Bma13 strategy marketing

Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission 1
Strategy & Marketing
Dr Paul Fifield
Visiting Professor

2Proprietary & confidential © Paul Fifield 2013. not to be used or copied without permission
Paul Fifield
• Paul advises companies on Market Strategy and has
written widely on the subject.
• He has 25 years’ experience in strategic consulting with
previous clients in: Agri Chemicals, Aviation, Banking,
Brewing, Business Services, Computing and Software,
Construction, Distribution, Domestic Appliances,
Economic Development, Education, Housing, Hotels and
Catering, Insurance, Leisure & Tourism, Online gaming,
Public Sector, Publishing, Retailing,
Telecommunications, Utilities, Web services and others.
• He holds a degree in Business Studies as well as an MBA and a PhD in
Marketing Strategy, both from Cranfield University.
• Paul teaches on a number of MBA programmes and is currently Visiting
Professor at the University of Southampton and the College des Ingénieurs in
Paris. He is President of the CIM Southern Region and a Fellow of the Royal
Society for the encouragement of Arts, Manufacturers and Commerce (FRSA).
• Paul co-founded The GreenField Organisation LLP in 2008

Agenda
DAY 1 STRATEGY
1.1 What is Strategy?
1.2 The critical importance of Customers
1.3 What business?
1.4 What is the Objective?
1.5 What is the Strategy?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

The Approach

2 days of THINKING

Dealing with strategy & marketing
A ‘Puzzle’ ..has a correct ‘Answer’
A ‘Problem’ ..has more than one ‘Solution’

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Strategy Terminology
• The OBJECTIVE(S)
– The goal or aim to which ALL activities in the organisation are directed
– An objective always begins with the word ‘TO’
– Objectives do NOT change in the short term
• The STRATEGY
– The ONE route which is both NECESSARY and SUFFICIENT to ACHIEVE
the objective
– A strategy always begins with the word ‘BY’
– Strategy is not changed in the short term
• The TACTICS
– The short term actions required to implement the strategy
– Manoeuvres on the field of battle
– Tactics do change in the short term

Filling the ‘strategy gap’
0 +1 +2 +3 +4 +5 +6 +7
The Gap
€

STRATEGY FORMULATION
ineffective effective
effective Die quickly Thrive
ineffective Die slowly Survive
STRATEGY
IMPLEMENTATION
Strategy and Implementation

Planning
1. Strategic:
• Three to Five years depending on the nature of the business.
2. Tactical:
• One year to 18 months.
3. Programmes:
• Rolling quarterly with quarterly and annual milestones and
reporting.

First, agree the Financial Hurdles
Our financial hurdles are:
1. ……………………………
2. ……………………………
3. ……………………………
4. ……………………………
Every organisation has one or more ‘financial imperatives’ that it must
satisfy to remain in business. These are not the same as objectives.
These ‘hurdles’ just need to be seen, measured and jumped. They
should NOT guide the destiny of the organisation

Then, set the business objective
1. What is our Business Objective?
 What do we want/need to achieve in this business?
 How is it measured?
 By when?
 How will we know when we have achieved it?
 If we achieve it, will it satisfy the Financial Hurdles?

Objectives
What is our Business Objective?
 What do we want/need to achieve in
this business?
 How is it measured?
 By when?
 How will we know when we have
achieved it?
OBJECTIVE:
•Begins with “To…….”
•One is better than many
•Must be ‘SMART’
•Different from Financial
Targets*
*“Too many organisations
confuse ‘purpose’ with
‘measures of success” RSA

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Must be both ‘NECESSARY’ and
‘SUFFICIENT’ to achieve the objective
Business Strategies
What is our Business
Strategy?
 How do we achieve the agreed
objective?
 What are the alternatives?
 Can it be done?
 Can we do it?
STRATEGY:
•Begins with “By…….”
•Not short term
•Not ‘straws in the wind’
•Not changed every Friday
•Not another word for important
tactics >

The Generic Strategies
Stuck in
The Middle
Cost Leadership Differentiation
Focus
[Source: Porter 1983]

Red Ocean – Blue Ocean (Kim & Mauborgne)

Strategy is rarely linear
Time
1 2 3 4 5 6 7 8 ……………..……….. x
A
Today
B Vision/Objective
Market Strategy
Sales/Profit/Market share/other objective The
Changing Market
Environment

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

22
Henry Ford
“It is not the employer
who pays the wages.
Employers only handle
the money. It is the
customer who pays the
wages.”
Henry Ford 1863-1947
American industrialist and pioneer of the
assembly-line production method,

Levitt on Customers
“Customers just need to get
things done. When people
find themselves needing to
get a job done, they
essentially hire products to
do that job for them”
Theodore Levitt (1925-2006), American
economist and professor at Harvard Business
School. Editor of the Harvard Business Review

We know that customers are Selfish
WIIfm• What’s
• In
• It
• For
•
Me Me Me Me Me Me Me?

