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MARKETING MANAGEMENT (MKT-522) CHAPTER-2

Q-1. Define strategic marketing planning. How strategic planning is carried out at the
corporate and division level of an organization?

“Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit
between the organization’s objectives, skills and resources and its changing market opportunities.”

………………Philip Kotler and Kevin Lane Keller

“Strategic marketing planning is the continuous process of developing and implementing marketing
strategies to achieve specific marketing objectives, which in turn lead to the achievement of an
organization’s overall objectives.”

……………..Steven J. Skinner

All corporate headquarters undertake four planning activities;

1. Defining the corporate mission,

2. Establishing strategic business units (SBU),

3. Assigning resources to each SBU,

4. Assessing growth opportunities.

1. Defining the corporate mission:

Defining the corporate mission is the first step of strategic marketing planning

“A mission statement is a statement of the organization’s purposes- what it wants to accomplish in the
larger environment.” …….Philip Kotler and Gary Armstrong

Organizations develop mission statement to share with managers, employees, and (in many cases)
customers.

Good mission statements have five major characteristics;

First, they focus on a limited number of goals.

Second, mission statement stress the company’s major policies and values.

Third, they define the major competitive spheres within which the company will operate, like;

i. Industry scope,

ii. Products and application scope,

iii. Competence scope,

iv. Market-segment scope,

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v. Vertical scope,

vi. Geographical scope.

Fourth, they take a long-term view.

Finally, a good mission statement is as short, memorable and meaningful as possible.

2. Establishing strategic business units (SBUs)

Companies often define their businesses in terms of products: they are in the “auto business” or the
“clothing business”. But Levitt argued that market definitions of a business are superior to product
definitions.

A business can be viewed in terms of three dimensions;

1. Customer groups,

2. customer needs, and

3. Technology.

Large companies normally manage quiet different businesses, each requiring its own strategy.

“Strategic business unit (SBU) is a single business or collection of related businesses that can be planned
separately from the rest of the company.”

……………Philip Kotler and Kevin Lane Keller.

An SBU has three characteristics:

i. It is a single business, or collection of relates businesses, that can be planned separately from the
rest of the company,

ii. It has its own set of competitors,

iii. It has a manager responsible for strategic planning and profit performance, who controls most of
the factors affecting profit.

The purpose of identifying the company’s SBUs is to develop separate strategies and assign appropriate
funding.

3. Assigning resources to each SBU:

The purpose of identifying the company’s business units is to develop separate strategies and assign
appropriate funding.

Two of the best-known business portfolio evaluation models are:

a. The Boston Consulting Group model, and

b. The General Electric model.

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Q-2. What is mission statement? Why it is so important to a company and what are major
characteristics of a good mission statement?

What Is a Mission Statement?

A mission statement is a sentence or short paragraph that defines the existence of a business, nonprofit,
government organization, or any other entity. Mission statements get at the heart of why a company
exists, rather than how it exists. In other words, a mission statement isn't a business plan that explains
how the entity will turn a profit; it's a statement that defines the motivation for trying to turn a profit in the
first place.

Importance of mission statement

It's also important to avoid confusing a mission statement with a vision statement. The difference is that a
mission statement focuses on a company’s present state while a vision statement focuses on a company’s
future.

* A mission statement answers the question "Who are we?" and the vision statement answers the question
"Where are we going?"

*To define its mission, a company should address Peter Drucker’s classic questions: What
is our business? Who is the customer? What is of value to the customer? What will our business
be? What should our business be?

*Organizations develop mission statements to share with managers, employees, and customers.

*A clear, thoughtful mission statement provides a shared sense of purpose, direction, and opportunity.

*Mission statements are at their best when they reflect a vision, an almost “impossible dream”
that provides direction for the next 10 to 20 years.

Good mission statements have five major characteristics.

1. They focus on a limited number of goals. The statement “We want to produce the highest quality
products, offer the most service, achieve the widest distribution, and sell at the lowest
prices” claims too much.

2. They stress the company’s major policies and values. They narrow the range of individual
discretion so employees act consistently on important issues.

3. They define the major competitive spheres within which the company will operate.
4. They take a long-term view. Management should change the mission only when it ceases
to be relevant.

5. They are as short, memorable, and meaningful as possible. Marketing consultant Guy Kawasaki
advocates developing three- to four-word corporate mantras rather than mission statements, like“Enriching
Women’s Lives” for Mary Kay. Compare the rather vague mission statements on the left with Google’s
mission statement and philosophy on the right:
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Q-3. What do you mean by strategic business unit (SBU)? Discuss the characteristics of
an SBU.

Definition of 'Strategic Business Unit'

Definition: 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.

Description: A strategic business unit or SBU operates as an independent entity, but it has to report
directly to the headquarters of the organisation 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. There are several benefits of having an SBU. This principle works best for organisations
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.

Characteristics of Strategic Business Unit

 Separate business or a grouping of similar businesses, offering scope for autonomous planning.
 Own set of competitors.
 A manager who is accountable for strategic planning, profitability and performance of the division.
A strategic business unit is specially formed to target a particular market segment, which requires
expertise in production or management, not present in the parent company.

 Strategic Business Unit utilizes a product-market strategy.

 SBU is a part of the organizational structure.

 It is regarded as organizational units that are devoid of individual and independent legal

personality.

 They perform activities that are considered the utmost crucial and significant for the entire

organization concerning decision making.

 It has a divisional structure determined by its size of production, accounting processes, research

and development activities, and marketing function.

 Strategic Business Unit decision-making autonomy comprises production, laboratory testing,

finance, production preparation, accounting, and marketing.

 They enable the organization to enjoy autonomous planning functions.

 It is responsible for functions like strategic planning, performance, and profitability of the division.

 Strategic Business Unit even has a set of competitors.

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4. Assume that, you are the responsible executive of Akij food and Beverage co. Ltd. And assigned

to determine the appropriate position of its SBUs to allocate optimum resources on them. How can

you measure the SBUs positions by using BCG matrix?

The BCG matrix, also known as the Boston growth-share matrix, is a tool to assess a company’s current
product portfolio. Based on this assessment, the Boston matrix helps in the long-term strategic planning of
the company’s portfolio, as it indicates where to invest, to discontinue or develop products. As the name
suggests, the BCG matrix has been developed by the Boston Consulting Group, and it has become a very
popular tool to assess a company’s portfolio and derive strategic investment decisions. But how does the
BCG matrix work?

The Boston Consulting Group (BCG), a leading management consulting firm, developed and popularized
the growth-share matrix, shown in the following figure.
Different business units of a company are been plotted on the matrix and their position in the matrix
represent their current sizes and positions in the company.

The market growth rate on the vertical axis indicates the annual growth rate of the market in which the
business operates.
In BCG matrix, the market growth rate ranges from 0 percent to 20 percent. A market growth rate above
10 percent is considered high.
Relative market share, which is measured on the horizontal axis of the BCG matrix, refers to the SBU’s
market share relative to that of its largest competitor in the segment. It serves as a measure of the
company’s strength of the relevant market segment.
A relative market share of 0.1 means that the company’s sales volume is only 10 percent of the leader’s
sales volume. A relative share of 10 means that the company’s SBU is the leader and has 10 times the
sales of the next strongest competitor in that market.

The growth-share matrix is divided into four cells, each indicating a different types of business:

Question Marks

Question marks are low-share business units in high-growth markets. They require cash to hold their
share, let alone increase it. The company needs to think hard about question marks – which ones should
be built into stars, and which ones should be phased out? Question marks have the following
characteristics:

 Low relative market share in a relatively young but promising market (growing)
 Potential of becoming stars if the market share can be increased
 If necessary market share is not reached, question marks are likely to turn into dogs as soon as
the market gets more mature
 Careful analysis is needed to determine whether to invest or not.

Stars

Stars are high-growth, high-share businesses or products. They often need heavy investment to finance
their rapid growth. Eventually, their growth will slow down, and they will turn into cash cows. Stars have
the following characteristics:
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 High market share in a promising market

 To turn a star into a future cash cow, heavy investment is needed to fight competition and expand
market share.
Cash Cows

Cash cows are low-growth, high-share businesses or products. These established and successful SBUs
need less investment to maintain their market share. As a result, they produce cash that the company
uses to pay its bills and to support other SBUs that need investment. As we have learned, question marks
and stars require heavy investment, which usually comes from the profitable cash cows. Cash cows have
the following characteristics:

 High market share in a slowly growing or mature market

 Create the highest cash flow
 No further investment should be undertaken due to limited or non-existent growth potential
 The company should try to “milk” the cash cows as long as possible.
(Poor) Dogs

Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain
themselves, but do not promise to be large sources of cash flow. Dogs have the following characteristics:

 Low relative market share in a slowly growing or declining market

 Products do mostly not generate large profit and may usually just break even
 The company should divest dogs, as these products have a negative effect on the overall
profitability of the company. Instead of carrying dogs along, the company should better focus on products
or SBUs with greater potential.

