Strategic Marketing Management v1.61.pdf

2013

STRATEGIC MARKETING MANAGEMENT V1.6 NAXILO

ABE LEVEL 6 DIPLOMA – BATCH 19 2013

STRATEGIC MARKETING MANAGEMENT MANAGEMENT

CHAPTER 1 – STRATEGIC MARKETING MANAGEMENT Strategy means a set of plans or procedures which are being pre-decided to achieve certain objectives. EX: While Allied Insurance Company focus more on individual and corporate insurance policies, Amana Takaful focuses on motor and third party insurance. A company will have more than one strategy and also many options to achieve their objectives, following is an example of Singapore Airlines vs. Easy Jet .

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SINGAPORE AIRLINES Strategy is to provide value added services and diversify the offering Operates with a young fleet with a turnover of 5 years Skimming pricing strategy is encouraged Sales is encouraged through all possible channels Hosts events, does lot of branding activities Maximum number of staff with better training Code share flights via Singapore Focuses on main airports Best food menu served In-flight entertainment provided Holiday starts from home Higher Luggage Facilities

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EASY JET Strategy is to keep the cost at minimum and provide the basic service only Young fleet and highest usage per airline Penetrative pricing or lowest pricing strategy used Website is the only sales point encouraged Marketed only via price

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Minimum number of crew

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Direct flights only Focuses on sub airports No food is served Minimum entertainment Only the transfer Only the hand luggage is free

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CHAPTER 1 – STRATEGIC MARKETING MANAGEMENT Strategy means a set of plans or procedures which are being pre-decided to achieve certain objectives. EX: While Allied Insurance Company focus more on individual and corporate insurance policies, Amana Takaful focuses on motor and third party insurance. A company will have more than one strategy and also many options to achieve their objectives, following is an example of Singapore Airlines vs. Easy Jet .

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SINGAPORE AIRLINES Strategy is to provide value added services and diversify the offering Operates with a young fleet with a turnover of 5 years Skimming pricing strategy is encouraged Sales is encouraged through all possible channels Hosts events, does lot of branding activities Maximum number of staff with better training Code share flights via Singapore Focuses on main airports Best food menu served In-flight entertainment provided Holiday starts from home Higher Luggage Facilities

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EASY JET Strategy is to keep the cost at minimum and provide the basic service only Young fleet and highest usage per airline Penetrative pricing or lowest pricing strategy used Website is the only sales point encouraged Marketed only via price

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Minimum number of crew

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Direct flights only Focuses on sub airports No food is served Minimum entertainment Only the transfer Only the hand luggage is free

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Marketing Planning and Strategy In order to have a proper strategy there should be a proper plan. A marketing plan should include the following stages: 1) Where do we want to go? (vision, mission and objectives) 2) Where are we now? (situational audit) 3) What is the best way to reach? (strategy) 4) Making sure to reach (Implementation and Control)

Strategic Marketing Plan Strategic Marketing Plan is a complete guideline which includes objectives, strategies, tactics and control points.

QUESTION: DEC 2012 Explain a theoretical marketing plan and evaluate its importance for a marketing manager. (15 marks) A well developed marketing plan can increase the effectiveness of the corporate plan. A good strategic marketing plan will have a clear vision within a well defined objective armed with strategies to achieve them. Even though marketing plan period changed in accordance to the industry, having a marketing plan is better than not having any. A proper strategic marketing plan will include the following steps. 

Corporate Objectives

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Situational Analysis

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SWOT (Internal)

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PEST (External)

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Resources

Marketing Strategies 

Segmentation/Targeting/Positioning

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Ansoff’s Matrix

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Marketing Mix

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Boston Matrix

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Shell Matrix

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Marketing Tactics 

Quarterly Targets

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Sales Budgets

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Product Development and Launch

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Research

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Implementation

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Monitor

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Control

Vision, Mission and Objectives Vision is the ultimate dream that the organisation expect to achieve in its long run. Rarely there are organisations that have exceeded the dream and therefore redefine the vision again. EX: Amazon.com‘s initial vision was “to be the world’s leading le ading bookstore”. Once they achieved it, they changed their vision to “Anything under the SUN”. Vision is more weight and more

qualitative. Mission is more of a quantitative definition of the vision. It converts the vision into an achievable format and gives a practical target. EX: IBM put their mission statement as the best and most preferred IT partner in terms of corporate and individual needs. Objectives are further breakdowns of the mission for shorter periods and initial targets. EX: “To increase the market share by 2% at the end of the year 2015.” EXII: Clique College may have the objective “to enrol 1000 students within next 3 years.”

Objectives should be Specific, Measurable, Achievable, Realistic and Time-frame, or i n other words, “SMART”. There are several stages of the marketing plan. If we start from the beginning, corporate plan is the organisations ultimate plan followed by marketing, human resources, finance, etc. Therefore organisations overall planning with related to marketing can be displayed as follows:

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CORPORATE 

Human Resources

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Information Technology

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Sales

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Finance

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Logistics

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Marketing 

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Marketing Plan 1 (Product Range A) -

A1 [promotional plan]

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A1 [branding plan]

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A2 [promotional plan]

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A2 [branding plan]

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STRATEGIC MARKETING MANAGEMENT

CHAPTER 2 – PRODUCT MANAGEMENT AND DEVELOPMENT Product A product can be a good service or even an idea. This is maybe to describe a physical or nontangible aspect which can only be felt. Whatever it is, it should be to satisfy a need. A product may have the following: 

A physical product or service. EX: A chair

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Expected product is the benefit out of it, it may have a brand name, price, etc. EX: Golden Lane’s Avatar chair.

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Augmented products which differentiate from the competitors. EX: Long lasting PC designed avatar chair.

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Potential product which allows the organisation to offer a combined solution. EX: Avatar PC furniture design.

Also, a product can be categorised in another dimension. 1) Functional Dimension: The use of the product. EX: For smooth shaving 2) Tangible Aspects: This is where the touch and the feel of the product is considered. EX: Philips develops electric trimmers/shavers in different sizes for different markets. 3) Symbolic Aspects: Represents the value of the brand. EX: Coca-cola is valued as a true American legend than a carbonated drink.

