- lecture notes module 2.pdf

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Module 2 Environmental Analysis

MM555

Source: http://www.forbes.com/sites/sap/2012/12/03/6-steps-to-executing-a-content-strategy/


Session Outline

Welcome & Overview

Nominate Student Representative

Review & brief Recap of Module 1

Digging Deeper

Module 2: Environmental Analysis; Market Information and Market Research

Analysing Cases & Assessment Requirements for MM555 (details in separate presentation)

Next Steps


Review of Module 1

Reviewed the Marketing Management Framework & Expectations for the Unit

Examined the various marketing orientations

Investigated the link between expectations and customer satisfaction and why it is important to have satisfied customers.

We reflected on the importance of creating value and developing customer relationships so that loyalty is built.

3


DIGGING DEEPERIn the News; Out of Academia; Around the Grounds

“In each Module we encourage you to hunt out the latest news; explore the research and scan social media for what’s new, what’s important and what has piqued your interest on the topic of marketing”


…..What Caught Your Eye This Week?

Source: http://thisweekin.com


From Mad Man to SuperwomanThe inevitable rise of the chief marketing officer in the age of the empowered consumer

A good online article highlighting the changing role of the Chief Marketing Officer and the shifting expectations that go with it. To deliver, CMOs will need to adopt new operational frameworks for harnessing the art, science and individuals involved.

Suketu Gandhi, Giovanni Rodriguez and Greg Banks, From Mad Man to Superwoman, Deloitte Univeristy PressURL http://dupress.com/articles/from-mad-man-to-superwoman-the-legitimization-of-the-chief-marketing-officer/?ind=


This Week’s Reading….…..Which Ideas Will You Hold Onto?

Chan, K.W. & Mauborgne,R.1999. Creating new market space. Harvard Business Review 77 (1): 83-93.

Rust R., C. Moorman and G. Bhalla. 2010. Rethinking Marketing. Harvard Business Review 88 (1/2): 94-101.

Ho Yin Wong, Kylie Radel, Roshnee Ramsaran-Fowdar 2011 Building a Marketing Plan: Chapter 1: Introduction to Marketing Planning:

Ho Yin Wong, Kylie Radel, Roshnee Ramsaran-Fowdar 2011 Building a Marketing Plan: Chapter 2: The Situation Analysis,HBP Product number:

Ofek, Elie; Wathieu, Luc 2010 Are You Ignoring Trends That Could Shake Up Your Business? Harvard Business Review. Jul/Aug, Vol. 88 Issue 7/8, p124-131. 8p. 3

What were your top 3 concepts from the

readings? Share these in class or online


Creating New Market Space* 6 Basic Approaches….

Image: http://www.blueoceanstrategy.com/too/boss.html



Creating New Market Space* (cont)Conventional Boundaries of Competition

Head-To-Head Competition Creating NewMarket Space

InnovativeCompany Examples

IndustryFocuses on rivals within its industry. Looks across substitute

industries.Home Depot, Intuit's Quicken Software, Federal Express, UPS, and Southwest Airlines.

Strategic GroupFocuses on the competitive position within a strategic group.

Looks across strategic groups within its industry.

Polo Ralph Lauren, Toyota's Lexis, Sony Walkman, and Champion prefab housing.

Buyer GroupFocuses on better serving the buyer group.

Redefines the buyer group of the industry.

Bloomberg business information, and Philips Lighting Company.

Scope of Product &Service Offerings

Focuses on maximizing the value of product & service offerings within the bounds of its industry.

Looks across to complementary product and service offerings that go beyond the bounds of its industry.

Borders Books & Music, Barnes & Noble, Virgin Entertainment, Dyson vacuum cleaners, and Zeneca Cancer Centers.

Functional-EmotionalOrientation of anIndustry

Focuses on improving price-performance in line with the functional-emotional orientation of its industry.

Rethinks the functional-emotional orientation of its industry.

Starbucks coffee bars, Swatch watches, the Body Shop and Direct Line Insurance.

TimeFocuses on adapting to external trends as they occur.

Participates in shaping external trends over time.

Enron, and Cisco Systems.



