Marketing for Lawyers Marketing strategies Lesson 8 Eva Tomášková eva.tomaskova@law.muni.cz Strategy lStrategy refers to a plan of action designed to achieve a particular goal. l lA goal is a projected state of affairs that a person or a system plans or intends to achieve l lGoals should be SMART lS – specific lM – measurable lA – attainable lR – relevant (realistic) lT – time-bound l lDetermine 3 goals (could be from your personal life) which are SMART. l Marketing strategy lMarketing strategy is a process that can allow a company to concentrate its limited resources on: l the greatest opportunities to increase sales and lachieve a sustainable competitive advantage (requires erecting barriers against the competition). l lThe main goal of marketing strategy is customers satisfaction. Position of the market lInformation about increasing of market is necessary for analysis of position on the market. l lBCG matrix lMarket attractiveness BCG Matrix I. la portfolio planning model of the Boston Consulting Group in the early 1970's. l lIt is based on the observation that a company's business units can be classified into four categories based on combinations of: lmarket growth and lmarket share l relative to the largest competitor l lmaps the business unit positions within these two important determinants of profitability. l BCG Matrix II. Categories of BCG Matrix lDogs lhas little potential lsuch businesses are candidates for divestiture lQuestion marks l(known as a "problem child") has the potential to gain market share and become a star lif they does not succeed, they will degenerate into a dog lmust be analyzed carefully in order to determine whether they are worth the investment required to grow market share lStars lgenerate large amounts of cash lit will become a cash cow when the market growth rate declines lthe portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation lCash cows las leaders in a mature market lgenerate more cash than they consume lcash cows provide the cash required to turn question marks into market leaders Task lPrepare BCG matrix for selected products or version of products. Example lDogs – floppy disk lQuestion marks – USB 3.0 lStars - USB flash drive – USB 1.0 or USB 2.0 lCash cows – Compact disk (CD), Digital Video Disc (DVD) l l Market attractiveness (GE matrix) lthe McKinsey and Company Consulting group l lIncludes: lMarket attractiveness - market growth as the dimension of industry attractiveness, lCompetitive strength - market share as the dimension by which the competitive position of each company is assessed. l lFactors that Affect Market Attractiveness l - Market Size - Market growth - Market profitability - Pricing trends - Competitive intensity - Overall risk of returns in the industry - Opportunity to differentiate products and services - Segmentation - Distribution structure (e.g. retail, direct, wholesale) l lFactors that Affect Competitive Strength l - Strength of assets and competencies - Relative brand strength - Market share - Customer loyalty - Relative cost position (cost structure compared with competitors) - Distribution strength - Record of technological or other innovation - Access to financial and other investment resources Market attractiveness (GE matrix) High Market Attractiveness Market Share High Medium Low Medium Low Invest or go away Invest Keep the leader position Cash and go to disinvestment strategy Cross Increase of market attractiveness Disinvestment strategy Cash and go to disinvestment strategy Cash Limitation of BCG and GE Matrix lBCG matrix overlooks many other factors of profitability l lThe framework assumes that each businessman is independent of the others. l lThe matrix depends heavily upon the breadth of the definition of the market. A businessman may dominate its small niche, but have very low market share in the overall industry. In such a case, the definition of the market can make the difference between a dog and a cash cow. l l l BCG matrix still can serve as a simple tool for viewing a corporation's business portfolio (a range of property investments) Types of strategies lStrategies based on market dominance lPorter generic strategies lInnovation strategies lGrowth strategies Strategies based on market dominance Marketing warfare strategies lA company must identify its position relative to the competition in the market l lTypically there are four types of market dominance strategies: lLeader lhas market dominance lChallenger lThe market challengers’ strategic objective is to gain market share and to become the leader eventually lHow? lBy attacking the market leader lBy attacking other firms of the same size lBy attacking smaller firms lFollower lproduct imitation strategy might be just as profitable as a product innovation strategy l e.g. Product innovation—Sony, Product-imitation--Panasonic lNicher lSmaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms l l Task lFind companies (in your country) which are in lLeader position lChallenger position lFollower position lNicher position l l l Market Leaders Strategies lMarket Leader’s objectives: lExpand the total market by lFinding new users lCreating new users, and lIncreasing of usage by users l lProtect its current market share by lAdopting defense strategies lPosition Defense lMobile Defense lFlanking Defense lContraction Defense lPre-emptive Defense lCounter-Offensive Defense l lIncrease its market share lNote the relationship between market share and profitability l Defense Strategies lDefense Strategy lLeast successful of the defense strategies l lMobile Defense lBy market broadening and diversification l lFlanking Defense lSecondary markets (flanks) are the weaker areas and prone to being attacked l lContraction Defense lWithdraw from the most vulnerable segments and redirect resources to those that are more defendable l lPre-emptive Defense lDetect potential attacks and attack first l lCounter-Offensive Defense lResponding to competitors’ head-on attack by identifying the attacker’s weakness then launch a counter attack Question lWhich of these defense strategies are possible to see at the companies in your country? Market Challenger Strategies lTypes of Attack Strategies lFrontal attack lSeldom work unless lThe challenger has sufficient fire-power (a 3:1 advantage) and staying power lThe challenger has clear distinctive advantage l lFlank attack lAttack at weak points or blind spots i.e. its flanks lIdeal for challenger who does not have sufficient resources l lEncirclement attack lAttack at many fronts at the same time lIdeal for challenger having superior resources l lBypass attack lBy diversifying into unrelated products or markets neglected by the leader lCould overtake the leader by using new technologies l lGuerrilla attack lBy small, intermittent hit-and-run attacks to destabilize the leader lUsually use to precede a stronger attack l Question lWhich of these attack strategies are possible to see at the companies in your country? Market Follower Strategies lTypes of Attack Strategies lImitator e.g. car manufacturers imitate the style of one another l lAdapter e.g. many Japanese firms are excellent adapters initially before developing into challengers and eventually leaders Market Nicher Strategies lNichers must create niches, expand the niches and protect them lMarket niche may be attacked by larger firms once they notice the niches are successful Porter generic strategies lProduct differentiation lCost leadership Question lWhich of these two types of Porter generic strategies are often used at lawyers? l Innovation strategies ldeals with the firm's rate of the new product development and innovations l lPioneers lconcentrate on being the one with the newest, hottest products around. lA company promises its customers will get the new technology before anyone else does. l lClose followers lwait for other to pioneer in different direction, and when they are on to something, a company quickly adopts it, improves it and makes it its own. l lLate followers lA company adopts only the most stable of technology, it stresses to its customers that its products will be stable, tried and tested, with no bugs or last minute recalls. l Growth strategies lPossibilities how a company should grow l lHorizontal integration lA company tryes to expand by acquiring or starting new business in the same field as its main business lit allows to control a bigger market share lVertical integration lA company tryes to acquire or start businesses that supply its current business or sell its products. lit allows to have a stable production and delivery structure l lDiversification lA company tryes to get new markets with new products, where are great profits there l lIntensification lA company adds new features to its existing products (new versions of products) lit allows to expand its market position