Marketing Strategy
Table of Contents
Article 2A: BCG Growth-Share Matrix.....................................................................................3
Article 2B: The Ideal Brand Portfolio.......................................................................................4
Lecture 2: Principles of Resource Allocation..........................................................................5
2.1 Two Dimensions of RA (Resource Allocation)...............................................................5
2.2 Horizontal Resource Allocation = Brand Portfolio Management....................................6
2.2.1 The Branded House...............................................................................................6
2.2.2 The House of Brands..............................................................................................6
2.2.3 Disadvantages of Large Brand Portfolios?.............................................................6
2.2.4The Boston Consulting Group (BCG) Growth-Share Matrix........................................7
2.2.5 The Brand Renewal Matrix (the second tool for resource allocation) see article 2B. .9
Step 1: Identity Brand Portfolio........................................................................................9
Step 2: Assess Brand Contributions................................................................................9
Step 3: Assess Market Position.......................................................................................9
Step 4: Sort by Strategic Imperative..............................................................................10
2.3 Vertical Resource Allocation.......................................................................................10
Where and When: The Buying Process............................................................................10
A Generic Funnel: Marketing Mix (4Ps).........................................................................11
So How Much Should I Spend on Advertising?.................................................................11
Optimal Resource Allocation: Benchmark.........................................................................12
So How Much Should I Spend on Salesforce/CRM?.........................................................12
Marketing Mix Elasticities..................................................................................................12
Summary.......................................................................................................................... 13
So… Where Should I Invest?............................................................................................13
Why Plug the Gaps?.....................................................................................................13
What if Elasticities of Different Marketing Mix Instruments Differ in Size?.....................13
Big Picture........................................................................................................................ 13
Article 3A: Three Questions You Need to Ask About Your Brand.........................................14
Article 3B: What is Strategy..................................................................................................15
Article 3C: Strategic Insight in Three Circles.........................................................................16
Lecture 3: Market-Driven Strategies through Determining Optimal Position – Toolbox.........17
Lecture 4: Coffee Case.........................................................................................................20
Summary of the case:........................................................................................................... 22
,Lecture 5: The LGE Case.....................................................................................................23
Summary of the case:........................................................................................................... 27
Lecture 6.............................................................................................................................. 29
Lecture 8: TomTom case......................................................................................................32
Lecture 9: Renoon case....................................................................................................... 38
Lecture 10: Cialise case.......................................................................................................39
,Article 2A: BCG Growth-Share
Matrix
● A matrix used to help corporations to analyze their business
units, that is, their product lines.
● Products are ranked across relative market share and growth
rate. There are 4 categories a product, or unit, can be:
● Cash Cows: Low Market Growth, High Market Share. When
the industry is slowly growing and you have high market
share, cash cows generate excess cash, more than is needed
to maintain them, as they can be milked for continuous profit,
with very little investment.
○ Staid and boring in a “mature” market. You
have a big cut of a market that isn’t changing
any time soon → cha-ching.
○ No investment, because it’s wasted in a slow industry.
○ Milked cash can be used to fund stars and problem children, which should evolve into
cash cows later.
● Dogs: Low Market Growth, Low Market Share.
You have a small cut of a slow market. Easy to maintain, and typically break even, generating
just enough cash to maintain itself/its market share.
○ Social benefit of providing jobs, possible synergies to help other business units.
○ But accounting POV, worthless - depressing return-on-assets ratio (which shows how
well the company is being managed).
○ Ideally should be sold off once short-time harvesting has been maximized (don't keep
them around)
● Question mark/Problem Child: High Market Growth, Low Market Share
The starting point for most units, with the potential to go either way - the market is growing,
and they could climb to stars, and eventually cash cows when the market slows, or if they fail
to become market leaders, they'll drain cash until they become dogs when the market slows.
○ If the problem child is unlikely to become a star, reposition its resources.
○ Require careful analyse to determine if they are worth the investment to grow market
share, or should be binned.
● Stars: High Market Growth, High Market Share:
● Problem children with market-leading or niche-leading trajectory, becoming a market share
front-runner in a high-growth sector, having a: monopolistic product, or a dominant USP,
novel product, prestigious promotion, customer loyalty (company backed/forced loyalty by
gangs), innovation, or oligopoly.
○ Hoping to be cash cows.
○ Need high funding to fight competitors and maintain growth rate. if the market slows,
and they’re still a leader, they become cash cows - if not, they become dogs.
● All business units end up as Cash Cows or Dogs. Most units start as problem children, then
stars, then cash cows when the market slows, until they turn into a dog.
● “Only a diversified company with a balanced portfolio can use its strengths to truly capitalize
on its growth opportunities. The balanced portfolio has:”
○ Stars whose high share and high growth assure the future;
○ Cash Cows that supply funds for future growth; and
○ Problem children are to be converted into stars with the added funds.
, ○ This is to balance cash flows. High growth requires cash input to grow. Low growth
should generate excess cash. Both kinds are needed simultaneously.
● Relative Market Share: Indicates cash generation, because the higher the share, the more
cash is generated. Because of economies of scale, earnings grow faster the higher the share.
○ The exact measure is relative to your largest competitor - relative position, not
absolute.
○ Rule of 123 - the most stable and profitable position is a share double that of the 2nd
strongest brand, and triple that of the 3rd strongest brand.
○ Higher market share means more experience curve benefits, which means a cost-
leadership advantage.
○ Also shows information other than cash - market positioning vs competitors, potential
future avenues, and what marketing activities might be effective.
● Market Growth Rate: Market growth is bought with investment, that eventually (hopefully)
turns into profits. High growth rate indicates demand of investment. Safe level is 10% per
year, above that is significant growth (and needs more cash).
● Mistakes:
○ not always usable, like fast-moving consumer goods.
○ cash cows shouldn't always be milked to fund others, that money needs to
be used to defend the cash cows' position too. Milking the cow too much
may get it in trouble → turning it into dogs.
Article 2B: The Ideal Brand Portfolio
The article "Achieving the Ideal Brand Portfolio" by Sam Hill, Richard Ettenson, and Dane
Tyson, published in the MIT Sloan Management Review, outlines a structured, five-step
approach to effectively manage and optimize brand portfolios. The authors argue that many
companies face challenges with brand portfolio "bloat," where resources are spread thin
across too many brands, leading to inefficiencies and market confusion.
The five-step framework for brand portfolio renewal includes:
1. Understanding the portfolio/Identifying Brands for Review: Start with a comprehensive
list of brands, including all trademarks and partner brands, to determine which brands
warrant further review.
2. Assessing Brand Contribution: Evaluate each brand’s financial impact, including hidden
costs and benefits, to categorize brands based on their profitability and overhead.
3. Assessing Market Position: Assess the current market traction and momentum of each
brand to understand its competitive position and future growth potential.
4. Identifying Problem and Opportunity Brands: Classify brands into categories such as
"power," "sleeper," "soldier," or "discard," to determine specific action plans for each brand.
5. Developing a Renewal Plan: Create an overall strategy to strengthen the portfolio,
focusing resources on high-potential brands while retiring or repositioning others as needed.
The framework emphasizes systematic evaluation and strategic planning to maintain an
effective brand portfolio that enhances market position and improves resource allocation.
Table of Contents
Article 2A: BCG Growth-Share Matrix.....................................................................................3
Article 2B: The Ideal Brand Portfolio.......................................................................................4
Lecture 2: Principles of Resource Allocation..........................................................................5
2.1 Two Dimensions of RA (Resource Allocation)...............................................................5
2.2 Horizontal Resource Allocation = Brand Portfolio Management....................................6
2.2.1 The Branded House...............................................................................................6
2.2.2 The House of Brands..............................................................................................6
2.2.3 Disadvantages of Large Brand Portfolios?.............................................................6
2.2.4The Boston Consulting Group (BCG) Growth-Share Matrix........................................7
2.2.5 The Brand Renewal Matrix (the second tool for resource allocation) see article 2B. .9
Step 1: Identity Brand Portfolio........................................................................................9
Step 2: Assess Brand Contributions................................................................................9
Step 3: Assess Market Position.......................................................................................9
Step 4: Sort by Strategic Imperative..............................................................................10
2.3 Vertical Resource Allocation.......................................................................................10
Where and When: The Buying Process............................................................................10
A Generic Funnel: Marketing Mix (4Ps).........................................................................11
So How Much Should I Spend on Advertising?.................................................................11
Optimal Resource Allocation: Benchmark.........................................................................12
So How Much Should I Spend on Salesforce/CRM?.........................................................12
Marketing Mix Elasticities..................................................................................................12
Summary.......................................................................................................................... 13
So… Where Should I Invest?............................................................................................13
Why Plug the Gaps?.....................................................................................................13
What if Elasticities of Different Marketing Mix Instruments Differ in Size?.....................13
Big Picture........................................................................................................................ 13
Article 3A: Three Questions You Need to Ask About Your Brand.........................................14
Article 3B: What is Strategy..................................................................................................15
Article 3C: Strategic Insight in Three Circles.........................................................................16
Lecture 3: Market-Driven Strategies through Determining Optimal Position – Toolbox.........17
Lecture 4: Coffee Case.........................................................................................................20
Summary of the case:........................................................................................................... 22
,Lecture 5: The LGE Case.....................................................................................................23
Summary of the case:........................................................................................................... 27
Lecture 6.............................................................................................................................. 29
Lecture 8: TomTom case......................................................................................................32
Lecture 9: Renoon case....................................................................................................... 38
Lecture 10: Cialise case.......................................................................................................39
,Article 2A: BCG Growth-Share
Matrix
● A matrix used to help corporations to analyze their business
units, that is, their product lines.
● Products are ranked across relative market share and growth
rate. There are 4 categories a product, or unit, can be:
● Cash Cows: Low Market Growth, High Market Share. When
the industry is slowly growing and you have high market
share, cash cows generate excess cash, more than is needed
to maintain them, as they can be milked for continuous profit,
with very little investment.
○ Staid and boring in a “mature” market. You
have a big cut of a market that isn’t changing
any time soon → cha-ching.
○ No investment, because it’s wasted in a slow industry.
○ Milked cash can be used to fund stars and problem children, which should evolve into
cash cows later.
● Dogs: Low Market Growth, Low Market Share.
You have a small cut of a slow market. Easy to maintain, and typically break even, generating
just enough cash to maintain itself/its market share.
○ Social benefit of providing jobs, possible synergies to help other business units.
○ But accounting POV, worthless - depressing return-on-assets ratio (which shows how
well the company is being managed).
○ Ideally should be sold off once short-time harvesting has been maximized (don't keep
them around)
● Question mark/Problem Child: High Market Growth, Low Market Share
The starting point for most units, with the potential to go either way - the market is growing,
and they could climb to stars, and eventually cash cows when the market slows, or if they fail
to become market leaders, they'll drain cash until they become dogs when the market slows.
○ If the problem child is unlikely to become a star, reposition its resources.
○ Require careful analyse to determine if they are worth the investment to grow market
share, or should be binned.
● Stars: High Market Growth, High Market Share:
● Problem children with market-leading or niche-leading trajectory, becoming a market share
front-runner in a high-growth sector, having a: monopolistic product, or a dominant USP,
novel product, prestigious promotion, customer loyalty (company backed/forced loyalty by
gangs), innovation, or oligopoly.
○ Hoping to be cash cows.
○ Need high funding to fight competitors and maintain growth rate. if the market slows,
and they’re still a leader, they become cash cows - if not, they become dogs.
● All business units end up as Cash Cows or Dogs. Most units start as problem children, then
stars, then cash cows when the market slows, until they turn into a dog.
● “Only a diversified company with a balanced portfolio can use its strengths to truly capitalize
on its growth opportunities. The balanced portfolio has:”
○ Stars whose high share and high growth assure the future;
○ Cash Cows that supply funds for future growth; and
○ Problem children are to be converted into stars with the added funds.
, ○ This is to balance cash flows. High growth requires cash input to grow. Low growth
should generate excess cash. Both kinds are needed simultaneously.
● Relative Market Share: Indicates cash generation, because the higher the share, the more
cash is generated. Because of economies of scale, earnings grow faster the higher the share.
○ The exact measure is relative to your largest competitor - relative position, not
absolute.
○ Rule of 123 - the most stable and profitable position is a share double that of the 2nd
strongest brand, and triple that of the 3rd strongest brand.
○ Higher market share means more experience curve benefits, which means a cost-
leadership advantage.
○ Also shows information other than cash - market positioning vs competitors, potential
future avenues, and what marketing activities might be effective.
● Market Growth Rate: Market growth is bought with investment, that eventually (hopefully)
turns into profits. High growth rate indicates demand of investment. Safe level is 10% per
year, above that is significant growth (and needs more cash).
● Mistakes:
○ not always usable, like fast-moving consumer goods.
○ cash cows shouldn't always be milked to fund others, that money needs to
be used to defend the cash cows' position too. Milking the cow too much
may get it in trouble → turning it into dogs.
Article 2B: The Ideal Brand Portfolio
The article "Achieving the Ideal Brand Portfolio" by Sam Hill, Richard Ettenson, and Dane
Tyson, published in the MIT Sloan Management Review, outlines a structured, five-step
approach to effectively manage and optimize brand portfolios. The authors argue that many
companies face challenges with brand portfolio "bloat," where resources are spread thin
across too many brands, leading to inefficiencies and market confusion.
The five-step framework for brand portfolio renewal includes:
1. Understanding the portfolio/Identifying Brands for Review: Start with a comprehensive
list of brands, including all trademarks and partner brands, to determine which brands
warrant further review.
2. Assessing Brand Contribution: Evaluate each brand’s financial impact, including hidden
costs and benefits, to categorize brands based on their profitability and overhead.
3. Assessing Market Position: Assess the current market traction and momentum of each
brand to understand its competitive position and future growth potential.
4. Identifying Problem and Opportunity Brands: Classify brands into categories such as
"power," "sleeper," "soldier," or "discard," to determine specific action plans for each brand.
5. Developing a Renewal Plan: Create an overall strategy to strengthen the portfolio,
focusing resources on high-potential brands while retiring or repositioning others as needed.
The framework emphasizes systematic evaluation and strategic planning to maintain an
effective brand portfolio that enhances market position and improves resource allocation.
