Month: February 2021

Opportunity Analysis

• A careful analysis of the marketplace should lead to alternative market opportunities for existing product lines in current or new markets, new products for current markets, or new products for new markets
• Market opportunities are areas where there are favourable demand trends, where the company believes customer needs and opportunities are not being satisfied, and where it can compete effectively.

Competitive Analysis

• In developing the firm’s marketing strategies and plans for its products and services, the manager must carefully analyse the competition to be faced in the marketplace. For example, recently the U.S. market has seen significant growth in the high-end luxury market, with more consumers spending more of their money on luxury goods than ever before. High-end products from Coach, Tiffany’s, and Ralph Lauren are all benefiting from this change in consumer spending habits.
• This may range from direct brand competition (which can also include its own brands) to more indirect forms of competition, such as product substitutes.
• An important aspect of marketing strategy development is the search for a competitive advantage, something special a firm does or has that gives it an edge over competitors.

Target Marketing

Identifying Markets

Target market identification isolates consumers with similar lifestyles, needs, and the like, and increases our knowledge of their specific requirements.

The more marketers can establish this common ground with consumers, the more effective they will be in addressing these requirements in their communications programs and informing and/or persuading potential consumers that the product or service offering will meet their needs.

Market Segmentation

Dividing up a market into distinct groups that have common needs and will respond similarly to a marketing process.  The Process involves the following steps:

• Finding ways to group consumers according to their needs
• Finding ways to group the marketing actions—usually the products offered available to the organization
• Developing a market-product grid to relate the market segments to the firm’s products or actions
• Selecting the target segments toward which the firm directs its marketing actions
• Taking marketing actions to reach target segments

Market Positioning

Positioning has been defined as “the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition.” Positioning strategies generally focus on either the consumer or the competition.

Developing a Positioning Strategy: To create a position for a product or service, managers must ask themselves six basic questions:

• What position, if any, do we already have in the prospect’s mind?
• What position do we want to own?
• What companies must be outgunned if we are to establish that position?
• Do we have enough marketing money to occupy and hold the position?
• Do we have the guts to stick with one consistent positioning strategy?
• Does our creative approach match our positioning strategy?

Developing the marketing planning program

The development of the marketing strategy and selection of a target markets tell the marketing department which customers to focus on and what needs to attempt to satisfy. The next stage of the marketing process involves combining the various elements of the marketing mix into a cohesive, effective marketing program. Each marketing-mix element is multidimensional and includes a number of decision areas. Likewise, each must consider and contribute to the overall IMC program.

Product decisions

An organization exists because it has some product, service, or idea to offer consumers, generally in exchange for money. This offering may come in the form of a physical product (such as a soft drink, pair of jeans, or car), a service (banking, airlines, or legal assistance), a cause (United Way, March of Dimes), or even a person (a political candidate). The product is anything that can be marketed and that, when used or supported, gives satisfaction to the individual. The term product symbolism refers to what a product or brand means to consumers and what they experience in purchasing and using it.

Price Decisions

The price variable refers to what the consumer must give up to purchase a product or service. While price is discussed in terms of the dollar amount exchanged for an item, the cost of a product to the consumer includes time, mental activity, and behavioural effort. From an IMC perspective, the price must be consistent with the perceptions of the product, as well as the communications strategy. Higher prices, of course, will communicate a higher product quality, while lower prices reflect bargain or “value” perceptions.

Distribution Channel Decisions

One of a marketer’s most important marketing decisions involves the way it makes its products and services available for purchase. A firm can have an excellent product at a great price, but it will be of little value unless it is available where the customer wants it, when the customer wants it, and with the proper support and service. Channel decisions involve selecting, managing, and motivating intermediaries such as wholesalers, distributors, brokers, and retailers that help a firm make a product or service available to customers. The distribution strategy should also take into consideration the communication objectives and the impact that the channel strategy will have on the IMC program.

