Lecture 03 DMC and Strategy


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Lecture 03 DMC and Strategy

  1. 1. Digital Marketing Communications & Corporate Strategy<br />5G3190 DMC<br />David Edmundson-Bird<br />
  2. 2. DMC & Corporate Strategy<br />So what’s the problem?<br />You have to identify the strategic direction of your organisation<br />You have to identify the digital marketing opportunity based on the strategic direction of the organisation<br />
  3. 3. DMC & Corporate Strategy<br />So what do you need to learn?<br />How we define the concept of strategy and introduce the classical framework for strategic management<br />How we deal with Objectives<br />Whether strategy changes in the Digital economy<br />
  4. 4. The Concept of Strategy and The Classical Framework<br />
  5. 5. Business Strategy and the Classical Framework<br />Defining the “concept” of “strategy”<br />Time to refresh your memories<br />What is a strategy?<br />
  6. 6. The Concept of Strategy<br />A strategy is a plan for how an “organisation” will “compete” in the “marketplace”<br />What if you’re<br />A government?<br />Or a charity?<br />Or a city council?<br />Or some sad old bloke writing songs in your bedroom?<br />…..that’s just me then is it?<br />
  7. 7. Strategy Development involves:<br />Which customers? What products and services? Where will we operate?<br />Choosing where to compete<br />What benefits do our customers seek?<br />Do we have the resources, skills and assets to deliver the target benefits better than our competition?<br />Where can be defended?<br />Is proposition different from our top competitor’s?<br />Can customers tell the difference?<br />How to differentiate?<br />Where are the tradeoffs?<br />Do our resource allocations reflect our differentiation?<br />Do all of our strategic decisions fit together?<br />Do we create value by providing mutually reinforcing services?<br />Activities that link to this?<br />
  8. 8. Strategic Management is more than just developing strategy<br />Internal (Company) Analysis<br />Strategy Formulation1<br />Control andMonitoring<br />Objectives<br />Mission<br />Implementation<br /><ul><li>Corporate
  9. 9. Business-unit
  10. 10. Functional
  11. 11. Operating</li></ul>External Analysis<br />
  12. 12. Mission<br />Strategic Management begins with a Mission<br />Mission statements set direction<br />Clear sense of purpose for the organisation<br />Provides a clear sense of the business you’re in<br />Expresses organisation’s current business strategy and future strategic direction<br />eBay:<br />“To pioneer new communities around the world built on commerce, sustained by trust and inspired by opportunity.”<br />“To provide online marketplaces for the sale of goods and services as well as other online commerce, or ecommerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses.”<br />What’s the difference between a mission and a vision?<br />
  13. 13. Objectives<br />Objectives are SMART<br />Good strategic management involves objectives that:<br />Balance financial and strategic measures<br />Measure performance of the business at corporate, SBU and function levels<br />E.g. Measurable tangible<br />Past performance, often incorporating multiple or external variables<br />Sales targets, Profitability, Stock price<br />E.g. Qualitative valued-focus<br />Operational performance in relation to company’s mission<br />Employee retention, Customer satisfaction, Competitive responsiveness, Level of innovation<br />
  14. 14. Analysis Phase<br />EXTERNAL ANALYSIS<br />INTERNAL ANALYSIS<br />Differentiated <br />Competencies<br />Differentiated<br />Resources<br />Differentiated<br />Capabilities<br />Analyse customer by segment<br /><ul><li> Financial viability
  15. 15. Valued benefits
  16. 16. Desired customer experience</li></ul>Does it contribute to outcomes that target customers want?<br />Market Opportunities and Preferences of Desired Target Customers<br />YES<br />Competitor analysis by industry<br /><ul><li> Industry competitors
  17. 17. Nature of customers
  18. 18. Does we want to compete?</li></ul>Competitor analysis by segment<br /><ul><li>Can we serve the segment better than competitors?</li></ul>Source of Competitive Advantage<br />
