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West, Ford, & Ibrahim Strategic Marketing, 3rd edition Chapter 4: Strategic marketing decisions, choices, and mistakes © Douglas West, John Ford, and Essam Ibrahim, 2015. All rights reserved. Structure A. INTRODUCTION 1. Overview and Strategy Blueprint 2. Marketing Strategy: Analysis & Perspectives B. WHERE ARE WE NOW? 3. Environmental & Internal Analysis: Market Information & Intelligence E. DID WE GET THERE? 14. Strategy Implementation, Control & Metrics West, Ford, & Ibrahim: Strategic Marketing, 3rd edition C. WHERE DO WE WANT TO BE? 4. Strategic Marketing Decisions, Choices & Mistakes 5. Segmentation, Targeting & Positioning Strategies 6. Branding Strategies 7. Relational & Sustainability Strategies D. HOW WILL WE GET THERE? 8. Product Innovation & Development Strategies 9. Service Marketing Strategies 10. Pricing & Distribution Strategies 11. Marketing Communications Strategies 12. International Marketing Strategies 13. Social and Ethical Strategies Learning Objectives To define ‘strategic choice’ To outline strategic decisions taken at the corporate, SBU and functional levels To review the strategic marketing decisions including products to offer, markets to target and competitive position strategies To review the analytical models and frameworks that can be used by organisations to make their strategic choices for the future West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Strategic choice involves generating a welljustified set of interrelated strategic alternatives and choose from them the ones that will contribute to the achievement of the corporate overall goals and strategic objectives West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Where do we want to be? Strategic Decisions Strategic decisions at corporate level Mission statement, Directional strategy (Growth, Stability, Retrenchment) Resource allocation Strategic decisions at SBU level Choosing Generic Strategy; cost leadership, differentiation & focus Marketing-related strategic decisions Products to offer Market segments to target Positioning strategy Competitive stance to take West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Directional (grand) strategies Growth Strategies Stability Strategies Retrenchment strategies Concentration Turnaround Captive Company Sell-Out/Divestment Bankruptcy/Liquidation Vertical Growth Horizontal Growth Pause/Proceed with Caution No Change Profit Diversification Concentric Conglomerate West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Resource allocation: BCG matrix West, Ford, & Ibrahim: Strategic Marketing, 3rd edition General electric model Strong Business Position Medium Weak Industry Attractiveness High Medium Low Most attractive: Investment for Growth Least attractive: Harvesting/Divesting West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Medium attractiveness: Selectivity Porter’s generic strategies STRATEGIC TARGET COMPETITIVE ADVANTAGE Uniqueness perceived Low cost by customer position Industry -wide Specific segment Differentiation Cost Leadership Differentiation focus Cost focus West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Bowman's strategy clock West, Ford, & Ibrahim: Strategic Marketing, 3rd edition New Market Existing Market Ansoff’s product/market matrix Present Products New Products Penetration Strategy Product Development Strategy •Increase share of customer spending • Increase market share • Non-users to users (where both are in the same segment) Market Development Strategy •New markets • New distribution channels • New geographical areas West, Ford, & Ibrahim: Strategic Marketing, 3rd edition •Product modification via new features • Different quality levels • New Product(s) Diversification Strategy •Joint ventures • Mergers • Acquisitions/takeovers Competitive position tactics West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Strategic advice to managers to avoid failure Strategic Elements Poor strategy performance Taking strategic actions statement Addressing key stakeholders Industry dynamics Resources Strategic capabilities Core competences Domain selection Implementation What to do: Do not confuse a sustained decline with a brief hiccup or a series of hiccups. This delineation is critical: if confusion leads to oversight or inaction on your part, it may lead to your firm’s eventual death. Recognise a decline early and that there are elements of the firm’s strategy that must be changed. Be serious and judicious in understanding the situation you are up against and prioritise actions and execute your strategies accordingly. Know what your firm is all about: what basic customer needs your firm can serve well; the products you sell; the customers and market segments you serve. Develop a clear identity that sends a clear signal to customers. Listen carefully to key stakeholders. Ask for their input and all-out support and mobilize them to rally around your firm’s chosen course of action. Be careful about ambiguous and incomplete environmental data, as they might lead to incorrect interpretation of the industry dynamics. Because of constantly evolving industry dynamics, an incorrect reading does not let you manoeuvre the external forces well; rather it serves as a booby trap. Be steadfast and decisive in the acquisition and use funds needed to make the correct change in a timely fashion. The same change might need far more resources later, or the opportunity to change might have been lost for good. Have marketing to connect with what customers want and the financial acumen to fund needed changes. Make a dedicated effort to exploit where the firm can add value with rare, hard to imitate activities. Be familiar with your industry’s domain without defining it too broadly. Be ready to quickly adjust your domain along with changes in customer needs. Do not stick to domains that have recently seen limited success. Coordinate implementation of strategy elements to work together in an effective, decisive, and timely way. West, Ford, & Ibrahim: Strategic Marketing, 3rd edition Conclusion • Strategic choice involves understanding the underlying bases guiding future strategy, and generating strategic options for evaluation and selecting from among them. • Strategic decisions are usually taken at corporate level (e.g., directional strategy, resource allocation), at SBU level (e.g., generic strategy), and at functional level in relation to various functional areas (e.g., marketing, R&D, finance, HR, production, etc.). • Strategic marketing decisions include products to offer, market segments to target, and positioning strategies. • Organisational failure is arguably a product of repeated strategic mistakes and unsuccessful interactions between the firm and its environment. West, Ford, & Ibrahim: Strategic Marketing, 3rd edition