Consumer Behaviour models
The Process
Cultural
Cultural beliefs
& values
Lifestyles, etc
Sociological
Social class structure
Family/group influence
Life-Cycle
Opinion leadership, etc
Economic
Price
Delivery
Payment terms
Sales, services, etc
Individual Psychological Factors
Level of knowledge & awareness
Personal (emotional) characteristics
Motivations, Attitudes, etc
Buying Proposition
Product or Service
[Chisnall]

DECISION-MAKER INFLUENCER
USER BUYER
GATE-KEEPER SPECIFIER FINANCIER
CUSTOMER
The B2B Decision Making Unit (DMU)

Three Aspects of Customer Value
Your
Offer
Economic
Functional
Emotional
Constant Environmental Change

From Commodities to Experiences
The Commodity
(harvested & traded)
The Good
(ground, packaged,
sold)
The Service
(brewed in a
regular cafe)
The Experience
(enjoyed in a
5 star restaurant)
1–2¢
5–25¢
50¢
$2-5
Customer Perceived Value increases….

29
Laura Ashley
“We don't want to push our
ideas on to customers, we
simply want to make what
they want”
Laura Ashley CBE,
(1925 – 1985),
Welsh designer

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

What business?....
“Product led” Company “Market led”
Big Boys’ ToysMotor Cycles
Watches
Electric Motors
Railroads
Electronics
Cars
Watches
Beer
Cosmetics
Pubs
Coffee Shops
Leather/Luggage
Encyclopedias
Harley Davidson
Swatch
B&D
Amtrak
Sony
Jaguar
Rolex
A Busch
Revlon
Bass Taverns
Starbucks
Louis Vuitton
Britannica
1. Are we in?
2. Should we be in?

HD and their business definition
x

What business?
“Product led” Company “Market led”
Our Product? Our Company Our Business
Big Boys’ Toys
Fashion Accessories
DIY
Transport
Entertainment
Status
Jewelry
Friendship
“Hope”
Entertainment
The Third Place
The Art of Traveling
Parental guilt
Motor Cycles
Watches
Electric Motors
Railroads
Electronics
Cars
Watches
Beer
Cosmetics
Pubs
Coffee Shops
Leather/Luggage
Encyclopedias
Harley Davidson
Swatch
B&D
Amtrak
Sony
Jaguar
Rolex
A Busch
Revlon
Bass Taverns
Starbucks
Louis Vuitton
Britannica

What business are we in?
Our business is key to our plans, it:
1 Is defined by the customer
2 Focuses the organisation on needs satisfied
3 Establishes directions for growth
4 Establishes boundaries for effort
5 Determines real competitors
6 Establishes the markets to be served
- Would our customers understand our business?
- What needs should we be satisfying?
- Where should we be investing for the future?
- What should we do more of/stop doing?
- Who are we really competing with?
- What is our core target market?

Case Task
1. What business do you think your company should be in?
2. Who are your target Customers?

What businesses for Sony & Apple?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Case Task
• What objective or vision will you set for your company?
– Remember these must be ‘SMART’

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Case Task
• What strategy will you use for your company to achieve the
objective or vision you have set?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Nobody can foretell the future
The future is
where you must
invest. Now!
There are NO:
• Answers
• Solutions
• Guarantees
The only
Certainty IS that
this is the world
in which you will
live and work.

Some Global Strategic Issues
Some issues for consideration:-
1. The changing nature of society: technological advance;
demographic shifts; environmental issues; ethnic and religious
issues
2. Political instability: middle east; Africa; Russia; EU
3. The changing climate: real or imagined; who bears the brunt;
rate of change; influencing factors
4. The changing nature of work: new work patterns; decreasing job
security; sectoral shifts; ‘stakeholder’ demands
5. The changing face of organisations: increasing adaptability;
agility; more participative style; more openness
6. The changing world economy: global recession; changing
balance of power

Dependency Ratios
Sources, Business
Week & ONS
UK Pensioners :
Working Age
2008, 1:3.23
2033, 1:2.78

Political Instability

UK Average Temperature Estimates

Worldwide Rising Sea Levels?

