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CONSUMER BEHAVIOR AUDIT

The Consumer Behavior Audit is divided into the following sections: MARKET SEGMENTATION A. B. C. D. External Influences Internal Influences Situational Influences Decision-Process Influences

PRODUCT POSITION A. Internal Influences B. Decision-Process Influences PRICING A. B. C. D. External Influences Internal Influences Situational Influences Decision-Process Factors

DISTRIBUTION STRATEGY A. B. C. D. External Influences Internal Influences Situational Influences Decision-Process Factors

PROMOTIONAL STRATEGY A. B. C. D. External Factors Internal Factors Situational Influences Decision-Process Influences

PRODUCT A. B. C. D. External Influences Internal Influences Situational Influences Decision-Process Influences

Customer Satisfaction and Commitment


Marketers must produce satisfied customers to be successful in the long run. It is often to a firms advantage to go beyond satisfaction and create committed or loyal customers. 1. What factors lead to satisfaction with our product? Perception that the reference group have about Lopez. Fast and friendly service that is expected and provided by the employees. When buying at Lopez, customers feel satisfied by the products/services, and many of them return to buy there, showing loyalty to the store. Lopez symbolizes many things to customers. The more relevant issues include that buying at Lopez, a local store, customers are defending their community, their culture, and are supporting the well being of their society. All these feelings increase the satisfaction of customers, and balance between the benefits obtained and the relatively high price than competitors. People buying at Lopez feel great approval from their reference groups, such as their family, friends, neighbors, and even their employers, which as a result reinforce their activity of shopping there, and will continue to do so.

2. What factors could cause customer commitment to our brand or firm?


Consistency in the traditional theme, as well as the close and friendly environment they portrait or are perceived, as are important factors that causes customer commitment.

Sunday, November 19, 2006


Auditing Consumer Behavior: A Process for Building Marketing Strategy A complete understanding of the influences that affect consumer behavior is an essential foundation for building a marketing strategy. Hawkins, Best, and Coney (2001) suggested a process for identifying information associated with the critical decisions that marketing managers must make about major elements of marketing. The outline for auditing consumer behavior has been simplified and generalized below, but the execution of the process can be invaluable for identifying challenges and opportunities for improving marketing strategy. Marketing Decision Areas

Market segmentation division of all possible product users (i.e., consumers) into groups with similar needs to satisfy for product development and media selection. Product positioning determination of a desirable product or brand position in the mind of the consumer relative to competing brands. Price pricing policy consistent with the determined product position. The price is the all inclusive set of consideration that the consumer must tender in exchange for the product or service, such as time, patience, learning, and money.

Place (Distribution Strategy) channel or distribution strategy, such as retail, wholesale, or Internet, etc. consistent with the determined product position at which title to the product is relinquished or the service is performed. Promotion advertising, visual packaging, publicity, promotion, website, telemarketing and direct sales force activities. Product physical product characteristics or service to be experienced for each market segment. Customer satisfaction post-purchase policies to promoted customer use, loyalty, reference and repeat purchases. Customer Influences External influences

Culture, subculture, and values

Demographics, income, and social class

Reference groups and family / households

Marketing activities by the company (e.g., product attributes, packaging, advertisements, sales presentation, and retail outlet)

Internal influences

Needs, motives, and emotions

Perceptions, learning and memory

Personality and lifestyle

Attitudes

Situation influences

Physical features

Time perspective

Social surroundings

Task definition

Antecedent states and situations (e.g., product or offer communications, purchase, use, or definition)

Decision process influences (i.e., stages)

Problem recognition

Information search

Alternative evaluation

Outlet selection

Purchase

Post-purchase processes (e.g., use, disposition, and evaluation)

By interweaving the decision areas with the relevant customer influences listed above, it is possible to outline the areas in which data should be gathered in order to construct a complete consumer behavior audit template as follows:

Step 1: Market segmentation () Identify customer influences Step 2: Product positioning () Identify customer influences Step 3: Price () Identify customer influences Step 4: Place (Distribution strategy) () Identify customer influences Step 5: Promotion () Identify customer influences Step 6: Product () Identify customer influences Step 7: Customer satisfaction () Identify customer influences

By completing the above steps and answering all the associated questions regarding customer influences at each of the stages, the marketing manager should have a thorough understanding of the influences on consumer behavior and the key decision areas in which the influences are activated. Reference Hawkins, D.I., Best, R.J, & Coney, K.A. (2001). Consumer behavior: Building marketing strategy (8th ed.). New York: Irwin McGraw-Hill.

