SIBM-2013-International Syllabus Naren Ayyar

INTRODUCTION & OVERVIEW

DAY:1 SESSIONS 1-3

Internal Evaluation

Case

Study-1 Short Q &A Major Project Presentations

20 Marks 20 Marks 30 Marks 20 Marks

July 1-5 July 15-19 July 28-Aug10 Aug 24

Top Managers of an IT company were fussing over a product problem. The software manager declared This is not a software Problem. The Hardware manager suggested that the power supply be Switched off and on, then maybe the problem will get Solved. The Marketing Manager said The product is working 75% OK. Let us ship it. Let Customer Support fix the 25% Under warranty.

WHAT IS A BUSINESS?
A unit of an organization that has a distinct strategy & a manager with sales & profits responsibility. An organization will have many biz units Each country, each region, each segment Too many biz units = inefficiency
Lack

of scale economics Lack of skilled managers

 WHAT

IS A BUSINESS STRATEGY?

The Product-Market investment strategy The Customer value proposition Assets & Competencies Functional strategies & programs

PRODUCT MARKET INVESTMENTS * Product-Market scope * Investment Intensity * Resource Allocation

Where to compete? BUSINESS STRATEGY How to compete?

Value propositions Perceived Benefits * Functional * Emotional * Social

Assets & Competencies * Assets * Competences * Synergies

Functional Area Strategies * Product Strategy * Price Strategy * Distribution Strategy * Promotion Strategy

Where to compete?

Product Market Scope

- Which products to offer & which NOT to offer?

- Which markets to serve & which NOT to serve? -Which competitors to compete with & which not to compete with?

Investment choices..

INVEST TO GROW
MAINTAIN POSITION

INVEST TO ENTER NEW PRODUCT MARKETS Recover Assets

Milk the Business

Liquidate/Divest

Case Study
Crisis in 2004

Stock prices down (GBP3.45)

Many hostile takeover bids CEO Stuart Rose appointed to rebuild biz

Key to turnaround: improved products

Roses strategies
New ranges in clothing & food Quicker customer response in-store More shelf space to cheaper items Investment in strong TV Ad campaign Store renovations Renegotiation of supplier terms

In Mid 2006
share prices:

GBP 5.75

63,000 staff shared a bonus pool of GBP 70 Mil

Customer Value Proposition

Perceived functional, emotional, social or self-expressive benefit from the Companys offerings.

Customer Value Proposition

Propositions need to be
Relevant & meaningful to customer Sustainable over time Differentiate the offering from its competitors

Key elements of Customer Value Proposition

Good Value

Product Excellence

Best Overall Quality

Product Line Breadth

Innovative Offerings

Shared Passion for An activity

Global Prestige

Assets & Competencies (A & C)

Strategic Asset:
A resource (Brand name or installed customer base) which is strong compared to competitors

Assets & Competencies (A & C)

Strategic Competency:
What the company does exceptionally well (manufacturing, promotion). Usually a knowledge or a process

Assets & Competencies (A&C)

Balancing Cost of generating & maintaining A &C with benefits will ensure Sustainable Competitive Advantage(SCA) Assets range from Buildings or locations to R&D expertise. A strong A &C is difficult to build but can result in a significant & enduring advantage

SYNERGY is an important Asset from a business spanning Product markets. SYNERGY occurs when 2 Businesses can reduce costs or Increase sales by sharing a -sales force -logistics system -brand mgmt skill

SYNERGY is also gained when 2 companies offer combo products to consumers or retailers Competitive advantages from SYNERGIES are sustainable over time as they are based on - the organization -the product market scope -the business strategy which are difficult to copy

STRATEGIC OPTIONS

A STRATEGIC OPTION is a specific value proposition - for a specific product market - with supporting A&C and Functional programs

STRATEGIC OPTIONS

A Business strategy will be based on a limited number of Strategic Options. Conceptualizing & Labeling SOs helps to crystallize and describe alternate business strategies to employees, partners, investors and customers

STRATEGIC OPTIONS
Biz Strategies usually involve many Strategic Options

A customer focused strategy of making sensible products that are simple to use must continuously invest in technology & support its designs with fresh ideas from various sources. Strategic options are building blocks of Business strategy which is a set of integrated strategic options

SCA:SUSTAINABLE COMPETITIVE ADVANTAGE

Clear SCA is the foundation of a Marketing Strategy Every firm must possess some A&C relative to its competitors to be successful.

SCA:SUSTAINABLE COMPETITIVE ADVANTAGE

These competitive advantages must be explicitly - identified - developed and - emphasized in its Marketing Strategy

SCA:SUSTAINABLE COMPETITIVE ADVANTAGE

SOURCES OF COMP ADVANTAGE

ASSETS: Strong Brand Attracts new customers Retains existing customers

SCA:SUSTAINABLE COMPETITIVE ADVANTAGE

SOURCES OF COMP ADVANTAGE

COMPETENCIES: Low Price Highly efficient operations Streamlined operating procedures Gets budget-conscious customers

SCA:SUSTAINABLE COMPETITIVE ADVANTAGE

SOURCES OF COMP ADVANTAGE

SYNERGIES:Size & Scope Draw on the expertise across Cos to strengthen each Co/SBU

Becoming Market Oriented

Achieving Superior Performance

MARKET DRIVEN STRATEGIES (MDS)

Determining Distinctive Capabilities

Matching Customer Needs to capabilities

Dells Market Driven Strategy

Combines state-of-art technologies from Intel & Microsoft to serve customers efficiently. Dell introduces next gen products faster than its competitors as its MDS is built around a direct sales & build-to-order Business model This distinctive capability is supported by - effective suppliers - efficient distribution - reliable 3rd party services

Characteristics of Market Orientation

A market oriented firm - understands customers needs & preferences - effectively deploys the skills & resources - to satisfy customers

Characteristics of Market Orientation

*Dells direct customer contact is a distinctly superior source of info on their needs and preferences. *The build-to-order model avoids stocking of less than the latest technology products.

