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Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission 1

Strategy & Marketing

Dr Paul FifieldVisiting Professor

2Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission

Paul Fifield

• Paul advises companies on Market Strategy and has written widely on the subject.

• He has 25 years’ experience in strategic consulting with previous clients in: Agri Chemicals, Aviation, Banking, Brewing, Business Services, Computing and Software, Construction, Distribution, Domestic Appliances, Economic Development, Education, Housing, Hotels and Catering, Insurance, Leisure & Tourism, Online gaming, Public Sector, Publishing, Retailing, Telecommunications, Utilities, Web services and others.

• He holds a degree in Business Studies as well as an MBA and a PhD in Marketing Strategy, both from Cranfield University.

• Paul teaches on a number of MBA programmes and is currently Visiting Professor at the University of Southampton and the College des Ingénieurs in Paris. He is President of the CIM Southern Region and a Fellow of the Royal Society for the encouragement of Arts, Manufacturers and Commerce (FRSA).

• Paul co-founded The GreenField Organisation LLP in 2008


Agenda

DAY 1 STRATEGY

1.1 What is Strategy?

1.2 The critical importance of Customers

1.3 What business?

1.4 What is the Objective?

1.5 What is the Strategy?

1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


The Approach


2 days of THINKING


Dealing with strategy & marketing

A ‘Puzzle’ ..has a correct ‘Answer’

A ‘Problem’ ..has more than one ‘Solution’


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Strategy Terminology

• The OBJECTIVE(S)– The goal or aim to which ALL activities in the organisation are directed

– An objective always begins with the word ‘TO’

– Objectives do NOT change in the short term

• The STRATEGY– The ONE route which is both NECESSARY and SUFFICIENT to ACHIEVE

the objective

– A strategy always begins with the word ‘BY’

– Strategy is not changed in the short term

• The TACTICS– The short term actions required to implement the strategy

– Manoeuvres on the field of battle

– Tactics do change in the short term


Filling the ‘strategy gap’

0 +1 +2 +3 +4 +5 +6 +7

The Gap

€


STRATEGY FORMULATION

ineffective effective

effective Die quickly Thrive

ineffective Die slowly Survive

STR

ATEG

YIM

PLEM

ENTA

TIO

N

Strategy and Implementation


Planning

1. Strategic:

• Three to Five years depending on the nature of the business.

2. Tactical:

• One year to 18 months.

3. Programmes:

• Rolling quarterly with quarterly and annual milestones and reporting.


First, agree the Financial Hurdles

Our financial hurdles are:

1. ……………………………

2. ……………………………

3. ……………………………

4. ……………………………

Every organisation has one or more ‘financial imperatives’ that it must satisfy to remain in business. These are not the same as objectives. These ‘hurdles’ just need to be seen, measured and jumped. They should NOT guide the destiny of the organisation


Then, set the business objective

1. What is our Business Objective?

What do we want/need to achieve in this business? How is it measured? By when? How will we know when we have achieved it? If we achieve it, will it satisfy the Financial Hurdles?


Objectives

What is our Business Objective?

What do we want/need to achieve in this business?

How is it measured?

By when?

How will we know when we have achieved it?

OBJECTIVE:

•Begins with “To…….”

•One is better than many

•Must be ‘SMART’

•Different from Financial Targets*

*“Too many organisations confuse ‘purpose’ with ‘measures of success” RSA


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Must be both ‘NECESSARY’ and ‘SUFFICIENT’ to achieve the objective

Business Strategies

What is our Business Strategy?

How do we achieve the agreed objective?

What are the alternatives?

Can it be done?

Can we do it?

STRATEGY:

•Begins with “By…….”

•Not short term

•Not ‘straws in the wind’

•Not changed every Friday

•Not another word for important tactics >


The Generic Strategies

Stuck inThe Middle

Cost Leadership Differentiation

Focus

[Source: Porter 1983]


Red Ocean – Blue Ocean (Kim & Mauborgne)


Strategy is rarely linear

Time1 2 3 4 5 6 7 8 ……………..……….. x

AToday

B Vision/Objective

Market Strategy

Sales/Profit/Market share/other objective TheChanging Market

Environment


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


22

Henry Ford

“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.”

