Marketing Plan
Characteristics of a Good Marketing Plan
A good marketing plan should communicate to every
member what is desired of each member, so that they
have some level of goal clarity, understanding of
assumptions that lie behind the goals and the context of
each activity and decision.
Approaches in Marketing Plan
Different organizations follow different kinds of planning
approaches.
Organizations where top management sets both the
goals and plans for the lower management, follows a top
down approach.
In democratic and participative organizations, there is a
bottom up approach in which each unit in the
organization creates its own goals and plans, which are
then approved by the top management.
The third approach is to have goals down-plans up
approach. In this approach the top management sets the
goal but various business units create their own plans to
meet these goals
IMPORTANCE OF MARKETING
PLANNING
It helps in avoiding future uncertainties.
It helps in management by objectives.
It helps in achieving objectives.
It helps in coordination and communication among the
departments.
It helps in control.
It helps the customers in getting complete satisfaction.
STRATEGIC CORPORATE PLANNING BY TOP
MANAGEMENT
Establishing corporate mission, objectives and goals
Establishing Strategic Business Units
Assigning resources to each Strategic Business Unit
Planning for Business Growth.
Establishing Corporate Mission, Objectives
and Goals
It should not be an impossible statement.
It should be short and limited.
It should be motivating.
It should be enough to define the functions, the clientele
and the method of operation.
lt should be clear and should stress the company’s
policy.
It should be distinctive and should define company’s
major competitive scope.
It should indicate how objectives are to be accomplished.
Objective Setting
A higher market share
High growth opportunities
Increased ability to compete in global markets
Product innovation
Recognition as a leader in technology
Better customer services
Good reputation with customers
Low cost compared with competitors
High quality goods and services
Brand image and loyalty
Wider profit margin
Establishing Strategic Business Units
A strategic business unit has the
following characteristics:
Separate responsibility for strategic planning and profit
performance, and profitinfluencing factors.
A separate set of competitors.
Single business or a collection of related businesses,
which offer scope for independent strategic planning
from remaining organization
Resources to SBU Units
BOSTON CONSULTING GROUP
MATRIX
INTRODUCTION
BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by BRUCE
HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY
1970’s.
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
market’s 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 there’s 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 company’s 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.
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. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
Classifying the SBU’S on the basis of BCG
matrix.
Developing strategic objectives for each
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
company’s 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
HLL
IES
BCG MATRIX
scorpio
Jeep
balero
CONCLUSION
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.
Portfolio Planning:
Four Areas of Emphasis
Allocating resources
Formulating business-unit strategy
Setting performance targets
Analyzing portfolio balance
Cash flow
Continuity
Risk
BCG Growth-Share Matrix
High Star Question Mark
Market
Growth
Cash Cow Dog
Low
Strong Weak
Relative Market Share
Four Main Strategies of the BCG
Model
Increase market share
Hold market share
Harvest
Divest
BCG Growth-Share Matrix:
Quadrant Characteristics
30% Star Question Mark
Earnings: high stable, growing Earnings: low, unstable, growing
Cash flow: neutral Cash flow: negative
Strategy: hold or invest for Strategy: increase market share
growth or harvest/divest
Market
Growth
Cash Cow Dog
Earnings: high stable Earnings: low, unstable
Cash flow: high stable Cash flow: neutral or negative
Strategy: hold or add market Strategy: harvest/divest
-10% share
10 1.0 .1
Relative Market Share
Using the Model: Symbols
Product A Product A
Total Market Previous
Market Share Market Size
and Position
Product B Market
B Smaller but firm
has greater share
Plotting Your SBU’s
30% Star Question Mark
C C
B
Market A
Growth
Cash Cow Dog
A B
-10%
10 1.0 .1
Relative Market Share
Traditional SBU
or Product Path
30% Star Question Mark
2 1
Market
Growth
Cash Cow Dog
3 2
4
-10%
10 1.0 .1
Relative Market Share
• Strategic planning models
- BCG (Boston Consulting Group) model
- Ansoff’s model
- GE model
Business Portfolio Models
A. Boston Consultin Group (BCG) Model
Market Share – Growth Matrix
Hi
Marketing Growth Rate
Star ?
