Strategic Marketing

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  • 1. STRATEGIC MARKETING Management Centre
  • 2.  
  • 3. What is Consumer Behaviour?
    • The behaviour that consumers display in seeking, purchasing, using, evaluating and disposing of products that they expect will satisfy their needs.
    • CB is the study of how individuals make decisions to spend their resources on need satisfying goods and services.
  • 4. Model of Consumer Behaviour Marketing and Other Stimuli Buyer’s Black Box Buyer’s Response ? ?
  • 5. Factors Influencing Consumer Behaviour
    • Cultural
    • Culture
    • Subculture
    • Social Class
    • Social
    • Household type
    • Reference groups
    • Roles & status
    • Psychological
    • Motivation
    • Perception
    • Learning (memory)
    • Beliefs & attitudes
    • Personality &
    • self-concept
    Consumer BUYER DECISION PROCESS Lifestyle
    • Buyers’ responses
    • Product service &
    • category selection
    • Brand selection
    • Reseller selection
    • Purchase timing &
    • repurchase intervals
    • Purchase amount
    • Personal
    • Age & lifecycle stage
    • Occupation
    • Education
    • Economic situation
    • Marketing programs
    • Marketing objectives
    • Marketing strategy
    • Marketing mix
    • Environmental influences
    • Economic
    • Technological
    • Political
    Experiences
  • 6. Decision-Making Model
    • Problem recognition
    • occurs when the consumer’s desired state of affairs departs sufficiently from actual state of affairs to place the consumer in a state of unrest
    • can be triggered by either internal or external stimuli.
    • not all problems stimulate the same level of problem-solving activity; the level depends on the magnitude of the discrepancy between the desired and existing states and the importance of the problem
  • 7. Decision-Making Model
    • Information Search
    • internal information search - memory scan based on past experience.
    • external information search - major sources of information are :
        • personal sources - friends & relatives
        • public sources - various reports & magazines.
        • marketer-dominated sources - advertising, sales people
        • experience source - eg test driving a car
  • 8. Decision-Making Model
    • Evaluation of Alternatives
    • Set selection criteria for evaluation and selection -- price, style, colour, brand, store
    • Choice
    • Having gone through the steps above, the consumer makes a decision
    • Decide to purchase one which satisfies maximum criteria or minimises dissatisfaction criteria
  • 9. Decision-Making Model
    • Post-purchase evaluation
    • consumer assesses how satisfied or dissatisfied they are with the final purchase decision.
    • if satisfied, the purchase decision and process are reinforced.
    • dissatisfaction can occur with either the retail outlet or the product.
  • 10. Decision-Making Model
    • Post-purchase evaluation - cognitive dissonance
    • cognitive dissonance occurs when a consumer recognises an inconsistancy between their values and their behaviour and can arise when the consumer becomes aware that unchosen alternatives have desirable attributes; this leads them to wonder whether or not they have made the right decision.
    • cognitive dissonance can be reduced by reassessing unchosen alternatives or by seeking information which will validate their choice.
  • 11. Steps involved in the purchase of a new jumper
    • Problem Recognition
      • cold weather; new fashion in jumpers; old jumper has a hole in it etc.
    • Information Search
      • internal search (memory of last purchase); discuss with friends/relatives; fashion magazines; advertisements in print or on television; sales assistants; window shopping.
  • 12. Steps involved in the purchase of a new jumper
    • Alternative Evaluation
    • Evaluative criteria : price; colour; size; style; brand
    • Determinant criteria : will vary between students
    • Choice
    • Having gone through the steps above, the consumer makes a decision
    • decide to purchase using cash, lay-by, credit
    • Outcomes
    • happy with the purchase decision; dissatisfied - cognitive dissonance.
  • 13. Organisation interact with customers at each of the five stages of the decision-making process.
    • Problem Recognition
      • through personal selling, direct mailing to let potential customers know about new products which may fulfill a specified need.
