MARKETING STRATEGIC FOR BANKING

Bali, 25 27 January 2012 Dr. Josep Ginting

STRATEGIC MANAGEMENT : Bank and Customer

PASSIVA
RETAIL

BANK BRI

STRATEGIES
-CORPORATE - BUSINESS LEVEL

CUSTOMERS

ACTIVA

CORPORATE

STRATEGIC MANAGEMENT : 7 Changes in Banks Environment

COMPLEMENTER (C4)

CENTRE (C6)

COMPANY (C1)

CHANNEL (C5)

CUSTOMER (C2)

COMPETITOR (C3)

STRATEGIC MANAGEMENT : Resource and Market Based Views

DIMENSION Drivers of Strategy Derivatives Strategy Profile Appropriate Contexts RESOURCE BASED Unique Resources Markets Core Competencies Mature Market MARKET BASED Customers/Competitors Resources Positional Dynamic Markets

STRATEGIC MANAGEMENT : Capabilities Mismatch

TRUST EXTERNAL (TURBULENCE & DIVERSITY)

CAPABILITY MISMATCH

BUSINESS VALUE

CUSTOMER LOYALTY

RESOURCES (RESOURCES LIMITATION) IMAGE

STRATEGIC MANAGEMENT : Emergent Deliberate Strategies

INTENDED STRATEGY
Bank BUMN BCA DANAMON PANIN FOREIGN BANK

DELIBERATE
STRATEGY

REALIZED STRATEGY
Bank PASAR BPR

UNREALIZED STRATEGY

EMERGENT
STRATEGY

STRATEGIC MANAGEMENT : Strategic Thinking

The process of making better choices when day life becomes impossible. The art and science of moving from corporate survival to corporate success.

STRATEGIC MANAGEMENT : Strategic Focus

PRODUCT LEADERSHIP
CONTENT FOCUS Capability Resources CONTEX FOCUS Environment Market

Efficiency Driver (resources)

Effectiveness Driver (benefit) RIGHT DECISION

OPERATIONAL EXCELLENCE

Effuigence Driver

CUSTOMER INTIMACY

CONTROL FOCUS Strategy

STRATEGIC MANAGEMENT : Strategy

Strategy maybe thought of as the decision making process used to direct the allocation and application of critical resources in response to major opportunities and threats

STRATEGIC MANAGEMENT : Dimension of Strategy (5Ps)

PLAN, strategy (decision)

(C6)
PERPECTIVE Long term strategy STRATEGI

(C7)
PLOY, Adaptation to competitor

(C5)

(C1)

(C2)

(C3 AND C4)

POSITION PATTERN, Alternative Strategy

STRATEGIC MANAGEMENT : Organizational Competitive Framework : 3CAs

CA1

Unique resource
Trust, Image

Comparateve Strategy

Comparative Advantage

CA2

PO SITI ON AL

SUP ERI OR ORG ANI ZATI ON AL PER FOR MA NCE

Bank BRI

Superior Value

Competitive Strategy

Competitive Advantage

CA3 Bank Competitor Inferior Value

Product is not better than competitors product

Strategic Relationshi p

Cooperative Strategy

Cooperative Advantage

AD VA NT AG E

1.Alliance C1 + C3 2. Joint Venture 3. Collaboration C1 + C6 4. Distribution relationship C1,2,3,5,6

1.

Cooperation 2. Support 3. Short term

STRATEGIC MANAGEMENT : Strategic Dimension

ARENA ADAPT

Where ?

Why ?

ADVANTAGE STRATEGIC VISION

ACTIVITIES

When?

How Far ?

SUPERIOR ORGANIZATIONAL PERFORMANCE

ACCESS

ACCOUNT So Far ?

How?

STRATEGIC MANAGEMENT : Strategic Management Process (ADAP)

analysis
STRATEGIC SITUATION ANALYSIS

decision
STRATEGY FORMULATI ON

action
STRATEGY IMPLEMENT ATION

performance
EVALUATION AND CONTROL

FEED BACK

STRATEGIC MANAGEMENT : Strategic Management Process

EXTERNAL ENVIRONMENT ANALYSIS VISION STRATEGIC SITUATION ANALYSIS MISSION INTERNAL ENVIRONMENT ANALYSIS

STRATEGY FORMULATION

STRATEGY IMPLEMENTATION

EVALUATION AND CONTROL STRATEGY

FEED BACK

STRATEGIC MANAGEMENT : Strategic Management Process and Levels

CORPORATE
STRATEGIC SITUATION ANALYSIS (SSA) STRATEGIC FORMULATION (SF)