Consumer Behavior Audit - Salem, MA (USA) by: Vita Bataityte SS 2005

Table of Contents Executive Summary 01 I Market Segmentation 02 A. External influences 02 B. Internal influences 07 C. Situational influences 10 D. Decision process influences 11 II Product Position 14 A. Internal influences 14 B. Decision process influences 15 III Pricing 15 A. External influences 15 B. Internal influences 19 C. Situational influences 20 D. Decision process factors 21 IV Distribution Strategy 21 A. External influences 21 B. Internal influences 23 C. Situational influences 23 D. Decision process factors 24 V Promotion Strategy 25 A. External factors 25 B. Internal Factors 27 C. Situational influences 29 D. Decision process influences 29 VI Product 31 A. External influences 31 B. Internal influences 32 C. Situational influences 32 D. Decision process influences 33 VII Customer Satisfaction and Commitment 33

Summary of Recommendations 34 Works Cited Executive Summary Salem is a destination for about 800,000 people each year.1 This city has a deep history, which goes back into the 17th century and is famous for its legendary witch trials. Most people know Salem from this perspective and associate it with a historical and cultural heritage. In addition to its historical events, Salem has much more to offer. In particular, the newly restored Peabody Essex Museum, the House of Seven Gables, an engaging seaport past, etc. are remarkable and unique places to visit. However, most tourists come during the Halloween events and stay away for the rest of the year. Nonetheless, Salem is also internationally a known city. It should only be promoted including its true values and real heritage. Its image should be enriched and revived in order to get more consumers over the whole year. The following consumer audit will determine potential target markets for Salem, and emphasize on particular one, which should be addressed during the next campaign. One particular target audience, which had been neglected over the years by most marketers will turn out to be the most attractive to choose. Its expenditure and consumption behavior will be studied and the decision process discussed. The product itself, its positioning, distribution, and post purchase factors will be emphasized and brought into an association with the selected target audience. Finally, a summary of recommendation will finish this paper. I Market Segmentation A. External influences 1. Are there cultures or subcultures whose value system is particularly consistent (or inconsistent) with the consumption of our product? - Wicca community could be considered as a subculture, which is consistent with the value system of Salem. This subculture is steadily growing.2 There are an estimated of 50,000 Wiccans in the United States 3. Steve Wohlberg, in his book the Hour of the Witch, was the first to state the conclusion that Wicca would emerge as the third largest faith in America and would directly challenge Christian ideals of church and state.4 There is even a witch school online.5 - Harry Potter fan community could be considered as another subculture that has similar values to Salem. In particular, the witches tradition and atmosphere could serve Harry Potter fans for meetings. In fact, I have recently found that the second Harry Potter Symposium will take place in October 2005 in Salem, Massachusetts.6 In Massachusetts there is a Harry Potter fan community called Snitchseeker online community (www.snitchseeker.com), which includes over 50,000 members. - International people are often interested in culture, architecture, history and entertainment. Salem could serve this segment very well, because it offers historical and cultural environment and adventure. In fact, Salem has a lot of international tourist, which probably come through the whole year.7

2. Is our product appropriate for male or female consumption? Will ongoing gender-role changes affect who consumes our product or how it is consumed? - I dont think there is a difference between male and female consumers for our product. - The population in State Massachusetts consists of 48.2 percent male and 51.8 percent female habitants. This doesnt show anything unusual. 3. Do ethnic, social, regional, or religious subcultures have different consumption patterns relevant to our product? In Massachusetts live: - 84.5 percent White people - 6.8 percent Hispanic or Latino - 5.4 percent Black or African American - 0.2 percent Asian - 4.6 percent Two or more races - 3.2 percent Some other race Hispanic and Latino market have more children than the average American8 and therefore it is also a relevant and potential target market for Salem. Their lifestyle and consumption patterns are different, but behaves positively in regards to our product. In particular, this group is familyoriented, which would perfectly fit when promoting Salem as the Family weekend destination. [...]

Consumer Behavior: Building Marketing Strategy, 10/e

Delbert I. Hawkins, University of Oregon David L. Mothersbaugh, University of Alabama Roger J. Best, University of Oregon

ISBN: 0073101370 Copyright year: 2007 Book Preface

Marketing attempts to influence the way consumers behave. These attempts have implications for the organizations making them, the consumers they are trying to