Developing Promotional Strategies:

Promotion to the trade includes all the elements of the promotional mix. Company sales representatives call on resellers to explain the product, discuss the firm’s plans for building demand among ultimate consumers, and describe special programs being offered to the trade, such as introductory discounts, promotional allowances, and cooperative ad programs. The company may use trade advertising to interest wholesalers and retailers and motivate them to purchase its products for resale to their customers. Trade advertising usually appears in publications that serve the particular industry.

A push strategy tries to convince resellers they can make a profit on a manufacturer’s product and to encourage them to order the merchandise and push it through to their customers. Sometimes manufacturers face resistance from channel members who do not want to take on an additional product line or brand. In these cases, companies may turn to a promotional pull strategy, spending money on advertising and sales promotion efforts directed toward the ultimate consumer. The goal of a pull strategy is to create demand among consumers and encourage them to request the product from the retailer. Seeing the consumer demand, retailers will order the product from wholesalers which in turn will request it from the manufacturer. Thus, stimulating demand at the end-user level pulls the product through the channels of distribution.

Role of Advertising and Promotion

Marketers use the various promotional-mix elements; advertising, sales promotion, direct marketing, publicity/public relations, and personal selling to inform consumers about their products, their prices, and places where the products are available. Each promotional mix variable helps marketers achieve their promotional objectives, and all variables must work together to achieve an integrated marketing communications program. The development and implementation of an IMC program is based on a strong foundation that includes market analysis, target marketing and positioning, and coordination of the various marketing-mix elements.

Business’s communications objectives are the goals that you need to achieve through all communications, such as public relations, advertising and social media. Your sales objectives are the goals you need to achieve in sales, such as an incremental increase in a particular product or an entire line. Your communications plan can help you achieve that, but it also includes other aspects of your business other than sales, such as communicating both inside and outside your organization. Objectives in both areas should meet the “SMART” test: specific, measurable, achievable, realistic and time-focused.

External Communications Objectives

External communications are what you use to communicate with audiences and markets outside your business. This includes the media, current and prospective customers, analysts, investors and any other stakeholders. In young businesses or for new products, communications objectives may start out very broad, such as “create media awareness about our company and products.” This means you design communications to introduce yourself to the media, such as press releases announcing the opening of your business. As your contacts grow, your objectives can narrow, such as “increase media awareness by 10 percent based on a name recognition survey.”

Internal Communications Objectives

Your internal business communications include your employees, sales force and distributors. These communications are important because you want everyone in your business to be consistent in their communications with everyone they meet. You also do not want external audiences to get information before your employees receive it. Internal communications tools may include company web portals, newsletters and weekly meetings. Objectives may include “increase on-time attendance at weekly status meetings,” or “improve communications between work groups.” You then develop strategies and tactics to meet those objectives, such as providing incentives or training in meeting facilitation.

Sales Objectives

Your sales objectives are easier to measure than your communications objectives, as long as you keep them specific. You can set them for any time period you like, such as a month, quarter or year. You can break them out by a particular product as well as overall sales. For example, “increase sales of women’s shoes by 20 percent the first half of 2013.” If you have more than one business location, you need to set specific sales objectives for each geographical area.

Setting Complementary Objectives

One portion of your communications plan should be devoted to your products or services to support your sales objectives. This is where you lay out your strategies — using public relations and advertising, for example. An example of this communication objective might be “educate prospective customers in the warehouse district about the health benefits of our support shoe inserts.” Your strategies and tactics use all communications tools to achieve this objective, such as soliciting testimonials from current customers and posting them on social media sites.

Communications Objectives

A business communications team, or any type of work team with a communications element, is likely to only have objectives that fall within its area of expertise. For example, a public relations department may have an objective of issuing press releases addressing lawsuits within 24 hours. Likewise, a marketing department may be tasked with producing three new ad campaigns for less than $1 million each that bring customer awareness of a new product, as measured in surveys, to 75 percent.

