What is Marketing
Marketing is the Management process responsible for identifying,
anticipating and satisfying consumer
(Source: Chartered Institute of Marketing UK)
• Realised the consumers ultimate dream – a soap that does not dry skin
due to a quarter moisturizing cream
• A clearly demonstrable point of difference helped position the brand and
gain market share of 12% in the US by mid 1990s and now a global brand
Example of Innovation
Marketing is about ….
C C D V P (Philip Kotler)
Solving a important consumer problem that competitor have not
How do you set your brand / product apart from competition ?
Does your product actually live up to consumer expectations ?
Value to a target market for …
What is the unique value proposition of your product ?
Does the price you charge more than off-set the cost of making it ?
Steps in Business Analysis
1. Where are we today in terms of business performance ?
E.g. Current turnover of the Company is 12 billion
2. Where do we want to be ?
E.g. Required turnover is Rs 24 billion in 5 years
E.g. Unilever wants to double its business in the next five years
3. How do we get there ?
What do you do as the top management team to achieve the
difference (24 – 12) called the planning gap ?
Ansoff Matrix - Growth Strategies
An important model for strategic planning
How do we Grow the Business ?
New Market Development
New Product Development
• New Market Segments
– Heavy user
VFM segment SKUs
• New distribution channels
• New geographic areas
• Product modification via new
features, new variants
• Different quality levels
• New products / range extensions
• More purchasing and usage by
• Gain from competitors
• Convert non-users
• Extend availability – new outlets
• Extend the range in exist outlets
• Joint ventures
• Strategic alliances
• New categories
McDONALD, M. (2007) Marketing Plans. 6th ed. Italy: Butterworth-Heinemann, p.361
Summary Financial Statement of a
2006 2007 Plan 2008 Actual 2008
Volume (millions of units) 60.0 59.9 60.2 64.0
growth -0.2 0.5 6.8
Market Share NA 23.1 23.1 24.2
Turnover (GBP '000) 660.7 687.2 686.2 883.8
growth 4.0 -0.1 28.6
Gross Profit (GBP '000) 353.2 355.5 383.6 506
"% to Turnover 53 52 56 57
growth 0.7 7.9 42.3
Support Spend (GBP '000) 26.6 19.8 37.2 124.0
Net Profit (GBP "000) 326.6 335.7 346.4 382
"% to Turnover 49 49 50 43
growth 2.8 3.2 13.8
• “I can’t believe its not butter” (ICBINB) is the only alternative to butter
that satisfies a passion for the taste of butter without cholesterol
• The product tested prior to launch, was rated highly by consumers
• 84% of butter users in the study rated it equal to or better than butter
on an overall rating
• The brand combined major benefits of taste value of butter and
health benefit of margarine
No 1 position in USA in premium margarine
Example of Innovation
The Business Environment
The Company’s external environment changes so opportunities and threats
emerge and disappear
The Strategist has to recognise the need to monitor the external
environment to identify in advance any possible opportunities and threats
This will allow for a planning system and organisational structure that is
capable of handling change that will minimise the effects of threats and
help seize opportunities
Formulation of strategy is concerned with matching the capabilities of the
organisation with the demands of the environment
The business environment is made up of the sectors and forces outside the
firm which infringe upon the ability of management to develop and
maintain a successful relationship with its target group
The Micro & Macro Environments
Five Competitive Forces – Michael Porter
THOMPSON, A. and STRICKLAND, A (2001) Crafting and Executing Strategy. 12th ed. New York: McGraw-Hill, p.74
How GE managed a hostile
The Five Stages of Environmental
Audit of Environmental
Assessment of the nature
Of the environment
Identification of the key
Environmental forces that impact the business
Identification of the
Identification of key
Opportunities and threats
How uncertain is the environment ?
What are the sources of this uncertainty ?
How should this uncertainty be dealt with ?