influence, and the society in which these attempts occur. We are all consumers and we are all members of society, so consumer behavior, and attempts to influence it, are critical to all of us. This text is designed to provide an understanding of consumer behavior. This understanding can make us better consumers, better marketers, and better citizens. Marketing Careers and Consumer Behavior A primary purpose of this text is to provide the student with a usable, managerial understanding of consumer behavior. Most students in consumer behavior courses aspire to careers in marketing management, sales, or advertising. They hope to acquire knowledge and skills that will be useful to them in these careers. Unfortunately, some may be seeking the type of knowledge gained in introductory accounting classes; that is, a set of relatively invariant rules that can be applied across a variety of situations to achieve a fixed solution that is known to be correct. For these students, the uncertainty and lack of closure involved in dealing with living, breathing, changing, stubborn consumers can be very frustrating. However, if they can accept dealing with endless uncertainty, utilizing an understanding of consumer behavior in developing marketing strategy will become tremendously exciting. It is our view that the utilization of knowledge of consumer behavior in the development of marketing strategy is an art. This is not to suggest that scientific principles and procedures are not applicable; rather, it means that the successful application of these principles to particular situations requires human judgment that we are not able to reduce to a fixed set of rules. Let us consider the analogy with art in some detail. Suppose you want to become an expert artist. You would study known principles of the visual effects of blending various colors, of perspective, and so forth. Then you would practice applying these principles until you developed the ability to produce acceptable paintings. If you had certain natural talents, the right teacher, and the right topic, you might even produce a masterpiece. The same approach should be taken by one wishing to become a marketing manager, a salesperson, or an advertising director. The various factors or principles that influence consumer behavior should be thoroughly studied. Then, one should practice applying these principles until acceptable marketing strategies result. However, while knowledge and practice can in general produce acceptable strategies, great marketing strategies, like masterpieces, require special talents, effort, timing, and some degree of luck (what if Mona Lisa had not wanted her portrait painted?). The art analogy is useful for another reason. All of us, professors and students alike, tend to ask, "How can I use the concept of, say, social class to develop a

successful marketing strategy?" This makes as much sense as an artist asking, "How can I use blue to create a great picture?" Obviously, blue alone will seldom be sufficient for a great work of art. Instead, to be successful, the artist must understand when and how to use blue in conjunction with other elements in the picture. Likewise, the marketing manager must understand when and how to use a knowledge of social class in conjunction with a knowledge of other factors in designing a successful marketing strategy. This book is based on the belief that knowledge of the factors that influence consumer behavior can, with practice, be used to develop sound marketing strategy. With this in mind, we have attempted to do three things. First, we present a reasonably comprehensive description of the various behavioral concepts and theories that have been found useful for understanding consumer behavior. This is generally done at the beginning of each chapter or at the beginning of major subsections in each chapter.We believe that a person must have a thorough understanding of a concept in order to successfully apply that concept across different situations. Second, we present examples of how these concepts have been utilized in the development of marketing strategy. We have tried to make clear that these examples are not "how you use this concept." Rather, they are presented as "how one organization facing a particular marketing situation used this concept." Third, at the end of each chapter and each major section, we present a number of questions, activities, or cases that require the student to apply the concepts. Consuming and Consumer Behavior The authors of this book are consumers, as is everyone reading this text. Most of us spend more time buying and consuming than we do working or sleeping. We consume products such as cars and fuel, services such as haircuts and home repairs, and entertainment such as television and concerts. Given the time and energy we devote to consuming, we should strive to be good at it. A knowledge of consumer behavior can be used to enhance our ability to consume wisely. Marketers spend billions of dollars attempting to influence what, when, and how you and I consume. Marketers not only spend billions attempting to influence our behavior but also spend hundreds of millions of dollars studying our behavior. With a knowledge of consumer behavior and an understanding of how marketers use this knowledge, we can study marketers. A television commercial can be an annoying interruption of a favorite program. However, it can also be a fascinating opportunity to speculate on the commercial's objective, target audience, and the underlying behavior assumptions. Indeed, given the ubiquitous nature of

commercials, an understanding of how they are attempting to influence us or others is essential to understand our environment. Throughout the text, we present examples that illustrate the objectives of specific marketing activities. By studying these examples and the principles on which they are based, one can develop the ability to discern the underlying logic of the marketing activities encountered daily. Social Responsibility and Consumer Behavior What are the costs and benefits of direct-to-consumer (DTC) advertising of pharmaceutical products? How much more needs to be done to protect the online privacy of children? These issues are currently being debated by industry leaders and consumer advocacy groups. As educated citizens, we have a responsibility to take part in these sorts of debates and work toward positive solutions. However, developing sound positions on these issues requires an understanding of such factors as information processing as it relates to advertising -- an important part of our understanding of consumer behavior. The debates described above are just a few of the many that require an understanding of consumer behavior. We present a number of these topics throughout the text. The objective is to develop the ability to apply consumer behavior knowledge to social and regulatory issues as well as to business and personal issues. Features of the Tenth Edition Marketing and consumer behavior, like the rest of the world, are changing at a rapid pace. Both the way consumers behave and the practices of studying that behavior continue to evolve. In order to keep up with this dynamic environment, the tenth edition includes a number of important features. Internet and Technology The Internet and technology are rapidly changing many aspects of consumer behavior. We have integrated the latest research and practices concerning the Internet and technology throughout the text and the cases. Examples include:

Multi-channel shopping e-fluentials and Internet mavens Behavioral targeting and viral marketing Technographics segments

Continued Global Emphasis Previous editions have included a wealth of global material, and this edition is no

exception. Most chapters contain multiple global examples woven into the text. In addition, Chapter 2 and several of the cases are devoted to global issues. New global examples include:

Bollywood (India) goes global Roper Starch global lifestyle segments Starbucks in Asia Renault taps emerging global markets

Updated DDB Life Style StudyTM Data The DDB Life Style StudyTM Data is completely new for this edition. It comes from DDB's 2004 survey (the most recent data we can get you access to!) and is packed with exciting new variables of interest relating to culture, self-concept, decision making, marketing regulation, technology, and Internet shopping. We think this update offers an improved learning experience for students. Addition of a New Author to the Team Our book is now in its tenth edition. We continue to strive to provide the most current, relevant, and balanced presentation of consumer behavior in the context of building marketing strategy. As part of that ongoing tradition, we are pleased to announce the addition of a new author to our team -- David L. Mothersbaugh from The University of Alabama. David brings the same passion, enthusiasm, and devotion to the book's core mission that we have been nurturing for nearly three decades. Chapter Features Each chapter contains a variety of features designed to enhance students' understanding of the material as well as to make the material more fun. Opening Vignettes Each chapter begins with a practical example that introduces the material in the chapter. These involve situations in which businesses, government units, or nonprofit organizations have used or misused consumer behavior principles. Consumer Insights These boxed discussions provide an in-depth look at a particularly interesting consumer study or marketing practice. Each has several questions with it that are designed to encourage critical thinking by the students. Integrated Coverage Ethical/Social Issues Marketers face numerous ethical issues as they apply their understanding of consumer behavior in the marketplace. We describe and discuss many of these issues. These discussions are highlighted in the text via an "ethics" icon in the margin. In addition, Chapter 20 is devoted to social and regulation issues relating

to marketing practice. Several of the cases are also focused on ethical or regulatory issues, including all of the cases following Part Six. Internet Exercises The Internet is a major source of data on consumer behavior and a medium in which marketers use their knowledge of consumer behavior to influence consumers. A section at the end of each chapter has Internet assignments to enhance students' understanding of how marketers are approaching consumers using this medium. DDB Life Style StudyTM Data Analyses (New Data for the Tenth Edition!) Each relevant chapter poses a series of questions that require students to analyze data from the annual DDB Life Style StudyTM survey. These data are available in spreadsheet format on the disk that accompanies this text. These exercises increase students' data analysis skills as well as their understanding of consumer behavior. The DDB data have been completely updated for this edition to include results of their 2004 survey. A major advantage of this new data is that it includes information on behaviors related to Internet use and shopping. Four-Color Illustrations Print ads, Web pages, storyboards, and photos of pointof- purchase displays and packages appear throughout the text. Each is directly linked to the text material both by text references to each illustration and by the descriptive comments that accompany each illustration. These illustrations, which we've continued to update with the tenth edition, provide vivid examples and applications of the concepts and theories presented in the text. Review Questions The review questions at the end of each chapter allow students or the instructor to test the acquisition of the facts contained in the chapter. The questions require memorization, which we believe is an important, though insufficient, part of learning. Discussion Questions These questions can be used to help develop or test the students' understanding of the material in the chapter. Answering these questions requires the student to utilize the material in the chapter to reach a recommendation or solution. However, they can generally be answered without external activities such as customer interviews; therefore, they can be assigned as in-class activities. Application Activities The final learning aid at the end of each chapter is a set of application exercises.

These require the students to utilize the material in the chapter in conjunction with external activities such as visiting stores to observe point-of-purchase displays, interviewing customers or managers, or evaluating television ads. They range in complexity from short evening assignments to term projects. Other Learning Aids in the Text Three useful sets of learning material are presented outside the chapter format -cases, an overview of consumer research methods, and a format for a consumer behavior audit. Cases There are cases at the end of each major section of the text except the first. Many of the cases can be read in class and used to generate discussion of a particular topic. Students like this approach, and many instructors find it a useful way to motivate class discussion. Other cases are more complex and data intense. They require several hours of effort to analyze. Still others can serve as the basis for a term project. We have used several cases in this manner with success (the assignment is to develop a marketing plan clearly identifying the consumer behavior constructs that underlie the plan). Each case can be approached from a variety of angles. A number of discussion questions are provided with each case. However, many other questions can be used. In fact, while the cases are placed at the end of the major sections, most lend themselves to discussion at other points in the text as well. Consumer Research Methods Overview Appendix A provides a brief overview of the more commonly used research methods in consumer behavior. While not a substitute for a course or text in marketing research, it is a useful review for students who have completed a research course. It can also serve to provide students who have not had such a course with relevant terminology and a very basic understanding of the process and major techniques involved in consumer research. Consumer Behavior Audit Appendix B provides a format for doing a consumer behavior audit for a proposed marketing strategy. This audit is basically a list of key consumer behavior questions that should be answered for every proposed marketing strategy. Many students have found it particularly useful if a term project relating consumer behavior to a firm's actual or proposed strategy is required.

