Marketing Planning Dr. Gan Chenjing（干晨静） ganchenjing@nbu.edu.cn Schedule • First Class: 13:00-13:45 • Break Time: 5 minutes • Second Class: 13:50-14:35 • Break Time: 25minutes/5 minutes • Third Class: 15:00-15:45/14:40-15:25 WeChat Group Exam Grading Method • Attendance & Participation: 10% • Team Presentation (3~4 members): 40% • Essay: 50% (hand in the hard copy on the 9th week) • Debate Competition: +10% (bonus) Content • Chapter 1. Introduction to marketing planning • Chapter 2. Marketing planning process • Chapter 3. Marketing Audit • Chapter 4. Marketing Research • Chapter 5. Marketing Strategy Planning Content (Continued) • Chapter 6. STP Strategy Planning • Chapter 7. CI & CIS Strategy Planning • Chapter 8. Brand Planning • Chapter 9. New Product Development • Chapter 10. Public Relation Planning Team work • List everyone’s division in PPT • 1. SWOT analysis of Ningbo University (after chapter 3) • 2. Why did some company with hundred history would go into trouble?– strategy analysis (after chapter 5) • 3. STP analysis of cellphone market (after chapter 6) • 4. MI design of a target company (after chapter 7) • 5. Marketing planning report (after chapter 10) Debate competition • Topic: high-end brand is easier to sell than popular brand vs popular brand is easier to sell than high-end brand • 4 debaters for each side Debate competition • • • • • • • • • • • • Statement Session Pros’ 1 Debater: gives pros’ Opening Remarks (3 minutes ) Cons’ 1 Debater: rebuts pros’ 1 debater & gives cons’ opening remarks (3 minutes) Rebutment Session Pros’ 2 Debater: choose one debater from pro, raises at least 3 questions (3 minutes) Cons’ 2 Debater: choose one debater from pro, raises at least 3 questions (3minutes) Pros’ 3 Debater: rebuts on previous opinions and makes summary (2 minutes) Cons’ 3 Debater: rebuts on previous opinions and makes summary (2 minutes) Free Debate Session (15 minutes) Summary Cons’ 4 Debater: makes final conclusions (3 minutes) Pros’ 4 Debater: makes final conclusions (3 minutes) Self-Introduction • Name, Major • Why did you choose this course? • Have you ever taken the course of marketing? • What’s the difference between the courses of marketing and marketing plan? • What do you want to learn from this course? • What kind of career do you want to pursue in the future? Passive Learning Active Learning Lecture 5% Reading 10 % Video 20 % Demo 30 % Discussion 50 % Practice 75 % Teach others 90 % Chapter 1: Introduction to Marketing Planning • Learn the definitions of “marketing plan” • Learn different types of marketing plan • Learn the traits of marketing plan Case Discussion • How did Obama become the first black president? And won re-election? • No politic background (parliamentarian) • Refuse to use public campaign funds ($ 84,000,000) • High unemployment rate 8.1% > 7.2% • First “Internet president” • Interactive marketing • Integrated marketing communication • Affiliate marketing Marketing Planning • An outline of a design to accomplish a specific objective: ✓To create value for customers at a profit, or in the new concept of marketing ✓To create a mutually beneficial relationship Marketing Planning Strengths of organization Market Needs Wants Weakness of organization Existing competitors Design for creating value Expected competitors Marketing Plan=Business marketing strategy • Plan for marketing activities with specific purposes • Through marketing analysis • Choose the “right” product • Set the “right” price • In the “right” time and place • With the “right” promotion • What’s the most important thing in marketing plan? Let Mr. President to help sell books Marketing Plan • Narrow sense: product, price, place, promotion (4P) • Broad sense: 4P+2P(power, public)+1Service+1Costomer • A creative and feasible plan that outlines a company’s advertising and marketing efforts to achieve specific goals or solve some problems • Why do we need marketing plan? Essential of Marketing Planning • We need marketing planning when hostiles increased and environment is complex. Develop a Market Plan • Management provides little guidance as to how the process should be managed. • To Compromise between what is desirable and what is practicable • Management must be customized to their particular organization • Size • Complexity • Character and diversity of company operations Our Challenge • We should manage: Revenue Profit Optimization Cost Return on investment Application of Marketing Plan 1. 2. 3. 4. 5. 6. 7. To help identify sources of competitive advantage 8. 