Benefits of the matrix:

 Easy to perform;
 Helps to understand the strategic positions of business portfolio;
 It’s a good starting point for further more thorough analysis.

Brand positioning:

 To stand out their brand in the crowded marketplace.

 To stand out brand message from the myriad of messages that clutter consumers’ minds each day
 To offer a unique value proposition.
 Positioning in a way that their product appears better in relation to other products in the market.

BCG Growth Share Matrix:

 BCG Growth share matrix helps to identify brands position in the market as per market share. The
matrix has four segments each reflecting a position of a brand for the company.

 STAR:

 A product in this segment denotes to have high market share when the industry is experiencing
high market growth.
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 CASH COW:

 Product in this segment tends to have maximum market share when the industry is floating in low
market growth.

5. Explain the strategies under the Boston Consulting Group (BCG) approach to determine
the objective, strategy and budget to assign to each strategic business unit.

Purpose

When a company has many different products or even many different lines of business, strategy becomes
more complex. The company not only needs to complete a situation analysis for each business, but also
needs to determine which businesses warrant focus and investment. The BCG matrix (sometimes called
the Growth-Share matrix) was created in 1970 by Bruce Henderson and the Boston Consulting Group to
help companies with many businesses or products determine their investment priorities.

The BCG matrix considers two different aspects of a business unit or product:

1. What is the current market share?

2. What is the market’s growth potential?

Market Share

Market share is the percentage of a market accounted for by a specific product or entity. For instance, if
you run a neighborhood lemonade stand that sells 200 glasses of lemonade each summer, and there are
two other competing lemonade stands that sell 50 glasses and 150 glasses,

Market-Growth Potential

The market-growth potential is more difficult to quantify, but it’s the other important factor in the BCG
matrix. Let’s use some of the products in Proctor & Gamble’s portfolio to identify markets with different
growth potential. How about bathroom tissue—is that a high-growth market?

Understanding the Boston Consulting Group (BCG) Matrix

The horizontal axis of the BCG Matrix represents the amount of market share of a product and its strength
in the particular market. By using relative market share, it helps measure a company’s competitiveness.

The vertical axis of the BCG Matrix represents the growth rate of a product and its potential to grow in the
particular market.

In addition, there are four quadrants in the BCG Matrix:

1. Question marks: Products with high market growth but a low market share.
2. Stars: Products with high market growth and a high market share.
3. Dogs: Products with low market growth and a low market share.
4. Cash cows: Products with low market growth but a high market share.
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Supply Chain with Zero-Based Budgeting

In recent years, consumer packaged goods (CPG) companies have started to use zero-based budgeting
(ZBB) to attack their costs. These initial efforts have typically focused on indirect spending categories
related to selling, general, and administrative expenses. Costs in the supply chain have received less
attention. We believe it is time for that to change. ZBB offers CPG companies the means to achieve step-
change improvements in supply chain performance.

CPG companies have traditionally sought to reduce supply chain costs by 2% to 5% a year. Incremental
reductions are no longer sufficient to withstand the pressures of today’s business environment; companies
must make fundamental changes to their supply chain cost base while improving service and driving
growth. However, at most CPG companies, the organizational setup and capabilities impede efforts to
execute and sustain transformative cost reduction programs. When implemented effectively, ZBB provides
mechanisms and instills mindsets that help overcome these challenges.

Q-6. Explain the General Electric model to determine the objective, strategy and budget to
assign to each strategic business unit.

GE MATRIX

The GE matrix was developed by Mckinsey and Company consultancy group in the 1970s. The nine cell
grid measures business unit strength against industry attractiveness and this is the key difference.
Whereas BCG is limited to products, business units can be products, whole product lines, a service or
even a brand. You can plot these chosen units on the grid and this will help you to determine which
strategy to apply.

Before you can plot anything on the grid however first you need to decide how you will determine both
industry attractiveness and business unit strength.

