Basic Marketing Strategies

A basic model of strategic planning

SBU SBU

Corporate Strategy

SBU

SBU

Marketing
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Marketing Implications of Corporate Strategic Planning

Define the Corporate Mission Evaluate Environment (last lecture) Set Organizational Goals and Objectives Establish the Business Portfolio Grow the Business

MISSION STATEMENT

Broad Statement of Purpose: What is your organizations mission statement?

Reason for existence Scope of services Current and potential customers Areas of specialization/differentiation
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Defining a Companys Present Business

Narrow
soft drinks videos toys life insurance computers

Broad

Establishing the Structure of the Business

A PORTFOLIO APPROACH
GOALS: 1. Classify strategic business units (SBU) 2. Maintain a balanced portfolio 3. Allocation of resources 4. Directions for growth
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PORTFOLIO APPROACHES
BCG MATRIX:
Classify SBU on 2 variables: 1. market attractiveness

2. company strength
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BCG MATRIX
RELATIVE MARKET SHARE Question Marks Stars

Market Growth Rate

?
Cash Cows Dogs

CRITIQUE OF BCG
LITTLE

USE IN IDENTIFYING AREAS OF FUTURE INVESTMENT CONSIDERS CASH FLOW RELATIONSHIPS BETWEEN BUSINESSES
TOO SIMPLISTIC
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ONLY

GE MODEL
INDUSTRY ATTRACTIVENESS High Medium Low High

Medium

Low

BUSINESS STRENGTH

Critique of GE

Advantages

More factors considered More guidance on allocations of resources More useful for evaluating new product-markets

Disadvantages

Subjective and ambiguous

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GROWTH STRATEGIES
Current Markets
Current Products MARKET MARKET PENETRATION PENETRATION

New Markets
MARKET MARKET DEVELOPMENT DEVELOPMENT

New Products

PRODUCT PRODUCT DEVELOPMENT DEVELOPMENT

DIVERSIFICATION
DIVERSIFICATION

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GROWTH STRATEGIES:
Market Penetration: Sell more existing product/ service to existing customers 1. Increase Usage 2. Introduce Intermediaries 3. Mandatory Consumption
Market Development: Tap new segments for existing/service products
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GROWTH STRATEGIES:
Product Development: -New products/services developed for existing customers -utilizing strengths
Diversification: New products/services to new target markets Horizontal Vertical Concentric

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What are you doing if not growing?

Sustain current level

Retrench

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Marketing Implications of Business Level Strategies

How will the SBU compete to gain a sustainable competitive advantage within its industry:

What is the competitive domain/scope Which market segments can it target What needs can it satisfy How can it distinguish itself from competition

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Gaining Competitive Advantage

1)Increase the willingness to buy

Better demonstrate benefits that consumers already value Develop new products with more important benefits Focus on neglected benefits Make sure necessary complementary products/ services exist Produce/service perceived to solve consumer problems Ensure compatibility with values Reduce perceived risk
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2) Increase the ability to buy

Initial and maintenance costs

Innovative financing, smaller minimum sizes

Distribution at time and place that meets needs

fewer stockouts, different outlets, easier procedures for delivery/discarding

Improve package/product size to improve storage issues

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3) Increase demand for your brand

by:

Increase number of situations in which the product/service is used

Increase amount used at one time

Package size, volume discounts Emphasize neglected benefits

Encourage replacement

By providing improved products

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4) More basic strategies

Differentiation strategy

Unique benefit or attribute highly desired by market Niching

Focus Strategy: narrow focus in the marketplace

Niche

Cost leadership strategy

Head-to-headsame benefitslower cost Wisdom???

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More Basic Strategies contd

Prospector

First mover in new product and market areas Responds quickly to new opportunities
Maintain a secure position in relatively stable product/service areas Protects domain by offering lower prices, higher quality,better service Tends to ignore industry changes Somewhere between prospector and defender Seldom a first mover but often a second or third No consistent product or mkt development Not as aggressive as established products Responds primarily when forced to
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Defender

Analyzer

Reactor

5) Retaining existing customers

Good for large market-share holders or niche holders

Satisfaction programs Meeting competitions strategies Relationship marketing Much more on this in a few days
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Exercise:

Bring in two products from the same product category that would be used by different types of people Describe the person who buys this product Describe the Marketing Mix for this Product Email me a brief write-up of your example We will discuss this next class

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