    • Information Search
      • advertising, personal selling.
  • 14. Organisation interact with customers at each of the five stages of the decision-making process.
    • Alternative evaluation
      • presentation of company products with possible modification to fit specific needs.
  • 15. Organisation interact with customers at each of the five stages of the decision-making process.
    • Choice
      • easy access purchase facilities eg through mail order or faxes
    • Outcomes
      • use follow-up techniques to minimise cognitive dissonance.
  • 16. The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behaviour
  • 17. Types of Buying Decisions Complex Buying Behaviour Dissonance- Reducing Buying Behaviour Variety- Seeking Behaviour Habitual Buying Behaviour High Involvement Significant differences between brands Few differences between brands Low Involvement
  • 18. Life-style dimension Activities Work Hobbies Social Events Vacation Entertainment Club membership Community Shopping Sports Interest Family Home Job Community Recreation Fashion Food Media Achievement Opinions Themselves Social Issues Politics Business Economics Education Products Future Culture Demographics Age Education Income Occupation Family Size Dwelling Geography City Size Stage in life cycle
  • 19. Lifestyle Dimension Activities Work Hobbies Social Events Vacation Entertainment Club membership Community Shopping Sports Interest Family Home Job Community Recreation Fashion Food Media Achievement Opinions Themselves Social Issues Politics Business Economics Education Products Future Culture B. Socioeconomic and demographic variables associated with consumer lifestyle. Age Education Income Occupation Family Size Dwelling Geography City Size Stage in life cycle
  • 20. Individual and social factors play an important role in the consumer’s decision-making process Buy/Don’t Buy Individual Factors Perception Motivation Learning Values, beliefs & attitudes Personality Self-concept Lifestyle Social Factors Reference groups Opinion leaders Family Life cycle Social class Culture Sub-culture Consumer Decision Making Process
  • 21. Motives -Maslow’s Hierarchy of Needs Self-Esteem Belongingness Safety Physiological Self Actualization
  • 22. Social Factors: Group Influence Public Luxuries Public Necessities Private Luxuries Private Necessities Group Influence on Product Choice Strong Weak Group Influence on Brand Choice Strong Weak
  • 23. Family - Consumer Buying Roles Decider Buyer User Influencer Initiator Key Family Decision Roles
  • 24. Family and Lifestyle Influences Family Influences Age and Life Cycle Stage Occupation Economic Situation Lifestyle Identification Activities Opinions Interests
  • 25. VALS 2 Actualizers Principle Oriented Fulfilleds Believers Status Oriented Achievers Strivers Action Oriented Experiencers Makers Minimal Resources Strugglers Abundant Resources
  • 26. iVALS Wizard Pioneer Surfer Upstreamer Mainstreamer
  • 27. Steps in Consumer Decision Process Recogni- tion of problem or Opportunity Search for Most Appropriate Solution Evaluation of Alternative Solution Evaluation of Alternative Solution Search for Most Appropriate Solution Recogni- tion of problem or Opportunity Individual Influence Environ- mental Influence
  • 28. Marketing Planning & Implementation
    • Strategic Analysis
    • Formulation of Strategy
    • Strategic Implementation
  • 29. 5 Major Areas
    • Market-led approach to planning
    • Analysis
    • Techniques for analysis and strategy development
    • Strategy formulation and selection
    • Implementation and Control
      • The 7 S’s model
      • Benchmarking
  • 30. Strategic Analysis
    • External Analysis
    • Segmentation
      • E.g. MBA benefit segments
    • Internal Analysis
    • Developing a Future Orientation
      • Forecasting
      • Scenario Planning
  • 31. Strategic Analysis
    • External Analysis
    • Macro-environmental Analysis (PEST or STEP)
    • Industry Analysis (Microenvironment, Porter’s 5 competitive forces)
    • Competitor Analysis
      • Identification, competitors’ objectives & strategies, reaction patterns, etc.