STRATEGIC IMPLEMENTA TION (SI)

STRATEGIC EVALUATION CONTROL

DIVISION

(SSA)

(SF)

(SI)

(SEC)

FUNCTIONAL

(SSA)

(SF)

(SI)

(SEC)

STRATEGIC MANAGEMENT : Strategic Management Process (details)

Environment

STRATEGIC FORMULATION
Mission

STRATEGIC IMPLEMENTATION

E&C

EXTERNAL
Social Environment

Goals

Marketing Strategy

Task Environment

Strate gies
Policy Program Budget

INTERNAL

Resources structure

Procedure

Perfor mance

STRATEGIC MARKETING MANAGEMENT : Market Driven Strategy

Strategic Marketing examines the concepts and processes involved in market driven strategies. Developing market oriented culture and processes are essential features of market driven strategies. Driving forces behind a market driven strategy is the reality that the route to obtaining a competitive advantage is providing superior value to customers. The underlying premise of market driven strategy is that the market and the customers that form the market should be the starting point in businesses strategy formulation.

STRATEGIC MARKETING MANAGEMENT : Market Driven Strategy

Several aspects of the competitive challenge are apparent : Marketing strategy provides concepts and processes for gaining a competitive advantage by delivering superior customer value. Marketing is a major stakeholder in key organizational core processes new product development, customer management, and value/supply chain management. The use of cross function teams to manage core business processes is changing the role and structure of the traditional hierarchical organization. Changes in how organizations are designed place new priorities on forgoing collaborative relationships with customers, suppliers, value chain members, and competitors. Understanding customers, competitors, and market environment requires the active involvement of the entire organization. Developing processes that enable the organization to continually learn from customers, competitors and other sources is vital to sustaining a competitive edge. The environmental and ethical aspects of business practice are critical concerns, requiring active involvement by the entire organization.

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Driven Strategies

MARKET ORIENTATION Understanding customers, competitors and markets

Identify customer capabilities

SUPERIOR PERFORMANCE Using market driven strategy to achieve High superior performance Customers value/Capabi lities Match

LEVERAGING OF DISTINCTIVE CAPABILITIES

Market driven strategy is used to match customers

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation

Information Acquisition Inter functional assessment

Customer Information

Competitor Information

Superior Customer Value

Other Market Information

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation

Customer focus, many similarities between concept and market orientation, advocates starting with customer needs/wants, deciding which needs to meet, to satisfy the customers. The importance difference is that market orientation is more than philosophy since it consist of a process for delivering customer value. It helps to focus on customers objectives. Competitor Intelligence, a market oriented organization recognizes the importance of understanding its competition as well as customer : what technologies, target of customers, competitors short term strengths and weakness and long term capabilities and strategies. Cross Function Coordination, important characteristic of market oriented companies is that they are effective in getting all business functions working together to provide superior customer value. Performance implication, companies that are market oriented begin strategic analysis with a penetrating view of the market and competition.

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (component of organization capabilities)

Skills (cross functional teams) Accumulated knowledge (new product experience)

Organizational processes

(New Product Development)

SUPERIOR CUSTOMER VALUE

Coordination of activities (communication)

Assets (brand image)

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (desirable capabilities)

Superior to the Competition

Desirable Capabilities

Applicable to multiple Competitive situation

Difficult to duplicate

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (classifying capabilities)

EXTERNAL EMPHASIS INTERNAL EMPHASIS

Outside in Processes SPANNING PROCESSES Market sensing Customer order fulfillment Customer linking Pricing Channel bonding Purchasing Customer service delivery New product/service development Strategic development

Inside out Processes

Financial management
Cost control Technology development Integrated logistics Manufacturing/Transformation processes Human resources management Environment health and safety

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (important issues in the process view of capabilities) The market driven organization has a clear external focus. Capabilities typically span several business functions and involve teams of people. Processes need to be clearly defines and have identifiable owners. Information should be shared across all process participants. Processes are interconnected to other processes and management needs to coordinate the linkages.

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (Creating Value for Customer Customer Value)
Customer value is the outcome of a process that begins with a business strategy anchored in a deep understanding of customer needs. Customer value is the trade off benefits less the costs involved in acquiring a product. The bundle of benefits includes the product, the supporting services, the personnel involved in the purchase and use experience, and the perceived image of the product. The cost include the price of purchase, the time and energy involved, and the physic costs.

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (Creating Value for Customer Providing Value to Customer)
Delivery value by differentiating the product offer. Offering lower prices relative to competing brands. A combination of lower cost and differentiation.

