Hoorcollegeaantekeningen Marketing en Strategie 1 t/m 3

Deze samenvatting is gebaseerd op collegejaar 2012-2013. Bekijk hier ons huidige aanbod.

Lecture 1

Part 1 Introducing Marketing and Strategy

Introducing Strategic Manamegent

The word ‘strategy’ comes from the Greek word  ‘strategos’, which means “the general’s view”. Strategy contains the whole overview of a firm. It looks at the company as a whole. So strategy is ‘the coordinated means by which an organization pursues its goals and objectives’ (An introduction into marketing and strategy by Joris Ebbers & Roger Puppers, page 10). Companies need strategies to help them to reach the objectives to compete with other firms. Strategic management therefore is ‘the process by which a firm manages the formulation and implementation of a strategy’ (An introduction into marketing and strategy, page 8).

There are different factors that help companies to formulate and apply their strategies (how a company will achieve these factors), these form the Strategic Management Process:

• Vision and Mission; they are the fundamental purposes and values of an organisation. The Mission is about the fundamental purpose: why a company exists and how it wants to access their Vision. The Vision is a long-term outlook on the company itself and the world around the company. The vision and mission lead to the Goals and Objectives. These are specific targets of a company, they are more concrete and therefore possible to measure. They don’t have to be financial! Those together form the company’s strategy.
• Strategic Analysis; which contains the internal and external analysis of a firm.
• Implementation Levers and Strategic Leadership. They influence the strategy, but the strategy also influences them.

There are corporate and business strategies. Business Strategy is the strategy in an industry or industry segment (for example Coca-Cola). Corporate Strategy is the strategy when companies are part of more markets (for example The Coca-Cola Company, the company that owns the drink Coca-Cola). So business strategy is focused on one specific market, while corporate strategy is focused on more than one market.

Business strategy diamond

Strategy is based on choices and these choices are categorized in the Business Strategy Diamond, which contains five categories shaped in diamond form:

1. Arenas (place in the diamond is up):  ‘Where a company will be active and with how much emphasis (An introduction into marketing and strategy, page 15)?’ The arenas tell in which parts a company is active. They are very specific and can say for example what products a company will make, in which market segments it will operate, through which technologies etc.
2. Vehicles (place in the diamond is on the right): ‘How will we get there (An introduction into marketing and strategy, page 15)?’ Vehicles are the ways a company can collaborate in the targeted arenas. For example when a company wants to expand abroad or build alliances.
3. Differentiators (place in the diamond under): ‘How will we win (An introduction into marketing and strategy, page 15 and 16)?’ Differentiators distinguish a company’s product from the other (competitive) products. A firm can differentiate by price, image etc.
4. Staging & pacing (place in the diamond is on the left): ‘What will be our speed and sequence of moves (An introduction into marketing and strategy, page 15 and 17)?’ Staging and pacing is about how quick or in what sequence a company can expand.
5. Economic Logic (placed in the middle of the diamond): ‘How will returns be obtained (An introduction into marketing and strategy, page 15 and 17)?’  The economic logic explains how a firm will obtain profit (a positive outcome after all the costs have been subtracted from the revenue).

Companies want strategies because these help them to make profits through competitive advantage. Competitive advantages is that one company can distinguish itself from other companies through it’s value. The main question though is how companies will be able to get sustained, higher than the average profits. So strategies are based on objectives and can a firm get competitive advantage.

Competitive advantages can be achieved in different ways:

• Internal (also called resource-based view); by analyzing a firm’s resources and capabilities, it will be clear that some firms are better than others with resources and capabilities.
• External (also called the position’s view); by analyzing the industry, you can position a firm and make use of the opportunities in an industry. Variation between firms makes ‘industry attractiveness’. Firms can do two things: they can place themselves in positions from where they can compete in attractive industries or they can apply a strategy which makes their present industries more appealing.   
• Dynamic; the markets change very quickly, therefore the current position of a company is not a good prediction of the company’s position in the future. That’s why looking at the past for information about how the company actually got into this position and looking at the future (internal and external) will give a more accurate prediction about the company’s future.

Marketing

Strategies influence marketing and are influenced by marketing. Marketing is the process within companies to create value for their customers and to maintain strong customer relationships. So that in return the company will get value from their customers, which benefits the organization and it’s stakeholders (from the powerpoint slides out the books: AMA, 2004 and AKHB 2012). Marketing management contains the profitable relationships with customers from targeted markets.

