AN INTRODUCTION TO MARKETING STRATEGY

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AN INTRODUCTION TO MARKETING STRATEGY A
presentation to AUT Marketing Management Roger
Marshall, Semester 2, 2008
Marshall on Marketing
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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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Marketing as a Process
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Marketing as a Process

• Marketing
• mix
• Product
• Distribution
• Promotion
• Price

Monitor
Target market(s)
Portfolio planning
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Marketing as a Process
Corporate level Objective setting.
Portfolio planning. Resource assessment.
Functional level Segmentation. Environmental
scanning. Marketing mix decisions.
Monitoring.
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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

8
Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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Objectives...
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Objectives...
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Objectives...
Personal selling Extensive Limited
Constraints imposed by Corporate objectives
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levels of objectives

• Corporate-level goals are rather general
• in nature, even visionary, and provide a
• long-term sign-post. Usually called a
• Mission Statement.

• Business unit-level goals are operational
• statements and are much more specific.

• Functional-level goals are very specific,
• and are usually short-term.

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An example close to home...
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AUT Mission Statement
Foster excellence, equity and ethics in
learning, teaching, research and scholarship and
in so doing serve our regional, national and
international communities.
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Strategic themes

• Five key strategic themes guide the future
  development of the University
• AUT University will provide excellent education
• that inspires students to reach their full
• potential.
• AUT University will conduct excellent research,
• advancing knowledge and practice in its areas
  of
• expertise and supporting its higher education
  
• programmes.

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Strategic themes

• AUT University will actively engage with the
• communities it serves, and contribute to
  their
• social and economic development.
• AUT University will attract, develop and retain
• excellent staff.
• AUT University will ensure its sustainability
• through good management, strong performance
• and reputation.

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Objectives to attain Theme 1

1. To ensure that AUT graduates are knowledgeable,
   sought after and inspirational
2. To enhance curriculum flexibility and increase
   student choice
3. To build and broaden discipline strengths
4. To encourage students to progress to, and be
   successful in, higher education programs
5. To ensure that the student learning experience is
   of high quality

AUT University will provide excellent
education that inspires students to reach
their full potential.
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Objectives to attain Theme 1

1. To ensure that AUT graduates are knowledgeable,
   sought after and inspirational
2. To enhance curriculum flexibility and increase
   student choice
3. To build and broaden discipline strengths
4. To encourage students to progress to, and be
   successful in, higher education programs
5. To ensure that the student learning experience is
   of high quality

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Tactics to attain Objective 3

• To build and broaden discipline strengths
• Developing a wider range of new programmes,
• majors and minors
• Extending the range of professional
• qualifications, particularly at
  postgraduatelevel
• Identifying and developing curriculum
• opportunities in new subject areas, while
• reinforcing current areas

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Tactics to attain Objective 3
Professor Graydon, Dean of Business, among other
things, hired me and gave me a brief. In the last
two years the Marketing Discipline has launched
the first Sales major in NZ will launch a
Retailing major this year will launch a new
marketing research paper and graduate
diploma next year has increased the Masters
intake x 3 has introduced a PhD scholarship
program increased the PhD numbers x 3
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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

22
Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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The Experience curve
Two major influences on strategy were
growth (Product Life Cycle) and market share...
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The Experience curve
cost
Declining costs caused by ? Bulk buying ?
Spreading fixed costs ? Learning to do it
better.
Accumulated experience
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The Experience curve
cost
Price
Accumulated experience
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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

27
Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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The BCG Matrix
10x 11 0.10x
Market share (sales in proportion to top 3)
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PORTFOLIO EXERCISE

• An industrial equipment company has the following
  Strategic Business Units (SBUs)
• SBU Sales(m) Sales of top 3(m) Mkt growth
• A 0.5 2.0, 0.7, 0.5 15
• B 3.5 3.5, 1.0, 0.5 18
• C 1.8 1.8, 1.2, 1.0 7
• D 4.2 4.2, 0.8, 0.7 4
• E 0.5 4.5, 1.8, 0.5 2
• Is this a healthy portfolio?
• What are the strategic implications?