  19. 19. Creating a Strategy<br />Organisations face different decisions when contemplating corporate strategy and SBU strategy<br />CORPORATE STRATEGY<br />SBU STRATEGY<br />ALL THAT WE DO<br />HOW RELATED ALL THE THINGS<br />THAT WE DO ARE<br />WHAT WE DO IN THIS SBU<br />WHAT ARE OUR GOALS<br />HOW WE ACHIEVE ADVANTAGE<br />HOW WE MANAGE OUR VALUE<br />CHAIN<br />HOW OUR ACTIVITES RELATE<br />TO EACH OTHER<br />WHAT THE BUSINESS FUNCTIONS<br />STRATEGIES ARE<br />BROAD<br />FOCUSSED<br />
  20. 20. Creating an Advantage<br />DigitalMarketingStrategy<br /><ul><li>Positioning and target-market selection
  21. 21. Marketing tactics (4Ps)</li></ul>Competitive advantages are:<br /><ul><li>Relative to competitors
  22. 22. Not mutually exclusive
  23. 23. Changing over time</li></ul>Differentiated Competencies<br />Competitive Advantages<br />Performance Outcomes<br />Distinctive competencies don’t always translate into value for customers<br /><ul><li>Better skills
  24. 24. Betterresources
  25. 25. Better customer value
  26. 26. Low-cost producer
  27. 27. Delight
  28. 28. Loyalty
  29. 29. Market share
  30. 30. Profitability</li></ul>Competitive advantages don’t always translate into superior performance outcomes<br />The public may not perceive the firm’s superior value<br />Sometimes outcomes are competitive advantages<br />Investment to Create and Sustain Advantage<br />Organisations keep striving for that advantage<br />Do you want more of this? Read G.S. Day and R. Wensley, “Assessing Advantage: A Framework for Diagnosing Competitive Superiority,” Journal of Marketing 52 (1988): 1-20<br />
  31. 31. What’s the difference between “Planning” and “Strategy”?<br />Planning<br />Internal focus<br />Introspective<br />Stable environment<br />Predictable environment<br />Goal:<br />Optimize the organisation<br />Strategy<br />External focus<br />Competitive<br />Unstable environment<br />Unpredictable environment<br />Goal:<br />Win the war<br />
  32. 32. How we deal with Objectives<br />
  33. 33. The Strategic Waterfall<br />Any marketing tools we use must be in pursuit of our communications objectives<br />But how do we get there?<br />
  34. 34. The Strategic Waterfall<br />We start with the Mission<br />From there we create business objectives<br />Designed to show “how” you’ll achieve your mission<br />In order to fulfil our business objectives we need some marketing objectives<br />
  35. 35. Marketing Objectives<br />2 types<br />Strategic Thrust: Which products are sold in which markets<br />Enter new markets, product development, market penetration/expansion, market development<br />Product Level: Build, hold, harvest, divest<br />
  36. 36. Marcomms Objectives<br />Once your marketing objectives are in palce you can derive your Marketing Communications Objectives<br />These need to be SMART<br />They are very specific and relate to the achievement of a given marketing objective<br />Examples found on page 228 of Chaffey et al<br />
  37. 37. Digital Marcomms Objectives<br />They’re digital if they relate to the use of (a) digital marketing lever(s)<br />Should be written<br />Achieve <insert change of state> from <initial state> to <final state> by <insert time frame> (amongst <insert specific target audience>)<br />Use terms such as acquire, convert, retain<br />Also consider growth, penetration and cost objectives<br />
  38. 38. Does Strategy change in the digital Economy?<br />
  39. 39. The 4 Digital Forces affect Strategy<br /><ul><li>Back office efficiency potential
  40. 40. Face-to-screen not face-to-face</li></ul>Centricity of Technology<br /><ul><li>Have to respond quickly
  41. 41. Not what I can supply but who actually wants what I’ve got</li></ul>CustomerGains Control<br />Fast, Unpredictable<br />Competition<br />Strategy Formulation<br /><ul><li>I decide how and when I interact with your organisation
  42. 42. I decide how much info I want to share with you
  43. 43. I can compare prices
  44. 44. I need your offering to be made personal to me</li></ul>Rapidly Reconfigured<br />Company Resources<br /><ul><li>Rethinking relationships with competition
