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.

7. Source:
http://www.aci-bd.com/about-us/mission-
vision-and-values.html

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.

17. work with competitors

18. https://eu.louisvuitton.com/eng-e1/articles/louis-vuitton
-bmw-i-partner-to-create-luggage-of-the-future

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-

23. Unilever (Example)

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/

29. Apple Product Portfolio

30. Mouse
Router iWatch
Pencil

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.

34. http://www.pginvestor.com/Company-Strategy/Index?KeyGenPage=208821

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

57. stars
Invest for growth

58. Cash cows
( milk to fund other business)

59. Question Marks

60. Dogs