Marketing Managment

Marketing Strategy

1-Marketing influence
on Strategic Thinking

By: Ahmed El-Tagy

[email protected]
www.eltagy.com

© Ahmed El-Tagy, AAST 2021

1
What Is Strategy?

© Ahmed El-Tagy, AAST 2021 2

 Definition of Strategy
• The long term Direction and scope of an organization,
which achieves advantages in changing environment
through it’s configuration of resources and
competences with aim of fulfilling stakeholder
expectations.

© Ahmed El-Tagy, AAST 2021 3

 The Vocabulary of Strategy
• The three Big strategic questions
• Mission.
• Vision.
• Objectives (Goals).

© Ahmed El-Tagy, AAST 2021 4

 Three Big Strategic Questions

1. Where are we Now? (Situational Analysis)

2. Where do we want to go? (Vision/ Objectives)
3. How do we get There? (tools / Plans)

A B

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 A mission statement
• A statement of the organization’s purpose, what it
wants to accomplish in the larger environment.
• Why do we exists?
• What is our business?
• Who is the customer?
• What are their needs?
• Should be market oriented and defined in terms of
satisfyingstatement
A mission basic customer needs. your
expresses
organization’s purpose, core values and
foundational aims. It encapsulates your business’s
heart and concisely communicates its primary
focus, brand identity and
© Ahmed El-Tagy, approach.
AAST 2021 It serves as a 6
 Local Example:
• Mission statement: Our mission is to satisfy all
communication needs of the developing markets
which we serve. It is our belief that there is viable
economic model to serve emerging markets while
availing affordable quality. We are racing to serve
the largest possible number of customers, covering
the most populous countries in the world. We
believe that by positioning ourselves as the
primary provider of communication services, we
are shaping the future of the markets we serve.
© Ahmed El-Tagy, AAST 2021 7
• Starbucks: “To inspire and nurture the human spirit — one person, one cup and one
neighborhood at a time.”
• Starbucks’ mission statement is passion-driven and appeals to emotion while focusing on the
brand’s core purpose — serving coffee globally. It’s short, sweet and easy to understand.
• Tesla: “To accelerate the world’s transition to sustainable energy.”
• This auto company’s mission statement concisely communicates its reason for existing and
foundational aims. The use of “accelerate” is forward-thinking and fast-paced, which aligns well
with its brand identity.
• IKEA: “To offer a wide range of well-designed, functional home furnishing products at
prices so low that as many people as possible will be able to afford them.”
• IKEA presents its company mission with an accessible statement. It highlights what the brand does
— providing practical home furnishings almost anyone can afford. It also points to its unique
offering — huge product variety and well-designed items.
• Nike: “To bring inspiration and innovation to every athlete* in the world. * If you have a
body, you are an athlete.”
• Nike’s mission statement expresses its fundamental values, inspiration and innovation in athletics.
It’s intentionally inclusive, reminding us that “athlete” doesn’t just refer to the Michael Jordans of
the world but to each of us. This makes it relatable and memorable.
• Google: “To organize the world’s information and make it universally accessible and
useful.”
• Google’s mission statement communicates the range of complex activities it works on in simple
terms. It highlights the company’s primary focus on cataloging and offering information to the
world while laying out its core values — accessibility and practicality.

© Ahmed El-Tagy, AAST 2021 8

 The Vision statement
• It is a future picture, long term direction
• Where the organization is heading?
• What the organization would like to achieve
• Gives the firm a sense of identity.
• Road map for the future
• To be 5-10 years in nature

“Provide a global trading platform where practically anyone can trade

practically anything”

“Be the world’s premier food company, offering nutritious, superior tasting
foods to people everywhere. Being the premier food company does not mean
being the biggest but it does mean being the best in terms of consumer value,
customer service, employee talent and consistent and predictable growth”

© Ahmed El-Tagy, AAST 2021 9

 Local Example:
• Vision :To become one of the world’s leading telecom operators
providing the reliable quality services to our customers, value to
our shareholders and a dynamic, challenging and fun
environment for our employees.

© Ahmed El-Tagy, AAST 2021 10

 objectives
• Objectives are converting the vision and
mission into specific performance targets.
• Ensure that the organization is result oriented.
• Decision making is based on results.
• Provides a set of benchmarks for judging
organizational performance.
• The success of the firm is measured by how
well the firm has achieved it’s objective.

© Ahmed El-Tagy, AAST 2021 11

 SMARTER Objectives
• Any objective needs to be:
• Specific- not vague
• Measurable- in some way
• Agreed upon
• Responsible person/Realistic .
• Time bound- with dates.
• Evaluated- with success criteria.
• Reviewed- at agreed intervals
© Ahmed El-Tagy, AAST 2021 12
 Marketing Strategy
• Marketing strategy is a process that can allow an
organization to concentrate its limited resources on
the greatest opportunities to increase sales and
achieve a sustainable competitive advantage in a
certain market.
• The marketing logic by which the company hopes to
create customer value and achieve profitable
customer relationships

© Ahmed El-Tagy, AAST 2021 13

 Marketing Strategy
• The company formulate it’s Marketing Strategy
simply by answering 2 questions:
1. What consumers will we serve?  (Segmentation
and Targeting)
2. How can we best serve targeted consumers?
(Differentiation and Positioning)

© Ahmed El-Tagy, AAST 2021 14

 Strategy Plan
External Analysis Internal Analysis

SWOT Corporate Strategies

Macro Environment Access to Finance
(PESTL) Marketing
Micro environment Process skills
(Five forces) TOWS Core Competencies

STRATEGIC CHOICE

Differentiation & Positioning (7P’s)

Implementation & Control

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 External Analysis

The environment is everything that is not me.

Einstein

© Ahmed El-Tagy, AAST 2021 16

 Factors Influencing Marketing Strategy
1-External Analysis: 2- Internal Analysis Strength)
• Macro analysis (PESTL) Ability
• Task environment (Porter • Corporate Strategies
five forces) • Financial resources
• Marketing
• Human resources
• Process skills
• Core competencies

In this analysis you have to highlight: In this analysis you have to highlight:
• Opportunities (O) • Strengths (S)
• Threats (T) • Weakness (W)
© Ahmed El-Tagy, AAST 2021 17
 Environmental analysis (PESTL)
• PESTL
• P Political.
• E Economic.
• S Social.
• T Technological
• L Legal.

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 PESTL Analysis
• Political • Economic • Social
• Life Style changes
• Government •GDP • Career expectations
Stability •Interest Rates • Regional shift in
• Foreign trade laws. •Money Supply population

• Attitude toward •Inflation rate • Population growth

•Unemployment • Age distribution
foreign companies • Birth rate
•Wages
• Employment laws • Mortality rate
•Price control • Religious orientation
•Devaluation • Increase Health
•Reevaluation Consciousness
•Energy costs and • Changing pace and
location of life
availability • Changing household
•Disposable income composition

© Ahmed El-Tagy, AAST 2021 19

 PESTL Analysis
• Technological • Legal
•R&D Spending •Regulations
•Patent protection •Tax laws
•Telecom • Customs regulations
infrastructure
•Internet availability
•Availability of
certain
Technology need to
improve productivity

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 Micro-Environment: Porter 5 Forces
• Competition is often looked at too narrowly by
managers.
• Yes we are competing with our direct competitors.
• But we are also in a fight for profits with a broader
extended set of players.
Customers and suppliers who have bargaining
power.
New entries who might come in and grab a part of
the market.
Substitutes that place a constrain on your profits.

© Ahmed El-Tagy, AAST 2021 21

 Micro-Environment: Porter 5 Forces
Threat of
New Entry

Bargaining Bargaining
power Rivalry power
of supplier of buyer

Threat of
Substitutes
© Ahmed El-Tagy, AAST 2021 22
 Threat of New Entry

Barriers to entry:
• Brand loyalty
• Absolute cost advantages
• Economies of scale
• Switching costs
• Government regulation
- Entry barriers reduce the threat of new and
additional competition
© Ahmed El-Tagy, AAST 2021 23
 Local Examples: New entrant
• The NTRA prevents any new entrant from
going in the mobile operator market by
licensing.
• Mobinil, Vodafone, Etesalat

• The high real state prices in prime locations in

a big city could be an entry barrier for new
coffee chain

© Ahmed El-Tagy, AAST 2021 24

 The Bargaining Power of Buyers
• Buyers are most powerful when:
• There are many small sellers and few large buyers.
• Buyers purchase in large quantities.
• A single buyer is a large customer to a firm.
• Buyers can switch suppliers at low cost.
• Buyers purchase from multiple sellers at once.
 Identify market segments, which is attractive, which
is having more or less attention by competition, which
is getting larger.
© Ahmed El-Tagy, AAST 2021 25
 The Bargaining Power of Suppliers
Suppliers have bargaining power when:
• Their products have few substitutes and are
important to buyers.
• The buyer’s industry is not an important
customer to the supplier.
• Differentiation makes it costly for buyers to
switch suppliers.

