Strategic Marketing, 3rd edition Chapter 3: Environmental and internal analysis: market information and intelligence

Structure A. INTRODUCTION 1. Overview and Strategy Blueprint 2. Marketing Strategy: Analysis & Perspectives B. WHERE ARE WE NOW? 3. Environmental & Internal Analysis: Market Information & Intelligence C. WHERE DO WE WANT TO BE? 4. Strategic Marketing Decisions, Choices & Mistakes 5. Segmentation, Targeting & Positioning Strategies 6. Branding Strategies 7. Relational & Sustainability Strategies E. DID WE GET THERE? 14. Strategy Implementation, Control & Metrics D. HOW WILL WE GET THERE? 8. Product Innovation & Development Strategies 9. Service Marketing Strategies 10. Pricing & Distribution Strategies 11. Marketing Communications Strategies 12. International Marketing Strategies 13. Social and Ethical Strategies

Learning Objectives To review the three areas of the Strategic Marketing Management Process (SMM) To define the marketing environment and its components To review the analytical models/frameworks that can be used in the external strategic analysis stage To outline the purpose of internal analysis and review tools/frameworks to use in organisational analysis To outline the outcome of the strategic marketing analysis

Strategic analysis is concerned with understanding the strategic position of the organisation in terms of its external environment, internal resources and competencies, and the expectations and influence of stakeholders

Strategic marketing management The marketing strategy development process aims to answer a complete set of questions: Where are we now? Where we want to be? How will we get there? Did we get there?

Where are we now? Environmental and Internal Analysis What are the major trends and probable changes in the marketing environment? Who are the main competitors, and how we can differentiate our offerings from competition? Who are the target customers, and what are their needs? What competitive advantages and core competences do the organisation have? Can we sustain it?

The marketing environment Company Microenvironment Suppliers Customers Distributors Competitors Macroenvironment Political/Legal Environment Technological Social Economic

Macro (remote) environment: PESTLE model Political Factors Economic Factors Socio-cultural Factors Technological Factors Legal Factors Environment Factors A framework that assists in analyzing the external (remote) environment and identifying the existing opportunities & threats

Micro (competitive) environment: 5 forces model The purpose: Identify and analyse the key external forces that affect the organisation ability in achieving its goals and objectives Assess the power of each factor and the likely response

Porter’s five forces for competitive analysis POTENTIAL ENTRANTS Threat of entrants Competitive Rivalry BUYERS SUPPLIERS Bargaining power Bargaining power Threat of substitutes SUBSTITUTES

Analysis of internal environment The Purpose: Appraise/audit the organisation resources and capabilities, Assess the organisation competitive advantages Identify the organisation major strengths and weakness

Analysis of internal environment Two models to use: Resource audit financial resources, human resources, physical resources, intangible resources Porter’s Value Chain Model: Help analysing Firm’s Competitive Advantage and Core Competencies

Value chain analysis: Identifying Competitive Advantage Competitive advantage will arise through: Providing buyer value comparable to competitors but performing value chain activities more efficiently – cost based advantage and / or Performing value chain activities in unique ways that create greater buyer value than competitors and hence command a premium price – differentiation based advantage

Strategic fit ‘Strategic Fit’ is the effective match and management of the environmental opportunities and threats while taking into account the organisation strengths and weaknesses

SWOT analysis Integrates the internal and external environmental analysis Not just a list of SWOT variables! SWOT/TOWS Matrix can be helpful SWOT/TOWS analysis is the alternative ways in which an organisation can use its specific strengths to capitalise on opportunities or to minimise threats and invest in available opportunities to overcome its weaknesses

SWOT (TOWS) matrix

Conclusion Strategic marketing management (SMM) process covers 3 areas; strategic analysis, strategic choice and strategy implementation Strategic analysis involves the collection and analysis of relevant types of information about the environmental forces and trends, and organisational resources and capabilities External (macro) environment can be analysed using PESTLE model, while the micro environment could be examined using Porter Five forces model. The internal environment can be assessed using various models, most notably is the ‘value chain’ approach The effectiveness of any marketing intelligence system is dependent on the frequency of collecting, interpreting, and disseminating the information required about the marketing environment & competition SWOT analysis is an important foundation for producing realistic and meaningful strategic recommendations for the firm’s future directions