9. To set objectives and strategies To force an organized approach To develop specificity To ensure consistent relationships To inform everyone in the organization about priorities To obtain resources needed to implement plans To engage organizational support at all levels, form the bottom to the top of the organization To gain commitment towards goals Case: How to increase the visibility and market awareness of Citizen? • Air-drop in Australia: 1. obtain authorization 2. Rent the helicopter 3. Advertisement • Drop in hundreds of meters high • A property to who pick up the watch Elements of Marketing Plan Target Subject • Single • Multiple • Who put forwards and conduct the plan? Information • Internal company/Environment • Customer needs/Rivals Techniques • Calculation/Graphs/Simulations Marketing Plan Types • According to the planning subject ✓Internal: marketing department (familiar, lack of innovation) ✓External: professional institution (high cost, less feasible) • According to the planning object ✓Marketing strategy plan: positioning, rival, development, image ✓Marketing tactics plan (short-term, more specific): 4P Traits of Marketing Plan Innovation • Determines the effectiveness Dynamics • Flexible to future market • Make adjustment Advanced • Forecast • Arrangement Subjectivity • Objective data • Subjective planner Complexity • Knowledge/Information/materials Use of Marketing Plan To determine: • Where the company is now, • Where it wants to go, • How to get there Includes: • Advertising Plan • Sales Promotion Plan • Pricing Plan • Distribution Plan • Product Plan • Target Market Plan Chapter 2 Marketing Planning Process Outline • Understand the procedure of marketing plan • Get creative design of marketing plan • Learn the structure and content of a marketing plan Marketing Planning Process Definition: • The application of marketing resources to achieve marketing objectives. Marketing Planning Process 1. 2. 3. 4. 5. Performing a situation analysis Formulating basic assumptions Setting objectives for what is being sold and to whom Deciding how the objectives are to be achieved Scheduling and costing out the actions necessary for implementation Key Issues to Be Covered By the Marketing Plan* • A Summary of the present position in the market • A forecast of where things are going with the current strategy • Our objectives in this market (SMART) • Our market strategy – reflecting the strategic pathway • The predicted competitive re-action to the strategy • Our proposed marketing programmes (marketing mix) • Specific tactics/action plans (plan-do) • The financial forecasts/budgets • * Piercy, N. (2000), Market Led Strategic Change, Butterworth Heinemann, p. 280. Back Stages of Marketing Plan Phase One Goal Setting Phase Two – Situation Review 1. Mission 2. Corporate objectives 3. Marketing audit 4.SWOT analysis 5. Assumptions Phase ThreeStrategy Formulation 6. Marketing objective and strategies 7. Estimate expected result 8. Identity alternative plans and mixes Phase Four9. Budget Resources allocation and 10. First year detailed implementation program monitoring Measurement and review A Mission Model Internal External Levitt’s (1960) Marketing MyopiaProduct-Market What business are we in Organisational Visionary but Realistic What business should we be in Domain Philosophy Walk the talk What business wetobe in Where are we can going What do we want to be? operate? Broad Mission Statement Narrow Organisational Key Ethics and Social Values Responsibility How Nike do we want our people to behave? Internal Broad Narrow Critical Success Factors Porter’s generic strategies What do we have to be good at in this industry? External Porter’s generic strategies Back Marketing Audit “Marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s— or business unit’s—marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance” —Philip Kotler Marketing Audit Goal: To see how well the firm is applying the marketing concepts 1. Examine external and internal information and procedures 2. Identify problems in the environment Marketing Audit Need for an audit does not manifest itself until things start to go wrong for a company in the form: • Declining sales • Falling margins • Lost market share • Underutilized production capacity Marketing Audit • At least once a year • Using: • Normal information, • Control Procedures, • Marketing Research Back Marketing Objectives • Primary Objectives • Which products/services into which markets, how many, by when • Secondary Objectives • Increase penetration of a Distribution Channel from 15 to 25% • Increase awareness/image of our brand from 45 to 65% in a given target market Confirm the theme of marketing plan Survival High profit Market share High quality Back The Marketing Budget • To justify all marketing expenditures from a zero base each year against the task that you wish to accomplish. Plan Do Cycles • To get the plan implemented the milestones need to be clear and accepted • Budgets also Control Progress Plan-Do Cycles Jan Task I.D. Feb Mar April May June July Aug Sept Make a marketing plan • Design plan: feasibility analysis (pilot) • Optimization • Set progress/schedule • Budget making Objective-and-task Method Sales target: 5,000,000 bottles of soft drinks Advertisement period: 2 months Frequency: 50 times Budget: RMB 150,000 (100,000 for advertisement, 30,000 for free drinking, 20,000 for promotion activities) Effect Evaluation Market Share Brand & Image Cost Index Method of creative design • Transplant reference ✓Direct: learning ✓Indirect: learning (pattern) & innovation • Reverse thinking ✓Si Maguang “the wisdom of breaking the jar” ✓Single side printing—double side