Week 4

Professional Diploma In Marketing
A B M Nazmul Kayes
CHARTERED MARKETER MBA(UWB), MSS(DU), Dip. M, MCIM Email: abmnazmulkayes@gmail.com
3/13/2012
AN Kayes, Chartered Marketer/MPP/WK-4
Module 01: Marketing Planning Process

Week-4
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Section 2: The Marketing Audit & Strategic Outcomes

Chapter 8
The Internal Marketing Environment
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Organizational Capability
Organizational capability is a businesss
ability to establish internal structures and processes that influence its members to create organization-specific competencies and thus enable the business to adapt to changing customer and strategic needs. David
Ulrich & Dale G
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Organizational Assets
Organizational assets are the accumulated capital, both financial and non-financial, that a company has at its disposal. These assets are both tangible and intangible.
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Organizational assets incl.

Financial assets- working capital
Physical assets- property, office
Operational assets- machinery, process technologies People Assets- human resource

Systems assets- MIS
3/13/2012 AN Kayes, Chartered Marketer/MPP/WK-4
Student Activity???
For your organization, undertake an internal audit with regard to how assets and capabilities affect customer satisfaction. To do this first identify the assets and capabilities of your organization.
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7S Framework
7S Framework was Developed in the early 1980s by
Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm. The 7-S framework of McKinsey is a Value Based Management (VBM) model that describes how one can holistically and effectively organize a company. The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.
McKinsey 7 S Framework
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Hard
and
Soft
Elements
Mc Kinsey 7S Model involves 7 interdependent factors which are categorized as Hard Element and Soft Element
7S Hard Elements Strategy Soft Elements Style
Structure
Skills Shared Value
Systems
Staff
Hard Elements
"Hard" elements are strategy statements; organization charts and reporting lines; and formal
processes and IT systems.

They are
normally feasible easy to identify in an organization as they are normally well documented and seen in the form of tangible objects or reports such as strategy statements, corporate plans, organizational charts and other documents easier to define or identify management can directly influence them
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Soft Elements
"Soft" elements can be more difficult to describe, and are less tangible and more influenced by
culture.
However soft elements are as important as the hard elements if the organization is going to be
successful.
They are
more difficult to comprehend possible to understand these aspects only after studying the organization very closely, normally through observations and/or through conducting interviews to change and are the most challenging elements of any change-management strategy.
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The 7S Cont.
Strategy: Strategy is the plan of action an
organization anticipation environment so advantage over

Structure:
prepares in response to, or of, changes in its external as to maintain and build competitive the competition.
refers to the way an
Structure
organization is structured and who reports to whom.

It is about authority and relationship between the executives and the individual contributors.
7 S Cont.
System: System are the daily activities and procedures that staffs engage in to get the job done. These are Business Processes strictly followed and are designed to achieve maximum effectiveness.
Shared Values: Shared Values are the core values of the company that are evidenced in the corporate culture and the general work ethic. Shared Values is the interconnecting center of McKinsey's model .It indicates what does the organization stands for and what it believes in
i.e. Central beliefs and attitudes.

7 S Cont.
Style: Style refers to the style of leadership adopted. Its Organizational culture which includes
the dominant values, beliefs and norms developed over time which become relatively enduring features of the organizational life.
Staff: The employees and their general capabilities. : These are people within the organization who make the real difference to the success of the organization in the increasingly knowledge-based society.
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7 S Cont.
Skills: Skills refers to the actual skills and competencies of the employees working for the company. These are both institutional and individual skills relevant for the organizations growth.
Shared Values is placed in the middle of the model to emphasize that these values are central to the development of all the other critical elements.
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Application/Uses
It is a model for change management. It provides a checklist of areas that need to be
carefully considered and integrated to support successful strategy implementation

Improve the performance of a company
Examine the likely effects of future changes within a company

Align departments and processes during a merger or acquisition Determine strategy.
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how
best
to
implement
proposed
Internal Marketing Environment

The internal marketing environment determines what the organization is capable of delivering to its customers. Change to the internal environment is often necessary and the starting point for any change emanates from the strategy & structure in place.
Internal Marketing Audit

