lesson 4 & 5 2.pdf · lesson 4 & 5. marketing strategy outline ... abell& hammond’s...

2017-07-07

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Lesson 4 & 5

Marketing Strategy

Lesson 4 & 5.

Marketing Strategy

Outline

� SBU defining

� portfolio evaluation (models of portfolio analysis, market

attractiveness and business position assessment, criticism of portfolio analysis)

� growth & consolidation strategies (types of

the strategic gap, growth strategies, including: intensive growth, integrative growth and diversification; consolidation strategies)

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SBU Defining

SBU - Main Characteristics

� SBU is a pasrt of the company that for allintents and purposes has its own distinctproducts, markets and assets

� single business (or collection of relatedbusinesses) that can be planned separatelyfrom the rest of company

� has its own competitors

� has its own manager.......

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SBU

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Mars Food

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Mars Chocolate

Wrigley

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Mars Petcare

Product Portfolio Analysis

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� A product portfolio is the collection of all the products or services offered by a company.

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Portfolio Evaluation Frameworks

� BCG’s Growth Share Matrix

� GE Multifactor Matrix

� Shell Directional Policy Matrix

-----------------------------------------------------

� Abell & Hammond’s Investment Opportunity Matrix

� Arthur D. Little Strategic Condition Matrix

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BCG’s Growth Share Matrix

(traditional approach)

Market

growth

rate

Relative market share

Stars Question marks

Cash cows Dogs

0 xO,5 x1 x

0 %

10 %

100 %

Determinants of market attractiveness

� Market factors (eg size, growth)

� Competitors

� Investment factors

� Technological change

� Other PEST factors

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Determinants of business strenght

� Product quality

� Distribution

� Brand reputation

� Production capacity

� Management skill

BCG’s Growth Share Matrix

(practical approach)

Market

attractiveness

Competitive position (business strenght)

Question marks Stars

Dogs Cash cows

100500

0

50

100

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Gap Analysis

� Diagrammatical approach to viewing the difference between:

� Where we are going? (in the currentway)

� Where we want to be? (targets for achievement)

Gap Analysis

Time

Sales

Desired sales

Current portfolio

Diversification growth

Integrative growth

Intensive growth

The planning

gap

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Intensive Growth

Ansoff’s Product - Market Matrix

Product

Current New

Current

New

Market

Market penetration strategy

Market development strategy

Product development strategy

Intensive Growth Strategies

� market penetration strategy

� market development strategy

� product development strategy

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Intensive Growth


Product

Current New

Current

New

Market

Market penetrationstrategy




� more purchasing and usage from existing customers

� gain customers from competitors

� convert non-users into users

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Market penetration tools

� Loyalty programs,

� Commercial claims

� New opportunities to use

� Suggesting additional benefits

� Price cuts

� Distribution intensifying

� Establishing or joining new distributionchannels


Advantages:

� Synergy effect (marketing synergy, operating synergy, management synergy)

� Total Cost

� Time needed

Disadvantages:

� Scale of incerase

� Predictibility

� Customer & technology dependance

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Intensive Growth


Product

Current New

Current

New

Market





� new market segments

� new distribution chanells

� new geographic areas

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Market development tools

� New targeting

� New positioning of the productand/or brand

� Commercial claims

� New distribution channels

� International expansion

� Price adapted to new clients’ requirements


Advantages:

� Use of existing resources

� Capacity utilization

� Know-how and experience utilization

Disadvantages:

� Level of risk (new customers, newbusiness context)

� Lack of management knowlegde

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Intensive Growth


Product

Current New

Current

New

Market





� product modifications via newfeatures

� different quality levels

� ‘new’ product

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Advantages:

� Forces competitors to innovate

� Creates bariers for new entrants

� Capacity utilization

� More options for customers

� Stronger barganing position towardsdistributors


Disadvantages:

� Additional costs

� Limitations based on Pareto rule

� Time needed

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Integrative Growth Strategies


� Development beyond the presentproduct market, but still within thesame market system

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� Horizontal integration (HMS)

� Vertical integration (VMS)

- backward

- forward

Horizontal integration

S

M

W

R R

W

R

M

W

R R

S

M

W

R

Customers

R R

M

W

R

W

R R

S – supplier, M – manufacturer, W – wholesaler, R - retailer

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Horizontal integration

� Refers to development into activitieswhich are competitive or directlycomplimentary to company’s presentactivities

� Horizontal = the same level of the marketing system! The same business sector!