  45. 45. Explore together, exploit separately</li></li></ul><li>The Digital Impact on Porter 5 Forces<br />New Entrants<br />Wherever technology enables a task to be easily undertaken, barriers to entry go down<br />New market entrants can acquire technology applications easily<br />Large capital pool has attracted new entrants to many industries<br />High technology costs and expertise increase barriers to entry<br />Substitutes<br />Especially for digital technology or services, substitute products can easily be offered<br />The Digital Marketplace has introduced new business methodologies, thus creating additional substitution threats<br />
  46. 46. The Digital Impact on Porter 5 Forces<br />Bargaining Power of Suppliers<br />The digital world provides direct connection to customers; however, it minimizes suppliers’ bargaining power<br />Suppliers can access end-users through digital interfaces, minimizing the need for middlemen<br />Differentiation becomes more difficult as access to suppliers is equalized via digital markets and purchases<br />Fewer barriers to entry result in increased buyer competition, thus boosting supplier bargaining power<br />Bargaining Power of Buyers<br />Reduces bargaining power of channels<br />Consumers have more information and ability to search for better deals<br />Decreases switching costs<br />
  47. 47. The Digital Impact on Porter 5 Forces<br />Competitive Rivalry<br />The digital world minimizes ability to product differentiate; less differentiation means more competition over price<br />Low barriers to entry open markets to heavier competition<br />Variable costs decrease as a percentage of fixed costs, leaving price discounting as a primary method of competition<br />
  48. 48. Interactivity & Individualisation<br />Measuring responsiveness to increasing customer control<br />High<br />Digital presence is highly interactive<br />but is not customisable to theindividual<br />Digital presence is highly interactiveand is highly customised to theindividual by themselves or theorganisation<br />CAN YOU THINK OFAN EXAMPLE?<br />CAN YOU THINK OFAN EXAMPLE?<br /><ul><li>Interactivity
  49. 49. User’s ability to conduct two-way dialogue through a digital presence</li></ul>CAN YOU THINK OFAN EXAMPLE?<br />CAN YOU THINK OFAN EXAMPLE?<br />Digital presence is highly customisedto the individual by themselves or theorganisation but is not interactive<br />Digital presence is not interactiveand is not customisable to theindividual<br />Low<br />Low<br />High<br /><ul><li>Individualization
  50. 50. Customization activities initiated by user or firm</li></li></ul><li>Resource Insight<br />High<br />Low Payoff<br />Sweet Spot<br />Waiting for Customers tosupport the infrastructure<br />SO WE SHOULD<br />Increase the quality ofCustomer Insight<br />Stronger than competition<br />SO WE SHOULD<br />Sell something new<br />Force competition to tryand keep up<br /><ul><li>Quality of theResource System
  51. 51. Can it be copied?
  52. 52. Is it flexible?</li></ul>Vulture Victim<br />Resource Contained<br />In growth or in decline<br />SO WE SHOULD<br />Improve the quality ofthe resource system<br />We’re being copiedSO WE SHOULD<br />Find a buyerLever the Brand<br />Low<br />Low<br />High<br /><ul><li>Quality of Customer Insight
  53. 53. How many customers do we have? How much do we know about them?
  54. 54. How quickly can we know about them?</li></ul>CAN YOU THINK OFEXAMPLES?<br />
  55. 55. “Digital” adds to External Analysis<br />Internal (Company) Analysis<br />Strategy Formulation1<br />Control andMonitoring<br />Objectives<br />Mission<br />Implementation<br /><ul><li>Corporate
  56. 56. Business-unit
  57. 57. Functional
  58. 58. Operating</li></ul>External Analysis<br />Centricity of Technology<br />Customer Control and Power<br />Fast, Unpredictable Competition<br />
  59. 59. Summary<br />We’ve seen what a strategy is<br />We’ve looked at the basic strategic decisions that people have to make to develop a competitive strategy<br />We’ve seen how to create DMC objectives<br />We’ve looked at the 4 Digital Economy Forces that affect strategy formulation<br />We’ve seen how the classical framework is impacted by the Network Economy<br />