© Ahmed El-Tagy, AAST 2021 26

 Threat of Substitutes

• A new product that is different than the

existing product, but satisfy customer needs.

V.S.

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 Substitute Example Photography industry

• In the past the traditional cameras with films.

• then Digital cameras.
• Now mobile phones.

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 The Difference between new entries and
substitutes
• New Entry to an industry, brings new capacity, it has the
desire to gain market share, prices and profits will go
down.
• Example: when Etisalat entered the mobile market in
Egypt.

• Substitute: other products that can perform the same

function (satisfy the same needs) as the products of the
industry with different technology.
• Example: Skype, What’s app, Viber.

© Ahmed El-Tagy, AAST 2021 29

 Local example: Low threat of
new entrants
Detergents
???

++
Strong buyer power
High degree from retailers.
Limited supplier of Competition.
power
-
++ --
-
--
High threat of substitutes
Detergent less
washing machine

© Ahmed El-Tagy, AAST 2021 30

 Local example: threat of
new entrants
Banks

buyer power
supplier
power

Individuals and Individuals and

Companies threat of substitutes Companies

Stock exchange
© Ahmed El-Tagy, AAST 2021 31
 Michel Porter Video
• 5 forces.

© Ahmed El-Tagy, AAST 2021 32

 External Analysis
Macro- Political
Environment

Legal Threat of
New Entry

Bargaining Bargaining
power Rivalry power Economic
technological of supplier of buyer

Threat of Micro-Environment
Substitutes

Social

All the external analysis at the 2 levels are

The sources of Opportunities (O) and Threats (T)
© Ahmed El-Tagy, AAST 2021 33
 External Environment Trends

-2 years Now + 2 years

Political :Political stability is increasing (O)

Economic : Dollar price was EGP 7  12  18 (T)
Buyers: there is an increase in health consciousness (O)
Buyers: the demand for smart phones increase
Competition: the number of competitors is increasing (T)

© Ahmed El-Tagy, AAST 2021 34

• Mid term

© Ahmed El-Tagy, AAST 2021 35

 Rivalry Among Established Firms
Rivalry occur because:
• Industry’s competitive structure.
• Demand (growth or decline) conditions in
industry.
• Height of industry exit barriers.

© Ahmed El-Tagy, AAST 2021 36

 Quantitative evaluation of competition CSF
• Quantitative
• CSF critical success factors matrix
• what gets measured, gets done but finding an easy way to evaluate how the
organization is doing is difficult.
• What are the CSF of the industry
Customer Weight Your offer Competitor 1 Competitor 2 Competitor
seeks By experts By customer offer offer 3 offer

Low price
Quality
Product line
Reliability
Delivery
Warranty
Credit line
Total
© Ahmed El-Tagy, AAST 2021 37
 BENCHMARKING
Kmart
•• Wal-Mart
•• Core customer under 44; $40k income; kids
Core customer over 55; < $20k income; no kid
•• $185 sales/ft2
$379 sales/ft2
•• 15 shopper
32 shopper visits/y
visits/y
•• 19%loyalty
46% loyalty
•• Location
49% inconvenient
drive past Kmart to go to Wal-Mart

© Ahmed El-Tagy, AAST 2021 38

• The CSF gives in a quantitative form a
competitive analysis from the customer
prospective.
• You can realize where you are better, and
where is your competitor better.
• You can improve the weak CSF.

© Ahmed El-Tagy, AAST 2021 39

 Analyzing the Current Business Portfolio
• Portfolio analysis: The process by which
management evaluates the products and
businesses that make up the company
• The best business portfolio is the one that best fits
the company’s strength and weakness to
opportunities in the environment

© Ahmed El-Tagy, AAST 2021 40

 The BCG Matrix

• Market Share/ Market Growth Matrix:

• A marketing planning tool that classifies a firm’s
SBU’s or products according to industry growth
rates and market shares relative to competing
products
• Stars
• Cash Cows
• Dogs
• Question Marks
© Ahmed El-Tagy, AAST 2021 41
 The BCG Matrix
Boston Consultancy Group

© Ahmed El-Tagy, AAST 2021 42

 BCG Matrix benefits
• The model provides guidance for resource allocation.
• A company with a product portfolio requires different
strategies to compete effectively and efficiently
according to their cash usage and generation.
• It is not a question of one strategy fits all SBUs since
the likelihood for each of them experiencing the same
market growth rate, industry-threats and leverage is
very slim.

