Successful Marketing Starts with a Strategy

1. A good marketing strategy involves: • Finding your unique niche in the marketplace or a place where you rule. • Identifying your company's marketing message and positioning. • Determining how you stack up against your competitors. • Understanding your customers' wants and needs and how your company's product or service fulfills that need. • Uncovering the best opportunities to reach your target audiences. • Balancing a mix of marketing activities or tactics Successful Marketing Starts with a Strategy

2. Company & Marketing Strategy Chapter 2

3. Strategic Planning • Def:S P is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including • SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and • PEST analysis (Political, Economic, Social, and Technological analysis) or involving Socio-cultural, Technological, Economic, Ecological, and Regulatory factors.

4. Strategies Strategies are different from tactics in that: • They are proactive and not re-active as tactics are. • They are internal in source and the business venture has absolute control over their application. • Strategy can only be applied once, after that it is process of application with no unique element remaining. • The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc.

5. Strategic Planning • It is the formal consideration of an organization's future course. • All strategic planning deals with at least one of three key questions: • "What do we do?" • "For whom do we do it?" • "How do we excel?"

6. Business Strategic Planning • The third question is better phrased "How can we beat or avoid competition?". (Bradford and Duncan, page 1). • In many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years. • In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the "strategic plan". • May be a tool for effectively plotting the direction of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface in the coming days in order to plan your organizational strategy.

7. Vision, Mission and Values • Vision: Defines the desired or intended future state of a specific organization or enterprise in terms of its fundamental objective and/or strategic direction. • Mission: Defines the fundamental purpose of an organization or an enterprise, basically describing why it exists. • Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities.

8. Mission Statements and Vision Statements Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement: • While the existence of a shared mission is extremely useful, many strategy specialists question the requirement for a written mission statement. However, there are many models of strategic planning that start with mission statements, so it is useful to examine them here. • A Mission statement tells you the fundamental purpose of the organization. It concentrates on the present. It defines the customer and the critical processes. It informs you of the desired level of performance. • A Vision statement outlines what the organization wants to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria.

9. Difference B/W Vision & Mission • The Mission serves as an ongoing and time-independent guide. • The Mission describes why it is important to achieve the Vision. • A Mission statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well. • The Vision describes a future identity. • A Vision statement is more specific in terms of both the future state and the time frame. • Vision describes what will be achieved if the organization is successful.

10. Which comes first?Vision or Mission • That depends. If you have a new start up business, new program or plan to re engineer your current services, then the vision will guide the mission statement and the rest of the strategic plan. • If you have an established business where the mission is established, then many times, the mission guides the vision statement and the rest of the strategic plan.

11. Features of an Effective Vision Statement • To become really effective, an organizational vision statement must (the theory states) become assimilated into the organization's culture. • Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization's overall vision. • Clarity and lack of ambiguity • Vivid and clear picture • Description of a bright future • Memorable and engaging wording • Realistic aspirations • Alignment with organizational values and culture

12. Basic Steps Strategic Planning Process • Step One - Getting Ready • Step Two - Articulating Mission and Vision • Step Three - Assessing the Situation • Step Four - Developing Strategies, Goals, and Objectives • Step Five - Completing the Written Plan

14. BCG Growth-Share Matrix • The BCG matrix is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. • This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis. • A simple chart to assist large corporations in deciding how to allocate cash among their business units. • The corporation would categorize its business units as "Stars", "Cash Cows", "Question Marks", and "Dogs", and then allocate cash accordingly, moving money from "cash cows" toward "stars" and "question marks" that had higher market growth rates, and hence higher upside potential. • The chart was popular for two decades and "continues to be used as a primer in the principles of portfolio management," as BCG says.

15. BCG Growth-Share Matrix • To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

16. BCG Growth-Share Matrix

17. Stars • Are units with a high market share in a fast-growing industry. • The hope is that stars become the next cash cows. • Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. • When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom (fame) to dogdom.

18. Cash Cows • Are units with high market share in a slow-growing industry. • These units typically generate cash in excess of the amount of cash needed to maintain the business. • They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. • They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

19. Question Marks • It is also known as problem child, are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. • The result is a large net cash consumption. • A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. • If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. • Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

20. Dogs • Dogs or more charitably called pets, are units with low market share in a mature, slow-growing industry. • These units typically "break even", generating barely enough cash to maintain the business's market share. • Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. • They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. • Dogs, it is thought, should be sold off.