The internal marketing audit is specifically aimed at reviewing the marketing activities of the enterprise and is split into five distinct areas.
(Kotler et al.,1996)
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Areas of Internal Audit

marketing strategy is it realistic?
marketing organisation structure how does it
operate, does it work?

marketing systems focus on the efficiency of
the planning system

marketing
productivity are the products profitable, is the organisation operationally efficient? the marketing tools
marketing functions examines the details of
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Internal Audit Tools

Product Life Cycle
The BCG Matrix
General Electric (GE) matrix

The Value Chain
Gap Analysis
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Product Life Cycle
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Product Life Cycle

: definition a product as "anything both that is capable of satisfying customer needs. This includes
physical
products (e.g. cars, washing machines, DVD

players) as well as services (e.g. insurance,
banking, private health care). The stages through which individual products develop over time is called commonly known as the "Product Life
Cycle".
Product Life Cycle-Stages

.
Sales
Profit
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Introduction/development stage:
A product is in the development stage when market research, product development and marketing testing activities are undertaken. High development costs, low sales and low income.
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Marketing Strategies: Introduction Stage

Sales Costs Profits
Marketing Objectives
Low sales High cost per customer Negative

Create product awareness and trial
Product
Offer a basic product
Price Distribution
Advertising
Use cost-plus basis Build selective distribution

Build awareness among innovators, early adopters
Growth StageRapid growth in sales and profits. Profits arise due to an increase in output (economies of scale) and possibly better prices. At this stage, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.
Marketing Strategies: Growth Stage

Sales
Costs
Rapidly rising sales
Average cost per customer

Rising profits
Profits
Maximize market share

Offer product extensions, service, warranty Penetration Pricing Build intensive distribution Build awareness in the mass market
Product Price Distribution
Advertising
Maturity Stage
The product becomes fully developed and the initial needs are satisfied. Its success depends on repeat purchase. Competitors will appear in the market. As the saturated, sales will slow down and profits will start to decrease.
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Marketing Strategies: Maturity Stage

Sales
Costs
Peak sales
Low cost per customer

High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits
Profits
Product Price Distribution
Advertising
Decline stage:
In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully.
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Marketing Strategies: Decline Stage

Sales Costs
Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers
Profits
Product Price Distribution Advertising
Student Activity???
For an organization of your choice, analyse the portfolio of products that you produce in terms of the PLC stage that currently
fit
into.
What
are
the
actions
for
managing these products in the future?
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The BCG Matrix

The BCG (Boston Consulting Group) Matrix is a two-by-two matrix which helps you to understand the relative importance of
various products that your organization produces. Products are categorized according to their market share and their market growth rate.
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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? The higher your market share, the higher proportion of the market you control.
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Market Growth
Market growth is used as a measure of a markets attractiveness. Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.
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BCG Matrix cont.
Cash Generated +++ Cash Used - - -
Cash Generated + Cash Used - - -
Cash Generated +++ Cash Used -
Cash Generated + Cash Used -
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STARS
High growth, High market
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.
38
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.
39
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.
40
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.
41
BCG PRODUCT LIFE CYCLE

.
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Uses of BGC Matrix
Strategy evaluation
Resource allocation
Creating growth
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Student Activity???
For a product/service of your company, conduct a BCG analysis and suggest your actions for its future management.
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General Electric (GE) Matrix

Developed
by
McKinsey
&
Company
in
1970s.
GE
is a model to perform business portfolio
analysis on the SBUs.

GE is rated in terms of Market Attractiveness
& Business Strength

It is an Enlarged & Sophisticated version of
BCG.
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GE Matrix Classification
xxx
xxx
xx
xxx
xx
xx
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Market Attractiveness

Annual market growth rate Overall market size Historical profit margin Current size of market Market structure Market rivalry Demand variability Global opportunities
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Business Strength
Current market share Brand image Production capacity Corporate image Profit margins relative competitors R & D performance Promotional effectiveness
to
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Strategies
1. Protect Position Invest to grow Effort on maintaining strength 2. Invest to Build Challenge for leadership Build selectively on strength
1 3
3. Build Selectively Invest in most attractive segment Build up ability to counter competition Emphasize profitability by raising productivity
Strategies
4. Protect & Refocus Manage for current earning Defend strength 5. Selectivity for Earning 4 Protect existing program Investments in profitable segments 6. Build Selectively Specialize around limited strength Seek ways to overcome weaknesses Withdraw if indication of sustainable growth are lacking
6 5
Strategies
7. Limited Expansion for Harvest Look for ways to expand without high risk
8. Manage for Earnings Protect position in profitable 8 9 segment Upgrade product line Minimize investment 9. Divest Sell at time that will maximize cash value Cut fixed costs and avoid investment meanwhile
SBUs are portrayed in a circle whereby

The size of the circles represents the market size The size of the pie represents the market Medium share of the SBUs Arrows represents the direction and the movement of SBUs in the future
Weak
Strong
Strong
Medium
Weak
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52
Mc Kinsey/ GE Matrix
The Green Zone consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this product/service. Best Strategy: INVEST FOR GROWTH The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this product/service. The suggested strategy is to seek to maintain share rather than growing or reducing share. Best Strategy: INVEST FOR EARNINGS The Red Zone consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that management should begin to make plans to exit the industry. Best Strategy: HARVEST or DIVEST
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High Attractiveness LEADER Strong Competitive Position Strategies: provide maximum investment diversify your position to focus your resources accept moderate near-term profits to build share
High Attractiveness GROWTH Average Competitive Position Strategies: build selectively on strength define the implications of challenging for market leadership fill weaknesses to avoid vulnerability
High Attractiveness IMPROVE/QUIT Weak Competitive Position Strategies ride with the market growth seek niches or specialization seek an opportunity to increase strength through acquisition
Medium Attractiveness TRY HARDER Strong Competitive Position Strategies: invest heavily in selected segments establish a ceiling for the market share you wish to achieve seek attractive new segments to apply strengths
Medium Attractiveness Average Competitive Position Strategies: segment the market to find a more attractive position make contingency plans to protect your vulnerable position PROCEED WITH CARE
Medium Attractiveness PH. WDL Weak Competitive Position Strategies: act to preserve or boost cash flow as you exit the business seek an opportunistic sale seek a way to increase your strength
Low Attractiveness CASH GENERATION Strong Competitive Position Strategies: defend strengths shift resources to attractive segments examine ways to revitalize the industry 3/13/2012 time your exit by monitoring for harvest or divestment timing
Low Attractiveness PH. WDL Average Competitive Position Strategies: make only essential commitments prepare to divest shift resources to a more attractive segment
Low Attractiveness WITHDRAWAL Weak Competitive Position Strategies: exit the market prune the product line
55
STRATEGIES
BUSINESS STRENGTH
Strong
PROTECT POSITION Invest to grow at max. digestible rate. Concentrate effort on maintaining strength.
Invest heavily in most attractive segments Build up ability to counter competition Emphasize profitability by raising productivity
Medium
INVEST TO BUILD
Challenge for leadership Build selectivity on strengths Reinforce vulnerable areas
Weak
Specialize around ltd strengths
BUILD SELECTIVITY
Seek ways to overcome weaknesses Withdraw if indications of sustainable growth are lacking
BUILD SELECTIVITY
SELECTIVITY/ MANAGE FOR EARNINGS

Protect existing program Concentrate investments in segments where profitability is good and risks are relatively low.
LIMITED EXPANSION OR HARVEST Look for ways to expand without high risks else minimize investment DIVEST Sell at time that will maximize cash value Cut fixed costs and avoid investments meanwhile
56
PROTECT AND REFOCUS MANAGE FOR EARNINGS Manage for current earnings Protect position in most Concentrate on attractive profitable segments segments Upgrade product line Defend strengths Minimize investment
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BCG v/s GE
BCG Market Growth GE Market Attractiveness Market strength
Market share
4 cell Multi Products Primary tools
9 cell
Multi Business Units
Secondary tools
THE VALUE CHAIN ANALYSIS

The
by
value
Michael
chain
Porter in
approach was developed
the 1980s in his book

Competitive Advantage: Creating and Sustaining Performance. Superior
Definition of value chain analysis

an interdependent system or network of activities, connected by linkages is known as value chain analysis .
-Michael Porter.
The Value Chain Cont.