Classifications of the products In marketing, products are classified into: 1) Consumer Products 2) Industrial Products

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Consumer Products Consumer products are expected to be bought by the end user. The product is further classified into sub groups, depending on the value, usage point or by features. 1) Convenience: Easily available, less brand loyalty, slight variance compared to competitors and mostly the generic products. 2) Shopping: Mostly semi durable appliances such as mixers, grinders, dry irons, washing machines, etc. This may require a guarantee, warranty, It can be payable through debit cards and value is more important than the price. 3) Speciality: Most of the time it is a high involvement product. Decisions will be taken after careful analysis and references, previous experience matters a lot.

Industrial Products Industrial products are used and marketed differently than consumer products, since the target audience have different expectations.   

Raw materials and components: EX: Fabric, buttons, zippers, etc. Equipments and plants: EX: Huge machineries, warehouses, etc. Supplies: These are products required to complete the product using raw materials and machineries. EX: Cartridges, Ink toners, imaging units, etc.

The concept of marketing a product In marketing, we are more focused on satisfying the need, rather than selling a product. Therefore it is important to understand the benefit you offer than the product only. Variations may come in different forms, but the need and the benefit remains the same. EX: Sony tries to enter all entertainment segments such as TV, Audio, Cameras, Gaming, DVD and CD, etc.

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New Product Development Process (NPDP) Idea Generation

A M O

Screening

U N T

Concept Testing and Development

O F IN V

Marketing Strategy

E S T E M

Business Analysis

E N

Product Development

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Test Marketing

T

Commercialization/Launch

Managing Products A marketer has to carefully balance the product range in order to be efficient or successful. Either; 1) Existing product can be well managed, properly branded and penetrate the market. 2) Introducing new products and extending the range. EX: Whale Submarine in Maldives tries to maximise their sales with the existing product by offering different packages and timings. EXII: During the recent years, Clique College have consolidated courses on IT, ACCA, Judicial Service and Language Proficiency.

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Product Life Cycle (PLC)

During the introduction, a small quantity is manufactured, and then these products are tested with the actual target market. Later with corrections and amendments, you may come to the market aggressively with minimum variants (sizes, flavours, etc.) Once the product starts to make the profit and hits the break-even point, marketers can be very aggressive to get the market share. When the product reaches the growth stage, marketers introduce maximum variants and sizes. You may also develop own competitive brands to keep the competitors busy. At this stage, either catching up with competitors or challenging them is common. When reaching maturity, you may get rid of all ill performing brands and the successful brands are given high priority. These brands will be heavily branded until they become top of the mind. In the decline stage, two things can be done. That is either to re-launch or to introduce next generation products.

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Roger’s Diffusion Model

Roger’s diffusion model represents how a customer adopts a new product from the

introduction stage to the end. As marketers, Roger’s model is a good guideline when planning their product management.

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CHAPTER 3 – PRICE MANAGEMENT Pricing the product right is not a chance but science. Getting the price right is hard but achievable through proper marketing analysis. A price is viewed in different ways by sales manager, product manager, finance manager or distributor.

Pricing Decisions Pricing decisions are based on two factors: 1) Customer and the market factor: Here, marketer will analyse the perception of the customer about the product, the value that they are willing to pay for the product and emotional aspects. 2) Cost Incurred: After considering the total expenditure and the profit margin which customers will also accept, pricing will be decided.

Pricing Policies There are many reasons behind pricing strategies. Pricing policies consist of factors that influence the strategy to be chosen.

Cost Oriented Industries such as FMCG, industrial goods, electronics are forced to cover the minimum price and reasonable profit margin. At minimum the product should cover the fixed and variable costs.

Demand Oriented It is very common in general marketing. EX: Hospitality industry, Ticketing & transportation, some seasonal food products

Competitor Oriented The pricing is totally dependent on the market conditions and competitor strategies. These maybe used when the market has a price war or monopoly or oligopoly conditions. EX: OPEC maintains standard prices to keep the demand.

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Influences on Pricing There are many factors which influence the pricing decision. All these factors can be classified into three sections. 1) Corporate and Company factors  Profit Margins  Market share ideology  Quality concerns  Service factors  Return On Investments (ROI) 2) Product Factors  Product Life Cycle (PLC) stage  Customers idea about the segmentation and positioning  Quality standard of the product  Packaging and storage requirements 3) Customer and Market Factors  Demand  Perceived Value  Customer Benefit  Competition  Environment and Geographic factors

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Pricing Strategies Pricing strategies help marketers to give a science behind their decisions. Choosing the right strategy should also analyse the pricing policies and the influences.

1) Price Skimming This is where above the average price is quoted for the uniqueness, innovation or due to the strong brand image. Marketer should be careful to make sure that customers comprehend the uniqueness or difference.

2) Penetrative Pricing When the product is generic or does not have any uniqueness/no market demand, marketers will have to adopt this strategy.

3) Early Cash Return Certain organisations spend huge amount of money during the initial investment and if they feel their advantage might not last long, they may try to get the return on investment much faster. Depending on the market condition, it may either be by increasing the price or lowering the price.

4) Satisfactory Cash Return 5) Differential Pricing To overcome certain competitive and market challenges, differential pricing is encouraged.

6) Competitive Pricing 6.1) Discounts: Either based on the volume or the value. 6.2) Menu Pricing: Here different options are given for customers to choose from. This is a better way to avoid brand image conflicts. 6.3) Promotional Pricing: Temporary action to overcome competitive barriers.

Managing Price Managing price is one of the hardest decisions a marketer may have to make in his job role in the management. The following may take place: 1) To reduce the price of the product 2) To increase the price of the product 3) Compete with competitors

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Whenever you are making a decision on the above, marketer will have to analyse the following factors: 1) Cost: Variable, fixed and hidden cost should be considered 2) Demand Factors: When deciding on a price decision, elasticity and inelasticity of demand should be considered. 3) Break-even point: This is considered along with the PLC to understand how the pricing changes will backfire at the bottom-line.

