Principles of Marketing Chapter 2 (Part 1)
- 1. Copyright © 2009 Pearson Education, Inc. Chapter 1- slide 1 Publishing as Prentice Hall Chapter Two
- 2. •An operation intended to carry out specific program objectives •A higher calling or meaning, a reason for being. Often this is the reason the company was first created – to fill a need in the marketplace or society • A concise statement of business strategy developed from the customer’s perspective and it should be aligned with the company’s vision •The mission should answer three key questions •What is it that we do? •How do we do it? •For whom are we doing it? Mission
- 3. • Vision is a clear, comprehensive ‘photograph’ of an organization at some point in the future. It provides direction because it describes what the organization needs to be like, to be successful within the future. • If anybody does not know where are you going, he/she probably is not going to get there. Will be lost somewhere. • Identifying where one wants to go in relation to where he is, is the key to identify the areas that need to be improved. Vision
- 4. What’s the difference? • A mission statement concerns what an enterprise is all about. • A vision statement is what the enterprise wants to become.
- 5. •Goals are an expected or desired outcome of a planning process. Goals are usually broad, general expressions of the guiding principles and aspirations of a community. •Objectives are precise targets that are necessary to achieve goals. Objectives are detailed statements of quantitatively or qualitatively measurable results the plan hopes to accomplish. Goals & Objectives
- 6. Values Organizational values drive the way we influence, how we interact with each other, and how we work together to achieve results. Organizational values are not descriptions of the work we do or the strategies we employ to accomplish our mission, they are the unseen drivers of our behavior, based on our deeply held beliefs that drive decision-making. The collective behaviors of all employees become the organizational culture – “the way we do things around here” – fulfilling the organization's promise to stakeholders. Organizational values exist in the hands, minds and hearts of employees or not at all.
- 8. http://www.bat.com/strategy ‘’ At the heart of our strategy is our vision to be ‘the world’s best at satisfying consumer moments in tobacco and beyond ‘’
- 9. Examples Company: Tesla Mission: To accelerate the world’s transition to sustainable energy. Vision: To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles. Why it works: What better word than “accelerate” in a mission to serve as the driving force behind what Tesla does. While boldly stating “best in the century” reflects loftier dreams in the vision.
- 10. Examples Company: Google Mission: To organize the world’s information and make it universally accessible and useful. Vision: To provide access to the world’s information in one click. Why it works: Google may seem complex, but its mission clarifies that organization and accessibility are what they offer. Their vision statement is about improving accessibility in the future “in one click.”
- 11. Examples Company: Facebook Mission: To give people the power to build community and bring the world closer together. Vision: People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them. Why it works: Facebook’s mission is focused on the community their platform promises. Their vision talks about why community matters, interweaving how they will “bring the world closer together” from the mission.
- 12. The mission of the library media program is to ensure that students and staff are effective users of ideas and information. The school library media specialist (SLMS) empowers students to be critical thinkers, enthusiastic readers, skillful researchers, and ethical users of information Improve the media center learning environment so that it is more conducive to constructive student activity by providing more adult supervision and assistance Objectives: A. Develop a plan for recruiting volunteers, including incentives and guidelines B. Develop a training program for media center volunteers C. Implement plan and assess after one year Examples The University library will be the hub and academic town square of the university by being an essential component of the academic and creative life of the institution.
- 13. Offering attractive payment options for customers designing hassle-free customer interaction processes creating attractive customer interfaces selecting employees with suitable knowledge and skills to serve customers sensitive to the ethical concerns of customers when they source from abroad Marketing is verything McKenna, R. (1991). Marketing is everything. Harvard Business Review, 69(1), 65–79.
- 14. What is Strategy? A strategy is simply a plan chosen to bring about a desired future. The key word here is chosen, since strategy always involves choice: if there is no choice, we need no strategy. The three central questions to generate strategic choices or options are straightforward: • Where do we compete? • How do we compete? • With whom do we need to develop key relationships?
- 15. Where do we compete? - not only refers to the geographical market area, but also to the choice of technology (e.g., different operating systems) or the choice of customers (business-to-consumers or business- to-business). How do we compete? - not only revolves around the analysis of competitive positioning and the generation of competitive advantage, but also forces marketers to question the vision and mission of their company, including its fundamental ethical values and corporate social responsibility.
