Introduction to Strategic

Marketing
Session 2-3

MBA-II

Course In-charge: Dr. Shamaila Burney

 Learning Objectives

OVERVIEW OF MARKETING STRATEGIC MARKET DRIVEN

CONCEPTS & STRATEGY MARKETING. STRATEGY.
Because Marketing is the basis of all courses
of Marketing, we should understand

What is Marketing What is Marketing & What is Marketing

Concept Strategy
Nature and scope of strategy
 A strategy is a plan that integrates an organization’s major goals,
policies, decisions and sequences of action into a cohesive whole.
 It can apply at all levels in an organization and pertain to any of
the functional areas of management.
 Thus there may be production, financial, marketing, personnel
and corporate strategies, just to name a few. If we look
specifically at marketing then there may be pricing, product,
promotion, distribution, marketing research, sales, advertising,
merchandising strategies etc.
 Strategy is the process of analyzing the environment and
designing the fit between the organization, its resources and
objectives and the environment. It should lead to SCA-
Sustainable Competitive Advantage
SCA-Sustainable Competitive Advantages

• Sustainable Competitive Advantages –SCA: are company assets,

attributes, or abilities that are difficult to duplicate or exceed; and
provide a superior or favorable long term position over competitors.
Three levels of strategy
The three levels of strategy are:
1.Corporate level strategy: This level answers the
foundational question of what you want to achieve. Is it
growth, stability, or retrenchment?
2.Business unit level strategy: This level focuses on how
you’re going to compete. Will it be through customer, product
or service leadership, or lowest total cost? What’s the
differentiation based on?
3.Market level strategy: This strategy level focuses on how
you’re going to grow. Will it be through market penetration,
market development, product or service development, or
diversification?
THE STRATEGY-MAKING
PYRAMID(DIVERSIFIED COMPANY)

Corporate strategy

Business Strategy

Functional Strategy

Operating Strategy
THE STRATEGY-MAKING
PYRAMID(SINGLE BUSINESS COMPANY)

Business Strategy

Functional Strategy

Operating Strategy
Diversified Company (conglomerate firms)

A diversified company is a company that has

multiple, unrelated businesses.
Unrelated businesses are those who (1) require
unique management expertise, (2) have different
end customers and (3) produce different products
or provide different services. One of the benefits of
being a diversified company is that it buffers a
company from dramatic fluctuations in any one
industry sector.
CORPORATE STRATEGY

 It concerns how a diversified company intends to establish business

positions in different industries and the actions and approaches to
improve the performance of the group of business the company has
diversified into (Thomson & Strickland,2001).
 Among the major concern of this level are determining the corporate
vision or mission, the corporate objectives, corporate strategies
(growth), resource allocation, establish synergy among the business
and structure of the organization.
 The responsibility belong to corporate level managers.
BUSINESS STRATEGY

 It concerns the actions and approaches to produce

successful performance in one specific line of business.
 The central business strategy issue is how to build stronger
long-term competitive position or sustainable competitive
advantage (Thomson & Strickland, 2001).
 Continue…

 Among strategies that are executed at this level are such

as deciding what product/service attributes offer the best
chance to win a competitive advantage; developing
expertise, resource strengths, and competitive
capabilities that set the company apart from rivals and ;
competing strategies/approaches such as niche strategy,
building technological superiority, and etc.
FUNCTIONAL STRATEGY

 It concern on executing functional activities or process within a

business such as marketing, finance, production, manufacturing,
and etc.
 Marketing strategies are such as market targeting and positioning, building
marketing relationship, introducing new product, pricing strategy,
promotion strategy, and etc.
 All these activities must be based on the developed business strategy.
OPERATIONAL STRATEGY

 It concerns on executing operating tasks and

daily operations.
 Examples executing advertising campaign
through television for the first two weeks
of January 2009.
CRITERIA FOR STRATEGY SELECTION
 The question is that how to choose and select
appropriate strategy?
 There are several criteria that we could use as a
guideline.
 As suggested by Aaker, those are such as:
1. Consider the strengths, weaknesses, opportunities and threats (SWOT) analysis that
are performed earlier..
2. Be consistent with the company’s vision and objectives.
3. Be feasible (can be done with the available resources, culture, organization
structure and etc.)
What is Strategic
Marketing?
 It is a market-driven process of strategy development, taking
into account a constantly changing business environment
and the need to deliver superior customer value.
 It links the organization with the environment and views
marketing as a responsibility of the entire business rather than a
specialized function (Craven & Piercy, 2009).

 Also known as Strategic Market

management.
 It is a system designed to help management in making strategic
decisions, as well create strategic vision (Aaker, 2001).
Why Strategic Market Management?