Henry Ford 1863-1947 American industrialist and pioneer of the

assembly-line production method,


Levitt on Customers

“Customers just need to get things done. When people find themselves needing to get a job done, they essentially hire products to do that job for them”

Theodore Levitt (1925-2006), American economist and professor at Harvard Business School. Editor of the Harvard Business Review


We know that customers are Selfish

WIIfm• What’s

• In• It• For

•Me Me Me Me Me Me Me?


Consumer Behaviour models

The Process

Cultural

Cultural beliefs& values

Lifestyles, etc

Sociological

Social class structureFamily/group influence

Life-CycleOpinion leadership, etc

Economic

PriceDelivery

Payment termsSales, services, etc

Individual Psychological FactorsLevel of knowledge & awareness

Personal (emotional) characteristicsMotivations, Attitudes, etc

Buying Proposition

Product or Service

[Chisnall]


DECISION-MAKER INFLUENCER

USER BUYER

GATE-KEEPER SPECIFIER FINANCIER

CUSTOMER

The B2B Decision Making Unit (DMU)


Three Aspects of Customer Value

YourOffer

Economic

Functional

Emotional

Constant Environmental Change


From Commodities to Experiences

The Commodity(harvested & traded)

The Good(ground, packaged,sold)

The Service(brewed in a regular cafe)

The Experience(enjoyed in a 5 star restaurant)

1–2¢

5–25¢

50¢

$2-5

Customer Perceived Value increases….


29

Laura Ashley

“We don't want to push our ideas on to customers, we simply want to make what they want”

Laura Ashley CBE, (1925 – 1985), Welsh designer


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


What business?....

“Product led” Company “Market led”Big Boys’ ToysMotor Cycles

WatchesElectric MotorsRailroads Electronics Cars Watches Beer CosmeticsPubsCoffee ShopsLeather/LuggageEncyclopedias

Harley DavidsonSwatch

B&DAmtrak

SonyJaguar

Rolex A Busch

RevlonBass Taverns

StarbucksLouis Vuitton

Britannica

1. Are we in?2. Should we be in?


HD and their business definition

x


What business?

“Product led” Company “Market led”

Our Product? Our Company Our Business

Big Boys’ ToysFashion AccessoriesDIYTransportEntertainment StatusJewelryFriendship“Hope”EntertainmentThe Third PlaceThe Art of TravelingParental guilt

Motor CyclesWatchesElectric MotorsRailroads Electronics Cars Watches Beer CosmeticsPubsCoffee ShopsLeather/LuggageEncyclopedias

Harley DavidsonSwatch

B&DAmtrak

SonyJaguar

Rolex A Busch

RevlonBass Taverns

StarbucksLouis Vuitton

Britannica


What business are we in?

Our business is key to our plans, it:

1 Is defined by the customer

2 Focuses the organisation on needs satisfied

3 Establishes directions for growth

4 Establishes boundaries for effort

5 Determines real competitors

6 Establishes the markets to be served

- Would our customers understand our business?

- What needs should we be satisfying?

- Where should we be investing for the future?

- What should we do more of/stop doing?

- Who are we really competing with?

- What is our core target market?


Case Task

1. What business do you think your company should be in?

2. Who are your target Customers?


What businesses for Sony & Apple?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Case Task

• What objective or vision will you set for your company?– Remember these must be ‘SMART’


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Case Task

• What strategy will you use for your company to achieve the objective or vision you have set?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Nobody can foretell the future

The future is where you must invest. Now!

There are NO: • Answers• Solutions• Guarantees

The only Certainty IS that this is the world in which you will live and work.


