msca 2_dr.satish
TRANSCRIPT
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MSCA
Session 2
Dr.R.Satish Kumar
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Session Objectives
PEST Analysis
To show the value of an integrated marketing plan
To discuss the elements of a well-integrated marketing plan
To present five types of marketing plan analysis:
benchmarking, customer satisfaction research, marketing
cost analysis, sales analysis, and the marketing audit
To see the merit of anticipating and planning for the future
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PEST analysi
Political factors
Economic factors
Socio-cultural factors Technological fact
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Political/ Legal
Monopolies legislation
Environmental protection laws
Taxation policy Employment laws
Government policy
Legislation
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Economic Factors
Inflation
Employment
Disposable income Business cycles
Energy availability and cost
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Sociocultural factors
Demographics
Distribution of income
Social mobility Lifestyle changes
Consumerism
Levels of education
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Technological
New discoveries and innovations
Speed of technology transfer
Rates of obsolescence Internet
Information technology
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Definitions of Strategy and Tactics
Strategy:
An explicit statement of the firms vision of its
future, objectives, and purpose
Provides long-term direction for decisions
Includes corporate policies, resource allocations,
customer markets, and competitive environment
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Definitions of Strategy and Tactics (contd)
Tactics:
Serve as guidelines for implementing the intent of
the strategic plan
Are the basis for day-to-day operating decisions
(including the marketing mix)
Have a shorter-term planning horizon than
strategic planning
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Dimensions That Define Strategy
The product market in which the business will compete
The level of investment in a strategic business unit
The functional area strategies required for competing in
the chosen market
The underlying strategic assets and skills (core
competencies) that give the firm a sustainable
competitive advantage
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Marketing, Strategic Planning, andOrganizational Levels
Insert table 3.1
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Feedback
The Strategic Planning Process
Mission
Set Performance Objectives
Environmental and Self Analyses
Strategic Objectives & Strategy Definition
Implementation and Tactics
Execution
Evaluation and Control
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Strategic Perspectives
Strategic readiness Ability to take advantage of unexpected market opportunities by
having a long-term strategic plan and vision in place
Strategic vision Longer-term, futuristic perspective, requires patience and
determination
Strategic opportunism Focus on present, and seizing market opportunities in a dynamic,
uncertain environment
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External Environmental Analysis
Customers Who are most desirable? Should the market be segmented?
What are their characteristics, preferences, and behaviors?
Competitor Assessment Who are our present and potential competitors?
How well matched are their strategies and strengths to
the markets key success factors?
What are their weaknesses?
How much of a threat are they?
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Assaels Four types of Buying
Behaviour
1
Habitual buying
behaviour
(e.g. instant coffee)
3
Dissonance
reducing behaviour
(e.g. furniture)
2
Variety seeking
Behaviour
(e.g. chocolate bars,
And breakfast cereal)
4
Complex
buying
behaviour
(e.g. computers)
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A sequential model of buying
behaviour
The search for
Information
Evaluationof the
alternative
Thepurchase
decision
Recognitionof a
problem
Postpurchase
behaviour
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Obviously
Individual customers & organisational
customers buy goods & services
They are stimulated & prompted to buy
Marketers
are interested in their decision behaviour try to stimulate & influence this behaviour to
get better responses from the customer
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Buyer Behaviour Model
buyers
blackbox
buyers
blackbox
Needs - wants, stimuli
Product, price, place,
promotion etc
Environmental (PEST)
factors
Buyer
responses
Choices of
product
brand
dealer
timingprice
Buy more, less,
stay loyal etc
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Information searchInformation search
How we buy (a rational view)
Need recognition,
problem-awareness
Need recognition,
problem-awareness
Evaluate alternativesEvaluate alternatives
Information searchInformation search
BuyBuy
Post-purchase
evaluation
Post-purchase
evaluation
Shape desire, wantShape desire, want
Evaluate alternatives (against evoked set)Evaluate alternatives (against evoked set)
Window-shop simmering interestsWindow-shop simmering interests
BuyBuy
Post-purchase
evaluation
Post-purchase
evaluation
functional
emotional ?
current vs desired situation
relative importance
need inhibitors
are they aware of need ?
can we mediate need inhibitors?
can we stimulate awareness &
action
internal search (memory)
external search (personal
sources, commercial sources
third party reports (e.g. Which) personal observation/testing
Evokedset
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Five Roles in the buying decision processafter Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson
Each role can be acted by parent, children or other
members of the buying centre.