Cash cow Dog
Lo
Hi Lo
B. Ansoff’s Product-Market Development Model
Existing Product New Products
Existing
Market Market Penetration Product Development
New Market Development Diversification
Market
C. G.E Strategic Planning Model
Business Strength
Strong Average Weak
Industry Attractiveness
High
Medium
Low
Business Strength Index Industry Attractiveness Index
* Market Share * Market size
* Price Competitiveness * Market Growth
* Product Quality * Industry Profit Margin
* Customer Knowledge * Amount of Competition
* Sales Force and Effectiveness * Seasonality
* Geographic Advantage * Cost Structure
* Others * Etc.
THE STRATEGIC PLANNING PROCESS
Assessment and adjustment of core strategy
(market / competitive analysis, internal analysis)
Formulation of global strategy
(choice of target countries, segments and competitive strategy)
Development of global marketing program
Implementation
(organization structure, control)
Michael Porter’s
Five Forces
Model
Michael Porter …
“An industry’s profit potential is
largely determined by the intensity
of competitive rivalry within that
industry.”
Porter’s Five Forces
Portfolio Analysis …
… Strategy at the time (1970s) was focused on two
dimensions of the portfolio grids …
… Industry Attractiveness
… Competitive Position
Business Strength Matrix
Where was
Michael Porter
coming from?
School of Economics …
… at Harvard …
… Exposed Porter to the
Industrial Organization (I0)
sub-field of Economics.
Structural reasons why
…
… some industries were profitable
* Firm concentration
* Established cost advantages
* Product differentiation
* Economies of scale
Structural reasons …
… all represented barriers to
entry in certain industries,
thus allowing those
industries to be more
profitable than others.
Porters Five Forces …
* Threat of Entry
* Bargaining Power of Suppliers
* Bargaining Power of Buyers
* Development of Substitute
Products or Services
* Rivalry among Competitors
Barriers to Entry …
… large capital requirements or the
need to gain economies of scale
quickly.
… strong customer loyalty or strong
brand preferences.
… lack of adequate distribution
channels or access to raw materials.
Power of Suppliers …
… high when
* A small number of dominant, highly
concentrated suppliers exists.
* Few good substitute raw materials or
suppliers are available.
* The cost of switching raw materials
or suppliers is high.
Power of Buyers …
… high when
* Customers are concentrated, large or
buy in volume .
* The products being purchased are
standard or undifferentiated making it
easy to switch to other suppliers.
* Customers’ purchases represent a
major portion of the sellers’ total
revenue.
Substitute products …
… competitive strength high when
* The relative price of substitute
products declines .
* Consumers’ switching costs decline.
* Competitors plan to increase market
penetration or production capacity.
Rivalry among competitors
… intensity increases
as
* The number of competitors increases
or they become equal in size.
* Demand for the industry’s products
declines or industry growth slows.
* Fixed costs or barriers to leaving the
industry are high.
Summary …
As rivalry among competing
firms intensifies, industry
profits decline, in some
cases to the point where an
industry becomes inherently
unattractive.
The Experience Curve
…
… as an entry barrier
Unit costs associated with
economies of scale, the learning
curve for labor, and capital-labor
substitution decline with
“experience,” and this creates a
barrier to entry, as new competitors
with no “experience” face higher
costs than established ones.
However …
… If a new entrant has built the
newest, most efficient plant, it
will not have to “catch up.”
… Technical advances purchased
by new entrants – free from the
legacy of heavy past Investments –
may provide those companies a
cost advantage over the leaders.
In addition …
The experience curve barrier can be
nullified by product or process
innovations that create an entirely
new experience curve – one to
which leaders may be poorly
positioned to jump, but to which
new entrants can alight as they
enter the market .
Strategic Groups …
Firms that face similar threats or
opportunities in an industry but
which differ from the threats and
opportunities faced by other
sets of firms in the same
industry (e.g., in the beverage
industry: soft drinks group
versus alcoholic beverages).
Strategic Groups …
Rivalry generally is more
intense within strategic groups
than between them because
members of the same group
focus on the same market
segments with similar products,
strategies and resources.
Industry & Product
Life Cycles
Industry & Product
Life Cycles
Bright Horizons (12 months)