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ff n iv D f n iv
MarketingStrategyA
contradiction
or
complimentary?
Dr.PantriHeriyati
PT.HOLCIMBINUSBUSINESSSCHOOL
KNOWLEDGESHARINGSESSION 20OCTOBER2010
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Background
Flexibleand
innovative
players
enter
the
market
rapidlyerodingtheadvantagesofestablishedplayers(DAveni,1994)
ExploratoryStudy (Heriyati, 2007):
Marketshares
are
more
difficult
to
gain,
Firminsufficientlyequippedwithknowledge
strategyjustdoesnotmatchwiththemarketchallenge
Itispredicted:
firmsarenotchoosing therightmarketing
3
environmentandmarketchallenge
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Twoapproachesincompetitivemarketingstrategy:
Firmmustapplyamorerelationshipmarketing (Hunt,1983;Gronroos,1994;Gummesson,2002;Johnson&Selnes,2004)=defensive
Firmmust aggressivelyseektofillmarketopportunity (Keegan&Davidson,2003;Roberson,Eliashberg &Rymon,1995)=offensive
4
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ac groun A
good
strategist
seeks
not
only
to
win
the
hill,
butholdontoit. Subash Jain
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SunTzes OffensiveStrategies
Toknock
out
abusiness
rival
so
astotakeoverhiscompany:Indofoodsupermie
Toknockoutacompeting
productso
as
to
take
over
its
marketshare: Indomiemie sedaap
Covertoffensivestrategy
Keepas
low
aprofile
as
possiblewhilemakingoffensive
e.g. eps use anattac strategyaga nst o e
inChinabylocatingitsbottlingplantsinthe
interiorprovinces
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StrategiesforMarketLeaders
MarketLeadersobjectives:
Expandthetotalmarketby
Findingnewusers
Creating
new
uses,
and
Protectitscurrentmarketshareby
Increaseitsmarketshare
profitability
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Whichstrategytouse?
epen sonyouranswer
tothefollowing:
Isitworthfighting?
Are
oustron
enou h
tofight?
defense?BUSINESS
butto
fight?
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OffensiveMarketingStrategy Activities aimedatattractin and ainin newcustomer Johnson&
Selnes,2004)
builtoncapabilitiestoacquirenewcustomer,obtainadditionalcus omers,encourage ran sw c ng oown ran an ncreasepurchasefrequency(Fornell &Wenerfelt,1987;Boyd,1996)
Mainob ective=salesandmarketshare includeex ansionoforganizationsoffering(Rust&Zahorik,1993)
mostlysuitableforgrowthmarket (Boyd,1996)withfrequentchanging,
,
,
Eliashberg &Rymon,
1995;
Vorhies &
Harker,
2000;
Hooley
et
al.,
2004;
Bradley,2003)
marketingattacksarecarriedoutwithpricepromotionsoradvertising,warranty&launchingnewproducts (Hooleyetal.,2004;Stenkaamp etal.,
2005;
Camamero,
Martin
&
Gutierres,
2005
).
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moreprofitable forfirm(Rust,Zeithmal &Lemon,2000;Venkatesan &Kumar,
2004;Day,2000;Fornell &Wernerfelt,1988).
Usescustomerasashield intheirbattledwithrival(Fornell & Westbrook,1984;Fornell,1992;Fornell &Wernerfelt,1998;Johnson&Selnes,2004).
Focus:managingcurrentorexistingcustomer (Bolton,Lemon&Verhoef,2004;Gummesson,
2002)
&
building
relationship
and
retaining
customer
(Boyd,
1996),
re uc ngsw c ng ymanag ngcus omercomp a n o ncreasecus omer
retention(Fornel &Wernerfelt,1987;Smith,Bolton&Wagner,1999;Boyd,1996)
, .
Therelationshipbuiltthroughcommunication,cultivatingtrust,empathy,, , ,
1995;Callaghan,1995)
Bythis
definition,
relationship
marketing
can
be
regarded
as
defensive
strategy
(Sinetal.,2002;Tse etal.,2004).
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ConceptualModelFirmTypology Generic Performance
MarketPerformance
Firmsresourceand
capacity(highvs.
ar e ng ra egy
MarketShare
CustomerRetention
Financial
Performance:
ROI,Netincome
Growth
Defensivevolatility&
complexity
(Highvs.low)
11Source:Heriyati,
2009
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ens ve:
mens onsDimensions Items
Firms Product development effort (Vorhies &
Harker , 2000, Davidson & Keegan, 2003): firmseffort in product/service development involving
organizational formal structure, financing and level
1. Our product development efforts are more oriented to
customer needs than those average competition2. We invest more in R&D compare to average
competitor
.