Some Global Strategic Issues

Some issues for consideration:-1. The changing nature of society: technological advance;

demographic shifts; environmental issues; ethnic and religious issues

2. Political instability: middle east; Africa; Russia; EU3. The changing climate: real or imagined; who bears the brunt;

rate of change; influencing factors4. The changing nature of work: new work patterns; decreasing job

security; sectoral shifts; ‘stakeholder’ demands5. The changing face of organisations: increasing adaptability;

agility; more participative style; more openness6. The changing world economy: global recession; changing

balance of power


Dependency Ratios

Sources, Business Week & ONS

UK Pensioners : Working Age2008, 1:3.232033, 1:2.78


Political Instability


UK Average Temperature Estimates


Worldwide Rising Sea Levels?


Europe Rising Sea Levels?


A fresh look at the current “Recession”

© 2013


Some research areas covered

Dynamic capability

Adaptive advantage

Horizontal organisations

Customer value

Buyer behaviour modelling

Organisational buying behaviour

Value-based marketing

Change management

Value innovation (‘blue ocean’)

Discontinuity

Action learning

Chaos theory

Behavioural economics

Stakeholder management

Market research

Futurology

Management accountancy

Organisation development

Theory of growth

Systems theory

Classical economics

Swarm theory

Behavioural finance

Theory of the firm

Business development

Customer experience management

Organisational culture

Knowledge management

Personal Values

Strategic & scenario planning

Structured creativity Complexity theory

Economic cycle theory

Benchmarking

Corporate strategy (incl. business-model innovation competitive advantage, emergent strategy, decision-making etc.)

Econometrics

Unreason

Brand equity

Strategic market theory

Leadership


NICE (Mervyn King) has become NASTY

• Non

• Inflationary

• Continuous

• Expansion

• Nightmare of

• Austere and

• STagflationary

• Years

Copyright 2011


Is it just another Recession?

Discontinuity:

“A break or gap in a process that would normally be continuous”


Despite the protestations of the media…….


Kondratiev waves


Kondratiev and Stock Market Cycles since 1789


From Datastream – the 6th wave = ???


End of wave 5 - Timeline2

00

7

20

08

20

09

20

10

20

11

Aug 2007Sachsen LB rescued after E17bn lifeline

Feb 2007HSBC writes down sub-prime bonds by $10nb

Sep 2007Northern Rock receives liquidity support from BoE

Dec 2007US enters recession

Early 2008Scale of sub-prime problem clear when Fannie Mae & Freddie Mac have problems

Sep 2008Collapse of Lehman Bros (Considered the ‘precipice’ of crisis

Late 2008US & global Government Interventions

Early 2009OECD composite leading indicators begin to turn up

Mid 2009First indications from OECD that situation is stabilising

May 2010Greek Bailout

Late 2010Bailout of Irish Banks


And the dark side…..


We are in the economic ‘Winter’


Waves appear to be shortening


Case Task

• What do you believe will drive the 6th Wave?


Implications – Customer Behaviour?


Customer Value has MIGRATED….

Much has been spoken about:• The Economic Implications of Social &

Political concerns• End of consumerism• Local/Provenance/Authenticity• The Environment – Really?• Return of manufacturing• From Global to Local?• From Quantity to Quality?• Make-do-and-mend/Repair-ability• B-I Obsolescence versus Sustain-

ability?• Slow Tech & ‘robustness’


Brand shift through the discontinuity

• Down:• “Exclusive” -60%

• “Arrogant” -41%

• “Sensuous” -30%

• “Daring” -20%

• Up:• “Kindness & Empathy” +391%

• “Friendly” +148%

• “High Quality” +124%

• “Socially Responsible” +63%

Source: Gerzma & D’Antonio “Spend Shift” 2010


Implications – Organisation?


Don’t see it, too busy.. (© Banksy)


Ignore it (© Banksy)


Wonder what to do about it (© Banksy)


Charles Darwin

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”

Charles Robert Darwin (1809–1882) He wrote: On the Origin of Species,

The Descent of Man, and Selection in Relation to Sex,

The Expression of the Emotions in Man and Animals.

http://en.wikipedia.org/wiki/File:Charles_Darwin_seated.jpg


Jack Welch

“When the rate of change inside the company is exceeded by the rate of change outside the company, the end is near”

John Francis "Jack" Welch, Jr. (1935-) is an American chemical engineer, business executive, and author. He was Chairman and CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4000% and was the most valuable company in the world for a time. In 2006 Welch's net worth was estimated at $720 million.


