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Fragrance
November 2007 SMiP Case
V1
Your Objective
To analyse
 To evaluate
 To make strategic Decisions

 Product
Development
 Launch
 Brand
©November 2007
Position
Audit Section
The marketing information system
(MkIS)
Marketing
environment
• Target
markets
• Marketing
channels
• Competitors
• Publics
• Macroenvironment
forces
Marketing information system
Developing information
Marketing
intelligence
Internal
records
Assessing
information
needs
Marketing
research
Information
analysis
Distributing
information
Marketing
managers
• Analysis
• Planning
• Implementation
• Organisation
• Control
Marketing decisions and communications
Source: Kotler et al
©November 2007
Audit

Size and Structure of Industry
©November 2007
Understanding the structure
of the market
Suppliers
to industry
Supplier
I
Industry
players
Competitor
a
Channels for
Customers/
communication
segments
& distribution
Channel
1
FIRM
Supplier
II
Channel
2 Own Label
Competitor
b
Customer
A
Customer
B
Customer
C
Adapted from Porter
©November 2007
The organisation’s marketing
environment
The economy
Cultural
forces
The
public
Social
factors
Demography
Suppliers
Distributors
& dealers
The
organisation
Competitors
Political
structures
©November 2007
Customers
Technology
Legal
structures
Audit

Products
 Nature
of Product
 Life Cycle
 Portfolio
©November 2007
Understanding customers’
expectations
Where value
is added
Potential
Augmented
Expected
Core
What the customer buys
(functions & benefits)
©November 2007
What the
customer expects
Audit

Segmentation
 Industry
 Consumer
 DMU
©November 2007
Porter’s industry analysis:
The 5 forces model
POTENTIAL
ENTRANTS
Barriers
to entry
SUPPLIERS
Bargaining
power
Threat of
rivalry
Bargaining
power
INDUSTRY
Competitive rivalry
BUYERS
Threat of
substitution
SUBSTITUTES
Source: Porter
©November 2007
Audit

Distribution and Pricing
©November 2007
Audit

Major Players - Coty
 Review
and revise SWOT
 PIMS (Profit impact of market strategy)
©November 2007
Audit

Minor Player – Scents of Time
Chain –next slide
 Create SWOT
 Value
©November 2007
SUPPORT ACTIVITIES
FIRMS INFRASTRUCTURE - Customer focused, Marketing taken on and understood
at every level, core function - strong internal communications
HR MANAGEMENT - Retain technical and knowledge based employees and recruit
marketing and sales experts - Project/consulting expertise
TECHNOLOGY DEVELOPMENT - Technology leaders, continuous innovation,
R&D focused towards buyers needs, strength in R&D relationships I.e. Research institutes
MARGIN
PROCUREMENT - Combined buying power.
INBOUND
LOGISTICS
• Intranet
• JIT
OPERATIONS
• JIT
•Efficient
production
(closely
monitored)
©November 2007
OUTBOUND
LOGISTICS
•Order
handling
•JIT
MARKETING
AND SALES
• Customer/
segment
research
•Investment
in Branding
•Relationship
marketing,
Key Account
management
PRIMARY FUN CTIONS
SERVICE
• Total
systems
MARGIN
solution
•Consultancy
services
•Maintenance
•Outsourcing,
facilities
networks
Benchmarking to compare with
‘best of breed’
Price
Marketing
Sales
Technology
R&D
investment
Growth
Quality
ROI
Management
©November 2007
Capacity
utilisation
Integration
Interpretation:
 Outside the
circle = better
than average
 Inside the
circle = below
average
Manufacturing
Extended SWOT
Internal
Review
Strengths
Weaknesses
External
Review
Opportunities
Threats
©November 2007
Using existing
strengths
to capitalise on
opportunities
Use existing
strengths to
limit impact of
Threats
Prevent weaknesses
from damaging
opportunities
Prevent
Weaknesses from
reinforcing threats
Conclusion

Critical Factors for Success in the
Fragrance Industry
©November 2007
Summary p39