4. R&D is an important function in our organizations
structure
5. Our product development is an ongoing process
New/modified product launched (Bradley, 2003;
Roberson, Eliashberg & Rymon, 1995; Slater &
Narver,1994): defined as new product launched
relative to other competitors in principal served
market over the ast ear
1. We frequently launch new/modified product launch
each year compare to average competitor.
2. The rate of product success each year is higher than
average competitor
3. We alwa s develo new roduct accordin to trend in
the market4. It is important to launch new product each on every
year.
5. Our new product always receive good response from
t e customer
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Offensive:Dimensions(contd)Dimensions Items
Customerattract onprogram Forne Wernelfelt,
1987,
1988;
Camamero,
Martin
&
Gutierrez,2005):definedasactivitiesprimary
focusedonattractingandwiningnewcustomer.
1. Weo ersgoo servicewarrantyo itpro ucts
andservice
2. Ourproductofferedhigherqualitythanaverage
competitor
, .
customer
4. We spend more on advertising than average
competitor.5. We do a ressive romotions to attract customer.
Competitororientation
6. We spend more on promotion than average
competitor
7. Our pricing approach is more competitive than
competitors
(Narver &Slater,
1990):
seller
understand
the
shorttermstrengthandweaknessandlong
termcapabilitiesandstrategiesofbothkey
currentandpotentialcompetitors
1. We respond rapidly to competitors action
2. Our salespeople share competitors information
3. Our top managers discuss competitors strategies
. we are a e o an c pa e an ac on u ure ren
quickly
5. Target opportunity for competitive advantage
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e ens ve:
mens onsDimensions Items (measurement)
,Sinetal.,2002,Morgan&Hunt,1994): formaland
informalsharing
of
meaningful
and
timely
informationbetweensellerandbuyer.
Communicationalsoactsasgluethatholdthem
. .
2. Wecanshowourdiscontenttoeachotherthrough
communication
3. Wecancommunicateopenly/honestly
4. Weallocatetimetocommunicatewithour
together customer
5. Wehavededicatedlinetocommunicatewith
customer
, ,
Morgan&Hunt1994)definedasawillingnessto
relyonanexchangepartnerinwhomonehas
confident.
.
2. Our customer give reliable inputs
3. According to our past relationship, my company
think our customers are trustworthy
Bonding:defined
as
the
dimension
of
a
businessrelationshipthatresultintwo
parties;thebuyerandselleractinginunified
mannertowardadesiredgoal(Cross&Smith,
1. We rely on each other to reach ourobjectives
2. We both try to establish a longterm
relationship
1995;Callaghan,1995;Tse etal.,2004) 3. We work in close cooperation
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Defensive:Dimensions(contd)Dimensions Items (measurement)
asfirmsspecificfunction tomanagethe
dissatisfiedcustomer
in
such
manner
that
its
negativeandharmfuleffectsonfirmare
.
2. Firmaddcustomercomplaintfunctioninthe
formalorganizations
structure
3. Firmtrainemployeetodealwithcustomer
4. Firmprovidecompensationforcustomer
whoseclaimedareconstructive
SwitchingBarriers:(Bruhn,2003;Sorce &Edwards,2004) definedasfirmcreate
barrierstoensurecustomerdependenceon
thefirmandthattherelated rofitsare
1. Customerarecontractuallyboundtothe
firm
2. Firmprovidemorediscountforrepeat
urchase
securedover
the
time
period
involved.
3. Firm
rewards
repeat
buyers
4. Ownproduct/brandhas auniquebenefit
whichcompetitordonthave
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Strategyvs.Environment:Managerialimplicationfor VigilantFirms
Typology Characteristic Strategy Recommendation
Vigilant Vigilant has prime capability in
finding and exploiting new product
and market opportunities
Important for manager to maintain reputation as innovator in
product and market, even more important rather than achieving high
profitability (Mc. Daniel & Kohari, 1987).
g an s mar e now e ge s
distinctive competence.
anager nee o emp as ze s organ za ona resource on e
continuation of the research and development activity (Hauser &
Shugan, 1983; Roberson, Eliashberg & Rymon, 1995; Vorhies &
Harker, 2000, Hooley et al., 2004)
Firms are in growth stage Manager more emphasize on price, and the length of the product line
should be relatively short to reduce production cost and to hold down
inventory.
Heavy advertising in order to generate awareness among new
customer and the use of broad mass media.
New product with price considerably high may recommended to
launch the lower-price version to anticipate competitor entering the
same market with lower price strategy.
