1. Topic 3: Strategic marketing decisions, choices, and mistakes

2. Structure C. WHERE DO WE WANT TO BE? B. WHERE ARE WE NOW?
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
11. Marketing Communications
12. E-Marketing Strategies
13. Social and Ethical Strategies

3. Learning Objectives To define ‘strategic choice’
To outline strategic decisions taken at the corporate, SBU and functional levels
To review the strategic marketing decisions including products to offer, markets to target and competitive position strategies
To review the analytical models and frameworks that can be used by organisations to make their strategic choices for the future 3

4. Marketing Mix – 7 P

5. Consumer Good Type

6. Strategic choice
Strategic choice involves generating a well-justified set of interrelated strategic alternatives
and choose from them the ones that will contribute to the achievement of the corporate overall goals and strategic objectives 6

7. Marketing Strategy Process

8. WHERE DO WE WANT TO BE? Strategic Decisions
Strategic decisions at the corporate level
Developing mission statement
Directional strategy
Resource allocation
Strategic decisions at the SBU level
Choosing generic strategy (strategic orientation):
Cost leadership strategy
Differentiation strategy
Focus strategy: Cost focus & Differentiation focus
Strategic decisions at the functional level
Products to offer
Market segments to target
Market position tactics 8

9. Directional (grand) strategies
Growth Strategies
Stability Strategies
Retrenchment strategies
Concentration
Vertical Growth
Horizontal Growth
Diversification
Concentric
Conglomerate
Pause/Proceed with Caution
No Change
Profit
Turnaround
Captive Company
Sell-Out/Divestment
Bankruptcy/Liquidation 9

10. Resource allocation: BCG matrix10

11. Boston Consulting Group

12. Industry Attractiveness
General electric model
Business Position
Strong Medium Weak
Industry Attractiveness
High
Medium
Low
Most attractive: Investment for Growth
Least attractive: Harvesting/Divesting
Medium attractiveness: Selectivity 12

13. Shell Directional matrix

14. Competitive position tactics14

15. Porter’s generic competitive strategies
Cost Leadership strategy
Differentiation strategy
Cost focus strategy
Focused differentiation strategy

16. Customer Information systems

17. Requirements for generic competitive strategies
Commonly required skills and resources
Common organizational requirements
Generic Strategy
Sustained Capital investment and access to capital
Process engineering skills
Intense supervision of labour
Products designed for ease of manufacture
Low cost distribution system
Strong marketing abilities
Product engineering
Creative flair
Strong capability in basic research
Corporate reputation for quality of technological leadership
Long tradition in the industry or unique combination of skills drawn from another businesses.
Strong co-operation from channels
Combination of the above policies directed at the particular strategic target
Tight cost control
Frequent, detailed control reports
Structured organisation and responsibilities
Incentives based on meeting strict quantitative targets
Strong co-ordination among functions in R & D, product development, and marketing
Subjective measurement and incentives instead of quantitative measures
Amenities to attract highly skilled labor, scientists or creative people.
Combination of the above policies directed at the particular strategic target
Overall Cost
Leadership
Differentiation
Focus

18. Setting Marketing Objectives
Hierarchical – Objectives should go from most to least important
Quantitative- In order to avoid ambiguity, marketing managers must turn objectives in to measurable targets with respect top time and size
Realistic – Objectives should be developed based on the result of a detailed analysis of the firm’s capability, its competitive strengths, and external opportunities
Consistent – To avoid confusion, marketing managers have to pursue compatible marketing objectives. It is obviously unrealistic to aim for substantial gains in both market share and profitability at same time.

19. Selecting and developing marketing strategies for different market and competitive situations
Major decision/actions
Important Issues
Defining product market structure
Customer profiles
Industry / distribution/competitor analysis
Market size estimation
Selecting the basis of segmentation
Forming segments
Analyzing Segments
Sources of competition
Industry structure
Strategic group analysis
Finding opportunity gaps
Cost/differentiation strategy/focus
Good/better/best brand positioning strategy
Selecting targets
Positioning of each target
Positioning concept
Marketing mix integration
Product Market definition and analysis
Market Segmentation
Define and analyze industry structure
Competitive advantage
Market targeting and positioning strategies
Evaluating the complexity of the product – market structure
Establishing product-market boundaries
Deciding which level of the product-market to segment
Determining how to segment the market
Defining the competitive area
Understanding competitive structure
Anticipating changes in industry structure
Deciding when, where, and how to compete
Deciding market scope
Good/better/best brand positioning strategy

20. Functional Strategies
Marketing Strategy
Other functional Strategies
Manufacturing strategy
Research and Development (R&D) Strategy
Human Resources management
Information based strategy
Internet strategy

21. Ansoff’s product / market matrix

22. Market Penetration
Market penetration strategy, according to Ansoff, carries the lowest risk in comparison to the other strategies. This strategy is termed to be the least risky because of its use by a firm to advertise existing products and luring its existing customers to buy more products/services from them. For example, a company could advertise to its existing customers the benefits of upgrading their club membership from regular to VIP. By doing so, the amount of time and effort spent on selling a VIP based club membership is significantly reduced

23. Market Development
The market development strategy is significantly riskier in comparison to the Market Penetration Strategy. If a firm wants to acquire new customers and increase its market share, it will need to adopt the market development strategy. In this strategy, a firm does not sell new products to its new customers but just sells them its existing ones. For example, consider an electric car manufacturing company who has its base set up in Europe and opens a branch in Asia to increase the number of car sales and acquire new customers.