Each actor may display
multiple roles when buyinga toy purchase
a house
a washing machine
an armoured vehicle
a sound system
computer software
Each actor may display
multiple roles when buyinga toy purchase
a house
a washing machine
an armoured vehicle
a sound system
computer software
Infants, teenagers, working
women, husbands?
Infants, teenagers, working
women, husbands?
Influencing Strategies
1. expert influencing
2. subtle (incl. use of
rewards
3. emotional
4. combination
Influencing Strategies
1. expert influencing
2. subtle (incl. use of
rewards
3. emotional
4. combination
Who is initiator
influencer
decider
buyer user
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What is the Relative Influence of HusbandsWhat is the Relative Influence of Husbands
vs. Wives in Decision Making?vs. Wives in Decision Making?
How is this changing?
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Influences on Consumer Behaviour
Cultural broadest & deepest influence
cultures & subculture
social classesSocial
Family
Social roles and status (multiple)
Reference groups
Membership - primary vs. secondary Aspirational vs. dissociative
PersonalPersonal AgeAge
Life cycle stageLife cycle stage
OccupationOccupation
Economic circumstancesEconomic circumstances LifestyleLifestyle
PersonalityPersonality
SelfSelf--conceptconcept
PsychologicalPsychological MotivationMotivation PerceptionPerception
LearningLearning
BeliefsBeliefs
AttitudesAttitudes
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Consumer thinks, feels, is involved & acts
Behaviour,
action
GoalsNeeds,
desires,
wants
drive
construes
achieve
satisfy
A simple need-satisfaction Motivation ModelSocial & psychological construction after Abraham Maslow
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Evaluate Harley-Davidson Consumer Behaviour
Hells Angels ? Burly,leathers, bikers, rebels
New breed: older
more affluent
better educated
rubbies (rich urbans)
Showrooms + salesapproaches
Customer types from HD
research
adventure-loving traditionalists
sensitive pragmatists
stylish status seekers
laid-back campers
classy capitalists
cool-headed loners
cocky misfits
all loved their Harleys because
independence, freedom, power
more than a machine part ofself-expression
classic look, throaty sound
American legend
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Scope of B2B Market
Agriculture Mining
Construction
Manufacturing
Transport Wholesale & retail
Finance, insurance,property
Government
Non-profit & voluntaryorganisations
different needs & buyingdifferent needs & buyingpatterns e.g. medical frompatterns e.g. medical fromrubber glovesrubber gloves vsvs body scannerbody scanner
buy raw materials/inputs tobuy raw materials/inputs tomake other goods/services e.g.make other goods/services e.g.
sugar & flavouring as inputs forsugar & flavouring as inputs forPepsiPepsi
sell on to other business userssell on to other business usersor consumers e.g. Argosor consumers e.g. Argos
use purchases to conductuse purchases to conductbusiness e.g. stationery, legalbusiness e.g. stationery, legalservices, IT/systemsservices, IT/systemsconsultancy, marketing servicesconsultancy, marketing services
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Purchasing decisions in B2B MarketsB
uying is less frequent.
new task buy buying decision not been
made before
modified rebuy
bought before but this timechange spec. or new supplier
straight rebuy routine purchase made many
times before
One-off, a batch or steadyflow (JIT)
Long, complex negotiation
Service & consistency ofquality & supply are vital
Buying centreBuying centre Buying often a group process.Buying often a group process.
Who is in the buying group?Who is in the buying group?
