MARKETING MANAGEMENT

MRM - (2010-12)

Tapas Kumar Mandal

UNDERSTANDING MARKETING STRATEGY

SESSION: 1

GENESIS OF MARKETING STRATEGY

To Grasp Marketing Planning we have to start with corporate strategy planning Nature, Importance and Scope of Strategy Planning Strategy Planning and Value delivery Process Clarifying the Mission Defining the business Surveying the Environment Internal Appraisal of the Farm Setting Corporate objectives Formulating the Corporate Strategy Drawing heavily from both Logic and Intuition

2-3

LEVELS OF A MARKETING PLAN

Strategic

Tactical

Target marketing decisions Value proposition Analysis of marketing opportunities

Product features Promotion Merchandising Pricing Sales channels Service

2-4

CORPORATE HEADQUARTERS PLANNING ACTIVITIES

Define the corporate mission Establish SBUs Assign resources to each SBU Assess growth opportunities

2-5

GOOD MISSION STATEMENTS

Focus on limited number of goals Stress major policies and values Define major competitive spheres

2-6

MAJOR COMPETITIVE SPHERES

Industry Products Competence

Market segment Vertical channels Geographical

2-7

MOTOROLA The purpose of Motorola is to honorably

serve the needs of the community by providing products and services of superior quality at a fair price to our customers; to do this so as to earn an adequate profit which is required for the total enterprise to grow; and by doing so, provide the opportunity for our employees and shareholders to achieve their personal objectives.
2-8

DIMENSIONS THAT DEFINE A BUSINESS

Customer groups

Customer needs

Technology
2-9

CHARACTERISTICS OF SBUS
It is a single business or collection of related businesses It has its own set of competitors It has a leader responsible for:

Strategic

planning Profitability Efficiency

2-10

MARKET OPPORTUNITY ANALYSIS (MOA)

Can the benefits involved in the opportunity be articulated convincingly to a defined target market? Can the target market be located and reached with cost-effective media and trade channels? Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?

2-11

..MARKET OPPORTUNITY ANALYSIS

Can the company deliver the benefits better than any actual or potential competitors? Will the financial rate of return meet or exceed the companys required threshold for investment?

2-12

Why is marketing planning necessary?

Systematic futuristic thinking by management better co-ordination of company efforts development of better performance standards for control sharpening of objectives and policies better prepare for sudden new developments managers have a vivid sense of participation

Objectives of the marketing plan

Acts as a roadmap assist in management control and monitoring the implementation of strategy informs new participants in the plan of their role and function to obtain resources for implementation to stimulate thinking and make better use of resources

.Objectives of the marketing plan

Assignment of responsibilities, tasks and timing Awareness of problems, opportunities and threats Essential marketing information may have been missing if implementation is not carefully controlled by managers, the plan is worthless!

EVALUATING A MARKETING PLAN

Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?

2-16

THE CONTENTS AND STRUCTURE OF THE MARKETING PLAN

The executive summary table of contents situational analysis and target market marketing objectives marketing strategies marketing tactics schedules and budgets financial data and control

CAUTIONARY NOTES FOR EFFECTIVE PLANNING

Dont blindly rely on mathematical and statistical calculations. Use your judgement as well Dont ever assume that past trends can be exploited into the future forever if drawing conclusions from statistical data, make sure the sample size is sufficiently large

STANDARD PLANNING FRAMEWORK

Analysis

- where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we ensure arrival? Control - are we on the right track?

BOSTON CONSULTING GROUP MATRIX (BCG )

INTRODUCTION

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.

RELATIVE MARKET SHARE AND MARKET GROWTH

To understand the Boston Matrix you need to understand how market share and market growth interrelate.

MARKET SHARE

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARE

RMS = Business unit sales this year Leading rival sales this year
The higher your market share, the higher proportion of the market you control.

MARKET GROWTH RATE

Market growth is used as a measure of a markets attractiveness. MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.

THE BCG GROWTH-SHARE MATRIX

It is a portfolio planning model which is based on the observation that a companys business units can be classified in to four categories: Stars Question marks Cash cows Dogs

It is based on the combination of market growth and market share relative to the next best competitor.

STARS
HIGH GROWTH, HIGH MARKET SHARE Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.

CASH COWS

Low growth , High market share

They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.

DOGS
LOW GROWTH, LOW MARKET SHARE
Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

QUESTION MARKS

HIGH GROWTH , LOW MARKET SHARE

Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.

WHY BCG MATRIX ?

To assess : Profiles of products/businesses The cash demands of products The development cycles of products Resource allocation and divestment decisions

MAIN STEPS OF BCG MATRIX

Identifying and dividing a company into SBU. Assessing and comparing the prospects of each SBU according to two criteria : 1. SBUS relative market share. 2. Growth rate OF SBUS industry. Classifying the SBUS on the basis of BCG matrix. Developing strategic objectives for each SBU.

BCG MATRIX WITH CASH FLOW

BENEFITS
BCG MATRIX is simple and easy to understand. It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them. It is used to identify how corporate cash resources can best be used to maximize a companys future growth and profitability.

LIMITATIONS
BCG MATRIX uses only two dimensions, Relative market share and market growth rate. Problems of getting data on market share and market growth. High market share does not mean profits all the time. Business with low market share can be profitable too.

PRACTICAL USE

MAHINDRA & MAHINDRA

BCG MATRIX

scorpio

Jeep

balero

Though BCG MATRIX has its limitations it is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multi-products.