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CHAPTER 4 – DISTRIBUTION MANAGEMENT This is where the whole process of taking the product from organisation to the consumer is being discussed. Here, distribution management has been classified into logistics management and retail chain management.

Distribution Methods/Channels Direct Sales – EX: Olive Garden Online Marketing – EX: Air Asia Direct Marketing – EX: Insurance and Savings deposits Tele Marketing – EX: TV Representatives/Agents – EX: Dhiraagu Indirect -> Retailers – EX: “Killi” in Maldives Wholesaler -> Retailer – EX: Philips Agents -> Wholesale -> Retail – EX: Red Bull

Distribution Strategy There are different channels and methods identified to move a product from the organisation to customer. All these methods are selected based on the strategic approach the organisation expects to implement.

Intensive Distribution In this strategy, you may try to maximise the distribution range. You may perhaps even choose all the distribution channels. 

Price of the product will be low or disposable

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Suitable for low involvement products

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When the visibility is high, chances of selling is higher EX: Supari, Chocolates

Selective Distribution Total solution is provided by the representative agent from spare parts to after sales. EX: Home appliances, paints, motorbikes, etc.

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Exclusive Distribution When the product is of high value, then exclusive distribution is encouraged. 

Products will be of up market and high valued.

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High involvement products (EX: Housing, Vehicles, etc.)

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Packaging will be given high priority

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If the product is specialised, (EX: Consultancy, Media selling) this method can be used.

Channel conflicts can happen when 2 or more channels overlap or when one channel is been made cut by another. When managing the distribution process, few things should be considered: 

Strategies

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Product Factors

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Seasonality – EX: Cashew nuts

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Rate of turnover – EX: A house for lifetime

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Product Life Cycle (PLC) – EX: Some softwares have a short life span.

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Perishable: If the goods are not durable, distribution method should be changed.

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Image of the product should suit the packaging and distribution.

Requirement of the Seller 

Competition which may come from price, brand or margin

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Intermediary attitudes in how the supplier considers control and other supportive factors

Franchising Franchising is the easiest way to expand business overseas and gain exposure with least investment. Brand name and training will be provided by the Franchisee.

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CHAPTER 5 – MARKETING PROMOTIONS AND MARKETING MIX Marketing promotions are used as a communication tool to carry the organisations message to customers. A good marketer should respect the following factors: 1) Target Audience 2) Consistent Message 3) Right Promotional Tools and Channels A promotion or communication will have at least one of the following objectives 1) For informative purposes EX: Villa College 2) Persuading EX: Jilbaab 3) To repeat buy a product EX: SONEE Hardware 4) For branding purposes EX: Coca-Cola, Dhiraagu

Promotional Mix Advertising Personal Selling Direct Marketing Public Relations Exhibitions Packaging Posters and Flyers Hoardings and Danglers Internet and Social Media Point Of Sales (POS) Materials

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Promotional Campaigns Promotional campaigns are in nature aggressive, short term and win-win for customers as well as the organisation. This may run through up to 3 months. Promotional Campaigns may require lot of effort from marketers in terms of critical thinking and implementation. EX: Clique College will be launching first Herriot Watt Marketing Batch in Jan 2013. Make a campaign plan to promote the event. After deciding to go for a promotion, marketers come out with a promotional plan which is represented through GANT CHART. These promotions are done in 3 ways: 1) Burst Campaign 2) Drip Campaign 3) Mixed Campaign When creating a promotional campaign, a marketer must consider the following factors. 1) How much does the campaign cover in terms of target audience 2) Cost of promotion (marketers have to mind per head cost, return on investment as additional customers, etc.) 3) It can either use attack, defence or protective strategy

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CHAPTER 6 – BRANDING AND BRAND MANAGEMENT Branding is commonly known as a name, term, sign, image, colour, logo or a combination of these which differentiate the product from the rest of competitors.

Purpose of branding 1) To give a unique identity 2) Avoid stereotyping 3) To make a demand 4) To last longer 5) To give an advantage through service EX: A car painting garage will be able to differentiate their product through service. 6) Advantage through other intangibles EX: Coca-Cola stands out from the competitors due to branding.

Brand Loyalty When a brand repeatedly satisfies a customer and if it has been marketed through proper advertising, branding comes into action. Brand Loyalty is when a customer naturally tends to purchase a product and to buy it repeatedly. EX: A normal Starbucks customer visits 6 times per month while a loyal customer visits 16 times per month; meaning higher frequency of purchase.

Brand Value A brand value is measured in 3 ways: 1) How much income does it bring to the organisation 2) Market approach which compares it to other similar organisations 3) Cost approach where the amount of money is spent on building the brand is considered

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Brand Erosion Due to different reasons, brands get diluted or disappear from the market. 1) Private Branding EX: TESCO starting their own range of products 2) Brand Forgery Some brands have many plagiarisers which will ruin the original brand. EX: BOSS vs. BOOS 3) Negative Brand Associations EX: Pepsi had to face many problems when Michael Jackson had a fire accident. 4) Bad business practices EX: Nike was accused of using child labour in Bangladesh 5) Act of God / Natural Causes Certain airlines did not recover after 2001 downfall 6) Grey Marketing This happens when the marketing activities are unclear and difficult to gain confidence in the public.

Building Brands This is a long term expensive task which requires lot of commitments, plans and long term vision. Branding can be done in 3 ways.

1) Corporate Umbrella Branding One brand is promoted and all the new developments come as a sub-product of the original brand. EX: Toyota releases new car in different ranges (Lexus, Rav4, Corolla, Allion). It can be a good method for multinational companies, but the drawback is that negative publicity of one brand can ruin the whole brand range.

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2) Range Branding This is where one company has different ranges for different products. This helps the organisation to concentrate more on each product separately. EX: Companies such as Unilever, Proctor & Gamble (P&G) and Coca-Cola use this method. It makes it difficult for competitors as it covers all gaps in the market.