printing—reverse printing Write a marketing plan Main principle ✓Logic ✓Concise ✓Feasible ✓Innovative Main content of marketing plan: 5W2H1E • What is the target? • Who are the persons take part and in charge? • Where to conduct? • When to conduct? (schedule) • Why to conduct this marketing plan? (necessity, feasibility) • How to achieve? • How many sub targets and budgets? • Evaluation (standards, who, handle variations) Framework of marketing plan • Background Analysis ✓Macro environment analysis: PEST (politics, economics, society, technology) ✓Micro environment analysis: competitor analysis, SWOT ✓Corporate general analysis: history, status quo, future development ✓Survey materials analysis: market demand, customer need, customer behavior, customer satisfaction, corporate reputation, corporate influence • Action Plan ✓How to select target market? (market positioning, segment) ✓How to capture target market? 4P (product development, packaging, price setting, sales place selection, promotion strategy) Structure of marketing plan • Cover page: title, client name, planner name, submit date, using time • Abstract • Catalog • Introduction: background, significance, define theme • Environment analysis: market, rivals, customers • SWOT: combine with environment analysis • Marketing targets: market share, sales, customer satisfaction • Marketing strategy: STP(segmentation, target, positioning), 4p • Action plan: schedule, location, staffing • Financial analysis & control plan: budget, risk analysis, contingency plan • Conclusion: suggestion • Appendix: data, questionnaire, background materials Techniques for writing marketing plan • Theoretical basis • Use examples • Use statistics • Use graphs • Stress on main points • Prepare alternatives • Layout design • Pay attention to Details Chapter 3 Marketing Audit Outline • Understand the definition of marketing environment • Learn the techniques for macro and micro environment analysis What is market environment? • It’s a marketing term and refers to factors and forces that affect a firm’s ability to build and maintain successful relationships with customers. ✓Micro (internal) environment: small forces within the company that affect its ability to serve its customers directly ✓Macro environment: larger societal forces that affect the microenvironment. (indirectly) • Video: http://v.youku.com/v_show/id_XMTczNzk5NjkyMA==.html?from=s1.8-11.2&spm=a2h0k.8191407.0.0 Micro Environment Public Company Intermediaries Competitor Customer Micro Environment: Company • Company (itself): the internal environment of the company ✓This includes all departments, such as management, finance, research and development, purchasing, operations and accounting ✓Each of these departments influences marketing decisions Micro Environment: Intermediaries • Marketing intermediaries: the people that help the company promote, sell, and distribute its products to final buyer ✓Resellers: hold and sell product, match the distribution to the customers and include places: e.g. Wal-Mart ✓Physical distribution firms: the places such as warehouses that store and transport the company's product from its origin to its destination ✓Marketing services agencies: companies that offer services such as conducting marketing research, advertising, and consulting ✓Financial intermediaries: institutions such as banks, credit companies and insurance companies Micro Environment: customer market • Customer Market ✓Consumer market: consists of individuals who buy goods and services for their own personal use or use in their household ✓Business market: include those that buy goods and services for use in producing their own products to sell ✓Reseller market: includes business that purchase goods to resell as is for a profit ✓Government market: consists of government agencies that buy goods to produce public services or transfer goods to others who need them ✓International market: include buyers in other countries and includes customers from the previous categories Micro Environment: competitors • Competitors ✓A factor in the micro-environment and include companies with similar offerings for goods and services ✓To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry ✓The company should develop a strategic advantage over their competitors Micro Environment: Public • Publics: any group that has an interest in or effect on the organization’s ability to meet its goal ✓Financial publics: hinder a company's ability to obtain funds affecting the level of credit a company has ✓Media public: newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers' opinions ✓Government public: affect the company by passing legislation and laws that put restrictions on the company's actions Micro Environment: Public (continued) ✓Citizen-action publics: environmental groups and minority groups and can question the actions of a company and put them in the public spotlight ✓Local publics: the neighborhood and community organizations and will also question a company's effect on the local area and the level of responsibility of their actions ✓General public: affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the company's customer base ✓Internal public: those who are employed within the company and deal with the organization and construction of the company's product Macro environment Cultural Demography Environment Political Economic Environment Environment Technological Nature Environment Environment Macro environment • Demography: studying human populations in terms of size, density, location, age, gender, race and occupation ✓Helps to divide the population into market segments and target markets ✓Generation-gap ✓Geographic Issue Macro environment • Economic environment: the purchasing power of potential customers and the ways in which people spend their money ✓Subsistence economies: based more in agriculture and consume their own industrial output ✓Industrial economies: have markets that are diverse and carry many different types of goods. Macro environment • Natural environment ✓Includes the natural resources that a company uses as inputs that affects their marketing activities ✓ The concern in this area is the increased pollution, shortages of raw materials and increased governmental intervention Macro environment • Technological environment ✓One of the fastest changing factors in the macro-environment ✓As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. ✓They must stay informed of trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially. The Bankruptcy of Kodak • Established in 1880 • More than 10,000 patents • Invented digital camera in 1975 • The patent protection of digital camera ended in 2007 • Bankrupted in 2013 Deloitte 德勤 Video: http://www.365yg.com/group/6468562002628313613/ Macro environment • Political environment ✓Includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society ✓As laws and regulations change often, this is a very important aspect for a marketer to monitor. Macro environment • Cultural environment ✓Consists of institutions and basic values and beliefs of a group of people ✓ The values can also be further categorized into core beliefs, which passed on from generation to generation and very difficult to change, and secondary beliefs, which tend to be easier to influence. ✓As a marketer, it is important to know the difference between the two and to focus your marketing campaign to reflect the values of a target audience. Moving From the Audit to the SWOT Analysis • Put forward in 1980s by an American Professor • Opportunities and Threats （External Environment Analysis） • Strengths and Weaknesses (Internal Environment Analysis) • characteristics of the business that place the business or project at a disadvantage relative to others • characteristics of the business or project that give it an advantage over others • elements in the environment that the business or project could exploit to its advantage Strength Weakness Opportunity Threat • elements in the environment that could cause trouble for the business or project When to use SWOT analysis? • Explore new solutions to problems • Identify barriers that will limit goals/objectives • Decide on direction that will be most effective • Reveal possibilities and limitations for change • To revise plans to best navigate systems, communities, and organizations • As a brainstorming and recording device as a means of communication • To enhance “credibility of interpretation” to be utilized in presentation to leaders or key supporters SWOT Analysis Source Strengths Weaknesses Internal (controllable) 4 P, Brand Opportunities Threats External (uncontrollable) Market, Consumer, Competitors, Channel Key issues D Jobber, Principles and Practice of Marketing, © 1998 McGraw-Hill 5 Opportunity Analysis SUCCESS PROBABILITY big ATTRACTION small big small First Type Third Type Second Type Forth Type • • • • First: seize the opportunity Second: careful consideration Third: cost-benefit analysis Forth: Discard Threat Analysis PROBABILITY big SEVERITY small big small First Type Third Type Second Type Forth Type • • • • First: pay high attention & solve Second: warning system Third: solve in time Forth: avoid escalation Threat-Opportunity Analysis OPPORTUNITY small THREAT big big small First Type Third Type Second Type Forth Type • First: ideal business • Second: mature business, based on market share • Third: cost-benefit analysis • Forth: withdrawal Generic Problem Solutions from the SWOT Analysis • “MATCHING” WITHIN THE SWOT • Possible Permutations • S + • S + T • W + O • W + T O Generic Problem Solutions from the SWOT Analysis • “MATCHING” WITHIN THE SWOT • Possible Permutations Action • S + • S + T • W + O Reinforce to Attack • W + T Reinforce to Defend O Attack Defend Group Homework • SWOT Analysis of Ningbo University ✓Internal and external environment analysis ✓Put forward suggestions or strategy for future development ✓List your division!!! Chapter 4 Marketing Research Marketing Research • designs the method for collecting information • manages and implements the data collection process • analyzes the results • communicates the findings and their implications Failure of Coca-cola • With nearly 1 billion Coca-Cola drinks sold