 It is a process of analyzing external environments, internal

factors, identifying and selecting a strategy so that the
organization can achieve its long term goals and its vision.
 Example : PTCL “PTCL has organization's new "Position Statement" 'Hello to the Future' at the start of the new year. PTCL's new positioning
statement illustrates the company's aim to transform the world of telecommunication and the way its customers communicate." Hello to the
Future" is a fusion of vision, brand philosophy, brand values and strategy. The positioning statement of PTCL "Hello to the Future" joins two
most significant words in the arena of communication i.e. "Hello" that provides the inward communication, a word which is related to the
telecommunication history and has been used ever since and will be used in future, whereas through the use of second word "Future" PTCL
promises to lead its customers, in to future with futuristic ideas and products.
So Why Strategic Marketing ?
 Changing business trends (it gives opportunities & sometimes looses
opportunities)
 More Knowledgeable Customers
 No Market boundaries
 New form of Competition
(eg: Polaroid and Kodak & Digital Photography , smart phone , smart
watches)
 Shortening Product life cycles. (like disruptive technology)
Phases of Strategic Marketing
Strategic marketing has three distinct phases:
1. Strategic Analysis
 To move forward we must first answer the question:
where are we? This stage entails a detailed
examination of the business environment,
customers and an internal review of the
organization itself.
 Tools such as portfolio analysis and industry structure
models help management to assess objectively the
organization’s current position.
 Equally, it is important to develop some view
regarding future trends. This is achieved via
forecasting and defining assumptions about the
future market trends.
Phases of Strategic Marketing
2. Formulating Strategy
 Having analyzed our situation, we then determine a way
forward. Formulation involves defining strategic intent
– what are our overall goals and objectives? Managers
need to formulate a marketing strategy that generates
competitive advantage and positions the
organization’s products effectively.
 To be successful, this must be based on core
competencies. During this stage, product development
and innovation are strategic activities, offering the
potential to enhance competitive position and further
develop products and brands. Additionally, formulation
emphasizes the need to form relationships with
customers and other businesses.
Phases of Strategic Marketing
3. Implementation
 Consideration needs to be given to implementing the
strategy. Marketing managers will undertake programs
and actions that deliver strategic objectives. Such
actions will often focus on individual elements of the
marketing mix. Additionally, a process of monitoring
and control needs to be put in place. This ensures
compliance and aids decision making.
Phases of Strategic Marketing
Why Strategic Market Management?

 Force long-range view

 Make visible resource allocation decisions
 Aid strategic analysis and decision making
 Provide a strategic management and control system
 Provide horizontal and vertical communication and
coordination systems
 Cope with change
Chapter 2

MARKET DRIVEN STRATEGY

WHAT IS MARKET-DRIVEN STRATEGY?
 The strategy that is formulated based on the
customer’s needs and wants and the
environments.
 The starting point of development of the strategy is
always based upon the customers that form the
market and then comes competitors, the strengths
and weaknesses of the firm, the economic
condition, the cultural forces and other market
environments.
CHARACTERISTICS OF MARKET- DRIVEN
STRATEGY

According to Craven and Piercy (2009), there are four main

characteristics of market-driven strategy which are:

1) Market oriented.
2) Matching customer value with the firm’s capabilities.
3) Identifying distinctive capabilities.
4) Delivering superior customer value.
WHAT IS MARKET ORIENTED FIRM O
MARKET ORIENTATION?

 Generally there are two widely accepted definition of

market orientation.
 One is by Kohli & Jaworski and another one by Slater &
Narver.
Market orientation by Kohli & Jaworski
 The authors defined market orientation as
the organization wide generation of market
intelligence pertaining to current and
future customer needs, dissemination of
intelligence across departments, and
organization wide responsiveness to it.

 Thus, based on this definition, we say the company is market oriented when it collects
information regarding the customer needs, share it among its employees and take necessary
actions towards those information.
Market orientation according to Slater and Narver.

 The authors defined market orientation as a

business culture that consists five main components
such as:
- Customer focus/orientation/intelligence.
- Competitor focus/orientation/intelligence.
- cross functional or departmental
coordination.
- Long-term focus (appropriate investment is
necessary).
- Profitability (so that the company can
sustain its
business and achieve its long term goals)
Market orientation

 Thus from those two point of views we can

summarize that:
- Market orientation is a culture of
organization that requires a whole
employees effort on acquiring
information regarding the customers, the
competitors and the market, share the
information and take actions to the
information.
Market orientation according to Slater and Narver.
- It also focus on the customer’s satisfaction
needs and wants, focus on competitors and
requires all effort and
coordination of all department in the
organization.
- All of these efforts focus on achieving long
term profit and goals.

