarking: very interesting to inspire, to translate, to copy ideas/ practices. Key output for evaluating competitors: Create a table comparing key competitors from all relevant KPIs you define, looking at the reliable sources or through your research.

Consumers The Wheel of Consumer Analysis The Wheel of Consumer Analysis is a framework that helps us understand consumer behavior. It helps by allowing us to structure consumer behavior phenomena. We can understand consumer behavior at various levels - that of individual consumers, market segments, industries and society at large. Initiator: who first suggests buying the product or service. Influencer: whose comments affect the decision made. Decider: who ultimately makes all or part of the buying decision. Buyer: who physically makes the purchase. User: who consumes the product or service.

Who is my potential user/consumer/buyer? Quantify: - How many individuals/companies are potentially your clients? It is compulsory to be able to estimate a number in order to set the business case - INE.es is a relevant source to find population info - If it is BtoB or specific targets you should find an adequate source for this - Count them today and if it is relevant estimate how this number will vary in the future Segment/Define: among my potential buyers we can identify different profiles: - Demographic aspects - Business aspects - Attitude aspects /lifestyle - Professional typologies We can set our own criteria to segment the target with objective and subjective aspects or we can apply a segmentation already published. Then, it is important to decide to which segments I will address my project. If it’s a general target we can also define priorities. Understand: - Their opinions, needs, drivers, barriers in relationship to the existent offer - How they judge our potential concept or other potential ideas to see how to improve it, how is it in comparison to existent competitors Which needs this product/service is going to resolve? Why this product/service does better than competitors? Internal analysis Internal analysis of the company: - Position in the market - Key benefits - Previous actions and their outcomes - Resources and capabilities analysis What is important? - Sales, profit, evolution of key financial aspects - Market share and distribution - Brand strategy - Compare to competition The strategy formulation process must be grounded in a thorough analysis of past performance. Questions we need to address: - Which objectives over the most recent period have been met? - Which ones have been missed? Why? - What are the firm’s current strengths and weaknesses? 1.3 The latest trends (technology and online) Fashion...