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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 Implementation

Portfolio Analysis

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% STAR Invest Reinvest
Fl ow Ca sh

???
PROBLEM CHILD No Invest

Growth & Cash Required

Based on the principle of balancing cash flows

Low <10% CASH COW DOG

Divest

Cash Flow

10

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

The General Electric Model
MARKET ATTRACTIVENESS
5
High

3.33
Medium

1.67
Low

0

5

Strong

3.33 Medium 1.67 Weak

0

BUSINESS STRENGTH

Marketing Strategy–1

Evaluating Market Attractiveness and Business Strength
Weight
Market Attractiveness Sales Volume in Market Market Growth Rate Competitive Intensity 0.4 0.2 0.4

Rating (1 – 5)
3 5 4

Value
1.2 1.0 1.6 3.8

Weight
Business Strength Market Share Brand Reputation Distribution Coverage Unit Costs 0.2 0.3 0.1 0.4

Rating (1 – 5)
5 5 4 3

Value
1.0 1.5 0.4 1.2 4.1

Marketing Strategy–1

Management Strategies
MARKET ATTRACTIVENESS
5

Protect Position

Invest to Build

Build Selectively

3.33

High

1.67
Low

Selectivity/ Limited Build Manage for Expansion Selectively Earnings or Harvest Protect and Manage for Refocus Earnings
5
Strong

Medium

Divest
0

0

3.33 Medium 1.67 Weak

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

IMPORTANCE High Med Low

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
Success Probability Probability of Occurrence

Attractiveness

High Low

Seriousness

High 1 3

Low 2 4

High High Low 1 3

Low 2 4

Opportunities - e.g., Technology 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) Opportunity and issue analysis (3 C’s) Objectives Marketing strategy (4 P’s) Action programs (4 P’s) Background data on sales, costs, profits, market, competitors, distribution, and environment. Identifies the main opportunities/threats, strengths/weaknesses. Defines plan’s financial and marketing goals in terms of sales volume, market share, and profit. 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