Implications – Strategy?


72

John Howard

"You can't fatten the pig on market day."

1939- ) Australian politician and the 25th Prime Minister of Australia.

http://en.wikipedia.org/wiki/Image:Howard2003.JPG


Edward Abby

“Growth for the sake of growth is the ideology of the cancer cell”

Edward Paul Abbey (1927– 1989) was an American author and essayist noted for his advocacy of environmental issues, criticism

of public land policies, and anarchist political views.


Henry Mintzberg

“Setting oneself on a predetermined course in unknown waters is the perfect way to sail straight into an iceberg.”

Professor Henry Mintzberg, OC, OQ, FRSC (born in Montreal, 1939) is an internationally renowned academic and author on business and management.


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


Case Task

• What is your target market for the future– Where will you be investing the future of your organisation?


Strategy & MarketingDAY 2


Agenda

DAY 1 STRATEGY



1.3 What business?



DAY 2 MARKETING

2.1 Product

2.2 Price

2.3 Place

2.4 Promotion


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion


What is ‘Marketing’?

• "Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others“ Philip Kotler

• “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges to satisfy individual and organizational objectives” AMA

• The act or process of buying and selling in a market. The commercial

functions involved in transferring goods from producer to consumer. Answers.com

• “The point of Marketing is to make Selling unnecessary” Drucker

• “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”

CIM(UK)


Marketing

“Marketing’s contribution to business success in manufacturing, provision of services, distribution or retailing activities lies in its commitment to detailed analysis of future opportunities to meet customer needs and a wholly professional approach to selling to well-defined market segments, those products and services that deliver the sought after benefits.

“Achieving revenue budgets and sales forecasts are a function of how good our intelligence services are, how well suited our strategies are and how well we are led”

Malcolm MacDonald


Fifield’s Preface to REAL Marketing

• What is the point of Marketing?

• How do you do that?

• To be able to charge the highest possible price for your product or service

• Seek out and add By:

1. Being easy to choose

2. Treat customers as individuals

3. Giving them a REAL reason to come

4. Ensure the organisation delivers

The better you do these, in a constantly changing environment, the higher your prices will go

“Differentiation”

“Segmentation”

“Branding”

“Alignment”

Customer Value


Market Share


Sales Share


Profit Share


VisionLong TermFinancialObjective Mission

Leadership

ShareholderValue

OtherStakeholders’requirements

Personal values of key implementers

Customer and market orientation

ExternalFocus

Strengths and Weaknesses

Resource/Performance Audit

Competitiveopportunities

Competitoranalysis

EnvironmentAudit

OpportunitiesAnd Threats

Structuralopportunities

Industryanalysis

The BusinessObjective

The BusinessStrategy

The MarketingObjective

CompetitiveStrategy

SustainableCompetitiveAdvantage

The Customer

The Marketing Plans, Programmes & Implementation

ProductPolicy

PricePolicy

Place(distribution)

PolicyPromotion

Policy

FinanceObjective/Strategy

H. Resource Objective/Strategy

OperationsObjective/Strategy

ITObjective/Strategy

SCORPIO ©

(Mar

ketin

g St

r ate

g y)

(Feedback & Control)

(Feedback & Control)

Customer

Retention

The

Customer

OrganisationStructure &

Culture

Industryor

Market

Offerings

Positioning& Branding

Segmentation& Targeting

© Fifield 2007


Product Planning

Branding

Pricing

Advertising

The Marketing mix (Neil Borden)

Distribution channels

Personal Selling

Promotions

Packaging

Display

Servicing Physical Handling

Fact finding &

Analysis

THETARGETMARKET


Product

Place

Price

Promotion

The Marketing mix (4P’s)

