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MKTG7512
Strategic Marketing Management
Semester 2, 2023
1st August
Lecture 2
Strategic Marketing and the Changing Environment
CRICOS code 00025B
 Course overview
 Assessments
 The concept of Marketing
 The development of strategic marketing thought
 Market orientation
Last week
2
CRICOS code 00025B
 Fundamentals of marketing principles
 The marketing strategy process
 SWOT Analysis
 Portfolio analysis
 (Macro) environmental analysis (PESTLE)
 Porter’s five-forces model (Industry competition)
 Strategic groups
 (BCG advantage matrix – supplementary)
This week
3
1. Focus on the customer (long-term)
2. Only compete in markets where you can establish a
competitive advantage
3. Customers do not buy products
4. Marketing is organisation-wide
5. Markets are heterogenous
6. Markets and customers change ("kaizen" – continuous
improvement)
Six Fundamental marketing principles
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Marketing strategy - It’s all about strategic fit
Strategic Planning – fundamental
Questions
1. What is the business doing now?
2. What is happening in the environment?
3. What should the business do
11
Strategy v Tactics
Strategy is concerned with the actions and resources needed to achieve
specific long-term objectives. It is how the organization will seek to gain a
sustainable competitive advantage (Doyle 1994)
Tactics are concerned with the short to medium term co-ordination of
activities and the deployment of resources needed to reach a particular
strategic goal.
•Marketing uses tactics to undertake the day to day activities in the
marketing mix. It is the implementation of strategy
• It is the coordination of the marketing mix consistent with business
objectives and the desired competitive positioning (Doyle 1994)
•Planning versus actions
The Marketing
Strategy Process
summary
Objectives &
What business markets are we in,
guiding principles & what do we want to
be?
The identification of attractive market
opportunities & firm’s capabilities.
Critical success factors in markets and
capabilities identified. Based on this, objectives
set. Core strategy is broad statement of how
objectives will be met.
Target markets selected and
differentiation from competitors
determined
Based on competitive
positioning, marketing mix
developed, ie. products/services
developed, prices set,
distribution determined
& marcoms developed
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A Mission Statement should include… External factors
influencing and
influenced by
strategy
Internal factors
influencing and
influenced by
strategy
The extended Marketing Strategy Process
Core Strategy
Which questions are we asking in a SWOT?
Core Strategy
What does a SWOT
enable us to do?
Directly informs the strategic options open to the
organization
•Where to deploy strengths
•Where to acknowledge/address weakness ie.
set objectives
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Starbucks SWOT Analysis
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Core Strategy
Core strategy is the broad plan through which the
business’s objectives may be reached.
For example - objectives could be
• A leader in the market
• To increase share to y%
• ….
Marketing Strategy Process
Once Core Strategy is set, the MS process moves onto
• Competitive Positioning
Competitive Positioning
Having identified a Core Strategy,
it is time to design a more detailed strategy to
meet those objectives
[More on competitive positioning later].
Main tasks:
•1. Choose Target Markets
-Market attractiveness
-Company’s current & potential strength in serving
market(s)
•2. Identify Differential Advantage
-Cost leadership
-Differentiation of marketing mix.
-Mixture of the two
out how do
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Implementation
Implementation must consider 3 areas
1. Developing the marketing mix – the tools to do the job.
2. Ensuring there is the supporting organization –
and the resources to do it (internal and external)
3. Establishing means of control – mechanisms for
monitoring and controlling implementation
e.g., KPIs (Key Performance indicators)
The BCG Matrix
25
Product types and paths in the product portfolio
Which quadrant (1, 2, 3, or 4) do these UQ "products" fit in the product portfolio, from a
UQ perspective?
UQ Business School, Aged-care nursing degree program, UQ History School, UQ molecular
clamp potential vaccine for COVID-19
1
2
3
4
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Which quadrant (1, 2, 3, or 4) do these UQ "products" fit in the
product portfolio, from a UQ perspective?
• UQ Business School
• Aged-care nursing degree program
• UQ History School
• UQ molecular clamp potential vaccine for COVID-19
MACRO EXTERNAL
ENVIRONMENT ANALYSIS
PESTLE
Political
Legislation on business
Taxation policy
Social welfare policy
Government stability
Foreign trade regulations
Government intervention in
natural resource
management (eg. energy)
3
Economic
Business cycles
GNP trends
Interest rates
Money supply
Inflation
Unemployment
Disposable income and
consumer spending
patterns
Cost of energy
Shortages of raw
materials
Social
Population
demographics - size,
density, location, age,
gender, race
Income distribution
Geographically, by
social group
Social mobility
Cultural values and
lifestyle changes
Attitude to work and
leisure Consumerism
Levels of education
PESTLE
Technological New discoveries &
developments
Speed on technology transfer
Rates of obsolescence Government
spending on research (grants etc)
Government and industry focus on
technological effort
4
Legal
Health and safety
Product safety
Employment law
Monopolies
legislation
Environmental
Energy
consumption
Increased pollution
& environmental
protection laws
Waste disposal
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• Increased access
- Dilution of geographic borders
- Anytime availability
• Digital and social media marketing
• The bot
The Digital Influence (aka. Technology)
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5
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6
For full report, see https://datareportal.com/reports/digital-2023-
july-global-statshot
INDUSTRY & MARKET
ANALYSIS
(MICRO EXTERNAL ENVIRONMENTAL ANALYSIS)
The Micro environment – Five Forces
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also known as the “Porter’s Five Forces” model
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• Identifies 5 forces that determine the competitive intensity and
therefore attractiveness of a market.
• Helps firms analyse the strength of competitive threats by examining
• The intensity of existing competition – how many, how big, how
powerful
• Barriers to entry of new competitors – how easy/difficult for
newcomers to get into the market. Is the competitive environment
going to change?
• The threat of substitutes – how the development of other products can
create competition
• Bargaining power of customers – dominant customers can drive
down prices
• Bargaining power of suppliers – dominant suppliers can drive up costs
All of the above can affect profitability and the achievement of
company objectives
Porter’s 5 forces
analysis Mini-exercise : Intensity of Existing Competition
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• Can you think of an industry
that has strong rivalry among
competitors?
Zoom Chat room: Write down the industry, and a one-
sentence explanation if you wish.
• Entry costs low
• More accessible distribution
channels
• Low retaliation anticipated
• Current firms have low
differentiation
• Gaps in the market
Threat of entry is higher when
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• New technology
• Incremental product
improvements on other products
Threat of substitutes is higher when
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• Suppliers more concentrated
than buyers (e.g., franchisor to
franchisees)
• High cost of switching
• Highly differentiated suppliers
Supplier bargaining power is higher when
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• Buyers more concentrated
than sellers (e.g., grocery
stores to farmers)
• Alternative sources of supply
• Low switching costs
Bargaining power of buyers is higher when
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Industry Lifecycle/Evolution
Conceptually the same as product lifecycle (brands are subject to product lifecycle whereas product
type are subject to industry lifecycle)
Now video streaming to replace DVDs
CRICOSOS codede 00025B00025B
The product life cycle
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PLC Styles, fashions and fads
CRICOS code 00025B 3
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Strategic Groups
• Firms within an industry following similar strategies
• Compete with one another on similar basis
Aimed at similar customers/groups
• Share competitive pressures
• Unified against substitutes and new entrants
• Different groups are separated by barriers to mobility
(e.g., specialist car makers versus high volume car
makers – different skills developed to cater for
different markets)
CRICOS code 00025B
Note: * Brands now owned by large-scale American or European manufacturers.
Strategic groups in the US automobile market Another example
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• Stalemate (few CA opportunities, little
potential size advantage)
- Compete with efficient
manufacturing & distribution
• Fragmented (many CA opportunities,
little potential size advantage)
- Find & dominate several niches
• Volume (few CA opportunities, good
potential size advantages)
- Compete with volume and
economies of scale
• Specialized (many CA opportunities,
good potential size advantage)
- Many competing companies. Aim to
dominate particular segment(s)
BCG advantage matrix
Nature of market and strategic response
CA = competitive
advantage
What you should do next:
• Read Chapter 2&3 of the textbook
• Review the lecture slides
• If you want to get ahead, we next cover Chapters 4&5 (lecture 3
on 8th of August)