24. Product Development
Most firms do not try to build new products and sell them in the existing markets unless the credibility of a firm is established with its existing customers. This type of strategy is used generally used by the firms who are well established in the market and enjoy significant market share in comparison to the new entrants in the market. If a new entrant adopts this strategy, then it takes a higher risk approach as it is highly likely to experience fall in the market share of its existing products by selling new ones. One example of this is if an electric car manufacturing company based in Europe wants to develop and sell electric bikes in its existing market, i.e. Europe.

25. Diversification
This is the most risky strategy of all strategies in the Ansoff Matrix. The reason behind its higher risk is because of the risk it carries to diversify the market share due to development of new products and entry into new markets. The expenses in adopting this strategy are high as well, mainly due to the investment required in developing new products and also the additional advertising budget needed to sell them to a new and existing market. For example, an electric car manufacturing company based in Europe may want to develop and sell electric bikes and electric cars in its existing market (Europe) as well as to a new market (Asia).

26. Competitive timing / direction matrix
Goal
Move before competition
Move with competition
Move away from Competition
Market Share protection (hold defend)
Mix adjustments
Deterrent action
Imitate
Compensate
Merger
Acquisition
Collusion
Market share advancement ( growth)
New areas
New segments
Additional channels
Penetration pricing
Capitalize
Leapfrog
New offerings
Reciprocal agreements

27. Competitive position tactics
Market Leader –
The firm with the largest market share and, by virtue of its pricing, advertising intensity, distribution coverage, technological advance, and rate of new product introduction, it determine the nature, pace, and bases of competition. To remain number one, leading firms may implement both offensive and defensive tactics.
Market Nichers

28. Competitive position tactics
Market Challenger
A runner up firm that is fighting hard to increase its market share. It may adopt to choose an aggressive stance and attack other firms, including the market leader. Therefore, it will normally implement offensive tactics.

29. Competitive position tactics. Continued
Market Follower
Another runner-up firm that wants to hold its share without rocking the boat. It may adopt a less aggressive stance and defensive tactics in order to maintain the status quo, but at the same time to follow the leader.

30. Competitive position tactics..continued
Market Nichers:
Firms that serve the smaller segments not being pursued by other firms. By concentrating their efforts in this way, market nichers are able to build up specialist market knowledge and avoid expensive head-on fights with larger companies. We can discriminate between segmenters and nichers in a few words.

31. Expanding market share
Position Defence
Company build s fortifications around its current position, but simply defending a current position or product rarely works.
Flanking Defence
In which the company carefully checks its flanks and attempts to protect the weaker one.

32. Expanding market share…Contd.
Pre-emptive Defence
Where, in contrast to a flanking defence, the leader firm can be more aggressive, striking competitors before they can move against it.
Counter-offensive Defence
Where despite its flanking or pre-emptive efforts, a market leader company could be attracted, so it needs to respond to minimize the threat. Counter attack is particularly important in those market that are crucial to the leader. Therefore the leader must act decisively and swiftly.

33. Expanding market share…Contd.
Mobile Defence
Involves more than aggressively defending a current market position; the leader extends itself to new markets that can serve as a future bases for defence or offence.
Contraction Defence -
When firm find its resources are spread too thinly and competitors are nibbling away on several fronts, so it opts to withdraw from those segments in which it is most vulnerable or in which it feels there is the least potential. It then concentrates its resources in other segments in order to be less vulnerable.

34. Competitive tactics for the market challenger
Frontal attack
Consists of opposing the competitor directly by using its own weapons, and without trying to use its weak point
Flanking attack
As an alternative to a costly and risky frontal attack, the challenger can focus its strength against the competitors weaker flanks or on gaps in the competitors market coverage.

35. Competitive tactics for the market challenger
Encirclement attack
Involves attacking from the front and sides. A challenger encircles the competitors position in terms of products or markets both.
Bypass attack
The challenger chooses to change the rules of the game. It might diversify into unrelated products, move into new geographic markets, or leapfrog into new technologies to replace existing products.

36. Competitive tactics for the market challenger
Guerrilla attack
This tactic open to a challenger is in many ways best suited to smaller companies with a relatively limited resource base. The challenger might use selective price cuts, executive raids, intense promotional outbursts, or assorted legal actions.

37. Competitive tactics for the market Follower
Following closely
With similar marketing mix and segmentation.
Following at a distance
The follower can flag up some area of differentiation, and diminish the obvious similarities with leader.
Following selectively
Both in product and market terms so that the likelihood of direct competition is minimized.

38. Competitive tactics for the market nicher
A nicher is interested in one or two niches, but not in a whole market. The objectives is to be a large fish in a small pond rather than a small fish in large pond. The key idea in nichemanship is specialization. A market nicher can specialize in serving one type of end user , specializing in serving a given customer size group, or focus on one of few specific customers.

39. Conclusion
Strategic choice involves understanding the underlying bases guiding future strategy, and generating strategic options for evaluation and selecting from among them.
Strategic decisions are usually taken at corporate level (e.g., directional strategy, resource allocation), at SBU level (e.g., generic strategy), and at functional level in relation to various functional areas (e.g., marketing, R&D, finance, HR, production, etc.).
Strategic marketing decisions include products to offer, market segments to target, and positioning strategies.
Organisational failure is arguably a product of repeated strategic mistakes and unsuccessful interactions between the firm and its environment. 39