3) Individual Product Branding Nestle uses individual branding to market their products. Kitkat, Milkmaid, Milo are separately branded. This may require higher investment to brand separately but outcome will be quite positive.

Developing Brands This is a difficult management decision to make and have to consider many aspects of it. 1) Analysing the effect of the existing brand is very important as it may ruin the current brand image 2) Compatibility and suitability for the global operation. Name, colour, symbols should not make issues in the global standard. Certain brands may have ethnic issues such as the cross in the Anchor label in Middle East. 3) Potential Growth Ability: Having the expansion facility both horizontally and vertically will give the opportunity in the long run.

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CHAPTER 7 – SERVICE AND NOT FOR PROFIT MARKETING MANAGEMENT Service marketing is becoming increasingly popular due to the reason that there is no pure product or no pure service. Therefore we are considering service as a partial product with few differences from a complete product. EX: Many restaurants and cafés provide same type of food but they may change the product or service factor. While some restaurants prefer American pan pizza while others may prefer thin crust Italian pizza. The main difference between a product and a service is intangibility. Apart from that, there are other differences such as inseparability, heterogeneity, perishability and lack of ownership. Intangibility: 

No brand, difficult to sample, low entry barriers, no patents

Inseparability: 

Restrictions in mass production, produced and used at the same time, service receiver also have a part in the service.

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Depends on the employee that cant distribute it like a product

Heterogeneity: 

Naturally service level varies, quality control and standardisation is very difficult

Perishability: 

Spoilage, time sensitivity and usage of unused capacity is not possible

Lack of Ownership: 

Customers cannot own the service, it is only a rent

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Service Quality Service quality is analysed by marketers to measure the standard of service. Measuring quality correctly is very important in the customers’ point of view. There can be many reasons for a service to not reach the expected standard. This is explained by the gap model. WORD OF MOUTH

PERSONAL NEEDS

PAST EXPERIENCE

EXPECTED SERVICE CUSTOMERS

GAP5 GAP1

PERCEIVED SERVICE

SERVICE DELIVERY

GAP4

GAP3

SERVICE QUALITY

EXTERNAL

SPECIFICATIONS

COMMUNICATIONS TO CUSTOMERS

GAP2 MANAGEMENT PERCEPTION ON ORGANISATION

CUSTOMER EXPECTATIONS

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Gap model is used to find out the difference in the service expectations in accordance to the views of customer and organisation. It also analyses gaps within the organisation.

Service Quality (SERVQUAL) SERVQUAL is an analytical system used by marketers to analyse the service quality. In this all the factors of a service industry is divided into 5 sectors; 1)

Tangibles

2) Reliability 3) Responsiveness 4) Assurance 5) Empathy When studying SERVQUAL, all aspects of service will be analysed with the above 5 factors, the main disadvantage is that expected level in each criteria may vary from person-to-person.

Not for Profit Marketing

In Not for Profit sector, also called as the third sector, the main purpose is different to what public sector does (“Electoral Mandate”) and what private sector does (making profit). Third

sector satisfies those who have a need but neither of the other parties is interested to satisfy. EX: Blue Cross is a society which comes forward to control cruelty towards animals. There are governmental and private sector N4P organisations. National Lottery in UK is a government formed N4P; while Bill Gates Foundation is an example for private.

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CHAPTER 8 – MARKETING INFORMATION ANALYSIS AND RESEARCH Marketing information has become a key priority as rest of the planning is totally dependent on the information.

Situation Analysis Here, we analyse what happens inside the organisation, as well as what happens in the outer environment. Therefore it is analysed in two areas. 1) Internal Environment (Micro Environment) 2) External Environment (Macro Environment) In the external environment, marketers are more concerned about financial difficulties, developing trends in customers and other relevant factors.

Porter’s Five Forces Theory Porter identified the competition is really n ot coming from only direct competitors. EX: Pepsi is not the real competitor of Coca-Cola, but instead it is water. Therefore Porter analysed 5 areas which could be competitive for a product. 1) Direct Competitors 2) Threat of New Entrants: Printing industry is more worried about the digital media than the direct competitors. 3) Bargaining Power of Suppliers: When Coca-Cola withdrew from Wal-Mart because they could not get the front shelf, sales dropped from Wal-Mart and they had to accept demands from Coca-Cola. 4) Bargaining Power of Customers: Tesco supermarket chain forced suppliers to bring down the cost to what they want or else to lose the total business.

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5) Threat of substitutes: Instead of choosing a chocolate, a customer may choose an ice cream. Therefore, the product range has to be fought against as well.

1) Using an organisation of your choice briefly describe porters five forces theory model and explain how it can be used as a basis for investigating industry competition. 2) A) Describe what is meant by a hierarchy of plans. Corporate Plans – Set according to the company vision, mission and objectives analyses financial aspects, shareholder perspectives brand equity and qualitative measures. Regional Plans – This is where organisation gives priority, for the regional advantages. EX: Asian region for manufacturing and European region for service and research. International Corporate Plans – Each country or SBU is considered with a unique plan. By default, this should be in line with regional and corporate plan. EX: Marketing Plan, Sales Plan Tactical Plans – This is to achieve midterm objectives and target. EX: First quarter sales, market share, etc. Operational /Functional Plans - day to day activities Contingency Plans - are used to recover when the original plans are not in time. EX: In case of a Tsunami, to divert production to an unaffected stable area.

B) Identify and briefly describe the various types of plans that the strategic marketer is likely to come across when working in a multinational company.

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CHAPTER 9 – CONSUMER MARKETS AND CONSUMER BEHAVIOUR Consumer behaviour can be discussed in many aspects. It may be in industrial market or in consumer market. Both the markets have different characteristics, but when it comes to segmenting, targeting and positioning the factors may turn out to be the same.