- 16. With whom do we need to develop key relationships? - a company has to forge key relationships if it wants to deliver customer value. It might have to work with competitors (co-opetition) and it will certainly need collaborators (e.g., distributors, agents, joint ventures), suitable managers, employees and, last but not least, the right customers.
- 21. Strategic Planning (formal definition)- The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. Strategic planning is a systematic process whose purpose is to map out how the enterprise should get from where it is today to the future it envisions. Strategic Planning-
- 25. Product mix length refers to the total number of items a company carries within the product lines. For instance, Colgate carries several different brands within each line. In Colgate’s oral care product line, several different categories of toothpastes can be identified (Same in Sensodyne’s case as well). A car manufacturer may have several series in its car product line, such as 3-series, 5-series, and 7-series. Product mix width is all about the number of different product lines the company carries
- 27. Consistency of a product mix completes our four product mix decisions. Consistency refers to how closely related the product lines are in terms of end use, production requirements, distribution channels or any other way. In Colgate’s case, we can observe a rather strong consistency, which is based on the fact that all product lines constitute consumer products and go through the same distribution channels. The vehicle manufacturer also has a relatively consistent product mix, since both product lines contain consumer-vehicles, can be sold in the same way etc. product mix depth refers to the number of versions offered for each product in the product line. For instance, Colgate toothpastes come in several tastes and variations. The vehicle manufacturer’s 3-series in the car product line may be offered in several versions: convertible, coupé, sedan, and so further.
- 28. The four product mix decisions are more than a strategic issue that has some impact on the company’s success. To be precise, the product mix is one of the most critical instruments the company has. It is the center of its offerings. Therefore, the right product mix decisions should be taken, in line with customer needs. Since customer needs may change rapidly, product mix decisions need to be taken more than once at the beginning – product mix decisions are part of an ongoing process. Only if product mix decisions are taken on an ongoing basis, maximum value for customers can be created. https://marketing-insider.eu/product-mix-decisions/
- 31. Strategic Business Unit: A strategic business unit, popularly known as SBU, is a fully-functional unit of a business that has its own vision and direction. Typically, a strategic business unit operates as a separate unit, but it is also an important part of the company. It reports to the headquarters about its operational status. A strategic business unit or SBU operates as an independent entity, but it has to report directly to the headquarters of the organization about the status of its operation. It operates independently and is focused on a target market. It is big enough to have its own support functions such as HR, training departments etc.
- 32. There are several benefits of having an SBU. This principle works best for organizations which have multiple product structure. The best example of SBU are companies like Proctor and Gamble, LG etc. These companies have different product categories under one roof. For example, LG as a company makes consumer durables. It makes refrigerators, washing machines, air-conditioners as well as televisions. These small units are formed as separate SBUs so that revenues, costs as well as profits can be tracked independently. Once a unit is given an SBU status, it can make its own decisions, investments, budgets etc. It will be quick to react when the product market takes a shift or changes start happening before the shift happens.
- 35. •SBU is a separate business or a group of businesses that is owned by a company that are responsible for autonomous planning. •Strategic business units do not have the same set of rival companies as the others. •The head of a strategic business unit will be responsible for the profitability, performance, and strategic planning of the specific unit. •SBUs work in different markets and target different groups of customers. SBU Characteristics:
- 36. •Strategic business units simplify the strategic management process. •Strategic business units help a company to improve coordination. •Strategic business units can channel accountability in an organizations. •Setting up strategic business units is simple and easy when it comes to monitoring and checking. •SBUs do help a company to focus more effectively. SBU Advantage :
- 37. •Sometimes it is hard to communicate with upper management in case of having too many SBUs. •Strategic business units can result in internal tension, which is directly made by access to sources of funding. •Slow response time to get approval. •Increase expenses. •Too many close SBUs may result in cannibalization. SBU Disadvantage:
- 38. Different types of organizational structure:
- 39. Boston Consulting Group Matrix is developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s. According to this technique, business or products are classified as low or high performance depending upon their market growth rate & relative market share often known as growth share matrix. It is portfolio planning model which is based on the observation that company’s business unit can be classified in to four categories .
