MM – Instructor Manual

CHAPTER 14 - MARKETING STRATEGY

KNOWLEDGE OBJECTIVES

1. Understand the importance of some marketing tools for strategy, including the BCG matrix for
portfolio assessment and Ansoff’s growth matrix.
2. Become familiar with the role corporate identity plays in strategic behavior
3. Recognize the significance of marketing metrics in strategy

CHAPTER OUTLINE

 Types of Business and Marketing Goals

 Marketing Strategy
 How to “Do Strategy”
 Key Marketing Metrics

1. Introduction

Section relates to knowledge objective #3

Marketing strategy centers on assessing the current situation and determining future direction.

2. Portfolio Assessment

Section relates to knowledge objective #1

As part of the overall marketing management process and an integral part of strategy
formulation, managers assess their collections of products or product lines. The Boston
Consulting Group (BCG) matrix is a commonly used graphical tool used in portfolio assessment.

Figure 14.1 Portfolio Analysis

This figure applies to knowledge objective #1

Figure details the Boston Consulting Group (BCG) matrix used in portfolio analysis. Market
Growth Rate is on the vertical and relative market share on the horizontal. There are four
categories of products. Products in low growth markets and with low relative share are referred
to as “dogs.” Products in high growth markets but having low share are referred to as “question
marks” (sometimes as “problem child”). Product in high growth markets with high relative
market share are referred to as “stars.” Products in low growth markets but with high relative
market share are referred to as “cash cows.”

3. Corporate Identity

Section relates to knowledge objective #2

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 MM – Instructor Manual

Some companies are innovative, taking pride in regularly bring new products to market. Others
are more conservative and rarely do so. Some companies are leaders, while others are followers.
Firms can be leaders due to having the largest market share. Other firms can be leaders because
of being first to bring new products to market. Still others are leaders for improving upon what
is in the market or through great customer service. Companies rarely behave the same way for
every product, at all times.

4. Measures for Marketing Strategy

Section relates to knowledge objective #3

Marketing strategy is the link between corporate goals and operational tactics. Measures are
critical during both assessment and planning. In addition to profits and other financial measures,
marketers must keep track on such measures as satisfaction, levels or awareness, and trial and
repeat purchasing.

Figure 14.2 $Cha-Ching: How to Increase Profitability

This figure applies to knowledge objective #3

Figure reveals several ways to increase profits through a tree (or branching) style chart. Firms
can increase profits by decreasing costs. Firms can also increase profits by increasing revenue.
Revenue can be increased by changing price or through an increase in volume. Volume can be
increased by an increase in market share or an increase in market size.

Marketers increasingly refer to a “dashboard” as an analogy for the many indicators of a

performance that should be monitored, much like an instrument panel on an automobile.

Figure 14.3 Dashboard

This figure applies to knowledge objective #3

Figure provides an illustrative example of what a dashboard might look like and may entail.
Some measures on a dashboard would likely include sales, profit margins, market share,
employee satisfaction, and customer satisfaction.

Figure 14.4 Scorecard

This figure applies to knowledge objective #3

Figure provides a radar chart as a variation on the dashboard depicted in figure 14.3(.) In the
case of this particular chart, scores near the center are bad. Scores can be obtained through
management judgment or through ratings indices.

Figure 14.5 Marketing Metrics Visualization

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 MM – Instructor Manual

This figure applies to knowledge objective #3

Figure shows that dashboards, or scorecards, or graphic representation of metrics can take any
form, ranging from line charts, or pie charts, to bar charts.

5. Goals

Section relates to knowledge objective #3

Marketing strategy links goals and tactics. There are 4 classes of goals: making money, pleasing
customers, repositioning ourselves in the market place, or achieving broader social goals.
Whether sales goals or profit goals, most companies have basic growth goals. How are these
goals met through expanding the business(es) is the key issue. Firms must also consider the
numerous customer based initiatives previously discussed. Examples of such initiatives include
enhancing customer loyalty of considering what CLV components are most effective. Goals can
cover all of the elements of the 4P’s for reshaping the firm’s position in the marketplace. Goals
can also involve much grander social goals. There are three strategies: Do nothing, do nothing
differently, do something different. In considering doing something the 2 x 2 x 2 x 2 positioning
matrix in Chapter 4 serves as an excellent starting point.

TEACHING NOTE: In emphasizing social goals, a reminder of the social welfare implications
associated with marketing may be timely. Because exchange occurs between two parties within
a social environment in which other parties may be impacted by the exchange, firms should be
aware of the social welfare impact – Do I benefit? Does the customer? Does society? Firms do
consider the wider social impact of their activities. There are many examples of firms that have
incorporated social goals into their corporate identity abound. Several firms are frequently noted
in the popular press: The Body Shop and Patagonia are well known examples. Brooks recently
introduced Brooks introduced a new biodegradable midsole, BioMoGo. For example of a
smaller firm see the following article
http://www.washingtontimes.com/news/2009/jan/20/running-to-recycling/

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

1. Judging some brands just by their advertising—the content of the ads and the media in
which the company places the ads—describe the strategies of the brand managers of
Pepsi, Coke, Dr. Pepper, and Mountain Dew. Do the same for BMW vs. Hyundai vs.
Prius.