every single day, it is the world’s most recognized brand • Yet in 1985 the Coca-Cola Company decided to terminate its most popular soft drink and replace it with a formula it would market as New Coke Competition between Coca-cola and Pepsi-cola • Compete for more than 100 years • In the late 1950s, Coke outsold Pepsi by a ratio of more than five to one. • In 1960s, Pepsi repositioned itself as a youth brand. By narrowing its focus, Pepsi was able to position its brand against the old and classic image of its competitor Pepsi Challenge • 1970s, Pepsi testing consumers blind on the difference between its own brand and coca-cola • More than 80% believe Pepsi tastes better • In 1981, Coke’s number one status was starting to look vulnerable. New Coke • The Atlanta-based company conducted 200,000 taste tests to see how it fared. • The results were overwhelming. Not only did it taste better than the original, but people preferred it to Pepsi-Cola as well • However, if Coca-Cola was to stay ahead of Pepsi-Cola it couldn’t have two directly competing products on the shelves at the same time. • It therefore decided to scrap the original Coca-Cola and introduced New Coke in its place. “Angry” Customers • The trouble was that the Coca-Cola company had severely underestimated the power of its first brand. • On 23 April 1985, New Coke was introduced and a few days later the production of original Coke was stopped. • A large percentage of the US population immediately decided to boycott the new product. Surrender • ‘We have heard you,’ said Goizueta at a press conference on 11 July 1985. • He then left it to the company’s chief operating officer to announce the return of the product. Why did the New-cola research fail? • Focus too much on product itself • did not measure or reveal the deep and abiding emotional attachment to original Coca-Cola A wonderful American mystery • When Coca-Cola was launched in the 1880s it was the only product in the market. • As such, it invented a new category and the brand name became the name of the product itself. • Throughout most of the last century, Coca-Cola capitalized on its ‘original’ status in various advertising campaigns. • In 1942, magazine adverts appeared across the United States declaring: ‘The only thing like Coca-Cola is Coca-Cola itself. It’s the real thing.’ Destined to fail • If you tell the world you have the ‘real thing’ you cannot then come up with a ‘new real thing’. • So despite the tremendous amount of hype which surrounded the launch of New Coke it was destined to fail • Cost over US $10 million Lessons from New Coke • Do the right market research. Despite the thousands of taste tests CocaCola carried out on its new formula, it failed to conduct adequate research into the public perception of the original brand. Failure of Disneyland in Paris Market Potential and Sales Forecast  Market Potential—what a whole market segment might buy  Sales Forecast—an estimate of how much an industry or company hopes to sell to a market segment Approaches to Forecasting  Extending past behaviour — —  Factor method — —  Trend extension Assumes future patterns will be like past patterns based on finding a variable (a factor) that is related to the variable being forecast multiple factors may be helpful Leading series — factors that move in advance of what is being forecast Predicting Future Behaviour Calls for Judgement and Opinions • Jury of executive opinion • forecasting by combining the opinions of experienced executives, perhaps from marketing, production, finance, purchasing and top management • Sales force estimates • combining the sales estimates from each sales person • Surveys, panels and test markets Marketing Research Type • Marketing research is often partitioned into two sets of categorical pairs, either by target market: ✓Consumer marketing research, and ✓Business-to-business (B2B) marketing research. • Or, alternatively, by methodological approach: ✓Qualitative marketing research, ✓Quantitative marketing research. Characteristics of Marketing Research • Systematic ➢The procedures followed at each stage are methodologically sound, well documented, and, as much as possible, planned in advance. Marketing research uses the scientific method in that data are collected and analyzed to test prior notions or hypotheses. • Objective ➢It attempts to provide accurate information that reflects a true state of affairs. Methods of Marketing Research • Based on questioning ✓Qualitative marketing research ✓Quantitative marketing research • Based on observations ✓Ethnographic studies ✓Experimental techniques Qualitative marketing research • generally used for exploratory purposes • small number of respondents • not generalizable to the whole population • statistical significance and confidence not calculated • examples include focus groups, in-depth interviews, and projective techniques Back Quantitative marketing research • generally used to draw conclusions • tests a specific hypothesis • uses random sampling techniques so as to infer from the sample to the population • involves a large number of respondents • examples include surveys and questionnaires. Techniques include choice modelling, maximum difference preference scaling, and covariance analysis. Back Ethnographic studies • by nature qualitative • the researcher observes social phenomena in their natural setting • observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) • examples include product-use analysis and computer cookie traces. See also Ethnography and Observational techniques. Back Experimental techniques • by nature quantitative • the researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables • examples include purchase laboratories and test markets Chapter 5 Marketing Strategy Planning Marketing Strategy Definition: • It is a statement of how a brand or product line will achieve its objectives • It has the fundamental goal of increasing sales and achieving a sustainable competitive advantage • It Provides decisions and direction regarding variables such as: • • • • Segmentation of the market, Identification of the target market, Positioning, Marketing Mix elements and expenditures. Marketing Strategy vs Marketing Management • Strategic marketing concerns the choice of policies aiming at improving the competitive position of the firm. • Managerial marketing is focused on the implementation of specific targets Marketing Strategy vs Corporate Strategy Corporate Strategy Strategic Business Unit 1 Production Strategy Strategic Business Unit 2 Marketing Strategy Strategic Business Unit 3 R&D Strategy Human Resource Strategy Marketing Strategy vs Marketing Mission • A marketing strategy describes how a firm will achieve the stated goal in a way which is consistent with the mission • You should also write a marketing mission when starting your own business. Rules of Marketing Planning 1. Develop the strategic marketing plan. • • 2. Scanning the external environment Identifying early on the effect this may have on the company A strategic plan should cover a three-year period. • Never write the one-year plan first and extrapolate from it. Movie Time: Apple VS Microsoft • Movie: Pirates of Silicon Valley • Apple: April 1st 1976 • Microsoft: April 4th 1975 • What kind of entrant strategy does Apple and Microsoft take ? • Although Apple is more advanced in technology, Why Microsoft has higher market share? Entrant Strategies • Pioneers • Close Followers • Late Followers Market Pioneers • open a new market to consumers based off a major innovation • Pioneers have the first-mover advantage, and in order to have this advantage, business’ must ensure they have at least one or more of three primary sources ✓Technological Leadership: gaining an advantage through either Research and Development or the “learning curve”. ✓Preemption of Assets: allowing the first-mover to be able to have control of existing assets ✓Buyer Switching Cost: those who enter later would have to invest more expenditure in order to encourage customers away from early entrants Back Close Followers • Challengers to Market Pioneers • more than likely to invest a significant amount in Product Research and Development than later entrants • allows businesses to find weaknesses in the products produced before • having a different strategy Back 1. have the ability to learn from those who are already in the market 2. catching the shifts in customer needs and wants towards the products 3. a cost advantage due to the use of product imitation 1. cost advantage away due to the expense of changing markets for the business 2. Market share 3. Customer PathDependence Disadvantage Advantage Late Followers Growth Strategies • Horizontal Integration • Vertical Integration • Diversification Horizontal Integration • Horizontal integration is the degree at which employees are specialized and integrated in. ➢LOW horizontal levels: employees are specialized in their work ➢HIGH horizontal levels: employees are integrated in their work 1. leads to a larger market for merged businesses 1. limits and restricts the field of interest that the business is 2. it is easier to build expanding the new good reputations for products into a business 2. Avoid competition Disadvantage Advantage Horizontal Integration Back Vertical Integration • Vertical integration is when business is expanded through the vertical production line on one business: controlling the inputs of supplies and outputs of products as well as the distribution of the final product • Apple: owns all their own software, hardware, designs and operating systems instead of relying on other businesses to supply these 1. Transaction cost reduced 2. Opens up opportunities to create different products for the market 1. High internal cost 2. loses access to information from suppliers and distributors Disadvantage Advantage Vertical Integration Back Diversification • Horizontal diversification is when a new product is introduced but doesn’t contribute to the already existing product line. • Vertical diversification focuses more on the introduction of new product onto new markets, where the business could have less knowledge of the new market Ansoff’s Product/Market Growth Matrix