Marketing Strategy Formulation, Implementation,

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Marketing Strategy Formulation, Implementation,
Control

• From Analyses to Intent to Reality

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Market Strategy

• Different levels - resource allocation among
  within businesses
• Within - what business- which customers? target
  market selection?
• What is our offer to these customers? - value
  proposition, position
• How will we deliver support this offer?
  Marketing mix - products/services,
  price,communications, channels, people,
  organizational requirements
• Market performance assessment?

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Marketing Strategy Framework
Mgt Preferences

• Climate
• Customer
• Competition
• Channels

Companys Resources Capabilities
Market Environment
Marketing Strategy

• Value Proposition
• Target Market
• Marketing Mix

Company Processes Systems
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Consistency Checks

• Analyses strategy
• Target market marketing program
• Within marketing program

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Value to Other Stakeholders

• Employees
• Shareholders
• Partners
• Government
• Society

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Six Steps to Marketing Strategy

• Understanding
• Visioning
• Direction Setting
• Committing
• Implementing
• Sustaining

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Inputs to Strategy Formulation

• What we can do - capabilities,competencies
• What might do - innovation, creativity
• What we want to do - desires, preferences
• What we should do - market requirements

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Three Approaches to Strategy

• SourceKathleen M. Eisenhardt and Donald Soll,
  Strategy As Simple Rules, Hayward Business
  Review (January 2001), 109.

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Components to a Marketing Plan

• DIAGNOSIS - WHERE IS THE COMPANY NOW?WHY?
• PROGNOSIS - WHERE IS THE COMPANY HEADED?
• OBJECTIVES - WHERE SHOULD COMPANY BE HEADED?
• STRATEGY - WHAT IS THE BEST WAY OF GETTING THERE?
• TACTICS - WHAT SPECIFIC ACTIONS? BY WHOM? WHEN?
• CONTROL - WHAT SHOULD BE MONITORED TO INDICATE
  WHETHER THE COMPANY IS SUCCEEDING?
• See STERICYCLE Example

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10 Cs of Strategy

• Consistent
• Competitive
• Contingent
• Concrete
• Complete
• Concise
• Communicated
• Controlled
• Committed
• Continuous

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Marketing Your Business Model

• How we will win business - earn our living -
  deliver superior value to customers
• Four considerations - 1) a value proposition or
  value cluster for targeted customers 2) an
  offering - product, service, information, combn
  3) a unique defendable resource system and 4) a
  financial model

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1. Determining your Value Proposition or Value
Cluster

• Three specific requirements -
• Target Segment
• Focal Customer Benefit or Benefits
• Rationale for Competitive Superiority
• 3 Perspectives - customer, company, competitor

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Decision Criteria
Determinant Factors
Important Options Differ Swing the Business!!
Bar or Table Stakes Lose if we dont Offer
Important
Salient Factors
Possible Factors
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Value Drivers

• Give Get Factors
• Get - Product Service Quality Dimensions
• Give - , time, effort, hassle
• Value types - acquisition, transaction, in-use,
  redemption
• Best, Lowest Cost, Easiest, Fastest

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Value Disciplines

• Operational Excellence - best total cost
• Product Leadership - best product
• Customer Intimacy - best total solution
• Your companys value discipline? Implications?

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Example of Value Propositions -

• Southwest Airlines - convenience and low-price
• Four Seasons - outstanding service
• SteelCase - complete office space solution
• Your company- ?

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2. The Market Offering

• Three issues -
• Scope of the offering - category specific
  dominance or cross-category
• Customer decision process- pre-purchase,
  purchase, post-purchase
• Mapping products or services into decision process

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3. Specifying the Resource System

• Five Steps
• Identify Core Benefits in the Value Proposition
  or Cluster
• Identify Capabilities that relate to each Benefit
• Link Resources to each Capability
• Identify what capabilities the firm can deliver
• Identify partners who can complete the
  capabilities
• Considerations - uniqueness, linkages - benefits,
  capabilities, resources, sustainable advantage

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4. Financial Model

• Revenue generation
• Shareholder value
• Growth

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Example Southwest Airlines

• Short haul flights
• Low fares
• Point to point service between midsize cities
  (avoids large airport)
• Minimal in-flight service
• Standardized fleet of 737s
• No interline baggage checking
• Minimal use of travel agents

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Southwest Strategy Map
No baggage transfers
No meals
Limited Passenger service
No Connections With other airlines
No seat assignments
Limited use Of travel agents
Short-haul, Point-to-point Routes between Midsize
cities And secondary airports
Frequent Reliable departures
Standardized Fleet of 737 aircraft
15-minute Gate turnaround
Very low Ticket prices
Automatic Ticketing machines
Lean, highly Productive Ground and Gate crews
High Compensation Of employees
High Aircraft utilization
Southwest, The low-fare Airline
Flexible Union contracts
High level Of employee Stock ownership
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Summary Comments Marketing Strategy

• Analyses of 6 Cs SWOT, market opportunity
  options, validation of current strategy
• Market segmentation, targeting, positioning
  strategic focus
• Integration alignment of marketing elements to
  support the strategic position
• Consistency analyses strategic focus,
  marketing elements and strategic position, within
  marketing elements
• Projection of financial performance