Segmentation Main purpose of segmentation is to differentiate the company from the rest of players. If successfully segmented, target market should not have a second thought or confusion regarding the choice. When you segment successfully you should be able to: Focus activities: Diabetes Association of Maldives organising awareness walks To reduce risk: Memory plus is for instant memory power Battle Competition: Traders Hotel offers 5 star facilities in Male’ Understand the customers: Pizza Hut realises the need of having spicy menus in the Asian markets. Helping in Planning: Harley Club and Ferrari Club know exactly what their customers want

Targeting When targeting a market, strategic marketers may have to look into the following: 1) Loyalty: CFL bulb market 2) Price sensitivity: Marlboro 3) Ability to cross spend: A Philips TV buyer may choose to buy a Philips Home Theatre and DVD. 4) Growth Potential: Villa College utilises their resources into segments such as diving schools, Islamic studies, psychology

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Positioning Commonly used techniques are positioning maps and perceptual maps. The positioning is done in the consumers mind. Therefore it requires lot of effort and money apart from time.

Influences on organisational buying 

Multiple objectives – EX: A purchaser might consider quality factors, cost, profit, etc.

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Many people and departments are involved – EX: For a purchasing of raw material shipment, marketing, finance, logistics, procurement, senior management may be involved.

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Value of purchase will be very high and repeated – EX: Annual text book purchasing from the government.

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Buying patterns are set – EX: When resorts are buying food items, they have limit ed but trusted, selected suppliers.

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Market influences – EX: During financial crisis, low cost options

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Organisational factors – EX: Apple may deal with selected suppliers, since Samsung copied their technology.

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Personal Reasons – EX: Politics and conflicts

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Using a company of your choice explain how strategic marketers can approach new business opportunities successfully. P.s. students can use analytical methods such as SWOT or PESTEL Marketing environmental analysis is given high priority when analysing and making strategic marketing plans. Having a clear idea on the strengths, weaknesses, opportunities and threats gives marketers the opportunity to look into hidden factor and also for future developments. External environmental analysis helps the organisation to prepare well in advance for uncontrollable factors such as PESTEL factors. Having a clear vision, understanding and in-depth knowledge may make the marketing plan more synergetic and realistic. Fuel Supplies Maldives (FSM) is a well known organisation in Maldives for supplying of fuels. It is a government owned entity which is responsible for social welfare and also for profit making. When FSM is doing strategic planning they may use environmental analysis in many different ways to make it more appealing and realistic. By understanding their strengths and weaknesses they may decide on the competing strategy. As they are the market leader they may use this strength to capitalise on the market share. They may often miss the weakness as the focus is more on opportunities. FSM may have difficulty in being flexible, and turn around will be slower than the competition due to bureaucracy. FSM may find different opportunities in the market and as the flexibility is the problem they may plan well in advance. They may approach upcoming resorts and airports with a better proposal. As Maldives is highly affected from global warming, fuel consumption may be considered as a social responsibility. Therefore FSM can take precautions and develop a green attitude. Around the globe solar energy, wind power, turbine energy is more appreciated than fuel energy. Therefore FSM may include a contingency plan if alternatives are encouraged. Technological developments may force to bring changes in the product. Therefore future techno aspects will be analysed by FSM such as 98% octane petrol.

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Economical factors such as exchange rates and environmental factors such as Somalia Piracy may happen anytime. Analysing the environment helps the organisation to keep a healthy margin of profit and insure while transporting, etc. As mentioned above an organisation can make their marketing efforts and plans much successful by analysing the environment. Also, it gives additional point of view and dimensions that haven’t been thought of to the planning process.

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CHAPTER 10 – MARKETING INFROMATION SYSTEM (MIS) Marketing Information System (MIS) is a supporting tool for decision making. To make better decisions MIS should have better information. To get accurate outcomes, information should be up to date, error free and sufficient. MIS is sophisticated software which has the ability to connect database management systems, search engines and other relevant materials. MIS consists of 4 components which coordinate with each other through a logical mathematical system

MANAGERS

- Strategic - Tactical - Functional - Planning - Implementation & Control

MARKETING ENVIRONMENT

Internal

Marketing

Document

Intelligence

Marketing

Marketing

Anal sis

Research

- Political - Economical - Social - Technological - Environmental - Legal - Pressure group - Competitor - Customer - Supplier

Feedback

Utilising MIS 

MIS is used to filter loyal customers and to implement CRM strategies towards them. EX: Emirates Airlines offers skywards, free mileage flyi ng for frequent flyers.

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It helps the company to decide future business trends and to come up with proper plans. EX: Emirates came up with a joint venture to Qantas (Australian Airline) seeing the growth potential in the eastern world.

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It is a good tool to analyse the internal and external synchronisation. EX: Emirates understands their customer preferences and staff are well aware about the customer needs. They have a cabin crew member who understands and speaks in customer’s language.

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It helps to understand the hidden reasons behind a customer’s thinking process and it notices the factors that may be ignored by a manager. EX: Emirates have state-of-the-art entertainment system I C E which offers something for everyone.

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MIS may improve the service factors through research techniques. EX: Emirates is committed for continuous training and development for their staffs.

Marketing Research Marketing research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services. Marketing Research is carried out in two ways: 1) The Pilot phase- This is where when you research the data that is already available. Therefore it is also called as Secondary research/Exploratory research. Since it is convenient, it is also called as desk research. 2) Primary Phase: Here, an in-depth research is being conducted with fresh objectives and probably in the field (maybe in a laboratory, where real business takes place)

Marketing Research Process 1) Set Objectives 2) Define Research problems 3) Assess the value of the research 4) Construct a research proposal 5) Specify data collection method 6) Specify techniques of measurement 7) Select the sample 8) Data Collection 9) Analysis of result 10) Present in a final report

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Problems in a research Marketing research can be misleading or can become useless due to following reasons: 1) Accuracy: A research is carried out to identify an exact problem or to find a solution. Therefore inaccuracy may take off the sole purpose of research. EX: Regarding a research of an infants baby oil, it is a must to considers mothers opinion as well. 2) Cost: To get a better result, sufficient sample size is a mandatory factor. When sample is too small, it may not reflect the population. This often happens when the budget is not enough to conduct a proper research. 3) Safety: Often people suspect that their information will be misused. Therefore they may avoid the research or give false information. EX: When a middle class individual is asked regarding his life standards, answers tend to be exaggerated. 4) Time Factor: Certain research requires time to gather and analyse information. When the time is limited, high tendency for shortcuts and convenience samples. This may give a wrong answer to research problem. 5) Errors in conducting research 6) Researchers knowledge levels 7) Literacy rate of the audience

Secondary Research Secondary research is also called desk research, pilot research, desk research, etc. It is the f irst phase of the research where already available information is being analysed and interpreted. Mostly it is available for free, or can be bought at a very reasonable price. EX: Customer panel research which can be bought for few dollars. This may have all the information regarding TV channels, programmes and audience viewing rate.