Sales Objectives

Sales objectives rely on statistical data to set target sales levels over time. Sales objectives don’t necessarily need to refer to the number of goods a business sells. Instead they could refer to a revenue target, a number of new customers or a particular number of sales for each member of a sale staff. A computer manufacturer may set a sales objective of 200,000 new laptops in the fiscal quarter. However, unless this objective includes the stipulation that all 200,000 models are sold for the full wholesale price, a sales team could reduce prices to increase sales to retailers and meet the objective without benefiting the company.

Setting Goals

Integrated Marketing Communication (IMC) is an approach to brand communications where the different modes work together to create a seamless experience for the customer. Customers are presented with a similar tone and style that reinforce the brand’s core message. The ultimate goal is to make all aspects of marketing communication; advertising, sales promotion, public relations, direct marketing, personal selling, online communications and social media work together as a unified force, rather than in isolation. This synergy between different marketing elements maximizes their cost effectiveness.

The cost effectiveness of mass media due to fragmentation has forced integrated marketing communications to the forefront of modern marketing. As consumers spend more time online and on mobile devices, the goal for marketing teams should be for all exposures of the brand to tie together so they are more likely to be remembered. Increasingly the strategies of brands cannot be understood by looking solely at their advertising. Instead they can be understood by seeing how all aspects of their communications ecosystem work together and in particular how communications are personalized for each customer and react in real time.

Common IMC Objectives

In addition to considering recent market, consumer and technological shifts, brands must assess their marketing budget and target audience when setting IMC goals. An IMC strategy with a budget of $2 million will be radically different in size, scope and reach than a marketing budget of only $2,000. Thus, smaller businesses with tiny IMC budgets may rely heavily on social media advertising and word-of-mouth networks to increase brand presence and generate new leads, rather than more expensive television and billboard advertising.

Despite varying budgets, product features and benefits, and consumer behaviors, organizations typically set and work towards the following goals when implementing IMC strategies:

• To develop brand awareness
• To increase consumer or business demand for a product category
• To change or influence customer beliefs or attitudes
• To enhance purchase actions
• To encourage repeat purchases
• To build customer traffic to physical stores, websites or other marketing channels
• To enhance firm/brand image
• To increase market share
• To increase sales
• To reinforce purchase decisions

IMC strategies may seek to achieve one, many or all of these objectives throughout the course of a campaign. Once strategies have been implemented, they are not changed unless major new events occur. Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies and reassess IMC goals.

Objectives of Integrated Marketing Communications

• Provide information: provide necessary information for consumers to help them make buying decision.
• Create demand for products: to stimulate people to desire what they do not have and inspire them to earn the money to acquire items.
• Communicate value: convey a product’s benefits in a memorable way
• Communicate product uniqueness: illustrate their brand’s unique qualities to build preference in their target markets.
• Close the sale: move buyers to action the first time and reinforce their positive experience
• Build relationships and loyalty

Objective Setting

• Setting specific objectives should be an integral part of the promotional planning process. This section discusses the value of objectives and distinguishes among marketing, behavioural, and communication objectives for optimal IMC planning. Value of Objectives
• Advertising and promotional objectives are needed for reasons such as communication function. Planning and decision making, and measurement and evaluation of results.

Communication Function

• Many people are involved in the planning and development of an IMC program including client personnel and contracted agencies.
• The program must be coordinated within the company, inside the ad agency, and between the two. Potential problems can be avoided if all parties have written approved objectives to guide their actions and serve as a common base for discussion.

Planning and Decision Making

• All phases of a firm’s promotional strategy should be based on the established objectives, including budgeting, creative, and media decisions as well as supportive programs such as direct marketing, public relations/publicity, sales promotion, and/or reseller support.

Measurement and Evaluation of Results

• Setting specific objective provides a benchmark against which the performance of the promotional campaign can be measured.
• One characteristic of good objectives is that they are measurable; they specify a method and criteria for determining how well the promotional program is working.