Industry Attractiveness:
Factors you could choose to base this on include:
 Market size
 Market growth
 Pestel factors
o Political
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o Economical
o Social
o Technological
o Environmental
o Legal

 Porters five forces

o Competitive rivalry
o Buyer power
o Supplier power
o Threat of new entrants
o Threat of substitution

You need to decide which factors you will use as a determining factor as these will be applied to ALL
business units.
Step 1: Decide on determining factors

Step 2: Give each factor a weighting number based on its magnitude (make the total weight of all factors
add up to 1.00 or 10.00 for example)

Step 3: Rate each business unit against each factor on a scale. For example 1 – 5 where 1 is extremely
attractive and 5 is extremely unattractive.

Step 4: Give each business unit a weighted rating on each factor by multiplying its rating by the weight for
that factor.

Step 5: Total up all the weighted ratings for each business unit.
 
Business Unit Strength:
Factors to determine how strong a unit is compared to others in its industry include:
 Market share
 Growth in market share
 Brand equity
 Profit margins compared to competition
 Distribution channel process – the strength of

Now you have the measurements you can plot your business units on the GE matrix and depending on
where they are plotted will determine your strategy from one of the following:
Grow/Invest:

Units that land in this section of the grid generally have high market share and promise high returns in the
future so should be invested in.
Hold/Selectivity:

Units that land in this section of the grid can be ambiguous and should only be invested in if there is
money left over after investing in the profitable units.
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Harvest/Divest:
Poor performing units in an unattractive industry end up in this section of the grid. This should only be
invested in if they can make more money than is put into them. Otherwise they should be liquidated.
As you can see this model is very useful for analysing your business units against multiple factors rather
than the 2 dimensional approach of the BCG.

Q-7. What do you mean by strategic planning gap?How Ansoff’s intensive growth
strategies can help Walton (a leading domestic electronics company) to identify
opportunities to achieve further growth within its current business? Explain.

A strategy gap refers to the gap between the current performance of an organisation and its desired
performance as expressed in its mission, objectives, goals and the strategy for achieving them. Mckeown
argues that a strategic gap may be transformed into a strategic stretch.
Often unseen, the strategy gap is a threat to the future performance—and even survival—of an
organisation and is guaranteed to impact upon the efficiency and effectiveness of senior executives and
their management teams. The strategy gap is considered to be real and exists within most organisations.
[3]
 An article in Fortune magazine (June 1999 edition) stated that some 70% of CEOs' failures were the
result of poor execution rather than poor strategies.

1. Performance Gap: The difference between expected performance and the actual performance.
2. Product/Market Gap: The gap between budgeted sales and actual sales is termed as
product/market gap.
3. Profit Gap: The variance between a targeted and actual profit of the company.
4. Manpower Gap: When there is a lag between required number and quality of workforce and actual
strength in the organization, it is known as manpower gap.

For different types of gaps, various types of strategies are opted by the firm to get over it.

How can a Company Fill the Strategic Planning Gap?

Strategic planning gap can be minimized by exploiting one of the three growth opportunities;

1. Intensive Growth Opportunities: Identifying opportunities to achieve further growth within the

companies current businesses.

2. Integrative Growth Opportunities: Identifying opportunities to build or acquire businesses that

are related to the company’s current businesses, and

3. Diversification Growth Opportunities: Identify opportunities to add attractive businesses

unrelated to the companies’ current businesses.

We shall now turn our attention to each of the growth opportunities mentioned above :

Intensive Growth Opportunities

Intensive growth opportunities are those present in the current product market. Management should first
try to identify whether there are any opportunities in the company’s current product-market activities.
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1. market penetration;
2. market development; and
3. product development.
Market Penetration
In a market penetration strategy, a company attempts to fill an existing market’s needs with its present
products. This type of strategy may use several approaches.

Market Development

A market development strategy occurs when the marketing manager attempts to find new markets for its
existing products or services.

Product Development

A product development strategy exists when the manager attempts to develop new or improved products
for customers in its present markets. A number of approaches may be used here also.

Integrative Growth Opportunities

Integrative growth opportunities are those present in the other parts of the core marketing system.

Backward Integration

If a company seeks ownership or increased control of its supply system, it is called backward integration.

Forward Integration

If a company seeks ownership or increased control of its distribution system, it can be termed as forward
integration.

Horizontal Integration

If a company seeks to own or exert control over some of its competitors, it can be called horizontal
integration.