THETARGETMARKET


Product

Place

Price

Promotion


People

Process PhysicalEvidence

THETARGETMARKET


Product

Place

Price

Promotion


People

Process PhysicalEvidence

Personal Interests

Privacy

PublicCommentary

Personal(Social

Networks)

THETARGETMARKET


CustomerNeeds & Wants

Convenience

Cost (to the user)

Communication

The Marketing mix (4C’s)

THETARGETMARKET


Product

Place

Price

Promotion


Position

THETARGETMARKET


Product

Place

Price

Promotion

The Marketing mix (make-your-ownP’s)

P

P P

THETARGETMARKET


ProductQuality SizesFeatures ServicesOptions ReturnsStyle WarrantiesBrand PackagingDifferentiation

THETARGETMARKETPlace

Channels CoverageLocations InventoryTransport PartnersRoutes-to-marketSupply ChainIntermediaries

PriceList price DiscountsAllowances RatesCredit ChangesCommunications Opportunity CostPayment period

PromotionMessage MediaAbove/Below-the-lineAdvertising DirectPublicity PRPersonal Selling WOMPromotion Internet



Case Task

• What is your target market for the future– Where will you be investing the future of your organisation?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion



PlaceChannels CoverageLocations InventoryTransport PartnersRoutes-to-marketSupply ChainIntermediaries




THETARGETMARKET


Products and/or markets?

•Product features

•Product sales

•Technical excellence

•Product service

•Rational solutions

•Product profitability

•Customer needs/wants

•Customer satisfactions

•Customer expectations

•Customer service•Emotional

solutions•Customer and/or

segment profitability

‘PUSH’ ‘PULL’ Strategy Strategy

The

Great

Debate:


Levitt on the product

“A product is what a product does”

Theodore Levitt (1925-2006), American economist and professor at Harvard Business School. Editor of the Harvard Business Review


What-it-is (features) or What-it-does? (benefits)

Are you selling a 6mm drill Or a 6mm hole?

A Telephone? Or Identity?


– A service is..

Government

LegalEducationalHealthMilitaryEmploymentCreditCommunicationsTransportationInformationservices, etc

Private Non-Profit

Art & Music GroupsLeisure FacilitiesCharitiesChurchesFoundationsColleges, etc

Business &Professional

AirlinesBankingInsuranceHotelsManagementconsultantsSolicitorsArchitectsAdvertising AgenciesMarket Research, etc


The Service Product

“A service is any activity or benefit that one party can offerto another that is essentially intangible and does not resultin the ownership of anything. Its production may or maynot be tied to a physical product” [Kotler]

Characteristics of services:

1 Intangibility2 Inseparability3 Heterogeneity4 Perishability5 Ownership


The Augmented Product Concept

TangibleBenefits or‘Knowhow’

Additional Benefits

Emotional Benefits

eg. functions

eg. design

eg. Service, trust, prestige

The Support Services component

The Core component

The Packaging component


The Product/Service Life Cycle

Introduction Growth Maturity Decline

Supply;• Can’t make

enough• Little formal

infrastructure• Higher costs

Demand:• Innovators• Early adopters• Higher Price• Higher Risk• Little awareness• ‘New’

• Growing availability

• Growing Competition

Demand:• Growing

awareness • Reducing Prices • Early majority• Emerging

standard design

• No new buyers• Repeat purchase• Can get boring• Best marketing?• Customer focus• Market Segmentation

(S) critical• Consolidation• Fewer BIG players• More NICHE players• Can last a looong time

• Failing demand• Falling profits or

debts• Fewer

customers• Death, or• Rejuvenation• Possible re-

positioning

“Consolidation”

The ‘Chasm’

Push to Pull!


Case Task

• What Product/Service does your strategy require?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion







THETARGETMARKET


An important word about Price

In any developed market, 90% of customers would prefer to buy on non-price reasons and pay some level of premium price for perceived additional value

10% will always buy the cheapest – because they don’t care about the category

In an undeveloped market, a proportion of customers will prefer to pay premium price for additional value

Still, 10% will always buy the cheapest

A proportion appears to want the cheapest but have latent needs that have not yet been identified and exploited

108


Approaches to Pricing

1. ‘Cost Plus’ pricing Cost informs the price

2. ‘Market’ pricing Customers inform price

Cost informs the profit available

Why is this important????????????