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Most common secondary research sources are publications by the organisation; annual reports, invoice and delivery reports. Others include government publications, statistics, and ministry publications. Internet and websites, magazines and newspapers can also be classified as other sources. Secondary research is conducted first, because it gives an idea in advance to the raw data collection. It also helps to find customers for sampling and research, and at times to eliminate the need of research.

Ethical Issues in Marketing Marketing is a controversial subject when it comes to profit and ethical factors. It is often complained that marketers ignore the importance of ethicality when they are more focused towards profits. EX: When Coca-Cola was having a sales drop for the fi rst time, their sales figures being taken over by Pepsi. They were then forced to make extreme measures, where they played sweet cola campaign, which was inspired within the organisation itself.

Latest Developments in the Concept of Marketing Since the introduction of marketing, many concepts and additional components have added values to increase the meaning of it. Instead of looking at the company and the customer relationship, this enables the organisation to go few steps further and to increase the benefit towards the whole society. 1) Societal/Green Marketing Effects: Following ethical guidelines, maintain honesty in all dealing and concerning other environmental factors are all part of green marketing. It is slightly different from Corporate Social Responsibility (CSR). It is more than benefitting the society; it is towards doing the right thing. 2) Relationship Marketing: This is where customers and the company work as partners in the business, which is very common in B2B marketing. At times it is applied in B2C as well. EX: The relationship between Open University of Malaysia and Villa College. EXII: Marble Hotel issues a loyalty card for the frequent customers. 3) Internal Marketing: It values the staff and their career and personal developments, as well as their rights.

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4) Direct Marketing: This helps to maintain one-to-one relationships with customers. This may use all the possible media available. 5) Electronic Marketing

6) Customers: Rather than looking at the customer in one point of view organisations started to value different perspectives.

Corporate Social Responsibility CSR should never be used as an advertising or marketing tool. CSR is done to fulfil a societal need which is not given the proper recognition by others. This maybe simple or it may l ead to a huge campaign such as Bill Gates Foundation. Some of the CSR examples in real life are as follows: 

Emirates group have a ship filled with food items, medicines and necessities to cater in disastrous situations.

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ODEL, a leading clothing chain in Sri Lanka runs a CSR campaign called embark to provide shelter for stray dogs.

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HSBC helps to improve IT knowledge in Africa by donating computers and conducting classes.

When it is a CSR programme it should be different from what the company markets and they should take the ownership of the project.

Is CSR Necessary? 

Since organisations are profit motivated, it is often questioned whether a CSR is necessary. It is necessary because business is conducted in the society; therefore organisation is responsible for their well being.

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Is the organisation supposed to undertake social welfare and address broader issues? In long term sustainability, businesses benefit from CSR.

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Will the business get powerful in the society? Since business employs skilled and capable staff, why not address these issues?

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What if the competitor spends that money for promotions and product improvements? This may look profitable in short-term, but by the time competitors realise social issues, CSR will come in handy.

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Organisations specialise in resource management and not social welfare management. Organisations and employees take responsibilities in each of their job task, and therefore they are qualified to address social responsibilities as well.

Internal Marketing Until recently, employees or whoever works very closely within the organisation’s parameters

were considered as secondary. Only after many practical implications they started recognising internal staff as well. Any activity which is more like marketing which motivates employees to work towards organisations goals is concerned as internal marketing. EX: Segmenting them in different categories, hard working, loyal, smart, etc. EXII: Grievance/Complaints hotline EXIII: Suggestion Boxes EXIV: Corporate internet & intranet facilities EXV: Company organised events, staff together, inter departmental tournaments and recreational activities At the same time, there can be negative motives towards internal marketing, due to cost, time and low engagement levels from staff.

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CHAPTER 11 – E-MARKETING AND NEW MEDIA Due to the development in technology, marketers are much capable of communication with customers than ever. Most common technological developments are: 

Internet

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Social Networks

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Search Engines

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PayPal

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Wire Transfer

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Email Campaigns

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Viral Marketing

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E-forums and blogs

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Interactive media such as interactive TV, Skype & chat forums

Internet marketing, also known as online marketing is used in 5 ways commonly known as online marketing’s “5S”: 

Sell – To a global market

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Serve – To provide additional information or service

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Save – By reducing traditional methods of advertising

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Speak – One-to-One

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Sizzle – Impress visitors by a grand website

At the same time, E-marketing has a few unique characteristics. This is studied under “6Is” 

Interactivity

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Intelligence

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Individuality

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Integration

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Industry restructuring – Inventing new distribution channels

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Independence of location

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Capabilities of E-marketing 

As a research and planning tool

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As a distribution channel

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Customer Service

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Communication and promotions : Travel agents, tour operators, book stores and supermarkets, etc

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As an advertising medium

Risks involved in E-marketing 

Connectivity

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Cost

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Technical Staff

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Technical Faults

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Viruses and Hackers

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Legal Issues

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Spam

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Intellectual property

New Media Due to the growth in virtual media, there are few new media, which are now dominating the market. 

Email marketing campaigns

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Viral marketing, also known as word of mouse, where one i ndividual share one event to their friend

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Wireless marketing/mobile marketing

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Interactive television: A good media for instant feedback, used in voting, product search, banking and gambling.