MODULE 2: ENVIRONMENTAL ANALYSIS

Identifying opportunities in the marketplace


Marketing Management Framework

The MM555 Marketing Management Framework draws on a number of sources including Iacobucci (2013), Armstrong et al (2012) and Gibbs (2009) and includes the key factors which need to be taken into account when developing a comprehensive marketing strategy.

Create Value

Product / ServicePeople

Processes Physical Evidence

Capture Value

Price

Communicate Value

Integrated Marketing Communications

(including Promotion)

Deliver Value

Placement Logistics

CustomerConsider factors such as decision making,

values, needs & wants

CompanyOr organisation. What

is our Strategic Purpose? Capabilities?

Weaknesses?

ContextWhat’s going on in

the macro environment?

CollaboratorsWho do we work with? Who are our partners?

CompetitorsWho are our current

and potential competitors? Where are they placed in the

market?

SegmentationBased on geographic,

demographic, psychographic and/or behavioural factors

TargetingConsider strategic fit;

potential and defensibility against competition

Analysis & Strategy

Planning & Implementation

Positioning Your place in the market space

Core benefit propositionUnique selling proposition

Positioning Statement

DifferentiationDifferentiating the market offering to create superior

customer value

Implementation, Monitoring & Measuring Outcomes

Marketing is about creating customer value and profitable

customer relationships

Marketing ObjectivesFocus for Module 2


Module 2: Learning Objectives

1. Develop an understanding of organisation-wide strategic planning.

2. Discuss portfolios analysis and growth strategies.

3. Explore marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value.

4. Describe the environmental forces that affect the company’s ability to serve its customers.

5. Review the SMART approach to setting Marketing Objectives

6. Review the importance of information in gaining insights about the marketplace and customers.

7. Develop an understanding of the marketing information system

8. Explain how companies analyse and use marketing information, including a brief review of the role of Market Research and the Marketing Research Process.


STRATEGIC PLANNING & LEVELS OF STRATEGY

Understand Your Boundaries

Source: http://www.pepsico.com/Purpose/Performance-with-Purpose/Our-Business-and-Brands.html

PepsiCo Americas

Beverages

PepsiCo Americas

Foods

PepsiCo Europe

PepsiCo Middle

East Africa


Thinking Strategically:The Three Big Strategic Questions

At the Strategic (organisation wide) level the questions are…:

1. Where are we now -- what is our situation?

2. Where do we want to go?• Business(es) we want to be in and market positions we want to stake

out

• Buyer needs and groups we want to serve

• Outcomes we want to achieve

3. How will we get there?Thus at the Marketing Management level the business we are in is a given, but the target groups, product offering etc. still needs to be decided.


The Hierarchy of Strategy

Corporate Strategy

Business Strategy (SBU)

Functional Strategy Consumer Product Firms Industrial Product Firms Service Organisations Non Profit Organisations


Levels of Strategy - Corporate

Corporate Level strategic decisions are concerned with:

overall purpose and scope adding value to shareholder investment portfolio issues resource allocation between SBUs structure and control of SBUs corporate financial strategy


Levels of Strategy - SBU (Cont)Business Unit strategy is concerned with: overall purpose and scope competitive strategy developing market opportunities developing new products/services resource allocation within the SBU structure and control of the SBU

Our Focus is here…


Levels of Strategy - Operational

Operational strategies are concerned with: The integration of resources, processes, people

and skills to implement strategy

Context is also

important

And here…


Strategic Management in Different Contexts (1)

In small businesses, the importance of:• the expectations of individuals (e.g. Owners and

founders) • competitive positioning

In the multi-national corporation, the importance of:

• product and geographic scope• portfolio decisions• corporate structure and control


Strategic Management in Different Contexts (2) In the public sector, the importance of: powerful

stakeholder influence (e.g. by government)• constraints or guidelines on strategic decision

making by government• competition for resources• delivery of value for money• within a political context

In the professional service organisations, the importance of:

• the expectations and standards of professionals• the powerful influence of internal stakeholders (e.g.

partners)• increasingly, competitive positioning.


THE ENVIRONMENTAL ANALYSIS

Sometimes referred to as a Situation Analysis

Source: Deloitte Website. Tracking the Trends

!

