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  • The Marketing Process This CTR corresponds to Figure 2-5 on p. 45 and to material on pp. 44-45. Teaching Tip: This material previews the focus on later chapters. You may wish to show this CTR as an introduction to the following discussion on target consumers. The lecture information below is provided if you wish to cover the strategic background information prior to coverage of details. The Marketing Process This begins an extended discussion of planning, organization, and specific-actions that includes slide transparencies on the 4 Ps, factors affecting marketing strategy decisions, and a general outline of the contents of a marketing plan. These topics are covered in more detail on subsequent CTRs. Marketing Analysis (and Planning). Marketing must conduct a complete analysis of its situation and all relevant environmental influences. Further, marketing must provide each functional area of the company with the information from this analysis that affects their area-specific tasks. Selecting Target Markets. In evaluating analysis, it should become clear that the company cannot service each market opportunity equally well. Target market selection occurs by matching strengths and weaknesses identified in analysis to particular target markets. Marketing Implementation. Plans must be coordinated and launched with realistic logistical support if they are to succeed. Marketers must be able to translate plans into concrete action. Marketing Control. The need to measure, assess and evaluate performance all relate to control issues. These are discussed in more detail later.
  • Analyzing Current SBU’s: Boston Consulting Group Approach This CTR corresponds to Figure 2-2 on p. 39 and relates to the discussion on pp. 38-39. Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. In portfolio analysis, management evaluates the businesses for their strategic fit in meeting company objectives. Strategic Business Units (SBUs) consist of separate units of the company that can be planned independently from other company businesses. The BCG Matrix Stars. High growth, high share businesses. Stars often require heavy investment to build/maintain share in rapidly expanding markets. You may wish to discuss the importance of market share to product profitability at this point. Cash Cows . Low growth, high share businesses. Cows generate profits for investment in other businesses. Question Marks. High growth, low share businesses. Strategy must decide between further investment to move question marks to star status or phasing the product out. Dogs . Low growth, low share. Dogs are often targets for divestment, but may still be profitable and/or contribute to other organizational goals.
  • The GE Planning Grid This CTR corresponds to Figure 2-3 on p. 40 and relates to the material on pp. 39-40. The General Electric Approach This matrix uses two dimensions of three zones each: Industry attractiveness is an index made up of such factors as market size, market growth, industry profit margin, amount of competition, seasonality & cyclicality of demand, and industry cost structure. Business strength is an index of factors like relative market share, price, competitiveness, product quality, customer & market knowledge, sales effectiveness, and geographic advantages. Which elements within these categories are utilized may vary from product to product and market to market. Strategies appropriate for each group of zones: Invest/Grow . This zone consists of the three green cells in the upper left corner and indicate strong SBUs. Selectivity/Earnings . This zone consists of the three yellow diagonal cells from the lower left to the upper right and represent SBUs of medium overall attractiveness. Sell or Reposition . This zone consists of the three red cells in the lower right corner and indicated SBUs with low overall attractiveness.
  • Transcript

    • 1. Project 1 Environmental Analysis Marketing Analysis & Research (MAR3613) By Kanghyun Yoon
    • 2. Strategic Planning Process
      • Strategic Planning involves developing an overall company strategy for long-run survival and growth (Kotler 2004) .
      • This process involves:
        • Defining a Mission : Statement of an organization’s purpose; should be market oriented.
        • Setting Company Objectives : Supporting goals and objectives to guide the entire company.
        • Designing a Business Portfolio : Collection of businesses and products that make up the company.
        • Planning Functional Strategies : Detailed planning for each department designed to accomplish strategic objectives.
    • 3. Marketing Management Process
      • Stage 1: Identifying business opportunities or problems.
        • Designing business portfolio to identify business opportunities or problems.
        • Implement SWOT analysis to diagnose the strategic fit between company’s capabilities to serve its customers and the changing market environment.
      • Stage 2: Market Segmentation, targeting, and positioning.
        • Dividing the total product market into some segments that have homogeneous needs and choosing the best segment(s) to serve.
        • Identify possible competitive advantages of its product using market positioning strategy.
      • Stage 3: Understanding the customers.
        • Requiring careful customer analysis since companies can’t serve profitably all customers.
      • Stage 4: Developing a marketing mix.
        • Designing a competitive marketing strategy by blending product, price, promotion, and place tools.
      • Stage 5: Managing the marketing efforts.