UsersUsers
use the product e.g. trucksuse the product e.g. trucks
Influencers (direct or indirect)Influencers (direct or indirect) Tech knowTech know--how, budget etchow, budget etc
DecidersDeciders
Make the actual decision:Make the actual decision:purchasing officer, manager,purchasing officer, manager,product/service userproduct/service user
GatekeepersGatekeepers
Control flow of informationControl flow of information
BuyersBuyers
Select suppliers & negotiateSelect suppliers & negotiatetermsterms
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Organisational buying
Need recognition,
problem-awareness
Need recognition,
problem-awareness
Evaluate, negotiate,
select
Evaluate, negotiate,
select
Search for sources,
research & approve
Search for sources,
research & approve
Finalise contract &
order routines
Finalise contract &
order routines
Performance feedback &
evaluation
Performance feedback &
evaluation
Determine specification &quantity
Determine specification &quantity
Receive proposals & analyseReceive proposals & analyse
Integrate partner
systems
Integrate partner
systems
competition
legal steps
financing
JIT
logisticsconflict
outsourcing
quantity
continuity
quality
price
financing
life cycle costs
prody
maintenance
residual values
risks
politics
personal
Choice criteria
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Eight stages model of organization
Buying Process
Problem recognition
Determine product dimensions and quantity
Precise description of product characteristics
Search and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and supplier selection
Selection of an order routine
Performance feedback and evaluation
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New Task-Firm has no experience in purchasing the
product; requires
extensive problem solving
Strong predispositions toward suppliers do
not exist
Two distinct buying decision approachesare employed
Judgmental new task: when unfamiliar
with parts, technology, etc.Strategic new task: when decision is
extremely important to the firm
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Straight rebuy
A recurring requirement; buyers
have substantial experience with
the purchase
Information needs are low; little need to
Evaluate alternative solutions
Routinized response behavior; selection of
Vendor from a list of acceptable vendors
Choice criteria are well developed
Strong predisposition to certain suppliers
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Modified rebuy
Buyer perceives benefits from a
reevaluation of alternatives LIMITED PROBLEM
SOLVING
THERE ARETWOTYPES
SIMPLE
COMPLEXComplex: involves a large set of choice alternatives
IN VS OUT SUPPLIER
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Conceptual Framework
Payer
UserBuyer UNDERSTANDINGCUSTOMER
BEHAVIOR
Model of Relationship-Based
Buying
Relationship Buying and Selling
in Business Markets
Art of Nurturing Suppliers
Supplier-Customer Partnering
Customer Relationship
Management on the Web
Relationship-Based Buying
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A Model of Relationship-Based Buying
Relationship-
Based Buying
Trust
Commitment
Search costs Risk reduction
Switching costs
Value-added benefits
Cost-Benefit Factors
Early socialization
Reciprocity
Keiretsu
Friendships
Socio-Cultural Factors
Supplier loyalty
Increased buying
Willingness to pay more
Proactive word-of-mouth
Goodwill (customer equity)
Antecedents (Motivators) Relationships Outcomes
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Cost Benefit Factors
The cost-benefit factors that drive decisions
about relationship-based buying include:
The search costs
The potential for risk reduction
The switching costs
The value-added benefits of the relationship
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Combinations ofPerceived Risk and
Switching Costs
High Low
Switching Costs
High Constrained in relationship Relational buying
Low Transactional exchange Vulnerable relationship
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Value-Added Benefits
Differentiation
These added benefits serve as a motivation for
customers to engage in relationship-based buying
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Sociocultural Factors
The sociocultural factors that influence the
formation of a customer relationship include:
Socialization
Reciprocity
Networks
Friendships
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The Supplier-Customer Relationship
Trust
A willingness to rely on the ability, integrity, and
motivation of the other party to act to serve my needs and
interests as agreed upon implicitly or explicitly Commitment
An enduring desire to continue the relationship and to
work to ensure its continuance
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Outcomes of Relationship-Based Buying
Supplier loyalty
Increased buying
Willingness to pay more Proactive word-of-mouth
Goodwill (customer equity)
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Process of Relationship Buying in Business
Markets
IMP Model
A model that describes the processes or steps in
the development of relationships in a series of
interactions
Industrial Marketing and Purchasing (IMP) group
established that long-term patronage is quite
common in business buying
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Characteristics of Relational Buying
The IMP model has identified three key factors
that characterize all relational buying by
business customers:
Transaction-specific investments/adaptations
Power dependence
Role formalness
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Steps in Relationship Development
The IMP group identified the steps thatcompanies go through in building arelationship
Needs complementarity Interactions
Outcomes and satisfaction
Investments
Commitment
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Copyright 1999 by Thomas
Southwestern. All rightsreserved.