This is about identifying opportunities and informed

decision making


!

Situational Analysis and the 5C’s

Company Customer[&Collaborators]

ContextCompetitors

[& Collaborators]

You could use a SWOT analysis to bring these

elements together and start to create

meaningful information from the raw data …


SWOT Examples of questions to explore…

InternalFactors

ExternalFactors

Strength What do you do particularly well?

What do you do that is unique in the “marketplace?”

What do your customers/clients/patrons ask for you to do over and over again?

What do you have the right tools/resources to accomplish?

Opportunities Are there new situations coming down the

road that you can take advantage of (new programs being offered, new faculty joining the department, new tools available to you)?

Are there gaps in the “market”that you can fill?

Are there partnerships that might be fruitful?

Weaknesses What do you not feel as comfortable

doing?

What needed resources, staff, or skills do you lack?

Threats Who is your competition and what do they

offer that you can’t do as well or at all?

Are there “environmental” changes or situations that could cause problems for you and your programs?

What other roadblocks are being thrown in your path?

The big question is ‘So what..?”! i.e. so what does this all mean? What are the implications of the information in each quadrant? A list on its own is of little value.


SETTING OBJECTIVES Be SMART!


Writing Objectives − be SMART!

Specific

Objectives have to be specific and positively described.

Measurable

A goal achievement should be measurable.

Attainable

It should be attractive for the team to reach the goal.

Realistic

The objective needs to be achievable in a realistic way.

Time-bound

The objective has to be set within a time frame.


Marketing Objectives – Sample targets

jEconomic marketing

objectivesClose connection to general

economic company objectives

revenue / profitabilityrevenue / profitability

profit contribution / Return-on-Investmentprofit contribution / Return-on-Investment

growth (revenue/sales/profit)growth (revenue/sales/profit)

rationalizingrationalizing

capacitiescapacities

security (risk distribution)security (risk distribution)

market position /market sharemarket position /market share

jNon-economic marketing

objectivesConnecting to mental processes

of buyer (purchase behavior)

customer retentioncustomer retention

customer satisfactioncustomer satisfaction

name recognitionname recognition

attitude (image / sympathie)attitude (image / sympathie)

repurchase raterepurchase rate

level of distributionlevel of distribution

effects of knowledgeeffects of knowledge

strength of purchase intentionstrength of purchase intention


Additional Sample Metrics


Marketing Objectives - Target Pyramid Objectives are generally set at each level of the pyramid,

but it is important that they are inter-connected.

Corporate objectives

Financial target

Communication target

Exhibition objectives

Measures such as ROI sit at the corporate level.

Objectives would relate to things like Increase in sales, improvement of company image; greater brand awareness

Specific objectives related to each area

Managing customer data, raise purchase interest, increasing popularity of brand; campaign specfiic objectives

Marketing objectives

Price policy target

Distribution target

PR- objectives Advertisement objectives


STRATEGIC OPTIONSSome Ideas for your Tool box

Portfolio Analysis & Strategic Options

Ansoff ’s Growth Matrix

BCG Matrix

GE Matrix

Porter’s Strategic Options

Tracy and Wiersemas’ Approach

Innovation Pentagram

!

We will only review these in brief. Please refer to

your text for more details.

These strategic choice models are often applied at the Corporate Level,

but can be equally valuable at the SBU or

Functional Level as indicated in this section.


Ansoff’s Growth Matrix

Market Penetratione.g convince

current users to have Sultana Bran as an

afternoon snack

Product Development

e.g selling cheese to current

customers that buy milk

Market Development

e.g selling chalk to not only

schools, but also to kids

Diversitye.g a cigarette

producer selling macaroni and

cheese

Currentmarkets

Newmarkets

Currentproducts

NewProducts Consider how Apple has

– or could - implement a strategy in each of these quadrants. Give examples.

Which strategy do you think Apple primarily uses?

Image: http://www.apple.com/au/


BCG Portfolio Matrix (Market Growth / Market Share matrix)

6-33

KeyEach circle represents one of the organisation’s business units. However, this matrix can also be used to evaluate a product portfolio.