        • Measuring and evaluating the results of marketing strategies and plans.
    • 4. Marketing Management Process Target Consumers Product Place Price Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis Competitors Marketing Intermediaries Publics Suppliers Demographic- Economic Environment Technological- Natural Environment Political- Legal Environment Social- Cultural Environment
    • 5. Stage 1 Identifying business opportunities and/or problems
    • 6. SWOT Analysis
      • The starting point toward identifying business opportunities or problems is …
        • To monitor some environmental factors, as opportunities or threats, from the constantly changing market environment that affect the company’s ability to serve its customers.
      • Three important tools for environmental analysis
        • SWOT analysis
        • Portfolio analysis with BCG or GE matrix
        • Market potential assessment or demand forecasting
      • SWOT analysis consists of:
        • internal capabilities of company: S trengths and W eaknesses
        • external uncontrollable factors: O pportunities and T hreats
      • The goal of SWOT analysis
        • Identify business/marketing opportunities or problems from environmental analysis.
        • Find the best strategic fit between company’s capabilities and its changing market environment to serve customers effectively.
    • 7.
      • Forces that shape opportunities and pose threats to a company:
        • Demographic - monitors changing nature of population in terms of age, sex, race, occupation, location and other statistics.
        • Economic - factors that affect consumer buying power and spending patterns.
        • Natura l - natural resources needed as inputs by marketers or that are affected by marketing activities.
        • Technological - forces that create new product and market opportunities.
        • Political - laws, agencies and groups that influence or limit marketing actions.
        • Cultural - forces that affect a society’s basic values, perceptions, preferences, and behaviors.
      Macro-Environmental Factors
    • 8.
      • What is Business Portfolio?
        • The collection of businesses and products that make up the company.
        • Designing the best business portfolio that fits the company’s strengths and helps exploit the most attractive opportunities.
      • The company must:
        • analyze its current business portfolio and make investment decisions for each business,
        • develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should not longer be retained.
      • Two best-known methods:
        • Boston Consulting Group (BCG) matrix and General Electric (GE) matrix
      • Key assumptions for BCG matrix:
        • The objective is cash balance.
        • Market share has a direct effect on profitability.
        • Cash flow can be predicted by the position and direction of the business.
        • High-growth markets are more attractive.
      Business Portfolio Analysis
    • 9. Examples of BPA (I)
      • Question Marks
      • High growth, low share
      • Build into Stars/ phase out
      • Requires cash to hold
      • market share
      • Stars
      • High growth & share
      • Profit potential
      • May need heavy
      • investment to grow
      • Cash Cows
      • Low growth, high share
      • Established, successful
      • SBU’s
      • Produces cash
      • Dogs
      • Low growth & share
      • Low profit potential
      Relative Market Share High Low Market Growth Rate Low High Boston Consulting Group Approach
    • 10. Examples of BPA (II) Industry Attractiveness GE Strategic Business-Planning Grid Business Strength High Medium Low Strong Average Weak A B C D
    • 11.
      • Two dimensions of BCG matrix
        • Market growth rate – it indicates a measure of market attractiveness.
        • Relative market share – it serves as a measure of SBU strength, against competitors, in the market.
      • Four quadrant in the matrix:
        • Question marks refer to businesses that have relatively weak market shares in fast growing markets.
          • “ Build Share” strategy: increase market share with investment
        • Stars are businesses that have strong market shares in fast-growth markets.
          • “ Hold” strategy: need heavy investment to sustain their growth.
        • Cash cows are businesses that have dominant shares in slow- or no-growth markets.
          • “ Harvest” strategy: maximize short-term cash flows and profits from the SBU.
        • Dogs refer to businesses that have relatively weak market shares in slow- or no-growth markets.
          • “ Divest” strategy: divest SBU by phasing it out or selling it.
      Boston Consulting Group Matrix
    • 12. How to Draw BCG Matrix?
      • Stage 1 : Identify the various Strategic Business Units (“SBU’s”) to design a company portfolio.
        • Those can be businesses or products or brands.
      • Stage 2 : Collect secondary data to calculate MGR and RMS.
        • Market growth rate (MGR)
        • Relative market share (RMS) = MS of my SBU / MS of top competitor.
      • Stage 3 : Locate the position of each SBU in a BCG matrix.
        • Size of circle of each SBU indicates the relative volume of each SBU in dollar unit.