    • Market Analysis
      • Actual & potential mkt size, trends, customers, customer segments and distn channels
  • 32. Strategic Analysis
    • Internal Analysis
    • Organisational Capabilities
      • Assets
        • Financial, physical, operational, people, legally enforceable, systems & mktg.
      • Core Competence
    • Auditing Process
      • Tools
        • Portfolio Analysis
        • SWOT Analysis
        • Value Chain
  • 33. Organisational Assets (Internal Analysis)
    • Financial assets – such as working capital
    • Physical ‘’ – ownership or control of facilities & property
    • Operational ‘’ – prod’n plant & process technologies
    • People ‘’ – quantity & quality of HR
    • Legally enforceable ‘’ – ownership of copyrights & patents
    • Systems ‘’ – MIS & database
  • 34. Organisational Assets (Internal Analysis)
    • MKTG:
    • A. Customer-based ‘’
      • 1.     Image & reputation – corporate identity
      • 2.     Brand franchises – customer loyalty
      • 3.     Mkt. leadership, e.g. beneficial shelf positions in retail outlets
      • 4.     Country of origin – Germany is associated with efficiency & quality
      • 5.     Unique pdts. & services 
    • B. Distribution-based ‘’
      • 1.    The size & quality of the dist’n network
      • 2.     Level of control over dist'n channels, e.g. Coca-Cola & McD’s 
  • 35. Organisational Assets (Internal Analysis)
    • MKTG:
    • C. Internally-based ‘’
      • 1.    Cost structure -> pricing
      • 2.    Info. Systems -> MR
      • 3.     Innovatory culture, e.g. 3M
      • 4.     Production skills, e.g. TPS
    •   D. Alliance-based ‘’
      • 1.    Access to mkts. – local distributors
      • 2.    Mgt. Expertise – from outside agencies
      • 3.    Access to technological developments or processes – through licensing or JV
      • 4.    Exclusive agreements – Coca-cola & McD’s
  • 36. Core Competemce (Internal Analysis)
    • Define the basis of SCAs
      • Skills & resources needed within defined mkts
      • Long term consideration
    • Aim
      • To match organisational capability with desired goals & the external environment
    • Major resource implications
      • Investment & rationalisation
  • 37. Core Competence This is what a company does best & what differentiates it from the competition. Honda, CNN, 3M, & Canon are part of the pack that put the concept into action. Rather than basing their strategies on pdts or mkts, these companies focus on competencies that given them access to multiple mkts & are tough for competitors to imitate.
  • 38. The Boston Consulting Group’s Growth-Share Matrix 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- 0 Market Growth Rate 10x 4x 2x 1.5x 1x Relative Market Share .5x .4x .3x .2x .1x Stars 5 4 3 ? Question marks ? ? 2 1 Cash cows 6 Dogs 8 7
  • 39.  
  • 40. The Generic Value Chain Inbound Logistics Opera- tions Out- bound Logistics Market- ing and sales Serv- ice Procurement Technology Development Human resource management Firm infrastructure Margin Margin
  • 41. Value Chain by Porter (Internal Analysis)
    • The concept of value chain categorises the org. as a series of processes generating value for customers & other stakeholders. It split activities into:
    • Primary value activities
      • Inbound logistics - material handling & warehousing
      • Operations - transforming inputs into the final pdt
      • Outbound logistics - order processing & dist’n
      • Mktg. & Sales – Com’n, pricing, & channel mgt.
      • Service - installation, repair, & parts
  • 42. Value Chain by Porter (Internal Analysis)
    • Secondary value activities
      • Procurement - procedures & information systems
      • Technology development - improving the pdt & processed systems
      • HRM - hiring, training, & compensation
      • Firm infrastructure - gen. mgt., finance, acct’g, gov’t relations, & quality mgt.
  • 43. Developing a Future Orientation
    • Scenario Planning
    • Peter F. Drucker
  • 44. Scenario Planning
    • 4 key stages in the development of simple scenarios:
    • Identify the critical variables
      • To use a brainstorming session to establish the factors that will drive changes in the future
    • Develop possible strings of events, more than1 view or interpretation
    • Refine the scenarios, consistency. E.g., a scenario wouldn’t be internally consistent if it had the UK gov’t cutting interests while at the same time the Pound was dramatically strengthening against the Euro.
    • Identify the issues arising, a major impact on the organisation or not?
  • 45. Scenario Planning (benefits)
    • It is a useful technique to help mgrs. understand the critical issues that lie at the heart of the future of org. It can help create a framework within which to understand events as they evolve.
    • It prepares mgrs. For the possibility there may be discontinuities in the external environment.
    • Critically, it helps to place fundamental strategic issues on the mgt. agenda.
    • N.B. The key dimension of scenario writing isn’t so much forecasting the future but helping mgrs. to understand the factors that could have a major impact on their business.
  • 46. Peter F. Drucker
    • Managing for the Future: The 1990’s and Beyond (1990)
    • 4 MKTG Lessons for the Future
    • buying customers by underpricing boomerangs
    • one can use mkt. research only on what is already in the mkt.
    • the customer rather than the maker defines a mkt.
    • mktg. starts with all customers in the mkt. rather than with our customers
  • 47. Formulation of Strategy
  • 48. Formulation of Strategy
    • Strategic Intent, Mission, Objectives
    • Strategy Formulation
      • Competitive Advantage
      • Mkt. Position
        • Mkt. leaders, challengers, followers & nichers
        • Offensive & defensive strategies
      • Pdt. & Mkt. Strategies
        • Pdt/mkt matrix
        • PIMS
        • PLC
  • 49. Types of Competitive Advantage
    • Superior pdt or service (real benefits), such as Sony & Boeing
    • Perceived advantage as a result of a pdt’s image & personality, e.g., Coca-Cola & Mercedes. They are usually built through advt’g & can also be developed through design, heritage or styling, such as Dunhill & Cartier.
    • Global skills
      • The C.A. includes global distribution; ability to produce & mkt. effectively on a multi-country basis; and skills at entering new countries. E.g., C-C, McD’s & Mars
  • 50. Ansoff’s Product/Market Expansion Grid Existing New products products 1. Market penetration 3. Product development 2. Market 4. Diversification development Existing markets
  • 51. Product/Market Expansion Grid Based on Starbucks
    • making more sales to current customers without changing its products.
      • How? Add new stores in current market areas, improvements in advertising, prices, etc.
    • identify and develop new markets for its current products.
      • How? Review new demographic (senior consumers) or geographic (Asian, European & Australian) markets
  • 52. Product/Market Expansion Grid Based on Starbucks
    • offering modified or new products to current markets.
      • How? Increasing food offerings, sell coffee in supermarkets, extend to Frappuccino drinks.
    • start up or buy businesses outside current products and markets.
      • How? Currently testing two new restaurant concepts – Cafe Starbucks and Circadia, or branded casual clothing.
  • 53. Fad & Fashion Product ’ s Life Cycle Sales volume Time Fad e.g. Tamago - chi Fashion e.g. mini skirts Sales volume Time Fad e.g. Tamag - chi Fashion e.g. mini skirts
  • 54. Formulation of Strategy
    • Porter’s 3 Generic Strategies
    • Targeting & Positioning
    • Brand Strategy
      • Brand equity
    • Product Development
    • Alliances
      • Globalisation, assets & competencies, risk, and learning & innovation
    • Strategic Mktg. Plan
  • 55. Porter’s 3 Generic Strategies
    • 1. Overall Cost Leadership
      • To achieve the lowest costs among those competitors adopting a similar differentiation or focus strategy
      • E.g., Wal-Mart, Toys “R”Us & Samsung
      • A low-cost producer creates imperfect competition by:
        • Reducing the bargaining power of suppliers
        • ‘’ ‘’ ‘’ ‘’ ‘’ customers
        • Making substitutes less attractive
  • 56. Porter’s 3 Generic Strategies
    • 2. Differentiation
      • To cultivate those strengths that will give it a competitive advantage
        • E.g., Nike, Gucci, L’Oréal hair colour, Canon’s copier (quality leader)
      • Mkt. shares vary greatly
        • Sellers of luxury brands, such as Mercedes, Hermès or Cartier, earn huge  margins on ea. item sold but hold a tiny share of the mkt. (differentiation + segmentation)
        • Others earn less exorbitant  margins but posses a huge share of the mkt ., such as Coca-Cola, Campbell’s soup, Quaker Oats oatmeal, Gatorade & Heinz ketchup
      • It creates ‘’ ‘’ in the following ways
        • Reducing the bargaining power of customers
        • Making substitutes less attractive
        • Reducing rivalry
  • 57. Porter’s 3 Generic Strategies
    • 3. Focus
      • To focus on 1 or more narrow mkt. segments rather than going after a large mkt, e.g., Naxos
      • Creates ‘’ ‘’ by:
        • Reducing rivalry
        • ‘’ pressure from substitutes
      • Mercedes-Benz?
        • Engineering excellence  differentiation
        • Customer base  segmentation
    • 4. Stuck in the Middle
      • Almost guaranteed a low profitably
      • Firms get stuck for the following reasons :
        • inexorable mkt. changes, e.g., Wing On & Sincere
        • Competitor’s actions
  • 58. Connecting With Customers determining distinct groups of buyers (segments) with different needs, characteristics, or behaviour.
    • evaluating each segment’s attractiveness and selecting one or more segments to enter.
    • arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
  • 59. Discussion Question
    • What is the difference between a market segment and a market target?
  • 60. Brand Strategy
    • 4 options for overall brand strategy
    • Corporate brand
      • 1 corporate name across all its pdt.
      • Heinz uses this unified approach (Baked Beans, Cream of Mushroom Soup, Tomato Ketchup)
      • Gives the opportunity of create economies of scale
    • Multi-brand (or discrete branding)
      • Each pdt. is given its own unique brand name.
      • Such as P&G’s washing powder, Daz, Ariel, Bold
      • Appropriate if the org. is competing in a no. of different segments & the consumers’ perception of a pdt’s position in 1 segment may adversely affect the consumers’ perceptions of another pdt.
  • 61. Alliances
    • Globalisation
      • Means of responding to the challenge
      • E.g., parts & components can be sourced worldwide
      • Joint initiatives give access to expertise & contacts in local mkts. and greatly help the process of mkt. entry
    • Assets & competencies
      • Causes: downsizing, contract out & huge cost of pdt. development
      • Inter-organisational synergy, the combined effect of 2 or more orgs. working together is greater than their individual effect.
  • 62. Alliances
    • Risk
      • Spreading of financial risk,
      • ‘ Go-it-alone’? Co-operative ventures can promote industry stds. & common practices. E.g., VHS vs. Betamax
      • Reduction of pdt. dev. time & ‘’ associated with pdt. launching
    • Learning & innovation
      • Technology & skills transfer are often essential in generating meaningful commercial benefit
      • Learning & knowledge transfer generated SCA via collaborative ventures, Morrison & Mezentseff (1997)
  • 63. Developing Relationships
    • Common principles of relationship MKTG
    • Use appropriately
      • Not all transactions are relational in nature. E.g., impulse buys or 1-off purchases don’t require, or offer, scope to develop relationships.
    • Establish relationship drivers
      • MR techniques facilitate understanding of what is important to building/maintaining relationships.
      • By identifying how customer expectations are set & evaluated, orgs. are more able to generate +ve interactions.
