Marketing Audit SWOT Analysis And Competitive Advantage

Marketing Audit , SWOT Analysis And Competitive Advantage At the end of this module the learning outcomes are : 1. Importance and purpose of management audit 2. Importance of SWOT analysis and its implication on strategy development. 3. Concept of competitive advantage and its sources. 1

Marketing Audit , SWOT Analysis And Competitive Advantage Suggested Reading 1. Strategic Marketing Management by Wilson and Gilligan Chapter 1 & 2. 2. Marketing Management by Ramaswami & Namkumari Chapter 8, 9 & 10. 3. Strategic Marketing by David Cravens Chapter 1 & 2 2

Marketing Audit , SWOT Analysis And Competitive Advantage Marketing Audit Purpose - Where is the company now - This is based on strategist's perception of three factors 1. Organization's current market position 2. Nature of environmental opportunities and threats 3. The organization's ability to cope with environmental demands. Starting point for strategic management planning process 3

Marketing Audit , SWOT Analysis And Competitive Advantage Marketing Audit - Is a part of overall management audit. Management audit consists of • Marketing audit • Financial audit • Production audit • Human resources audit 4

Marketing Audit , SWOT Analysis And Competitive Advantage Components of Audit External audit Covering macro environmental forces 1. PEST factors Political, economical, social and technological 2. Competitors 5

Marketing Audit , SWOT Analysis And Competitive Advantage Internal audit 1. Organization performance and structure 2. Operations and resources - Marketing objectives Marketing strategy Information systems Control systems Planning systems Functional efficiency Profitability analysis 6

Marketing Audit , SWOT Analysis And Competitive Advantage SCOPE AND FREQUENCY OF AUDIT Influenced by factors like - Nature of the business Rate of environmental change - Automobile versus Information Technology industry. 7

Marketing Audit , SWOT Analysis And Competitive Advantage Marketing Audit If carried out properly is highly specific, detailed and time - consuming. 8

Marketing Audit , SWOT Analysis And Competitive Advantage SWOT Analysis : • • Is an acronym for the internal strength and weaknesses of a business External opportunities and threats facing that business 9

Marketing Audit , SWOT Analysis And Competitive Advantage WHAT DOES SWOT DO? • Systematic identification of these factors • Strategy that reflects the best match between them. • An effective strategy - maximize a business's strengths and opportunities - minimizes its weaknesses and threats 10

Marketing Audit , SWOT Analysis And Competitive Advantage STRENGTH - WEAKNESS APPRAISAL MODI XEROX STRENGTHS - Strong brand name - Access to best technology - Value engineering skills - Solid base of over 50, 000 customers - Excellent market coverage - A well motivated sales force - Easier access to the Xerox product range. 11

Marketing Audit , SWOT Analysis And Competitive Advantage MODI XEROX WEAKNESSES - Higher priced than competition - Narrow product range - Low productivity by international standards - High attrition rates with competition snatching away maximum sales staff of Modi Xerox. 12

Marketing Audit , SWOT Analysis And Competitive Advantage OPPORTUNITES • An area of buyer need in which a company can perform profitably IBM in US • Was in mainframes • Entry into home computer segment was a major opportunity Had it not entered the home computer segment, its growth would have been limited. Personal Computer is the biggest segment today 13

Marketing Audit , SWOT Analysis And Competitive Advantage THREATS A challenge posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. 14

Marketing Audit , SWOT Analysis And Competitive Advantage THREATS (Contd. , ) Example Nirma’s challenge to HLL • Surf supremacy in 70’s. • Entry of Nirma in late 70’s. • Ignorance by Surf. • Nirma gaining market share. • Many strategies failed. • Creation of ‘Lalita ji” • Rejuvenation of Surf 15

Marketing Audit , SWOT Analysis And Competitive Advantage Threats if ignored, can be formidable Threat evaluation consists of - Probability of occurrence - Seriousness of occurrence 16

Marketing Audit , SWOT Analysis And Competitive Advantage Based on these, four outcomes are possible. • IDEAL BUSINESS Opportunities high, threats low. • SPECULATIVE BUSINESS Opportunities high, threats high. • MATURE BUSINESS Low opportunities, low threat • TROUBLED BUSINESS Low opportunities, high threat. 17

Marketing Audit, SWOT Analysis And Competitive Advantage COMPETITIVE ADVANTAGE • • As a part of their internal appraisal Competitive advantage is essentially a position of superiority on the part of the firm in some function factor / activity in relation to the competition. 18

Marketing Audit, SWOT Analysis And Competitive Advantage • Superiority can be in many ways • Technological /Product Superiority • Distribution Superiority • Pricing superiority. • By developing competitive advantage an organization is trying to perform a set of functions in a superior way compared to competitor’s 19

Marketing Audit, SWOT Analysis And Competitive Advantage Examples • Domino’s Pizza delivery in 30 minutes. • Intel State–of–the-art micro-chips. • Singapore Airlines Superior in-flight services 20

Marketing Audit, SWOT Analysis And Competitive Advantage DOMINOS-Competitive advantage • Home delivery model • Promise of 30 minutes delivery • Consistently achieve this • How? 21

Marketing Audit, SWOT Analysis And Competitive Advantage • • 10 minutes –pizza preparation 10 minutes-delivery 10 minutes-contingency Simple menu Only pizzas Semi-cooked Product mix has to be kept simple 22

