Managing Markerting Processes - Seminar 2
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Slides from second seminar in Managing Marketing Processes course in MGM program at SSE.
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Managing Markerting Processes - Seminar 2
- 1. Managing Marketing Processes ---- Aligning Strategy and the Marketing Planning Process Seminar 2 Robin Teigland Master of General Management Stockholm School of Economics October 8, 2014
- 2. Seminar 2 Overview Aligning Strategy and Marketing Planning Process Guest Speaker, Vanessa Meyer, Loadimpact.com 2
- 3. Marketing Plan Teams 3 GROUPS PREFERENCES 1. Team CG B2C SME Service - Crown Innovative Parking Team 2. B2C SME Service 4. Fika 4 Five B2C SME Product 5. 6 Llamas B2C MNC Product - Uniqlo Team 6 B2C MNC Service - Uber
- 4. What is Marketing Management? Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-4
- 5. Marketing planning process 1. Summary of Current Situation - Provides a description of the business; product/service analysis. The situational analysis encompasses internal and external factors, e.g., the company’s mission, strategy, offerings, and financial status; the economic and political climate; demand trends, and competitors. Discuss PESTEL, five forces, SWOT. Wood, 2008 5
- 6. Exercise 8 volunteers are needed 6
- 7. 7 What matters for success? Companies most successful in creating long-term shareholder value are typically those that: a) Have a vision and mission—They give precedence to purpose and goals other than profitability and shareholder return b) Have strong, consistent, ethical values Examples: • “Visionary”, e.g., Disney, HP, IBM, Merck, P&G, Shell, Wal-Mart • Boeing • Focus pre-1996: “to build great planes,” • Weak financial controls—yet high profitability • Focus 1997-2003 : “creating shareholder value” • Outcome: loss of market leadership, declining profitability Grant 2008
- 8. Some core concepts in strategy Mission Purpose: Why we exist Values What we believe in and how we behave Vision What we want to be 8 Collis & Rukstad, 2008
- 9. Walt Disney Purpose/Mission To make people happy Values No cynicism Nurturing and promulgation of “wholesome American values” Creativity, dreams, and imagination Fanatical attention to consistency and detail Preservation and control of the Disney magic Collis & Rukstad 2008 9
- 10. The Strategy Hierarchy 10 Where should we compete? How should we compete?
- 11. What is business strategy? Strategy An integrated and coordinated set of commitments and actions designed to gain a competitive advantage Competitive advantage When two or more firms compete within the same market, one firm possesses a competitive advantage over its rivals when it earns (or has the potential to earn) a persistently higher rate of profit Hitt, Ireland & Hoskisson 2006 13
- 12. Components of business strategy 1. Long-term goal (objective) 1. Scope of the firm (customer or offering, geographic location, vertical integration 1. Competitive advantage Collis & Rukstad 2008 14
- 13. Strategy ≠ Business Model Business model (Magretta, 2002) Describes, as a system, how the pieces of a business fit together. Does not factor in one critical dimension of performance: competition Reflection of a realized strategy 15 Every organization has a business model . [it] makes some choices, which have consequences. [But] not every organization has a strategy - a plan of action for different contingencies that may arise. (Casadesus et al. 2010)
- 14. 17 Generic strategies Scope (Customer/ variety) Type of competitive advantage Broad Narrow Differentiation Low cost Differentiation Cost leadership Differentiation-based focus Cost-based focus Porter 1998
- 15. 18 Generic strategies in auto industry Scope (Customer/ variety) Type of competitive advantage Broad Narrow Differentiation Low cost Mercedes (Differentiation) Nissan (Cost leadership) BMW (Differentiation-based focus) Lada (Cost-based Focus)
- 16. 19 Making choices Strategy is about choosing what NOT to do: Which customers not to serve What products or services not to offer Which activities not to perform Strategy is about NOT being all things to all people Porter
- 17. Avoid being stuck in the middle Market share Return on investment High Low High Low Differentiation Cost leadership Porter 20
- 18. Group Assignment for Today Questions for discussion (2 minutes) Why is an organization’s mission statement important from a marketing planning perspective? Should a marketing plan be considered an internal document only and not for public disclosure? 21
- 19. Characteristics of Core Competencies A source of competitive advantage Applications in a wide variety of markets Difficult to imitate Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-32
- 20. Core Competencies -Tree Diagram 1 2 3 4 5 6 Business 7 8 9 10 11 12 Core Product 1 Core Product 2 1 Business 2 Business 3 Business 4 End Products Competence Competence 1 1 Competence Competence 2 2 Competence Competence 3 3 Competence Competence 4 4 Core Product 3 End Products hhttttpp::////wwwwww..yyoouuttuubbee..ccoomm//wwaattcchh?? PPrraahhaallaadd && HHaammeell 11999900 vv==AArr__rr22kkEE99EEjj44&&NNRR==11 33
- 21. Holistic Marketing Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-35 Publishing as Prentice Hall 2-35
- 22. What is Holistic Marketing? Holistic marketing integrates the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-36 stakeholders.
- 23. Questions to Address in Holistic Marketing Value Exploration: What value opportunities are available? Value Creation: How can we create new value offerings efficiently? Value Delivery: How can we deliver the new offerings efficiently? Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-37
- 24. Phases of Value Creation and Delivery Choosing the value (STP) Providing the value (price, place, product) Communicating the value (promotion) Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-38
- 25. Seminar 2 Overview Aligning Strategy and Marketing Planning Process Guest Speaker, Vanessa Meyer, Loadimpact.com 39
- 26. Group Assignment for Today Apply your knowledge (6 minutes) Do some research on the mission statement and strategy of Load Impact (loadimpact.com) and look at some of the company’s recent marketing activities. What do you think that the company’s mission statement and strategy say about the customer focus, value creation, market scope, guiding values, and core competencies of this company? How do specific marketing actions appear related to the stated mission and business model? E.g., what are the targeted segments and how are they targeted? Do you think this reflects the customer focus in the mission statement? What changes would you suggest to the mission statement in order to make it more effective as a guide for the marketing planning process or an inspiration for managers and employees? 40
- 27. Seminar 3 Overview Marketing Research Processes: Analyzing the Market Guest Speaker, Wei Wei, Springfellow 41
Hinweis der Redaktion
- Team 1 CG awesome: Daniil, Filip, Mauricio, Peter S., Rose, Tingting 1. Business to consumer, SME, product (crown), 2. Business to consumer, SME, service Team 2: Atahan, Christina, Fabian, Mika, Philip, Raghu Business-to-Consumer - SME – Service, Business-to-Consumer - Multinational - Service Team 4 Fika 4 Five: Daniel, Dimitiria, Hampus, Jan, Paulina, Sebastian: Business-to-Consumer, SME, Product or secondly Business-to-Consumer, Multinational, Product as our category. Team 5: Aleksandar, Christian, Corliss, Fanny, Peter H., Carolynn Team 6: Alexander, Anni, Coşku, Nick, Rachel, Carl: Uber
- “The Marketing Planning Process” adopted from The Marketing Plan Handbook (Wood, 2008) by C. Melian (2009).
- When new mgt team took over Boeing in mid-1990s, focus was on building a vale-based environment where unit cost, return on investment, shareholder return are measures employees judged by. So lack of investment in major new civil aviation projects and diversification into defense and satellites. So lost considerable market share to Airbus. When Condit resigned in 2003, then boeing’s stock was 20% lower than when he was appointed. Companies that enjoy enduring success have a core ideology that remains fixed while their business strategies and practices endlessly adapt to a changing world - From Built to Last: Successful Habits of Visionary Companies by Collins & Porras, 1996
- Which objective is most likely to maximize shareholder value over the next several years? (Growth? Achieving a certain market share? Becoming the market leader?) Objectives = goals A firm’s scope encompasses three dimensions: customer or offering, geographic location, and vertical integration. The complete definition of a firm’s competitive advantage consists of two parts. The first is a statement of the customer value proposition. Any strategy statement that cannot explain why customers should buy your product or service is doomed to failure. Activity map Tieto Enator Vision: - The world's leading provider of high-value-added IT services in selected vertical marketsStrategy: - Global leverage of vertical expertise - Solutions - Partnerships Mission: - Building the Information Society Values:- Customer benefit & Personal growth
- What words would you highlight in the definition? Why?
- Grant 2008: the nature of strategy in a turbulent direction – it’s about direction, not detailed planning. Madonna (like Virgin or Google) displays clear direction combined with the flexibility to adapt to and exploit unexpected change Collis & Rukstad: It is always easy to claim that maximizing shareholder value is the company’s objective. In some sense all strategies are designed to do this. However, the question to ask when creating an actionable strategic statement is, Which objective is most likely to maximize shareholder value over the next several years?What our competitive game plan will be BALANCED SCORECARD How we will monitor and implement that plan of a Strategy Statement OBJECTIVE = Ends SCOPE = Domain ADVANTAGE = Means MISSION Why we exist VALUES What we believe in and how we will behave VISION What we want to be STRATEGY What our competitive game plan will be BALANCED SCORECARD How we will monitor and implement that plan The BASIC ELEMENTS of a Strategy Statement OBJECTIVE = Ends SCOPE = Domain ADVANTAGE = Means Single goal – profitability vs market share – what matters more? Scope - 3 dimensions – customer or offering, geographic location, vertical integration, clearly defined areas Advantage –1) value proposition – why should people buy your product over others? 2) combination of activities to deliver value proposition
- Industry factors only account for a small part of the differences in interfirm profits. The larger differences are had in each firms resource and capabilities! Stockholm University & SSE; both resources and capabilities Analyze R&D to understand potential for creating competitive advantage
- resource – a relatively stable, observable asset – stuff the firm owns or hires machines land a store a brand. usually can be bought and sold.
