WHY A STRATEGY?

We can’t predict the
future, we have to build it
and take decisions in the
present as part of a
coherent long-term plan.
The principles of
strategic thinking:



Taking a decision in an uncertain
environment
A lucid view of the future (external
assessment)
A lucid view of the company’s
capabilities (internal assessment)
THE NOTION OF STRATEGY:

THE WAY IN WHICH THE COMPANY INVESTS ITS
RESOURCES TO CHANGE A COMPETITIVE
SITUATION TO ITS ADVANTAGE OR STABILIZE
IT, TAKING INTO ACCOUNT THE CHANGES IN ITS
ENVIRONMENT.

DO NOT CONFUSE WITH THE CONCEPT
OF OBJECTIVES.
Internal assessment
A questioning about the company’s
capabilities and future development
 An evaluation of the strengths and
weaknesses
 Strength: an expertise that will
enable the company to secure its
position in the market
 Weakness: a key success factor
that the company does not fully
master

THE STAGES IN STRATEGIC DECISION-MAKING
STRENGTHS
CONSTRAINTS
OPPORTUNITIES
THREATS
ENVIRONMENT
COMPANY
Is there a
market
opportunity?
Does the company have
the means to exploit
this opportunity?
Marketing
objective
MARKETING STRATEGY
Target
Positioning
Marketing mix
Overall objectives
Financial or
non-financial
Marketing
Production
objectives
objectives
Are
HRM
Financial
objectives
objectives
based on the company’s overall objectives
Concern the target markets for which the company
is seeking to change reactions.
Marketing objectives
Communication
objectives: image
recall
Distribution objectives:
presence in retail outlets,
sales force
They may also be set out in accordance with different
policies (communication, sales force, distribution
 Increased
purchases by
current customers
 Maintain market share
 Increase in the number of
product tests
 Obtain a better re-purchase
rate
To be operational, they
must be:




expressed in measurable terms
accompanied by deadlines
evaluated in a realistic, stimulating
manner
prioritized and consistent with each
other
Grow by 15 % in
segment A within 2 years,
13 to 15 % market
share
in 1 year...
The concept of “target”
Understanding the concept
Know-how: choosing the target
Segmentation is an observation
The target is the first major
decision in the marketing
strategy
THE CONCEPT OF TARGET
 MARKET
SEGMENT (S) AT
WHICH THE PRODUCT IS
AIMED
undifferentiated
marketing
A
B
focused
marketing
C
differentiated
marketing
The focused targeting strategy

Propose a single offer to a single
segment:
– Porsche for sports cars


A distinctive expertise based on
specialization
Limitations linked to dependence on a
single market segment
The differentiated targeting strategy



Propose different offers to different
segments
Greater independence with regard to
the ups and downs of the market
A more expensive strategy
Th undifferentiated targeting
strategy

Propose a single offer and ignore
segmentation
– Guérande salt


The least expensive strategy
The riskiest strategy:
– risk of trivializing the product
– the offer must be highly attractive, e.g. as a result
of an innovation that modifies traditional
segmentation
• smart
Choosing the targeting
strategy:
the
segment’s
potential
consistent with the
company’s capabilities
Once you have chosen the target
Differentiate the offer
The concept of positioning
Understanding the concept
Know-how: define a positioning in the
marketing strategy
Why define a positioning?
In a context of market congestion, the
consumer finds it less easy to distinguish
between products or brands.
 Positioning is used to fight against this
trivialization.

DEFINITION:
•Promoting a product vis-à-vis
competitors’ products in the
consumer’s mind
•through the expression of differences
that are objective e.g. a technical feature
e.g. brand image
•or imaginary
•desired by the market
The conditions for good positioning: the
reference triangle for positioning
Product features:
a coherent differentiation
Market expectations: a differentiation
that is decisive for the consumer.
Competitive brand
positioning:
an exclusive differentiation




Buy two identical Michelin tyres at the
same time and gain access to Michelin
OnWay, three innovative services for
coping with mishaps on the road in
Europe
Tyre Assistance
Tyre Damage Warranty
SOS Direction
Product features:
The quality image of the brand,
A structure set up specially
Market
expectations: safety and rapid repair
service: undeniable expectations on the
part of motorists.
Competitive brand
positioning:
The only brand to offer
this service
The conditions for good positioning;
the differentiation must also be:




Communicable
Defendable
Accessible for the consumer
Profitable for the company
Points for positioning

Via the product
– Certain product features
• Enriched with omegas3
– Solutions to a problem
• Palmolive for sensitive skin
– Opportunities for use
• Washing powder for black clothing
– User categories
• Jacques Dessange anti-ageing
– By creating a new category
• “The morning health treatment”
–…

Via the service
– Practicality
• Change your contract with Bouygues Télécom
– Delivery
• “La Redoute 48-hr delivery”
–
–
–
–
Installation
Advice
After-sales service
Employees in contact with the customers…
Positioning strategies
Evaluating the product on its
characteristics
very poor
very good
not prominent
Do not act
Reinforce the
decisive nature of
the characteristic
prominent
Improve the
evaluation
of the product
on the
characteristic
Maintain the
positioning
Importance of
the
characteristic
The required positioning

The positioning required by the
company is conveyed by the
choices made on the mix, which
aim to express the distinctive
features that the company
wishes to see consumers
attribute to the product.
Perceived positioning:

The positioning perceived by the
consumer matches the
characteristics that the
consumer attributes to the
product
Differentiation criterion A
brand D
Differentiation criterion B
brand A
brand C
brand B
Positioning analysis tools


Perceptual analysis: this pinpoints those
attributes that are decisive in the consumer’s
mind and his perception of the different offers
on the market
Perceptual maps: these are used to pinpoint
brands that are perceived in a similar way
– pinpoint brands whose positioning is isolated
– show variances between required and perceived
positioning
The example of the perception of women’s magazines
Escape
Dream
Nous deux
Intimité
Seduction
Marie Claire
Elle
Madame Figaro
Marie France
Me
Femme actuelle
Reality
Avantages
Prima
Modes and travaux
The others
Practical
brand D
segment3
segment4
brand A
brand C
brand B
segment2
Price
Snow
sport
identity
Once you have defined the
positioning,
Express it through the product, the
price, distribution and
communication
THE MARKETING MIX

A set of variables on which the company can
act to implement its strategy.

A combination of four policies,
which, together, form the global
offer to the customer:
– the product policy,
– the price policy,
– the distribution policy,
– the communication policy.

Guiding principle: positioning
MANAGING THE
MARKETING MIX: 3 principles

The Coherence rule,

Budget distribution,

Choosing the driving component:
– Skimming strategy or penetration?
PULL STRATEGY
 Attract
the consumer
towards the product
 Communication: the driving
component in the mix
 Importance of the brand in
the buying criteria
PUSH STRATEGY
 Push
the product towards
the consumer
 Distribution: the driving
component in the mix
 Importance of retail outlet
advice in the buying criteria
The conditions for the success of
a strategy





Is the envisaged strategy coherent?
Is the strategy compatible with the
company’s resources.
Is the strategy a winning one?
Is the strategy not too risky?
Will the strategy be profitable?
THE NOTION OF PRODUCT
 Here,
it is the consumer’s
perception that defines the
product
 The solution chosen by the
company with a view to
satisfying a previously
detected need in a market
Product
and /or service
– which frontier?
product
service
The three levels of a product
satisfaction
felt by the
consumer
generic product
global product
services before,
during and after
the sale
tangible product
functional characteristic
THE CONCEPT OF LIFE CYCLE
A
product has a limited life
 Its sales go through different
evolutionary phases
 Its level of profit varies according t
each stage in the cycle
 The way in which the mix policies
are managed differs at each stage
sales
The life cycle
growth
launch
decline
maturity
time
THE LIMITATIONS OF THE MODE
 It
is not a predictive
model
 The definition of the
phases is subjective
 In practice we see some
very different life cycles
Other life cycle curves
SUCCESSIVE RELAUNCHES
Gimmick product
IMMORTAL PRODUCT
Long learning process
The value of the model
 It
attracts the attention to
the limited life span of the
product
 It helps us to analyze the
life cycle of the product
compared to that of the
market, brand, etc.
Managing the marketing mix during
the life cycle.
 LAUNCH
PHASE
LANCEMENT:
–product: no major modifications
–price: decision to be taken:
skimming or penetration
–distribution: placing the product
–communication: objective:
publicize the product, high budget
 GROWTH
PHASE:
–product: no change in general
–price: no change in general
–distribution: broaden the circuits
–communication: keep up the
effort
 MATURITY
PHASE :
–product: minor modifications
(adjustments compared to
competitors), range extension
–price: response to the
competition
–distribution: slow the arrival of
competitor products
–communication: keep up the
image
 DECLINE
PHASE:
– product: no expensive modifications
– price: occasional special offers or
frequent price reductions
– distribution: abandon certain retail
outlets
– communication: any promotional
actions
Managing the product portfolio
 The
B.C.G. model
 vertical axis: market
growth rate
 horizontal axis: relative
market share
Strong
STARS
DILEMMAS
Market
growth
rate
Weak
CASH COWS
DEAD WEIGHTS
Strong
Weak
Relative market share
What is a brand?
 the distinctive sign of a
product
 much more than that: a vehicle
for the emotional components
in the relationship with the
consumer
 takes a very long time to build,
quickly destroyed
The brand’s functions




