Strategic Marketing and Competitive Advantage

Posted on Jun 15, 2024 in Economy

Strategic Marketing

The relationship between market orientation, analyzing the external environment and creating value-driven strategy. The process of creating superior customer value, which will result in the creation of superior shareholder value and a sustainable competitive advantage. Marketing: “Managing profitable customer relationships” and the main goal of marketing is to attract new customers by promising superior value and keep and grow current customers by delivering satisfaction. The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more offset a higher price. Strategy A detailed plan for achieving success in situations such as war, politics, business, industry or sport. Strategy is the direction and scope of an org over the long term, which achieves competitive advantage for the org through its configuration of resources within a challenging environment to meet the needs of the markets and to fulfill stakeholder expectations.

Levels of Strategy

Corporate strategy, which deals with the allocation of resources among the various businesses or divisions of an enterprise; Business strategy, which exists at the level of the individual business or division, dealing primarily with the question of competitive position; Functional level strategy, which is limited to the actions of specific functions within specific businesses. Competitive advantage is the means by which a company can outperform its competitors and earn higher than average profits. An advantage over competitors gained by offering consumers greater value. Two Roots of competitive advantage Resource Based View: Unique resources will give many competencies and over a period of time these resources will give disproportionate profits. Analyze and interpret resources of the orgs to understand how orgs achieve sustainable competitive advantage. Resources that cannot be easily transferred or purchased, that require an extended learning curve or a major change in the org climate and culture, are more likely to be unique to the org and, therefore, more difficult to imitate by competitors. Positioning Approach: The mental map a person will get in to his mind when a brand is mentioned. Competitive positioning is a marketing approach that brands use to distinguish themselves from competitors and gain a favorable perception amongst their target audience. A company’s position depends on whether consumers find value in the goods and services the brand provides and how this value compares to other orgs within the industry. Product positioning may include several elements such as product application and use, clients’ requirements and product price and quality. Perceptual Maps | Marketing Management Orientations The orientation is the approach or the focus of the org. These approaches dictate the priorities and processes of the firm. Also, it can be identified as the basic philosophy of marketing.