“A business is market oriented when its culture is

systematically and entirely committed to the
continuous creation of superior customer value”
Matching Customer Value With Firm’s
Capabilities.

 Capabilities are complex bundle of skills and

accumulation of knowledge, exercised
through organizational process, that enable
the organization to coordinate activities and
make use of its assets (Day,1994).
 There are wide range of capabilities such as
product development capability, pricing
capability, marketing information system
capability, export capability, and etc.
Matching Customer Value With Firm’s
Capabilities.

 Each firms has different capabilities and

even they have the same capabilities but the
levels are different form each other.
 Example, Proton has the capability to make
passenger car just like Toyota, but Toyota
car’s are known for their quality and wide
product range. This is due to different
capabilities and level of capabilities that
Toyota has compared to Proton.
Matching Customer Value With Firm’s
Capabilities.
Continue…

 Firm must be able to match its customer’s

value or needs and wants with its own
capabilities.
 Capabilities can be improved by
knowledge.
 Get new knowledge through training and
retraining, R&D, and etc.
According to Cravens & Piercy, (2006), The Major components of
distinctive capabilities are:

 Organizational Processes.
 Skills and Accumulated Knowledge.
 Coordination of Activities.
 Assets.
Summary on Market Driven Strategy
 Market Driven Strategy requires the firm:
- Customer focus (satisfaction of the needs
and wants and thus customer analysis is
very important
- Competitor focus (competitors analysis is
crucial).
- Market environment analysis is crucial.
- Generate information, shared it and take
actions.
SUMMARY OF STRATEGIC
MARKETING

 To build and develop capabilities that match

up with the customer’s expectation and
value.
 Treat human capital as the main resources of
the firm (human as a source of capabilities).
 Customer focus, competitor focus, market
focus and development of capabilities
will lead to superior performance.
CHALLENGES OF NEW ERA IN STRATEGIC MARKETING

Among the challenges are such as:

- Escalating globalization.
- Technology diversity and uncertainty.
- Fast developing internet.
- The demand to become more socially
responsible.
SUMMARY OF STRATEGIC
MARKETING

 Strategic marketing is a process of identification and

implementation of market driven strategy so that the
company can achieve its long term performance
and mission or vision.
 Market driven strategy is a strategy that is market
oriented; lead to long term performance; build
capabilities and SCA; and match customers’ value
with the company’s capabilities.
SUMMARY OF STRATEGIC
MARKETING
 Market oriented firm is the firm that is customer focus, competitor
focus, have good cooperation among departments or functions,
focus on performance, value information and respond to its and
require participation from every employee.
SUMMARY OF STRATEGIC
MARKETING

 There are criteria that we could use as a

guideline for selecting and choosing a
strategy.
 The framework for strategic marketing as
suggested by Aaker consist three main
components such as external analysis;
internal analysis and; strategy identification
and selection.
STRATEGIC MARKETING FRAMEWORK

External
Analysis
Long term
Market Performanc
Driven e And
Strategy Vision
Internal
Analysis
 Strategic Analysis
Session 4&5

MBA-II

Course In-charge: Dr. Shamaila Burney

 Learning Objectives

SWOT ANALYSIS PEST ANALYSIS FIVE FORCES ANALYSIS

The Marketing Environment and Competitor Analysis

 What is Strategic Analysis

Strategic analysis of an organization is an essential factor when it comes

to formulating a plan for the smoother working of your company
Strategic analysis refers to the process of researching an organization
and it's working environment to formulate a strategy.
Types of strategic analysis
There are a few types of strategic analysis you should consider.
1. Internal strategic analysis
Internal Strategic Analysis will give you an overview of the functioning of your own
company. In this analysis, you assess and analyze your strengths and weaknesses,
and establish a strategy that will help you improve the image of your company.
2.External strategic analysis
Once the organization has completed its internal analysis, they can move on to the
external review. Many external factors can act as a roadblock to the organization's
growth.
Strategic Analysis process

There are five parts to any strategic analysis process:

Step 1: Know your goals

Step 2: Collect and analyze the information
Step 3: Construct a strategy
Step 4: Implement your strategy
Step 5: Evaluate and control
SWOT analysis

• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
SWOT ANALYSIS

• A SWOT analysis is an excellent tool to use if the

organization wants to take a step back and assess
the situation, they are in.

• Issues raised from the analysis are then used to

assist the organization in developing their
marketing mix strategy.
• A SWOT analysis must form the part of any
prudent marketing strategy.
SWOT Analysis

Based on assumption an effective strategy derives

from a sound “fit” between a firm’s internal resources
and its external situation

Opportunities Threats
A major favorable situation A major unfavorable situation in
in a firm’s environment a firm’s environment

Strengths Weaknesses
A resource advantage A limitation or deficiency in one
relative to competitors and or more resources or
the needs of markets firm competencies relative to
serves competitors
SWOT Examples
Strength examples could include:
A strong brand name.
Market share.
Good reputation.
Expertise and skill.