Marketing Audit, SWOT Analysis And Competitive Advantage • • Preparation can be done in 10 minutes Identify geographical area Covered in 10 minutes Trade area is clearly identified Addresses are not in a sequential manner Detailed survey of area Areas earmarked on maps Each house, location is identified on the map 23

Marketing Audit, SWOT Analysis And Competitive Advantage • • • Real-time delivery Capacity constraints Cross-functional training to employees Increases capacity Peak time it is required Even outlet mangers can do delivery if situation demands 24

Marketing Audit, SWOT Analysis And Competitive Advantage • Performance incentives based on the overall performance of the outlet • Encourage team building • Opening of a new outlet • Free delivery of pizzas • Delivery boys become familiar with the topography of the area 25

Marketing Audit, SWOT Analysis And Competitive Advantage • Build competencies • Competitors find it difficult to match • Trying to increase product range 26

Marketing Audit , SWOT Analysis And Competitive Advantage NATURE AND SIGNIFICANCE OF COMPETITIVE ADVANTAGE For strategy to work the firm must have the competitive advantage - Competitive advantage build up is a must - Base for successful strategy. 27

Marketing Audit , SWOT Analysis And Competitive Advantage Competitive advantage is distinct from strength - All strengths need not be competitive advantage Only strengths distinctively superior to competition can be termed as competitive advantage. 28

Marketing Audit , SWOT Analysis And Competitive Advantage ZEN versus SANTRO Zen strengths - Wide distribution network - Still lost market share to Santro - Not a significant competitive advantage 29

Marketing Audit , SWOT Analysis And Competitive Advantage DOMINOS versus PIZZA HUT Dominos - Home delivery their strength - Also a competitive advantage because it has the mechanism to deliver consistently within 30 minutes. 30

Marketing Audit , SWOT Analysis And Competitive Advantage • Any competitive advantage finally manifests as either a cost advantage or a differentiation advantage • Ultimate benefit to the customer is either - Cost advantage - Differentiation advantage Examples AEROFLOT versus BRITISH AIRWAYS 31

Marketing Audit , SWOT Analysis And Competitive Advantage SOURCES OF COMPETITIVE ADVANTAGE • Market share • Innovation • Customer satisfaction • New product leadership • Distribution • Advertising effectiveness • Market research capability • Stage of product in the life cycle. 32

Marketing Audit , SWOT Analysis And Competitive Advantage HOW DO COMPANIES BUILD/ ACQUIRE COMPETITIVE ADVANTAGE 1. Building competitive advantage is part of the corporate strategy 2. Internal appraisal and industry competition analysis. 3. Benchmarking is an effective tool in competitive advantage building 33

Marketing Audit , SWOT Analysis And Competitive Advantage MODI XEROX Benchmarked for its - After sales service - Customer satisfaction - Compensation practices 34

Marketing Audit , SWOT Analysis And Competitive Advantage CONCEPT OF VALUE CHAIN • View to analyze company strength and weaknesses • Identify competitive advantage Identify Primary Activities • Inbound Logistics • Outbound logistics • Marketing and sales • Service. 35

Marketing Audit , SWOT Analysis And Competitive Advantage Identify support activities • Procurement • Technology • Human Resources • Firm infrastructure. 36

The Value Chain 37

Marketing Audit , SWOT Analysis And Competitive Advantage Management audit-TATA group • Carried out in 90 s • Large group • 90 companies • Low equity stake in many companies • Some companies were easy takeover targets • Lack of strategic direction 38

Marketing Audit , SWOT Analysis And Competitive Advantage Management audit-TATA group • Cash cows, dogs, stars, question marks were dealt in the same manner • Lack of clearly identified competitive advantage • About 30 businesses • Group was really strong in only 4 businesses • Most organizations were production oriented 39

Marketing Audit , SWOT Analysis And Competitive Advantage Management audit-TATA group • Lack of marketing thrust • Tata- a prestigious name, no clear-cut plan about management of brand • Decline in the financial performance • Margins under pressure • 40% of the sales came from 2 companies • 12 companies accounted for 90% of the total profit 40

Marketing Audit , SWOT Analysis And Competitive Advantage Opportunity-threat analysis-Tata group Opportunities • Delicencing • Freedom from m. RTP restrictions • Freedom to raise capital • Freedom in imports • Freedom for global alliances 41

Marketing Audit , SWOT Analysis And Competitive Advantage Threats • Entry of MNCs • Technology/brand clout of MNCs • Global leveraging and competitive advantages of MNCs • Easy takeover targets of many Tata companies 42

Marketing Audit , SWOT Analysis And Competitive Advantage How TATAs handle these issues • Consolidation of ownership • Tata Sons raising stake • Recast of mission • Wants to double its sales every four years and double its profit after every three years • A sales of over Rs 1, 10, 000/- crores by 2005 43

Marketing Audit , SWOT Analysis And Competitive Advantage • Fewer businesses • Aims to be in top three in every business the group opts to be in • Businesses where there is a sustained growth. 44

Marketing Audit , SWOT Analysis And Competitive Advantage Identifies seven major lines of business • Metals • Engineering • Services • Information technology • Agribusiness • Utilities • Consumer products 45

Marketing Audit , SWOT Analysis And Competitive Advantage Strategic plan of TATAs • Strengthen businesses which are part of these seven businesses • Exit non-core businesses • Reinvest the cash raised into main businesses • Establish a strategic planning process in each of these businesses 46

Marketing Audit , SWOT Analysis And Competitive Advantage Conclusion A comprehensive management audit helps Tatas to strengthen their competitive position in the marketplace. 47