Amity School of Business Marketing Management Module – II Geetika Jain

1. Amity School of BusinessMarketing Management Module – IIGeetika Jain

2. In order to survive in this competitive environment wherein buyers have abundant choices, an organization can only survive by fine-tuning its value delivery process. Customer Value

3. Value Delivery Process Make the Product Sell the product Design Product Procure Make Price Sell Promote Distribute Service Traditional Physical process Choose the value Provide the value Communicate Distribute Sales force Service Dev Pricing Adv. Product Dev. Promotion Segment Making Positioning Selection Strategic marketing Tactical marketing Contemporary value creation & Delivery Process

4. Michael Porter has proposed the value chain as a tool for identifying ways to create more customer value. According to this model every organization is a synthesis of activities performed to design, produce, market, deliver and support it’s product. The value chain identifies nine strategically relevant activities (5 primary and 4 support) that create value and cost in a specific business. Value Chain

5. Value Chain Firm Infrastructure HRM Margin Support Activities Technology Development Procurement Inbound Logistics Margin Mkting & Sales Service Operations Outbound Logistics Primary Activities

6. Thus, successful marketing requires companies to have capabilities such as understanding customer value, creating customer value, delivering customer value, and sustaining customer value. In order to ensure that the marketers select and execute right activities marketers have to give priority to strategic planning specifically in 3 different areas.

7. A game plan for long-run survival and growth Situation Opportunities, Objectives Resources The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. Strategic Planning

8. Strategic Planning calls for action in 3 key areas: Managing company’s businesses as an investment portfolio. Assessing each businesses’ strength by considering market growth rate and company’s position to fit into it. Establishing strategy.

9. Corporate/ Division Planning Business Planning Product Planning Organizing Implementing Measuring Results Diagnosing Results Taking Corrective Action Strategic Planning Planning Implementing Controlling

10. All Corporate HQ’s undertake 4 planning activities: Define Corporate Mission Establish SBU’s Assigning Resources to each SBU Assessing Growth Opportunities Corporate Strategic Planning

11. Vision & Mission- the Relationship • Vision is a short, succinct, and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms. • Vision refers to the category of intentions that are broad, all-intrusive and forward-thinking.  • A mission statement is an organization's vision translated into written form. • It is an statement of the organization’s purpose- what it wants to accomplish in the larger environment.

12. Focus on limited number of goals Stress the company’s major policies and values Define the major competitive spheres within which the company will operate: Industry Products and applications Competence Market segment Vertical Geographical A Mission should…

13. A business portfolio is collection of businesses and products that make up the company. A business portfolio consists of several SBUs (Strategic Business Units). An SBU is a single business or collection of related businesses that can be planned and evaluated separately from the rest of the company. An SBU can be a company division, a product line within a division or sometimes a individual product or brand. Establishing SBUs

14. Once SBUs are defined, management must decide how to allocate corporate resources. 1970’s saw several portfolio planning models introduced to provide an analytical means for making investment decisions. BCG matrix GE 9 Cell These methods usually use two important dimensions: The attractiveness of the SBUs Market or industry, and The strength of the SBU’s position in that market or industry. Resource Allocation

15. Includes: Planning new business Downsizing Terminating old business The company’s plans for it’s existing businesses allow it to project sales and profits. But there tend to be a gap between the two. If there is a gap between future desired and projected sales, corporate management will have to develop or acquire new businesses to fill it. Assessing Growth Opportunities

16. Strategic Planning Gap

17. Intensive growth- to achieve growth within the company’s current businesses. Market penetration Market development Product development Integrative growth- to build or acquire businesses that are related to the company’s current businesses. Backward integration Forward integration Horizontal integration Options for filling the Strategic Planning Gap

18. Diversification growth- to add attractive businesses that are unrelated to company’s current businesses. Concentric Diversification Horizontal diversification Conglomerate diversification Options for filling the Strategic Planning Gap

19. SBU Strategies INVEST / GROW SELECTIVITY / EARNINGS HARVEST / DIVEST

20. Backward Integration Coca-cola has bought domestic and foreign bottling companies in order to increase its production and distribution efficiency Forward Integration Apple computer and Dell entered the retail industry to sell by deciding to set up a chain of stores Horizontal Integration IDBI acquired United Western Bank; added 230 branches Integrative Strategies