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PORTFOLIO EXERCISE
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The GE Matrix
1, Grow, invest 2, Selective investment 3,
Harvest/divest
Industry Attractiveness High Medium Low
High Medium Low
Business position Ability to compete
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Life-cycle/competitive position
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
This matrix plots maturity (life cycle stage)
against the estimated competitive strength
(technology, share, cost advantage etc). Circles
represent products bigger circles more dollar
value. Products move left to right by nature, up
and down through strategic effort.
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
DE
Key SVI Standard Visual Identification IT
Insecticide tag DE Dairy Equipment AM
Animal Management
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
Grow through export to the US
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
Maintain through promotion
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
DE
Grow through product line extension
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
AM
Grow through technical innovation
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
DE
Key SVI Standard Visual Identification IT
Insecticide tag DE Dairy Equipment AM
Animal Management
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Example from Allflex
Embryonic Growth Mature Aging
Dominant Strong Favorable Tenable Weak
DE
Key SVI Standard Visual Identification IT
Insecticide tag DE Dairy Equipment AM
Animal Management
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Marketing Strategy
The major strategies all require more detail...

• Major strategies
• Growth
• Maintain
• Harvest
• Divest

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An interesting view of strategic planning (Hamel,
HBR 96)
Strategy as revolution
1) 10 principles
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Strategy as revolution...
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Drucker, 1992, Managing for the future
Why the uncertainty - the lack of rules?
1) Changing World economy (trading blocs)
2) Emergence of the Knowledge Society
3) Changing society - decline of the servant
(the farmer, the blue-collar worker)
4) The learning society is taking over, but
most education does not deliver knowledge so
organizations must do it themselves
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More from Peter Drucker...
5) Innovation becomes central (last Centurys
lesson) and requires ? Organised abandonment ?
Seeing change as opportunity ? Hard work rather
than high IQ
The implications for strategy simply reinforce
the earlier suggestions - teaching you formulae
will stifle your strategic ideas - differentiate
strategy from planning!
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Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

51
Marketing Strategy

• Recap where it all fits
• Sorting out objectives from rhetoric
• The earlier strategic devices
• Portfolio planning
• The Boston Consulting Group matrix
• Attractiveness analysis
• Life cycle/competitive position
• A fantasy model
• Summary and endnotes

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Strategy models...
The Western Military model Useful conceptually,
e.g. Different attack modes depending
on relative strengths of the competitors. But
the objective is to annihilate the enemy?
The Eastern Military model is also useful
conceptually. E.g., Sun Tzu in Bing Fa recognized
he importance of moral influence (morale) within
an army (org.). But he grossly underestimates the
importance of soldiers vs. generals
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Strategy models...
A possibly better, simpler, model (that I dreamed
up) doesnt feature in any text book I have ever
read, I call it The biological survival
model. This is extra-curricular, simply a
thought of mine after struggling to find a
useful, practical model to work with in many
different competitive situations i.e. you dont
have to remember this one!
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Strategy models...
1) Gauses Principle of Mutual Exclusion
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Strategy models...
2) Darwin, The Similarity Principle
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Strategy models...
3) Competitive Equilibrium
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Strategy models...
4) Maintenance of Advantage
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Strategy, endnotes
Competitive power comes from three
sources Economic Operational efficiency can
lead to power ? Consolidation of the Units
competitive advantage through doing it
better than others can. ? By the
generation of resources that can then be
used for research, development and
defense.
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Strategy, endnotes
Political Political leverage can be gained
several ways ? With knowledge (of the
industry). ? By providing leadership. ? By
making friends, and ? forming liaisons.
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Strategy, endnotes
Marketing Ultimately, power in any business
situation will devolve upon the party that has
what others want. So, ? Select (a) target
market(s) and provide for their
specific need in a unique way. ?
Foster two-way relations with all
significant industry players.
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Summary
The implications for strategy are as follows 1)
The strategy devices are useful as a
framework for thought and analysis of market
forces. 2) Teaching you formulae will stifle
your strategic ideas - differentiate
strategy from planning!