Marketing
Week 1
Chapter 2: Strategic marketing planning process & BCG growth
Marketing planning = the structured process of researching and analyzing marketing
situations, developing and documenting marketing objectives, strategies and programs, and
implementing, evaluating and controlling activities to achieve the objectives.
The outcome of this structured process is the marketing plan, a document that summarizes
what the marketer has learned about the marketplace and indicates how the firm plans to
achieve its marketing objectives.
Strategic planning = the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities.
Mission statement = a statement of the organization’s purpose, what it wants to accomplish
in the larger environment.
The role of marketing in strategic planning:
- Marketing provides a guiding philosophy.
- Marketing provides inputs to strategic planners by helping to identify attractive market
opportunities and by assessing the firm’s potential to take advantage of them.
- Marketing designs strategies for reaching unit objectives.
,BCG growth-share matrix = an analysis of a company’s portfolio of different product or SBUs
(strategic business units). To be effective, objectives must be in specific terms of:
- The performance dimension being measured.
- The measures most appropriate for the performance dimension.
- The target value for each measure.
- The time by which the target should be achieved.
Strategic Business Unit:
1. Strategic audit:
- An external audit is a detailed examination of the markets, competition, business
and economic environment in which the organization operates.
- An internal audit is an evaluation of the firm’s entire value chain.
2. Financial statements of a strategic audit:
- A balance sheet shows the assets, liabilities, and net worth of a company at a time.
- The operating statement shows company sales, cost of goods sold, and expenses
during a given period of time
3. A SWOT analysis draws the critical strengths, weaknesses, opportunities, and threats
from the strategic audit.
4. A strategic business unit is a unit of the company.
Business portfolio = the group of different products or brands owned by an organization and
having different income-generating and growth capabilities.
Analyzing the current business portfolio and decide which businesses should receive more,
less, or no investment. Develop growth strategies for adding new products or businesses to
the portfolio.
What is it for? BCG A tool for:
Portfolio analysis = the process by which management evaluates the products and business
that make up the company.
1. Identify key businesses (SBUs).
2. Assess the attractiveness of each SBU.
3. Decide which SBUs should receive more or less of the firm’s resources.
The BCG growth-share matrix enables a firm to evaluate SBU’s on two important
dimensions:
- The attractiveness of the SBU’s market or industry.
- The strength of the SBU’s position in that market or industry.
BCG matrix: y-axis = market growth rate:
- Measured in percentages.
- High or low market growth rate depends on the type of market you are active in. E.g.
food market, construction market (5%) / telecommunications, internet market (20%).
BCG matrix: x-axis = relative marker share:
- Ratio of a SBU’s own market share to the market share held by the largest
competitor.
- The midpoint is 0.50 (half of the market share of the leader)
, The size of the circle
corresponds to the proportion of
total revenue generated by the
SBU.
BCG growth-share matrix strategies:
- Invest more in an SBU to build its share.
- Invest just enough to hold a SBU’s share at the current level.
- Harvest an SBU, milking its short-term cash-flows regardless of long-term effect.
- Divest an SBU by selling it or phasing it out and using the resources elsewhere.
Reflections on this model:
- Is the market share leader also the profit leader?
- Future is unpredictable.
- How about competitiveness?
- How about synergies?
Challenges the BCG matrix needs to be adapted to:
- The world is changing, and markets are quite turbulent. Technology is developing at a
rapid pace, and hence, business models get outdates quite quickly. Therefore, it is
more difficult to hold market share and there are fewer cash cows.
- Market share is not an exclusive predictor of sustained performance.
Components of a strategic planning:
- Mission
- Strategic objectives
- Strategic audit
- SWOT analysis
- Portfolio analysis
- Objectives and strategies
Week 1
Chapter 2: Strategic marketing planning process & BCG growth
Marketing planning = the structured process of researching and analyzing marketing
situations, developing and documenting marketing objectives, strategies and programs, and
implementing, evaluating and controlling activities to achieve the objectives.
The outcome of this structured process is the marketing plan, a document that summarizes
what the marketer has learned about the marketplace and indicates how the firm plans to
achieve its marketing objectives.
Strategic planning = the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing opportunities.
Mission statement = a statement of the organization’s purpose, what it wants to accomplish
in the larger environment.
The role of marketing in strategic planning:
- Marketing provides a guiding philosophy.
- Marketing provides inputs to strategic planners by helping to identify attractive market
opportunities and by assessing the firm’s potential to take advantage of them.
- Marketing designs strategies for reaching unit objectives.
,BCG growth-share matrix = an analysis of a company’s portfolio of different product or SBUs
(strategic business units). To be effective, objectives must be in specific terms of:
- The performance dimension being measured.
- The measures most appropriate for the performance dimension.
- The target value for each measure.
- The time by which the target should be achieved.
Strategic Business Unit:
1. Strategic audit:
- An external audit is a detailed examination of the markets, competition, business
and economic environment in which the organization operates.
- An internal audit is an evaluation of the firm’s entire value chain.
2. Financial statements of a strategic audit:
- A balance sheet shows the assets, liabilities, and net worth of a company at a time.
- The operating statement shows company sales, cost of goods sold, and expenses
during a given period of time
3. A SWOT analysis draws the critical strengths, weaknesses, opportunities, and threats
from the strategic audit.
4. A strategic business unit is a unit of the company.
Business portfolio = the group of different products or brands owned by an organization and
having different income-generating and growth capabilities.
Analyzing the current business portfolio and decide which businesses should receive more,
less, or no investment. Develop growth strategies for adding new products or businesses to
the portfolio.
What is it for? BCG A tool for:
Portfolio analysis = the process by which management evaluates the products and business
that make up the company.
1. Identify key businesses (SBUs).
2. Assess the attractiveness of each SBU.
3. Decide which SBUs should receive more or less of the firm’s resources.
The BCG growth-share matrix enables a firm to evaluate SBU’s on two important
dimensions:
- The attractiveness of the SBU’s market or industry.
- The strength of the SBU’s position in that market or industry.
BCG matrix: y-axis = market growth rate:
- Measured in percentages.
- High or low market growth rate depends on the type of market you are active in. E.g.
food market, construction market (5%) / telecommunications, internet market (20%).
BCG matrix: x-axis = relative marker share:
- Ratio of a SBU’s own market share to the market share held by the largest
competitor.
- The midpoint is 0.50 (half of the market share of the leader)
, The size of the circle
corresponds to the proportion of
total revenue generated by the
SBU.
BCG growth-share matrix strategies:
- Invest more in an SBU to build its share.
- Invest just enough to hold a SBU’s share at the current level.
- Harvest an SBU, milking its short-term cash-flows regardless of long-term effect.
- Divest an SBU by selling it or phasing it out and using the resources elsewhere.
Reflections on this model:
- Is the market share leader also the profit leader?
- Future is unpredictable.
- How about competitiveness?
- How about synergies?
Challenges the BCG matrix needs to be adapted to:
- The world is changing, and markets are quite turbulent. Technology is developing at a
rapid pace, and hence, business models get outdates quite quickly. Therefore, it is
more difficult to hold market share and there are fewer cash cows.
- Market share is not an exclusive predictor of sustained performance.
Components of a strategic planning:
- Mission
- Strategic objectives
- Strategic audit
- SWOT analysis
- Portfolio analysis
- Objectives and strategies