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CHAPTER 12 –THE APPLICATION OF STRATEGIC MARKETING TO VARIOUS BUSINESS CONTEXTS Strategic marketing differs from large organisations to smaller organisations. Depending on the size of organisation, product marketed and the ideology of management, marketing strategy may change. There are micro enterprises (less than 10 employees), Small enterprises (10-49 employees), Medium sized enterprises (50-249) and Large organisations (250+ employees). Depending on these types, strategies may change significantly. Also, on average only 5% of SMEs become successful enough to become a large organisation.

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SME Market Share is small : Low turnover Often, owner or family members or few individuals are in the management Attempts every opportunity possible, more practical and lacks marketing skills Lack of resources money, skills and people Generic Solutions Easy to enter, easily faded Individuals get multitasked Very flexible Lower wages, lack of training, limited benefits Average 5% success rate Provides many job opportunities and operates locally most of the time

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Large Organisations Market share is large : High Turnover You will have a board of directors, HODS and consultants as well More Strategic, long term plans with a proactive approach Enough resources and financial strength Specialisation Stable long term growth Clear responsibilities, limited range Bureaucratic Higher salaries, better benefits and training Grow multinational Downsizing and operates in all markets

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Developments in SMEs 

Exporting/Importing

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International niche market EX: Maldives exports sea cucumber as a highly demanded product

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Direct Marketing EX: Resort Supplies in Maldives purchase products around the world on behalf of the resort

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Being part of MNE (Multinational Enterprises) supply chain (piggy packing)

Entrepreneul Marketing There are a considerable amount of SMEs who are willing to take the challenge when there is an opportunity, while critics and experts forecast different ideas about it. They are willing to learn on the way and they consider expert opinions to m inimise the obstacles. Entrepreneurs will be very committed, hard working and they adapt and learn fast to survive. At times they end up in a disaster but it is only a learning curve. Through entrepreneul marketing, businesses have learned to include the following into any organisation culture: 1) Management’s commitment and dedication towards innovation 2) Encouraging innovation internally 3) Certain degree of risk 4) Flexibility and adaptability 5) Finding the niche and uniqueness 6) Cross selling and up selling

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Competitive advantage in a strategy 

Quality and Service: EX: Titan watches from Swiss EXII: LUX* Hotel chain in Maldives is a world benchmark in hospitality industry

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Flexibility: EX: Classic Travel in Sri Lanka launched only 7 years back, have gained 1/6 of the market share by offering photo studios, 24/7 helpline and 24/7 , 365 ticketing facilities

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Courage to manage the product portfolio: There will be some products which are successful and bring profit, at the same time there will be some which brings clients but no profits.

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Knowledge: Product knowledge and industry knowledge is a must for success. EX: Resort operators in Maldives make sure they reach 70% occupancy throughout the year by using the marketing and customer preferable knowledge.

Organisational Structure Large organisations will have a different culture to SMEs. At the same time these structures will be deciding the output of the efficiency and decision making.

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CHAPTER 13 – AUDITING THE MARKETING MIX Auditing the marketing mix is a process of re evaluating the 4 functions of the marketing mix. In this section, priority is given on checklist basis.

Product Checklist 1) Market Share 2) Consumer likes and dislikes 3) Historical sales trends 4) Seasonality 5) Capacity and the usage 6) Return on Investment 7) Product definition and benefits 8) Product Life Cycle

Price Checklist 1) Are pricing objectives appropriate? 2) Price and other 3ps 3) Stage of PLC, competitor pricing and customers response to the price 4) Discount, differentiated pricing and their effects on profit margin 5) Is there any requirement for price promotion?

Place Checklist 1) Does the product reach the consumer as expected? 2) Is the distribution cost included in the price? 3) Manufacturers control over the distributional channel 4) Strengths and weaknesses in distributional channel 5) Market coverage

Promotional Checklist Promotional activities are audited in 2 ways: 1) Overall promotional audit: Here we analyse all the possible options and functions together In this way, we try to audit the following: a) What is the overall promotional objective (Is it for rebranding/increase sale/survive)

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b) Is it realistic? Is it happening? c) Do these promotional activities: I)

Create Awareness? Awareness can be tested through recall tests. At times, recognition tests are also used.

II)

Do they affect the attitude? To check the attitude, we may use attitude tests and in -depth research.

III)

Generate Action? Response or action can easily be monitored via sales or via activity.

Personal Selling Personal selling is a very expensive and time consuming promotional method. Therefore it should be audited carefully. It can be measured through: 1) Number of calls made 2) Number of calls vs. orders received 3) Achievement of sales target 4) Profitability

Sales Promotions 1) Increase in sales 2) Number of new customers attracted 3) Preventing competition Marketing research is conducted with the motive of collecting first hand data. Therefore research has to be done very accurately and with a proper plan. This helps to minimise time wastage, error and other resources. In general, a research or plan process will have the following steps:

1) Set Objectives Here, we analyse what we expect to find out and set targets and goals.

2) Define research problem Objectives are narrowed down and more specified, so researcher knows exactly what to look for. EX: To identify most suitable country in South Asia with IT infrastructure facilities.

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3) Assess the value of research What is the budget allocated for research and total expected income?

4) Construct a research proposal Once the budget is decided, it has to be decided whether to go for an agency. Research proposal is what clarifies the organisations expectation to the agency that does the research.

5) Specify data collection method Is it through surveys, questionnaires or observation, etc?

6) Specify techniques of measurement How the data collection method will be used to analyse and measure criteria. If observation is used, are we going to use CCTV cameras, mystery shoppers, etc?

7) Select the sample 8) Data Collection Here, the research team will go in the field and physically get involved in research. This is the execution stage.

9) Analysing the result Conversion of raw data into meaningful information

10)

Present in a final report

In PDF, PowerPoint, printed book or CD/DVD You are the marketing manager for a small shoe manufacturer that employs 20 people. Owner of the business wishes to order to new overseas markets. Write a short report detailing various options that should be considered and recommended and justify your required option. Born globals and franchisers along with joint venture are dominating the international market. Large organisations such as Wal-Mart, Starbucks, KFC, General Motors & Electrics, P&G are invading domestic and rural market, where the survival and existence of SMEs itself is a challenge.