Europe Rising Sea Levels?

A fresh look at the
current “Recession”
© 2013

Some research areas covered
Dynamic capability
Adaptive advantage
Horizontal organisations
Customer value
Buyer behaviour modelling
Organisational buying
behaviour
Value-based marketing
Change management
Value innovation (‘blue
ocean’)
Discontinuity
Action learning
Chaos theory
Behavioural economics
Stakeholder management
Market research
Futurology
Management accountancy
Organisation development
Theory of growth
Systems theory
Classical economics
Swarm theory
Behavioural finance
Theory of the firm
Business development
Customer experience
management
Organisational culture
Knowledge management
Personal Values
Strategic & scenario
planning
Structured creativity
Complexity theory
Economic cycle theory
Benchmarking
Corporate strategy (incl.
business-model innovation
competitive advantage,
emergent strategy, decision-
making etc.)
Econometrics
Unreason
Brand equity
Strategic market theory
Leadership

NICE (Mervyn King) has become NASTY
• Non
• Inflationary
• Continuous
• Expansion
• Nightmare of
• Austere and
• STagflationary
• Years
Copyright 2011

Is it just another Recession?
Discontinuity:
“A break or gap in a
process that would
normally be
continuous”

Despite the protestations of the media…….

Kondratiev waves

Kondratiev and Stock Market Cycles since 1789

From Datastream – the 6th
wave = ???

End of wave 5 - Timeline2007
2008
2009
2010
2011
Aug 2007
Sachsen LB
rescued after
E17bn lifeline
Feb 2007
HSBC writes down sub-
prime bonds by $10nb
Sep 2007
Northern Rock
receives liquidity
support from BoE
Dec 2007
US enters
recession
Early 2008
Scale of sub-prime
problem clear when Fannie
Mae & Freddie Mac have
problems
Sep 2008
Collapse of Lehman
Bros (Considered the
‘precipice’ of crisis
Late 2008
US & global
Government
Interventions
Early 2009
OECD composite
leading indicators
begin to turn up
Mid 2009
First indications from
OECD that situation
is stabilising
May 2010
Greek Bailout
Late 2010
Bailout of Irish Banks

And the dark side…..

We are in the economic ‘Winter’

Waves appear to be shortening

Case Task
• What do you believe will drive the 6th
Wave?

Implications –
Customer Behaviour?

Customer Value has MIGRATED….
Much has been spoken about:
• The Economic Implications of Social &
Political concerns
• End of consumerism
• Local/Provenance/Authenticity
• The Environment – Really?
• Return of manufacturing
• From Global to Local?
• From Quantity to Quality?
• Make-do-and-mend/Repair-ability
• B-I Obsolescence versus Sustain-
ability?
• Slow Tech & ‘robustness’

Brand shift through the discontinuity
• Down:
• “Exclusive” -60%
• “Arrogant” -41%
• “Sensuous” -30%
• “Daring” -20%
• Up:
• “Kindness & Empathy” +391%
• “Friendly” +148%
• “High Quality” +124%
• “Socially Responsible” +63%
Source: Gerzma &
D’Antonio “Spend
Shift” 2010

Implications –
Organisation?

Don’t see it, too busy.. (© Banksy)

Ignore it (© Banksy)

Wonder what to do about it (© Banksy)

Charles Darwin
“It is not the strongest of
the species that survives,
nor the most intelligent, but
the one most responsive to
change”
Charles Robert Darwin (1809–1882)
He wrote: On the Origin of Species,
The Descent of Man,
and Selection in Relation to Sex,
The Expression of the Emotions
in Man and Animals.

Jack Welch
“When the rate of
change inside the
company is exceeded
by the rate of change
outside the company,
the end is near”
John Francis "Jack" Welch, Jr. (1935-) is an American chemical engineer, business
executive, and author. He was Chairman and CEO of General Electric between 1981
and 2001. During his tenure at GE, the company's value rose 4000% and was the
most valuable company in the world for a time. In 2006 Welch's net worth was
estimated at $720 million.