STRATEGIC MARKETING MANAGEMENT : Characteristics of Market Orientation (Creating Value for Customer Results of Customer Value Initiative Ability to retain customers. Ability to build long term customer relationship. Ability to attract new customers. Growth in market share. Growth in profit. Growth in sales. Reduction in customer complaints. Growth in product/service innovation.

STRATEGIC MARKETING MANAGEMENT : (corporate strategy)

Corporate strategy consist of deciding the scope and purpose of the business, its objectives, and the actions and resources necessary to achieve the objectives. Marketing strategy is guided by the decisions top management makes about how, when and where to complete.

BUSINESS AND MARKETING STRATEGIES : Marketing Strategy Process

This section consist of designing effective Market driven organization, strategy Implementation and control Situation Analysis Situational Analysis to guide The design of a new strategy or change an existing strategy

Designing Marketing Strategy Market sensing information Plays a key role in designing Marketing strategy, which include Market targeting, positioning analysis, Marketing program strategies implement Building marketing relationship and The positioning strategy in order to achieve Marketing Developing, introduction new product favorable positioning while allocating Program financial, human and resources to market Development

Implementing and managing Maketing Strategy

BUSINESS AND MARKETING STRATEGIES : Marketing Strategy Process

Situation Analysis, marketing management needs the information provided by the situation analysis to guide the design of a new strategy or change an existing strategy. The situation analysis is conducted on a regular basis after the strategy is under way to guide strategy changes. Situation analysis consist of market vision, structure and analysis, segmenting market and continuous learning about markets. Designing Market Driven Strategies, consist of market targeting, strategic planning, relationship strategies, planning for new products.

BUSINESS AND MARKETING STRATEGIES : Marketing Strategy Process

Market Focused Program Development, market targeting and positioning strategies for new and existing products guide the choice of strategies for the marketing program components. Product, distribution, price, and promotion strategies are combined to form the positioning strategy selected for each market target. Market Focused Program Development consist of Product Portfolio and Strategic Brand Management, Value Chain, Price, and Promotion Strategies. Implementing and Managing Market Driven Strategy, selecting the customers to target and the positioning strategy for each target moves marketing strategy development to the implementation stage. This stage considers designing the marketing organization and implementing and controlling the strategy.

BUSINESS AND MARKETING STRATEGIES : Preparing The Marketing Plan

Planning Relationships and Frequency, marketing plans are developed, implemented, evaluated, and adjusted to keep the strategy on target. The frequency of planning activities varies by company and marketing activity. Market targeting and positioning strategies are not changed significantly during the year. Planning Consideration, suppose that you need to develop a plan for a new product to be introduced into the national market next year. The plan for the introduction should include the expected results (objectives), market target, actions, responsibilities, schedules, and dates. The plan indicates details and deadlines, product plans, a market introduction program, advertising and sales promotion actions, employee training, and other information necessary to launching the product.

BUSINESS AND MARKETING STRATEGIES : Preparing The Marketing Plan

Preparing the Marketing Plan, the conference board offers several examples of plan formats in its excellent report on marketing plan. Format and content depend on the size of the organization, managerial responsibility for planning, product and market scope, and other situational factors. Marketing Plan consists of the Situation Summary, Describing the Market Target, Objectives for the market target, marketing program positioning strategy, forecasting and budgeting and international planning process (if any).

BUSINESS AND MARKETING STRATEGIES : Outline for Preparing The Annual Marketing Plan
Strategic Situation Summary. A summary of the strategic situation for the planning unit (business unit, market segment, product line, etc). Market Target(s) Description Define and describe each market target, including customer profiles, customer preferences and buying habits, size and growth estimates, distribution channels, analysis of key competitors, and guidelines for positioning strategy. Objectives for the Market Target (s) Set objectives for the market target (such as market position, sales, and profits). Also state objectives for each component of the marketing program. Indicate how each objective will be measured. Marketing program positioning strategy. State how management wants the firm to be positioned relative to competition in the eyes and mind of the buyer. A. Product strategy, set strategy for new product, product improvement, and product deletions.

BUSINESS AND MARKETING STRATEGIES : Outline for Preparing The Annual Marketing Plan
Marketing program positioning strategy. State how management wants the firm to be positioned relative to competition in the eyes and mind of the buyer. B. Distribution strategy. Indicate the strategy to be used for each distribution channel, including role of middleman assistance and support provided, and specific activities planned. C. Price strategy. Specify the role of price in the marketing strategy and the planned actions regarding price. D. Promotion strategy. Indicate the planned strategy and actions for advertising, publicity, personal selling, and sales promotion. E. Marketing research. Identify information needs and planned projects, objectives, estimated cost, and time table. F. Coordination with other business function. Specify the responsibilities and activities of other departments that have an important influences upon the planned marketing strategy.

BUSINESS AND MARKETING STRATEGIES : Outline for Preparing The Annual Marketing Plan
Forecasts and Budgets.
Forecast sales and profit for the marketing plan and set the budget for accomplishing the forecast.

Contingency plans.
Indicate planned actions if events differ from those assumed in the plan.

SITUATION ANALYSIS
Market vision, structure and analysis
Rapid technological change, global competition, and the diversity of buyers preferences in many markets require the constant attention of market watchers to identify promising business opportunities, see the shifting requirements of buyers, evaluate changes in competitive positioning, and guide the choice of which buyers to target and how to position a product or services. A broad view of the market is important, even when managements interest center on one or a few markets segments within a particular market. Mapping the entire market is necessary to understand and anticipate market changes and competitive threats. Understanding markets and how they are likely to change in the future are vital inputs to market driven strategies.

SITUATION ANALYSIS
Market and Strategies
Strategies and market are interlinked, market changes often require altering business and marketing strategies. Companies that do not understand their markets and how they will change in the future may find their strategies for competing inadequate as buyer needs and wants change and alternative avenues become available to meet buyer requirements. Value Migration, describes the process of customers shifting their purchases away from the products generated by outmoded business designs to new ones that offer superior value. Value migration may affect a product category, a company, or an entire industry forecasting the exact nature, scope, and timing of migration may be difficult but nonetheless is essential. Market knowledge is a key input to assessing migration trends. Value migration points to the close relationship between strategies and markets, and the need to define understand the market and competitive area. Shared vision about the market, an important part of becoming market oriented is developing a vision about the organizations markets and the possible future directions of change.

SITUATION ANALYSIS
Mapping Product Market
Matching needs with product benefits. The term product market recognizes that markets exist only when there are buyers with needs who have the ability to purchase products, and products (good and services) available to satisfy the needs. Mapping Product Market Boundaries and Structure, market definition and analysis provide important information for developing business and market strategies, and alert management to new competition. Product Market Structure, a companys brands of products compete with competing brands in generic, product type, and product variant product markets. The generic product market includes a broad group of products that satisfy a general, yet similar, need.

SITUATION ANALYSIS
Mapping Product Market
Forming Product Markets, the factor that influence the nature and scope of product market boundaries include the purpose of the analysis, the changes in market composition over time, and factors creating market complexity. Purpose Analysis, if management is deciding whether or not to exit from a business primary emphasis may be on financial performance and competitive position. Changing composition of markets, product market composition may change as new technologies become available and new competition emerges.

SITUATION ANALYSIS
Mapping Product Market (the process of gaining an understanding of markets)
Mapping the product market

Market structure analysis

Market forecast

Future vision about the market

SITUATION ANALYSIS
Mapping Product Market (breaking out product market boundaries)
Starting with a generic need category of interest to the firm

Identify products/services that fit into the category

BREAK OUT RELEVANT SPECIFIC PRODUCT MARKET

SITUATION ANALYSIS
Analyzing Competition

Defining the competitive arena, competition

includes more than the firms that are direct competitors like Bank BCA, Bank Danamon, Bank Mandiri.

Industry Analysis, the information needed for an

industry analysis includes : 1. industry characteristics and trends, such as sales, number of firms, and growth rates, 2. operating practices of the firms in the industry, including product mix, service provided, barriers to entry, and geographical scope.

SITUATION ANALYSIS
Analyzing Competition
Analysis of value added Chain, a study of supplier and distribution channels in important in understanding and serving product markets. Competitive Forces, offers a useful basis for examining competitive forces in the value added chain. Describing the competitors, a key competitor is a firm going after the same market target as the firm conducting the analysis. Evaluating competitor, although competitor description and evaluation are interrelated, it is useful to separate the two activities.

SITUATION ANALYSIS
Analyzing Competition
1. Define industry structure and characteristics

5. Identify new competitors

Product market structure and market segment

2. Identify and describe Key competitors

4. Anticipate actions by competitors

3. Evaluate key competitors

SITUATION ANALYSIS
Analyzing Competition Business scope and objectives. Management experience, capabilities, and weakness. Market position and trends. Market target(s) and customer based. Marketing program positioning strategy. Financial, technical and operating capabilities. Key competitive advantage.

SITUATION ANALYSIS
Analyzing Competition (evaluation of the competition)
EXTENT OF MARKET COVERAGE

CURRENT CAPABILITIES

COMPETITOR EVALUATION

CUSTOMER SATISFACTION

PAST PERFORMANCE