PRICE IS THE ONLY SOURCE OF REVENUE IN THE

MARKETING MIX!


Why industrial (B2B) companies lose customers

DevelopNew

Relationships

CompanyIndifference

95

14

31

68%

Death Relocation LowerPrice

ProductDissatisfaction

Perc

enta

ge o

f los

t cus

tom

ers

80

60

40

20


Understanding Profit Drivers

Sales Volume(Units)

1 million

Price €100

Revenues

Variable costper unit = €60

Sales Volume1 million

Variable Cost Fixed Cost€30 million

Cost

Profit

=

What is the profit impact if each of the 4 levers improves by 10%?


Understanding Profit Drivers (2)

An increase in price has a greater impact on profit than an increase in volume or decrease in costs.

Profit Driver Profit ProfitOld New Old New % Change

10% improvein:

Variable costper item

Sales Volume

Fixed costs

Price

€60 €54

€1m €1.1m

€30m €27m

€100 €110

€10 €16 60%

€10 €14 40%

€10 €13 30%

€10 €20 100%


Role of price

• What clients of “Engineering, Procurement & Construction” (EPC) want (2006)

1 Employees are knowledgeable & experienced in our industry

2 Provide quality engineering appropriate to our needs

3 Meeting schedule commitments

4 Meeting cost expectations & commitments

5 Deliver value for the money

6 Providing schedules that meet our needs

7 Provide quality fabrication and construction that meets our needs

8 Being able to perform the work wherever we need it done

9 Pricing for services & technologies

10 Having local employees with knowledge of local customs/regulations


The race to the bottom

Marketing should NOT be about:

• Selling as much as possible• Building market share – at any

cost• Chasing any sales revenue

available• Cutting the price to stay in the

“race”

• Unless you want to kill the company!


Case Task

• What Pricing Approach does your strategy require?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion







THETARGETMARKET


The distribution channel is ...

"The route along which a product and its title (ie the rights of

ownership) flow from production to consumption"


Channel Configurations

Originating manufacturer/Service provider

Direct

Distributor

OEM

VAR

OEM

Wholesaler

Retailer

Agent

Sub Contractor

Specialist

Prime Contractor

Post Phone Online F2F

DirectMail

End Buyer/User


Why use intermediaries?

• Specialisation• Division of labour• Provide assortment by gathering supplies together from

number of manufacturers - “honest broking”• Breaking bulk so as to meet scale of need of customers - and

buying in bulk on behalf of customers• Reduce “contactual costs”• Geographical proximity and local knowledge• Adding value (eg customisation, service, installation)• Theoretically cash received quicker up the chain• Running “interference” - for their customers and their

suppliers


Reducing “contactual” costs or channel geometry

4 Manufacturers contact4 retailers directly

No. of contacts = 4 x 4 = 16

W

RRRR

M M M MM M M M

R R R R

No. of contacts = 4 + 4 = 8

4 Manufacturers distribute through a wholesaler


Increasing Retailer concentration

W

RRRR

M M M MM M M M

R R R

RRRRRRRR

RRRR


"Let's say I have a new product. Sainsbury and Tesco have

over 50% of the London market: London is so important

that, if they won't accept my product, it simply isn't worth

launching."

- Major Food Manufacturer

"I account for 25% of your business. You account for less that

5% of mine. Let's talk terms."

- Retail Buyer to Major Household Products Manufacturer

Battle for control


Who ‘owns’ the customer owns the margins

Producer

Intermediary

Brand Franchise!

InformationCommunication

‘Push’(sales)

Consumer/ End User

‘Pull’(marketing)

= Margin


Your choice

Originating manufacturer/Service provider

Direct

Distributor

OEM

VAR

OEM

Wholesaler

Retailer

Agent

Sub Contractor

Specialist

Prime Contractor

Post Phone Online F2F

DirectMail

End Buyer/User


Case Task

• What Place/Distribution/Route to market solutions does your strategy require?