- 40. Main steps of bcg matrix • Identifying & dividing a company into SBU. • Assessing & comparing the prospects of each SBU according to two criteria- 1) SBU’s relative market share 2) Growth rate of SBU’s industry • Classifying the SBU’s on the basis of BCG matrix Developing strategic objective for each SBU.
- 41. The bcg growth-share matrix
- 42. Relative market share & market growth To understand the Boston Matrix you need to understand how market share & market growth interrelated. Relative Market Share On the Vertical axis, relative market share serves as a measure of company strength in the future. Market share is the percentage of the total market that is being serviced by your company measured either in the revenue terms or unit volume terms.
- 43. Relative market share Business Unit Sales this year RMS :- Leading rival sales this year The higher your market share, the higher proportion of the market you control.
- 44. Market Growth Rate Market Growth is used as a measure of a market’s attractiveness. Individual Sales this year – Individual sales last year MGR = Individual Sales last year Markets experiencing high growth are ones where the total market share available is expanding & there is plenty of opportunity for everyone to make money.
- 46. Stars (high growth, high market share) • Stars are leader in business • They also require heavy investment to maintain it’s large market share and their rapid growth • It leads to large amount of cash consumption & cash generation. • Attempts should be made to hold the market share otherwise the star will became a cash cow.
- 47. Cash cows ( low growth, high market share) • Cash cow represent the division within a company that has a large market share within a mature industry. • They are often foundation of the company & often the stars of yesterday. • They generate cash and those cash are used by companies to pay the bill and support other SBUs that need investment. • They are located in an industry that not growing or declining
- 48. Question marks (high growth, low market share) • Most business start of as question marks • They will absorb great amount of cash to hold their share, let alone increase it • Question marks have potential to become star & evenly cash cow but can also become dog. Thus, management needs to think hard that which one it should focus on to build into stars or which one to phase out • Question marks must be analyzed carefully in order to determine whether they worth the investment required to grow market share
- 49. Dogs (low growth, low market share) • Dogs have little market share and low growth market and thus neither generate nor consume a large amount of cash • Dogs are the cash traps because they they tie up the money in a business that has little potential • Business is situated at a declining stage • Dogs should be disposed of unless they somehow contribute to the sales of other brands/products within the portfolio
- 51. Dogs- The big multi-part desktop is fading away. Hard drive based iPods peaked a while ago as well and there are just so may competitors that can create a simple product such as an i pod now. Apple's Macs could be considered in the dog category as Apple is not a market leader in this market segment as there competitors have the desktop market in a monopoly. Cash Cows-The Mac Books are the portables of choice right now. The all-in-one i Mac is in that cash cow place. They make a lot of them, but computing is quickly shifting to portable and mobile so they are also in the dog section. Star -The iPhone and i Pad are rising stars. They can’t make enough of them. These products are so successful that their growth potential is really unknown. Question Mark- Apple TV makes a bit of money, but it’s not reaching it’s potential. If Apple can solve a few ecosystem problems, they could really own the TV space. There are tons of rumors of an Apple TV product that might just maybe dominate like the iPod/iPhone/i Pad https://strategicplanning13.weebly.com/bcg-matrix.html
- 52. Why bcg matrix To asses • Profile of product /business • Cash demands of products • The development cycle of product • Resource allocation & divestment decisions
- 53. Benefits of BCG Matrix • BCG matrix is simple & easy to understand • It helps to quickly & simply screen the opportunity open to you & help you think about how you can make the most of them. • The BCG-Matrix is helpful for managers to evaluate balance in the companies' current portfolio of Stars, Cash Cows, Question Marks and Dogs. • It is used to identify how corporate cash resources can best be used to maximize company’s future growth & profitability.
- 54. Limitation of BCG Matrix • BCG matrix uses only two dimensions relative market share & market growth rate. • Problem of getting data on market share & market growth • High market share does not mean profits all time. • Business with low market share can be profitable too.
- 56. Google has about 250+ products and services? In fact, even Google’s own products page is not listing all their products. - > Web based + Developer tools + Operating system + Desktop / Mobile Apps
- 58. Cash cows ( milk to fund other business)
- 59. Question Marks
- 60. Dogs