Diversification Growth

Diversification growth opportunities are those present completely outside the core marketing system of the
company. This type of growth opportunities makes sense for a company under the following situations:

 If the core marketing system does not show much additional opportunity for growth or profit;

 If the opportunities outside of the present core marketing system are superior.

Concentric Diversification

If a company seeks to add new products in its product line (s) with technological and/or marketing
synergies with the existing product line/s, it is named concentric diversification.
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Horizontal Diversification

If a company seeks to add new products to its existing product line(s) that could appeal to its present
customers, it is termed horizontal diversification.

Conglomerate Diversification

If a company plans to add new products into the existing product line (s) for new customers, it is called
conglomerate diversification.

Q-8. How different possible diversification strategies can help marketers to fill up strategic
planning gap? Explain with appropriate examples.

Gap Analysis

Identifying the reasons behind the performance gap

Once a business has identified a performance gap, the first challenge in closing the gap is to identify the
causes behind the gap. There could be any number of reasons within the marketing environment including
poor sales strategy, strong competition, or a struggling national economy. The cause could be obvious or
the company may need to carry out research to find out exactly what the problem is. Once an accurate
cause (or causes) have been discovered the firm can write a specific action plan to deal with the causes
behind the performance gap.

Closing the Performance gap through Corporate Strategy

If the cause of the gap is the manner in which the firm carries out its business operations a change in
corporate strategy is required. A good starting point for a change in strategy is Ansoff's Growth Matrix.
Ansoff's growth strategy provides the firm with one of four options and involves a firm's products and the
markets it operates in. Under Ansoff's matrix a firm can employ a market penetration strategy, product
development strategy,  market development strategy or a diversification strategy to help close the gap.

Performance Gap closure through Tactics (Actions)

Whereas strategy is about how the firm will close the gap, tactics are about the action (what) they will
undertake. Tactics are specific actions with a specific aim and they are often implemented over a short
term. For the purposes of this discussion the aim of the tactics is to close the performance gap between
how the business is performing and how it would like to perform.

Diversification is a corporate strategy to enter into a new products or product lines, new services or new
markets, involving substantially different skills, technology and knowledge.
Diversification is one of the four main growth strategies defined by Igor Ansoff in the Ansoff Matrix:[1]

Products

Present New
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Present Market penetration Product development

Market
s
Market
New Diversification
development

Ansoff pointed out that a diversification strategy stands apart from the other three strategies. Whereas, the
first three strategies are usually pursued with the same technical, financial, and merchandising resources
used for the original product line, the diversification usually requires a company to acquire new skills and
knowledge in product development as well as new insights into market behavior simultaneously.

Concentric diversification
This means that there is a technological similarity between the industries, which means that the firm is
able to leverage its technical know-how to gain some advantage. For example, a company that
manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The
technology would be the same but the marketing effort would need to change.
Horizontal diversification
The company adds new products or services that are often technologically or commercially unrelated to
current products but that may appeal to current customers. This strategy tends to increase the firm's
dependence on certain market segments. For example, a company that was making notebooks earlier
may also enter the pen market with its new product.
Conglomerate diversification (or lateral diversification
If a company plans to add new products into the existing product line (s) for new customers, it is called
conglomerate diversification.

The company makes such a decision because it promises to offset some deficiency or represent a great
environmental opportunity. The added products have no relationship to the company’s current market,
products, or technology.

Conclusion

Effective gap analysis requires accurate performance information about the firm and the market. Before
writing plans to deal with the "gap", firms should ensure that their targets (where they would like to be) are
realistic. Otherwise it may seem like there is a problem when the real issue is that the firm has set targets
that can not be achieved. If targets are realistic the next step is identification of the cause followed by an
appropriate action plan to close the gap.

Q-9. Define strategic marketing planning. How strategic planning is carried out at the
business unit level?

“Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit
between the organization’s objectives, skills and resources and its changing market opportunities.”

………………Philip Kotler and Kevin Lane Keller

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“Strategic marketing planning is the continuous process of developing and implementing marketing
strategies to achieve specific marketing objectives, which in turn lead to the achievement of an
organization’s overall objectives.”