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Being given the scenario, SMEs are forced to come with innovative solutions and to expand business globally through different means other than franchising, joint ventures or buy outs. Therefore, SMEs have adopted the following options to enter the international marketing arena.

1) Exporting Exporting is quite a traditional method, but comes handy when you are more focused on domestic market and when you need to sell the excess production. A shoe manufacturer may have excess quantity in certain designs and some models considered as very slow m oving. This can be used for bulk exporting.

2) International Niche Marketing This can be used when the manufacturer is primarily focusing on international market. Even though local requirements are smaller, the global niche will be able to provide enough profit. Footwear manufactured with genuine leather might be too expensive to find enough customers domestically, but globally this will have a very high demand.

3) Direct Marketing Direct Marketing using each channels and websites, SMEs can reach the world quite easily. But for a shoe manufacturer, this might not work effectively when logistic charges are added.

4) International Supply Chain By becoming part of an international supply chain (MNE), where the manufacturer have the opportunity to piggyback, where manufacturer will not have the headache of finding buyers, transportation, etc. but they will get the money i nstantly. Manufacturer can focus on generic sizes and increase the production. Nice marketing would be much appropriate since it gives the opportunity to build a global customer base, choose skimming prices and most of all to develop an own global brand which may increase the brand equity over the time and to introduce sub products in future.

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CHAPTER 14 – MARKETING AND STRATEGIC CHOICES Marketing does not happen by chance, but rather it is the outcome of carefully executed set of procedures and strategies. Depending on the market condition, competition and the organisational objective, marketers have to adjust their strategies.

Organisational Stands Organisations enter to the business scenario in different context with high investment and innovative product. EX: SONY launching Play Station 2 (PS2) to reach the market leader position. At the same time, some companies will have an innovative product, but with less investment to become the first in the market. EX: Even though Panasonic were the first to introduce 3D technology to the market, SONY capitalised on it through promotions. Therefore, we mainly categorise 3 market stances:

1) Market Leader Market Leader should be innovative, so that they can be in the forefront of the competition. They should do fortification to keep competition activities at minimum. Confrontation should be done by using aggressive and by getting into price wars, harassments through pressurising the distribution channels and criticising competition.

2) Market Follower Market Follower may benchmark the market leader, but can gain advantages through superior service, flexibility and by overcoming the short falls of market leader’s products, even though they cannot boast by saying the leader or innovator can easily gain market share from the need created by the leader and superior distribution systems. Brand loyalty will be less, but sales growth will be easier.

3) Market Nichers Market nichers focus on limited amount of customers, while enjoying higher profit rates and provide unique services, which others seem to ignore. This is not possible if there is no uniqueness or talent.

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Porter’s Generic Strategy Model

COMPETITIVE ADVANTAGE

E P O C S E V I T I T E P M O C

D A O R B

LOWER COST

DIFFERENTIATION

COST LEADERSHIP

DIFFERENTIATION

W O R R A N

FOCUS

When Porter analysed successful organisations, he found 3 sound strategies underlying beneath the success factor. These are called “Porter’s Generic Strategy Factors”

1) Cost Leadership When organisations are quite large, then the investment is high and organisations have the opportunity to manufacture in large scale, and thereby achieve economies of scale. This way organisation does not have to compromise that quality, at the same time, any excess production can be exported to international markets. Organisation should be careful to communicate correctly, that the product is value for money, and not a low quality product. Cost Leadership is possible by large organisations and at anytime a competitor might go lower than you to challenge.

2) Differentiation This is suitable for innovative and organisations with Unique Selling Propositions (USP). This means organisations should have an advantage, which the competitors cannot match. This way, organisations can sell even at a higher price, with a reasonable margin. EX: While others are focused on inbound and outbound tourism, Virgin group initiated space tourism.

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3) Focus Focus strategy is more towards niche market, and will be focused on few clients, but specialised total solutions. EX: Rolex watches, Intel processors, etc.

Porter’s Profitability Curve Cost Leadership or well differentiated strategy

Focused Strategy

Poorly Focused or differentiated with no cost leadership

Porter’s Profitability Curve clearly represents how a cost leader and a differentiator gains bigger

market shares. By gaining more customers, they gain a higher Return On Investment (ROI). Focus strategy may not entertain many clients, but will enjoy higher profits, and therefore higher ROI.

QUESTION: DEC 2011 Q5) Social networks are place where people with common interests of concerns come together to meet people with similar interests, express themselves and debate. YouTube and Flickr are good examples. Identify and briefly discuss 5 ways in which the strategic marketer can exploit the social web.

(17 marks)

A remarkable portion from the advertising budget is now being allocated for social marketing. Social and virtual marketing have given the opportunity to have a say for SMEs and therefore, despite the size of the organisation, everyone favours this.

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Using social networks have a high probability of going negative if not managed properly. One negative comment may reach a million audiences in no time. Marketers tend to exploit social networking through the following areas:

1) Generating Sales Leads From new product development to a purchasing of a product is a long task ahead for marketers. Per head costs for sales have dramatically decreased and facility of reaching the exact segment is much easier.

2) Brand Building To bring the brand to customers’ proximity was a challenging task and many companies had only TV, press and radio to reach households. Through organising communities, by interest groups, circulating hot topics within the group may help brand building.

3) To create mutual understanding and partnerships Making the customer a part of the organisation is an ultimate dream. Today, through likes (Facebook) , Shares, tweets (Twitter), links (linked.in) are few examples where customers have actively participated in joining the organisation’s cause. EX: Tiny Hearts of Maldives, who are an organisation for charity, made each social network member a disseminating point of information. 4) Internal communication Communications within the employees of different departments, levels, have been reduced to one single platform. This is also a way to discriminate differences and unite. 5) Research and Development Organisation has the ability to evaluate their products and services, and to find out their future preferences. Blogs, wikis, online communities, social networks provide real time information. Amazon.com uses this technique to cross sell products with similar interests.

QUESTION: ??? Outline McKinsey’s Seven S’s model and explain with examples how it can be used

to analyse the internal environment of an organisation.

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Strategic Marketing Management v1.61.pdf

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