The value chain framework has been used as a powerful analysis tool for the strategic planning of an organization for nearly two decades. The aim of the value chain framework is to maximize value creation while minimizing costs.
The Concept of a Company Value Chain

A companys
value chain consists of a

of value-creating activities
linked
set
performed internally. It includes basic raw

material coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product or
service,
and
into
ending
the hands of
with
the
distributors getting the final goods
ultimate consumer.
The Value Chain
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Representative Company Value Chain
Competitive Advantage
The Concept of a Company Value Chain cont.

The value chain contains two types of activities-
1. Primary activities: Where most of the value for customers is created. Physical creation of the products and its sale and transfer to the buyer as well as after sales services/assistance.
2. Support activities: Facilitate performance of the primary activities. They support the primary activities and each other by providing purchased inputs, technology, HR, and various firm-wide functions.
The Concept of a Company Value Chain cont.

Primary activities
Inbound logistics: receiving, storing and disseminating inputs. Material handling, warehousing, inventory control, scheduling. Operations: Activities involve transferring inputs into outputs. Machining, assembly, packaging, equipment, maintenance, testing, printing, facility operations. Outbound logistics: collecting, storing, physically distributing the product to buyers, finished goods warehousing, material handling, delivery vehicle operations, order processing, scheduling Marketing: advertising, promotion, selection, pricing, channel relation sales force, channel
Service- installation, repair, training, parts supply, product adjustments. It enhances or maintain the value of product.
The Concept of a Company Value Chain

Support activities
Procurement: process employed, technology used, procedure for dealing vendors, qualification rules, information system. Technological development: know how, procedures, technology embodied in processing equipments, telecommunication, order entry system, servicing procedures. HRM: recruiting, hiring, training, development, compensation General administration/Firm infrastructure: consists of activities including general management, planning, finance, accounting, legal, government affairs, and quality management. Infrastructure supports the entire value chain.
Linkages within the Value Chain

Value chain is not a collection of independent activities but a system of
interdependent activities. Linkages are relationship between the way one value activity is performed and affect the performance or (cost structure) of another activity.
Characteristics of Value Chain Analysis

Combined costs of all activities in a companys value chain define the companys internal cost structure Compares a firms costs activity
by activity rivals against costs of key
From raw materials purchase to Price paid by ultimate customer
Pinpoints which internal activities are a source of cost advantage or disadvantage
Why Do Value Chains of Rivals Differ?

Several factors can cause differences in value chains of rival companies
Internal operations Strategy Approaches used in execution of the strategy
Underlying economics of the activities
Differences complicate task of assessing rivals relative cost positions
Example:
Value
Chain
Activities
Home appliance manufacturer

Parts and components manufacture Assembly Wholesale distribution Marketing Retail sales After Sales Service
Example:
Value
Soft
Chain
Activities
Drink
Industry
Processing of basic ingredients Syrup manufacture Bottling and can filling Wholesale distribution Advertising
Retailing
Value Creating Activities common to a Cost Leadership Business Level Strategy

Cost Effective MIS Systems Simplified Planning Practices to Reduce Planning Costs Relatively Few Management Layers to Reduce Overhead Effective Training Programs to Improve Worker Efficiency and Effectiveness Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes Frequent Evaluation Processes to Monitor Suppliers Performances Small, Highly Trained Sales Force Effective Product Installations to Reduce Frequency and Severity Products Priced to of Recalls Generate Sales Volume National Scale Advertising
Support Activities
Consistent Policies to Reduce Turnover Costs Easy-to-Use Manufacturing Technologies
Systems and Procedures to find the Lowest Cost Products to Purchase Raw Materials
Highly Efficient Systems to Link Suppliers Products with the Firms Production Processes
Efficient Plant Delivery Schedule Scale to Minimize that Reduces Manufacturing Costs Costs Selection of Low Timing of Asset Cost Transport Purchases Carriers Policy Choice of Efficient Order Plant Technology Sizes
Located in Close Proximity with Suppliers
Organizational Learning
Interrelationships with Sister Units
Primary Activities
Value Creating Activities common to a Differentiation Business Level Strategy

