Amity School of Business Marketing Management Module

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Amity School of BusinessMarketing Management
Module IIGeetika Jain
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Customer Value

• 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.

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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
Positioning
Making
Selection
Strategic marketing
Tactical marketing
Contemporary value creation Delivery Process
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Value Chain

• 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 its
  product.
• The value chain identifies nine strategically
  relevant activities (5 primary and 4 support)
  that create value and cost in a specific
  business.

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

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Strategic Planning

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

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

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Strategic Planning
Planning
Implementing
Controlling
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Corporate Strategic Planning

• All Corporate HQs undertake 4 planning
  activities
• Define Corporate Mission
• Establish SBUs
• Assigning Resources to each SBU
• Assessing Growth Opportunities

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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 organizations purpose-
  what it wants to accomplish in the larger
  environment.

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A Mission should

• Focus on limited number of goals
• Stress the companys major policies and values
• Define the major competitive spheres within which
  the company will operate
• Industry
• Products and applications
• Competence
• Market segment
• Vertical
• Geographical

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Establishing SBUs

• 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.

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Resource Allocation

• Once SBUs are defined, management must decide how
  to allocate corporate resources.
• 1970s 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 SBUs position in that market
  or industry.

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Assessing Growth Opportunities

• Includes
• Planning new business
• Downsizing
• Terminating old business
• The companys plans for its 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.

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Strategic Planning Gap
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Options for filling the Strategic Planning Gap

• Intensive growth- to achieve growth within the
  companys current businesses.
• Market penetration
• Market development
• Product development
• Integrative growth- to build or acquire
  businesses that are related to the companys
  current businesses.
• Backward integration
• Forward integration
• Horizontal integration

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Options for filling the Strategic Planning Gap

• Diversification growth- to add attractive
  businesses that are unrelated to companys
  current businesses.
• Concentric Diversification
• Horizontal diversification
• Conglomerate diversification

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SBU Strategies
Protect Position Invest To Build Build Selectively
Build Selectively Selectivity / Manage for earnings Limited Expansion or Harvest
Protect and Refocus Manage for Earnings Divest
INVEST / GROW
SELECTIVITY / EARNINGS
HARVEST / DIVEST
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Integrative Strategies

• 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

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Diversification Strategies

• 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

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Business-unit Strategic Planning Process
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Porters Generic Strategies

• Overall Cost Leadership
• The business works hard to achieve lowest
  production distribution cost so as to price
  lower than its 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.

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Strategy Formulation

• Strategic alliances
• Product or service alliances HUL joined hands
  with PepsiCo India) to bottle and market Lipton
  Iced Tea in glass bottles.
• Promotional alliances PG 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.

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Marketing Process Product-level Planning

• 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 its
  goals.
• A marketing plan is a written document that
  details the actions necessary to achieve one or
  more marketing objectives.

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Contents of a Marketing Plan

• Executive Summary table of contents
• Brief summary of main goals and recommendations.
• Focus on plans 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 organizations
  goal attainment.
• Objectives
• Outlines plans major financial and marketing
  goals, expressed in sales volume, market share,
  profit.

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Contents of a Marketing Plan

• 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.

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Ansoffs Product-Market Expansion Grid
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BCG Growth Share Matrix

• 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 markets
  attractiveness.
• Markets experiencing high growth are ones where
  the total market share available is expanding,
  and theres plenty of opportunity for everyone to
  make money.

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BCG Growth-Share Matrix
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GE 9-Cell Matrix

• 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

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GE 9-Cell Matrix

• Factors underlying Business Strength can be like
• Market share
• Share Growth
• Product Quality
• Brand Reputation
• Distribution Network
• Production Capacity
• RD Performance
• Managerial Personnel

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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
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THE GENERAL ELECTRIC MODELClassification of SBUs