Transcript Ch002.02 - Texas Tech University

McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
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Class #3: Different Types of Organization, Mission
(=Vision) Statement, Goals(=objective), Culture,
Strategy (definition & why necessary): Why + What =
How; Strategy made at three levels
(corporate/?/functional level)
IBM Video  Homework Due
VIDEO CASE 2
IBM: USING STRATEGY TO BUILD
A “SMARTER PLANET”
2-3
● Since
1911, Numerous Accolades, founded as CTR
(Computing Tabulating Recording) company
● Famous Inventions – ATM, floppy disk, Hard disk drive,
magnetic stripe card, Universal Product Code (UPC), …
● Figures – Thomas Watson (1914-56) known as “Think,”
Samuel Palmisano (2000 – 2012) purchasing PwC,
initiated “Smarter Planet Strategy”
● In 2005, Sold the PC group (SBU) to Lenovo
● Joint work with NASA
● 5 Nobel Prize
● Business Model Change
Basic Questions – Smarter Planet Strategy
● What
kind of organization?
● Motivation for business model change?
● Target Market?
● Smart Planet Strategy was what level of strategy?
● Homework Evaluation: 10/8/5/0
● What were/are the needs in the market?
● They say it is a business strategy, not a marketing
promotion. If so, why did IBM made such an investment
on media? What was the impact of such strategies?
● What majors/disciplines would be helpful to get a job at
IBM?
● What are the 3 Core Values? Have they changed? The
core values help create what?
● Platform? What is it for?
Basic Questions – Smarter Planet Strategy
● What
factors will let IBM to prosper another century?
Focus
Corporate Characteristics
Abilities to provide what the customers want
High R&D investment
IBM is all about progress!!
VIDEO CASE 2
IBM
1. (a) What is IBM’s “Smarter Planet”
business strategy? (b) How does this
strategy relate to IBM’s mission and
values?
(a) This knowledge can help reduce costs, cut waste,
improve efficiency, and increase productivity for
companies, industries, and cities.
(b) The “Smarter Planet” strategy clearly promotes
leadership in the delivery of information technologies
that provide valued customer solutions (mission) and
a commitment to the customers’ success through
meaningful innovation, and professional behavior.
2-7
VIDEO CASE 2
IBM
2. Conduct a SWOT analysis for IBM’s
Smarter Planet initiative. What are the
relevant trends to consider for the next
three to five years?
2-8
VIDEO CASE 2
IBM
3. (a) How can IBM communicate its
strategy to companies, cities, and
governments? How is Watson a part of
the communication strategy? (b) what
was the base for the changes in its
business model?
(a) Publicity events, such as the appearance of the IBM
computer named “Watson” on the TV game show
Jeopardy!
(b) IBM believes that the transformation will provide growth
for the company and its employees, success for its
customers, and improved value for its stockholders.
2-9
VIDEO CASE 2
IBM
4. What are the benefits of the Smarter
Planet initiative to
(a) society and (b) IBM?
(a) The solutions also help reduce costs, cut waste, improve efficiency,
and increase productivity for companies, industries, and cities.
(b) Growth for the company
2-10
VIDEO CASE 2
IBM
5. How should IBM measure the results of
the Smarter Planet strategy?
In terms of SCM, Inventory, Sales
2-11
STRATEGY IN VISIONARY ORGANIZATIONS
LO3
DASHBOARDS, METRICS, AND PLANS

Marketing Dashboard
The visual computer display of
essential marketing information

Marketing Metric
A measure of the value or trend of a
marketing activity or result
 data visualization

Marketing
Plan

Business
Plan
2-12
FIGURE 2-3 An effective marketing
dashboard like Sonatica’s helps managers
assess a business situation at a glance
Source: Dundas Data Visualization
2-13
FIGURE 2-3A Marketing Dashboard: Website
Traffic Sources
2-14
FIGURE 2-3B Marketing Dashboard: Sales
Performance by SBU
2-15
FIGURE 2-3C Marketing Dashboard: Monthly
Website Visits by State
2-16
LO3
USING MARKETING DASHBOARDS
How Well is Ben & Jerry’s Doing?
[Dollar Sales and Dollar Market Share]
Dollar Market Share (%) =
Ben & Jerry's Sales ($)
Total Industry Sales ($)
2-17
Marketing Plan
A marketing plan is a road map
for the marketing activities of an
organization for a specified future
time period, such as one year or
five years.
2-18
LO3
STRATEGY IN VISIONARY ORGANIZATIONS
TYPES OF MARKETING PLANS

Long-Range Marketing Plans

Annual Marketing Plans
2-19
Business Plan
A business plan is a road map for
the entire organization for a
specified future time period, such
as one year or five years.
2-20
FIGURE 2-B Elements in typical marketing
and business plans targeted at different
audiences
2-21
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 2, YOU SHOULD BE ABLE TO:
LO4
LO5
LO6
Discuss how an organization assesses
where it is now (3 things) and where it
seeks to be (2 Analysis).
Explain the three steps of the planning
phase of the strategic marketing
process.
Describe the elements of the
implementation and evaluation phases
of the strategic marketing process.
2-22
LO4
SETTING STRATEGIC DIRECTIONS
WHERE ARE WE NOW?