Weaknesses could include:

Low or no market share.
No brand loyalty.
Lack of experience.
SWOT Examples

Opportunities could include:

A growing market.
Increased consumer spending.
Selling internationally.
Changes in society beneficial to your company.

Threats could include:

Competitors
Government policy eg taxation, laws.
Changes in society not beneficial to your company.
PEST analysis

• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
PESTAL
PEST All are different versions
STEEPLE of same analysis
DESTEP
PEST analysis
PEST analysis
Porter’s Five Forces Model

Potential Entrants

Threat of New Entrants

Bargaining Industry Bargaining

Power Competitors Power
of Suppliers of Buyers
Suppliers Buyers

Rivalry Among
Existing Firms

Threat of Substitute
Products or Services

Substitutes 61
These five forces determine the profit potential of a particular
Five forces analysis

• One assumption of Porter’s five

forces model is that some
industries are inherently more
attractive than others; that is, the
profit potential for companies in
that industry is higher. As this
figure indicates, the interaction
and strength of five forces
influences profit potential.
The purpose of Five-Forces Analysis

• The five forces are environmental forces that

impact on a company’s ability to compete in a
given market.

• The purpose of five-forces analysis is to diagnose

the principal competitive pressures in a market
and assess how strong and important each one is.
Porter’s Five Forces Model
 Threat of New Entrants

Product Differentiation

Capital Requirements

Switching Costs
Barriers
Access to Distribution Channels
to Entry
Cost Disadvantages

Government Policy
 Bargaining Power of Suppliers
Suppliers are likely to be powerful if:
Supplier industry is dominated by a few firms
Suppliers exert power
in the industry by:
Suppliers’ products have few substitutes
* Threatening to raise
prices or to reduce quality Buyer is not an important customer to supplier

Powerful suppliers
can squeeze industry Suppliers’ product is an important input to
buyers’ product
profitability if firms
are unable to recover
Suppliers’ products are differentiated
cost increases
Suppliers’ products have high switching costs
 Bargaining Power of Buyers
Buyer groups are likely to be powerful if:

Buyers are concentrated or purchases are large Buyers compete

relative to seller’s sales with the supplying
Purchase accounts for a significant fraction of
industry by:
supplier’s sales

Products are undifferentiated * Bargaining down prices

Buyers face few switching costs
* Forcing higher
Buyers’ industry earns low profits quality
Buyer presents a credible threat of backward
integration

Product unimportant to quality

Buyer has full information

 Threat of Substitute Products
Keys to evaluate substitute products:

Products Products with improving price/performance

with tradeoffs relative to present industry
products
similar
function
limit the
prices Example:

firms can Electronic security systems in place of

security guards
charge
Fax machines in place of overnight mail
delivery
Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Competing for strategic position

Using price competition

Staging advertising battles

Increasing consumer warranties or service

Making new product introductions

Occurs when a firm is pressured or sees an opportunity

Price competition often leaves the entire industry worse off

Advertising battles may increase total industry demand, but may be costly to
smaller competitors
Rivalry Among Existing Competitors
Cut-throat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
High storage costs
Lack of differentiation or switching costs
Capacity added in large increments
Diverse competitors
High strategic stakes
High exit barriers
Strategic Management in Action

Analyzing Deciding Putting Evaluating and

Current on Strategies Changing
Situation Strategies in Action Strategies
Situation Strategy Strategy Strategy
Analysis Formulation Implementation Evaluation

Organizational External Functional Competitive

Context Analysis

Internal
Analysis Corporate
Gap analysis - and what to do about it …
Sales/Profits (Rs.) Objective

The
strategic
‘gap’

Forecast

Time
Porter - the value chain
FIRM INFRASTRUCTURE
M
HUMAN RESOURCE MANAGEMENT A
SUPPORT R
G
ACTIVITIES TECHNOLOGY DEVELOPMENT IN
PROCUREMENT

INBOUND OPERATIONS OUTBOUND MARKETING SERVICE

LOGISTICS LOGISTICS & SALES IN
G
R
A
M

PRIMARY ACTIVITIES
(Source: M Porter)
Strategic Alternatives

1.Improve productivity 3. Market development

 Reduce costs  Geographical expansion
 Improve the sales mix  Find new customer segments
 Increase prices
 Reduce discounts
 Increase productivity 4. Product development
 Develop new products
2.Market penetration  Reconfigure existing products
 Increase market share
 Increase usage frequency
 Increase purchase values 5. Diversification
 New products to new markets