Product location
Guarantee
Personalization
Fun aspect
Managing a brand portfolio:
4 possible strategies




Own a global brand
Sell several products under the same
brand: umbrella brand
Be established in several segments with
different brands : product brand
Propose a varied offer by covering the
same target with a broad assortment
and a single brand: range brand
Brands in danger?

Two threats:
– consumer trends
– company errors
Changes in consumer practices

the role of the distributors:
– the increasing interest in own

Consumer behaviour
– the role of price
– product information: a consumer who buys
like a professional
Company errors



brand overkill
widespread use of umbrella brands
over-exploitation of a brand’s potential
What’s the future for brands?
 Established
brands
–legendary
–Significant
–cultural exceptions
 Condemned
–followers
–opportunists
–bulimics
brands
What is a new product?






A new brand on a market,
A range extension,
A product improvement,
A less expensive product,
Repositioning,
An entirely new product
Having a good idea ...




Market fragmentation, lower profits,
Complexity of regulations,
Production cost,
Shorter life cycles
Increasingly difficult
SOURCES OF IDEAS:
 Internal:
–sales force, R&D, creativity
groups
 External:
–customers, distributors.
STAGES IN THE LAUNCH
PROCESS



CONCEPT TEST
FINANCIAL ANALYSIS
PRODUCT FABRICATION
THE CONCEPT TEST:
A
description of the idea from the
point of view of the benefits that
the consumer will gain from it,
 Objectives:
–evaluate the obstacles and
incentives,
–Define the competitive environment
FINANCIAL ANALYSIS


Sales estimates
Cost estimates:
– Raw materials, labour, etc.
– Development costs: R&D, studies ...
– Allocated overheads
– Marketing expenditure


Estimate of the product’s gross
contribution
Evaluation of the rate of return on
investment
THE PROCESS OF ADOPTION
BY THE CONSUMER

The time taken to adopt the product
depends on the product’s
characteristics:
– relative advantage of innovation,
– compatibility with the individual’s
experience
– communicability
The differences in behaviour in
adopting innovation
Reflection
Scepticism
Early
majority
Late
majority
Risk
Early
receptives
Tradition
Latecomers
2.5%
13.5%
34%
34%
16%
time
The pioneers
PRICE: A SPECIFIC
VARIABLE


The only variable in the mix in which
external/internal coherence is
expressed
A monetary expression of value
– Greater value in exchange for an expected
satisfaction

Notion of perceived value:
– in cash
– in time
– in effort …
The traditional approach to pricefixing
INTERNAL ASPECTS
EXTERNAL ASPECTS
Marketing
objective
Acceptability
in the
market
Positioning
Competition
Cost analysis
Regulations
PRICE
Determining the psychological
price

We have to ask two questions
– What is the price beyond which the
consumer would not buy the product
because he finds it too expensive?
– What is the price below which the
consumer would not buy the product
because he finds it of insufficient
quality?
Analyzing the answers

the percentage of non - buyers
– the people who indicate a maximum price are
– non-buyers at higher prices

the percentage of buyers with regard to the maximum
price
– the person who announces a minimum price considers that the
quality is insufficient for all the other higher prices

the percentage of buyers
– the people who are above the minimum limit and for whom the
maximum price is not reached
Taking the results into account
 We
obtain a demand curve
 The psychological price is the
one that maximizes the number
of buyers
 The chosen price is not
necessarily the psychological
price
The two price policies
Skimming policy
Penetration
policy
Unit margin
Sales volume
PENETRATION POLICY
Choose a low price to make your mark
across a large part of the market
from the outset
As long as there is:
elastic demand at the price,
high-end market already satisfied,
strong competition,
Intensive distribution
SKIMMING POLICY:
Sell at a high price, focusing on a group
of buyers prepared to
pay that price
As long as:
the life cycle is quite short,
the product can be imitated quickly,
a low price would not be very profitable,
demand is inelastic
Buyer reactions to price changes

Possible perceptions of a price reduction
–
–
–
–

the product is selling badly
the product is about to be replaced
the quality has fallen
the price will fall even further, it’s better to wait
Possible perceptions of a price increase
– heavy demand and the risk of a stock
shortage
– Risk of an increase at a later date
– the price is fixed at the maximum tolerated by
the market
Competitor reactions to price
changes

Problem of anticipating the competitor’s
reactions
– Statistical analysis of his previous
reactions
– Analysis of his strategy
The company’s reactions to competitor
price changes

Maintain our price
– and do nothing
– counter-attack in other areas


Reduce our price
Increase and counter-attack on the
product
Price: variable number 1 in the mix?


A choice criterion for the consumer
against a background of ferocious
competition
A challenge to the traditional price-fixing
model
The new price paradox
price
Value-added offer
Stripped-down offer
quality
New price-fixing methods




The value price approach
The target price approach
The target cost approach
Limitations: the “reduction in
cost/human resources management”
equation
The Every Day Low Price
 Objective:
to put an end to the
promotional overkill by offering
low, stable prices
 How? Through a better
reorganization of all the
company’s processes
The New Deal offer
 Create
new market conditions
by differentiating the product
differently
 Innovate!!!
 Differentiate through a
combination of quality /price/
innovation.
The distribution functions
From the production site to the
consumer location:
 transport
 making up an assortment
 storage
 consideration of the
commercialization risk
 pre- and after-sales services

DESIGNING A
DISTRIBUTION CIRCUIT
CHANNEL: a set of agents who
intervene between the production site
and the place where the product
is consumed;

– there are several types of channels
CIRCUIT: a set of channels chosen by
a company to distribute its product

PROBLEM:
WHAT
FUNCTION(S)
SHOULD THE
PRODUCER
DELEGATE?
WARNING!!
 the
removal of an intermediary
from the channel does not
mean that the function is
removed
 the final price does not
necessarily depend on the
number of people involved in
the channel
GENERALLY SPEAKING:
COST:
Short circuit
Long circuit
SCREEN WITH
THE MARKET
THE CRITERIA FOR
CHOOSING A CHANNEL:
The
target market
The product
The company
Market criteria
buying behaviour,
 customer spread,
 order frequency.

Product criteria
 need
for advice in the
retail outlet
 life cycle phase
 type of purchase: day-today consumption or not
TYPES OF PURCHASES AND
TYPES OF CIRCUITS:
Day-to-day purchase:
Intensive distribution
Considered purchase :
Selective distribution
Speciality purchase:
Exclusive distribution
Company criteria
 financial
resources,
 previously established in
the channel,
 ability to negotiate with the
different people involved
in the channel
THE PREDOMINANCE OF
THE RETAILER
 anonymous,
 local
unbranded product
market
 traditional distribution structures
 retailer in control of his supplies
THE TRIUMPH OF THE
PRODUCER
 development
of producer
brands
 development of pull-type
strategies
The distributors’ reaction
development of central purchasing
consortiums
 existence of a listing right
 appearance of distributor brands
 need for “distributor marketing”

Managing the power struggle: the
manufacturers’ advantages
 the
intense competitive pressure
between the distributors
–the development of hard discount
–the need for greater differentiation
between the distribution chains
 The
essential role of a significant
brand
The distributor’s expectations:
Sales growth
Optimized brand policy
Benefits of partnership
Reduction in
stock
Reduction in costs