1. Customer Orientation is a business approach that prioritizes the needs of the customer over the needs of the business. It’s all about focusing on helping customers meet their goals. Essentially, the needs and wants of the customer are valued over the needs of the business.
2. Competitor Orientation It focuses on understanding the strength and weaknesses of existing and potential competitors as well as on discovering their potential to achieve customer satisfaction.
3. Production orientation The idea that consumers will favor products that are available and highly affordable; therefore, the org should focus on improving production and distribution efficiency.
4. Product orientation The idea that consumers will favor products that offer the most quality, performance, and features; therefore, the org should devote its energy to making continuous product improvements.
5. Selling orientation essentially mirrors the thought that consumers will not purchase enough of the company’s products unless large-scale promotional and selling efforts are carried out by it.
6. Marketing orientation philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs better than the competition.
7. Societal Marketing orientation holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and society’s well-being. Responsible marketing is an approach that ensures that you as a marketer are not only meeting customer’s needs, but also having a positive impact on the community that you are a part of. SOSTAC Framework PR Smith’s SOSTAC Situation – Where are we now? Objectives – Where do we want to be? Strategy – How do we get there? Tactics – How exactly do we get there? Action – What is our plan for implementation? Control – Did we get there? MOST analysis business analytic tool used to assess what an org wishes to achieve and how it aims to achieve the said goals. By conducting the MOST analysis, you’re able to align your long-term goals with your day to day tasks. Mission Objectives Strategies Tactics. How is MOST helpful? 1. Develop a clear understanding of what they want to achieve and how they plan to do this (mission, objectives, strategy, and tactics). 2. Understand the strengths, weaknesses, opportunities, and threats which are faced by the company. 3. Identify areas where they need improvement for them to achieve their objectives. 4. Understand what is working well for the company and capitalize on this. 5. Develop a workable plan to achieve their objectives (strategy, tactics, implementation steps). The marketing environment is the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful and profitable relationships with target customers. Importance of Analyzing Marketing Environment Essential for planning Understand the customers Tapping trends – Break into new markets and capitalizing on new trends Identify threats and opportunities To understand competitors external environment constitutes factors and forces which are external to the business and on which the marketer has little or no control. micro component of the external environment aka task environment. comprises of external forces and factors that are directly related to the business. the actors close to the company that affect its ability to serve its customers – the company, suppliers (This includes all the parties which provide resources needed by the organization and are treated as partners to provide customer value.), marketing intermediaries (help the company to promote, sell and distribute its products or services to consumers. Distributors/Wholesalers/Retailers/Marketing Services), competitors (Competitors are the players in the same market who targets similar customers as that of the organization. The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Competitor analysis: A competitive analysis is a strategy where you identify major competitors and research their products, sales, and marketing strategies.), publics (any group that has an actual or potential interest which can affect the company’s ability to serve its customers. Financial publics – banks, financial institutions who influence the ability to obtain funds/Media publics – This group carries news, features, and editorial opinion. It includes newspapers, magazines, television stations, and blogs./Government publics – Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters Citizen-action publics – A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Local publics – Neighborhood residents and community organizations. Large companies usually create departments and programs that deal with local community issues and provide community support) and customers (The aim of the entire value delivery network is to serve target customers and create strong relationships with them. Consumer Markets/Business Markets/Reseller Markets/Government Markets/International Markets). Macro environmental factors are external factors which affect the industry as a whole but don’t have a direct effect on the business. The organization will have extremely low or no control over macro factors. – Macro forces are the larger societal forces that affect the microenvironment-demographic, economic, natural, technological, political, and cultural forces. PESTLE P is for Political: Gov policy (business), stability, foreign trade, tax, central vs local power, foreign investor attitude, party views. E is for Economic: Growth, interest rates, exchange rates, inflation, consumer disposable income, wealth distribution. S is for Social: Lifestyles & shifts, changing social values, culture, beliefs, health & wellness trends, pressure groups. T is for Technological: Technological developments, innovations, R&D. L is for Legal: Labor law, import/export restrictions, rule of law. E is for Environmental: Resource availability, climate conditions, environmental regulations. Leadership & Management Styles – Leadership outlines what needs to be done by creating and identifying new ideas and establishing a vision and a clear direction. A leadership style is a leader’s style of providing direction, implementing plans, and motivating people. Difference Management is about coping with complexity by planning and budgeting (Usually for one month/ year ahead) whilst leadership, by contrast, is about coping with change by setting a direction through visions and strategy. Based on Kotter’s 1990 framework, leadership and management functions can be summarized as follows: Leadership involves establishing direction by creating a vision of the future and developing strategies for change to achieve goals. It focuses on aligning people by communicating the vision and strategy, and influencing the creation of teams that accept the validity of goals. Leadership is about motivating and inspiring people to overcome obstacles and satisfy human needs, resulting in positive and sometimes dramatic change. On the other hand, management focuses on planning and budgeting by deciding actions and timetables, and allocating resources. It involves organizing and staffing by deciding structure, allocating staff, and developing policies, procedures, and monitoring systems. Management is about controlling and problem-solving by monitoring results against the plan and taking corrective action, producing order, consistency, and predictability. The Blake and Mouton managerial/leadership grid (1964) categorizes management styles based on concern for people and concern for results. The grid identifies five main styles:
   1. Country Club Management (1,9): High concern for people and low concern for results, leading to a friendly, comfortable work atmosphere but potentially at the expense of productivity.
   2. Team Management (9,9): High concern for both people and results, fostering a work environment of trust, respect, and high productivity through committed and interdependent teams.
   3. Middle of the Road Management (5,5): Balanced concern for people and results, achieving adequate organizational performance by maintaining morale at a satisfactory level.
   4. Impoverished Management (1,1): Low concern for both people and results, resulting in minimal effort to get work done, just enough to sustain organizational membership.
   5. Authority-Compliance Management (9,1): High concern for results and low concern for people, focusing on efficiency and results by minimizing human elements’ interference.
   These styles illustrate the different ways leaders can balance people-oriented and task-oriented approaches to achieve various organizational outcomes. Competitive advantage through innovation – An innovation is the extension of an invention If an inventor discovers the ‘next big thing’ but is unable to find anyone to produce it, then the next big thing remains undiscovered to the world. ‘Real’ Innovation is accomplished consistently and systematically, given the true voice of the customer and a process for delivering solutions. Innovation life cycle The cycle of organizational innovation begins with the organization’s reputation for innovation, which attracts creative people. These individuals are then encouraged to innovate, leading to the development of innovative products. A culture that is willing to accept new ideas motivates employees and reduces frustration. This results in high morale and the retention of creative talent, further enhancing the organization’s reputation for innovation and perpetuating the cycle. An innovation audit is a critical assessment of the firm’s innovations record, the internal obstacles to innovation and how performance can be enhanced. The purpose of an innovation audit is to help organizations improve their creative and entrepreneurial skills. The innovation audit process Auditing the organizational climate – Attitude surveys, metaphorical analysis Evaluating the current performance- Rate of NPD, staff turnover Review of policies and practices driving and opposing innovation – Force field analysis Gauging the balance of cognitive styles. Teamwork – Trust, commitment, willingness to help Resources – Access to resources such as finance, facilities, systems Challenge – The sense of challenge at work Freedom – Amount of control people have over their work and ideas Supervisor – Managerial support in terms of morale Creative – Infrastructure Level of senior management support for creativity Recognition – Rewards for innovative ideas Unity & Corporation – Shared vision Productivity – Levels of productivity. Barriers to innovation – Resistance to change – Old planning systems – Centralized control – Lack of intelligence – Poor internal communication – Insufficient reward and motivation – Lack of resources – A backward culture. Sticky resources – Some resources, in particular intangible ones such as organizational capabilities, are ‘ This means that such resources (again intangible assets in particular) are difficult for rivals to imitate. This ‘ is also called ‘resource immobility. Brand equity is a marketing term that describes a brand’s value. Brand equity is the monetary value of the brand measured by the strength of the awareness, performance and preference of the brand in the marketplace. It is the difference in price that a consumer pays when they purchase a recognized brand’s product over a lesser known, generic version of the same product Brand equity is a competitive advantage that results in higher sales, higher revenues, and lower costs. Barriers to competitive advantage – Core Rigidities (When the company is overdependent on its competitive advantage and does not realize the need to change with the change in market dimensions) – Dynamic Environments (Rapid change characterizes dynamic environments vigorous marketplace activity, new and evolving products, expanding markets, advancing technology, social revolutions and rapid change usually includes uncertainty) – Risk of Innovation ( – Operational Failing to meet your quality, cost or scheduling requirements – Commercial Failing to attract enough customers – Financial Investing in unsuccessful innovation projects) – Sticky Resources (Sticky resources being possessed by the competitors would hinder endeavor of a company to achieve competitive advantage in a particular business sector). Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income ( relative to revenue, balance sheet assets, operating costs, and shareholders’ equity during a specific period of time. Margin ratios represent the company’s ability to convert sales into profits at various degrees of measurement. Some are – Gross profit margin ((revenue-COGS)/Revenue) – Earnings before tax, interest, depreciation and amortization (EBITDA) – Operating profit margin ((GP-operating expenses/revenue)) – Net profit margin – Cash flow margin. Return ratios are a subset of financial ratios that measure how effectively an investment is being managed. They help to evaluate if the highest possible return is being generated on an investment. Some return ratios are – Return on Assets (ROA) – Return on Equity – Return on Invested Capital (ROI or ROIC). Liquidity refers to the efficiency or ease with which an asset can be converted into ready cash without affecting its market price The most liquid asset of all is cash itself. Liquidity is a measure of a company’s ability to pay off its short term liabilities It’s usually shown as a ratio or a percentage of what the company owes against what it owns These measures can give you a glimpse into the financial health of the business. Inventory turnover is a financial ratio showing how many times a company has sold and replaced inventory during a given period. The higher the inventory turnover, the better, since high inventory turnover typically means a company is selling goods quickly, and there is considerable demand for their products. Calculating inventory turnover can help businesses make better decisions on pricing, manufacturing, marketing, and purchasing new inventory. A sale is a transaction between two or more parties in which the buyer receives tangible or intangible goods, services, or assets in exchange for money. Successful companies are characterized by efficient and high sales numbers and a higher market share.