The marketing process contains creating value and capturing value. A firm can create value by: (An introduction into marketing and strategy, page 33)

• ‘Understand the marketplace and the customer needs and wants.’ Human needs are when people feel deprivation. Human wants is what they want based on culture and personality. Human demands are a result of the buying power. They are fulfilled by what the markets actually offer to satisfy the customers.
• ‘Design a customer-driven marketing strategy.’  This strategy should be based on the customer’s wants, needs and demands and the rest of the market (suppliers, rivals etc.) The marketing strategy must say 1. which consumers a company wants to serve (targeted market) and 2. how they want to serve the consumers (value proposition). A company selects is consumers by dividing the market into segments (= segmentation) and select which parts it wants to serve (= targeting). A company chooses it’s value proposition by deciding what exactly it wants to deliver the customers to please their needs. The marketing management contains production concept (focus on production), product concept (focus on product improvement ), selling concept (focus on finding costumers), marketing concept (focus on the right product for the customer) and the societal marketing concept (focus on value for customer and society).   
• ‘Construct an integrated marketing program that delivers superior value.’ This can be obtained by using the marketing mix. The marketing mix, which consists of the 4P’s, is used to apply the marketing strategy. The 4P’s stand for Product, Price, Place and Promotion. You also have the 4 C’s, which stand for Customer solution, Customer Cost, Convenience and Communication. The 4C’s focus more on the customer, while the 4P’s focus more on the product.
• ‘Build profitable relationships and create customer delight.’ Customer Relationship Management  is the process of developing en maintaining profitable relationships with customers. This can be done through delivery of better than average customer value and satisfaction. The customer value and satisfaction form the Relationship Building blocks. The customer-perceived value is the evaluation of the things the markets offer compared to a company’s rivals. Customer satisfaction explains whether the product meet the customer’s expectations. Customer Relationship Levels are strangers, friends etc. Customer Relationship Tools are frequency marketing program or a club marketing program etc.

Companies are more and more selective about their customers and even try to select their customers by dismissing already existing customers or rejecting potential customers. However the relationships with their customers are getting more deeply and interactive. For instance, a lot of firms offer their consumers to invent a new product or line for the company through internet. This is called Consumer Generated Marketing.

• In return of the four steps from above a firm wants to ‘capture value from customers to create profits and customer equity’ (An introduction into marketing and strategy, page 33). With some customers companies have a life-time relationship, but with others not. Companies try to build relationships with the right ones. There are four categories of consumer loyalty: 1. Butterflies, they have a high profitability, but they are short-term customers. 2. True friends, they have a high profitability and they are long-term costumers (this is where most of the firms want to invest in). 3. Strangers, they have a low profitability and they are short-term customers. 4. Barnacles, they have a low profitability, but they are long-term customers.

The marketplaces have changed and companies need to respond to that. A lot of people buy more and more through internet instead of in the shops (digital age). There is also the not-for-profit marketing, such as universities, hospitals etc. Thanks to the rapid globalization companies can connect with customers and partners around the world. A new trend is also Ethics and Social responsibilities where customers are interested in the long-term effects of the production processes and want to be environmental-friendly.

Lecture 2

Part 2 (External and Internal) Strategic Environment

External and Internal Strategic Environment

The SWOT-analysis is a general analysis for both the internal and external environments. SWOT stands for Strengths (internal), Weaknesses (internal), Opportunities (external) and Threats (external). This SWOT-analysis is a good point to start for environmental analysis. From here on, you can go into detail and analyze by following one of the next models (two for external analysis and two for internal):  

1. PESTEL analysis; focuses on the macro characteristics (external)
2. Porter’s Five Forces; focuses on the industry (external)
3. Vrine-model; focuses on the resources and capabilities in combination with competitive advantage (internal)
4. Porter’s Value Chain; focuses on value-chain activities and competitive advantage (internal)

External

First, we’re going to focus on the external environment. In the external environment the focus lies at the arenas (from the Business Strategy Diamond from lecture/part 1) where companies can be in. Different arenas are: the Macro environment, the Industry environment, the Strategic group and the firm itself. In this lecture we discussed only the first two.

The macro environment can be analysed through the PESTEL-analysis. A company can’t influence the macro environment, but the macro environment can influence a company and it’s strategy (through changing consumer behaviour due to for example a recession, through productivity, supply, demand etc.). The P stands for Political factors such as the stability of a country or the taxation from a government etc. The E is for Economic factors like growth rates, interest rates etc. The S stands for Socio-Cultural factors for example religion, demographic etc. The T is for Technological factors such as the speed of change. The last E stands for Environmental factors like waste, pollution etc. The L is for Legal factors for instance rule of law and regulation. PESTEL helps finding the successes and failures of the strategies by having key factors which have an high impact and an high uncertainty. With PESTEL and those key factors a company can also ‘plan’ several futures (not predicting one!) and be prepared for those.