Implications – Strategy?

72
John Howard
"You can't fatten
the pig on
market day."
1939- ) Australian politician and the
25th Prime Minister of Australia.

Edward Abby
“Growth for
the sake of
growth is the
ideology of
the cancer
cell”
Edward Paul Abbey (1927– 1989) was an
American author and essayist noted for his
advocacy of environmental issues, criticism
of public land policies, and anarchist
political views.

Henry Mintzberg
“Setting oneself on a predetermined
course in unknown waters is the
perfect way to sail straight into an
iceberg.”
Professor Henry Mintzberg, OC, OQ,
FRSC (born in Montreal, 1939) is an
internationally renowned academic
and author on business and
management.

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Case Task
• What is your target market for the future
– Where will you be investing the future of your organisation?

DAY 2

Agenda
DAY 1 STRATEGY
1.3 What business?
DAY 2 MARKETING
2.1 Product
2.2 Price
2.3 Place
2.4 Promotion

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

What is ‘Marketing’?
• "Marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating, offering and
exchanging products of value with others“ Philip Kotler
• “The process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create
exchanges to satisfy individual and organizational objectives” AMA
• The act or process of buying and selling in a market. The commercial
functions involved in transferring goods from producer to consumer.
Answers.com
• “The point of Marketing is to make Selling unnecessary” Drucker
• “Marketing is the management process responsible for identifying,
anticipating and satisfying customer requirements profitably.”
CIM(UK)

Marketing
“Marketing’s contribution to business success in manufacturing,
provision of services, distribution or retailing activities lies in its
commitment to detailed analysis of future opportunities to meet
customer needs and a wholly professional approach to selling to
well-defined market segments, those products and services that
deliver the sought after benefits.
“Achieving revenue budgets and sales
forecasts are a function of how good our
intelligence services are, how well suited
our strategies are and how well we are led”
Malcolm MacDonald

Fifield’s Preface to REAL Marketing
• What is the point of Marketing?
• How do you do that?
• To be able to charge the highest
possible price for your product or service
• Seek out and add By:
1. Being easy to choose
2. Treat customers as individuals
3. Giving them a REAL reason to come
4. Ensure the organisation delivers
The better you do
these, in a constantly
changing environment,
the higher your prices
will go
“Differentiation”
“Segmentation”
“Branding”
“Alignment”
Customer Value

Market Share

Sales Share

Profit Share

Vision
Long Term
Financial
Objective Mission
Leadership
Shareholder
Value
Other
Stakeholders’
requirements
Personal values of
key implementers
Customer and
market orientation
External
Focus
Strengths and
Weaknesses
Resource/
Performance Audit
Competitive
opportunities
Competitor
analysis
Environment
Audit
Opportunities
And Threats
Structural
opportunities
Industry
analysis
The Business
Objective
The Business
Strategy
The Marketing
Objective
Competitive
Strategy
Sustainable
Competitive
Advantage
The Customer
The Marketing Plans,
Programmes & Implementation
Product
Policy
Price
Policy
Place
(distribution)
Policy
Promotion
Policy
Finance
Objective/Strategy
H. Resource
Objective/Strategy
Operations
Objective/Strategy
IT
Objective/Strategy
SCORPIO ©
(MarketingStrategy)
(Feedback & Control)
(Feedback & Control)
Customer
Retention
The
Customer
Organisation
Structure &
Culture
Industry
or
Market
Offerings
Positioning
& Branding
Segmentation
& Targeting
© Fifield 2007

Product
Planning
Branding
Pricing
Advertising
The Marketing mix (Neil Borden)
Distribution
channels
Personal
Selling
Promotions
Packaging
Display
Servicing Physical
Handling
Fact finding
&
Analysis
THE
TARGET
MARKET

Product
Place
Price
Promotion
The Marketing mix (4P’s)
THE
TARGET
MARKET

Product
Place
Price
Promotion
People
Process
Physical
Evidence
THE
TARGET
MARKET

Product
Place
Price
Promotion
People
Process
Physical
Evidence
Personal
Interests
Privacy
Public
Commentary
Personal
(Social
Networks)
THE
TARGET
MARKET

Customer
Needs & Wants
Convenience
Cost
(to the user)
Communication
The Marketing mix (4C’s)
THE
TARGET
MARKET

