1. Digital Marketing Communications & Corporate Strategy 5G3190 DMC David Edmundson-Bird

2. DMC & Corporate Strategy So what’s the problem? You have to identify the strategic direction of your organisation You have to identify the digital marketing opportunity based on the strategic direction of the organisation

3. DMC & Corporate Strategy So what do you need to learn? How we define the concept of strategy and introduce the classical framework for strategic management How we deal with Objectives Whether strategy changes in the Digital economy

4. The Concept of Strategy and The Classical Framework

5. Business Strategy and the Classical Framework Defining the “concept” of “strategy” Time to refresh your memories What is a strategy?

6. The Concept of Strategy A strategy is a plan for how an “organisation” will “compete” in the “marketplace” What if you’re A government? Or a charity? Or a city council? Or some sad old bloke writing songs in your bedroom? …..that’s just me then is it?

7. Strategy Development involves: Which customers? What products and services? Where will we operate? Choosing where to compete What benefits do our customers seek? Do we have the resources, skills and assets to deliver the target benefits better than our competition? Where can be defended? Is proposition different from our top competitor’s? Can customers tell the difference? How to differentiate? Where are the tradeoffs? Do our resource allocations reflect our differentiation? Do all of our strategic decisions fit together? Do we create value by providing mutually reinforcing services? Activities that link to this?

9. Business-unit

10. Functional

11. OperatingExternal Analysis

12. Mission Strategic Management begins with a Mission Mission statements set direction Clear sense of purpose for the organisation Provides a clear sense of the business you’re in Expresses organisation’s current business strategy and future strategic direction eBay: “To pioneer new communities around the world built on commerce, sustained by trust and inspired by opportunity.” “To provide online marketplaces for the sale of goods and services as well as other online commerce, or ecommerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses.” What’s the difference between a mission and a vision?

13. Objectives Objectives are SMART Good strategic management involves objectives that: Balance financial and strategic measures Measure performance of the business at corporate, SBU and function levels E.g. Measurable tangible Past performance, often incorporating multiple or external variables Sales targets, Profitability, Stock price E.g. Qualitative valued-focus Operational performance in relation to company’s mission Employee retention, Customer satisfaction, Competitive responsiveness, Level of innovation

15. Valued benefits

17. Nature of customers

19. Creating a Strategy Organisations face different decisions when contemplating corporate strategy and SBU strategy CORPORATE STRATEGY SBU STRATEGY ALL THAT WE DO HOW RELATED ALL THE THINGS THAT WE DO ARE WHAT WE DO IN THIS SBU WHAT ARE OUR GOALS HOW WE ACHIEVE ADVANTAGE HOW WE MANAGE OUR VALUE CHAIN HOW OUR ACTIVITES RELATE TO EACH OTHER WHAT THE BUSINESS FUNCTIONS STRATEGIES ARE BROAD FOCUSSED

22. Not mutually exclusive

24. Betterresources

25. Better customer value

26. Low-cost producer

27. Delight

28. Loyalty

29. Market share

30. ProfitabilityCompetitive advantages don’t always translate into superior performance outcomes The public may not perceive the firm’s superior value Sometimes outcomes are competitive advantages Investment to Create and Sustain Advantage Organisations keep striving for that advantage Do you want more of this? Read G.S. Day and R. Wensley, “Assessing Advantage: A Framework for Diagnosing Competitive Superiority,” Journal of Marketing 52 (1988): 1-20

31. What’s the difference between “Planning” and “Strategy”? Planning Internal focus Introspective Stable environment Predictable environment Goal: Optimize the organisation Strategy External focus Competitive Unstable environment Unpredictable environment Goal: Win the war

32. How we deal with Objectives

33. The Strategic Waterfall Any marketing tools we use must be in pursuit of our communications objectives But how do we get there?

34. The Strategic Waterfall We start with the Mission From there we create business objectives Designed to show “how” you’ll achieve your mission In order to fulfil our business objectives we need some marketing objectives

35. Marketing Objectives 2 types Strategic Thrust: Which products are sold in which markets Enter new markets, product development, market penetration/expansion, market development Product Level: Build, hold, harvest, divest

36. Marcomms Objectives Once your marketing objectives are in palce you can derive your Marketing Communications Objectives These need to be SMART They are very specific and relate to the achievement of a given marketing objective Examples found on page 228 of Chaffey et al

37. Digital Marcomms Objectives They’re digital if they relate to the use of (a) digital marketing lever(s) Should be written Achieve <insert change of state> from <initial state> to <final state> by <insert time frame> (amongst <insert specific target audience>) Use terms such as acquire, convert, retain Also consider growth, penetration and cost objectives

38. Does Strategy change in the digital Economy?

42. I decide how much info I want to share with you

43. I can compare prices

46. The Digital Impact on Porter 5 Forces Bargaining Power of Suppliers The digital world provides direct connection to customers; however, it minimizes suppliers’ bargaining power Suppliers can access end-users through digital interfaces, minimizing the need for middlemen Differentiation becomes more difficult as access to suppliers is equalized via digital markets and purchases Fewer barriers to entry result in increased buyer competition, thus boosting supplier bargaining power Bargaining Power of Buyers Reduces bargaining power of channels Consumers have more information and ability to search for better deals Decreases switching costs

47. The Digital Impact on Porter 5 Forces Competitive Rivalry The digital world minimizes ability to product differentiate; less differentiation means more competition over price Low barriers to entry open markets to heavier competition Variable costs decrease as a percentage of fixed costs, leaving price discounting as a primary method of competition

51. Can it be copied?

53. How many customers do we have? How much do we know about them?

54. How quickly can we know about them?CAN YOU THINK OFEXAMPLES?

56. Business-unit

57. Functional

58. OperatingExternal Analysis Centricity of Technology Customer Control and Power Fast, Unpredictable Competition

59. Summary We’ve seen what a strategy is We’ve looked at the basic strategic decisions that people have to make to develop a competitive strategy We’ve seen how to create DMC objectives We’ve looked at the 4 Digital Economy Forces that affect strategy formulation We’ve seen how the classical framework is impacted by the Network Economy