……………..Steven J. Skinner

The Business unit Strategic Planning process consists of the steps shown in the following figure:

The Business Mission

Each business unit needs to define its specific mission within the broader company mission. Thus, a
television-studio-lighting-equipment company might define its mission as, “To target major television
studios and become their vendor of choice for lighting technologies that represent the most advanced and
reliable studio lighting arrangements.” Notice this mission does not attempt to win business from smaller
television studios, offer the lowest price, or venture into nonlighting products. SWOT Analysis.
The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats is called
SWOT analysis. It’s a way of monitoring the external and internal marketing environment.

EXTERNAL ENVIRONMENT (OPPORTUNITY AND THREAT) ANALYSIS A business unit must monitor
key macroenvironment forces and significant microenvironment factors that affect its ability to earn profits.

A marketing opportunity is an area of buyer need and interest that a company has a high probability
of profitably satisfying. There are three main sources of market opportunities.31 The first is to offer
something that is in short supply. This requires little marketing talent, as the need is fairly obvious.

The second is to supply an existing product or service in a new or superior way.How? The problem
detection method asks consumers for their suggestions, the ideal method has them imagine an ideal
version of the product or service, and the consumption chain method asks them to chart their steps in
acquiring, using, and disposing of a product. This last method often leads to a totally new product or
service.

Marketers need to be good at spotting opportunities. Consider the following:

• A company may benefit from converging industry trends and introduce hybrid products or
services that are new to the market. Major cell manufacturers have released phones with
digital photo and video capabilities, and Global Positioning Systems (GPS).

• A company may make a buying process more convenient or efficient. Consumers can use the
Internet to find more books than ever and search for the lowest price with a few clicks.

• A company can meet the need for more information and advice. Angie’s List connects individuals
with local home improvement contractors and doctors that have been reviewed by others.

• A company can customize a product or service. Timberland allows customers to choose colors
for different sections of their boots, add initials or numbers to their boots, and choose different
stitching and embroidery.

• A company can introduce a new capability. Consumers can create and edit digital “iMovies” with the
iMac and upload them to an Apple Web server or Web site such as YouTube to share with friends around
the world.
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• A company may be able to deliver a product or service faster. FedEx discovered a way to deliver
mail and packages much more quickly than the U.S. Post Office.

• A company may be able to offer a product at a much lower price. Pharmaceutical firms have created
generic versions of brand-name drugs, and mail-order drug companies often sell for less.

• An environmental threat is a challenge posed by an unfavorable trend or development that, in the

absence of defensive marketing action, would lead to lower sales or profit. Figure 2.4 (b) illustrates the
threat matrix facing the TV-lighting-equipment company. The threats in the upper-left cell are major,
because they have a high probability of occurrence and can seriously hurt the company.

Q-10. Assume that, you are the marketing executive of Nestle Bangladesh Ltd. and want to
achieve your organizational goal by designing an effective strategy. How Porter’s Generic
strategies can help you in this regard? Explain.

The strategies of NBL are as follows:

• To offer strong brands to the consumers.
• To keep the best relationships with consumers.
• To invest in Research and Development (R&D) for the development of the products.
• To maintain innovation and renovation of the products.
• For the product availability to all type of consumers.

The products of Nestlé Bangladesh Limited (NBL) are [22];

• Beverage: Shad-Nescafé, Nescafé 3 in 1, Coffee Mate, Gold e-Magic Nestea, and Nesfuta.

• Culinary: Maggi Noodles, Shad-e-Magic, Maggi Healthy Soup, Magic Cube.

• Dairy: Nido Fortified, Nido 2+, Nido 3+, Nido Growing up Milk.

• Breakfast Cereal: Cornflex, Koko Crunch and Huny Gold.

• Nutrition: Lectozen, Lactogen Recover, Prelactogen, NAN, All 110, BABY & Me and Cerelac (Different
flavors).

• Confectionary: Nestlé Munch Rolls. Nestlé NAN is the first nutrient system clinically proven to enhance a
baby’s immune defenses which reduce allergic symptoms by 50%.

Cost leadership firms retain profitability by keeping costs low through:

1. increasing asset utilisation: for example, an airline that can turn aircraft around more quickly at
the gate, a restaurant that can turn tables more quickly, or a management consultancy can charge more
billable hours per member of staff and/or have fewer support staff, a factory can run expensive machinery
24 hours a day, etc.
2. increasing economies of scale: for example, manufacturers that produce and sell higher volumes
of goods can negotiate better deals on raw materials and distribution, and use more specialised
equipment and processes.
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3. utilising the experience curve: for example, firms that repeat processes more frequently and over
a longer period of time can use statistical and other methods to learn about and improve those processes.
4. standardisation: offering few options on products and services, like the Model T Ford "any colour
as long as it is black" approach. This will help to drive asset utilisation, economies of scale and the
experience curve.
5. process innovation: for example, by finding a substantially cheaper way to produce something.
6. employing other low-cost strategies, including operating from low-cost locations, outsourcing, etc.