Highly Developed Information Systems to better understand customers purchasing preferences A company wide emphasis on producing high quality products Superior personnel training Strong capability in basic research
Support Activities
Compensation programs intended to encourage worker creativity and productivity Coordination among R&D, product development and marketing
Extensive use of subjective rather than objective performance measures
Investments in technologies that will allow the firm to consistently produce highly differentiated products
Systems and procedures used to find the highest quality raw materials
Superior handling of incoming raw materials to minimize damage and improve the quality of the final product Consistent manufacturing of attractive products
Purchase of highest quality replacement parts

Accurate and responsive order processing procedures Strong Coordin- Complete field ation among stocking of functions in R&D, replacement parts Marketing and Product Development
Rapid responses to customers unique manufacturing specifications
Extensive Rapid and timely personal product deliveries relationships to customers with buyers Premium Pricing
Primary Activities
Gap Analysis
Its a process through which a company compares its actual performance with its expected performance to determine whether it is meeting expectations and using its resources effectively.
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Gap Analysis Cont.

Gap analysis answers two questions1. Where are we now? 2. Where do we want to be?
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Gap Analysis cont.
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Gap Analysis cont.

The figure shows that the initial forecast, or trend, of sales revenue only reaches point A, which falls short of the corporate target, point E. To close the gap without departing too far from current practices, following actions can be considered3/13/2012 AN Kayes, Chartered Marketer/MPP/WK-4
Gap Analysis cont.

To Reach from A to B
Actions (Market Penetration) Improve the mix of services and markets. Generate higher sales via a more effective and better managed sales force. Improve customer satisfaction with better service. Exploit differential advantages with increased
pricing.
Reduce costs and expenses. Change
3/13/2012
the
promotional
mix,
e.g.
level
of
advertising, service levels.

Gap Analysis cont.

Developing new services (taking us to point C).
Developing new markets (taking us to point D). Diversifying (the strategic gap). This can be achieved organically, or by acquisition, joint ventures and the like. Hopefully this or the previous actions take the service organization to point E.
3/13/2012
SWOT Analysis
SWOT
A widely used framework for organizing and using data and information gained from
situation analysis
Encompasses both internal and external
environments
One of the most effective tools in the
analysis
information
of
environmental
data
and
SWOT description
A SWOT analysis generates information that is helpful in matching an organizations or a groups goals, programs, and capacities to the social environment in which they operate It is an planning instrument within strategic
When combined with a dialogue, it is a participatory process
SWOT
Factors affecting an organization can usually be classified as: Internal factors
Strengths (S) Weaknesses (W)
Strengths
Weaknesses
External factors
Opportunities (O) Threats (T)
Opportunities
Threats
SWOT: internal factors

Strengths
Positive tangible and intangible attributes, internal to an organization. They are within the organizations control
Weaknesses
Factors that are within an organizations control that detract from its ability to attain the core goal. In which areas might the organization improve?
SWOT: external factors

Opportunities
External attractive factors that represent the reason for an organization to exist and develop. What opportunities exist in the environment which will propel the organization? Identify them by their time frames
Threats
External factors, beyond an organizations control, which could place the organizations mission or operation at risk. The organization may benefit by having contingency plans to address them should they occur Classify them by their seriousness and probability of occurrence
For a productive SWOT analysis

Stay focused. Be specific and avoid grey areas. Keep your swot short and simple. Avoid complexity and over analysis Look for causes, not characteristics Separate internal issues from external issues
SWOT-driven planning
1. The assessment of strengths and weaknesses should look beyond products, services and resources to examine processes that meet customers or stakeholders needs 2. Achieving goals and objectives depends on transforming strengths into capabilities by matching them with opportunities 3. Weaknesses can be converted into strengths with strategic investment. Threats can be converted into opportunities with the right resources
4. Weaknesses that cannot be converted become limitations which must be minimized if obvious or meaningful to customers or stakeholders
The SWOT matrix
Alternative Strategic Options
Ansoff Matrix
Product Market Matrix
3/13/2012
Ansoffs Matrix
The product/market direction of the firm can be modeled around the Ansoff Matrix. It identifies four basic strategies for the firm1. Market Penetration 2. Market Development 3. Product Development 4. Diversification
Ansoffs Matrix
Market
EXISTING NEW
MARKET PENETRATION
MARKET DEVELOPMENT
Product
Increase sales to existing Existing products sold EXISTING market to new markets Penetrate existing market more deeply
NEW PRODUCT DIVERSIFICATION New Products sold to DEVELOPMENT