It is clear that the fragrance industry has a significant
global presence and a large part of its success is due to
carefully targeted marketing. Advertising continues to
play a central role in driving up sales in a crowded
market place, where the rate of new product launches
continues to increase. The European market is currently
the largest in the world, but in due course, the growing
markets of Asia-Pacific may eclipse Europe’s position in
terms of turnover and sales. Competition is likely to
intensify over the next decade and growth will be
fostered by both innovative product development and
intelligent marketing.
©November 2007
Strategic Options
Strategic choice
Source: Johnson & Scholes
DEVELOPMENT
STRATEGIES
GENERIC
STRATEGIES
• Cost leadership
• Differentiation
• Focus
©November 2007
ALTERNATIVE
DIRECTIONS
• Do nothing
• Consolidation
• Market penetration
• Product development
• Market development
• Diversification
ALTERNATIVE
METHODS
• Internal
development
• Acquisition
• Joint
development
Evaluating
strategic options
Suitability
Acceptability
Feasibility
Does it solve
the problem?
Is it acceptable
to stakeholders?
Can we deliver?
 Establishing the
rationale
 Screening
options and
criteria
©November 2007
 Returns
 Risk
 Reactions by
stakeholders




Cash flow
Break-even
Resources
Competencies
Adapted from Johnson & Scholes
Evaluating strategic options
Porters Strategies
©November 2007
Developing a specific position

Positioning
 Perceptual map
 Associations for
positioning (Kotler)

Value proposition
 Customer
 Unique
benefit
 Profitable
 Sustainable
©November 2007

Branding
 Brand
 Brand
name strategies
values and
personality
 Developing existing
brands
How will the organisation compete in a
specific market/segment?



Strategies for pioneers –technical innovation
Strategies for market leaders
Strategies for market challengers market
knowledge
 Market Information
 Emerging Markets


Strategies for market followers - copier
Strategies for nichers – segments
©November 2007
Geographic Choice p51+
Spain
 Eastern Europe
 Middle East
 Latin America
 Africa
 China
 India

©November 2007
Shell directional policy matrix
©November 2007
Unattractive
Average
Weak
Disinvest
Phased
withdrawal
Double
or quit
Average
Phased
withdrawal
Custodial
growth
Try
harder
Strong
Business’ competitive capabilities
Prospects for sector profitability
Attractive
Cash
generation
Growth
leader
Leader
In which markets/segments will the
organisation compete?
Market/segment attractiveness
©November 2007
Strongly
avoid
Strong
(Current & potential company
strengths in serving segment)
Unattractive
Average
Attractive
Avoid
Possibilities
Avoid
Possibilities
Secondary
targets
Possibilities
Secondary
targets
Prime
targets
Competitors’ likely response
profiles
4 Future Goals
What drives the competitor?
•
•
•
•
•
•
3 Assumptions
About itself and industry
©November 2007
1 Current Strategy
How it is currently competing?
COMPETITOR’S RESPONSE
PROFILE
Likely response point?
Satisfied with current position?
How expansionist?
Likely moves or strategy shifts?
Where most vulnerable?
What will provoke retaliation?
2 Capabilities
Strengths, weaknesses &
level of awareness
Strategic Plan
Objectives

Corporate and Marketing
©November 2007
Product
Type and Range
 Branding
 Packaging
 Design
 Portfolio management

©November 2007
New Product Development p 49/50
New Scents Sources p41 and p 43+
 Technical innovation
 Seasonal
 Style – ie Light
 Product extensions
 Licensing to Names
 Fragrance extension

©November 2007
Promotion
Comms Mix p47+ 50
 Celebrity
 Positioning
 Timing

©November 2007
Pricing Strategy
Premium
 Mass market price
 Promotional offers on new products- gift
packs etc. (Airport duty free)
 Lower prices for light perfumes e.g. Dolce
& Gabbana (blue packaging)

©November 2007
Distribution
Online
 Offline
 Agents, distributors
 Retail companies
 Large supermarket chains- Walmart,
Tesco
 Airports, cruise ships

