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Value Chain
Primary activities:
Inbound Logistics: raw materials, Handling.
Operations:
Outbound Logistics: delivery, warehouse
Marketing & Sales: Local and web based, enquires support
Service: on-site technical support, warranty etc.
Support Activities:
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Value chain represents the value created by the value activities themselves and by the management of linkages between them. The activities affect one another and therefore must be coordinated.
Using the value chain, a firm can secure competitive advantage in several ways
· Invent new or better ways to do activities
· Combine activities in new or better ways
· Manage the linkage in its own value chain
· Manage the linkage in the value chain.
Value network
Several organisations’ value chains, it can be created more value by the use of bargaining power over supplies and customers. It can also be achieved more subtly by providing coordination and by fostering relationships that promote innovation.
Marketing Strategy:
· 4ps +3ps
Product: features of product
Price:
Promotion: direct mail, magazine, TV, internet etc
Place: distribution, warehouse, showroom etc
+ (sometimes you will get extra marks. It depends on scenario)
Physical evidence: paper documents,
Process: system
People:
Be aware the important thing is those Ps are not isolation. It acts as substitutes for each other and they must be integrated.
· Select appropriate target market and position products
Limited resources, competition and larger market, so it is necessary to select target markets. Target market is a particular attractive segment that will be served with a distinct marketing mix
Analysis your product, is it a shopping goods, convenience goods or luxury goods.
Then compliance with market mix
Kotler identified 6 steps in segmentation, targeting and positioning
1. Identify segmentation variables and segment the target market
2. Develop segment profiles
3. Evaluate the attractiveness of each segment
4. Select the target segments
5. Identify positioning concepts for each target segment
6. Select, develop and communicate the chosen concept.
Environmental Analysis
Macro-environment: PESTEL, Key drivers of Change, Scenarios
Industry or sector: Five Forces, Cycles of competition
Competitors and markets: Strategic groups, Market Segments, Critical success factors
PESTEL:
Political/ Legal:
The attitude of government, then what issues are going to concern? Taxation, trade barriers, employment, consumer protection, Health and safety etc
Economic:
General economic condition, the trend rate of growth, the degree of economic stability and current stage of the economic cycle, such as inflation, unemployment, interest rates.
Social Environment:
Demography: birth rate, average age, ethnicity, death rate, family structure.
Culture: language, religion, custom etc. business must be particularly aware of culture change.
Technological:
New products and services become available
Online trading
Using technology to solve problems
New way to communicate
Environmental:
Environmental uncertainty, senior managers must remain alert for its developments.
Environment protection. Legislation etc.
Five Forces:
Porter says that five forces together determine the long-term profit potential of an industry
The threats of new entrants
· Barriers to entry to keep them out.
· Likely response of existing competitors to the new entrant
The threats of substitute products
· A substitute product is good/service which satisfies the same customer needs
Bargaining power of supplier
· How many suppliers do exist in your market?
· Does your suppliers supply to your competitors? If does, then your suppliers do not heavily rely on you.
· If suppliers have a bargaining of power, it is more likely to have multitude of suppliers. The range of prices charged by different suppliers.
Bargaining power of customer
· Customers want better quality products and services at a low price.
· Satisfy this, company needs to force down the profitability of suppliers
· Volume bought.
· Scope of substitution, wide choice
· Company needs to understand their customers. It may be involved marketing research.
The rivalry among current competition
· The intensity of competitive rivalry within an industry will affect the profitability of the industry as a whole
· Competitive actions will influence customer opinion and increase market share then the form of price competition, advertising battle, sales promotion campaigns, introducing new products for the market, after sale services etc.
It should be noted that Porter’s five forces model has come in for criticism. Perhaps most importantly, it overemphasises the importance of the wider environment and therefore ignores the significance of the individual advantages held by the company itself such as resources, capabilities and competence. |
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