USING FRAMEWORKS EFFECTIVELY Prof' Douglas M' Stayman

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USING FRAMEWORKS EFFECTIVELYProf. Douglas M.
Stayman
Consulting SmartsOctober 2, 2002

• Induce your competitors not to invest in those
  products, markets and services where you expect
  to invest the most that is the fundamental rule
  of strategy. Bruce Henderson,
  Founder of BCG

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Outline

• Making Decisions and Using Frameworks
• Approaching the Problem
• How Frameworks Can Help (or Hurt!)
• Alternative Paradigms for Strategic Analyses
• Product / Market Growth Matrix
• Ohmaes 3 Cs
• Porters Five Forces
• The BCG Matrix
• The Product Life Cycle

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Making Decisions With Frameworks

• How to Approach a case?
• The Problem
• The Situation
• The Alternatives
• The Decision
• How do frameworks help?
• How can frameworks hurt?

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Strategic Marketing Analyses and Process
Step 1 Situation (SWOT) Analysis

• Identity industry / market trends
• Analyze competitors
• Assess own company
• Research customers

Step 2 STP Analysis

• Set market and product goals
• Select target markets
• Find points of difference
• Position the product

Step 3 Marketing Program Development

• Develop the programs marketing mix
• Develop the budget

Implementation and control phases
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Alternative Paradigms for Strategic Analyses

• There are many ways to define and examine the
  broad environment and specifics areas of
  opportunity/threat. Many alternatives are
  available.
• This section give an overview of five approaches
  which span the range and are well known.
• Product/Market Matrix for Growth
• Ohmaes 3 Cs
• Porters Five Forces
• The BCG Matrix
• The Product Life Cycle

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Firms Expansion Strategies Product/Market
Matrix (Benefits and Drawbacks)
Product
Existing
New

• Market Penetration
• Know products and market
• segments well
• Growth limited to this
• segment

Product Development Gain marketing economies
of scale - Need RD and mfg., can
cannibalize sales
Existing
Market
Market Expansion Gain RD mfg.
economies - Need new sales training and
distribution
Diversification Mitigate swings in core
business - No economies of scale in RD,
mfg., or mktg.
New
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Ohmaes 3 Cs
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The 3Cs Alternative Views of Differentiation

• Ohmae
• Cost Lower price (Wal Mart)
• Differentiation different product (BMW)
• Porter
• Cost Lower price (Wal Mart)
• Differentiation
• Product (Attributes/quality Corning)
• Niche (Know customer Pepsi)
• Treacy and Wiersema
• Cost Lower price (Wal Mart)
• Differentiation
• Product (Bloomingdales)
• Service (Nordstroms)

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Porters Five Competitive Forces
Potentialentrants
Threat ofnew entrants
Industrycompetitors
Bargaining powerof suppliers
Bargaining powerof Customers
Suppliers
Buyers
Rivalry amongexisting firms
Threat ofsubstitute productsor services
Substitutes
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Boston Consulting Group Growth-Share Matrix
20 High 10 Low 0
?
Question mark
Star
A
Market growth rate
D
B
Cash cow
Dog
C
10x High 1x Low 0.1x
Relative market share (share relative to largest
competitor)
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Product Life Cycle (PLC) Strategies
Maintain brand loyalty
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Session Take-Aways
1) There are many strategic paradigms 2)
Different paradigms are appropriate at different
times 3) Some look across time. Others take a
snapshot 4) Dont try to apply all paradigms
to all problems. Select a few appropriate ones
and use them as part of solving The problem
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Managing the Marketing Process

Consumer
Competition
Company
Product Price Promotion Place