West, Ford, & Ibrahim

Strategic Marketing, 3rd edition

Chapter 4: Strategic marketing

decisions, choices, and mistakes

© Douglas West, John Ford, and Essam Ibrahim, 2015. All rights reserved.
 Structure
A. INTRODUCTION

1. Overview and Strategy Blueprint

2. Marketing Strategy: Analysis &
Perspectives

C. WHERE DO WE WANT TO BE?

4. Strategic Marketing Decisions,
B. WHERE ARE WE NOW? Choices & Mistakes
5. Segmentation, Targeting
3. Environmental & Internal Analysis: & Positioning Strategies
Market Information & Intelligence 6. Branding Strategies
7. Relational & Sustainability
Strategies

D. HOW WILL WE GET THERE?

E. DID WE GET THERE?
14. Strategy Implementation, Control
& Metrics
8. Product Innovation & Development
Strategies
9. Service Marketing Strategies
10. Pricing & Distribution Strategies
11. Marketing Communications Strategies
12. International Marketing Strategies
13. Social and Ethical Strategies

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Learning Objectives

Ø To define ‘strategic choice and decisions’

Ø To outline strategic decisions taken at the corporate,

SBU and functional levels

Ø To review the strategic marketing decisions including

products to offer, markets to target and competitive
position strategies

Ø To review the analytical models and frameworks that

can be used by organisations to make their strategic
choices for the future

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Marketer Today

a) Strategists allocating resources to

support company goals and priorities

b) Technologists capitalizing on the useful

sophisticated technology

c) Scientists experimenting for the future

of their business

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Strategic choices and decisions

Marketing managers at different organizational

levels are required to translate the outcome of
strategic analyses (as discussed in Chapter 3)
into a number of strategic options and choose
the most appropriate ones.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Hierarchy of Strategic Choices and Decisions

§ Strategic decisions at corporate level

Ø Develop a Mission statement,
Ø Choose a Directional strategy (Growth, Stability,
Retrenchment)
Ø Resource allocation among sub-business unit

§ Strategic decisions at SBU level

Ø Cost leadership strategy
Ø Differentiation strategy
Ø Focus: cost focus and differentiation focus

§ The functional level: marketing-related

Ø Products to offer
Ø Market segments to target
Ø Market position tactics

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Collaboration is the key

• Collaboration across different organizational

levels and integration of the proposed
strategic options are needed to generate
harmonized decisions.
• For example, McDonald’s regional mangers
in Europe (and in far Asia as well) regularly
meet to discuss new products, promotional
ideas, quality issues, pricing options,
sustainability and waste matters.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Corporate level: define the corporate
mission
• An organization’s mission statement provides
a brief description of the unique purpose of
the organization.
• Components that are frequently included in
mission statements: customers, goods or
services, technology, concern with survival,
philosophy, concern with public image...
• The company’s mission is often shaped by
the company’s history, management
preference...

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Corporate level: directional (grand)
strategies
Growth Strategies Stability Strategies Retrenchment strategies
Concentration Pause/Proceed with Turnaround
Caution Captive Company
-Vertical Growth
No Change Sell-Out/Divestment
-Horizontal Growth
Profit Bankruptcy/Liquidation
Diversification
-Concentric
-Conglomerate

Fundamental questions:
1. Should we expand, cut back, or continue our businesses unchanged?
2. Should we concentrate our activities within our industry boundaries or should
we diversify into other lines of business?
3. If we want to grow and expand nationally or internationally, should we do so
via self-development or through external acquisition, mergers, or strategic
alliances?
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Corporate level: resource allocation
among SBUs
• Ovans (2011) compiled about 20 models that
changed the shape of strategy in the world.
• The Boston Consulting Group (BCG) matrix,
which focuses on market share and market
growth.
• General Electric’s (GE’s) business screen,
which places the SBUs in a nice-cell matrix
using the attractiveness of the industry and
the position of the business

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Boston Consulting Group matrix

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 BCG matrix à SBU directional strategy