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• Cash Cows:
These products are said to have high profitability, and require low
investment for the fact that they are market leaders in a low-growth
market.
• Stars:
• They tend to/should generate large amounts of cash but also use a lot of
cash because of growth market conditions.
• Question Marks
Question Marks have not achieved a dominant market position, and
hence do not generate much cash. They tend to use a lot of cash because
of growth market conditions.
• Dogs
Dogs often have little future and are big cash drainers on the company as
they generate very little cash by virtue of their low market share in a
highly low growth market.
 surplus cash from cash cow products should be channeled into Stars and
Questions in order to create the future Cash Cows
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• A unit’s relative competitive position is
defined as its market share in the
industry divided by that of the largest
other competitor.
• By this calculation, a relative market
share above 1.0 belongs to the market
leader.
• The line separating areas of high and
low relative competitive position is set
at 1.5 times.

• A product line or business unit must have relative strengths of this magnitude to
ensure that it will have the dominant position needed to be a “star” or “cash
cow.”
• On the other hand, a product line or unit having a relative competitive position
less than 1.0 has “dog” status.
• Each product or unit is represented by a circle. The area of the circle represents
the relative significance of each business unit or product line to the corporation
in terms of assets used or sales generated.
© Ahmed El-Tagy, AAST 2021 45
High

STARS QUESTION MARKS

Market Growth Rate (%)

CASH COWS DOGS

Disaster
sequences

Success
Low
sequences
High Low
Relative Market Share

46
© Ahmed El-Tagy, AAST 2021 46
 New Product Planning
• Companies need to continuously examine
alternative product and marketing development
strategies.
• The Ansoff Model is a very useful tool
Old Product New Product

Old Market
Market Product
Penetration development
Market Product
New Market Development Diversification

© Ahmed El-Tagy, AAST 2021 47

 Ansoff Model Application Starbucks
Old Product New Product
Market Penetration Product Development
 Company growth by increasing  Company growth by offering
sales to current customers modified or new products to
without changing the original current market segments
products 1. Via instant coffee and Tazo tea,
Old 1. Adding new stores in current fitting home brewers
Market market areas 2. Lighter roast coffee (blonde)
2. Improve advertising, prices, meeting the taste of 40%
services, menu selection, store Americans
design, remodeling store. 3. Energy drinks Starbucks Refreshers
Combining fresh juice and coffee
Market Development Diversification
 Company growth by identifying  Company growth through starting
New and developing new markets for up or acquiring business outside
Market its current products the company’s current products
1. New demographic and markets
markets(seniors) 1. Starbucks acquired Evolution Fresh
2. new geographic markets (non US providing super premium fresh-
markets) squeezed juices
© Ahmed El-Tagy, AAST 2021 48
 SWOT Analysis
An overall evaluation of the company’s Strengths (S), Weaknesses (W), Opportunities
(O)and threats (T)

• Strength • A resource, a skill or other

advantage relative to competitors
Internal Analysis
& needs of market

• Weakness • Limitation or deficiency in

resource or skill

• Major favorable situation

• Opportunity
External Analysis
• Major unfavorable situation

• Threat
© Ahmed El-Tagy, AAST 2021 49
 SWOT
• Strengths (S) • Weaknesses (W)

• Opportunities (O) • Threats (T)

© Ahmed El-Tagy, AAST 2021

50
 SWOT Analysis
Internal Strengths (S) Weaknesses (W)
Factors
External List 5 - 10 List 5 - 10
Factors strengths here weaknesses here
Opportunities (O)
List 5 - 10
opportunities here

Threats (T)
List 5 - 10
threats here
© Ahmed El-Tagy, AAST 2021 51
 SWOT Analysis

• Items are listed in separate short points.

• Best to be preformed in Brainstorming sessions.
• Strength and weakness are internal and we can
control.
• If you can influence  it is internal
• Opportunities and threats are external we can not
control, but only impact laws, technology, and
competitor.

© Ahmed El-Tagy, AAST 2021 52

 TOWS Analysis
Internal Strengths (S) Weaknesses (W)
Factors
External 5 - 10 5 - 10
Factors strengths weaknesses
Opportunities (O) SO Strategies WO Strategies
5 - 10 Use strengths to Take advantage of
opportunities take advantage of opportunities by
opportunities overcoming weaknesses
Threats (T) ST Strategies WT Strategies
5 - 10 Use strengths to Minimize weaknesses
threats avoid threats and avoid threats
© Ahmed El-Tagy, AAST 2021 53
 Thank You

© Ahmed El-Tagy, AAST 2021 54