NEW
New products developed new markets for existing markets
Ansoff Matrix
MARKET
EXISTING NEW
MARKET PENETRATION MARKET Little risk DEVELOPMENT EXISTIN Moderate Risk
PRODUCT
NEW
NEW PRODUCT DEVELOPMENT Moderate Risk
DIVERSIFICATION High Risk
Market Penetration
Maintain increase market share in current market with current products
Selling more of the same to the same people In saturated market - Difficult In stagnant market grab market share from others intense competition
Market Penetration
Increase usage by existing customers
Encourage increase in frequency of use Attract customers away from rivals / Gain market share at expense of rivals Devise and encourage new applications Encourage non-users to buy
Use Market Penetration when When the market is not saturated

When there is potential of growth When competitors share is falling When increase in volume leads to economies of scale When there is scope to sell more to existing users
Market-Penetration Strategy
Why ? To dominate market How ? To increase usage or get new customers; reduce price; expand distribution or increase promotional activities When ? When market is growing What to look out for ? Competitive reaction;
cost of conversion
Example: Airlines used reduced fares & promotion various family travel packages to
penetrate market
PRODUCT-MARKET STRATEGIES
A product- (new offering-) development strategy dictates that an organization create new offerings existing markets.
PRODUCT-DEVELOPMENT STRATEGY This strategy involves:

Product Innovation
Developing offerings.
totally
new
Product Augmentation
Enhancing the value to customers of existing offerings.
Product Line Extension
Adding different features, sizes, etc. to broaden the existing line.
Product Development Strategy

New product to replace old product New innovative products Product improvements
Product line-extensions
New products to complement existing
Products at a different quality level from

existing product
PRODUCT-DEVELOPMENT STRATEGY
Factors to consider when adopting this strategy:
The market size and volume needed for profitability.
The magnitude and timing of competitors responses.

The impact of the new product on the sales of existing offerings (cannibalization). The capacity of the organization to deliver the offerings to the market(s).
Product-Development Strategy

New or improved product; innovate or augment product
Why ? How ?
To satisfy buyers need
When ? Customer has a need or a problem What to look out for ?

Market size/volume competitor reaction effect on existing products resources to deliver new products
PRODUCT-MARKET STRATEGIES
A market-development strategy dictates that an organization introduce its existing offerings to markets other than those it is currently serving (existing offerings new markets).
Market Development Strategy

Selling the same product to different
market
Entering new markets, segments with existing products
Gaining new customers, new segments, new

markets
Requires changes in marketing strategy,

distribution, pricing policy, promotional strategy
Use market development when

Untapped market is beckoning
The firm has excess capacity
Attractive channels to access new markets
MARKET-DEVELOPMENT STRATEGY This strategy involves:

Adjusting the marketing mix, such as:
Modifying the basic product offering

Using different distribution outlets
Changing the sales effort or advertising

Analyzing competitors strengths, weaknesses, and potential for retaliation.
MARKET-DEVELOPMENT STRATEGY This strategy involves

