Strategic Marketing Management v1.61.pdf

7/30/2019 Strategic Marketing Management v1.61.pdf

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STRATEGICMARKETING

MANAGEMENTV1.6NAXILO

2013

ABE LEVEL 6 DIPLOMA BATCH 19 2013


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STRATEGIC MARKETING MANAGEMENT

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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.

SINGAPORE AIRLINES EASY JET

Strategy is to provide value addedservices and diversify the offering

Strategy is to keep the cost atminimum and provide the basic service

only

Operates with a young fleet with aturnover of 5 years

Young fleet and highest usage perairline

Skimming pricing strategy isencouraged

Penetrative pricing or lowest pricingstrategy used

Sales is encouraged through allpossible channels

Website is the only sales pointencouraged

Hosts events, does lot of brandingactivities

Marketed only via price Maximum number of staff with better

training

Minimum number of crew Code share flights via Singapore Direct flights only Focuses on main airports Focuses on sub airports Best food menu served No food is served In-flight entertainment provided Minimum entertainment Holiday starts from home Only the transfer Higher Luggage Facilities 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 Situational Analysis

SWOT (Internal) PEST (External) Resources

Marketing Strategies Segmentation/Targeting/Positioning Ansoffs Matrix Marketing Mix Boston Matrix Shell Matrix


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Marketing Tactics Quarterly Targets Sales Budgets Product Development and Launch

Research

Implementation Monitor ControlVision, 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.coms initial vision was tobe the worlds leading 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 in 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 Information Technology

Sales Finance Logistics Marketing

Marketing Plan 1 (Product Range A)- A1 [promotional plan]- A1 [branding plan]- A2 [promotional plan]- A2 [branding plan]


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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 non-

tangible 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

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

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

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 Products2) 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 competitorsand mostly the generic products.

2) Shopping: Mostly semi durable appliances such as mixers, grinders, dry irons, washingmachines, 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 aftercareful 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)

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 byoffering different packages and timings.

EXII: During the recent years, Clique College have consolidated courses on IT, ACCA, Judicial

Service and Language Proficiency.

Idea Generation

Screening

Concept Testing andDevelopment

Marketing Strategy

Business Analysis

Product Development

Test Marketing

Commercialization/Launch

-

A

MOUNTOFINVESTE

MENT

+


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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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Rogers Diffusion Model

Rogers diffusion model represents how a customer adopts a new product from the

introduction stage to the end. As marketers, Rogers 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 thecustomer 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 whichcustomers 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 OrientedIndustries 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 OrientedIt is very common in general marketing.

EX: Hospitality industry, Ticketing & transportation, some seasonal food products

Competitor OrientedThe 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 SkimmingThis 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 PricingWhen the product is generic or does not have any uniqueness/no market demand, marketers

will have to adopt this strategy.

3) Early Cash ReturnCertain 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 Return5) Differential PricingTo overcome certain competitive and market challenges, differential pricing is encouraged.

6) Competitive Pricing6.1) 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 product2) To increase the price of the product3) 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 considered2) 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 pricingchanges 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 managementand retail chain management.

Distribution Methods/ChannelsDirect 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 StrategyThere 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 Suitable for low involvement products When the visibility is high, chances of selling is higher

EX: Supari, Chocolates

Selective DistributionTotal 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. High involvement products (EX: Housing, Vehicles, etc.) Packaging will be given high priority 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 Product Factors

Seasonality EX: Cashew nuts Rate of turnover EX: A house for lifetime Product Life Cycle (PLC) EX: Some softwares have a short life span. Perishable: If the goods are not durable, distribution method should be changed. Image of the product should suit the packaging and distribution.

Requirement of the Seller

Competition which may come from price, brand or margin 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 tocustomers. A good marketer should respect the following factors:

1) Target Audience2) Consistent Message3) Right Promotional Tools and ChannelsA promotion or communication will have at least one of the following objectives

1) For informative purposesEX: Villa College

2) PersuadingEX: Jilbaab

3) To repeat buy a productEX: SONEE Hardware

4) For branding purposesEX: 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 Campaign2) Drip Campaign3) Mixed CampaignWhen creating a promotional campaign, a marketer must consider the following factors.

1) How much does the campaign cover in terms of target audience2) 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 identity2) Avoid stereotyping3) To make a demand4) To last longer5) 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 organisation2) Market approach which compares it to other similar organisations3) 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 BrandingEX: TESCO starting their own range of products

2) Brand ForgerySome brands have many plagiarisers which will ruin the original brand.

EX: BOSS vs. BOOS

3) Negative Brand AssociationsEX: Pepsi had to face many problems when Michael Jackson had a fire accident.

4) Bad business practicesEX: Nike was accused of using child labour in Bangladesh

5) Act of God / Natural CausesCertain airlines did not recover after 2001 downfall

6) Grey MarketingThis 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 BrandingOne brand is promoted and all the new developments come as a sub-product of the originalbrand.