Size of circle represents the relative size of the business unit in terms of revenue

Implications:

• Stars: Fund so they can continue to grow

• Question marks: Review –further investment or sell?

• Cash Cows: Milk funds to invest in more promising opportunities

• Dogs: Sell, abandon, or reposition for niche opportunities

The BCG Matrix is based on the product life cycle theory. The assertion is that you should have both high growth products as well a cash generators. It has 2 dimensions (market share and market growth). The basic ideas is that the bigger the share or the faster the growth the better it is for the company.

Think of an example for each category


GE Multifactor Portfolio MatrixIndustry Attractiveness

High

High

Medium

Medium

Low

Low

Invest/Grow

Selectivity/earnings

Harvest /Divest

Protect Position

Invest to Build

Build selectively

Build selectively

Selectively manage for earnings

Limited expansion or harvest

Protect & refocus Divest

Manage for earnings

A

B

Size of circle = market sizeSize of pie = market share

C

D


General Electric/McKinsey GridMultifactor Portfolio Analysis

Business Strength Strength of assets and competencies Relative brand strength Market share Market share growth Customer loyalty Relative cost position Relative profit margins Distribution strength and production

capacity Innovation strength Quality Access to capital

Market Attractiveness Market size Market growth rate Market profitability Pricing trends Competitive intensity/rivalry Risk of returns in the industry Entry barriers Demand variability Segmentation Distribution structure

LimitationsLimitations:• Subjective measurements across SBUs• Process also highly subjective - from the selection and weighting of

factors to the subsequent development of both a firm’s position and the market attractiveness

• Businesses may have been evaluated with respect to different criteria• Sensitive to how a product market is defined


Competitive Strategy – Michael PorterGeneric Competitive Strategies

Curtin University is a trademark of Curtin University of TechnologyCRICOS Provider Code 00301JDr Margot Wood

Competitive StrategyRisks of the Generic Strategies

Cost leadership is not sustained• competitors imitate• technology changes• other bases for cost leadership erode

Proximity in differentiation is lost

Cost focusers achieve even lower cost in segments

Differentiation is not sustained• competitors imitate• bases for differentiation become less important for buyers

Cost proximity is lost

Differentiation focusers achieve even greater differentiation in segments

The focus strategy is imitatedThe target segment becomes structurally unattractive• structure erodes• demand disappear

Broadly targeted competitors overwhelm the segment• the segment’s differences from other segments narrow• the advantages of a broad line increase

New focusers sub segment the industry

Risks of Cost Leadership Risks of Differentiation Risks of Focus


Tracy and Wiersemas’ Value Discipline Model

Disciplines Operational excellence: deliver products smoothly, reliably (e.g., Fandango,

TurboTax)

Product leadership: excellent quality; innovation (e.g., Apple, BMW)

Customer intimacy: knowledge of customer needs (e.g., Amazon, Facebook)

38

This model reflects Porter’s three basic strategy concepts of cost leadership, segmentation strategy and differentiation strategy. Tracey and Wiersema extend them into “value disciplines”.

The primary difference between Porter’s work and the value discipline model is that Tracey and Wiersema deepened the focus on the customer relationship by defining the Customer Intimacy value discipline. Porter’s focus was market-focussed, Tracey and Wiersema shifted to a customer focus.

Source: The Tracey & Wiersema Value Discipline Model – Part 1


Innovation Strategies - Innovation PentagramA tool of innovation management

Motive: Which motive targets the innovation?

Advantage: What kind of advantages does the innovation provide?

Revenue model: How is the revenue generated?

Business system: With what kind of business systemis the innovation

implemented?

Timing: When are we applying these measures?


MARKET INFORMATION & MARKET RESEARCH


Data Collection to form the Marketing Information System (MIS) How does your organisation collect information?

What are some of the issues with collection of information?Internal records

Marketing Intelligence

Market research


The Magic of Mindreading….