Product
Place
Price
Promotion
Position
THE
TARGET
MARKET

Product
Place
Price
Promotion
The Marketing mix (make-your-ownP’s)
P
P P
THE
TARGET
MARKET

Product
Quality Sizes
Features Services
Options Returns
Style Warranties
Brand Packaging
Differentiation
THE
TARGET
MARKETPlace
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
List price Discounts
Allowances Rates
Credit Changes
Communications
Opportunity Cost
Payment period
Promotion
Message Media
Above/Below-the-line
Advertising Direct
Publicity PR
Personal Selling WOM
Promotion Internet

Case Task
• What is your target market for the future
– Where will you be investing the future of your organisation?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Product
Quality Sizes
Features Services
Options Returns
Style Warranties
Brand Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
Allowances Rates
Credit Changes
Communications
Opportunity Cost
Payment period
Promotion
Message Media
Advertising Direct
Publicity PR
Promotion Internet
THE
TARGET
MARKET

Products and/or markets?
•Product features
•Product sales
•Technical
excellence
•Product service
•Rational
solutions
•Product
profitability
•Customer
needs/wants
•Customer
satisfactions
•Customer
expectations
•Customer service
•Emotional
solutions
•Customer and/or
segment
profitability
‘PUSH’ ‘PULL’
Strategy Strategy
The
Great
Debate:

Levitt on the product
“A product is
what a product
does”
Theodore Levitt (1925-2006), American
economist and professor at Harvard Business
School. Editor of the Harvard Business Review

What-it-is (features) or What-it-does? (benefits)
Are you selling a 6mm drill Or a 6mm hole?
A Telephone? Or Identity?

– A service is..
Government
Legal
Educational
Health
Military
Employment
Credit
Communications
Transportation
Information
services, etc
Private Non-Profit
Art & Music Groups
Leisure Facilities
Charities
Churches
Foundations
Colleges, etc
Business &
Professional
Airlines
Banking
Insurance
Hotels
Management
consultants
Solicitors
Architects
Advertising Agencies
Market Research, etc

The Service Product
“A service is any activity or benefit that one party can offer
to another that is essentially intangible and does not result
in the ownership of anything. Its production may or may
not be tied to a physical product”
[Kotler]
Characteristics of services:
1 Intangibility
2 Inseparability
3 Heterogeneity
4 Perishability
5 Ownership

The Augmented Product Concept
Tangible
Benefits or
‘Knowhow’
Additional Benefits
Emotional Benefits
eg. functions
eg. design
eg. Service, trust,
prestige
The Support
Services
component
The Core
component
The Packaging
component

The Product/Service Life Cycle
Introduction Growth Maturity Decline
Supply;
• Can’t make
enough
• Little formal
infrastructure
• Higher costs
Demand:
• Innovators
• Early adopters
• Higher Price
• Higher Risk
• Little awareness
• ‘New’
• Growing
availability
• Growing
Competition
Demand:
• Growing
awareness
• Reducing Prices
• Early majority
• Emerging
standard design
• No new buyers
• Repeat purchase
• Can get boring
• Best marketing?
• Customer focus
• Market Segmentation
(S) critical
• Consolidation
• Fewer BIG players
• More NICHE players
• Can last a looong time
• Failing demand
• Falling profits or
debts
• Fewer
customers
• Death, or
• Rejuvenation
• Possible re-
positioning
“Consolidation”
The ‘Chasm’
Push to Pull!

Case Task
• What Product/Service does your strategy require?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Product
Quality Sizes
Features Services
Options Returns
Style Warranties
Brand Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
Allowances Rates
Credit Changes
Communications
Opportunity Cost
Payment period
Promotion
Message Media
Advertising Direct
Publicity PR
Promotion Internet
THE
TARGET
MARKET

An important word about Price
In any developed market,
90% of customers would
prefer to buy on non-
price reasons and pay
some level of premium
price for perceived
additional value
10% will always buy the
cheapest – because they
don’t care about the
category
In an undeveloped market,
a proportion of customers
will prefer to pay premium
price for additional value
Still, 10% will always buy
the cheapest
A proportion appears to
want the cheapest but
have latent needs that
have not yet been
identified and exploited
108

Approaches to Pricing
1. ‘Cost Plus’ pricing  Cost informs the price
2. ‘Market’ pricing  Customers inform price
 Cost informs the profit available
Why is this important????????????
PRICE IS THE ONLY SOURCE
OF REVENUE IN THE
MARKETING MIX!