(continued):
Identifying the number, motivation, and buying patterns of new buyers. Determining the organizations ability to adapt to new markets to evaluate success.
MARKET-DEVELOPMENT STRATEGY
Internationally, this strategy has four forms:
Exporting Licensing
Joint Venture/ Strategic Alliance
Direct Investment
MARKET-DEVELOPMENT STRATEGY
Exporting
Involves marketing the same offering in another country through sales offices or intermediaries.
Licensing
Is a contract where one firm (licensee) is given the rights to patents, trademarks, etc. by the owner (licensor) in turn for a royalty or fee. Involves investment by both a foreign firm and a local company to create a new entity in the host country. The two forms share ownership, control, and profits of the entity. Involves investing in a manufacturing and/or assembly facility in a foreign market. Is the most risky and requires the most commitment.
Joint Venture/ Strategic Alliance
Direct Investment
Market-Development Strategy
Why ? How ?
To venture into new markets Sell existing products in new
markets; modify product; use different distribution; use different advertising/sales strategy
When ? Present market is saturated
What to look out for ? Competitive

reaction; understand new buyers; adaptability
Diversification
New products sold to new markets
New products sold to new customers
Select based on growth prospects which the two new variables offer that the present product-market does not
Uses of Ansoffs Matrix

A framework to explore directions for strategic growth Most commonly used model for strategic growth
Identify and analyze growth opportunities Considers expected returns and risks
Market Penetration
Advertise to encourage more people
within your existing market to choose your

product, or to use more of it Introduce a loyalty scheme
Launch a price or other special offer

promotions
Increase your sales force activities

Buy a competitor company (particularly in mature markets)
Product Development
Extend your product by producing different variants, or packaging existing products it in new ways
Develop related products or services In a service industry, shorten your time to market, or improve customer service or quality
Market Development
Target different geographical markets at
home or abroad
Use different sales channels, such as
online or direct sales if you are

currently selling through the trade Target different groups of people, perhaps with different age, gender or demographic profiles from your normal customers.
STRATEGY SELECTION
Product-market strategies are evaluated based on:

The organizations business definition, mission, and capabilities. Market capacity and behavior. Environmental forces. Competitive activities.
STRATEGY SELECTION
Product-market strategies are chosen based on:

Costs and benefits of a strategy. Probabilities of success for a strategy.
Analysis of competitive structure, market dynamics, and opportunity costs.

The product itself.
Student Activity???
For a product/service of your company, identify & explain a market penetration strategy and a market development strategy.
End of Session
Discussion on Assignment
3/13/2012

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Professional Diploma In Marketing

AN Kayes, Chartered Marketer/MPP/WK-4

Module 01: Marketing Planning Process

AN Kayes, Chartered Marketer/MPP/WK-4

Section 2: The Marketing Audit & Strategic Outcomes

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

Organizational assets incl.

Operational assets- machinery, process technologies People Assets- human resource

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

Skills Shared Value

processes and IT systems.

AN Kayes, Chartered Marketer/MPP/WK-4

organization anticipation environment so advantage over

organization is structured and who reports to whom.

i.e. Central beliefs and attitudes.

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

carefully considered and integrated to support successful strategy implementation

Examine the likely effects of future changes within a company

AN Kayes, Chartered Marketer/MPP/WK-4

Internal Marketing Environment

Internal Marketing Audit

AN Kayes, Chartered Marketer/MPP/WK-4

Areas of Internal Audit

marketing organisation structure how does it

operate, does it work?

the planning system

marketing functions examines the details of

AN Kayes, Chartered Marketer/MPP/WK-4

Internal Audit Tools

General Electric (GE) matrix

AN Kayes, Chartered Marketer/MPP/WK-4

Product Life Cycle

AN Kayes, Chartered Marketer/MPP/WK-4

Product Life Cycle

products (e.g. cars, washing machines, DVD

Product Life Cycle-Stages

AN Kayes, Chartered Marketer/MPP/WK-3

AN Kayes, Chartered Marketer/MPP/WK-3

Marketing Strategies: Introduction Stage

Low sales High cost per customer Negative

Offer a basic product

Use cost-plus basis Build selective distribution

Marketing Strategies: Growth Stage

Average cost per customer

Maximize market share

Product Price Distribution

AN Kayes, Chartered Marketer/MPP/WK-3

Marketing Strategies: Maturity Stage

Low cost per customer

Product Price Distribution

AN Kayes, Chartered Marketer/MPP/WK-3

Marketing Strategies: Decline Stage

Product Price Distribution Advertising

managing these products in the future?

AN Kayes, Chartered Marketer/MPP/WK-4

The BCG Matrix

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

AN Kayes, Chartered Marketer/MPP/WK-4

BCG Matrix cont.