Competitive Strategy

Competitive Marketing Strategy Introduction

What is the Marketing Concept

Marketing Concept is about satisfying consumer needs and wants simultaneously Meeting organizational objectives There are five types of needs: stated needs: unstated needs: real needs : secret needs: delight needs:

the customer wants an inexpensive car customer expects good service from a dealer customer wants a low operating cost car, not just a low price customer wants to be known as a savvy consumer customer wants a navigation system to be installed

Marketing Concept is about customer satisfaction Customer Satisfaction Hyundai Launches ‘Hyundai Sonata’ In the untapped Rs.10-20 lakh Segment - acquisition

Customer Acquisition

Volvo, Sweden has been very successful in Customer retention, with a repeat purchase Rate of up to 80% over last 40 years.

Customer Retention

Good customer satisfaction is obtained by focusing on both the customer acquisition and customer retention processes.

Marketing Concept is about customer satisfaction

Customer is also satisfied when they obtain the following a.

VALUE

b.

SERVICE

c.

QUALITY – Performance, Conformance

d.

CHOICE

Marketing concept is that of exchanges. A transaction is a measured exchange. Contract formalizes a transaction either for the present or for future and Legalizes it if necessary and also provides a recourse in case of a market failure There are five conditions of exchange 3. 4. 5. 6. 7.

There are at least two parties Each party has something that might be of value to the other party Each party is capable of communication and delivery Each party is free to accept or reject the exchange offer Each party believes it is appropriate or desirable to deal with other party

A transaction is distinguished from a transfer. A gives X to B but does not receive anything tangible in return. E.g. gifts, subsidies, charitable contributions. Persons making such transfers are possibly expecting gratitude or changed behavior in the person who accepts the transfer.

Marketing Management is Demand Management. Demand represents: -

desire and willingness to buy

-

ability to buy

Marketing Management is Demand Management. Eight demand States are possible 

Negative demand – ex-convicts and alcoholics in factories for employment



No Demand – Indian College students in semi-urban areas have no demand for foreign language courses



Latent Demand – Strong latent demand for harmless cigarettes or fuel efficient cars



Declining Demand – for Yamaha in Pianos in 1980s



Irregular Demand - Metro rail demand through the day, seasonality



Full Demand – Organizations sell to maximum capacity



Overfull Demand – Waiting list on Honda Scooters at the dealership



Unwholesome Demand – Hard Drugs

Marketing Concept has evolved over six stages -Production concept: It holds that consumers will prefer products that are widely available and inexpensive -product concept: Consumers will favor those products that offer the most quality, performance or innovating features -selling concept: Consumers do not buy enough, so firms must put in extra efforts to sell products. -marketing concept: sense the market and respond with offerings – consists of both reactive and proactive market orientation. Reactive means understanding and meeting customer’s expressed needs. Focusing on customer’s latent needs leads to proactive orientation. -holistic marketing concept:

Includes dimensions of internal marketing, development of integrated marketing programs that cover the 4Ps, relationship marketing that covers customers, channel and partners and socially responsible marketing that covers ethics, environment, legal and community issues.

Market Places Market Spaces Meta Markets cluster of complementary products and services that are closely related in consumer minds but are spread \ across a diverse set of industries. Automobile metamarket consists of auto manufacturers, dealers, service shops, auto magazines, auto sites on Internet.

• AMA definition :  Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. • Kotler definition :  Human activity directed at satisfying needs and wants through exchange processes

Marketing Management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering And communicating superior customer value.

Marketing people are in involved in marketing ten types of entities          

Goods Services Experiences Events Persons Places Properties Organizations Information Ideas

Important Schools of Thought in Mktg

- Functional School - Managerial School - Buyer Behavior School - Organizational dynamics school

Functional School:

Marketing is organized along functions – product management, sales, advertising, market research

Managerial School:

The marketing that is taught comprising of PLC, marketing mix, market segmentation and positioning. Pioneered by Joel Dean, John Howard, Neil Borden William Lazer, Theodore Levitt, Philip Kotler

Buyer Behavioral School: Unwise to target an “Eonomic Man”. Consumer behavior study will lend more depth. Pioneers include Ernest Dichter, John Howard, George Katona, James Engel Organizational Dynamics School: Interorganizational behavior is the key focal point for understanding marketing process.

Trends in Marketing

1.

Mass customization: This addresses heterogeneity in markets. e.g. Jenson and Nicholson in paints Mercedes Benz – choice of design of cars at factory on order using flexible manufacturing, JIT production JIT distribution, computer information systems

7.

Provision of supervalue / ecstasy Airline frequent flyers tied to hotel rentals/ auto rentals

10. Wants become needs Today’s power steering option- want is tomorrow’s need 13. Increasing Brand Proliferation – concept of power brands 15. Trend towards relationship marketing. CRM. Customer building takes precedence over classical marketing 6.

Rise of Competition e.g. HLL Pepsodent-Colgate; Computer Industry Rivalry

1.

The importance of branding and other intangible assets such as corporate reputation, intellectual capital.

4.

Requirement of both reactive and proactive market response mechanisms.

6.

Firms should make deliberate attempts to step out of short termism and look at long term

9.

Societal Marketing more widely practiced.