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 BrandingThis 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 BrandingNestle 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 brandimage

2) Compatibility and suitability for the global operation. Name, colour, symbols should notmake 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 willgive 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 pureproduct or no pure service. Therefore we are considering service as a partial product with few

differences from a complete product.

EX: Many restaurants and cafs 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 patentsInseparability:

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

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 possibleLack 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.

CUSTOMERS

GAP1

ORGANISATION

EXPECTED SERVICE

PERSONAL NEEDSWORD OF MOUTH PAST EXPERIENCE

PERCEIVED SERVICE

SERVICE DELIVERY

SERVICE QUALITY

SPECIFICATIONS

EXTERNAL

COMMUNICATIONS TO

CUSTOMERS

MANAGEMENT

PERCEPTION ON

CUSTOMER

EXPECTATIONS

GAP2

GAP3

GAP4

GAP5


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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) Tangibles2) Reliability3) Responsiveness4) Assurance5) EmpathyWhen studying SERVQUAL, all aspects of service will be analysed with the above 5 factors, themain 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.

Porters Five Forces Theory

Porter identified the competition is really not 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 Competitors2) 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, salesdropped 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 theorymodel 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.

SegmentationMain 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

TargetingWhen targeting a market, strategic marketers may have to look into the following:

1) Loyalty: CFL bulb market2) Price sensitivity: Marlboro3) 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 divingschools, 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. Many people and departments are involved EX: For a purchasing of raw material

shipment, marketing, finance, logistics, procurement, senior management may be

involved.

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

Buying patterns are set EX: When resorts are buying food items, they have limited buttrusted, selected suppliers.

Market influences EX: During financial crisis, low cost options Organisational factors EX: Apple may deal with selected suppliers, since Samsung

copied their technology.

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 differentways 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 muchsuccessful by analysing the environment. Also, it gives additional point of view and dimensions

that havent been thought ofto 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

Utilising MIS

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

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.

MANAGERS

- Strategic

- Tactical

- Functional

- Planning

- Implementation

& Control

Internal

Document

- Political- Economical

- Social

- Technological

- Environmental

- Legal

- Pressure group

- Competitor

- Customer

- Supplier

MARKETING ENVIRONMENT

Marketing

Intelligence

Marketing

Anal sisMarketing

Research

Feedback


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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

customers language.

It helps to understand the hidden reasons behind a customers thinking process and itnotices 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.

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 andprobably in the field (maybe in a laboratory, where real business takes place)

Marketing Research Process

1) Set Objectives2) Define Research problems3) Assess the value of the research4) Construct a research proposal5) Specify data collection method6) Specify techniques of measurement7) Select the sample8) Data Collection9) Analysis of result10)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 toosmall, 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 mayavoid 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 thetime is limited, high tendency for shortcuts and convenience samples. This may give a

wrong answer to research problem.

5) Errors in conducting research6) Researchers knowledge levels7) Literacy rate of the audienceSecondary Research

Secondary research is also called desk research, pilot research, desk research, etc. It is the first

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 MarketingMarketing 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 first 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 addedvalues 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 alldealing 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 thebusiness, 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 wellas their rights.


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

5)

Electronic Marketing

6) Customers: Rather than looking at the customer in one point of view organisations startedto 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 lead 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 indisastrous situations.

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

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

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.

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


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

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

come in handy.

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 organisations 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 Social Networks Search Engines PayPal Wire Transfer Email Campaigns Viral Marketing E-forums and blogs Interactive media such as interactive TV, Skype & chat forumsInternet marketing, also known as online marketing is used in 5 ways commonly known as

online marketings 5S:

Sell To a global market Serve To provide additional information or service Save By reducing traditional methods of advertising Speak One-to-One Sizzle Impress visitors by a grand website

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

Interactivity Intelligence Individuality Integration Industry restructuring Inventing new distribution channels Independence of location


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Capabilities of E-marketing

As a research and planning tool As a distribution channel Customer Service Communication and promotions : Travel agents, tour operators, book stores and

supermarkets, etc

As an advertising mediumRisks involved in E-marketing

Connectivity Cost Technical Staff Technical Faults Viruses and Hackers Legal Issues Spam Intellectual propertyNew Media

Due to the growth in virtual media, there are few new media, which are now dominating themarket.

Email marketing campaigns Viral marketing, also known as word of mouse, where one individual share one event to

their friend

Wireless marketing/mobile marketing Interactive television: A good media for instant feedback, used in voting, product search,

banking and gambling.


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CHAPTER 12THE APPLICATION OF STRATEGIC

MARKETING TO VARIOUS BUSINESS CONTEXTS

Strategic marketing differs from large organisations to smaller organisations. Depending on thesize 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.