• It has been suggested that each SBU should set up

its strategic objectives based on its position in the
BCG matrix.
1. Build/growth will be, arguably, an appropriate
strategic objective for the “starts”
2. Hold/harvest will be appropriate for the “cash
cows.”
3. Investment can be selected for the “wildcat.”
4. Divestment will be appropriate for the “dogs” who
are seen as having no potential.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 BCG matrix advantages and limitations

• The BCG matrix is a well-known tool with

many advantages:
a) It helps organizations planning the
desired movement of business over time
b) It plans the movement of funds from an
SBU where there is less need for it to
another SBU where it is needed.
• Are there any limitations? What are the
limitations?

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 An alternative portfolio analysis:
General electric model
Business Competitive Position
Strong Medium Weak

High
Industry Attractiveness

Medium

Low

Most attractive: Investment for Growth Least attractive: Harvesting/Divesting Medium attractiveness: Selectivity

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 BCG matrix vs. GE model

• Market growth à Industry attractiveness

• Market share à Business competitive

position

• It allows strategists to choose any industry

variables relevant to their organizations.

• Any shortcomings of GE model?

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Strategic decisions at the SBU level

• What is an SBU?
• It is a single business or interrelated
businesses that can plan separately from the
rest of the corporation.
• It has a manager responsible for strategic
planning and profit performance.
• The key strategic decision at the SBU level
relates to the choice of a generic competitive
strategy.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 SBU level: Porter’s generic strategies

COMPETITIVE ADVANTAGE
Uniqueness perceived Low cost
by customer position

Cost
STRATEGIC TARGET

Industry Differentiation
Leadership
-wide

Specific Differentiation Cost focus

segment focus

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Requirement for Generic Competitive
Strategies
Strategy Skills & Resources
Cost Sustained capital
leadership Process engineering skills
Intense labor supervision
Design for ease of manufacture
Low-cost distribution
Differentiation Strong marketing
Product engineering
Creative flair
Strong basic research
Quality and Technology leadership
Long tradition in the industry or
unique combination of skills drawn
from other business
Strong cooperation from channels
Focus Combination of the above policies directed at the particular
strategic target
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
Organizational
Tight cost control
Structured responsibilities
Incentives base on strict
quantitative targets
Strong coordination among
R&D, product development,
and marketing
Subjective measurement and
incentives instead of
quantitative measures
Amenities to attract talents
 Criticism of Porter’s generic strategies

• Generic strategy often proves inadequate for

use by “distressed” firms because it assumes
that companies operate “normally” in a
competitive environment.
• It is up to SBUs to choose from them,
although the appropriate selection of a
generic strategy will be dependent on the
firm’s resources and capabilities.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 SBU level: Bowman's strategy clock

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Strategic choices/decisions at
Functional level

• Strategic decisions taken at this level relate to

the various functional areas within an
organization (e.g., marketing, finance, R&D,
production).
• These decisions include marketing objectives
to support corporate strategy, products to
offer, market segments to target, and market
position tactics.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Ansoff’s product/market matrix

Present Products New Products

Market penetration
Existing
Market
• Increase share of customer
spending
• Increase market share
• Non-users to users (where
both are in the same segment)
Product Development
• Product modification via new
features
• Different quality levels
• New Product(s)

Market Development Diversification

Market

• New market segements • Joint ventures

New

• New distribution channels • Mergers

• New geographical areas • Acquisitions/takeovers

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Competitive position tactics

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Conclusion
• Strategic choice involves understanding the underlying bases guiding
future strategy, and generating strategic options for evaluation and
selecting from among them.

• Strategic decisions are usually taken at corporate level (e.g.,

directional strategy, resource allocation), at SBU level (e.g., generic
strategy), and at functional level in relation to various functional areas
(e.g., marketing, R&D, finance, HR, production, etc.).

• Strategic marketing decisions include products to offer, market

segments to target, and positioning strategies.

• Organisational failure is arguably a product of repeated strategic

mistakes and unsuccessful interactions between the firm and its
environment.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition