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Marketing Issues in Pakistan - tampe tees

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					Strategic Marketing: Markets and Competitive
Space




                       Week 4: Lecture A
                                                        Strategic Marketing




Agenda
l   Markets and Competitive Space
    –   Markets and Strategies
    –   Product Market Scope and Structure
    –   Describing and Analyzing End Users
    –   Analyzing Competition
    –   Market Size Estimation
    –   Demand Estimation (Presentation article)
         l   Reading: Ch3 from ‘Strategic Marketing’ by David Cravens.
                                                      Strategic Marketing




Markets and Strategies
l   Impact of markets on Strategy
    –    Markets are never static – they are
        dynamic
    –    There are several forces causing the
        change:
         l   deregulation
         l   globalization
         l   mergers and acquisitions
         l   changing customer expectations      Market Sensing
         l   disruptive technologies
         l   demographic and lifestyle shifts

    –   The changes put a new kind of pressure
        from new customers and new competitors
        on strategies
                                                          Strategic Marketing




Markets and Strategies
l   Impact of markets on strategy – some insights
    –   Deregulation
         l   Oil and Gas industry in Pakistan – downstream
    –   Globalization
         l   when countries start depending on each other and compete
             for the share of the wallet across the border
    –   Mergers and Acquisitions
         l   how advantages are combined together to offer unique mix
             of value
    –   Changing customer expectations
    –   Demographic and lifestyle shifts
         l   younger population, rise of the middle class, more
             disposable income, health consciousness
                                                Strategic Marketing




Markets and Strategies
l   Value Migration
    –   Value is not a static entity – it is unique to each
        customer and viewpoint, and is constantly evolving.

    –   Customers shifting their purchases away from the
        products generated by outdated business models to
        new ones that offer superior value.

    –   Value migration may affect a product category, a
        company, or an entire industry

    –   Market sensing and staying ahead is crucial
                                                                                             Strategic Marketing



Markets and Strategies
l    Business Model:                            Key Partners
                                                    Who are they?
                                               What are they brining in?
                                                What is their interest?


                                            Value Proposition
                                     What exactly do we offer to our customers?
                               Which customer needs are we satisfying? Who are they?
                             What are the products or bundles of benefits we are offering?

    Cost Structure                                                                                  Revenue
      Important costs?.
                                                Key Activities                                      Streams
      What are the key                   What exactly do we do for our USP?                      For what value they
        resources?                       Procurement, Production, Mktg etc.                       are willing to pay?
    What are the costs for                                                                         How much they
       key activities?
                                           Customer Relationship                                   currently pay?
          Theme?                                                                                  In what form they
                                          Transactional or Transformational?
                                                                                                        pay?
                                    How much are they involved in value creation?

                                            Customer Segments
                                          Who exactly are those people?
                                                 Single or multiple?


                                                    Channels
                                           How are we reaching them?
                         Strategic Marketing



Markets and Strategies
l   Value Migration
                                                          Strategic Marketing



Markets and Strategies
l   Value Migration
    –   There are three stages to value migration:

         l   Stage 1: Value inflow stage - value is absorbed from
             other companies or industries because of a superior
             business design

         l   Stage 2: Value stability stage - competitive equilibrium
             with stable market shares and stable profit margins

         l   Stage 3: Value outflow stage - companies lose value to
             other industry - reduced profit margins - loss of market
             share - outflow of talent and other resources
                         Strategic Marketing



Markets and Strategies
                                                                Strategic Marketing



Markets and Strategies
l   A Case in Example:
     – Automobile industry in the US
       l   Stage 1:
            –   Lack of public transport, larger families and rise of the baby
                boomers, industrialization, gasoline and outlets availability,
                limited airstrips and air travel, declining recession etc.
            –   Larger cars; size and availability

       l   Stage 2:
            –   GM and Ford providing such value at a massive scale
            –   Highly regulated industry initially then deregulation
            –   Rise in cost of fuel, urbanization, service sector boom, smaller
                families, rise of baby busters and innovation from Japs.
       l   Stage 3:
            –   Rise in transit and cost of fuel, economy cars, decline in
                births, etc. industry shakeouts.
                                                           Strategic Marketing




Markets and Strategies
l   A Case in Example
    –   One of the most obvious examples is offered by the
        transportation industry.
         l   In the 1920s, Ford Motor Company experienced a value
             outflow from its vertically-integrated, single-car-oriented
             business design [that is, the black model T) as value shifted
             toward GM, whose price-laddered, multi-optioned business
             design proved superior in meeting customers’ needs and
             priorities
                                                                Strategic Marketing




Markets and Strategies
l   A Case in Example
    –   Intel and Microsoft
         l   branding the ‘chip’ inside and the ‘O/S’ taking away the
             most of the value from computer giants
         l   Giants such as IBM and DEC lost over $50 billion in
             market value from 1984-1994
               –   while newcomers Microsoft, Intel, and Novell gained over
                   $80 billion, thus resulting in a rapid and dramatic
                   reallocation of value in the industry
                                                            Strategic Marketing




Markets and Strategies
l   A Case in Example
    –   Wal-Mart
         l   Competing in the burgeoning discount retail segment, Wal-
             Mart profited from the shortcomings of the more traditional
             retailers.

         l   value-migration shift by capitalizing on meeting the priorities
             of segments—especially, for greater selection and lower
             prices for branded staples

         l   It took away business from Macy’s, Marshall Field’s, and
             May’s at the high end and the Sears, JC Penney, and
             KMart at the middle and lower ends
                                               Strategic Marketing



Markets and Strategies
l   In each transition the trauma of change was the
    trauma of changing how the company did the
    business.

l   Its not about technology or format.
    –   Its how they organized themselves,
    –   how they configured their resources,
    –   and how they fashioned their approach to the
        customer. The Business Model!
                                                                      Strategic Marketing



Product-Market Scope and Structure
l   Product Market
       l   “Product market is defined as the set of products which are
           substitutes within those usage situations in which similar patterns
           of benefits are sought by groups of customers”

        Matching needs with product benefits
       l   Substitutes:
             –   Financial Services Product Market
                    l money market accounts, mutual funds, T bills, certificates


             –   Landline = Cell phone
             –   Mail: Internet
             –   A vacation trip = a laptop = a pair of jeans and so on

       l   Substitute depend on the ‘share-of-the-wallet’ and unique needs of
           the customers
                                                               Strategic Marketing



Product-Market Scope and Structure
l   Product-Market Scope and Structure
    –   Determine Product-Market Boundaries and
        Structure
         l   Product Market Structure
              – There are several types of products or classes of
                products when it comes to kitchen appliances. Generic
                product market

              –   The starting point in defining product market is to identify
                  the particular need or want that a group of products
                  satisfy
                                                               Strategic Marketing



Product-Market Scope and Structure
l   Determining Product-Market Boundaries and Structure
       l   Identifying the generic need category of interest to the firm
            –   Fast and convenient food

       l   Identify the products/services that fit into the category
            –   A Snack or a Bar
            –   TV Dinner or Frozen Pizza or a home delivery
            –   Burgers or a Deli

       l   Break-out relevant specific product-markets
            –   Microwave ovens
            –   Convenience store
            –   Super markets
            –   Traditional Restaurants
                                                              Strategic Marketing



Product-Market Scope and Structure
l   Determining Product-Market Boundaries and
    Structure
       l   Break-out relevant specific product-markets
            –   Microwave oven, Convenience store, Super markets,
                Traditional Restaurants




                   supermarkets                Microwave
                                                 Ovens


                                  Fast Foods

                    Convenience                 Traditional
                      Stores                   Restaurants
                                                                Strategic Marketing



Product-Market Scope and Structure
• Affecting Market Complexity
     l   The functions or the uses of the product performed by the
         customer: They might be different than you had expected!!!



                                 Wipe up sawdust


             Repels Ants                               Eliminate static
                                                          electricity

                                 Fabric Softener

     odor out of books              Softens
                                                       musty suitcases
     and photo albums




              Collect cat hair                     Golfers
                                          Strategic Marketing



Markets and Strategies
l   Mapping Product Markets
    –   Product Category Structure


                       Product Class

              Product Category/Sub Category

                       Product Type


                           Brand
                                                          Strategic Marketing

                                   Product Class

Product Sub-Category

                                   Beverages
   Product Type


      Brand                Water                   Flavored


                       Non-Alcoholic                Alcohol


              Milk                                 Wine


           Juices                                  Bear

        Soft Drinks                                  Distilled
                                                      Spirits
     Hot Beverages
                                                               Strategic Marketing



Describing & Analyzing End-Users
l   Profiling
       l   Consumer Markets
            –   Demographic Variables
            –   Geographic
            –   Psychographic
            –   Benefits sought
            –   RFM

       l   Organizational Markets
            –   type of industry: Govt, resellers, agriculture and
                manufacturing, non-profit, services, international
            –   Size
                  l Number of players and demand estimation
                          Strategic Marketing




Describing & Analyzing End-Users
    Problem
   Recognition



  Information
     Search


   Evaluation of
    Alternatives


     Purchase
     Decision


  Post-Purchase
   Evaluation
                                                             Strategic Marketing



Analyzing Competition
l   Step1: Define Competitive Arena
       l   Industry Characteristics and Trends
            –   sales, number of firms, growth, emerging technologies
            –   watch out conglomerates and international players
            –   strategic alliances and co-branding
            –   usual marketing practices

       l   Value Chain Analysis
            –   supplier side and distribution sides: How they work!
                  l ‘Collaborative or Transactional’

                  l outsourcing and contacting customers



            –   Consolidation and forward or backward integration
                                            Strategic Marketing



Analyzing Competition
l   Analyzing Competition
    –   Step1: Define Competitive Arena
    –   Competitive Forces

        l   Rivalry among existing firms
        l   Threat of new entrants
        l   Threat of Substitute products
        l   Bargaining power of Suppliers
        l   Bargaining power of Buyers
                                                              Strategic Marketing



Analyzing Competition
l Step 2: Identify and describe Key Competitors

      l   “A key competitor is a firm going after the same target
          market.”
            –   Archrivals

            –   New entrants.

            –   Substitute product sellers

            –   Analysis must include historical backgrounds and key
                decisions made in the past – depict patterns or footprints of
                changing corporate strategy
                                                  Strategic Marketing



Analyzing Competition
l   Step 3: Key Competitor Analysis
       l   Business Scope and Objectives
       l   Management Experience, Capabilities and Weaknesses
       l   Market position and trends
       l   Market target(s) and customer base
       l   Positioning Strategy for each segment
       l   Distinctive Capabilities
       l   Financial Performance
                                                            Strategic Marketing



Analyzing Competition
l   Step 3: Key Competitor Analysis

    –   Perceptual Maps

            –   a “Mental Map” of how our product is perceived by
                consumers relative to the different competing products in the
                marketplace.

            –   Linking ‘Segmentation and Positioning’.
                        Strategic Marketing



Analyzing Competition
                        Strategic Marketing




Analyzing Competition
l   Perceptual Maps
                                                          Strategic Marketing




Analyzing Competition
l   Step 4: Anticipating Competitor’s Actions
       l   Estimating Competitor’s Future Strategies
            –   Business intelligence
            –   R&D and New technologies


       l   Identify new competitors; major sources:

            –   companies competing in related product markets
            –   companies with related technologies
            –   companies looking cross selling
            –   companies competing in different geographical markets
                                                                 Strategic Marketing



Developing a Strategic Vision about the
Future
l   Questions you need to ask:
      l   Are industry boundaries clear or foggy?

      l   Do firms compete as “distinct entities or as families of
          suppliers?

      l   Is there a competition in managing value migration?

      l   Where is competition taking place?
            –   product line, business level, corporate levels


      l   Can there be competition between clusters of firms to
          influence standards and industry evolution?
                                                 Strategic Marketing



Market Size Estimation
l   Market Potential
    –   it is the maximum amount of product sales from a
        product market in a defined time. The Upper Limit

l   Sales Forecast
    –   Generally less than that of market potential
    –   related more to business and product levels

l   Market Share
    –   This is when your firm gets ‘relative’
                                                          Strategic Marketing



Next Class…things to do!
l   Case Analysis
    –   Kids Market Consulting, Ivey Publishing
    –   Questions
           – Use Porter’s Five Forces Analysis to Consider the
             attractiveness for the market research industry in Ukraine?
             What is bottom line

           – What are the SWOT for KMC in the Ukrainian market?

           – What are the advantages, disadvantages involved in
             targetting kids, tweens, and teens?

           – Keeping in mind the core competencies of KMC, what course
             of action should Berezovskaya pursue?

				
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posted:9/6/2013
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