21. BCG Drawbacks / Limitations • Difficult • Time consuming • Costly to Implement • Difficult to define SBUs and measure market share & growth.

22. Balanced Portfolio • Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. • The balanced portfolio has: • stars whose high share and high growth assure the future; • cash cows that supply funds for that future growth; and • question marks to be converted into stars with the added funds.

23. BCG Growth Strategy Star: High Market Growth Rate High Relative Market Share Question Mark: High Market Growth Rate Low Relative Market Share Market Growth Rate Cash Cow: Low Market Growth Rate High Relative Market Share Dog: Low Market Growth Rate Low Relative Market Share Relative Market Share

24. Product Life Cycle Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($) Sales and Profits Over the Product’s Lifetime

25. Marketing Strategy • Market Segmentation • Dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behaviors and who might require separate products or marketing programs • Target Marketing • The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter • Market Positioning • Arranging for a product to occupy a clear distinctive, and desirable place relative to competing products in the minds of target consumers.

26. Student Cafe • What are the advantages/disadvantages for Student Cafe to develop new products? • What are the advantages/disadvantages for Student Cafe to enter new markets? • Is Student Cafe over-expanding or taking advantage of market opportunities? • Put Student Cafe’s products in the product/market expansion grid to sustain growth? (Pg 44)

27. Case Discussions • Groups 1-3 (PH) • What were the trends/opportunities in the marketplace that allowed Pizza Hut (PH) to grow so quickly? • What niche has PH found? • Do you think large insurance companies will enter this market? Why or why not? • Groups 4-7 (Pakola Ice-Cream Soda Milk) (PI-Soda) • What is PI-Soda’s niche? • How do they maintain their niche in the industry? • What were the trends/opportunities in the marketplace that allowed PI-Soda’s to grow so quickly? • What does PI-Soda’s need to do in order to continue its growth?

28. Introduction to the Ansoff matrix • The Ansoff product/ market matrix is a tool that helps businesses decide their product and market growth strategy.Ansoff's product/ market matrix suggests that a business' attempts to grow depend on whether it markets new or existing products in new or existing markets. • The traditional four box grid or matrix Ansoff model

29. Ansoff Matrix

30. Alternative Ansoff Style MatrixA revised version of the Ansoff matrix featuring a 3x3 or nine box grid or matrix.

31. History - The Product / Market Matrix • Igor Ansoff created the Product / Market diagram in 1957 as a method to classify options for business expansion. • The simplicity of this model is that the four strategic options defined can be generically applied to any industry.This well known marketing tool was first published in the Harvard Business Review (1957) in an article called 'Strategies for Diversification'. It was consequently published in Ansoff�??s book on �??Corporate Strategy�?? in 1965.

32. About the Ansoff Matrix • It is used by marketers who have objectives for growth. Igor Ansoff's matrix offers strategic choices to achieve the objectives. There are four main categories for selection. • Market Penetration • Market Development(new markets, existing products): Lucozade was first marketed for sick children and then rebranded to target athletes. • Product Development (existing markets, new products): McDonalds is always within the fast-food industry, but frequently markets new burgers). • Business Diversification ( new markets, new products ):PIA , Hotel Industry

33. Market Penetration • It is one of the four growth strategies of the Product-Market Growth Matrix defined by Ansoff. • Market penetration occurs when a company enters/penetrates a market with current products. • The best way to achieve this is by gaining competitors' customers (part of their market share). • Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc). • Ansoff developed the Product-Market Growth Matrix to help firms recognize if there was any advantage of entering a market. • Market penetration occurs when the product and market already exists

34. Market Development • A MD strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments. (Winer) • A marketing manager has to think about the following questions before implementing a market development strategy: • Is it profitable? • Will it require the introduction of new or modified products? • Is the customer and channel well enough researched and understood? • The marketing manager uses these four groups to give more focus to the market segment decision: existing customers, competitor customers, non-buying in current segments, new segments.

35. Product Development • In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. • There are two parallel paths involved in the NPD process: • one involves the idea generation, product design, and detail engineering; • the other involves market research and marketing analysis. • Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.

