Plan for Today

 Recap of Session One

 Company Analysis:
 Starbucks case
 Core Competence and Competitive Advantage
 BCG Matrix
Session One: Summary
 Overview of Marketing:
 What is Marketing: Different orientations
 3C-4P Framework: Strategy-tactics
 Video Case: Barbie
 Admin stuff
Session 2: First C - Company
 Starbucks Case (Watch the Interview with
Howard Schultz)
 Corporate Vision
 What business are we in?
 Core Competence
 BCG Portfolio Planning Model
Starbucks
The Rock and the Pond
E xperience

S ervice

P roduct

5
 Third place

Training

Se
at
ing

in
ht

g
hare
Lig

Recru
Buying
ts

Roasting/

itme
Profi

blending

nt
New products
Au re

a
u

om
ton
ult
om C

Ar
y
Mu
sic

Atmosphere
 The 360o brand
Social Contributions
Contributions Employees
Employees
Social
Conduct Conduct
Conduct Conduct
Conduct
Conduct

Business
Business Product
Product
Conduct
Conduct
Company/
Company/
brand
brand
Sales Image
Image Communications
Sales Communications
Force
Force

Distribution
Distribution Price
Price
Channels
Channels Service Support
Service Support
 Howard Schulz

“Dream more than others think practical. Expect more

than others think possible. Care more than others think
wise.”

“When we love something, emotion often drives our

actions. This is the gift and the challenge entrepreneurs
face every day. The companies we dream of and build
from scratch are part of us and intensely personal. They
are our families. Our lives.”
Howard Schulz
 Company Analysis:
Portfolio Management and
Competitive Advantage
Information Research &
Manufacturing
systems development

Human
Finance Marketing
resources

Analyze current SBU’s. Developed to support organization goals

Corporate Strategy and Portfolio
Planning
Vision
Core ideology
Envisioned Future
Corporate Vision
Why does the organization exist?
Vision:
 Broad
 Enduring
 Inspirational
Great Organizations
Making money vs. making meaning
Marketing Myopia
• What is our business (are we being
myopic)? Who is our customer? What
customer benefits do we provide?
• What business should we be in?
Marketing Myopia
 What business are we in?
 Providing products vs. serving customers
 Railroads vs. transportation
 Dry cleaning vs. need to wear clean clothes
 Photographic film vs. capturing memories vs.
sharing moments
 Sustained growth depends on how broadly
you define your business
i.e. Kodak, digital industry replaced its business
What business are these
organizations in?
 Dell computers vs. Apple computers
Dell:
Apple: customer is more like buying their experiences and
high-end design.
The vision of the two companies are different.
 Wonderland vs. Disneyland
 Collective learning in an organization (coordination,
integration)
 Honda: Engine design
 Sony: Miniaturization
 Resource based view:
 Internal (own strengths)
 External (competitive)
 Is it hard to copy?
 Is it scarce?
 Does it make a significant contribution to the perceived
customer benefits of the end product
 Can you appropriate its value?
 Sustainable competitive advantage?
 What are you best at?
 Why do your customers buy from you?

 What is Your Competitive Advantage

 Fit & Sustainability: Southwest Airline’s Activity
System

No seat No meals No baggage

assignments transfers
No connections
Frequent, with other airlines
reliable Limited
departures passenger
service Short haul,
point-to-point
Standardized routes between
High 15-minute gate fleet of
compensation turnaround midsize cities,
Limited use of 737 aircrafts
of employees secondary
travel agents
airports
Lean,highly Automatic
productive ticketing
machines
Very low
crew ticket
Flexible Limited use
prices
Union High of travel agents
contracts aircraft
utilization Automatic
ticketing
High level of Standardized
employee machines
fleet of 737
stock ownership aircraft
Business Strategy
and
Portfolio Management
 Portfolio Analysis: The BCG Matrix
Based on the
principle of
??? balancing cash
flows
STAR PROBLEM
High
>10% CHILD
Cash Required
Growth &

Low
<10%

Cash Flow
CASH COW DOG
Relative Market Share
10 1 0 wrt Biggest Competitor
 Portfolio Analysis: The BCG Matrix
Based on the
principle of

Invest
??? balancing cash
flows
STAR PROBLEM
High
>10% CHILD
Reinvest
Cash Required

ow
Growth &

Fl
sh No Invest
Ca

Low
<10% Divest

Cash Flow
CASH COW DOG
Relative Market Share
10 1 0 wrt Biggest Competitor
 The BCG Growth-Share Matrix
High Low
STARS PROBLEM CHILDREN
* Market leaders * Rapid growth
* Fast growing * Poor profit margins
* Require investment to Grow * Enormous demand for cash
STRATEGY STRATEGY
* Protect share * Invest to aggressively build share
High * Reinvest earnings through price cuts,
* Buy existing share by acquiring
product improvement, more efficiency
* Obtain large share of new users
Market CASH COWS DOGS
Growth * Profitable products * Many products may fall in this category
* Generate more cash than needed for share * Cost disadvantage - few growth
maintenance opportunities at Reasonable Cost
* Slow sales growth * Markets not growing
STRATEGY STRATEGY
* Maintain market dominance * Focus on a specialized, defendable
Low * Invest in process technology improvement segment
and price leadership, R&D in other product * Harvest: cut back maintenance support
markets * Divest (sell); abandon (Delete from line)

High Low
Relative Market Share
BCG Matrix: Limitations
 Does not address how ‘value’ is created:
the one common link is cash
 For diversified companies, relatedness of
businesses is crucial: core competence
 Assumes need for self-sufficiency
Some Recent Examples of
Today’s Concepts
Example 1 - Mission: Greyston Bakery, NY
Bakes brownies for Whole Foods and Ben & Jerry’s
CEO Mike Brady did a stint in jail, and now wants others to
get a second chance… workers tend to be ex-convicts
Mission with a strong social purpose: All profits not
invested in the bakery go towards community housing,
childcare, community gardens to the neighborhood.
Some Recent Examples of
Today’s Concepts
Example 2 – Customer Value: General Mills
For its Trix and other cereals, artificial colors are
replaced with natural colors from fruits and veggies
Responsive to consumer trends
Natural colors – but more calories from fruit juice!
Some Recent Examples of
Today’s Concepts
Example 3: Samsung Core Competence
Innovating to bring together IT, biologics and medicine
Expertise in chips & smartphones being used for entry
into biologic drugs for cancer and many more. Building
world’s largest biologic drug plant
Semiconductors and biopharmaceutical require huge
investments and attention to
detail - Samsung’s key strengths
Some Recent Examples of
Today’s Concepts
Example 4: Portfolio Planning – P&G
Willshed more than half of its brands – keep 70-80
brands, drop over a hundred.
Focus not on size but on being the No. 1 choice of
consumers.
Part of overall plan to cut costs, accelerate growth
and improve profitability
Session Two: Summary
Next session: Competition
 Reading:
Competitor Analysis: Understand your
competition
 Barco Projection System (A) case