STRATEGIC

MARKETING

TOPIC 2: STRATEGIC MARKETING PROCESSES 1

By: Aishath Faseeha Mohamed

 CONTENTS
▶ STRATEGIC MARKETING PLANNING
PROCESSES
▶ STRATEGIC MARKETING ANALYSIS,
▶ MARKETING STRATEGY OBJECTIVE SETTING,
▶ PERCEPTUAL MAPPING,
▶ OPTION EVALUATION,
▶ CHOICE FORMULATION,
▶ IMPLEMENTATION AND CONTROL. 2
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 INTRODUCTION
▶ Strategic management concerns both the formulation of strategy and how
such strategy is put into practice.
▶ The process involves undertaking analysis and forecasting, and
implementation.
▶ The concern is with managing change and transforming the organisation
within an increasingly turbulent business environment.
▶ Strategic problems can be viewed as having three distinct components.
▶ Firstly analysis, we need to understand the business environment and the
resource capabilities of the organisation.
▶ Secondly, managers need to make strategic choices. The organisation needs
to define:
▶ (i) what is the basis of our strategy,
▶ (ii) what product/market areas wi l we operate in and 4

▶( i) developing specific strategies to achieve corporate goals.

 STRATEGIC MARKETING ANALYSIS
▶ Through strategic analysis we try to understand the organisations
current position.

▶ It includes a detailed examination of the business environment,

customers and an internal review of the organisation itself.

▶ Tools such as portfolio analysis and industry structure models help

management to objectively assess the organisation’s current
position and future trends.

▶ It creates the information and analysis necessary for an

organisation to begin to identify the key issues it wi l need to
address in order to develop a suc c essful strategy.
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1. EXTERNAL ANALYSIS

▶ The external environment can be broken down

into three key steps. That are:

▶ Analysis of the macro-environmental

influences that the organisation faces.

▶ Examination of the competitive (micro)

environment the organisation operates within
&

▶ a specific competitive analysis is undertaken.

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Macro Environmental Analysis
▶ The macro-environment audit examines the broad
range of environmental issues that may affect the
organisation.

▶ This wi l include the political/legal issues, economic

factors, social/cultural issues and technological
developments.

▶ The aim of this analysis is to identify the critical issues

in the external environment that may affect the
organisation and understand the impact it wi l have 8

on the organisation.
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ACTIVITY 2.1

Choose a multinational company and do an

external environment analysis using PEST.
Prepare slides and present to the class.

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Industry analysis
▶ An organisation has to understand the nature of the relationship within
its industry, in order to allow the enterprise to develop strategies to gain
advantage of the c urrent relationships.

▶ This analysis should be conducted at the level of the individual

strategic business unit (SBU).

▶ A useful framework, that can be utilised when undertaking this analysis,

is Porter’s ‘five forces’ model.
▶ Porter identified five factors that affect the level of competition
and therefore profitability within an industry 11
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The factors are:
1- Suppliers: The power of suppliers is
liable to be strong where:
●Control over supplies is
concentrated into the hands of a few
players.
●Costs of switching to a new source
of supply are high.
●If the supplier has a strong brand.
● The supplier is in an industry with
a large number of smaller disparate 13

customers.
2 - Buyers: The power of buyers is liable to be strong
where:
●A few buyers co ntrol a large percentage of a
volume market.
●There are a large number of sma l suppliers.

●The costs of switching to a new supplier are low.

● The supplier’s product is relatively

undifferentiated, effectively lowering barriers to
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alternative sources of supply

3 Potential entrants: The threat of potential entrants will be determined by a number of barriers to
entry that may exist in any given industry:

● The capital investment necessary to enter the industry can be very high in areas such as
electrical power generation or chemical production.
● A well-entrenched competitor who moved into the industry early may have established
cost advantages irrespective of the size of their operation

● Achieving economies of scale in production, distribution or marketing can be a necessity in

certain industries.

● Gaining access to appropriate distribution channels can be difficult.

● Government legislation and policies such as patent protection, trade relations with other
states and state owned monopolies can all act to restrict the entry of competitors.

● The prospect of a well-established company’s hostile reactions to a new competitor’s entry to

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the market may be enough to act as a deterrent.
4 Substitutes: Substitution can arise in a number of ways:
● A new product or service may eradicate the need for a previous
process. Insurance services delivered directly by producers over the
phone or Internet are substitutes for the services of the independent
insurance broker.

● A new product replaces an existing product or service.

Cassette tapes replaced vinyl records, only to be replaced by
compact discs.

● All products and services, to some extent, suffer from generic

substitution. Consumers may choose to substitute buying a car in 16

order to purchase an expensive holiday instead

5 Competitive rivalry: The intensity of competition in the industry wiLL be
determined by a range of factors:
● The stage of the industry life cycle wi l have an effect. Natural growth reaches a
plateau once an industry reaches maturity; the only way a organisation can continue to
grow in the industry is to take market share off its rivals.

