Transcript Integrating the Analysis: Boxes and Things Putting the Analysis to

Integrating the Analysis:
Boxes and Things
Putting the Analysis to Use:
Generating Strategic Options
The Marketing Audit
Company strengths
Company performance
Customer needs
Market needs
Corporate Objectives
Market characteristics
Company needs
Market performance
The Role of Portfolio Models
We summarise the performance of
product-market combinations on two
key criteria – market attractiveness and
competitive capabilities.
 We look at overall performance and that
of different units within the firm
 We then introduce dynamics into the
equation (potential and trends)
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The need to understand the overall
corporate strategic context
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Ensure sum of parts achieves desired total
Efficiently check whole exploits opportunities
Effectively ensure whole covers vulnerability
Maximize potential synergy between
products
Minimize conflict between products
Problem ch ildren
High
S tars
Cash cow s
D ogs
Low
Market g row th rate
The Boston Consulting Group
Matrix
10
High
1.0
Low
Comp etitive p os ition (ratio of s hare to
share of largest competitor)
0.1
Because BCG type models have limitations,
new measures of company strengths and
market opportunity have been developed:
The Directional Policy Matrix
(or the GE-McKinsey Matrix)
Bu sines s sector prospects
U nattractive
Withdraw al
Average
A ttractive
D oub le
or quit
Phased
w ith draw al
Comp any's comp e titive capabilities
Weak
Proceed
w ith care
Phased
w ith draw al
Proceed
w ith care
Try
h ard er
Average
Grow th
Cash
generation
Leader
Grow th
S trong
Leader
Steps in Building a
Directional Policy Matrix
1. Understand what you want out of a market.
What features will help you achieve your
corporate objectives?
(The Elements of Market Attractiveness)
2. Understand what the market wants from you.
What does a company in this market have to do
well to succeed?
(The Elements of Competitive Capability)
Building a DPM (contd.)
3. Determine the Relative Importance of the
Elements of Market Attractiveness. Determine
the Relative Importance of the Elements of
Competitive Capability.
4. Identify the units which you are going to
analyse. (They can be products, lines,
categories, market segments, SBUs, etc.). We
will call them products.
Building a DPM (contd.)
5. For each product determine how it rates on
each element of market attractiveness. (How
effective is it in meeting the various aspects of
your corporate objectives?)
6. For each product determine how it rates on
each element of competitive capability. (How
well does it deliver on the criteria important to
meeting consumer needs?)
Building a DPM (contd.)
7. Work out the overall market attractiveness and
competitive capability of each product by
adding up the elements (weighted by their
importance if used).
8. Plot the products on the Directional Policy
Matrix.
Uses of a Directional Policy Matrix
Assessing Portfolio Balance
1.
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Number of Market Leaders
» (Long term robustness)
•
Number of Cash Generators
» (Ability to sustain growth)
•
Number of Double or Quits
» (Vehicles for future growth)
•
Assessing the Need for New Products
Uses of a Directional Policy Matrix
2. Using the DPM to Determine Product
Potential
•
Trends in DPM Positions
» (Repeat in 3 years time)
•
Establishing Product Potential
» (How attractive could the market be? How capable could
we be?)
•
The Cost of Product Potential
» (Cost to realise 20, 50, 80, 100% of a product’s potential.)
Uses of a Directional Policy Matrix
3. Using DPMs to Define Product Roles
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Given its DPM position, trends, and
potential what do we want this brand to
do for us, and for the consumer?
What should be the customer promise
(core benefit proposition) so it does this
for the consumer?
What should be the company support so
that the product realises its potential for
the company?
Uses of a Directional Policy Matrix
4. Construct your competitor’s DPM.
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What is important to them?
How well are they doing?
What are their corporate goals?
What will they do next?
Improving product performance
1 The Role of the Product in the Portfolio
·
How can we focus and improve what this product
does for the company? (e.g., minimize cannibalization,
increase defensive cover, increase margins and profit,
product line extend).
2
Success of Product in Meeting Consumer
Needs
·
How can we focus and improve what this product
does for the consumer? (The Product Promise) (e.g.,
the core benefit proposition, features to support the
core benefit proposition, teach, communication).
Putting the Analysis to Use:
Generating Marketing Options
Review of course development
Having understood
where we are
We are going to look
at how we can stay
there and move
further ahead
Using the
marketing mix
and account
management
strategies
P
Strengths
Objectives
Needs
Market
characteristics
Growth
A
Defense
R
M
P
P
P
Outline
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Dynamics and Product Life Cycles
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Threats and Means of Defense
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Opportunities and Methods of Growth
Product Life Cycles
The stages of the product life cycle
summarize the state of customer knowledge
and the nature of competition
Sales
Time
Intro
Growth
Maturity
Decline
Product life cycles
Many marketers believe that sales of
the product start low, grow gradually
and then quickly, before flattening out
and declining.
 The product life cycle is
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– Intuitive
– Widely believed
– Simple, but also potentially problematic
Analysis of the Product Life
Cycle
A better question than “Do we believe in
the product life cycle?” is “What is
driving the product life cycle?”
 Internal factors driving the product life
cycle (changing strengths, focus)
 External factors (changing needs,
competitors, channels, climate)
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The dual marketing challenge:
Objective
Performance measure
(share, profit, revenue,
etc.)
Opportunities for
Growth
Forecast, given
initiatives
Threats
Requiring
Defense
Current
position
Natural trend
Time
The dual marketing challenge in
practice
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Establish current position
(the marketing audit)
Evaluate planned initiatives
(forecast given initiatives)
Review threats in external environment
(understand natural trend)
Identify potential opportunities
(plan growth)
Reviewing Threats in the
Environment
Strengths And Weaknesses
Customer Needs
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Ensure strengths are
refreshed and updated
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Monitor changing tastes and
implications
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Cover skill gaps and
weaknesses
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Check market coverage and
segment needs
Corporate Objectives
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Keep culture relevant
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Maintain mission
Market characteristics
Monitor competitive climate
 Build channel dependence
 Review economic and
regulatory trends
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Market Defense
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Identify likely sources of attack and the
competitive basis where they will win
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Develop defensive strategies:
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Preemptive (good intelligence, innovative)
Fast follower (good intelligence, fast)
Second but better (strong differentiation)
Breakout strategies (imagination, flexibility)
Ideas for developing defense
strategies
Eternal vigilance (Andy Grove: “Only the
Paranoid Survive”)
 Dictate the battleground (rarely play on
price and if so use a flanker)
 Judge outcomes relative to alternatives,
not the past
 Skate to where the puck is going to be
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Reviewing Opportunities in the
Environment
Strengths And Weaknesses
Customer Needs
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Exploit and harness strengths
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Develop new applications
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Extend capabilities
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Leverage customer base
Corporate Objectives
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Establish and apply growth
criteria
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Develop and implement a
rating system
Market characteristics
Imitate competitive best
practice
 Increase channel reach and
power
 Identify good environments
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Growth strategies: Ansoff Matrix
Existing
Products
New
Products
Existing
Markets
Penetration
Product
Development
New
Markets
Market
Diversification
Development
Current Marketing Issues in Growth
Strategies
Existing
Products
New
Products
Existing
Markets
Cross selling Order of entry
Customer
Brand Equity/
satisfaction Extensions
New
Markets
Global
Diffusion of
marketing
innovations
Susceptibility
Ideas for identifying growth
opportunities
Look for places to add value
(or reduce cost)
 Opportunities to add value come from
the marketing audit (and its dynamics)
or from marketing implementation
 Two good questions:
Is there a gap in the market?
Is there a market in the gap?
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Questions?