Textbook Resource: Kotler, Keller, Burton: Marketing Management © 2009 Pearson Education Australia

Sources of Competitive Information Independent online review

forums

Sales agent feedback sites

Combination sites offering customer reviews and expert opinions

Customer complaint sites

Public blogs

Former employees


http://bit.ly/wJgvL4

Textbook Resource: Kotler, Keller, Burton: Marketing Management © 2009 Pearson Education Australia

Sources of Secondary Data Begin the data collection phase with

secondary data from both internal and external sources:

Internal sources:Sales reports, by geographical area, product or product lineAccounting informationCompetitive information

External sources:Magazines and newslettersTrade and industry associationsOn-line databasesGovernment databases (e.g. ABS)


Possible secondary data sources for Assessment 3.

Small Business Development Corporation• http://www.smallbusiness.wa.gov.au/

IBISWorld • http://www.ibisworld.com.au//

Gartner• http://www.gartner.com/technology/home.jsp

Australian Bureau of Statistics• http://www.abs.gov.au/

What can you add to this list?


Marketing Research Marketing decisions should be fact-based

Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

A specific problem or opportunity

46


The Marketing Research Process

Example of Interrelationship:At the first step the researcher must understand what is involved in the remaining stages

Ex 2.1 The Research Project StepsSource: Marketing ResearchBy A. Parasuraman, Dhruv

Grewal, R. Krishnan 2007 Houghton-Mifflin Co.

Fisher Price draw extensively on market

research


Types of research

Exploratory ResearchResearch conducted to gather more information about a

problem or to make a tentative hypothesis more specific.

Descriptive ResearchResearch conducted to clarify the characteristics of certain

phenomena to solve a particular problem.

Causal Research“Cause and effect” research in which it is assumed that a

particular variable X influences a variable Y.


Research – An Example

There are many avenues for collecting data. Here’s an example from Westnet. What they do with it is clearly linked to brand implications. Click here to link through to Awards.


Module 2: Learning ObjectivesChecking In…..

1. Develop an understanding of organisation-wide strategic planning.

2. Discuss portfolios analysis and growth strategies.

3. Explore marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value.

4. Describe the environmental forces that affect the company’s ability to serve its customers.

5. Review the SMART approach to setting Marketing Objectives

6. Review the importance of information in gaining insights about the marketplace and customers.

7. Develop an understanding of the marketing information system

8. Explain how companies analyse and use marketing information, including a brief review of the role of Market Research and the Marketing Research Process.


Next Steps Review the Material for Module 3: Segmentation, Targeting

& Positioning

Complete the required reading • Piskorski, M. 2011 Social strategies that work Harvard Business Review no. 11 pp

116 -122. There’s also an interesting interview with Piskorski via this link.• Kumar, V. 2006. Knowing what to sell, when, and to whom. Harvard Business

Review 84 (3): 131-137.• Thomas, J.S. 2004. Getting the most out of all your customers. Harvard Business

Review 82 (7/8).

Finalise team and focus for Applied Project

Watch for Announcements

Internal Classes – Practical Activity

Don’t forget to Dig Deeper!


BRICS, CIVETS & the Next Eleven!Next week we are putting theory into practice Take note of your assigned country.

o Group 1: China o Group 2: Indiao Group 3: Indonesiao Group 4: Sub Saharan Africao Group 5: Australia

Locate at least 1 report that relates to that country. More if you can. Bring along next week. We will be exploring questions such as:

o What are the opportunities?o Where should organisations focus? Which industries? Markets?o What is required for an organisation to succeed in that market?

This is an in-class activity. Just make sure you have something to work with!


Sample Resources Report| McKinsey Global Institute Manufacturing the

future: The next era of global growth and innovationo http://www.mckinsey.com/insights/mgi/research/productivity_competitiveness_and

_growth/the_future_of_manufacturing

Report| It's a MAD world: How Mobile, Agile, Digital employees and consumers are reforming Australia

o http://www.accenture.com/Microsites/futurebusinesstrends/Pages/trend-one-video.aspx

Report| The Rise of the African Consumer

o http://www.mckinsey.com/global_locations/africa/south_africa/en/rise_of_the_african_consumer

- lecture notes module 2.pdf

Documents

legitimiz curtin university

stepscurtin university

comcurtin university

onlinecurtin university

marketing planning

rethinking marketing

chief marketing officer

various marketing orientations