Strategic Marketing 97 03

8/7/2019 Strategic Marketing 97 03

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Strategic Marketing

1. Defining the Corporate Mission

2. Defining the Business

3.Assessing Growth Opportunities


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1. Defining the Corporate Mission

A Company should address certain questions.

A Company Mission defines the major competitive

spheres such as

- Industry Example- DuPont ,Dow ,3M

- Competence Example- Japans NEC

- Market Segment Example Porsche, Gerber

- Vertical Example Ford

- Geographical Example Unilever ,Nokia, Caterpillar


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2. Defining the Business

A business can be defined in terms of threedimensions

- Customer groups

Example- Designing lighting system for TV studios.- Customer needs

Example- Making lighting for other customergroups such as home, Office,etc.

- Technology

Example- Design other lighting technologies forTV studios.


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Strategic Business Unit

It is a single business or collection of relatedbusiness that can be planned separately from

the rest of the company.

It has its own set of competitors.

It has a manager who is responsible forstrategic planning and profit performance and

who controls factors affecting profit.


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Examples of SBU

An SBU may be defined by its common raw materials.

e.g.- Kimberly-Clark for example has a variety of paper products such asKleenex, Kotex (sanitary napkins ), Huggies.

Another SBU may be defined by its common manufacturing processes.

e.g.- A company such as General Motors may have separate unitsmaking automobiles, trucks, diesel-electric locomotives, all based on

such engineering and assembly processes.

Yet another SBU is based on common customers.

e.g.- Proctor & Gamble makes Pringles potato chips, Ultra-Pampers,Dawn detergent, Crest toothpaste, all based on the fact that these

products are largely sold through super markets.

An SBU may also be based on its service processes.

e.g.- An accounting firm ( Deloitte Touche ) or a consulting firm (Accenture )

where its particular set of skills of its personnel have a clear competitiveadvantage.


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Assessing Growth Opportunities


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3. Assessing Growth Opportunities

Intensive Growth- Identifying opportunities toachieve further growth within the current

business.

Integrative Growth- Identifying opportunitiesto build or acquire businesses that are related

to the current business.

Diversification Growth- Identifyingopportunities to add attractive businesses that

are unrelated to the current business.


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ANSOFFS MATRIX

(Product-Market Expansion Grid)

Current

Markets

New

Current New

Products

Market

Penetration

Product

Development

MarketDevelopment

Diversification


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ANSOFFS MATRIX

(Product-Market Expansion Grid)

Current

Markets

New

Current New

Products

1. Market

Penetration

3. Product

Development

2. MarketDevelopment

Diversification


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Example-MUL MUL Started producing Maruti-800(a 976cc hatchback) in

collaboration with Suzuki Motor corporation of Japan from 1983.

Market Penetration- Initially penetrated the metro, mini-metro and

other class-I towns through the twin advantages of fuel efficiency and

affordability.

Market Development- It subsequently entered into class II and class-III towns.

Product Development- It added new products such as Gypsy, Omni

Van, Maruti 1000, Zen, Esteem, Alto, Wagon R, Bolero and Suzuki

Grand Vitara.

Diversification - MUL has diversified into automotive insurance,

automotive financing, buying and selling second-hand cars through

Maruti true Value.

The effect By April 2005, MUL had already added about 5 million

vehicles on Indian Roads.


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Example Music India

Intensive Growth

Market Penetrationby attracting competitors customers

by influencing current customers to buy more

by convincing the non-users to use the cassettes

Market Development

by attracting institutional customers if currently selling to

only end users.

by adding new distribution channels such as coffee shops etc

by entering untapped domestic markets such as rural areas

and also exploring export opportunities.

Product Development

by developing longer playing tapes, tapes of superior quality etc.


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Example Music India

Integrative Growth

Music-India might acquire one or more of its

suppliers ( Backward integration)

It might enter music distribution, wholesale or

retail ( Forward Integration)

It can also acquire one or more of its competitors

( Horizontal Integration)


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Example Music India

Diversification Growth

Music-India might start a computer tapemanufacturing operation leveraging its audio cassettemanufacturing capability.(Concentric Diversification)

It might produce cassette holding trays(HorizontalDiversification)

It may consider entering new businesses such asapplication software( Conglomerate Diversification)


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BCG Matrix


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Strategic Objectives

Stars

Market growing rapidly

High Market Share.

Stars are to be protected

As they are cash cows of

Future when the growth of

Market declines.


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Cash Cows

Market is growing slowly.

market share is high and hence a high revenue.

Excess fund to be ideally invested.


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Question Marks

- Market is growing high.

- Market share is low.Probable choices are

increase investment - to make it stars

withdraw by harvesting orby divesting or

by identifying a niche market


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Dogs

Market is growing slowly.

Market share is low and hence

less revenue.

The possible choices are either

Harvesting or Divesting.


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Model of General Electric

1. Market Attractiveness CriteriaMarket size

strength of competition

market growth rate

profit potential

social, political and legal factors

2. Competitive Strength Criteria

Market share

cost advantage

reputa

tiondistribution capabilities

3. Weighing the Criteria


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GE Model Matrix


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Activity 1

1. Identify a company with its product portfolio

management.

2. Describe its growth strategies in line with

the ones we have discussed.

3. Based on your understanding provide inputs

for the growth of the company.

Strategic Marketing 97 03

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