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Evaluating Strategic Marketing Opportunities

• Suitability,Validity,Consistency,Feasibility,Vulne
  rability, Profitability
• Balanced Scorecard - value to various stakeholders

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Overall Market Opportunity Assessment Framework
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Developing Marketing Capacity

• Market orientation culture
• Market driven capabilities
• Value adding processes
• Core competencies
• Intellectual capital
• Business assets
• Business network

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The Delivery System Needs to Support and
Reinforce the Resource System
Delivery System
Mapping the Resource System
People


Processes
Supply Chains
Systems




Assets
Source Clayton M. Christensen, Meeting the
Challenge of Disruptive Change, Harvard Business
Review 78, no. 2, March-April 2000
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Implementation Facilitators/Barriers

• Buy-in on the plan
• People skills
• Resources (Time )
• Reward/punishment system
• Information/knowledge
• Bureaucracy
• Inter-functional cooperation
• Culture
• Management Support

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Signs of Trouble

• No ownership
• Too busy
• Not willing to make trade-offs
• Lack of clarity
• Poor integration with other initiatives
• Disconnect between budget plan
• Business as usual

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The New Marketing Concept

• Global Customer
• Value-Delivery Strategy
• Customer Knowledge
• Selective Customer Focus
• Customer Loyalty
• Innovation
• Mass Customization
• Corporate Alignment - processes, structure,
  culture
• Loyal Customers Employees
• Market Intelligence
• Learning Organization
• Network

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Executing The New Marketing Concept - Guidelines

• Customer Focus Throughout
• Listen to the Customer
• Define Nurture Distinctive Competence
• Define Marketing as Market Intelligence
• Target Customers
• Manage For Profitability Not Sales
• Customer Value - Guiding Star
• Customer Defines Quality
• Measure Manage Customer Expectations
• Build Customer Relationships Loyalty
• Define Business as a Service Business
• Continuous Improvement Innovation
• Partners Alliances
• Destroy Marketing Bureaucracy

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How Well is This Company Doing? Why?
Performance (Mil) Base Year 1 2 3
4 5 Sales Revenue 254 293 318 387 431 454
Cost of Goods sold 135 152 167 201
224 236 Gross Contribution 119 141 151
186 207 218 Manufacturing Overhead 48
58 63 82 90 95 Marketing Sales
18 23 24 26 27 28 R D
22 23 23 25 24
24 Administrative Overhead 15 15 15
16 16 16 Net Profit 16 22 26
37 50 55 Return on Sales () 6.3
7.5 8.2 9.6 11.6 12.1 Assets 141
162 167 194 205 206 Assets ( of Sales)
56 55 53 50 48 45 Return
on Assets () 11.3 13.6 15.6 19.1
24.4 26.7
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Same Company But Through Different Metrics - How
Are They Doing?
Market-Based Base Year 1 2 3 4
5 Market Growth 18.3 23.4 17.6 34.4 24.0 1
7.9 Company Growth 12.8 17.8 13.3 24.9 18.
2 7.7 Market Share 20.3 19.1 18.4 17.1 1
6.3 14.9 Customer Retention
88.2 87.1 85.0 82.2 80.9 80.0 New
Customers 11.7 12.9 14.9 24.1 22.5 29.2 D
issatisfied Customers 13.6 14.3 16.1 17.3 1
8.9 19.6 Relative Product Quality
19 20 17 12 9 7 Relative Service Quality
0 0 -2 -3 -5 -8 Relative New Product
Sales 8 8 7 5 1 -4
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Introducing the Performance Dashboard
Steps of Strategy
Customer Interface
Implementation and Branding
Evaluation
Performance Dashboard
Financial
Implementation and Branding
Customer
Business Model
Market Opportunity
Areas Addressed

• Size of market opportunity
• Attractiveness of target segments
• Competitive landscape

• Customer acquisition
• Changes in customer behavior
• Site experience and usability

• Branding
• Technology infrastructure
• Internal organization
• Relationship with suppliers and partners
• Fulfillment capability

• Revenue
• Profit
• Cost
• Balance sheet

• Uniqueness of value proposition
• Attractiveness of offering
• Firm capabilities relative to competition
• Sustainability of competitive position

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The Balanced Scorecard -- Strategy Into
Operational Terms
Financial To succeed financially, how should we
appear to our shareholders?
Customer To succeed financially, how should we
appear to our customers?
Internal Business Process To satisfy our
shareholders and customers, what businesses must
we excel at?
VisionandStrategy
Learning And Growth To succeed financially, what
knowledge and competencies will we need to grow?
Source Robert S. Kaplan and David P. Norton,
Using the Balanced Scorecard as a Strategic
Management System, Harvard
Business Review 74 (January-February) 76, 1996
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TiVo

• New product service
• Value proposition to customers
• Adoption barriers for new offering
• Value proposition to other stakeholders
• Launch strategy
• Competitive reaction
• Performance tracking

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Summary

• Strategy is important but it has to be executed
  well
• Strategy business model
• Implementation challenges - anticipate address
  early in the process
• Internal as well as external communications
• Performance metrics - market based as well as
  traditional internal metrics