Differentiation

In differentiation strategies, firms compete by offering superior products or services to customers, usually
at higher prices.

Firms achieve differentiation through:

1. customer intimacy: having strong relationships with their customers and knowing what they want
and value.
2. product or service innovation: developing new products, services and features to satisfy those
wants and needs (learn more).
3. brand building: to convince customers that a firm's products or services are somehow superior to
a greater extent than what they really are, or to convince customers that they want product or service
features the firm offers more than they actually need them.

How to use the generic strategies

1. Decide which of the three generic strategies you want to pursue It is often, but not universally true
that larger firms must choose between cost leadership and differentiation, whilst smaller firms must pursue
focus.

2. Actively develop strategies and pursue which are aligned to and strengthen that position See the
three descriptions above for examples of the kinds of strategies you might pursue under each of the three
generic strategies.

3. Identify and phase out any activities you currently undertake which do not support your chosen
generic strategy.

4. When evaluating new opportunities, eliminate those which are not compatible with your chosen
generic strategy.

Q-11. How McKinsey’s 7S framework helps marketers for successfully implementing their
strategies? Explain.

McKinsey 7s model
 
is a tool that analyzes firm’s organizational design by looking at 7 key internal elements: strategy,structure,
systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow
organization to achieve its objectives.
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When to Use the McKinsey 7-S Model

You can use the 7-S model in a wide variety of situations where it's useful to examine how the various
parts of your organization work together.

For example, it can help you to improve the performance of your organization, or to determine the best
way to implement a proposed strategy.

The Seven Elements of the McKinsey 7-S Framework

Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully
compete in the market. What does a well-aligned strategy mean in 7s McKinsey model? In general, a
sound strategy is the one that’s clearly articulated, is long-term, helps to achieve competitive advantage
and is reinforced by strong vision, mission and values.

Structure represents the way business divisions and units are organized and includes the information of
who is accountable to whom. In other words, structure is the organizational chart of the firm.

Systems are the processes and procedures of the company, which reveal business’ daily activities and
how decisions are made.

Skills are the abilities that firm’s employees perform very well. They also include capabilities and
competences. During organizational change, the question often arises of what skills the company will
really need to reinforce its new strategy or new structure.

Staff element is concerned with what type and how many employees an organization will need and how
they will be recruited, trained, motivated and rewarded.

Style represents the way the company is managed by top-level managers, how they interact, what actions
do they take and their symbolic value. In other words, it is the management style of company’s leaders.

Shared Values are at the core of McKinsey 7s model. They are the norms and standards that guide
employee behavior and company actions and thus, are the foundation of every organization.

Using the McKinsey 7-S Model

You can use it to identify which elements you need to realign to improve performance, or to maintain
alignment and performance during other changes. These changes could include restructuring, new
processes, an organizational merger, new systems, and change of leadership.

Follow these steps:

1. Start with your shared values: are they consistent with your structure, strategy, and systems? If
not, what needs to change?

2. Then look at the hard elements. How well does each one support the others? Identify where
changes need to be made.
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3. Next, look at the soft elements. Do they support the desired hard elements? Do they support one
another? If not, what needs to change?

4. As you adjust and align the elements, you'll need to use an iterative (and often time-consuming)
process of making adjustments, and then re-analyzing how that impacts other elements and their
alignment. The end result of better performance will be worth it.

Q-12. Suppose that, you are the product manager of a multinational company and
assigned to develop a marketing plan for one of its product. How will your plan look like?
What will it contain? Explain.

7 Steps to creating an effective marketing plan

A Marketing Plan is a bit like a job description for your company. Everyone should have one, but they’re
often not fit for purpose, out of date and reviewed infrequently... Research has shown that businesses with
plans succeed, outperform competitors, and retain staff, more than those with no plan. Without a plan
there’s no direction for the company or its employees, decisions can be uninformed, opportunities can be
missed and threats can damage or destroy the business.