SME Large Organisations

Market Share is small : Low turnover Market share is large : High Turnover Often, owner or family members or

few individuals are in the management

You will have a board of directors,HODS and consultants as well

Attempts every opportunity possible,more practical and lacks marketing

skills

More Strategic, long term plans with aproactive approach

Lack of resources money, skills andpeople

Enough resources and financialstrength

Generic Solutions Specialisation Easy to enter, easily faded Stable long term growth Individuals get multitasked Clear responsibilities, limited range Very flexible Bureaucratic Lower wages, lack of training, limited

benefits

Higher salaries, better benefits andtraining

Average 5% success rate Grow multinational Provides many job opportunities and

operates locally most of the time

Downsizing and operates in all markets


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Developments in SMEs Exporting/Importing International niche market

EX: Maldives exports sea cucumber as a highly demanded product

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

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 minimise 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) Managements commitment and dedication towards innovation2) Encouraging innovation internally3) Certain degree of risk4) Flexibility and adaptability5) Finding the niche and uniqueness6) 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

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

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.

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 StructureLarge 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 Checklist1) Market Share2) Consumer likes and dislikes3) Historical sales trends4) Seasonality5) Capacity and the usage6) Return on Investment7) Product definition and benefits8) Product Life Cycle

Price Checklist1) Are pricing objectives appropriate?2) Price and other 3ps3) Stage of PLC, competitor pricing and customers response to the price4) Discount, differentiated pricing and their effects on profit margin5) Is there any requirement for price promotion?

Place Checklist1) Does the product reach the consumer as expected?2) Is the distribution cost included in the price?3) Manufacturers control over the distributional channel4) Strengths and weaknesses in distributional channel5) Market coverage

Promotional ChecklistPromotional activities are audited in 2 ways:

1) Overall promotional audit: Here we analyse all the possible options and functions togetherIn 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 SellingPersonal 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 made2) Number of calls vs. orders received3) Achievement of sales target4) ProfitabilitySales Promotions1) Increase in sales2) Number of new customers attracted3) Preventing competitionMarketing 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 ObjectivesHere, we analyse what we expect to find out and set targets and goals.

2) Define research problemObjectives 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 researchWhat is the budget allocated for research and total expected income?

4) Construct a research proposalOnce 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 methodIs it through surveys, questionnaires or observation, etc?

6) Specify techniques of measurementHow 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 sample8) Data CollectionHere, the research team will go in the field and physically get involved in research. This is the

execution stage.

9) Analysing the resultConversion of raw data into meaningful information10) Present in a final reportIn 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)ExportingExporting is quite a traditional method, but comes handy when you are more focused ondomestic 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 moving. This

can be used for bulk exporting.

2)International Niche MarketingThis 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 MarketingDirect 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 ChainBy 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 instantly. 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 StandsOrganisations 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, SONYcapitalised on it through promotions.

Therefore, we mainly categorise 3 market stances:

1)Market LeaderMarket 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 FollowerMarket Follower may benchmark the market leader, but can gain advantages through superior

service, flexibility and by overcoming the short falls of market leaders 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 NichersMarket 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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Porters Generic Strategy Model

When Porter analysed successful organisations, he found 3 sound strategies underlying

beneath the success factor. These are called Porters Generic Strategy Factors

1)Cost LeadershipWhen organisations are quite large, then the investment is high and organisations have theopportunity 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)DifferentiationThis 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.

COMPETITIVE ADVANTAGE

LOWER COST DIFFERENTIATION

COM

PETITIVESCOPE

NARROW

FOCUS

BROAD

DIFFERENTIATIONCOST LEADERSHIP


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3)FocusFocus strategy is more towards niche market, and will be focused on few clients, but specialised

total solutions.

EX: Rolex watches, Intel processors, etc.

Porters Profitability Curve

Porters 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.

Cost Leadership

or well

differentiated

strategy

Focused

Strategy

Poorly Focused or

differentiated

with no cost

leadership


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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 LeadsFrom 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 BuildingTo 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 partnershipsMaking 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 injoining the organisations cause.

EX: Tiny Hearts of Maldives, who are an organisation for charity, made each social network

member a disseminating point of information.

4) Internal communicationCommunications 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 DevelopmentOrganisation 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 McKinseys Seven Ss model and explain with examples how it can be used

to analyse the internal environment of an organisation.


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McKinseys model was initially introduced for strategy selection, but now it is used as an

internal environment auditing tool. The steps identified by McKinsey can cover all aspects of

internal marketing.

Structure: Represents how the chain of command and reporting works with expansions andnew products, structure may require changes.

Strategy: This analyses the internal management strategy, which may be autocratic or

democratic. It also covers the strategy to unite the team.

Systems: It may be either procedure or software used.

Style: Communication, management and behavioural, as well as controlling styles.

Staff:

Skills: What are the training and development programmes, how best the talents are used and

are the right skills in the right designations.

Shared Values: On what basis the organisation promotes, builds reputation and sustains

business ethics.

Strategic Marketing Management v1.61.pdf

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