Marketing Objectives

• Marketing objectives are generally stated in the firm’s marketing plan and are statements of what is to be accomplished by the overall marketing program within a given time period.
• Marketing objectives are usually defined in terms of specific, measureable outcomes such as sales volume, market share, profit, or return on investment.

Determining a Budget

As with all business activities, marketing budgets help the planning of actual operations by forcing managers to prioritize activities and consider how conditions might change. Marketing also encourages managers to take steps now, so they can deal with problems before they arise. It also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments, which is a key component of integrated marketing. The essential purposes of budgeting include:

• To control resources
• To communicate plans to various responsibility center managers
• To motivate managers to strive to achieve budget goals
• To evaluate the performance of managers
• To provide visibility into the company’s performance

Marketing plans are resource driven and they affect the budget. Therefore, two big budgeting decisions should be resolved up front:

How shall these efforts be funded? For example, 70% will be reallocated through cost reductions by consolidating programs and 30% will come from new funding.

For example, 70% will advance the reputation of the company and 30% will build “steeples” the critical core themes that make a difference, which are usually only built one at a time.

Measuring Success

The final stage of any marketing planning process is to establish targets or standards so that progress can be monitored. Accordingly, it is important to put both quantities and timescales into marketing objectives and corresponding strategies. for example, to capture 20 percent by value of the market within two years.

Continuous monitoring of performance against predetermined targets is of utmost importance. More important is the enforced discipline of a regular formal review. As with forecasts, the best or most realistic planning cycle will revolve around a quarterly review. Best of all at least in terms of the quantifiable aspects of the plans is a quarterly rolling review. This involves planning one full year ahead each new quarter. While this absorbs more planning resources, it also ensures that plans use the latest information. Moreover, both the plans and their implementation tend to be more realistic.

The most important elements of marketing performance which are normally tracked include:

• Sales Analysis: Sophisticated organizations track sales in terms of “sales variance” the deviation from the target figures which allows an immediate picture of deviations to become evident.
• Market Share Analysis: Market share is an important metric to track. Though absolute sales might grow in an expanding market, a firm’s share of the market can decrease, which bodes ill for future sales when the market starts to drop. Market share is tracked through parameters including overall market share, segment share, relative share, annual fluctuation rate of market share, and the specific market sharing of customers.
• Expense Analysis: The key ratio to watch in this area is usually the “marketing expense to sales ratio.” This may be broken down into elements including advertising to sales and sales administration to sales.
• Financial Analysis: In theory, the “bottom line” of all marketing activities should be net profit. Key ratios include gross contribution to net profit, gross profit to return on investment, and net contribution to profit on sales. There can be considerable benefit in comparing these figures with those achieved by other organizations, especially those in the same industry.

Economic literature makes a distinction between so-called ‘bank-oriented’ systems in which financial institutions are the predominant source of financing and a ‘market-oriented’ model whereby funds are raised primarily via the securities markets. In the former, banks are responsible for channelling funds from savers to borrowers, particularly non-financial corporates. By performing this intermediation role, banks constantly ‘monitor’ the borrowers on behalf of the deposit holders, a function which could not be conducted individually by each of those deposit holders or lenders.

In a market-oriented system, the companies are more inclined to issue securities (shares, bonds, etc.). Savers purchase these securities directly through distribution networks or banks. However, the key difference is the absence of any financial intermediary that alters the nature of the security issued.

Although both forms of financing coexist in all jurisdictions, countries differ in terms of the relative weight of each model. The synthetic proxies often used to determine the system bias include the stock of bank credit outstanding with the private sector and the market value of the securities equity shares and fixed income (bonds and notes)  issued by private enterprises. In order to facilitate a comparison between countries, these indicators are usually measured against the value of a country’s gross domestic product (GDP).

A comparison using those benchmarks confirms that the US is the most market-oriented system, while the banks dominate the financial systems in Europe. Specifically, the European banking system, measured by its volume of assets or their weight in GDP, is nearly three times the size of the US system. Conversely, the percentage of listed securities’ market values over GDP in the US is much higher. This can be partially attributed to the fact that the US system is more specialised in direct financing via the markets.