It can be daunting to develop a marketing plan for the first time, so this Guide takes you through a step by
step process. And, if you’ve already got some of the work in place or available, you can move swiftly on to
the next step!

Step 1. Situation Analysis - Understand your customers

As part of PR Smith’s SOSTAC® model, a good plan starts with a situation analysis to see where the
business is now. Gain an overview via your customers, but don’t forget to ask the right questions. One of
my pet hates is the ‘hypothetical question’ e.g. A hotel asking “if you would stay here again?” It’s possible
you would stay there again, but if it’s been a one-off visit it’s very unlikely it will actually happen. Removing
hypothetical questions ensures you capture facts not fiction.

Step 2. Situation Analysis - Marketing audit: where are we now?

After you’ve captured customer insights, the next step is a comprehensive review or audit of the business.
Most countries publish statistical data on businesses in their region. This can tell you the number of
businesses in specific sectors, average numbers of employees, average earnings, average income per
household and more. This valuable information highlights market values, market potential and
opportunities. This enables you to understand where your business sits in its market sector and the market
share available.

Step 3. Objectives - Create sustainable objectives: Where do we want to go?

It’s easy to create general objectives; it’s harder to develop SMART objectives.

Taking this one stage further, businesses that use numbers alone often miss key values inside the
business. It’s easy to become numbers-driven; it’s harder to create ‘softer’ objectives. In Emarketing
Excellence (2012) ,Dave Chaffey and PR Smith developed the 5s model, initially as a mechanism for
reviewing websites. I’ve used this for many years to develop business objectives. It tends to challenge the
thinking within a business and gets the owners and managers considering the business as a whole, rather
than sales alone.
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Step 4. Strategy: Segment your customer base

Key strategic initiatives for your business will include one or more of these options:

 Enter new markets

 Develop new products
 Improve the competitive position of the business
 Maintain the competitive position
 Harvest part of the business
 Exit the business
When you know the strategic initiatives the business is taking, it’s easier to segment your customer base,
whether you’re B2B, B2C or a blend of both. You can use the mnemonic SUPERB to identify your
customer segments:

 Size – Is the market large enough to justify segmenting?

 Unique – Do measurable differences exist between segments?
 Profits – Do anticipated profits exceed the costs of additional marketing plans and other changes?
 Easy Access – Is each segment easily accessible to your team?
 Reaction – Is the market able to react to your communications?
 Benefits – Will the different segments need different benefits?

Step 5. Strategy: Target new customers and position your business

Growing a business always involves finding new customers, this may be different segments or markets
and may encourage your business to look at product development.

What opportunities are there in your business to:

 Sell more of your existing products or services to your existing customer base? (Market
Penetration Strategy)
 Introduce your existing product range to a new customer group? (Market Development Strategy)
 Augment or improve the existing product offer? (Product Development Strategy)
 Move into a new market with a new product offer using the skills within the business?
(Diversification Strategies)
Pricing is a critical area in any business. Kotler (1988) described nine marketing mix
strategies on price quality, which we look at in detail in the Business marketing plan guide for Business
members, to support your pricing strategy development.
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And which of these strategies are your main competitors using?

Step 6. Tactics and Action - Create your marketing action plan

The key to making it happen is to create a detailed marketing action plan. If you don’t have time to conduct
each step yourself, you can explore other options and contract out specific tasks to an external consultant
or agency.

I have found that an Action Plan that includes more detail, nominates someone to do the work and sets
dates by when it should be completed, is more likely to get done than a loose set of instructions. A good
action plan becomes ’work instructions’ for different people.

Step 7. Control - Monitor, manage and improve

The final step is about monitoring action, managing the process and measuring results. The 7 steps to
make your plan happen are:

1. It is essential to maintain the impetus, start the plan today, not tomorrow.

2. Appoint one person to monitor the entire plan and give them the authority to do so.

3. Regular meetings should be held to review the plan. These could be 20-minute meetings at the
start of the week.

4. If you don’t do it today, your competitors will start tomorrow.

5. If one item is difficult to start, move on to the next area.

6. At the end of each quarter, review what has taken place and where more help is needed.

7. The most successful businesses stick to the plan and make it happen – whilst still getting on with
the day job.

or
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Step 1: Take a snapshot of your company’s current situation.

Step 2: Define who your target audience is.

Step 3: Make a list of your marketing goals.

Step 4: Research marketing tactics

Step 5: Set your marketing budget.