- First: the formal definition from the book. Second: a way to think about this, how it is generally used in newspapers. Capabilities Are the firm’s capacity to deploy resources that have been purposely integrated to achieve a desired end state Emerge through complex interactions among resources The foundation of many capabilities lies in: The unique skills and knowledge of employees The functional expertise of those employees Often developed in specific functional areas capability – firm’s ability, using its organization and people, to accomplish tasks at a high level of expertise (repeatedly). usually can’t be bought/sold unless you sell a whole business.
- Firm’s capacity for undertaking particular productive activity in relation to other firms
- Industry environment and competition shape strategy Whereas industry analysis is concerned with which industry to be in and positioning. Firm analysis is concerned with ownership and uniqueness. Industry analysis leads to the same, but firms must not do the same! What is potential for creating comp adv? Must distinguish between resources and capabilities. Resources are productive assets owned by the firm, capabilities are what the firm does with them. Individual resources do not confer competitive advantage, they must work together to create organizational capabilities. Whichever approach is used, the goal is to build a list of resources and capabilities that can then be appraised in terms of their importance and relative strength. The resources and capabilities can then be shown on a single chart (see Figure 5.9). This analysis requires an example, preferably an organization that is familiar to everyone. At Georgetown I typically use our own business school. 4. The purpose of this analysis is to generate strategy implications. Here students readily identify the potential for building on weaknesses in resources and capabilities. Perceptive students will inquire into the possibility of outsourcing activities where the firm’s capabilities are weak. But the key area of strategy is the exploitation of strengths. In which market segments, in relation to which customers are a firm’s resource and capabilities strengths likely to be most effective? What are the implications for how the firm should compete?
- H&P: A big big big bundle of simpler resources and capabilities that together gives you strong ability to do a huge number of things. Test to see if core competence Provides potential to a wide variety of markets Makes a significant contribution to the benefits of the product as perceived by the customer Should be difficult for competitors to imitate
- An organization’s resources are the assets, capabilities, processes, information, and knowledge that the organization controls. Firms use their resources to improve organizational effectiveness and efficiency. Resources are critical to organizational strategy, because they can help companies create and sustain an advantage over competitors. Organizations can achieve a competitive advantage by using their resources to provide greater value for customers than competitors can. A competitive advantage becomes a sustainable competitive advantage when other companies cannot duplicate the value a firm is providing to customers. Importantly, sustainable competitive advantage is not the same as a long-lasting competitive advantage, though companies obviously want a competitive advantage to last a long time. Instead, a competitive advantage is sustained if that advantage still exists after competitors have tried unsuccessfully to duplicate the advantage and have, for the moment, stopped trying to duplicate it. to achieve sustainable competitive advantage, you need to think about how to create lots of value for acceptable cost, then An offense – how you will sustain your leadership in creating value at the right price. A defense – either make it hard for others to copy you or make it hard for customers to switch
- John Kay (an influential economist and writer on business strategy) identifies three main classes of organisational capability that meet the above criteria: innovation, architecture and reputation. Innovation is an obvious source of distinctive capability, but it is much less often a sustainable or appropriable source because successful innovation quickly attracts imitation. Maintaining an advantage is most easily possible for those few innovations for which patent protection is effective. There are others where process secrecy or other characteristics make it difficult for other firms to follow. More often, turning an innovation into a competitive advantage requires the development of a whole range of supporting strategies. What appears to be competitive advantage derived from innovation is frequently the return to a system of organisation capable of producing a series of innovations. This is an example of a second distinctive capability which I call architecture. Architecture is a system of relationships within the firm, or between the firm and its suppliers or customers, or both. Generally the system is a complex one and the content of the relationships implicit rather than explicit. The structure relies on continued mutual commitment to monitor and enforce its terms. A firm with distinctive architecture gains strength from the ability to transfer information which is specific to the firm, product or market within the organisation and to its customers and suppliers. It can also respond quickly and flexibly to changing circumstances. It has often been through their greater ability to develop such architecture that Japanese firms have established competitive advantage over their American rivals. A third distinctive capability is reputation. Reputation is, in a sense, a type of architecture but it is so widespread, and so important, that it is best to treat it as a distinct source of competitive advantage. Easier to maintain than create, reputation meets the essential conditions for sustainability. Indeed an important element of the strategy of many successful firms has been the transformation of an initial distinctive capability based on innovation or architecture to a more enduring one derived from reputation. (Kay, 1993, p. 14)
- http://www.youtube.com/watch?v=Ar_r2kE9Ej4&NR=1 (microsoft) – ballmer and kawasaki Start at 1:43 to get discussion of skill sets Core competences are Make a disproportionate contribution to ultimate customer value or to efficiency that value is delivered Provide a basis for entering new markets