      • Stage 4 : Recommend some strategic points.
        • Diagnose current condition of the company.
        • Suggest some recommendations of what the company should do.
    • 13.
      • To develop effective targeting strategies and to manage the marketing efforts effectively …
        • measuring current market size and forecasting future demand are required.
          • Overly optimistic estimates -> costly overcapacity or excess inventories.
          • Underestimating market demand -> missed sales and profit opportunities.
      • Five major uses of market demand
        • 1) To answer “what if” questions; 2) to help set budgets; 3) to make resource allocation decisions over the product life cycle; 4) to set objectives and evaluate performance; 5) to make market entry/exit decision.
      • Three concepts to understand
        • 1) Market potential (e.g., what the company might or could achieve).
        • 2) Market forecast (e.g., what the company probably will achieve).
        • 3) Market minimum (quota) (e.g., what the company should achieve).
      • A critical part of forecasting
        • A key assumption: Forecasts depend on a set of conditions.
      Measuring and Forecasting Demand
    • 14. Forecasting Methods of Demand
      • Estimating current market potential
        • Total market potential method (Lilien and Kotler 1983)
        • Chain-ratio method (Ackoff 1970)
      • Forecasting future demand
        • Judgmental method
          • Naïve extrapolation, sales force composite, delphi, executive opinion.
        • Market survey analysis
          • Buyer purchase intentions, product tests via market testing.
        • Time series analysis
          • Naïve methods, moving averages, exponential smoothing, Box-Jenkins method, decompositional methods, regression method.
        • Causal analysis
          • Regression method, econometric models, input-output analysis, new-product forecasting, leading indicators.
      • This project will use either total market potential or chain-ratio method for assessing current market potential or regression method for forecasting future demand.
    • 15. Estimating Current Market Potential
      • Both methods depend on the potential users or buyers of the product.
        • Step 1: Determine the potential buyers or users of the product.
        • Step 2: Estimate the purchasing or usage rate.
        • Step 3: Find the average price of a unit of the product.
      • Total Market Potential Method
        • Q = n X q X p
        • Q = total market potential, n = number of buyers in the market, q = quantity purchased by an average buyer per year, and p = price of an average unit.
      • Chain-Ratio Method
        • Q = Total number of U.S. households
        • X the percentage of U.S. households containing one or
        • more serious amateur photographers
        • X the percentage of these household owning a personal computer
        • X the percentage of PC-owning households with enough discretionary
        • income to buy Sony’s new digital camera.
    • 16. Forecasting Future Demand
      • Regression Method
        • Key assumptions: Sales are time-dependent or can be explained with the causal relationships among the identified variables.
        • Historical data of both dependent and independent variables are used for estimating future demand.
      • Steps for Using Regression Method
        • Step 1: Plot sales over time to identify the trend of sales performance.
        • Step 2: Specify a causal relationship with the identified relevant variables – linear or non-linear relationship.
          • Identify variables regarding customers, marketing plans, competitive behaviors, and/or market environment.
        • Step 3: Gather the historical data for dependent and independent variables.
        • Step 4: Use the regression command in SPSS program to estimate the value of the parameters in regression equation.
        • Step 5: Prepare the estimated equation - Ŷ = â + b1*X1 + b2*X2.
        • Step 6: Prepare the values of X variables and plug those into the regression equation to get the forecast of Y.
    • 17. Reference
      • Day, George S. (1986), Analysis for Strategic Market Decisions , West Publishing Company. (see chapter 6)
      • Kotler, Philip (1997), Principles of Marketing Management: Analysis, Planning, Implementation, and Control , 9 th ed., Prentice Hall. (see chapter 9)
      • Kotler, Philip and Gary Armstrong (2004), Principles of Marketing , 10 th ed., Prentice Hall. (see chapter 8)
      • Lehmann, Donald R. and Russell S. Winer (2005), Analysis for Marketing Planning , 6 th ed., McGraw-Hill. (see chapter 6)
      • McDaniel, Carl and Roger Gates (2004), Marketing Research Essentials , 4 th ed., John Wiley & Sons, Inc.
      • Urban, Glen L. and John R. Hauser (1993), Design and Marketing of New Product , 2 nd ed., Prentice-Hall. (see chapters 8-11)
      • Zikmund, William G. (2003), Essentials of Marketing Research , 2 nd ed., Thomson: South-Western.

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