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Integrating the Analysis: Boxes and Things Putting the Analysis to Use: Generating Strategic Options

Integrating the Analysis: Boxes and Things Putting the Analysis to Use: Generating Strategic Options. The Marketing Audit. Company strengths. Customer needs. Company performance Market needs. Market characteristics. Corporate Objectives.

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Integrating the Analysis: Boxes and Things Putting the Analysis to Use: Generating Strategic Options

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  1. Integrating the Analysis:Boxes and ThingsPutting the Analysis to Use:Generating Strategic Options

  2. The Marketing Audit Company strengths Customer needs Company performance Market needs Market characteristics Corporate Objectives Company needs Market performance

  3. The Role of Portfolio Models • We summarise the performance of product-market combinations on two key criteria – market attractiveness and competitive capabilities. • We look at overall performance and that of different units within the firm • We then introduce dynamics into the equation (potential and trends)

  4. The need to understand the overall corporate strategic context • Ensure sum of parts achieves desired total • Efficiently check whole exploits opportunities • Effectively ensure whole covers vulnerability • Maximize potential synergy between products • Minimize conflict between products

  5. The Boston Consulting Group Matrix

  6. Because BCG type models have limitations, new measures of company strengths and market opportunity have been developed:The Directional Policy Matrix (or the GE-McKinsey Matrix)

  7. Steps in Building a Directional Policy Matrix 1. Understand what you want out of a market. What features will help you achieve your corporate objectives? (The Elements of Market Attractiveness) 2. Understand what the market wants from you. What does a company in this market have to do well to succeed? (The Elements of Competitive Capability)

  8. Building a DPM (contd.) 3. Determine the Relative Importance of the Elements of Market Attractiveness. Determine the Relative Importance of the Elements of Competitive Capability. 4. Identify the units which you are going to analyse. (They can be products, lines, categories, market segments, SBUs, etc.). We will call them products.

  9. Building a DPM (contd.) 5.  For each product determine how it rates on each element of market attractiveness. (How effective is it in meeting the various aspects of your corporate objectives?) 6. For each product determine how it rates on each element of competitive capability. (How well does it deliver on the criteria important to meeting consumer needs?)

  10. Building a DPM (contd.) 7. Work out the overall market attractiveness and competitive capability of each product by adding up the elements (weighted by their importance if used). 8. Plot the products on the Directional Policy Matrix.

  11. Uses of a Directional Policy Matrix 1. Assessing Portfolio Balance • Number of Market Leaders • (Long term robustness) • Number of Cash Generators • (Ability to sustain growth) • Number of Double or Quits • (Vehicles for future growth)  • Assessing the Need for New Products

  12. Uses of a Directional Policy Matrix 2. Using the DPM to Determine Product Potential • Trends in DPM Positions • (Repeat in 3 years time) • Establishing Product Potential • (How attractive could the market be? How capable could we be?) • The Cost of Product Potential • (Cost to realise 20, 50, 80, 100% of a product’s potential.)

  13. Uses of a Directional Policy Matrix 3. Using DPMs to Define Product Roles Given its DPM position, trends, and potential what do we want this brand to do for us, and for the consumer? • What should be the customer promise (core benefit proposition) so it does this for the consumer? • What should be the company support so that the product realises its potential for the company?

  14. Uses of a Directional Policy Matrix 4. Construct your competitor’s DPM. • What is important to them? • How well are they doing? • What are their corporate goals? • What will they do next?

  15. Improving product performance 1 The Role of the Product in the Portfolio ·       How can we focus and improve what this product does for the company? (e.g., minimize cannibalization, increase defensive cover, increase margins and profit, product line extend).  2 Success of Product in Meeting Consumer Needs ·       How can we focus and improve what this product does for the consumer? (The Product Promise) (e.g., the core benefit proposition, features to support the core benefit proposition, teach, communication).

  16. Putting the Analysis to Use:Generating Marketing Options

  17. Review of course development We are going to look at how we can stay there and move further ahead Using the marketing mix and account management strategies Having understood where we are P P P P Strengths Needs Growth Defense A R M Market characteristics Objectives

  18. Outline • Dynamics and Product Life Cycles • Threats and Means of Defense • Opportunities and Methods of Growth

  19. Product Life Cycles The stages of the product life cycle summarize the state of customer knowledge and the nature of competition Sales Time Intro Growth Maturity Decline

  20. Product life cycles • Many marketers believe that sales of the product start low, grow gradually and then quickly, before flattening out and declining. • The product life cycle is • Intuitive • Widely believed • Simple, but also potentially problematic

  21. A better question than “Do we believe in the product life cycle?” is “What is driving the product life cycle?” Internal factors driving the product life cycle (changing strengths, focus) External factors (changing needs, competitors, channels, climate) Analysis of the Product Life Cycle

  22. The dual marketing challenge: Objective Performance measure (share, profit, revenue, etc.) Opportunities for Growth Forecast, given initiatives Threats Requiring Defense Current position Natural trend Time

  23. The dual marketing challenge in practice • Establish current position (the marketing audit) • Evaluate planned initiatives (forecast given initiatives) • Review threats in external environment (understand natural trend) • Identify potential opportunities (plan growth)

  24. Reviewing Threats in the Environment

  25. Market Defense • Identify likely sources of attack and the competitive basis where they will win • Develop defensive strategies: • Preemptive (good intelligence, innovative) • Fast follower (good intelligence, fast) • Second but better (strong differentiation) • Breakout strategies (imagination, flexibility)

  26. Ideas for developing defense strategies • Eternal vigilance (Andy Grove: “Only the Paranoid Survive”) • Dictate the battleground (rarely play on price and if so use a flanker) • Judge outcomes relative to alternatives, not the past • Skate to where the puck is going to be

  27. Reviewing Opportunities in the Environment

  28. Growth strategies: Ansoff Matrix

  29. Current Marketing Issues in Growth Strategies

  30. Ideas for identifying growth opportunities • Look for places to add value (or reduce cost) • Opportunities to add value come from the marketing audit (and its dynamics) or from marketing implementation • Two good questions: Is there a gap in the market? Is there a market in the gap?

  31. Questions?

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