Why industrial (B2B) companies lose customers
Develop
New
Relationships
Company
Indifference
9
5
14
31
68%
Death Relocation Lower
Price
Product
Dissatisfaction
Percentageoflostcustomers
80
60
40
20

Understanding Profit Drivers
Sales Volume
(Units)
1 million
Price €100
Revenues
Variable cost
per unit = €60
Sales Volume
1 million
Variable Cost Fixed Cost
€30 million
Cost
Profit
=
What is the profit impact if each of
the 4 levers improves by 10%?

Understanding Profit Drivers (2)
An increase in price has a greater impact on profit than an increase in
volume or decrease in costs.
Profit Driver Profit Profit
Old New Old New % Change
10% improve
in:
Variable cost
per item
Sales Volume
Fixed costs
Price
€60 €54
€1m €1.1m
€30m €27m
€100 €110
€10 €16 60%
€10 €14 40%
€10 €13 30%
€10 €20 100%

Role of price
• What clients of “Engineering, Procurement & Construction” (EPC) want
(2006)
1 Employees are knowledgeable & experienced in our industry
2 Provide quality engineering appropriate to our needs
3 Meeting schedule commitments
4 Meeting cost expectations & commitments
5 Deliver value for the money
6 Providing schedules that meet our needs
7 Provide quality fabrication and construction that meets our needs
8 Being able to perform the work wherever we need it done
9 Pricing for services & technologies
10 Having local employees with knowledge of local customs/regulations

The race to the bottom
Marketing should NOT be about:
• Selling as much as possible
• Building market share – at any
cost
• Chasing any sales revenue
available
• Cutting the price to stay in the
“race”
• Unless you want to kill the
company!

Case Task
• What Pricing Approach does your strategy require?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Product
Quality Sizes
Features Services
Options Returns
Style Warranties
Brand Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
Allowances Rates
Credit Changes
Communications
Opportunity Cost
Payment period
Promotion
Message Media
Advertising Direct
Publicity PR
Promotion Internet
THE
TARGET
MARKET

The distribution channel is ...
"The route along which a product and its title (ie the rights of
ownership) flow from production to consumption"

Channel Configurations
Originating manufacturer/Service provider
Direct
Distributor
OEM
VAR
OEM
Wholesaler
Retailer
Agent
Sub
Contractor
Specialist
Prime
Contractor
Post
Phone
Online
F2F
Direct
Mail
End Buyer/User

Why use intermediaries?
• Specialisation
• Division of labour
• Provide assortment by gathering supplies together from
number of manufacturers - “honest broking”
• Breaking bulk so as to meet scale of need of customers - and
buying in bulk on behalf of customers
• Reduce “contactual costs”
• Geographical proximity and local knowledge
• Adding value (eg customisation, service, installation)
• Theoretically cash received quicker up the chain
• Running “interference” - for their customers and their
suppliers

Reducing “contactual” costs or channel geometry
4 Manufacturers contact
4 retailers directly
No. of contacts = 4 x 4 = 16
W
RRRR
M M M MM M M M
R R R R
No. of contacts = 4 + 4 = 8
4 Manufacturers distribute
through a wholesaler

Increasing Retailer concentration
W
RRRR
M M M M
M M M M
R R R
RRRR
RRRR
RRRR

"Let's say I have a new product. Sainsbury and Tesco have
over 50% of the London market: London is so important
that, if they won't accept my product, it simply isn't worth
launching."
- Major Food Manufacturer
"I account for 25% of your business. You account for less that
5% of mine. Let's talk terms."
- Retail Buyer to Major Household Products Manufacturer
Battle for control

Who ‘owns’ the customer owns the margins
Producer
Intermediary
Brand Franchise!
InformationCommunication
‘Push’
(sales)
Consumer/
End User
‘Pull’
(marketing)
= Margin

Your choice
Originating manufacturer/Service provider
Direct
Distributor
OEM
VAR
OEM
Wholesaler
Retailer
Agent
Sub
Contractor
Specialist
Prime
Contractor
Post
Phone
Online
F2F
Direct
Mail
End Buyer/User

Case Task
• What Place/Distribution/Route to market solutions does
your strategy require?