Supplemental Learning Materials We have developed a variety of learning materials to enhance the student's learning experience and to facilitate the instructor's teaching activities. Please contact your local Irwin/McGraw-Hill sales representative for assistance in obtaining ancillaries. Or visit the McGraw-Hill Higher Education Web site at www.mhhe.com. Instructor's Presentation CD-ROM The Instructor's CD-ROM to Accompany Consumer Behavior includes all of the instructor's resources available for Consumer Behavior in electronic form and an easy interface that makes it even easier to access the specific items the instructor wants to use:

Instructor's Manual The Instructor's Manual contains suggestions for teaching the course, learning objectives for each chapter, additional material for presentation, lecture tips and aids, answers to the end-of-chapter questions, suggested case teaching approaches, and discussion guides for each case. Test Bank and Computerized Test Bank (All New for the 10th Edition!) The test bank for the tenth edition is completely new and improved. Laurie Babin (University of Southern Mississippi) has created over 2000 questions ranging from multiple-choice, to true-false, to short-answer. These questions are coded according to degree of difficulty and are designed with the flexibility to suit your students' needs and your teaching style. These questions cover all the chapters, including material in the opening vignettes and in the Consumer Insights. Questions are marked with a page number so that instructors can make quick reference back to the book. Digital Four-Color Ad Set A set of digital four-color images of ads, picture boards, point-of-purchase displays, and so forth is included. These items are keyed to specific chapters in the text. The Instructor's Manual relates theses items to the relevant concepts in the text. PowerPoint Program (All New for the 10th Edition!) The tenth edition comes with a completely new and more comprehensive set of PowerPoint slides for each chapter. They include the key material from each chapter as well as additional illustrations and examples to enhance the overall classroom experience. These PowerPoints can be used "off the shelf," in combination with the instructor's own materials, and/or can be combined with the digital four-color ad set to create powerful presentations which include both text and non-text materials.

Video Cases A set of video cases is available to adopters. These videos describe firm strategies or activities that relate to material in the text. A guide for teaching from the

videos is contained in the Instructor's Manual. Text Web site The book-specific Online Learning Center, located at www.mhhe.com/hawkins10e, offers comprehensive classroom support by providing resources for both instructors and students. For instructors, it gives access to downloadable teaching supplements (Instructor's Manual and PowerPoint slides), resource links, and PageOut. For students, it offers resource links and quizzes for self-testing. Acknowledgements We enjoy studying, teaching, consulting, and writing about consumer behavior. Most of the faculty we know feel the same. As with every edition of this book, our goal for the tenth edition has been to make a book that students enjoy reading and that excites them about a fascinating topic. Numerous individuals and organizations helped us in the task of writing this edition. We are grateful for their assistance. At the risk of not thanking all who deserve credit, we would like to thank Martin Horn at DDB, Tom Spencer at Claritas, Shannon McDonald at eMarketer, Rick Bruner at DoubleClick, and Carrie Hollenberg at SRI Consulting Business Intelligence. Alexa Martinez Given and Tracy Bradshaw (The University of Alabama) deserve special thanks for their countless hours of research and analysis. We would also like to thank the many members of the McGraw-Hill Higher Education team, including Barrett Koger, Nancy Barbour, Marlena Pechan, Gina Hangos, Joyce Chappetto, Adam Rooke, and Janna Martin. Particular thanks are also due to the many people who helped us in the development of this text. We believe that the tenth edition is improved because of your efforts: Jurgita Baltrusaityte, University of Illinois; Robert Bergman, Lewis University; Sheri Bridges, Wake Forest University; Hongsik John Cheon, Frostburg State University; Sharon Delay, Hondros College; David Hagenbuch, Messiah College; Lee Hibbitt, Freed-Hardeman University; Martie R. Kazura, Berea College; Nora Martin, Claflin University; George Miaoulis, Jr., Lynchburg College; Carlos Moore, Baylor University; Patricia Pulliam, Benedictine College; Patrick Quinlan, Adrian College; Esmeralda de los Santos, University of IncarnateWord; Lois Smith, University of Wisconsin-Whitewater; Mita Sujan, Tulane University; William Williamson, Govenors State University; Alan R. Wiman, Rider University; Joseph Wisenblit, Seton Hall University; David Wright, Abilene Christian University. Finally, to our colleagues at Oregon and Alabama -- Thanks for your ongoing support, encouragement and friendship.