36. PD:Types of New Products • There are several general categories of new products. • Some are new to the market (ex. DVD players into the home movie market), some are new to the company (ex.Game consoles for Sony), some are completely novel and create totally new markets (ex.the airline industry). • When viewed against a different criteria, some new product concepts are merely minor modifications of existing products while some are completely innovative to the company. • Changes to Augmented Product • Core product revision • Line extensions • New product lines • Repositionings • Completely new • These different characterizations are displayed in the following diagram.

37. Types of New Products

38. Diversification • Diversification is part of the four main marketing strategies defined by the Product/Market Ansoff matrix:

39. Diversification • It is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. • Diversification can occur either at the business unit or at the corporate level. • At the business unit level, it is most likely to expand into a new segment of an industry in which the business is already in. • At the corporate level, it is generally entering a promising business outside of the scope of the existing business unit.

40. Diversification • Ansoff pointed out that a diversification strategy stands apart from the other three strategies. • The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. • Therefore, diversification is meant to be the riskiest of the four strategies to pursue for a firm.

41. Existing Products New Products Market Penetration: A strategy for company growth by increasing sales of current products to current market segments without changing the products Product Development: A strategy for company growth by offering modified or new products to current market segments. Existing Markets Market Development: A strategy for company growth by identifying and developing new market segments for current company products Diversification: A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets. New Markets

42. Existing Products New Products Market Penetration: Product Development: Existing Markets Market Development: Diversification: New Markets

43. Existing Products New Products Market Penetration: Adding new stores in current markets. Average 23 new cafe a week. Jan. 8th Starbucks will offer Chantico™ drinking chocolate 6 oz. can Rs.22 Product Development: Adding hot breakfast sandwiches to the menu. Selling new products such as coffee ice-cream and bottled coffee drinks Existing Markets Market Development: Reviewing and building business through new demographic or geographic markets. Selling coffee in grocery stores Diversification: ? New Markets

44. Assignment No. 2aDunkin’ Donuts • What is the mission of Dunkin’ Donuts? • What is Dunkin’ Donuts target market? • How does Dunkin’ Donuts satisfy its target market? • What is Dunkin’ Donuts position in the marketplace? • Can Dunkin’ Donuts survive with the emergence of McDonald & Others? What will it take to remain competitive?

45. Assignment No.2b( Submission Date: 15 Oct,08)For Next Time Research the following U.S. Generation Group. Be prepared to discuss some of their values and characteristics. How should companies focus their products/services/advertisements to this generation? • Group 1 - Millennials • Group 2 – Generation Y • Group 3 – Generation X • Group 4 – Baby Boomers • Group 5 – Baby Boomers • Group 6 – War Babies • Group 7 - Depression/GI Generation (Silent Generation)

46. Downsizing • Downsizing is defined in this effort simply as a reduction in the size of the work force. • Downsizing as a positive and purposive strategy: "a set of organizational activities undertaken on the part of management of an organization and designed to improve organizational efficiency, productivity, and/or competitiveness" (Cameron, 1994:194). • Downsizing thus defined falls into the category of management tools for achieving desired change, much like "rightsizing" and "reengineering".

47. Layoff • Layoff is the temporary suspension or permanent termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary or a business slow-down or interruption in work. • Originally the term "layoff" referred exclusively to a temporary interruption in work, as when factory work cyclically falls off. • However, the term has also applied to the permanent elimination of positions as a cost-cutting measure (or for other reasons).

48. Layoff • Further euphemisms are often used to "soften the blow" in the process of firing and being fired, including downsize, rightsize, smartsize, workforce reduction or workforce optimization, simplification and reduction in force (also called a "RIF", especially in the government employment sector). • Mass layoff implies laying off a large number of workers. • Attritionimplies that positions will be eliminated as workers quit or retire. • Early retirement means workers may quit now yet still remain eligible for their retirement benefits later. • While redundancy is a specific legal term in UK employment law, it may be perceived as obfuscation. Firings imply misconduct or failure while lay-offs imply economic forces beyond ones control.

49. Customer-Centered Marketing Strategy • Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and select one or more market segments to enter. • Differentiationinvolves actually differentiating the firm’s market offering to create superior customer value. • Positioningconsists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

50. Assignment Presentations • Reengineering is a term that brings forth images of organizational or bureaucratic change. • How Widespread is Downsizing? • The different types of diversification strategies • Market segmentation • Market Positioning • 4Ps • 4Cs • Marketing Planning