16
Vigilant has broad market
opportunity
-Intensive distribution through independent outlet or retail store
(Kotler, 2003)
-Offering free trial or extended warranty policies
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PROFILE 2025
Vigilant: PLC Stage
Vigilant: Industry Type
5
2419
9
0
5
10
15
Introduction Growth Maturity Decline
Automotive, 8,
14%Other , 2,4%
Pharmacy, 5,
9%
Home
Appliances, 3,
5%
, ,
9%
Electronic , 2,
4%
Automotive
Food and
Beverage , 32,
55%
CosmeticElectronicFood and BeverageHome AppliancesOtherPharmacy
Source:Heriyati,
2009
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Strategyvs.Environment:ManagerialImplicationfor NeuroticFirms
Typology Characteristic Strategy Recommendation
Neurotic Firm with too much market
scanning activity
Product market is in maturity stage
1. adjustment especially on the cost or investment over the market scanning
activity.2. Improved its scoping activity by identifying not too broad area of
investigation.
3. Identify a specific homogeneous target market that will be served and
protected. The market should be profitable for firm to maintain.
If market opportunity are wide
enough and resource is abundant
Move the organization to Vigilant position and take aggressive action
enough but resource is limited:
.
2. Product strategy emphasizing on eliminating unprofitable or weaker items.
Enjoy a relatively stable share in the
industry, but also seeking new
To sustain its share through differentiation of its products offering on the basis of
superior quality or by service attach to the product or by maintaining low-cost
segment.
, .
1. Strengthen the relationship with its channel to ensure they are still
motivated to sell the product and thus maintaining its current market share.
2. Contractual distribution with the authority limited to distribution of the
18
.
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Neurotic: PLC Stage
PROFILE
15
euro c: n us ry ype
Other , 3,
14%Automotive,
1, 5% Cosmetic, 2,
811
2
0
5
Growth Maturity Decline
Food and
Appliances,
1, 5%
10%
Automotive
Cosmetic
Beverage ,14, 66%
Food and Beverage
Home Appliances
Other
Source:Heriyati,2009
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Typology Characteristic Strategy Recommendation
Strategyvs.Environment:ManagerialImplicationforFocused Firms
vision capability to operate in stable
market environmentIn the mature to decline market.
.
2. Depend on firms ability to sustain at lower cost
delivery or heighten product quality and additionalservice to product
3. Manager not too focus on supporting declining market
too long, it hurt current profitability (defensive)
4. Product rejuvenation is mostly designed to promoting
new uses or by encouraging customer to use more often
(In-dept interview)n t s sta e-mature mar et, ex t
barrier is low
manager to e very su c ent an e c ent n mar et ng
program to increase market share via lower cost policy or
more promotional effort (offensive) in order to driving out
weaker competitor.
In this stable-mature market, if exitbarrier is high
Focus in maintaining and protecting their existing or currentmarket with lower price and organization efficiency
Source:Heriyati,2009
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30
Focused: PLC Stage
PROFILE
Focused: Industry Type
1 4
2517
0
10
20
Introduction Growth Maturity Decline
Pharmacy, 9,
19%
Cosmetic, 4,
9%
Automotive, 6,
13%
Electronic , 1,
2%Other , 6, 13%
Automotive
Cosmetic
Home
Appliances, 4,
9%Food and
Beverage , 17,
35%
ElectronicFood and Beverage
Home Appliances
Pharmacy
Source:Heriyati,2009
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T olo Strate Recommendation
Strategyvs.Environment:ManagerialImplicationforVulnerable Firms
Vulnerable Vulnerable: lacking of
market knowledge
Urgent to develop its market knowledge capability:
1. Assign the responsibility to an existingfunctional group
2. Mobilize ad hoc issue group
3. Create a market-hypotheses testing initiative
4. Invest in start-up ventures
Firm in mature to decline Focus on strategy & avoids prolonged direct
market confrontation with larger and stronger competitor
(Cravens & Piercy, 2003; Kotler, 2003; Kotler &
Singh, 1981)
pro uc cos per-un s
low :
pp y ower pr ce or eav er persona approac
effort when necessary to retain customer,
If product cost per-unit is Or firm has limited resources relative to competitor,
product (market niche) (Mullin et. al 2008)
Source:Heriyati,
2009
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Vulnerable: PLC StagePROFILE
Vulnerable: Industry Type
10
15
Pharmac 3
Apparel , 1,
4%Automotive ,
1, 4%Cosmetic, 1,
4%
3
119
2
0
5
Introduction Growth Maturity Decline
12%
Other , 2,
8%
, ,
8%
Home
Appliances, 1,
4%
Food and
Beverage , 14,
56%
Source:Heriyati,2009
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Conclusion
Strategyinfluenced
by
the
external
and
OffensiveandDefensivestrategy:compliment
strate
Maydependonproductmarketcharacteristic
OrganizationneedtostayalertandbuilditsVi ilant ca abilit
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Thank You