Marketing Strategy

Marketing Strategy • Introduction • Three C’s

Professor Carl Mela Marketing 360 Marketing Management Fuqua School of Business

– Company – Consumer – Competition

• Four P’s • Summary

Marketing Strategy–

Medicines • Done Well – Analyses, Segmentation

• Consider Also – – – – –

Overview of issues Intuition regarding why analyses are necessary Intuition regarding results of analyses Overview See my cover memo for details on what the best cases did

Marketing Strategy–

Agenda • Strategic Planning – BCG Matrix – GE Matrix – SWOT

• Marketing Planning

Marketing Strategy–

Marketing Strategy • “More than half the polled executives at 250 corporations ranked Marketing as the most important element of strategy” – (Yankelovitch, Skelly & White Survey 1995)

Marketing Strategy–

Strategic Planning and Marketing Planning Strategic Planning * Situation Assessment * Organizational Mission * Org. Objectives * Org. Strategies

Marketing Planning * Marketing Objectives * Marketing Strategies Target Market Marketing Mix * Marketing Plans

Portfolio Analysis

Implementation

Control

Marketing Strategy–

Corporate Strategic Planning

Define Corporate Mission

Identify Strategic Business Units (SBU’s)

Analyze, Evaluate Current Business Portfolio

Identify New Business Arenas to Enter

Marketing Strategy–

1. Define Corporate Mission • What is our business? • Who is the customer? • What is the value to the customer? • What will our business be? • What should our business be?

-Peter Drucker

Marketing Strategy–

2. Identify SBUs • Single business standing alone from rest of company • Having own competitors to equal or surpass • Has own manager who is responsible for strategic planning and profit

Marketing Strategy–

3. Evaluate the Current Business Portfolio • The Boston Consulting Group (BCG) Matrix • The General Electric (GE) Approach

Marketing Strategy–

Portfolio Analysis: The BCG Matrix High >10%

Fl ow

Reinvest

Based on the principle of balancing cash flows

PROBLEM CHILD No Invest

Ca sh

Growth & Cash Required

Invest

STAR

???

Low <10%

Divest

Cash Flow

CASH COW

10

DOG

1

0

Relative Market Share wrt Biggest Competitor

Marketing Strategy–1

Portfolio Analysis: The BCG Matrix

Marketing Strategy–1

Portfolio Analysis: The BCG Matrix

Marketing Strategy–1

BCG Rise and Fall • Rise – Balanced cash flows and focused executive attention on high growth areas – Helped management make difficult decisions – Only two dimension to strategy -- simple

• Fall – Cash flow became less of an issue with more efficient capital markets and lower interest rates – Only two dimensions to strategy -- limiting – Multiple companies could not jointly pursue a strategy to be #1, but they tried…with disastrous consequences

Marketing Strategy–1

High

5

Medium

3.33

1.67 Low

MARKET ATTRACTIVENESS

The General Electric Model

0

5

Strong

3.33 Medium 1.67 Weak

0

BUSINESS STRENGTH

Marketing Strategy–1

Evaluating Market Attractiveness and Business Strength Market Attractiveness

Sales Volume in Market Market Growth Rate Competitive Intensity

Weight

Rating (1 – 5)

Value

0.4 0.2 0.4

3 5 4

1.2 1.0 1.6 3.8

Business Strength

Market Share Brand Reputation Distribution Coverage Unit Costs

Weight

Rating (1 – 5)

Value

0.2 0.3 0.1 0.4

5 5 4 3

1.0 1.5 0.4 1.2 4.1

Marketing Strategy–1

5 High

Protect Position

Invest to Build

Build Selectively

3.33 Medium

Selectivity/ Limited Build Manage for Expansion Selectively Earnings or Harvest

1.67 Low

MARKET ATTRACTIVENESS

Management Strategies

0

Protect and Manage for Refocus Earnings 5

Strong

Divest

3.33 Medium 1.67 Weak

0

BUSINESS STRENGTH

Marketing Strategy–1

Problems with Portfolio Models • Subjective inputs can lead to selfconfirming strategies • Assumes SBU is independent – Synergies not considered

Marketing Strategy–1

SWOT: Strengths and Weaknesses PERFORMANCE Strength Neutral Weak

IMPORTANCE High Med Low

Marketing 1. Reputation 2. Awareness 3. Market Share 4. Distribution Coverage

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Finance 1. Capital Cost/Availability 2. Cash Flow

Operations 1. Capacity 2. Technical Skills

Organization 1. Employee Morale 2. Responsiveness

Marketing Strategy–1

SWOT: Opportunities and Threats High High Low

Low

1

2

3

4

Opportunities - e.g., Technology 1. ___________________ 2. ___________________ 3. ___________________ 4. ___________________

Probability of Occurrence

Seriousness

Attractiveness

Success Probability

High High Low

Low

1

2

3

4

Threats - e.g., competitor 1. ___________________ 2. ___________________ 3. ___________________ 4. ___________________

Marketing Strategy–1

The Marketing Plan - Integrating the 3 C’s and the 4 P’s Current marketing situation (3 C’s)

Background data on sales, costs, profits, market, competitors, distribution, and environment.

Opportunity and issue analysis (3 C’s)

Identifies the main opportunities/threats, strengths/weaknesses.

Objectives

Defines plan’s financial and marketing goals in terms of sales volume, market share, and profit.

Marketing strategy (4 P’s) Action programs (4 P’s)

Presents the broad marketing approach that will be used to achieve the plan’s objectives.

Presents the special marketing Adapted From: Philip Kotler, Marketing Management, pg. 89. programs designed to achieve the Marketing Strategy–2 Project profitbusiness objectives.

The Marketing Plan

Marketing Strategy–2

Agenda: Key Take Aways • Strategic Planning – BCG Matrix – GE Matrix – SWOT Analysis

• Marketing Planning

Marketing Strategy–2