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Horizontal integration - advantages

� Acces to competitors clients, distributors, markets, brands….

� Cooperation instead of competition on markets

� Reduction of R&D costs

� Strenghtening barganing power

Horizontal integration - disadvantages

� Corporate culture maladjustment,

� Strategy redefinition

� Schizophrenic corporate identity

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Vertical integration

S

M

W

R R

W

R

M

W

R R

S

M

W

R

Customers

R R

M

W

R

W

R R

S – supplier, M – manufacturer, W – wholesaler, R - retailer

Vertical integration

Company becomes its own:

� supplier of raw materials, componentsor services (backward verticalintegration)

� distributor or sales agent (forwardvertical integration)

Vertical = between different levels of MS!

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Hyundai Case

67

Hyundai Motor Company and their subsidiary companies established Hyundai

MOBIS and Glovis. Hyundai MOBIS is a module manufacturer, and provides a

stable and price competitive supply of materials and component parts to Hyundai

Motor. Glovis is a logistics company which handles global logistics requirements,

which includes the export of automobiles to overseas markets.

https://www.researchgate.net/publication/264118425_Business_network_excellence_for_competitive_advantage_Case_of_Korean_firms

An american software producer(production programming)

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Vertical integration advantages

� Secure supply of components or rawmaterials with more control

� Reduction of supplier barganing power

� Strenghten the relationships andcontacts of the manufacturer with thefinal consumer of the product

� Raise barriers to entry

� New business opportunities

Vertical integration disadvantages

� Overconcentration (‘more eggs in thesame basket’)

� Inflexible policy, more sensitive to instabilities

� Increases the firm’s dependence on particular aspect of economic demand

� Lack of know-how and experience

� High risk

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Diversification Growth Strategies


� Development beyond the presentindustry (marketing system)

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� concentric diversification

� horizontal diversification

� conglomerate (lateral) diversification

Concentric diversification

� New client

� New product

� Technological consistency

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Guarlain

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Concentric diversification - advantages

� Knowledge & experience

� Well established cooperation withsuppliers & distributors

� Increasing potential demand thanks to new customers

� Better adjustment to customerneeds&preferences

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Concentric diversification -

disadvantages

� Technological overconcentration

� Level of risk as a consequence of ‘unknown’ customer

� New market reality - newcompetitors

Horizontal diversification

� The same customer

� Completely new (unrelated) product

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Horizontal diversification -

advantages

� Well recognized customer’s needs, wants & preferencess

� High level of customer satisfactionand loyalty

� Can use company’s image and reputation

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Horizontal diversification -

disadvantages

� High risk in case of customerunsatisfaction

� Need to invest into new technology or konw-how

� Necessity of establishing newbusiness relations

� Time & costs

Lateral diversification

� New clients

� New products

� Completely unrelated businesses

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87Source: marketinghandbook.blogspot

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Lateral diversification - advantages

� Risk spreading (protects against thefailure of current products& markets)

� Creates additional souces of profits

� Helps escape from present business

� Offer the chance of growth withoutcreating a monopoly

� Exploit under-utilised resources

� Can use company’s image and reputation

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Lateral diversification - disadvantages

� Dilution of shareholders’ earnings

� Lack of the common identity and purpose

� Lack of management experience

� Costs & risk & time

Consolidation/limitation strategies

� Deinvestment (Divest)

� De(z)integration

� Prunning

� Reduction

� Harvesting

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References

� Armstrong G., P. Kotler: Marketing.Wprowadzenie, Wolters Kluwer,Warszawa 2012

� Kotler P. Marketing Management.Eleventh Ed., Prentice-Hall, EnglewoodCliffs, 2003

� Strategic Marketing Management:Planning and Control, BPP ProfessionalEducation, 2003

Marketing Management -1

� Marketing management is art and science of choosing target markets and getting, keeping, and growing customers through understanding, creating and delivering superior customer value

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Source: own preparation based on: P. Kotler (2003). Marketing Management,

11th, Prentice Hall, Upper Saddle River, p. 17-27.

