Understanding the elements that go into making strong and useful strategies. Also Business Intelligence and Market Research.

1. Vinod Kaul Jan 2015
Developing Business &
Marketing Strategies
Strategy, tactics, competitive advantage, marketing plan, mis-mr-mi,
Bowman’s clock

2. What is strategy?
• A method or plan chosen to bring about a
desired future, such as achievement of a goal
or solution to a problem.
• The art and science of planning and
marshalling resources for their most efficient
and effective use.
The term is derived from the Greek word for generalship or
leading an army!

3. What is strategy?
• Success comes from a good strategy and
executing it well!!!
STRATEGY
Management
Decisions &
Actions
RESULTS
Competitive
Environment
GOALS

4. The difference between
Strategic & Tactical?
STRATEGIC
• Important or essential in
relation to a plan of action
or an independent
objective.
• Winning a war: B-52
Bomber
TACTICAL
• Made or carried out with
only a limited or immediate
end in mind.
• Winning a battle: MI-24
support helicopter

5. The difference between
Strategic & Tactical
Strategic
• Direction
• Strategy Statement
• Broad
• Unstructured
• Problem solving
• Creativity
• External Focus
• Irregular
• Long Term
• Difficult to evaluate
• Senior Management
Tactical
• Implementation
• Annual plans
• Specific detailed
• Structured
• Problem solving
• Analytical
• Internal focus
• Regular
• Short term
• Easy to evaluate
• Middle-level Management

6. The Three Levels of Strategy
• Corporate Level Strategy ‘The What’
• Business Level Strategy ‘The How’
• Functional Level Strategy ‘The Operational’

7. The Three Levels of Strategy
• Corporate Level Strategy
– Highest level of strategic decision-making by Top
Management
– Covers actions dealing with objectives of the firm,
acquisition, allocation of resources, coordination
of strategies of SBUs for optimal performance
– Decision is value oriented, conceptual & less
concrete
– Defines long term objectives, limits to the whole
enterprise

8. The Three Levels of Strategy
• Business Level Strategy
– Strategy for SBUs serving discrete independent
product/market segments in separate
environments
– Operates within the overall, long-term strategies
of the organization

9. The Three Levels of Strategy
• Functional Level Strategy
– Tactical
– Relates to single functional operation and
activities
– Guided by and constrained by overall strategic
considerations
– Each function may be further divided into sub-
functions:
marketing strategy  promotion, sales, distribution,
pricing strategies

10. What is Competitive Marketing
Strategy?
• It is an organisational process to optimize
resources and opportunities to meet business
goals and to increase sales through a
sustainable competitive advantage.
• Focuses on long term marketing activities and
competitor analysis to formulate, evaluate
and select market-oriented strategies.
• Bata: from factory to market

11. What is Competitive Advantage?
• the ability gained through attributes and resources to
perform at a higher level than others in the same industry
or market
• External Market attributes
– Price
– Product
– Brand
– Distribution
• Dynamic Internal attributes
– Innovation
– Operational efficiency
• Resources
– Financial resources:

12. Competitive Advantage
• Price: Walmart, Big Bazaar, Nano
• Design: Jimmy Choo
• Innovation: 3M
• User interface: Apple (PC, mouse, icon drag,
tablet, i-pod)
• Mass customisation: Dell
• Lifestyle, iconic: Harley Davidson, Royal
Enfield

13. e.g.Elements in Marketing Strategy
• Target Market
– Customer Needs, identification
• Marketing Channels
– Method for Satisfying Needs
• Building Sustainable Competitive Advantage
– Defending position against competitors

14. How can a marketer develop a sustainable
competitive advantage?
• Dropping the price of his merchandise?
• Building a store at the best location?
• Deciding to sell ‘hot’ merchandise?
• Increasing his level of advertising?
• Attracting better sales associates by paying
higher wages?
• Providing better customer service?

15. Sources of Competitive Advantage
More Sustainable
• Location (for retail)
• Customer Loyalty
• Customer Service
• Exclusive Merchandise
• Low cost supply chain
management
• Information Systems
• Buying power with vendors
• Committed employees
Less Sustainable
• Better computers
• More employees
• More merchandise
• Greater assortments
• Lower prices
• More Advertising
• More Promotions
• Cleaner Stores

16. Types of Competitive Strategies
• Cost Leadership Strategy
• Differentiation Strategy
• Innovation Strategy
• Operational Effectiveness Strategy
• Customer Orientation Strategy

17. Cost Leadership Strategy
• This strategy involves the firm winning
market share by appealing to cost-
conscious or price-sensitive customers.
• Achievement of lowest cost on
sustained basis
• Buying clout through size/economies of
scale
• Economies of scale: manufacturing,
retailing, distribution
• Efficiencies in supply chain
• New / external sourcing

18. Differentiation Strategy
• Differentiate the products in some way in
order to compete successfully.
• Appropriate where the target customer
segment is not price-sensitive, the market
is competitive or saturated, customers
have very specific needs which are
possibly under-served, and the firm has
unique resources and capabilities which
enable it to satisfy these needs in ways
that are difficult to copy.
•Firm has unique resources /
capabilities which enable it
to satisfy needs in ways that
are difficult to copy
Design
Branding

19. Strategies Based on Market
Dominance, Scope, Strength
• Leader: Apple, Nokia
• Challenger: Samsung (now leader), Sony
• Follower: Micromax, Spice
• Nicher: Blackberry
• Strategic Scope: market penetration: Bata
• Strategic Strength: sustainable competitive
advantage, GE

20. Operational Effectiveness
• The goal of operational effectiveness, is to
perform internal business activities better
than the competitors. This strategy attempts
to increase quality, productivity, and
employees and customers satisfaction with
the company
– E.g. Sports Station (Nike, Levi’s, Benetton, Lotto)