Let’s zoom a bit in and get closer to the company; the industry. The Industry can be analysed through Porter’s Five Forces-model. An industry is a market consisting of a group of companies that sell the same products. A company needs to analyse what’s the industry it is in, but it has to be careful because it should not be including or excluding rivals. For example Coca-Cola is not in a beverage market (that also includes water), but it is neither in a non-alcoholic carbonated softdrink beverage industry (that could excludes threats like juice which could be a substitute for a coke).

The first force of the Five Forces model is the ‘degree of rivalry’. This force gives information about the intensity of the competition in an industry (how many competitors are there, are there high exit barriers etc.). The second force is the ‘supplier power’. This provides information about the position of the suppliers in the industry towards the company. For example if the supplier is easy to replace or not. When a supplier uses the information from the company and starts it’s own company, it’s called downstream integration. Number three is the ‘buyer power’ and gives information about the position of the buyers in an industry towards the company. With buyer is not only meant the ‘individual consumer’, but also other firms/corporate partners of a company. When a buyer has a lot of choices for a product, it has more power than when he doesn’t have a lot of choice. The fourth part is the ‘threat of substitute’. This provides information about how many similar choices a buyer has in an industry to replace the product of one company (a substitute). When there are a lot of substitutes, a company has to differentiate itself from the others. The last force is the ‘threat of new entrants’. This gives information about how easy a new company can entrance the industry. For example are there high barriers to enter or do you need specific knowledge.

As you can see, all the forces are related to each other. For example, when there is a big threat of substitute, buyers will have more power.

Internal

Now we’re going to focus on the internal environment.  In the internal environment the focus lies at the differentiators and a firm itself. The question is why some companies perform better than others while the micro environmental characteristics are the same. There are firms which have internal possibilities (resources and capabilities) to make use of external opportunities. So the internal and external environments are related to each other. Resources are ideas, opinions and input a firm has to create products and services. Capabilities are the skills/possibilities of a firm to use it resources. These capabilities mainly distinguish companies and they are the base of the principle business undertakings. The more dynamic those capabilities are, the easier a company can adapt to changes in the environment. However not all resources and capabilities have a big influence on competitive advantage. Recourses can be tangible or intangible, capabilities can be processes or routines.

The Resource-Based View looks inside the company for differences in competitive advantages (so an internal basis).

The VRINE-model is a model to analyze if a resource/capability is possible to help a company get competitive advantage. A resource/capability is Valuable if it takes advantage of chances and takes care of threats. It is Rare when it’s relatively scarce to demand. A resource/capability is Inimitable when it’s hard to imitate by competitors and Nonsubstitutable when a rival doesn’t have a substitute. Resources and capabilities are Exploitable if a company can gain profit from the resource/capability. Thus to analyze internally, you should focus on how a company gained sustainable competitive advantage (through VRINE).

Even if two companies have the same resources and capabilities, it is still possible that one of them has a competitive advantage. This can be analyzed through the Value Chain-model. The value chain is divided into two parts.

• Primary activities; these are focused on the product of the company and how to gain the competitive advantage. The primary activities include the Inbound logistics, Operations, Outbound Logistics, Marketing and sales and Service.
• Support activities; these are not really focused on the product of the company, but on the supporting roles which help the company in different ways than for instance the product. Support activities include the Firm infrastructure, the Human resource management, the Technology development and procurement.

It may come over as if the support activities are less important, but that is not true. All the activities together are possible sources of competitive advantage. The value chain focuses on what to emphasize, what not and what to outsource.

Mostly use the VRINE-analysis as a point from where to start when discussing outsourcing.

Lecture 3

Part 3 Designing a marketing strategy

Designing a marketing strategy

To design a marketing strategy a company should be able to understand the marketplace and the customer needs and wants. Therefore we should take a closer look at the consumer and business buyer behavior. The Consumer Buyer Behavior is the buying behavior of individuals and families who buy products and services for their own consumption. The aim is to understand what influences the buying behavior of consumers. To understand a bit more of their buyer behavior, there is the Stimulus response model. Part one of this model are the Stimuli; environmental factors, such as the marketing stimuli (using the 4P’s: price, product, place, promotion) and other macro environmental factors (using the PESTEL-model: political, economic, socio-cultural, technological, environmental, legal). These stimuli stimulate consumers to buy something. Then comes the Buying process (also called the buyer’s black box). In this part of the process the focus lies at the buyer’s characteristics and the buyer’s decision process. Companies try to find how they might control the consumers. The consumer buyer’s characteristics are:

• Cultural; 1. Culture, the basic values, needs and wants of the society in general (for example countries) 2. Subculture, people who share life experiences and situations (for example ethnic groups) 3. Social Class, the society divided by income and interests/behavior (for example upper class spends more money on something than the lower class)
• Social; 1. Groups, people with the same goals (for example affinity with a soccer club) 2. Family (for example which family member decides what is bought or children who persuade their parents to buy Spongebob Cookies) 3. Roles/Status, when people buy products that reflect their jobs or social status
• Personal; 1. Age/lifestyle stage 2. Occupation, it is about the work someone does 3. Economic situation, depending someone’s income 4. Lifestyle (for example skaters) 5. Personality/self-concept, those are the psychological characteristics of a single person
• Psychological; 1. Motivation/drive, it is a need that presses a person (Maslow’s hierarchy of needs shows the order of importance of people’s needs: psychological needs, safety needs, social needs, esteem needs, self-actualization needs) 2. Perception, selecting information from a significant picture of the world (first you pay attention, than you evaluate and interpret and at last you remember or forget) 3. Learning 4. Beliefs and attitudes

The buyer’s decision process follows a schedule: need recognition, can be done by internal stimuli like a person’s needs or external stimuli like friends or advertisements àinformation search, getting information from family and friends, from commercials, from the internet or from experiments àevaluation of alternatives, ratio versus intuition àpurchase decision, can be influenced by others or situations àpost purchase behavior, the expectations against the actual performance (An introduction into marketing and strategy, page 158-160).

The last stage is the Response. Here we evaluate buyer’s responses; their buying attitudes and preferences, the purchase behavior (what he buys, when, where and how much it costs) and the brand and company relationship behavior.

Business Buyer Behavior

The Business Buyer Behavior is the buying behavior of companies that buy products and services to produce their products. The aim is to understand what influences the business buyer behavior. The Business Buyer Behavior differs from the one for consumers. The first part is the same. The stimuli are the marketing (4P’s) and macro environmental factors (PESTEL). There is one difference in this stage of the model. The business stimuli is also influenced by the competitive (advantage) of a company. The next step is the buying decision process. The business buyer’s characteristics are:

• Environmental; 1. Economy 2. Supply conditions 3. Technology 4. Politics/Regulation 5. Competition 6. Culture and customs
• Organizational; 1. Objectives 2. Strategies 3. Structure 4. System 5. Procedure
• Interpersonal; 1. Influence 2. Expertise 3. Authority 4. Dynamics
• Individual; 1. Age/education 2. Job position 3. Motives 4. Personality 5. Preferences 6. Buying style

Also the buyer’s Responses are different; product or service choice, supplier choice, order quantities, delivery terms and times, service terms and payment.

There are some differences between consumer and business buyer behaviors. First of all the market structure, the business market has fewer buyers, but the buyers are most of the time larger than the consumer buyers. Besides that, the business buyers are dependent from the consumers. The business demand actually originates from the consumers. Also the nature is different. When a company buys something, there are a lot more people with different opinions who decide about the purchase. Besides that, companies are most of the time more professional than consumers. The types of decision and the decision processes differ as well. The business purchases are usually more complex, the process is more formal and the buyers and suppliers/sellers depend on each other. 

ST(D)P

The ST(D)P-model is a customer-driven marketing strategy. All the different factors in the model help creating value for consumers.

Step one is the S, which stands for segmentation; dividing the market into different, smaller segments. Segmentation can be based on geographic (cities/regions/countries), demographic (gender/age), psychographic (lifestyle) and behavorial (occasions like holidays).

Step two is the T, which stands for targeting. The difference between segmentation and targeting is that targeting is choosing one of the segments to focus on. Inside targeting there are four kinds of marketing. Number one is undifferentiated mass marketing, wherein the targeted group is really broad (the question is whether this is really possible). The next one is differentiated (segmented) marketing, which is a bit more narrowed and has more focus than the first marketing. For example Kellog’s has different cornflakes for different segments of the market. The next marketing is the concentrated (niche) marketing, where the focus is more on a particular, small group. The last marketing is micromarketing (local or individual marketing), where the targeted group is really narrow. People can personalize their products. The marketing mix (4P’s) is a tool that can help getting a response in the targeted market.

Step three in the STDP-model is the D from differentiation. There is product differentiation (your product differs from the others), services differentiation (for example, which airline has the best service), channel differentiation (expertise and information), people differentiation through training (this one can be related to the service differentiation, because most of the time people provide services) and image differentiation (for example Apple differs from other brands because of the image of the brand ‘Apple’).

The last step is the P from positioning. Position is where a company wants to place itself. For instance, does a company want to have high quality and be expensive or does it want to have lower quality and a less expensive price. Positioning is the basis for competitive advantage.

Thus, segmentation and targeting are more focused on the costumers. Differentiation and position are mainly focused on creating value for the market.