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Reasons for Relationship Development in
Business Buying
Businesses may need a long-term exchange
contract to assure long-term supply
Business customers also want to reduce the
cost of buying transactions
Buyers and sellers may also have quality and
cost goals that require collaboration
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Determinants of Trust and Commitment in
Business Relationships
Determinants for the Customer Determinants for the Supplier
Switching costs Supplier-specific investments
Partner-specific investments Customer avoidance of opportunistic behavior
Mutually shared goals Single-source policy
Communication and product support Data sharing and nurturance
Supplier avoidance of opportunistic behavior
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Relationship Based Buying: The Art of
Nurturing Suppliers
The art of nurturing suppliers is clearly needed
when the existing suppliers cannot meet the
required quality, quantity, price, service, and
delivery objectives
Rather than select from the slate of existing
suppliers, the purchaser task is then to create
suppliers
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Reasons For Nurturing Suppliers
Meeting future needs
Government policy compliance
Good citizenship Promoting environmental policies
Quality assurance
Cost reduction
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d l d h
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Vendor Relations in Japan and the
United States
Traditional U.S. Model Japanese Partnering Model
Department or firm focus, optimize firm efficiency. Business system focus (includes supplier/customereconomics), optimize value chain efficiency.
Emphasis on unit cost/price (minimum quality
standards).
Emphasis on full value chain (systems) costs as well
as on improving quality.
Manufacturer defines needs; specifications of
activities; sequential planning.
Joint efforts to define needs and problem solve;
highly integrated operations and planning.
Communication is sporadic, problem driven; little
sharing of information or assistance.
Communication is frequent and planned; continuous
sharing of information and assistance.
General investments; uniform approach. Customized investments to meet unique customer or
supplier needs (e.g., in information systems, people,
manufacturing equipment).
Precise contracts that split economic benefits
beforehand.
Flexible contracts that adjust to spilt economic gains
fully as market conditions change.
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Factors for the Growth of Supplier
Partnering
Competitive intensity
Pressure on market prices
Concern with quality Enabling technology
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Customer Relationship Management and the
Three Customer Roles
CONCEPT BUYERPAYERUSER
General concept of
relationship marketing
Marketer refocuses on
the user after the sale.
A model of relationship-
based buying
Motivation
Search costs Search entails time and
effort of the buyer role.
Risk reduction P
erformance risk touser is reduced.
Switching costs Effort to learn to deal
with the new supplier.
Retooling costs. Usage learning of
product from new
supplier.
Value-added benefits Better financing plan
may benefit the
payer.
Add-on benefits for
the user.
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Customer Relationship Management and the
Three Customer Roles (contd)
CONCEPT BUYERPAYERUSER
Early socialization Buyer socialization. User socialization.
Reciprocity Source availability
assured.
Payment through
reciprocal exchange
assured.
Networks Easier to do business. Firms in network are
accommodating in
financial exigencies.
Friendships Friendly vendors give
friendly service.
Suppliers in network
more trustworthy with
product/service
quality.
Friendly supplier
assures quality
product/service.
Reverse marketing Lower costs over the
long run.
Better performance
value.
Supplier partnering Buying function
becomes more
efficient.
Total cost reduction. Better performance
value; data sharing;
joint planning helpful
to user.
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The Marketing Audit
A marketing auditmarketing audit is a
systematic,
critical,
impartial
review and appraisal
of the basic goals and policies of the marketing
function, and of the organization, methods,procedures, and personnel employed to
implement the policies and achieve the goals.
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The Marketing Audit Process (1)
1.
Determining
Who Does the
Audit
2.
Determining
When and
How Often
Audit IsConducted
3.
Determining
the Areas to
Be Audited4.
Developing
Audit Forms
5.
Implementing
the Audit
6.
Presenting the
Results to
Management
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The Marketing Audit Process (2)
1. The audit is conducted by company specialists, company divisionor department managers, or outside specialists.
2. It may be done at the end of a calendar year, the of the annual
reporting year, or when doing a physical inventory.3. A horizontal audithorizontal audit studies the overall performance of a firm,
emphasizing the interrelationship of variables. A vertical auditvertical audit isan in-depth analysis of one aspect of a firms marketing strategy.
4. Audit forms list the topics to be examined and the exactinformation required to evaluate each topic.
5. Implementation decisions include: the timing and duration,employee awareness, when and how audit is performed, andhow the audit report will be prepared.
6. Findings and recommendations are given to management.
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DEFINING THE
MARKETING AUDIT
Is a comprehensive ,systematic, independent,
and periodic examination of a companys or
business units marketing environment,
objectives, strategies & activities.
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MARKETING AUDIT
PURPOSE
View to assessing problems areas orweaknesses, opportunities &
recommending a strategic plan for action
to improve the companys marketing
performance
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4 CHARACTERISTICS OF MARKETING
AUDIT
1. COMPREHENSIVE - covers ALL aspects of thebusiness. So not just trouble areas.
Unlike the Functional audit which would only coverthe sales force or pricing etc.