1) Competencies – answers for what do we do best?
•
Special capabilities (ex: world-class tech, training, service)
• Competitive Advantage – competencies should be
distinctive enough to provide __________
• Core Competencies

Core competencies are particular strengths relative to other
organizations in the industry which provide the fundamental
basis for the provision of added value.
2) Customers
•
How much a satisfying experience
they have?
•
Started as catalog retailer
2-23
LO4
SETTING STRATEGIC DIRECTIONS
WHERE ARE WE NOW?

3) Competitors
2-24
LO4
SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?
1) Business Portfolio Analysis (BCG Matrix)
A technique that mangers use to quantify performance measures and
growth targets of their firms’ strategic business units
High
Stars
Question Marks
SBU or
Offering?
Market Growth Rate

Cash Cows
Dogs
Low
High
Low
Relative Market Share
2-25
LO4
Kodak Consumer-Related Products
What SBU type in the BCG growth-share matrix?
Kodak digital camera
Kodak digital photo printer
Kodak film
Kodak Picture kiosk
2-26
FIGURE 2-4 BCG business portfolio
analysis for Kodak’s consumer SBUs for
2003 (red circle) and 2012 (red arrow)
①
③
Kodak
film
Kodak digital
photo printer
②
④
Kodak digital
camera
Any patterns?
Kodak
Picture kiosk
2-27
Founded in 1880
● In 1976, 90% of film and 85% of camera
● In the early 1990’s, one of the most valuable companies
● Until 2000, depended on its traditional film
●
1. Film: $8bil cash cow in 2003 to 500mil in 2009 
vanish in 2012
2. Digital camera: invented but no exploit, smart
phone  dog
3. Printer: despite online photo sharing, still Kodak believe ? will
become Star
4. Self-service kiosk: potential ? Or dog
●
In 2012, filed for bankruptcy protection: phasing out digital cameras,
pocket video camera due to the growth of ?
LO4
SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?

Diversification Analysis
• Market Penetration
• Market Development
• Product Development
• Diversification
2-29
FIGURE 2-5 Four alternative market-product
strategies for Ben & Jerry’s to expand sales
revenues using diversification analysis
Which one is Risky? Which is not?
2-30
LO5

THE STRATEGIC MARKETING PROCESS
Strategic Marketing Process
• How Do We Allocate
Our Resources to Get to
Where We Want to Go?
• How Do We Convert
Our Plans into Actions?
• How Do Our Results Compare
With Our Plans and Do
Deviations Require New Plans?
2-31
FIGURE 2-6 The strategic marketing process has
three phases: 1) planning, 2) implementation,
and 3) evaluation
2-32
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Step 1: Situation (SWOT) Analysis
• Situation Analysis
• SWOT Analysis
 Strengths
 Weaknesses
 Opportunities
 Threats
2-33
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Step 1: Situation (SWOT) Analysis
• SWOT Analysis Study
 Identify Industry Trends
 Analyze Competitors
 Assess the Organization
 Research Present and
Prospective Customers
2-34
FIGURE 2-7 Ben & Jerry’s SWOT analysis
that serves as the basis for management
actions regarding growth
2-35
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Step 1: Situation (SWOT) Analysis
• SWOT Analysis Actions
 Build on a Strength
 Correct a Weakness
 Exploit an Opportunity
 Avoid a DisasterLaden Threat
2-36
VIDEO CASE 2
IBM
2. Conduct a SWOT analysis for IBM’s
Smarter Planet initiative. What are the
relevant trends to consider for the next
three to five years?
2-37
VIDEO CASE 2
IBM
Favorable
Internal
External
Unfavorable
Strengths
Weaknesses
• Global brand name.
• New technologies and patents.
• A planning process that included online
discussions among 50,000 employees.
• A clear concise mission statement.
• IBM’s size may make change difficult.
• Products such as PCs and hard disk drives are
becoming commodities and are not customizable.
Opportunities
Threats
• Growth markets such as China, India,
Brazil and Africa.
• Business analytics and optimization.
• Cloud and smarter computing.
• Connectivity.
• Shift to custom-made technological solutions.
• Demand for Smarter Planet solutions will depend
on interest in change rather than just reaction to
problems.
• Demonstrating success will require accurate and
timely measurement of relevant outcomes.
2-38
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Step 2: Market-Product Focus and
Goal Setting
• Market Segmentation
• Points of Difference
=Unique Selling Proposition
2-39
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Example: Medtronic’s Pacemaker
• Set Marketing & Product Goals
• Select Target Markets
• Find Points of Difference
• Position the Product
2-40
LO5
THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE

Step 3: Marketing Program
• Product Strategy
• Price Strategy
• Promotion Strategy
• Place (Distribution) Strategy
2-41
FIGURE 2-8 The four Ps elements of the
marketing mix must be blended to produce
a cohesive marketing program
2-42
FIGURE 2-E Results of good and bad
marketing planning and implementation
2-43
LO6
THE STRATEGIC MARKETING PROCESS
THE IMPLEMENTATION PHASE

1) Obtaining Resources - ?, from where

2) Designing the Marketing Organization – a
typical structure

3) Defining Precise Tasks, Responsibilities, and
Deadlines

4) Executing the Marketing Program
• Marketing Strategy
The means by which a
marketing goal is to be
achieved: target market +
MKT program
• Marketing Tactics
Detailed day-to-day
operational decisions
essential
2-44
FIGURE 2-9 Organization of a typical
manufacturing firm, showing a breakdown
of the marketing department
2-45
LO6
THE STRATEGIC MARKETING PROCESS
THE IMPLEMENTATION PHASE

Defining Precise Tasks,
Responsibilities, and Deadlines
• Action Item List – the outcome of each
of the meeting
• Program Schedules
• Gantt Chart
2-46
FIGURE 2-G Tasks and time needed to
complete a term project
2-47
FIGURE 2-10 Gantt chart for scheduling a
term project that distinguishes sequential
and concurrent tasks
2-48
LO6
THE STRATEGIC MARKETING PROCESS
THE IMPLEMENTATION PHASE

Improving Implementation of Marketing
Programs
• Communicate Goals and The Means of
Achieving Them
• Have a Responsible Program Champion
Willing to Act
• Reward Successful Program
Implementation
2-49
LO6
THE STRATEGIC MARKETING PROCESS
THE EVALUATION PHASE

Comparing Results with
Plans to Identify Deviations
• Planning Gap = growth target – trend
extrapolation (V shape)

Acting on Deviations
• Exploiting a Positive Deviation
• Correcting a Negative Deviation
2-50
FIGURE 2-H The evaluation phase of the
strategic marketing process ties results and
actions to goals, often using marketing
metrics and dashboards
2-51
FIGURE 2-11 The evaluation phase requires
that Kodak compare actual results with
goals to identify and act on deviations to
fill in the “planning gap” by 2012
2-52
LO6
THE STRATEGIC MARKETING PROCESS
THE EVALUATION PHASE

In response to the negative and positive
deviations from targets, Kodak task force
might have considered the following in

Exploiting a positive deviation – new line of
digital camera #1 in US  quickly launch in
international market

Correcting a negative deviation – if
international sales were not good, Kodak might
have reconsidered it pricing or distribution
strategies
2-53
Business Plan
A business plan is a road map for
the entire organization for a
specified future time period, such
as one year or five years.
2-54
Business Portfolio Analysis
Business portfolio analysis is a
technique that managers use to
quantify performance measures and
growth targets to analyze its clients’
strategic business units (SBUs) as
though they were a collection of
separate investments.
2-55
Diversification Analysis
Diversification analysis is a
technique that helps a firm search
for growth opportunities from
among current and new markets
as well as current and new
products.
2-56
Strategic Marketing Process
The strategic marketing process
is the approach whereby an
organization allocates its
marketing mix resources to reach
its target markets.
2-57
Situation Analysis
A situation analysis involves
taking stock of where the firm or
product has been recently, where
it is now, and where it is headed
in terms of the organization’s
marketing plans and the external
factors and trends affecting it.
2-58
SWOT Analysis
A SWOT analysis is an acronym
describing an organization’s
appraisal of its internal Strengths
and Weaknesses and its external
Opportunities and Threats.
2-59
Market Segmentation
Market segmentation involves
aggregating prospective buyers
into groups, or segments, that
(1) have common needs and
(2) will respond similarly to a
marketing action.
2-60
Points of Difference
Points of difference are those
characteristics of a product that
make it superior to competitive
substitutes.
2-61
Marketing Strategy
Marketing strategy is the means
by which a marketing goal is to be
achieved, usually characterized
by a specified target market and
a marketing program to reach it.
2-62
Marketing Tactics
Marketing tactics are the detailed
day-to-day operational decisions
essential to the overall success of
marketing strategies.
2-63