Agenda
DAY 1 STRATEGY
1.3 What business?
1.6 The Future…..
DAY 2 MARKETING
2.1 Target Market
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion

Product
Quality Sizes
Features Services
Options Returns
Style Warranties
Brand Packaging
Differentiation
Place
Channels Coverage
Locations Inventory
Transport Partners
Routes-to-market
Supply Chain
Intermediaries
Price
Allowances Rates
Credit Changes
Communications
Opportunity Cost
Payment period
Promotion
Message Media
Advertising Direct
Publicity PR
Promotion Internet
THE
TARGET
MARKET

Which half ?
"I know that half my
advertising budget
is wasted, but I’m
not sure which half."
William Hesketh Lever, 1st Viscount
Leverhulme (1851 –1925) was an
English Industrialist, philanthropist and
colonialist. He established a soap
manufacturing company called Lever
Brothers (now part of Unilever) with his
brother James

Value or Volume?
2006 data (UK):
• Number of messages seen per day = +/-3500
– = 4/minute in a waking day
“EyeContact” glasses:
• 90 minute London shopping trip
• 250 messages recorded
– 100 brands
– 70 formats
• Prompted recall =
– Customer interested
• Unprompted recall =
130
1

The Future of Advertising?
A recent paper titled "The
Future of Advertising is Now"
by Christopher Vollmer et al,
attempts to solve Lord
Leverhulme’s dilemma, at
least for the automobile
industry.
Clearly, his lordship’s
assessment remains
remarkably accurate, as this
chart from the paper shows.

Promotion can affect….
1.Attention
2.Interest
3.Desire
4.Action

Promotional objectives
Promotion may be used to achieve the following:
1. To build awareness and interest in the service or product and
the service organisation
2. To differentiate the product/service offer and the organisation
from competitors
3. To communicate and portray the benefits of the
products/services available
4. To build and maintain the overall image and reputation of the
providing organisation
5. To persuade customers to buy or use the product/service
Promotion, on
its own, cannot
sell

Promotion by objectives
1 Promotional objectives
2 The target audience
3 The message
4 The media: advertising
sales promotion
publicity
personal selling
public relations
5 Budgets
6 Testing and Control

The promotional mix
Newspapers and Magazines
Trade and Professional Press
Television and Radio
Cinema
----------------------------------------------------------
Exhibitions
Direct Mail
Public Relations
Point of Sale
Digital/Internet
Packaging
Sales Promotion
Personal Selling
Company Image
The Service Product
Pricing
Word of Mouth
In services, personal
selling may be
indistinguishable from
service delivery
Indirect
“The Line” separates the
mass media from the
more targeted

The fundamental proposition
The
4
Questions
1
Who is the one person
you want to talk to?
2
What is the one thing
you want to say to
them?
3
Why should they
believe you?
4
How do you want them
to feel as a result?

Case Task
• What Promotional policy does your strategy require?

FINAL Case Task
• From 0 to 10
• How confident would you be of investing your entire pension
over the next 40 years in the outcome of your plans?

Reading List
1. “Principles of Marketing: European Edition” - Kotler, Saunders & Armstrong,
FT Prentice Hall 2004
2. “Mercator : Théorie et pratique du marketing”, Lendrevie, Levy & Lindon
2006
3. “Marketing Strategy” 3rd
Edition - P Fifield, Elsevier 2007
4. “Marketing Strategy Masterclass” – P Fifield, Elsevier 2008
5. “Collected Essays in Marketing Strategy” P Fifield, Fifield, 2006
6. “The Marketing Imagination” - T Levitt, Free Press, 1998
7. “Market-led Strategic Change” – N Piercy, Butterworth Heinemann, 2010
8. “Marketing Briefs” – S Dibb & L Simkin, Butterworth Heinemann 2004
9. “Marketing Plans” – M MacDonald, Butterworth Heinemann 2002
10. “Marketing Management and Strategy ” – P Doyle, FT Prentice Hall, 2006
11. “Marketing Research: An Applied Approach” – D Birks & N Malhotra, FT
Prentice Hall 2005
12. “Essentials of Marketing Research” - T Proctor, FT Prentice Hall, 2003
13. “International Marketing” – V Terpstra, South Western College Pub, 2001
14. “Marketing across cultures” - JC Usenier & J Lee, FT Prentice Hall 2005

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