©November 2007
Measurement and
Control
Balanced scorecard
How do customers
see us?
Financial
perspective
Goal
Measure
How do we look
to stakeholders?
What must we
excel at?
Internal
perspective
Goal
Measure
Customer perspective
Goal
Measure
Innovation &
learning perspective
Goal
Measure
How can we continue to
improve and create value?
©November 2007
Source:
Harvard Business Review
The marketing information system
(MkIS)
Marketing
environment
• Target
markets
• Marketing
channels
• Competitors
• Publics
• Macroenvironment
forces
Marketing information system
Developing information
Marketing
intelligence
Internal
records
Assessing
information
needs
Marketing
research
Information
analysis
Distributing
information
Marketing
managers
• Analysis
• Planning
• Implementation
• Organisation
• Control
Marketing decisions and communications
Source: Kotler et al
©November 2007
Control



-
-
-
Control: Monitors and corrects current performance. Import for the
Marketing department to monitor and control the effort.
Performance can be monitored:
1. Market performance:
Sales :
Using the Mkis system to identify Key performance indicators:
Measure Sales targets for each agent
sales team have to generate X sales and measuring the retention
rates for repeat business generated by the account management
team.
Measuring sales V targets
Market share: against objectives set
customer attitudes: Satisfaction surveys
Loyalty:
Need to Monitor changes in these over a specific time period e.g
every month/ 6 months/ 12 months and relate these back to our
original objectives.
©November 2007

2. Financial Performance
-
Turnover Targets
Profit Targets
Return on Investment
-

Must be careful that our marketing objectives and financial objectives
do not conflict. For example our longer term Marketing objectives are
not to the detriment of short term financial performance may arise.

3. Efficiency of Strategy can be monitored through a detailed
evaluation of the elements of the Marketing Mix. We would benefit
from regular, independent Marketing audited (McDonald, 1984,
Brownlie, 1996).
Should provide an objective, external evaluation of both the
effectiveness and efficiency of our marketing operations.

©November 2007

4. Contingency Planning

Responses to competitor product launches:
Poor Investment performances: if The company does not meet
its performance targets: Marketing and financial what are the fall
back options.
Forecasting competitive reactions
Scenario planning




-
How do we know we have got there?
Implement a control system to measure and monitor CRM
Programme
Targeted marketing campaigns: PR and email marketing etc..
Measured by customer enquiries, and use of the web site
Account managers and sales staff to be measured by sales
performance
Any control process should include a mechanism for taking
corrective action.
©November 2007
Marketing Control systems
Adjust Mktg
Objectives
Set Marketing Objectives
Adjust
Targets
Set specific targets
Assign responsibility
Evaluate performance against
standards
Management
action
Measure Performance
Review and take action as required
Control systems can operate simple feedback loops. These pre-empt problems by anticipating the
effect of inputs on overall performance e.g our objective to reinvest 12% of turnover on R&D would
be assigned to the MD and performance would be evaluated against actual performance. The
system can be adjusted by the relevant management action and objectives altered to reflect this,
keeping the system flexible.
©November 2007
Control of Marketing activity
Product
Market Share
Sales
Sales by market
NPD
ROI
Repeat purchases
Price
Profit margin
Price comparisons
Market very price sensitive ?
Place
Promotion
Channel costs
Media Coverage: PR, exhibitions
Channel volume
Sales per person/agent
Channel growth
Awareness levels
Delivery time
Visits to the website and enquiries
Stock levels
©November 2007
Effective Control systems

Involvement: Encouraging all members of staff to contribute in target
setting. E.g getting the sales teams and account management teams
and finance teams to aid in the setting of targets.

Target Setting: Target material should be measurable and achievable,
this needs to be communicated internally throughout the company:
Internal briefings and newsletters.

Effectiveness: Measurement should be accurate, valid and consistent

Management by exception: Attention from management needs to be
directed to areas of need if targets are not met.

Action: Good control systems promote action and solve problems,
therefore extra resources should be made available-contingency plans.
©November 2007
Benchmarking



Need to compare SoT UK ltd. Performance against competitors to
maintain current position against forecasted position and implement
continuous improvement (Learning organisation).
Best Practice
Performance standards
©November 2007