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Marketing Management - 2

analyzing market situation

designing marketing strategies

implementing and organizing the marketing effort

controlling marketing performance

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Lesson 6

Analyzing Marketing Opportunities

Customer Analysis

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The Organisation’s Marketing

Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology

Political structures

Legalstructures

Demography

Suppliers

Distributors& dealersMarket

demands

CompetitorsCustomers

Customer Analysis

Outline

• types of customers

• the business market versus the consumer market

• DMU (decision-making unit)

• types of buying behaviour

• stages of the buying decision process

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Types of Customer Markets

� consumer markets

� Producer markets� purchase to make profit from using operationally or to produce

other goods

� Reseller markets� purchase to make profit from reselling with no or minor alteration

� Government markets� buy to support operations - normally purchase through bids or

negotiation

� Institutional markets� seek to achieve charitable, community, educational or non-

business goals

Characteristics of Organisational Markets

� Producer markets

� purchase to make profit from using operationally or to

produce other goods

� Reseller markets

� purchase to make profit from reselling with no or minor

alteration

� Government markets

� buy to support operations - normally purchase through bids

or negotiation

� Institutional markets

� seek to achieve charitable, community, educational or non-

business goals

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What Influences the Buyer?

� Cultural factors� values, attitudes, beliefs, ideas, artefacts and

symbols

� Social factors� primary membership groups (family ..)

� secondary member groups (union, cim ..)

� aspirational groups (MBA…!)

� dissociative groups (hell’s angels…??)

� Personal factors� age, life cycle, occupation, lifestyle, personality ...

� Psychological factors� motivation, perception,

The Buyer ‘DMU’

Initiator

first suggests buying product or service

Influencer

whose comments affect the decision

Decider

Ultimately make all or part of buying decision

Buyer

Physically makes purchase

User

Consumes product or serviceInitiate process / define specs

Help define spec, help inevaluation of alternatives

Product requirementsand suppliers

Formal authority to selectsupplier - negotiate terms

User

Source:Webster and Wind, 1972

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Does Behaviour Change in

Relation to What is Purchased?

Degree of involvement

Sig

nif

ican

t d

iffe

ren

ce

betw

een

bra

nd

s

low high

few

many

HABITUAL DISSONANCE

(differing of views)

VARIETY

(seeking)

COMPLEX

Source:Assael, 1987

Consumer Decision Making Process

� Need recognition� stimuli can be internal or external

� Information search� personal, commercial, public, experiential

� Evaluation of alternatives� forms judgement - conscious & rational

� Purchase decision� commit

� Post-purchase evaluation� re-evaluate and re-assure

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The Organisational Buyer

� fewer

� highly concentrated

� close relationship between buyer and seller

� geographically concentrated buyers

� demand for industrial goods is ultimately

derived from the demand for consumer

goods

� professional purchasing

The Industrial Buyer ‘DMU’