● The relative size of competitors is an important factor. In an industry where rivals

are of similar size, competition is likely to be intense as they each strive for a
dominant position.

● In industries that suffer from high-fixed costs, companies wi l try to gain as much

volume throughput as possible, this may create competition based on price

discounting.
● There may be barriers that prevent companies withdrawing from an industry. This
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may be plant and machinery that is specialist in nature and therefore cannot be
Competitor analysis
▶ The ‘five forces’ analysis has examined the overall industry and is a
starting point in assessing a company’s competitive position.

▶ This is a rather broad definition of an industry and contains a number

of companies that would not be direct competitors.

▶ The next step is identification of the strategic groups; competitors

within the same industry that are pursuing equivalent strategies
targeting groups of c ustomers that have similar profiles.

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STRATEGIC GROUPS
▶ There is a range of attributes that can be used to identify strategic groups.
Some examples are as fo lows:
● Size of the company
● Assets and skills
● Scope of the operation
● Breadth of the product range
● Choice of distribution channel
● Relative product quality
● Brand image

▶ Defining an organisation’s strategic group allows a company to concentrate

its analysis on its direct competitors and to examine them in more detail 19
▶ FOR EACH COMPETITOR IN THEIR STRATEGIC GROUP AN ORGANISATION NEEDS,
AS FAR AS POSSIBLE, TO
establish the following:

▶ Competitors objectives

▶ Competitor’s current and past strategies

▶ Competitor’s capabilities

▶ Competitors future strategies and reactions

▶ The competitive analysis allows the organisation to establish its relative position versus
its competitors on a range of important criteria. However the organisation has to judge
itself and its competitors against the market it is operating within.

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 THE MARKET ANALYSIS
▶ A market analysis wi l be made up of a range of factors relevant to the particular
situation under review, but would normally include the following areas:

▶ Actual and potential market size:

▶ Trends:

▶ Customers:

▶ Customer segments:

▶ Distribution channels:

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 2. MARKETING STRATEGY OBJECTIVE SETTING

▶ Based on the analysis of marketing audit of the company the firm

requires to set the marketing objectives for the company

▶ The objectives describe where the company wants to go. The

strategies depict how it intends to get there.

▶ The marketing objectives represent performance commitments for

the future, and are typically stated in terms of market share, sales
volume, levels of sterling distribution, and profitability.
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 3. PERCEPTUAL MAPPING
▶ Mapping consumer perceptions can allow an organisation to see where it is
currently placed compared to competitor’s offerings.

▶ A simple perceptual map is based upon two axis representing key attributes
in a particular market.

▶ These attributes are identified through market research and are determined
by
consumer’s perceptions of the important factors in a market.

▶ Eg: itcan be price and quality, or style and performance or a range of other
issues.

▶ Through the use of perceptual maps marketers can establish the current situation
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in a particular market. There wi l then be a number of alternatives from which to
choose.
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 OPTION EVALUATION
▶ Based on the perceptual mapping analysis firm can decide on how the product can
be positioned within the market place.

▶ In a seminal work Ries and Trout (1981) claim that when considering positioning there
are three principal alternatives open to an organisation:

▶ An organisation can build on a current position to create a distinctive perception of the

brand by consumers.

▶ Having established the attributes that are most important to the consumer, see if there are any
unoccupied positions that are desirable in consumer’s minds and therefore viable
opportunities

▶ Due to changes in consumer behaviour or where perhaps there has been of a failure of
the original positioning a third alternative can be considered which is to reposition the 25

brand
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 POSITIONING & CHOICE
▶ One view is that an organisation should identify one unique selling proposition (USP)
for a product and concentrate purely on that aspect.

▶ The whole focus of this approach is to be seen as the brand leader on that key
attribute.

▶ For example, Gortex fabric is seen as the leading fabric for breathable,
waterproof, lightweight clothing material.

▶ The most effective USPs are based on quality, service, price, value or
advanced technology (Ries and Trout, 1981).

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ACTIVITY 2.2 (30 mins)

Choose a multinational company and conduct

porters five forces analysis

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IMPLEMENTATION AND CONTROL
▶ The implementation and control of marketing plans is a process which should ensure
the achievement of the strategic objectives adopted by the company.

▶ Controlling of marketing involves monitoring and evaluation of the marketing activities of

the company, recording and reporting of deviations to management, which takes
decisions based on this information.

▶ Marketing plan control process includes the following phases:

▶ setting the values of indicators, which are the subject of observation and measurement (e.g.
sales volume, market share, stock rotation, etc.)

▶ determining the tolerance ranges from planned values,

▶ measurement of the values of indicators,

▶ comparison of planned values to actual values, to determine deviations and give explanation of
their causes,
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▶ formulation of proposals to eliminate the detected deviations or change of values of indicators.
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