Del I. Hawkins David L. Mothersbaugh Roger J. Best

Competitive Strategies And Environment


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Competitive Strategies And Environment Presentation Transcript


1. THE INSTITUTE OF BUSINESS DEVELOPMENT EXECUTIVE CONVERSION COURSE LECTURE SERIES COMPETITIVE STRATEGIES AND ENVIRONMENT Paul Ikele, M.Sc, MBA, FBDI, FBTM 2. Discussion Plan o What is Competitive Strategies & Environment o How business strategy is created o Managing the Competition o Pricing o Communicating the Strategy o What are Customers Thinking? o Conjoint Analysis o When the Chips are Down o Nature of Business Environment o Environmental Scanning o Sustainable Competitive Overview o Key Routes to Competitive Advantage o Evaluating the Effectiveness of a Strategic System o Class Debate Session 3. What is Competitive Strategies & Environment o It is a fundamental pattern of presentation of planned objectives, resources deployment and interaction of an organisation with market competitors and other environmental factors: Boyd, Walker and Lareche. o STRATEGIC MAIN TASKS: o IS o Those things that need to be done over the medium and long time period to achieve a particular goal . 4. How business strategy is created o The process includes the following: o Analysis: o The examination of the available resources within the organisation for sustainable advantage:o - ORGANISATION ASSESSMENT o a) What the organisation does and hope to achieve as widely

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as possible. b) To determine the available resources and further requirements o c) The extent the objectives in terms of long and short term scenarios. o d) The strengths, weakness, opportunities and Traits. o e) The organisations overall mission and strategy o f) The organisations Resource requirements. o g) The organisations Policies and Norms. o h) The organisations Past Performance. o i) The organisations Capacities. How business strategy is created o ENVIRONMENTAL ASSESSEMENT o This is categorized into two o Operating Environment: The environment of which a company interacts on a routine basis in carrying out its business. o The key actors are:- The Competitors o The Public Institutions o 2) Macro Environment: It defines the society with which an organisation operates. How business strategy is created o FORMULATION o This is the identification of tactical options. o It can be either Competitive or Collaborative. o Competitive when an application of distinctiveness is made. o Collaborative when opting for alliance, mergers and joint venture. How business strategy is created o IMPLEMENTATION AND CONTROL o Company o Customer Competitor Implementation and Control o The differentiation by the Company of its position from its Competitors using its weakness and strength to better satisfy Customers o Need to create a Strategic Planning Unit ( S. P.U.) o The Unit to have full freedom expected with respect to 3C o Members of the Unit to compose of professionals with peculiar character features, broad minded and well read individuals. o THE SPUs MAIN FUNCTIONS AMONGST OTHERS INCLUDES:o Clear definition of Customer wants. o Ability to garner informed speculations on the wants o To keep an eye on Competitors
o

The company must ensure that adequate resources are made available for quick response to any of the wants of the customer. 9. Implementation and Control o KEY APPROACHES THAT CAN BE USED o CUSTOMER BASED STRATEGY : This is a systematic means of segmenting the market on the usual consumer ways and then devising key ways of approaching the segmentation. It can be by use, location and demographic characteristics. CBS is very significant in key decision issues in organisations on the need of the product being determined by consumer behaviour. o COMPANY BASED STRATEGY : This is maximizing the Company's price in the functional areas that is critical in the industry. The key thing here is to understand the functional areas. It is important to be clear in sequencing the functional areas because they dont remain constant in terms of their priority. E.g. the Japanese were able to penetrate the Western World in business in areas of Automobile and Electronics. o THE COMPETITIVE BASED STRATEGY : This the identification of the Company's key Competitors and determine their strengths. It is important to look at customers reaction to every strategy. All strategies should be positioned to have a feed back process so as to enable you determine where deviations occur. 10. Managing the Competition o Sometimes allowing the competitor to win in the unattractive segments can create the opportunity to gain a foothold in the market place, allowing you to stake out a superior position and making it very difficult for the competitor to re-establish themselves. In any market it's important to: o Understand the profit drivers . o Recognize that the profit drivers can be different for different segments. o Consider that margin percentages and high gross profits don't always translate into bottom line profits. o For any product it will be amazing how a simple market segmentation can give a competitive advantage in a tough price driven market. Isn't it interesting how easy strategy can be - the tough part is actually taking the time to think it out. Take the time - develop a strategy - manage your competition! 11. Pricing Experience is what you get when you don't get what you want... Anon o Getting a price increase in a tough competitive environment is difficult. By raising prices you're challenging the