Products Existing Existing Markets New Market Penetration or Expansion Market Development New Product Development Diversification H.I.Ansoff (1957), Strategies for Diversification, Harvard Business Review Strategic Models Marketing businesses often use strategic models and tools to analyze marketing decisions • The 3C’s • The Ansoff Matrix • Marketing Mix Model (4P’s) The 3C’s Corporation Costumer Competition Corporation • focuses on maximizing the strengths of the business from which the business can influence the relevant areas of the competition to achieve success within the industry. Back Customer • Customers are the basis to any business. • Without customers you have no business. • The most important factors of customers and the wants, needs and requirements that the business needs to fulfill in order to attract buyers. Back Competitor • Competitors can be looked at in various different ways such as; purchasing, design, image and maintenance. • The more unique steps a business takes the less competition a business will face in that field Back Ansoff’s Product/Market Growth Matrix Products Existing Existing Markets New Market Penetration or Expansion Market Development New Product Development Diversification H.I.Ansoff (1957), Strategies for Diversification, Harvard Business Review Market penetration • Market penetration covers products that are already on the market and are familiar to the consumers • this creates a low risk as the product is already on the established market Increase sales volume Market penetration Win competitors’ customers Market expansion Buy competitors Product development Market development Entry into new markets Discourage competitive entry Increase sales volume Market penetration Market expansion Convert non-users Product development Increase usage rate Market development Entry into new markets Back Product development • Product development is the introduction of a new product into an existing market. • This can include modifications to an already existing market which can create a product that has more appeal in the market. Increase sales volume Market penetration Product line extension Market expansion Product development Product replacement Market development Innovation Entry into new markets Back Market development • Market development is when an already existing product is introduced to a new market in order to identify and build a new clientele base. • This can include new geographical markets, new distribution channels, and different pricing policies. Increase sales volume Market penetration Market expansion Product development Promote new uses Market development Enter new segments Entry into new markets Back Diversification • Diversification, is the riskiest area for a business. • This is where a new product is sold to a new market at the same time. • There are two type of Diversification; ➢Related which means the business remains in the same industry that they are familiar with. ➢The other is Unrelated which is when there are no previous relations or market experiences for the business. Increase sales volume Market penetration Market expansion Product development Market development Entry into new markets New products Back Marketing Mix Model (4P’s) Marketing Mix Place Product Customer Solution Convenience Price Promotion Customer Cost Communication Marketing Mix Model (4P’s) • The 4P’s also known as Price, Product, Place and Promotion • This strategy was designed as an easy way to turn marketing planning into practice. • This strategy is used to find and meet the consumers needs and can be used for long term or short term purposes. Implementation and Control McKinsey Seven-S Framework Structure Systems Strategy Shared Values Style Skills Staff • Strategy: the plan devised to maintain and build competitive advantage over the competition. • Structure: the way the organization is structured and who reports to whom. • Systems: the daily activities and procedures that staff members engage in to get the job done. • Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. • Style: the style of leadership adopted. • Staff: the employees and their general capabilities. • Skills: the actual skills and competencies of the employees working for the company. Group Homework • Why did some company with hundred history would go into trouble? • Focus on strategy analysis • Choose one company as an example Fortune 500 Companies in 1955 By 2027, 75% companies would disappear The Bankruptcy of Kodak • Established in 1880 • More than 10,000 patents • Invented digital camera in 1975 • The patent protection of digital camera ended in 2007 • Bankrupted in 2013 General Motors • Formed on 1908, the unprecedented growth of GM would last into the early 1980s, when it employed 349,000 workers and operated 150 assembly plants • In 2008, 8.35 million GM cars and trucks were sold globally under various brands. • In 2009, after heavy losses, General Motors went bankrupt. • In 2010, it came back and sold 8.39 million. • GM reached the milestone of selling 10 million vehicles in 2016
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