Bank-based vs Market-Based Economies

In countries such as Japan, France and Germany, where banks provide around 20% of the corporate financing, it is known that banks are making significant effort to develop a relationship banking culture, with long-term loans and preferential interest rates for clients with a ‘good history’. These economies can be called Bank-Based Economies.

There are also countries where the borrowing-lending activities take place through organized markets, such as London Stock Exchange, in the UK, or New York Stock Exchange in USA. These are known as Market-Based Economies. Although banks are present in these countries, they are highly competitive, the relationship with lenders and borrowers is purely limited to the transactions of granting loans or taking deposits and loans are usually granted on short-term.

The competition between the bank-based financial system and the market-based one is starting to lose terrain nowadays, due to globalization. The clear separation between the two types of financial systems is slowly fading, since banks have become active players on the organized markets. In addition, banks are constantly changing the way they are operating as financial intermediaries, moving from the ‘brick and mortar’ concept of bank towards an almost exclusive electronic presence.

Financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and reduce poverty. The Financial sector is the set of institutions, instruments, and markets. It also includes the legal and regulatory framework that permit transactions to be made through the extension of credit. Fundamentally, financial sector development concerns overcoming “costs” incurred in the financial system. This process of reducing costs of acquiring information, enforcing contracts, and executing transactions results in the emergence of financial contracts, intermediaries, and markets. Different types and combinations of information, transaction, and enforcement costs in conjunction with different regulatory, legal and tax systems have motivated distinct forms of contracts, intermediaries and markets across countries in different times.

A well-functioning financial system has complete markets with effective financial intermediaries and financial instruments allowing:

• Investors to move money from the present to the future at a fair rate of return;
• Borrowers to easily obtain capital;
• Hedgers to offset risks; and
• Traders to easily exchange currencies and commodities.

The five key functions of a financial system in a country are:

(i) Information production ex ante about possible investments and capital allocation.

(ii) Monitoring investments and the exercise of corporate governance after providing financing.

(iii) Facilitation of the trading, diversification, and management of risk.

(iv) Mobilization and pooling of savings.

(v) Promoting the exchange of goods and services.

Financial sector development takes place when financial instruments, markets, and intermediaries work together to reduce the costs of information, enforcement and transactions. A solid and well-functioning financial sector is a powerful engine behind economic growth. It generates local savings, which in turn lead to productive investments in local business. Furthermore, effective banks can channel international streams of private remittances. The financial sector therefore provides the rudiments for income-growth and job creation.

Well-functioning financial systems are characterized by financial instruments that help people solve financial problems, liquid markets with low trading costs (operationally efficient), timely financial disclosures resulting in market prices that reflect available information (informationally efficient), and therefore prices that move primarily with changes in fundamental value instead of liquidity demands. Well-functioning markets ultimately lead to efficient allocations, which use resources where they are most valuable.

Deepening and broadening of financial access should be an important public policy objective. Better financial access translates into robust economic growth, as more firms are able to make profitable investments. It also enhances financial stability, for example, by allowing firms to hedge their risks, or more easily obtain refinancing if in financial distress. Lastly, broader access to finance also reflects the values of social justice by contributing to equal economic opportunities.

To achieve a fundamental increase in financial access, public policy should target its main Determinants institutional and financial system development.

The principal institutional dimensions are:

• Well defined commercial property rights, including:
  • Effective contract enforcement;
  • Collateral pledging and claiming mechanisms;
  • Bankruptcy procedures; and
  • Investor protection and corporate governance systems.
• An environment that fosters transparency, including adequate accounting principles and other mechanisms enabling credible disclosure.