21. Sports Station
• SSIPL Group: specialty retailer across retailing,
manufacturing & franchising of sports & lifestyle
products.
• Exclusive Nike stores: 156 stores, first in 1998
• Franchised stores: Levi’s, Benetton, Beverly Hills Polo
Club
• MBO’s: Shoe Tree, Value Station
• Licensed: Lotto

22. DLF Retail
• Closed luxury operations
• Franchised operations:
DKNY, Alcott, Claire’s,
Mothercare, Boggi,
Sunglass Hut, Early Learning
Centre
• 150 stores
• Limited success inspite of
huge resources
– Real estate initiative

23. Customer-Orientation Strategy
• The goal of customer-orientation strategy, is to delight the
customer. This strategy focuses on what the customer wants
from the company and how to provide that.
• Business centered on consumer & retailer needs and
identifying relevant insights into market trends,
demographics, etc to adapt or add products & services.
• HUL, P&G, ITC

24. Growth & Diversification Strategies
• Horizontal integration
– Mergers & acquisitions,
Flipkart acquires Myntra
• Vertical integration
– Supply chain, manufacturing,
Woodland enters retail
• Diversification
– Brand extension, licensing,
Benetton
• Intensification
– Line extension, Subsidiary
brands, Bata

26. Strategies for Profitability
• Private Label
• Cost cutting
– Advertising & promotion
– Personnel
– Pruning unviable stores,
renegotiating rentals
• Streamlining operations
– Enhancing productivity
– Automation
• Direct sourcing

27. Bowman’s Strategy Clock
• 1980: Michael Porter publishes seminal book
Competitive Strategy: Techniques for
Analyzing Industries & Competitors.
• Strategy reduced to three generic variables
– Cost leadership (price)
– Product differentiation (perceived value)
– Market segmentation (specific customer)
• 1996: Cliff Bowman & David Faulkner extend
three strategic positions to eight combinations
of varying levels of price & value.

28. Bowman’s Strategy Clock
.

29. Bowman’s Strategy Clock
• Position 1: Low Price / Low Value
– Bargain basement bin
– Companies forced in this position if no differentiation
– Need to continually get new customers & sell large volumes
– Examples: cheap Chinese imports, USA (Ulhas Nagar)
• Position 2: Low Price
– Low cost leaders
– Very low prices, very high volumes
– If unsustainable, can cause price wars
– Examples: Walmart, Big Bazaar, Vishal, Peter England

30. Bowman’s Strategy Clock
• Position 3: Hybrid (moderate price/differentiation)
– Attractive cost but with higher perceived value
– fair price for reasonable goods, builds customer loyalty
– Examples: discount department stores – Shoppers Stop, Westside,
Lifestyle
• Position 4: Differentiation
– High perceived value, branding, pricing as per market share targets
– Examples: Nike, Reebok, Louis Philippe, M&S ?
• Position 5: Focused differentiation
– High perceived value & high prices
– Designer products
– Examples: BMW, Ritu Kumar, Ravissant

31. Bowman’s Strategy Clock
• Position 6: Increased price / standard product
– A gamble for increased profitability
– Short term strategy
• Position 7: High price / low value
– Monopoly pricing, unsustainable in modern scenario
– Examples: pre-liberalization – cars, air travel (IA)
• Low value / standard price
– Declining market share, price reduction spiral
– CRT TV, Ambassador cars (move to niche ?)

32. The contents and structure of the
marketing plan
• The executive summary
• Situational analysis
• Threats and opportunity Analysis
• Marketing objectives
• Marketing strategies
• Marketing tactics/Action Programs
• Schedules and budgets
• Financial data and control

33. Objectives of the marketing plan
• Acts as a roadmap
• assist in management control and monitoring
the implementation of strategy
• informs new participants in the plan of their
role and function
• to obtain & deploy resources for
implementation
• to stimulate thinking and make better use of
resources

34. Marketing Information system
• It consists of people , equipment and
procedures to gather , sort, analyze, evaluate
and distribute needed, timely and accurate
information to marketing decision makers

35. Marketing Information System
Process
Analysis Planning Implementation Control
Marketing Environment
Target MarketsMarketing ChannelsCompetitors Publics
Assessing
Information
Needs
Distributing &
Using
Information
Marketing Information System
Internal
database
Marketing
Intelligenc
e
Marketing
Research
Informatio
n analysis
Marketing Managers and other info users
Developing Needed Information

36. Marketing Intelligence
• It is a set of procedures and sources managers
use to obtain everyday information about
developments in the market environment.
• Sources: Sales persons, newspapers, trade
publications, stake holders, internet,
discussion groups, blogs etc

37. Marketing Research
• Set objectives
• Define research Problem
• Assess the value of the research
• Construct a research proposal
• Specify data collection method
• Specify techniques of measurement
• Select the sample
• Data collection
• Analysis of results
• Present in a final report
The systematic gathering,
recording and analysing of
data about problems relating to
the marketing of goods and
services.

38. Terminology of Marketing
Research
• Primary data - collected firsthand
• Secondary data - already exists, desk research
• Quantitative research - statistical basis
• Qualitative research - subjective and personal
• sampling - studying part of a ‘population’ to
learn about the whole

39. Marketing Research Techniques
• Interviews
• Attitude measurement
– Likert scale: strongly agree, agree, neither agree nor disagree, disagree,
strongly disagree
– Semantic differential scales - differences between words e.g. practical v
impractical
– Projective techniques: sentence completion, psychodrama (yourself as a
product), friendly martian (what someone else might do)
• Group discussion and focus group
• Diary panels - sources of continuous data
• Store audits (Nielsen): scan barcodes
• Telephone research
• Observation
• home audit
• direct observation
• In-store testing