The Micro and Macro Environments
Is made of those elements which are closest to the company and which
exert the greatest and most direct influence over its ability to deal with
E.g. Organisation itself, its suppliers, its distribution network,
customers, competitors and the public at large
Consists of the broader set of forces that have a bearing upon the
E.g. economic, demographic, technological, political, legal, social
and cultural factors
Read Business Environment Analysis
The PESTEL Framework
Complexity arises because many of the different issues in the business
environment are interconnected
E.g. Tech development in IT changes the way we operate which alters
consumer behaviour and purchasing patterns
Therefore understanding the interconnections are important in
developing a strategic picture of the business environment
Speed of change – the pace of technological change and the speed of
global communication mean more and faster change now than ever
Your task is to perform environmental analysis for organisations that will
help in identifying key issues and ways for coping with complexity and
The PESTEL Framework
It is important to build an understanding of how changes in the macro
environment are likely to impact on individual organisations
Use the PESTEL framework to identify how future trends in the political,
economic, social, technological, environmental and legal environments
might affect the organisation
This provides the broad data from which the key drivers of change can
These will differ from sector to sector and from country to country
If the future environment is going to be very different from the past it is
important to create possible future scenarios
The PESTEL Framework
Within the general environment, an important layer is the industry or
sector – a group of organisations producing the same products or
The five-forces framework and competitor analysis can be used to
understand how the competitive dynamics in an industry are changing
The concept of strategic groups can be used to identify direct and
Consumer expectations are not all the same and market segmentation
and critical success factors for each segment needs to be considered
Remember that PESTEL factors are linked and NOT interdependent
The PESTEL Framework
Managers need to identify the key drivers of change and the differential
impact of these external influences on particular industries, markets and
Identifying key drivers cuts across “layers of the business environment”
Although there will be many changes happening in the macro
environment of organisations, it is important to identify the key factors
and their influence rather than all of the factors
The Key Drivers of Change
Remember that key drivers will be different from country to country and
market / sector and the specific key drivers of change need to be
identified depending on the organisation and the environment it is
Risk of military invasion
Legal framework for contract enforcement
Intellectual property protection
Trade regulations & tariffs
Favoured trading partners
Taxation - tax rates and incentives
Wage legislation - minimum wage and overtime
Mandatory employee benefits
Industrial safety regulations
Product labelling requirements
Political and Legal Environment
What impact would a change in each factor below have on the
Company sales, profit, and market share ? And what do you
recommend doing to deal with opportunities or threats as a result?
Type of economic system in countries of operation
Government intervention in the free market
Comparative advantages of host country
Exchange rates & stability of host country currency
Efficiency of financial markets
Skill level of workforce
Business cycle stage (e.g. prosperity, recession, recovery)
Economic growth rate
How the are factors below predicted to change in the next two years and
therefore, what should you do if you were formulating strategy for the
Culture (gender roles, etc.)
Attitudes (health, environmental consciousness, etc.)
What are the global trends and how can the current technology change or
be made obsolete ? If so what will be the impact on the Company be ?
How should my strategy change to deal with this situation in the next two
Recent technological developments
Technology's impact on product offering
Impact on cost structure
Impact on value chain structure
Rate of technological diffusion
What are your Company’s key strengths that enable it to take advantage
of opportunities in the business environment ?
Advantages of proposition?
USP's (unique selling points)?
Resources, Assets, People?
Experience, knowledge, data?
Financial reserves, likely returns?
Marketing - reach, distribution, awareness?
Location and geographical?
Price, value, quality?
Accreditations, qualifications, certifications?
Processes, systems, IT, communications?
Cultural, attitudinal, behavioural?
What weaknesses should we overcome and why? How do you propose it
be done as part of the implementation plan of your strategy ?
Disadvantages of proposition?
Gaps in capabilities?
Lack of competitive strength?
Reputation, presence and reach?
Own known vulnerabilities?
Timescales, deadlines and pressures?
Cash flow, start-up cash-drain?
Continuity, supply chain robustness?
Effects on core activities, distraction?
Reliability of data, plan predictability?
Morale, commitment, leadership?
Processes and systems, etc?
Trends in the micro and macro environment that can have a favourable
impact or effect on your Company’s sales and profit, i.e. to grow sales and
Industry or lifestyle trends?
Technology development and innovation?
New markets, vertical, horizontal?
Niche target markets?
Geographical, export, import?
Tactics - surprise, major contracts, etc?
Business and product development?
Information and research?
Partnerships, agencies, distribution?
Volumes, production, economies?
Trends or events that will have a negative impact on the Company’s sales,
market share, and profit
Competitor intentions - various?
New technologies, services, ideas?
Vital contracts and partners?
Sustaining internal capabilities?
Loss of key staff?
Sustainable financial backing?
Economy - home, abroad?
Swatch Case Study
Do A SWOT Analysis for the Swiss Watch Industry
What went wrong with Swatch and why?
What were the key driving forces in the environment that led to
this situation and why?
How would you as the management team of ensure that your
market share did not erode?
1. The business environment is increasingly dynamic and complex and
unstable. Discuss the implications of this for the strategic planning
process. Illustrate your answer with appropriate contemporary
examples from a sector of your choice.
2. All business operate within an environment which directly or
indirectly affects the way in which they function. Critically discuss
this statement using illustrations from an industry of your choice