11. How to convert niche products to larger markets e.g. mobile phones, home computers etc. 12. Globalization

Marketing Conceptualization

Design Build Up

of

Marketing to Programs

Identify and satisfy customer needs and wants Through exchange processes simultaneously Fulfilling organizational objectives

Execution Monitor

Strategy Long term implications Huge Investments Contingency Build Up

Market Structure based on Consumption and Ownership Pattern Very Rich, those who buy the most expensive consumer pdts

Consuming class – those that buy bulk of consumer goods Marketed in the country.

Indian Market

Climbers who own or purchase slightly more expensive consumer Goods like B/W TV, sewing m/s, mixers.

Aspirants – those who purchase a few inexpensive consumer Goods like cycle, radio/transistor

Destitutes - Consume very little of m/f goods

Market Structure based on SEC Classification Education – Illiterate, School upto 4th, Literate but no formal Schooling, School 5th – 9th, SSC/HSC, Some College but not A graduate, Graduate/Post Graduate – General, Graduate / Post Graduate- Professional

SEC Urban

Occupation – Unskilled Workers, Skilled Workers, Petty traders, Shop Owners, Businessmen / Industrial with no of employees (a) 1-9 (b) 10+, Self Employed Professional, Clerical / Salesman, Supervisory Level, Officers / Executive Junior, Officers / Executives – Middle/Senior The eight socio-economic classes in the urban area – A1, A2, B1, B2, C, D, E1, E2

Market Structure based on SEC Classification

Education – Illiterate, School upto 4th, Literate but no formal Schooling, School 5th – 9th, SSC/HSC, Some College but not A graduate, Graduate/Post Graduate – General, Graduate / Post Graduate- Professional

SEC Rural

Type of House – Pucca, Semi Pucca, Kuchha

The four socio-economic classes in the rural area are R1, R2, R3, R4

MARKETING STRATEGY FORMAT Marketing Objective

Strategic Mkt Analysis

Internal Analysis

Analysis of past performance and present strategy

Developing Marketing strategies

Analytical inputs to developing marketing strategy

Competition

Implementation & control

TRANSACTION FACILATATORS • • •

INFORMATION SERVICING FINANCING

Objective: Maximize Profit, share ,sales. Minimize Uncertainty Risk Marketing Objectives:  Enhance brand image, Improve Customer Satisfaction, provide customer value , maintain price stability

Functionality

Domain

Restraint

Resource allocation in marketing

Market selection

Organizational opportunity

Strategic decision making

Positioning/differentiation

Contingency build –in

Dynamic adjustments to competition & market

Market entry/exit /timing

Coherent with vision

Action setting

4P’s

Relationship with key publics

functionality

COMPETITIVE FOCUS : CUSTOMER ORIENTATION

FRAMEWORK FOR MARKETING STRATEGY

Intensive Growth Opportunities

Growth Opportunities

Integrative Growth Opportunities

Diversification Growth Opportunities

Intensive Growth Strategies – Ansoff’s Product-Market Expansion Grid

Current Products Current Markets

Market Penetration Strategy

New Markets

Market Development Strategy

New Products Product Development Strategy

(Diversification Strategy)

Identification of Growth Opportunities … cont

Integrative growth opportunities backward (acquiring suppliers) , forward (acquiring channel members) and horizontal integration (acquiring competitors) Diversification growth opportunities concentric – technological or marketing synergies to a new group of consumers e.g. audio cassettes from a firm making computer tape Conglomerate – new opportunities which have no relation to current technologies, products or markets Reliance into Telecom Horizontal diversification – Appeal to current customers with new technologies e.g. Music company produces CD / Cassette racks

Product Portfolio Analysis

Objectives of Product Portfolio Analysis 3) Resource allocation among products and markets 4) portfolio analysis of competitors leads to a refined understanding of competitive strategy by action – reaction steps 7) Assess the marketing effort for each product to direct it in the product portfolio from one place to another

Boston Consulting Group- Growth share matrix. M A R K E T G R O W T H

High

STARS

PROBLEM CHILD

CASH COW

DOG

Low High

Low

RELATIVE MARKET SHARE

Shell International directional policy matrix Prospects for sectors profitability Unattractive

Average

Attractive

Company’s Competitive Capabilities

Weak

Disinvest

Phased withdrawal

Double or quit

Company’s Competitive Capabilities

Average

Phased withdrawal

Custodial Growth

Try harder

Company’s Competitive Capabilities

Strong

Cash generation

Custodial growth

leader

Competitive capabilities- Market position - Production Capability - Product R &D

Mc Kinsey/GE Business Array Industry attractiveness – Size, Market Growth, Pricing, Mkt. Diversity Competitive Structure, Industry Profitability Business strength - Size - Growth - Share - Position - Profitability - Margins - Tech. Position - Image - People

High

Medium

Low

High

Investment and growth (G)

Investment and growth (G)

Selectivity/ Earnings

Medium

Investment and growth (G)

Selectivity/ Earnings

Harvest

Low

Selectivity/ Earnings

Harvest

Harvest

Product performance matrix Company sales Profitability

Industry sales

MKT share Growth

Dominant average Marginal

Stable

Dominant average marginal

Decline

Dominant average Marginal

Decline Below target

Stable Target

Above Target

Below target

Growth Target

Above target

Below target

Target

Above target

Getting Back to Basics of Customer Needs and Wants

Understand Ground Realities of the Market Understand Perceived Realities of the Organization Manage the interaction of the Ground Realities and the Perceived Realities