relationship between the money asked for and the value provided. In order to raise prices one needs a solid understanding of the value one's product or service brings to the customer. In some cases this value can be different for each customer. The easiest time to get the right price is when the product is introduced. A poor product launch often means the launch team had a weak understanding of the product's value. Pricing too low has the effect of transferring potential profits directly to the customer's bottom line. Once a product is in the market and the value established, raising price is, at best, difficult. Opportunities to increase price are when a significant update is launched or when a new market is entered. 12. Effective Ways to Raise Price o The following six ways can be used to increase prices: o Brute force: simply insist on a higher price. The risk is that you may alienate your customer. A price hike without an explanation can send the customer looking for alternatives. If the customer has choices this is not a good tactic. o Change the value: Bringing more value to the customer allows one to increase the price. However, like beauty, value is in the eyes of the beholder. Customers rarely figure out the increase in value for themselves. Do it for them! Show them why the new product is a better value. o Price completely: Charge for previously free services. Sophisticated customers want the product and expect to pay the lowest price while others expect service to accompany the product. Segment the market and offer the product at price points for different segments with different service needs. o Change Roles: Some customers just want the job done. They don't want to purchase products. Sell them the completed job rather than just the product. o Leverage your price structure: Some customers (especially in bid situations) focus heavily on the initial price. Knowing that they will need additional services to complete the purchase bid low and price the add-ons at a premium. o Manage the price: Allowing local offices to charge what they may can work for established products, but is often a disaster for new products. Territories determining their own pricing won't work in today's transparent world. Establish a team to manage new products. Pricing takes great discipline which few territorial managers can exercise. o If experience is what you get when you don't get what you want - then many of us have lots of experience in pricing. 13. Communicating the Strategy o A good business strategy exploits and strengthens a

competitive advantage and must be communicated throughout the company. Business units might then adapt or modify the corporate strategy but in the end everyone must be completely clear about the tasks that must be done. They must be certain who will do those tasks and how they will be performed. Ask any individual what are the two or three key things that they or their business unit need to accomplish this year and the answers should always link back to the over all strategy and the role their business unit plays in executing it. Great leaders know they must speak in clear, simple and uncomplicated terms so everyone knows exactly what is required. They leave no doubt where the company is going...and where it is not. Successful communication is not measured by how much is said but rather in the clarity of what was said. The listener must "get it" and when they do they must be inspired to act. From clear communication people find courage - they get ready to fight. Say it as simply as you can and engage your people. o Use discussions not decks of slides : strategies on slide decks greater than ten to twelve slides are rarely well thought out and even more, rarely understood. o Synthesize : be prepared to discuss details (if asked) but keep the focus on the strategy and the overall picture - don't dump data - it doesn't impress anyone. o Understand your audience : Depending on the business unit and level in the organization a business strategy can affect audiences in different ways. Treat them like any other customer and speak to their needs. They must leave knowing what is expected of them and be motivated to do it. o Invite participation : Let team members come back with ideas on how they can better execute their part of the strategy. o Great leaders communicate the business strategy so it engages everyone and leaves no doubt what objectives will be achieved and by whom. 14. What are Customers Thinking? o Customers are fickle! So when Motorola was developing a new version of its popular TalkAbout two way radio for the recreational and industrial market it was trying to determine what customer groups might want in a two-way radio. Motorola couldn't possibly fit all the new features they envisioned into the new two-way radio but which ones should they incorporate and which ones should they leave out? Motorola needed to answer a question asked by all companies; which product or service features would the customers value most and how much to charge for the new product? The obvious answer to the question is to ask the

customer. However, traditional research tools such as focus groups and surveys have provided little help to unlocking the customers' true needs and to understanding their decision making process. Gerald Zatman in his book states that 95% of thinking that ultimately drives human behavior takes place below the level of awareness in memories, emotions and stories that he claims are the real drivers of purchase behavior. So how does one understand the true motivators behind customers' decisions? 15.
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CONJOINT ANALYSIS A tool developed by Dr. Paul Green at Wharton Business School called 'Conjoint Analysis' unlocks the answer. Conjoint analysis can accurately determine why a customer chooses one product or service over another. This tool measures the trade offs customers make by having potential customers compare various product and service attribute options. It then simulates these choices (using regression mathematic techniques) and determines how customers will likely react to changes in the product attributes. This sounds very complicated (and the math is) but the survey itself is quite easy to conduct. Conjoint studies can provide an excellent measure of the consumer's true needs. The results of a conjoint study can be used to assist in: Product development: to determine what attributes to include in a product. Price setting: to establish what the customer is willing to pay for a specific product or service. Market segmentation: to identify customer groupings who value the product attributes similarly. Market size and share prediction: to predict market size and potential market share and thus assist in setting production and sales strategies. Motorola conducted conjoint studies in six key markets across North America with groups who actively participated in outdoor activities and with industrial users where two way radio communications is a natural benefit. They tested eighteen different product benefits and price points to come up with the optimal two-way radio. Using the research results they designed what is today by far the market leader in the recreational and industrial two-way radio market In short, Conjoint Analysis gives a glimpse into the future and is a proven tool that can be used to accurately predict potential market share and price sensitivity. New product development teams can use the conjoint information to better