Initiator

first suggests buying productor service

Influencer

whose comments affect the decision

Decider

Ultimately make all or part of buying decision

Buyer

Physically makes purchase

User

Consumes product or serviceInitiate process / define specs

Help define spec, help inevaluation of alternatives

Product requirementsand suppliers

Formal authority to selectsupplier - negotiate terms

Approvers

Gatekeepers

User

Authorise decider andbuyer proposals

Control random contactfrom sellers / flow of information

Source: Webster and Wind, 1972

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Types of Purchase

� New Task

� First time purchase, full buying process

� Modified re-buy

� E.g. faster delivery, lower price, specification

� Straight re-buy

� Routine re-purchase, same terms

� Truncated buying process

Organisational Buying Process

� recognise the problem

� develop product specification to solve problem

� search for products / suppliers

� evaluate products to specification

� select and order most appropriate product

� evaluate product and supplier performance

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Types of Purchase

Source:Robinson et al, 1967

YYYPerformance review and feedback

YPossiblyNEstablish order routine

YPossiblyNSelection of supplier

YPossiblyNDetailed evaluation of suppliers

YPossiblyNSearch for potential suppliers

YYYSpecific description of product required

YPossiblyNDetermining general need

YPossiblyNRecognition of problem

New Task

Modified Re-buy

Straight Re-buy

Phases of the buying process

Buy classes

Differences Between Industrial and Consumer Marketing

Only on major purchaseContractual normalLegal factor12

Less importantCritical to successCustomer service11

Lots, complex channelsLimited – short channelsPlace decision10

Fixed – discounts soughtDetermined before – terms vitalPrice decision9

Mass media advertisingPersonal sellingPromotional dec.8

Low technical contentTechnically sophisticatedProduct detail7

Short-term relationshipLong-term relationshipTime effect6

Individual / family unitGroup decisionNature of buyer5

Similar group needsBespokeCustomer needs4

Immediate satisfactionEconomic needsEmphasis of seller3

PrimaryDerived or jointNature of demand2

Individual / familyMultiple influencesPurchase motiv.1

Consumer MarketingIndustrial Marketing

Impact on demand directImpact on sales direct / indirectEnvironmental13

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Lesson 7

Analyzing Marketing Opportunities

Demand Analysis

111

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The Organisation’s Marketing

Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology

Political structures

Legalstructures

Demography

Suppliers

Distributors& dealersMarket

demands

CompetitorsCustomers

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Outline - Measuring and Forecasting

Market Demand

� estimating market potential

� estimating industry sales and market share

� estimating future demand

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Market

� Market is the set of all actual and potential buyers of a market offer (product)

Market potential

Market penetration

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115

Market potential and penetration

� Market potential– the maximum number of customers who enter the market given a specific served market definition

� Market penetration – the total number of customers who have entered that market at a specific point of time

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Forces that limit market penetration

Forces that limit market penetration:

� Awareness

� Availability

� Ability to use

� Benefit Deficiency

� Affordability

Market penetration

Awareness

Availability

Ability to use

Benefit Deficiency

Affordability

MaximumNumber

of Potential

Customers

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Expanding the number of customers

Awareness • Collaborative efford of entire industry

• Intensive marketing communication

•Training addressed to customers

Availability • New distribution channels

• Vending machines

• More intensive distribution

• Special events

Ability to Use • training addressed to potential customers

• simpler products

• additional support

Expanding the number of customers

Benefit Deficiency • New positioning

• New RTB

• New marketing communication

Affordability • Cheap, basic versions of the product

• New financing solutions and programs

• Alternative methods of access

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Market Development Index

Market Market Penetration

Development = x 100

Index Market Potential

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Market demand

� Market demand for a product is thetotal volume/value that would bebought by a defined customer groupin a defined geographical area in adefined period in a definedmarketing environment underdefined marketing program

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Market demand

Market demand is function:

� market development index

� condition of environment

� industry marketing expenditure

� marketing sensitivity of demand

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Estimating potential market demand

� Number of customers – secondary data (totalnumber of customers, market developmentindex, rate of enter) - n

� Purchase amount – secondary data (averageconsumption, production, export and importof products) and primary data - q

� Average price – secondary data – p

Q = n x q x p

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Estimating future demand (sales)

Heuristic methods

� Executive opinions

� Sales force opinions

� Survey of buyers’ intentions

Statistic methods

� Time series analysis

� Exponential smoothing

� Moving averages method

� Regression analysis

lesson 4 & 5 2.pdf · lesson 4 & 5. marketing strategy outline ... abell& hammond’s...

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