Each computer is custom configured to its customer.

Dell is able to save channel costs and inventory costs & introduce new technology earlier than competition.

Characteristics of Market Orientation

Competitor Intelligence

Which Competitors? What technologies? Do target customers see competitors as viable alternatives?

Characteristics of Market Orientation

Competitor Intelligence

Identify & understand the the principal competitors - short term strengths & weaknesses. - Long term capabilities & strategies

Characteristics of Market Orientation

Competitor Intelligence:

Polaroid defined its market too narrowly: Instant photos

Outflanked by digital photo Companies. If market oriented, Polaroid would have -understood market changes -Recognized competitive threat -Developed strategies to counter that threat

Characteristics of Market Orientation

Cross-Functional Coordination

Market oriented Cos are effective in getting all business Functions working together to provide superior customer value. - Marketing works closely with Operations, HR and Finance

Characteristics of Market Orientation

Superior Performance Market oriented cos have a penetrating view of market. Several Mkt research studies shows that these cos out-perform cos that are not market oriented

Contrasting Strategic & Operational Market Planning

Planning characteristics
Time Horizon Strategy Scope

Strategic
Long term Covers whole Business High External Effectiveness Future High High High Little Innovative

Operation
Short term Covers part Of it Low Internal Efficiency Present Low Low Low Much Incremental

Organizational Significance Organizational Perspective Prime Goal Financial Focus Level of Uncertainty/Risk Decision Difficulty Management level involved Management Control Management Decision Style

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

STRATEGIC OBJECTIVES

ESTABLISH GOALS, CONSISTENT WITH STRATEGY CHOICES, FOR - SALES/MKT SHARE - PROFITABILITY
TOOLS USED FOR ANALYSIS & DECISION MAKING SWOT ANALYSIS GE & BCG MATRICES

TWO CONTRASTING ROUTES TO INCREASING PRODUCT PROFITABILITY FOCUS ON INCREASING SALES VOLUME
EXPAND

THE MARKET PENETRATE THE MARKET

IMPROVE PRODUCTIVITY

DRIVEN BY 2 STRATEGIC CONCEPTS PRODUCT LIFE CYCLE THEORY ABSOFFS PRODUCT-MKT MATRIX

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

NEW PRODUCT MARKET ENTRY

Focus on Market share (Penetration) to improve profitability over long term Build volumes to secure Cost Advantage
Economies

of scale Experience curve

High brand recognition

Stronger

bargaining power with customers Higher Margins

10% increase in Mkt Share= 5% increase in PBT

 STABLE/MATURE

PRODUCT

MARKETS
Shift in focus from Volume Expansion to Productivity
Decline

in market growth Move from cash user to cash generator Find new markets or create new products Diversification opportunities considered

 CONFLICT BETWEEN TWO STRATEGIES

Volume

expansion consumes cash while Productivity focus generates cash Financial & Market share objectives
Broad product range, new products and more market promo increase sales but reduce profits Takes long time for market volumes to result in profits Need for balance between short-term volumes and longterm profits

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

CUSTOMER TARGETS

SEGMENT THE MARKET

SELECT SEGMENTS TO TARGET DEPLOY AN EFFECTIVE POSITIONING STRATEGY

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

COMPETITOR TARGETS

Develop competitive marketing strategies to gain strongest possible competitive advantage

COMPETITOR TARGETS

Sound competitive strategies

Understanding of competitors & their strategies Grasp of competitive market dynamics Current competitors, new entrants, substitutes Prepare appropriate defenses

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

Differential Advantages

Impregnable defense by creating Sustainable Differential Advantage by offering value over above that by competitors
Retail:

Sports shoes:

Differential Advantages

How do firms gain advantage over direct, comparable competitors?

Toyota Lexus offers a car comparable to Mercedes-Benz at a substantially lower cost

KEY SOURCES OF DIFFERENTIATION

PRODUCT DIFFERENTIATION
Unique designs, features, quality, performance, reliability

PRICE DIFFERENTIATION
Exceptional low price based on low costs

DISTRIBUTION & SERVICE DIFFERENTIATION

Fast & JIT delivery After sales service superiority

Differential Advantages

KEY SOURCES OF DIFFERENTIATION

IMAGE DIFFERENTIATION Established reputation Brand confidence

EMPLOYEE DIFFERENTIATION

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

To earn a premium firms must continuously invent new ways to - create - communicate and - deliver Superior value to their target markets

Components of Strategic Marketing Planning

Corporate Strategy
Strategic Objectives Strategic Focus Customer Targets

Competitor Targets
Differential Advantage Marketing Mix Implementation & Organization

Marketing Performance

IMPLEMENTATION & ORGANIZATION

Marketing Managers need to overcome - pitfalls in effective planning & - barriers to effective implementation

IMPLEMENTATION & ORGANIZATION

A) Consider different scenarios in the marketing environment

B) Pursue a Sustainable Competitive Advantage C) Be consistent with Orgn vision & objectives

D) Careful use of scarce resources

E) Exploit synergies within and among SBUs