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Pepsi is clearly the follower and also the aggressor having Coke clearly in its sites. It is
aggressive in its attacks on Coke and its strategies are that of attack and expressing that
Pepsi is “young” while Coke is “old”. Refer to the advertising links in the earlier chapters
for comparative ads featuring Pepsi. Dr. Pepper’s ads (“I want it all”, “I would do
anything”) are in fact, outside of Pepsi direct assault on Coke, are quite similar. Its
advertising is directed at younger consumers as indicated by where the ads are placed and
the actors in the ads. Dr. Pepper stresses that its product is exciting and full of flavor (23 in
fact), and Dr. Pepper users would go to great lengths to, even to the detriment of personal
relationships to enjoy a Dr. Pepper. Advertisements for Mountain Dew have featured action
start Steven Seagal and Jackie Chan. They attempt to create an even more exciting image
for the product. The tag line for the Jackie Chan commercial is “nothing is more intense
than slamming a Dew.” Not drinking, slamming. It’s intense! It is worth noting that only
Coke regularly does NOT take this aggressive approach.

These advertisements for BMW stand in stark contrast to the advertising for the beverages
above.
BMW=seductively sexy, performance. A timeless classic (never old, never dated).
Hyundai has a more difficult time due to the wide price range of its automobiles for sub
$10,000 to the luxury Genesis. So, each one of these vehicles has a slightly different tone
due to the different strategy involved. However, the Sonata and Genesis do share some
similarities as both are taking on entrenched (established) competitors. So both use some
rational appeals in their advertising. Genesis, that it won best car 2008. The Sonata that it
costs 1,000’s less than comparably equipped Hondas and Toyotas.
Toyota Prius at least at the time of this ad was clearly positioning itself towards
environmentally concerned consumers. Very aspirational.

2. Think about the company where you currently work or most recently worked. How does
the company see itself? A leader, fast follower, etc.? Do you believe the company’s self-
perception is accurate, or is it wishful thinking?

Ask students to review the company’s mission statement. Does it reveal anything about itself
in regards to the above? Why do student agree of disagree with it?

For students not fully in the work force, have them select a company they may be familiar
with as a consumer. Have them review the mission statement. Ask to consider whether they
agree with the mission statement (why or why not).

3. What metrics does your company watch? Are they the right indicators? If not, how might
the dashboard be changed or supplemented?

Employed students could mention just about anything including profits, market share, back
orders, inventory levels, order fill time, customer satisfaction, returns, and shrinkage.

For students not fully in the workplace, have students consider what metrics the college or
university might have. Average GPA, years to completion, majors, enrollment, transfer
rates, retention rates are just a few.

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4. Think across your company’s brands and products. Which one(s) might be suitable for
each of these strategies:
a. “Do nothing” (e.g., a cash cow brand)
b. “Do nothing different” (e.g., a mature product in a stable market)
c. “Change in strategy is needed”?
What factors (from the 5Cs) support your concern for change? How will you modify the
4Ps accordingly?

As an alternative exercise have students quickly review a company or TV network.

Evaluate products as potential for the above a – c.

SUGGESTED ANSWERS TO MARKETING PLAN QUESTIONS

Now that we’ve discussed strategies, try to fill in answers for the following questions. The
questions on “context” and “competitors” were first posed in Chapter 13, and the questions on
“collaborators” resonate with those answered for Chapter 9—see if your former answers hold,
of if you’d like to revise any of them.
Company
What are we good at? Known for? Do a SWOT. Company1
What do we want to become? Future strategy. Company2

Context
Is the economy a factor? Is it stable? Growing? What's the consumer mood? Context1
Are politics a factor? Are our partners stable? Context2
Is legal a factor? Are there any consumer laws looming? Context3
Is technology a threat/opportunity? Machines? IT? Context4
Any societal concerns? Demographic shifts? Attitude shifts? Context5

Collaborators
Good relations with supply chain providers? Collaborators1
Good relations with distribution channel members? Collaborators2
Want any modifications? Collaborators3

Competitors
Who are our major competitors (define this broadly)? Competitor1
What are our competitors’ strengths? Competitor2

Having covered the material and activities of the previous chapters, now should be the time to
review all prior activities. For the energy drink example, students should know each of the
major competitors in the market, recent entrants (Coca-Cola’s Vault?) and have a perceptual
map of the market. They should have developed a budget and timeline for spending. During the

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 MM – Instructor Manual

review, students should begin to address “future strategy” which could entail projected product
introductions or line extensions.

SUGGESTED ANSWERS TO MINI-CASE: THE GENERAL ELECTRIC MODEL FOR

MARKETING STRATEGY

The case really just outlines the use of the GE model, so it might be applied to anything. Perhaps
some company is in the news (Apple with some new “i-something”) and that product/brand can
be compared to others. Perhaps the class has just finished some HBS case discussion and the GE
model can be applied to it. The steps are pretty straightforward. The students may get nervous
about the assumptions they make—after all, most of the pieces are judgments and rating scales.
For the ones who get more nervous (usually the “quant” types), encourage them to turn this GE
modeling exercise into a “what if” exercise—put all the pieces into a spreadsheet, and see how
much the end result changes, if some of the input assumptions/numbers change. That will give
them a good feel for which assumptions are more important than others.

VIDEO OVERVIEW & DISCUSSION QUESTIONS

Timbuk2 (11:35)

The primary questions in developing marketing strategy are where are we now and where do we
want to go. Timbuk2 was in a slow revenue decline. Its goal was to increase revenue to $25
million in 5 years. Its product portfolio consisted of a single product in multiple colors. It
planned to grow its revenue through not only expanding its market share but also expanding its
product line.

Discussion Questions:
1. Given the management adage, “You measure what matters,” discuss what matters to
Timbuk2. Discuss which metrics you might expect to see on Timbuk2’s dashboard.

2. Why do you think it is important for Timbuk2 to meet so often with its staff -- daily
instead of quarterly?

3. How would expanding its product line potentially impact sales? Discuss some ideas for
potential product lines that Timbuk2 might consider carrying.

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