Market-Based ManagementMarket-Based Management

Chapter 11, 12, 13Chapter 11, 12, 13

Portfolio Analysis and Portfolio Analysis and Strategic Market PlanningStrategic Market Planning

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Figure 11-1 Product Life Cycles of Two Product Portfolios

Which would you rather have?

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Figure 11-6 Product Life Cycle/Share Development Portfolio

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Factors Impacting Mkt AttractivenessFactors Impacting Mkt Attractiveness

• Market ForcesMarket Forces Market sizeMarket size Growth rateGrowth rate Buyer powerBuyer power

• Competitive EnvironmentCompetitive Environment Number of competitorsNumber of competitors Price rivalryPrice rivalry Ease of entryEase of entry

• Market AccessMarket Access Customer familiarityCustomer familiarity Channel accessChannel access Sales requirementsSales requirements

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Competitive Position InfluencesCompetitive Position Influences

• Differentiation positionDifferentiation position Product qualityProduct quality Service qualityService quality Brand imageBrand image

• Cost PositionCost Position Unit costUnit cost Transaction costTransaction cost Marketing expensesMarketing expenses

• Marketing PositionMarketing Position Market shareMarket share Brand awarenessBrand awareness DistributionDistribution

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Portfolio analysis• An evaluation of a business, product, or market

with respect to market attractiveness and competitive position as an aid in identifying strategic plans.

• Offensive portfolio strategyOffensive portfolio strategy Invest to growInvest to grow Improve positionImprove position New market entryNew market entry

• Defensive portfolio strategyDefensive portfolio strategy Hold/protect share positionHold/protect share position Optimize/monetize positionOptimize/monetize position Harvest/divest share positionHarvest/divest share position

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Product Life Cycle and Offensive Product Life Cycle and Offensive and Defensive Strategiesand Defensive Strategies

Figure 12-2 Market Growth and Offensive and Defensive Strategies

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Portfolio Analysis and Portfolio Analysis and Strategic Market PlansStrategic Market Plans

Figure 12-3 Portfolio Analysis and Strategic Market Plans

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Core Offensive StrategiesCore Offensive Strategies

Core Strategy 1 Core Strategy 2 Core Strategy 3

Invest to grow sales

Invest to improve competitive

position

Invest to enter new markets

Grow in Existing Markets

Improve Margins

Diversified Growth

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Offensive Core Strategy 1: Offensive Core Strategy 1: Invest to Grow Sales Invest to Grow Sales

Sub Strategy A

Sub Strategy DSub Strategy C

Sub Strategy B

Grow Market Share

Grow Revenue Per Customer

Enter New Market Segment

Expand Market Demand

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Offensive Core Strategy 2: Offensive Core Strategy 2: Invest to Improve Competitive PositionInvest to Improve Competitive Position

Sub Strategy A

Sub Strategy DSub Strategy C

Sub Strategy B

Improve Customer Loyalty

Improve Differentiation

Advantage

Lower Costs/Improve Marketing Productivity

Build Marketing Advantage

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Offensive Core Strategy 3: Offensive Core Strategy 3: Invest to Enter New MarketsInvest to Enter New Markets

Sub Strategy A

Sub Strategy DSub Strategy C

Sub Strategy B

Enter Related New Markets

Enter Unrelated New Markets

Enter New Emerging Markets

Develop New Markets

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Selecting an Offensive StrategySelecting an Offensive Strategy

• Why enter new markets?Why enter new markets? New source of growthNew source of growth Smoother performanceSmoother performance Diversification and reduced vulnerabilityDiversification and reduced vulnerability

•Why invest to grow sales?Why invest to grow sales?

•Why improve competitive position?Why improve competitive position? Achieve price premiumsAchieve price premiums Customer retentionCustomer retention Improve margins and NMCImprove margins and NMC

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Defensive StrategiesDefensive StrategiesFigure 13-3 Strategic Market Plans and Performance

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Defensive Strategic Market PlansDefensive Strategic Market Plans

• What are the What are the main main objectives of objectives of defensive defensive strategies?strategies?

• When are When are defensive defensive market plans market plans employed?employed?

Figure 13-5 Portfolio Positions and Defensive Strategic Market Plans

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Core Defensive StrategiesCore Defensive Strategies

Core Strategy 1 Core Strategy 2 Core Strategy 3

Protect Position Optimize Position Monetize, Harvest, or

Divest

Maintain Sales

Maximize Profits

Cash Flow

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1. Protect position in growth markets

2. Protect a high-share position

3. Protect a follower share position

4. Protect a niche share position

Defensive Core Strategy 1: Defensive Core Strategy 1: Invest to Protect PositionInvest to Protect Position

Sub Strategy A Sub Strategy B

Protect Market Share

Build Customer Retention

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Protecting Follower Share PositionProtecting Follower Share PositionFigure 13-8 Market Structure and Share Position

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Defensive Core Strategy 2: Defensive Core Strategy 2: Optimize PositionOptimize Position

Sub Strategy A

Sub Strategy B

Maximize Net Marketing

Contribution

Selective Market Focus

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Defensive Core Strategy 2: Defensive Core Strategy 2: Optimize PositionOptimize Position

Figure 13-14 Profit Life Cycle and

Components of Marketing Profitability

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1. Harvest Price Strategy

2. Harvest Marketing Resource Strategy

3. Divest Market Strategy

Defensive Core Strategy 3: Defensive Core Strategy 3: Monetize, Harvest, or DivestMonetize, Harvest, or Divest

Sub Strategy A Sub Strategy B

Manage for Cash Flow

Harvest-Divest for Cash Flow

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Defensive Core Strategy 3: Defensive Core Strategy 3: Monetize, Harvest, or DivestMonetize, Harvest, or Divest

Figure 13-17 Harvest Price Strategy

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Break Time Break Time

10 minutes