problems with traditional strategic marketing planning process products, brands and innovation price...
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Problems with traditional strategic marketing planning process
Products, brands and innovation Price and value Distribution channels and value chains Marketing communications The “new marketing” challenge Marketing is strategy
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1 Mission
2 Corporate Objectives
7 Marketing objectives and strategies
3 Marketing Audit
4 Market overview
5 SWOT analysis
6 Assumptions
8 Estimate expected results and identify alternative plans and mixes
9 Budget
10 First year detailed implementation programme
Phase OneGoal Setting
Phase TwoSituation Review
Phase ThreeStrategy Formulation
Phase FourResource allocationand Monitoring
Measurementand review
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4 MAIN STAGES - A. ANALYSIS – data driven/market-place/company
position within it/relative to competition B. OBJECTIVES – link to corporate strategy/ use ‘SMART’
technique C. STRATEGY – consistent with corporate strategy/general
direction which will deliver the objectives D. TACTICS – the detailed action plans underpinning the
strategy
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Requires one year to complete all stages Needs hard data from detailed and in-
depth analysis of market before company can make decisions
Undertaken by marketers/strategists without involvement of other people in organisation
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Requires one year to complete all stages Nope not necessarily
Needs hard data from detailed and in-depth analysis of market before company can make decisions Should be ongoing
Undertaken by marketers/strategists without involvement of other people in organisation insane
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Based on ideas of “Planning School” Machine assumption
produce each of the component parts as specified, assemble them according to the blueprint, and the end product (strategy) will result!
Often reduced to a numbers game of performance control that had little to do with strategy
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall
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1. Predetermination Organisation must be able to predict the
course of its environment, to control it, or simply to assume its stability Impossible to predict discontinuities (e.g.
technological breakthroughs or price increases) Requires stability during strategy making
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall
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2. Detachment It is through administrative systems that planning and policy
are made possible, because the systems capture knowledge about the task… true management by exception, and true policy directions are now possible, because management is no longer wholly immersed in the details of the task itself.
Effective strategists .. immerse themselves in daily detail while being able to abstract the strategic messages
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall
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3. Failure of formalisation• Failure of:
forecasting to predict discontinuities institutionalisation to provide innovation Hard data to substitute for soft Fixed schedules to respond to dynamic factors
Source: Mintzberg et al (1998) Strategy safari, Hemel Hempstead, Prentice hall
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Companies don’t have time to wait for plan to be developed
Rejected marketing and strategy (strategy departments closed in 1980’s)
Customers not accept being dictated to by companies and changed relationship – Customer is King
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Old marketing is about marketing programmes structured/planned around traditional model operations/tactical
New marketing is concerned with the underlying process of going to market and strategic choices
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Confronting revolution in markets Identifying renewal opportunities Developing new ways of doing
business/new business models or reinvention
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Is it real? Are markets revolutionised (since when?) The need for renewal –is it new? Is reinvention/revolution necessary or
irresponsible? Or is this a message for incompetent 2nd
raters? How did your firm get where it is? What are its problems and opportunities?
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Disruptive pressureson existing businessmodels
Value-creatingopportunities fornew business models
REVOLUTIONRadical marketand customerchange/trends
RENEWALCoping/
adaptationmechanisms
REINVENTIONDesigning newways of doing
business
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“the fate of marketing hinges on elevatingthe role of marketing executives from promotions- focused tacticians to customer-focused leaders of transformational initiatives that are strategic, cross-functional and bottom-line oriented”
Nirmalya Kumar, 2004
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“the fate of marketing hinges on elevatingthe role of marketing executives from promotions- focused tacticians to customer-focused leaders of (transformational)
initiatives that are strategic, cross-functional and bottom-line oriented”
Nirmalya Kumar, 2004
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Brand marketing Relationship marketing Value-driven strategy The search for customer value
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Branding Relationship marketing Value
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Branding is central to conventional marketing thinking – brand the product/service, company, person, country, etc.
Brands bring important benefits to customers (reduced search time) and companies (brand equity or value)
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Branding can transform markets Cool brands often win BUT – brands do not make you
unbeatable Coca-Cola Levi-Strauss Marlboro
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Most valuable brand in world 1999 had 50% market share of world soft drinks market Problem – world fell out of love with carbonated soft
drinks Tried to keep up with fragmenting soft drinks market Introduced bottled water, flavoured water, juice-based
drinks, flavoured iced tea and coffee drinks and energy drinks
Use local brands Products not always branded with Coca-cola name Lost market share to Pepsi
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UK customers assume bottled water from natural sources ie springs
Coca- Cola purified water from tap water in London
Origin came to light when a complaint was made to the British Food Standards Agency over Coke's use of the word "pure" in its Dasani marketing - implies that tap water is 'impure'.
Like Nestle, McDonald's and Cadbury Schweppes, Coke makes a
gratifying target for journalists, in that all those companies trade heavily on their brand.
Source: Guardian March 4, 2004
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Issues that go wrong with branding blind branding private brand competition brands which are liabilities counterfeit brands wrong brand trajectory, e.g., Stella Artois
“wife beater”
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Strategic brand management is the priority not creativity
Does the brand create customer value and how?
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Customer relationship provides the basis for market segmentation
Contrast the relationship the customer wants (long-term vs short-term) with the closeness wanted in the supplier relationship (close vs distant)
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Value has become the central focus of strategy (because there is no choice)
The key issue is now value innovation (in the customer’s terms)
But value does not have a single meaning e.g., operational excellence vs. customer
intimacy vs. product leadership (Treacy and Wiersema, 1995)
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Operational Excellence Providing customers with reliable products or services at
competitive prices and delivered with minimal difficulty or inconvenience
Customer intimacy Segmenting and targeting markets precisely and then tailoring
offerings to match exactly the demands of those niches Companies combine detailed customer knowledge with
operational flexibility – can respond quickly to almost any need and creates customer loyalty
Product Leadership Offering leading-edge products and services that enhance the
customer’s use or application of the product Make rivals goods obsoleteSource: Treacy, M. and Wiersema, F., 1993, Customer Intimacy and Other Value Disciplines
Harvard Business Review January- February
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Operational excellence Product leadership Customer intimacy
Strategic value pathway (value proposition)
Best total cost Best product Best total solution
Golden rule Variety kills efficiency
Cannibalising your success with breakthroughs
Solve the client’s broader problem
Core processes End-to-end product delivery
InventionCommercializationMarket exploitation
Client acquisition & developmentSolution development
Improvement levers Process redesignContinuous improvement
Product technologyR&D cycle time
Problem experienceService customization
Major improvement challenges
Shift to new asset base
Jump to new technology
Total change in solution paradigm
Choice of strategic value pathway
Source: Barnes et al (2009) Creating and Delivering your Value Proposition, Kogan Page p 46
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The danger of making assumptions “we know what our customers want” “bung in some customer service” “just make it cheaper” or, perhaps, take customer value seriously?
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Value as rational cost/benefit analysis Value migration
value migrates from one attribute feature to another
different people buy different value Customer value is complex, multi-
dimensional, unstable and idiosyncratic, but it is what matters