21. Concentric Diversification The entry of Reckitt Benckiser from industrial chemicals into household products. Conglomerate Diversification Virgin Media moved from music producing to travels and mobile phones. ITC presence from FMCG to hotels to agri-businesses to paper boards and specialty paper etc. Horizontal Diversification Walt Disney moved from producing animated movies to theme parks and vacation properties Diversification Strategies

22. External Analysis Program Implementation Strategy Goal Business Mission SWOT Analysis Internal Analysis Feedback & Control Business-unit Strategic Planning Process

23. Overall Cost Leadership: The business works hard to achieve lowest production & distribution cost so as to price lower than it’s competitors and win a large market share. Firms pursuing this strategy should be good at engineering, purchasing, manufacturing, distribution. Differentiation: Focus is on achieving superior performance in an important customer benefit area. Focus: The business focuses on one or more narrow market segments. The firm gets to know these segments intimately and pursues either cost leadership or differentiation within the target segment. Porter’s Generic Strategies

24. Strategic alliances Product or service alliances – HUL joined hands with PepsiCo India) to bottle and market Lipton Iced Tea in glass bottles. Promotional alliances – P&G India has used endorsements of Bombay Dyeing for promoting Ariel detergent powder in the past. Logistics alliances – Transystem, a joint venture between TCI and Mitsui co. Ltd. Of Japan offers complete logistics services to Toyota Kirloskar Motors Pvt. Ltd. Pricing collaborations – Airlines, Hotels and car rental companies joining hands to offer attractive rates. Strategy Formulation

25. It consists of analyzing marketing opportunities, researching and selecting target markets, designing marketing strategies, planning marketing programs, and organizing, implementing & controlling marketing effort. Each product level (product line, brand) must develop a marketing plan for achieving it’s goals. A marketing plan is a written document that details the actions necessary to achieve one or more marketing objectives. Marketing Process & Product-level Planning

26. Executive Summary & table of contents Brief summary of main goals and recommendations. Focus on plan’s major thrust. Current marketing situation Relevant background data on sales, cost, profit, the market, competitors, channels and macro environmental forces. This information is used to carry out a SWOT analysis. Opportunity & Issue analysis Review the main opportunities and issues in the SWOT which are likely to affect organization’s goal attainment. Objectives Outlines plan’s major financial and marketing goals, expressed in sales volume, market share, profit. Contents of a Marketing Plan

27. Marketing strategies Define STP and other Mix Strategies Action program Derived from marketing strategies. Answers questions like, what will be done, when will it be done, who will do, how much will it cost. Financial projection Build supporting budget. Forecasted sales volume, expected cost of production, projected profit. Implementation & control Outlines controls for monitoring and adjusting implementation of the plan. Contingency plans. Contents of a Marketing Plan

28. CURRENT PRODUCTS NEW PRODUCTS CURRENT MARKETS NEW MARKETS MARKET PENETRATION PRODUCT DEVELOPMENT MARKET DEVELOPMENT DIVERSIFICATION Ansoff’s Product-Market Expansion Grid

29. According to the BCG technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. Relative Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. RMS = Business unit sales this year Leading rival sales this year Market growth is used as a measure of a market’s attractiveness. Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money. BCG Growth Share Matrix

30. BCG Growth-Share Matrix

31. Each business is rated in terms of two major dimensions, market attractiveness and business strength. The company has to decide on its list of factors. Factors underlying Market Attractiveness can be like; Overall market size Annual market growth rate Competitive intensity Technological requirements Historical profit margins Energy requirement Socio-political-legal factors GE 9-Cell Matrix

32. Factors underlying Business Strength can be like: Market share Share Growth Product Quality Brand Reputation Distribution Network Production Capacity R&D Performance Managerial Personnel GE 9-Cell Matrix

33. Building GE Matrix Rating (1-5) Weight Value Factors underlying Market attractiveness 1= very unattractive 5= attractive Rating (1-5) Weight Value Factors underlying Business Strength 1= very unattractive 5= attractive

34. THE GENERAL ELECTRIC MODELClassification of SBUs