The principal financial system dimensions are:

• Efficient financial regulation and supervision;
• An ownership structure of financial institutions, reflecting:
• A clear and focused role for state financial institutions, if they exist;
• The degree of foreign ownership reflecting the country-specific benefits and costs; and
• Controls on the negative effects of bank-industry cross-ownership.
• An entry and competition policy that balances entry opportunities with preserving the charter value of financial institutions;
• Crisis resolution tools, such as deposit insurance, liquidity support mechanisms, effective financial institutions bankruptcy procedures; and
• Financial infrastructure, such as the payments system and credit databases.

The institutional and financial system development policies are necessary to achieve a fundamental increase in financial access, and should, therefore, be regarded as a priority. However, there can be a number of problems in their implementation. Firstly, even the best fundamental development policies, especially those targeting institutional improvements, may have very long gestation periods. The government may have the need to provide more immediate transitory solutions. Secondly, there can be genuine market failures restricting access to finance, which cannot be resolved by improving the overall economic environment, but may require more targeted and direct government interventions.

When fundamental financial access policies do not work due to long gestation, genuine market failures, or political opposition governments may choose to correct for the lack of market-based finance by the public provision of missing financial services. Undoubtedly, well-designed interventions by a “noble” and efficient government can indeed provide transitory solutions to complement long-term development policies and correct financial market failures. But, in practice, governments are commonly not fully “noble,” but influenced by special interests. The efficiency of governments is also commonly limited by bureaucratic incentive structures.

As a result, even when market failures create a theoretical field for social welfare improving interventions, practical government failures may in fact be more distortionary than the market shortcomings they were intended to address, and render public involvement undesirable. Put differently, market failures by themselves do not warrant public intervention. Recognizing its limitations, government should act only if it can address the economic imperfection better than the market. In practice, however, governments around the world are often excessively interventionist, in which case their policies may compromise rather than improve social welfare.

Regulatory Perspective

Despite the recognized risks and costs, public financial institutions are an important part of the financial landscape around the world. Public financial institutions are commonly associated with developing countries, which turn to them when their growing real sector potential seems to outrun financial system capacities. In practice, however, public financial institutions exist and are often prominent even in the most financially developed countries.

The establishment of government financial services is typically a political decision on which financial regulators may have only limited influence. Therefore, they view the decision on the creation, preservation, or liquidation of public financial institutions as given. The relevant question is how the regulators should respond to such decisions. The response should seek to maximize possible benefits of enhanced financial access, while seriously acknowledging potential costs and risk, and seeking to contain them. While possibly not having direct authority, regulators may contribute to the public discussion on the rationale and optimal design of public financial institutions.

Conflicts of interest pose significant reputation and legal risks to corporate finance professionals. In investment banking, and M&A in particular, there is a higher risk of bad press and civil litigation than is the case with other areas of corporate finance.

Because of the higher risk of conflict problems arising, investment bankers must be particularly careful in identifying, assessing, and managing conflicts of interest in connection with such transactions.

In many cases, investment banks can easily identify conflicts.  In other cases, important conflicts may not be as readily identifiable. It is not possible to provide a comprehensive definition of what constitutes a “conflict of interest” but the phrase generally refers to circumstances in which:

• A firm has more than one interest in a transaction
• The existence of those multiple interests may compromise, or have the appearance of compromising, the bank’s ability to provide independent financial advice to its clients or impair the bank’s ability to satisfy the legitimate expectations of those clients.

Conflicts of interest in investment banking:

• The bank or an affiliate has more than one client who is interested in the outcome of a transaction or potential transaction
• The bank or an affiliate is a lender to, or investor in, one of the parties to a transaction or potential transaction
• The bank knows material non-public information about a party or potential party to a transaction that it is unable to share with its client.

How to Avoid Conflicts of Interest

• To mitigate reputation and legal risks associated with transactional conflicts of interest, it is a good idea to avoid:
• Providing financial advisory services for any transaction to two competing interests
• Making equity investments in any transaction with two competing interests
• Providing or arranging financing in connection with a take-over of a client
• Advising a client in connection with an unsolicited bid from another client