  • 64. Innovation Audit
    • Output – the no. of your innovations which reach the mkt.
    • Success
    • Illustration (based on Table 77 of Davidson, H.)
    • Innovation Criteria 3yrs ago This yr.
    • No. of sig. innovations in past 5 yrs
    • No. successful
    • % success rate
    • % total sales in p/s launched in past 5 yrs
    • % incremental sales
    • Average annual sales per new pdt/s ($/£)
    • Incremental payback ‘’ ‘’ ‘’ (yrs)
  • 65. CASE STUDY
  • 66.
    • CONTENTS
    • Introduction
    • Situation Analysis
    • Strategy Development
    • Recommendation
  • 67. 1.INTRODUCTION
    • Company background
    • Foundation in 1976
    • High quality skin & body care retailer
    • Was the first company to be certified to the Humane Cosmetics Standard
    • Famous for inspired skin & hair care products & use minimal packaging
    • Speedy selling frequency
    • Gained many awards
  • 68. Company background
    • Mission Statement
    • - To dedicate our business of social environmental change
    • - To balance the financial & human needs of our stakeholders
    • - A commitment to purchase only materials & products which meet the Company’s environmental & animal protection policies
    • - To ensures care, honestly, fairness & respect
    • - To passionately campaigns for the protection of environment
  • 69. 2.SITUATION ANALYSIS 2.1 Consumer Analysis 2.2 Competitor Analysis 2.3 Market Analysis 2.4 Environmental Analysis 2.5 Internal Analysis
  • 70. 2.1 Consumer Analysis--STP
    • Segmentation Level
    • - Niche Marketing
    • Segmentation Base
    • - Psychographic—Focused at lifestyle & personality differences
  • 71. Targeting--Characteristic of potential/current Body Shop users
    • Appeal to nature/natural products
    • Concern about environmental protection
    • High ethical standard
    • Caring
    • Animal lovers
  • 72. X Targeting--Characteristic of Non potential Body Shop users
    • Indifferent between natural and artificial products
    • Not concern about the environmental protection
    • Self-centered
    • Non animal lovers
  • 73. Positioning
    • The pioneer who fascinate the well being of the society by developing and promoting the non-animal tested natural products.
  • 74. Consumer Analysis—Motivation
    • Emotion Needs
    • Help to protect the natural environment
    • Help to save animal lives
    • Peer group recognition/appreciation
    • Physical Needs
    • Having sensitive skin
    • Daily usage
  • 75. Consumer Analysis – Unmet Needs
    • Household products e.g. house fragrance, scented candle
    • Beverage products e.g. healthy drink/snack
    • Beauty center e.g. facial, slimming
  • 76. 2.2 Competitor Analysis
  • 77. Identifying Strategic Group
    • * SIMILAR STRATEGIC CHARCTERISTICS :
    • Product : natural, pure ingredients
    • Price : low med, HK$100 – 400
    • Place : retail shop owned, convenient
    • Promotion: advertising, free gifts, coupon
    • Target Ordinance: lady, 18-30 years old, family
  • 78. Full Line Broad line, Good services, Low- med. price Full line, Good services, Med. price Full line, Good services, Low price Narrow line, Well services, Med-high price Narrow line, Well service , Low-med price Narrow line, Good services, Med. price Narrow Line A MAP OF STRATEGIC GROUP High GEOGRAPHICAL COVERAGE Low
  • 79.
    • Product Range
    • Soaps, creams, lotions, fragrance, body & hand care, hair care, facial, foot, home décor etc
    • Strategies
    • - Shipment guarantee
    • - Birthday card for 25% off
    • - 10% off all purchases when accrue UK 250
    • - On-line shopping
  • 80.
    • Strength Weakness
    • Natural packaging - Limited promotion
    • Diversification - Lack of ATL & PR
    • Wide product variety
    • Royalty program
    • High reputation
  • 81.
    • Product Range
    • - Body & hand, bath & shower, face care & make-up
    • Strategies
    • - Monthly promotion
    • e.g. Lavender month, honey month
    • - On-line shopping
  • 82.
    • Strength Weakness
    • Traditional packaging - Old packaging
    • Premium image - Low brand
    • awareness
    • - Low coverage
    • - Weak advertising
  • 83.
    • Product Range
    • - Skin care, hair care, sensory therapy, bath & body
    • Strategies
    • - Free gifts
    • - Membership, enjoy discount
    • - On-line shopping
  • 84.
    • Strength Weakness
    • Unique product - Limited coverage
    • Young image - low brand awareness
  • 85.
    • Strength Weakness
    • Loyal brand - Traditional
    • Geographic coverage packaging
    • Employees
  • 86.
    • Product Range
    • - Skin & health care products key brand No7 & Botanic, Dental care, foot, bath & body, hair, fragrance, make-up, sun care, hand etc.
  • 87.
    • Strategies
    • - Achieve modest sales growth
    • - Simple goal
    • - Advantage card
    • - Celebrity
    • - Free sample
  • 88.
    • Strength Weakness
    • Well known brand - Rely on stores
    • Sufficient capital - Image
    • Competencies - Weak product
      • effectiveness
  • 89. 2.3 Market Analysis Threat of new Entrants - HIGH Intensity of Rivalry - HIGH Bargaining power of supplier - MEDIUM Bargaining power of buyers - LOW Threat of Substitutes - MEDIUM
  • 90.
    • Threat of New Entrants
      • HIGH – market is growing; minimal government intervention; high profit margin
    • Bargaining Power of Suppliers
      • MEDIUM – threat of resource shortage; not the key customers to suppliers
    • Bargaining Power of Buyers
      • LOW – differentiated products; brand loyalty causing high switching cost; low price sensitivity
  • 91.
    • Threat of Substitutes
      • MEDIUM – DIY by consumers; take pills or medicines made from natural ingredients
    • Intensity of Rivalry
      • HIGH – high yield market; more participants are anticipated to enter
    • Natural health industry, cosmetics market and its sub-markets are attractive to companies to enter
  • 92.
    • Alternative distribution channels and their relative strengths
      • Direct Marketing: On – line Purchase
      • Relative low operating cost, ease of purchase
      • Beauty Salon
      • Helps to upgrade brand image & perceived value, strengthen the credibility
      • Fashion/Retail Store
      • Fashionable and trendy
      • Dept Stores: Supermarkets or Superstores
      • Enlarge the distribution coverage and source of sales & profit
  • 93.
    • Industry Trends
      • Rivalry will be intensified
      • Companies are expanding their natural products lines as a result of high awareness of healthy life importance by consumers
      • Backward integration strategy becomes a common way for market participants to ensure product quality, low production cost and efficient logistics control
      • Celebrity
  • 94.
    • Current Key Success Factors
    • Quality and natural products
    • Brand recognition and reputation
    • Customer loyalty
    • Professional and personalized service from well-trained staffs
    • Closed relationship with suppliers to ensure quality materials and sufficient supply and decrease other operating costs such as logistics, time spent on quality check and communication etc
  • 95.
    • Future Key Success Factors
    • Economies of scale because of intense competition
    • Able to provide extensive range of natural products
    • Commitment to environmentally responsible and protection to win public support
    • Backward integration or setting up on plants and manufacturing department to get rid of resource shortage threat
  • 96. 2.4 Environmental Analysis   i.e. Sales increase on some Retail industries due to the change of immigration policy of HK/China   International trade regulations, i.e. Tariff Trade Agreement Employment laws   Protect customer from abnormal business practice (packaging regulation or export issue) Tax legislation, Trademark legislation & Patent protection Affect on products supply, especially terrorism issue, it makes export activities not stable Protect co from unfair competition i.e., steel co and public utilizes have to invest billion of dollars for pollution control equipment Sourcing from developing countries Restriction on behaviors Positive factor: Impact from New Legislation Government regulation       Political/Legal Trends Opportunities Threats PEST Analysis
  • 97.
    • PEST – Economics
        Fiscal Policies     Unemployment levels     Inflation rates     Exchange rates   Price competition pull down the stock market Levels of discretionary income Retail industry tends to use female as the main workforce Increase buying power i.e., terrorism: lower the exchange rate of US dollars; and Interest rates Unemployment Rate is around 8% in HK Low Interest Rate Exchange rates affect overseas ventures. Trends in GNP     Economic Trends Opportunities Threats PEST Analysis
  • 98.
    • PEST – Social
          Demographic changes         Thus, lifestyles change, birth rate decreasing Major buying power belongs to Youngster and women, thus, affect the society buying habit   Socio-cultural drift (i.e., working wives, lifestyles) Overall Academic background increased China Decreasing Birth Rate Social movement (i.e., the consumer movement)       Social Trends Opportunities Threats PEST Analysis
  • 99.
    • PEST – Technology
            Huge spending on R&D for many industry More co choose this channel for new product launch Substantial amount of experiment is Required for new technologies Technological forecasts Technology level growth dramatically fast for the recent 50 years Advancement in Technology Doubt on new technologies, i.e. Telemarketing & online shopping R&D Trends Opportunities Threats Technical
  • 100.
    • PEST – Social
          Demographic changes         Thus, lifestyles change, birth rate decreasing Major buying power belongs to Youngster and women, thus, affect the society buying habit   Socio-cultural drift (i.e., working wives, lifestyles) Overall Academic background increased China Decreasing Birth Rate Social movement (i.e., the consumer movement)       Social Trends Opportunities Threats PEST Analysis
  • 101.
    • PEST – Technology
            Huge spending on R&D for many industry More co choose this channel for new product launch Substantial amount of experiment is Required for new technologies Technological forecasts Technology level growth dramatically fast for the recent 50 years Advancement in Technology Doubt on new technologies, i.e. Telemarketing & online shopping R&D Trends Opportunities Threats Technical
  • 102. The major strategic uncertainties and information read:
    • New tests and regulations
    • - Production cost would be high and the profit margin would be reduced.
    • - Specific quality standards to meet regulatory needs.
    • Due to terrorism, economic would be not stable, no more investment on capital
    • Consumers health safety – demand for reliable products
  • 103. Scenarios
    • To be a unique leader
    • Consider to develop superior detoxification and aromatherapy products
    • Real threats from short to long term
  • 104. 2.5 Internal Analysis
    • Resources Audit
    • The value chain
    • Core competence
    • Strategy
  • 105.
    • Resources Audit
    • Physical & Financial Resources
        • Strong retail outlet, global presence, a 300 million pound company
        • Gross margin is high (overall increase of 1.3% to 60.8%), operating margin is low (2.5 last year, and 5.9 this year)
    • Human Resources
        • New management team which brings in new concept
    • Intangible Resource
        • Strong brand equity
  • 106. 4. New Company Recommendation
  • 107. New Company Recommendation – STP
    • Segmentation
    • Demo-Psychographic
    • Targeting
    • Couples with 1-2 child/kid (aged below 15)
    • Mid to high income
    • Only giving the best to their child/kid
    • Animal lovers
  • 108.
    • Positioning
    • The most reliable all natural skin care products for your baby/kind
    • Brand Equity
    • The most reliable friend who take care of your child/kid
  • 109. New Company Recommendation – 4Ps
    • Brand -- NUBE “New Born Baby”
    • Price -- Premium pricing (most expensive in the market)
    • Product -- All natural, non animal tested skin care products for baby & kids
    • Place -- Exclusive listing, only available at specialized stores, clinic, premium drug stores
    • Promotion -- Informative/scientific approach, niche advertising/promotion e.g. doctors/nurses