Agenda

DAY 1 STRATEGY



1.3 What business?



1.6 The Future…..

DAY 2 MARKETING

2.1 Target Market

2.2 Product

2.3 Price

2.4 Place

2.5 Promotion







THETARGETMARKET


Which half ?

"I know that half my advertising budget is wasted, but I’m

not sure which half."

William Hesketh Lever, 1st Viscount Leverhulme (1851 –1925) was an

English Industrialist, philanthropist and colonialist. He established a soap

manufacturing company called Lever Brothers (now part of Unilever) with his

brother James


Value or Volume?

2006 data (UK):

• Number of messages seen per day = +/-3500– = 4/minute in a waking day

“EyeContact” glasses:

• 90 minute London shopping trip

• 250 messages recorded– 100 brands

– 70 formats

• Prompted recall =– Customer interested

• Unprompted recall =

130

1


The Future of Advertising?

A recent paper titled "The Future of Advertising is Now" by Christopher Vollmer et al, attempts to solve Lord Leverhulme’s dilemma, at least for the automobile industry.

Clearly, his lordship’s assessment remains remarkably accurate, as this chart from the paper shows.


Promotion can affect….

1.Attention

2.Interest

3.Desire

4.Action

http://www.amazon.com/exec/obidos/ASIN/0789301350/theringofthen-20


Promotional objectives

Promotion may be used to achieve the following:

1. To build awareness and interest in the service or product and the service organisation

2. To differentiate the product/service offer and the organisation from competitors

3. To communicate and portray the benefits of the products/services available

4. To build and maintain the overall image and reputation of the providing organisation

5. To persuade customers to buy or use the product/service

Promotion, on

its own, cannot

sell


Promotion by objectives

1 Promotional objectives2 The target audience3 The message4 The media: advertising

sales promotionpublicitypersonal sellingpublic relations

5 Budgets6 Testing and Control


The promotional mix

Newspapers and MagazinesTrade and Professional PressTelevision and RadioCinema

----------------------------------------------------------ExhibitionsDirect MailPublic RelationsPoint of SaleDigital/InternetPackagingSales PromotionPersonal SellingCompany ImageThe Service ProductPricingWord of Mouth

In services, personal selling may be indistinguishable from service delivery

Indirect

“The Line” separates the mass media from the

more targeted


The fundamental proposition

The4

Questions

1Who is the one person

you want to talk to?

2What is the one thing

you want to say to them?

3Why should they

believe you?

4How do you want them

to feel as a result?


Case Task

• What Promotional policy does your strategy require?


FINAL Case Task

• From 0 to 10• How confident would you be of investing your entire pension

over the next 40 years in the outcome of your plans?


Reading List

1. “Principles of Marketing: European Edition” - Kotler, Saunders & Armstrong, FT Prentice Hall 2004

2. “Mercator : Théorie et pratique du marketing”, Lendrevie, Levy & Lindon 2006

3. “Marketing Strategy” 3rd Edition - P Fifield, Elsevier 20074. “Marketing Strategy Masterclass” – P Fifield, Elsevier 20085. “Collected Essays in Marketing Strategy” P Fifield, Fifield, 20066. “The Marketing Imagination” - T Levitt, Free Press, 19987. “Market-led Strategic Change” – N Piercy, Butterworth Heinemann, 20108. “Marketing Briefs” – S Dibb & L Simkin, Butterworth Heinemann 20049. “Marketing Plans” – M MacDonald, Butterworth Heinemann 200210. “Marketing Management and Strategy ” – P Doyle, FT Prentice Hall, 200611. “Marketing Research: An Applied Approach” – D Birks & N Malhotra, FT

Prentice Hall 200512. “Essentials of Marketing Research” - T Proctor, FT Prentice Hall, 200313. “International Marketing” – V Terpstra, South Western College Pub, 200114. “Marketing across cultures” - JC Usenier & J Lee, FT Prentice Hall 2005


Strategy & Marketing

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