More effective in locating the real source of the
problem.
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4 CHARACTERISTICS OF MARKETING
AUDIT
2. SYSTEMATIC the marketing audit is an
orderly examination of macro marketing
environment and micro marketing
environments. Marketing objectives &
strategies, marketing systems and specific
activities.
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Cont.
Indicates the most need improvements these
are incorporated into a corrective action plan
include both short and long term steps for
improving all round effectiveness.
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4 CHARACTERISTICS OF MARKETING
AUDIT
3. INDEPENDENT - ,FREE FROM CONTROL BYOTHERS. The best AUDITS come from
outside consultants objective , board
experience in various industries or specific or
some industry knowledge. Plus the time and
attention to give to the audit.
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cont
Audits come in 6 types
1. Self audit
2. Audit from across3. Audit from above
4. Company auditing office
5. Company task force audit6. Outsider audit
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4 CHARACTERISTICS OF MARKETING
AUDIT
4. PERIODIC - Typically audit are after, a down turn in sales orprofits, sales force morale has fallen, and other problems
occur
A periodic marketing audit can benefit companies in good
health as bad corporate health
Generally companies wait till when they are in crisis to conduct
an audit
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Marketing audit
Starts with:-
1. Meetings between the companys officers and theauditors to work out the audits
Objectives
Coverage
Depth
Data
Report format Time frame
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6 COMPONENTS OF MARKETING AUDIT
1. Marketing environment audit
2. Marketing strategy audit
3. Marketing organisation audit4. Marketing systems audit
5. Marketing productivity audit
6. Marketing functions audits
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PROGRAMME FORMULATION &
IMPLEMENTATION
The resulting profile exposes weakness and
strengths highlighting problems or
opportunities, with a view to the company
becoming an outstanding player in the
marketplace.
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FEEDBACK & CONTROL
As strategies are implemented a company need
to detail and record results then monitor new
developments or new opportunities
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Macro environment
Political/legal
Economic/competitive
Socio/cultural Technological
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Environmental types - The Miles
Framework
1. What degree of complexity exists in the
environment?
2. How standardised or routine are the
organisations interactions with its
environment?
3. What interconnections exist between the
various dimensions of the environment?
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Types ofEnvironment
Simple/static
Dynamic
Complex
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Environmental Analysis
Audit the environment
Assess its nature
E
xamine specific factors Identify own position
Assess how environment will affect
organisation Decide future strategic position
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Types of environmental information
Market Tidings
structure, industry
competitors, customers
Acquisition leads leads for mergers, JVs
and acquisitions
Technical tidings
licenses, patents,processes etc.
Broad issues
general conditions and
trends
Other tidings suppliers, resources
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Strategic Groups
Organisations within the same industry that
are pursuing equivalent strategies.
Organisations targeting groups of consumers
with similar products.
Provides basis for competitor analysis by
focusing on most relevant competitors.
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Attributes identifying Strategic Groups
Size
Assets and skills
Scope of operations Breadth of product range
Choice of distribution channel
Brand image Relative product quality
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Strategic groups in the airline industry
Regional Global
Easyjet
Ryanair
etc.
Brittania
Air 2000
Monarch
KLM
British Airways
Air France
Price
Scope
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Competitor analysis
Response to challenge
Vulnerable areas
Likely directional shifts
What provokes them
Goals
Motivation
Current strategy
& performance
Assumptions
How realistic?
Strengths and
weaknesses
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Thoughts of Chairman Porter
Competition in an industry is rooted in its
underlying economic and competitive forces
that go well beyond the established
competence in a particular industry.
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Vulnerability
Financial factors
Market factors
P
roduct factors Organisational factors
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The Innovation Audit
Means of measuring organisations capabilities
& skills in the area of innovation
Involves coming to terms with the
organisations past & projected innovation
performance
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Conclusion
DEFINING THE MARKETING AUDIT
PURPOSE OF THE MARKETING AUDIT
4 CHARACTERISTICS OF THE AUDIT
GOAL FORMULATION
STRATEGIC FORMULATION
PROGRAMME FORMULATION & IMPLEMENTATION
FEEDBACK & CONTROL
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Conclusion
This session shows the value of an integrated marketing plan.
It discusses the elements of a well-integrated marketing plan.
It presents five types of marketing plan analysis:benchmarking, customer satisfaction research, marketing cost
analysis, sales analysis, and the marketing audit.
It shows the merit of anticipating and planning for the future.