STRATEGIC MANAGEMENT Theme Porter s competitive strategies Differentiation Dr

STRATEGIC MANAGEMENT Theme Porter’s competitive strategies. Differentiation Dr. Prof. Alexander Kozlov 21/1/12016

2 Competitive Strategies AVK Pi. K SPb. PU According to M. Porter there are only three strategies for every company to choose for successful operation on the market: Competitive strategies • Cost leadership • Differentiation • Focus (Concentration)

3 AVK Pi. K SPb. PU Differentiation Essentially external orientation using brand image It creates: § Brand loyalty by customers § Perception of exclusivity § Reduces price sensitivity of customers § Increases margins, avoiding need for low cost operations § High margins help with suppliers and distributors

4 AVK Pi. K SPb. PU Differentiation: Russian aspects So, in Russia a brand is Product symbol which is Ø registered ® Ø well-known among representatives of the target groups Ø connected in mind of consumers with definite product and /or company

5 Steps to create brand AVK Pi. K SPb. PU • Analysis of existing brands • Brand positioning • Development of the brand idea • Choice of promotion strategy • Promotion campaign • Than. . . Brand management

6 Brand name origin AVK Pi. K SPb. PU • Name of the founder (Boeing, Chrysler, Ferrari, Тиньков (Tinkoff), Peugeot, Parker, Porsche) • Connected names (IKEA – Ingvar Kamprad, born on the farm Elmtaeryd nearby Agunnaryd, Mercedes – daughter's name, Carlsberg – son’s name)

7 Brand name’s origin • Abbreviation AVK Pi. K SPb. PU IBM – International Business Machines RAMEC – Russian-AMerican Electronic Company ABB – Acea Brown Bovery FIAT – Italian Automobile Fabric in Tourine Авто. ВАЗ, ГАЗ, УАЗ, BMW и пр.

8 Brand name origin • Emotions ▫ ▫ ▫ ▫ Freshness Clearness Power Freedom Independence Purity Love Sureness ▫ ……………. AVK Pi. K SPb. PU

9 To choose the figure AVK 1 2 3 4 Pi. K SPb. PU 5 6

10 Brand management AVK Pi. K SPb. PU • Brand development • Brand support • Re-branding (Brand repositioning) • Euthanasia (death lethal injection) • Reincarnation

11 Brand evaluation AVK Pi. K SPb. PU Three main methods of brand value measuring ▫ Evaluation of additional income from the brand (ROI method) ▫ Comparison with value of similar brands ▫ Cost of brand development and promotion

12 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2015 г Brand value, Bln USD 1. Apple 2. Google 3. Coca-Cola 170, 28 120, 31 78, 42 4. Microsoft-Windows 5. IBM 6. Toyota 7. Samsung 8. GE 9. Mc. Donald’s 10. Amazon 67, 67 65, 10 49, 05 42, 30 42, 27 38, 81 37, 95

13 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2014 г Brand value, Bln USD 1. Apple 2. Google 3. Coca-Cola 4. IBM 5. Microsoft-Windows 6. GE 7. Samsung 8. Toyota 9. Mc. Donald’s 118, 9 107, 44 81, 56 72, 24 61, 15 45, 48 10. Amazon 34, 34 45, 46 42, 49 42, 25

14 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2013 г

15 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2012 г Brand value, Bln USD 1. Coca-Cola 77, 84 2. Apple 3. IBM 4. Google 5. Microsoft-Windows 6. GE 7. Mc. Donald’s 8. Intel 9. Samsung 10. Toyota 76, 57 75, 53 69, 73 57, 85 43, 68 40, 06 39, 39 32, 90 30, 28

16 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2009 г Brand value, Bln USD 1. Coca-Cola 2. IBM 3. Microsoft-Windows 68, 7 60, 21 56, 65 4. GE 5. Nokia 6. Mc. Donald’s 7. Google 8. Toyota 9. Intel 10. Walt Disney 47, 78 34, 86 32, 28 31, 98 31, 33 30, 64 28, 45

17 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2007 г Brand value, Bln USD 1. Coca-Cola 2. Microsoft-Windows 3. IBM 65, 3 58, 7 57, 1 4. GE 5. Nokia 6. Toyota 7. Intel 8. Mc. Donald’s 9. Walt Disney 10. Mercedes 51, 6 33, 7 32, 1 31, 0 29, 4 29, 2 23, 6

18 Differentiation: AVK Pi. K SPb. PU Most valuable brands of the year 2000 Brand value, Bln USD Coca-Cola Microsoft-Windows IBM Intel Nokia GE Ford Walt Disney Mc. Donald’s AT&T 72, 5 70, 2 53, 2 39, 0 38, 5 38, 1 36, 4 33, 5 27, 9 25, 5

19 Differentiation: AVK Pi. K SPb. PU Most valuable Russian brands of the year 2013 Brand 1. Gazprom Brand value, Bln USD 38, 61 2. МТС MTS 5, 88 3. Би. Лайн Bee. Line 4, 76 4. Мега. Фон 3, 50 5. Noril’ski Nikel’ 3, 41 6. Сбербанк Sberbank 3, 26 7. TNK 3, 01 8. Лукойл Lukoil 3, 32 9. Балтика Baltika 1, 72 10. Татнефть Tatneft 1, 65

20 Differentiation: AVK Pi. K SPb. PU Most valuable Russian brands of the year 2010 Brand value, Bln USD 1. МТС MTS 7, 75 2. Би. Лайн Bee. Line 6, 32 3. Балтика Baltika 2, 28 4. Лукойл Lukoil 1, 17 5. Мега. Фон Mega. Fon 0, 63 6. Сбербанк Sberbank 0, 59 7. Пятерочка Pyaterochka 0, 38 8. TNK 0, 373 9. Роснефть Rosneft 0, 37 10. Домик в деревне House in village/ countryside 0, 31

21 Differentiation: AVK Pi. K SPb. PU Most valuable Russian brands of the year 2008 Brand value, Bln USD 1. Би. Лайн Bee. Line 7, 43 2. МТС MTS 6, 92 3. Балтика Baltika 2, 38 4. Лукойл Lukoil 1, 07 5. Роснефть Rosneft 0, 79 6. Мега. Фон Mega. Fon 0, 57 7. Сбербанк Sberbank 0, 4 8. Домик в деревне House in village/ countryside 0, 39 9. Альфабанк Alfabank 0, 38 10. Пятерочка Pyaterochka 0, 36

22 Differentiation: AVK Pi. K SPb. PU Most valuables Russian brands of the year 2005 Brand value, Bln USD Би. Лайн Bee. Line МТС MTS Балтика Baltika 5, 03 4, 7 1, 7 Росбанк Rosbank Лукойл Lukoil Мегафон Megafon Северсталь Severstal Сбербанк Sberbank Альфабанк Alfabank Домик в деревне 1, 4 0, 7 0, 41 0, 39 0, 348 0, 343 0, 341

23 AVK Pi. K SPb. PU Differentiation: Russian aspects 1. Now it’s time to construct brands, in consumer goods markets in particular (Cosmetics, food, furniture, clothing etc. ). 2. Russian versus foreign Brands Food – preferably Russian brands «Чудо» , «Домик в деревне» , «Бородинский» Clothe – “foreign” brands “Isi”, “Designi”, “Gregory”, “Oggi”, “Palmetta”

24 AVK Pi. K SPb. PU Russian versus Foreign Brands • As purchasing power among Russia's various consumer segments has increased, a preference for domestically produced items (Russian brands) has also increased. • Some foreign manufacturers have sought to become more competitive on the market through local production of "Russian" brands, creating "national" brands, which have gained popularity among Russian consumers.

25 Brand names AVK Pi. K SPb. PU Examples • VALIO Valio is one of the biggest and foremost food companies exporting to Russia. Valio's Russian operations has been organised under OOO Valio covering activities in St. Petersburg and Moscow. • Brands : Viola, Valio Butter (imported butter market leader in Moscow and St. Petersburg), Valio Oltermanni, Valio Gefilus

26 Brand names Examples AVK Pi. K SPb. PU

27 AVK Pi. K SPb. PU Russian versus Foreign Brands • Promotion and advertising of international brands has increased. Aggressive advertising, promotion policy, and slight decrease in prices are currently the three most important factors shaping consumer choice.

28 AVK Pi. K SPb. PU Russian versus Foreign Brands • Competition between local brands and international brands is intense. International brands, particularly in the fast-moving consumer goods market, have benefited from a recognized reputation and the improved financial situation of Russia's consumers. • Local brands are currently perceived as high quality, a good value-for-money, and benefit from Russians' patriotic impulse to buy "Russian-made" products.

29 AVK Pi. K SPb. PU Differentiation: Russian aspects • Russian attitudes to brands, though, were shaped by 1998. The glamour attached to non-Russian global brands has been replaced by a trust in Russian alternatives.

30 AVK Pi. K SPb. PU Differentiation: Russian aspects • Russian brands - particularly food and cosmetics - are generally seen as less artificial, more affordable, and of equal if not higher quality to non-Russian products. • But most Russian brands are not very proactive in marketing terms, there is huge scope for international brands to counter such impressions.

31 AVK Pi. K SPb. PU Differentiation: Russian aspects • A huge opportunity lies in the shift towards new distribution channels: suburban mega stores, discount houses, and most importantly doorto-door salesmen (very rare in the old Russia).

32 AVK Pi. K SPb. PU Differentiation: Russian aspects • Loyalty to local brands a manifestation of the Russian sense of being an exception: the widely held belief in Russia's status and role as a world power (a sense the current government is keen to bolster).