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design new products, segment markets and more accurately predict potential market share and profits. When business teams ask "what's the customer thinking", Conjoint can provide the answer. 17. When the Chips are Down o There are many brilliant strategies sitting in the bottom of too many drawers or in the minds of too many bright managers because managers don't know how to or don't have the confidence to implement them. Equally there are many good strategies that are not effectively implemented leading to poor business or business unit performance. So why do so many good strategies fail and what did Andy Grove and others like him do to push their strategies through? o Plan: Strategic change is difficult because people often perceive they will lose power, and / or resources. The change plan must be thought through with the same discipline as the development of the new strategy. o Courage: When you know what to do, one needs courage to push the strategy through o Try not to do everything at once: The strategic change plan must set priorities. Too many tasks at once can overwhelm even the believers. o Define responsibilities: Assign managers specific change tasks. This gives managers specific objectives to work towards - this helps ensure buy-in as they feel like their input to the change program is essential (which of course it is) o Communicate the change properly: Change can be a threat or an exciting journey. One must market to the internal team as much as to the customers. o There are three parts to developing a good strategy. Analyze the market, develop the strategy, and implement the strategy. The toughest step by far is implementation. When the chips are falling make sure they fall the right way! 18. NATURE OF BUSINESS ENVIRONMENT o Basically, the business environment can be classified into three categories micro, macro and international environment. o The micro-environment consists of elements whose decisions and activities have immediate impact on the operations of the business enterprise. These elements include consumers or users, trade unions, competitors, creditors, government regulatory agencies, marketing intermediaries, suppliers, investors, and the community. The micro-environment is also called task environment or operating environment. The business enterprise cannot survive without taking into cognizance the activities of these groups.

The macro-environment consists of those external forces over which the firm has no control. They include economic, sociocultural, political, legal, technological and physical environment. The international environment refers to all those elements or forces outside of the national boundaries but which are capable of having effect on the decisions and operations of a business enterprise. o These three categories of the business environment exert pressure on the business enterprises simultaneously. They also interact and affect one another. 19. ENVIRONMENTAL SCANNING o All the environmental factors are not all equally important to the survival and growth of the business. Some are more critical. Nevertheless, business managers are expected to establish a system by which they can monitor the nature and direction of changes in the environmental factors and determine the action they must take to ensure a satisfactory performance. o At any point in time there are key factors which affect or are likely to affect the operations of the business. The first step in monitoring the environment is to identify these factors. One process is a general and continuous surveillance of the environment. Without any particular problem in mind, managers read newspapers, magazines, journal articles, listen to radio and television in order to be informed about developments in the society. They participate in the activities of organizations such as the Manufacturers Association of Nigeria (MAN) and exchange views with colleagues in the industry. They also attend workshops, seminars and conferences where issues affecting businesses are generally discussed. o When managers are faced with a specific problem and they require information about the environment to make decisions, they may engage in a systematic study. This process is more focused on the problem at hand than a general environmental surveillance. A systematic study involves a definition of the problem, identification of the key factors that may be useful in analyzing the problem, measurement of the key factors, evaluation and selection of a preferred course of action to solve the problem. o The purpose of environmental scanning is for managers to be able to determine the current state or conditions in the environment and predict changes that are likely to take place in the future. This way, managers build up a capability to deal with threats that may emanate from the environment or take advantage of opportunities available.

20. SUSTAINABLE COMPETITIVE OVERVIEW o To achieve sustainable success in the market place over the Competitive Motivations. o To have the Knowledge of Resources and Capabilities you have. o To anticipate the current and changing nature of customers demand, e.g. the cement dealer anticipates the changes through market research, knowledge and experience. o To perform in the market place in a manner which is efficient and more effective than your Competitor. 21. Key Routes to Competitive Advantage o Identify key factors for Success: In the industry or business concentrate resources on the key factors to gain advantage and establish your presence in the market. o Identify those area where you have relative superiority over your competitors : Try to emphasise on those areas e.g. technology, sales, network, asset and marketing base. o Identify where the Competitors are skidding of and challenge them: You seek to challenge the rule of the game by obstructing the statuesque and dislodge them, or challenging the basic assumptions on the ways business are done. It is also known as mkt strategy based on Strategic Initiative. (MSBAI) o Deployment of Innovations bases on the degree of freedom: This happens when there is intensive Competition ensure to avoid head on war. 22. 23. EVALUATING THE EFFECTIVENESS OF A STRATEGIC SYSTEM ALLIGNMENT OF RESULTS & GOALS EFFICIENCY OF TECHNIQUES The soundness of the system in any organisation can be evaluated with criteria as follows: INTELLIBILITY ADEQUACY OF CONTROLS SYSTEMATIC REVIEW ADEQUACY OF DELEGATION & DECENTRALISATION FLEXIBILITY ADEQUACY OF COMMUNICATIONS 24. 25. Class Debate Session 26. 27. ISSUE Competitive Strategies and Environment always depends on the market scenarios It is realistic to evaluate the effectiveness of Competitive Strategies and Environment Issue Group Group For Against For Against Speaking Speaking 1 2 3 4 28. 1.29. Regularly review the effectiveness of the Competitive Strategies and Environment for adequacy Concluding Comments