Basic Marketing Unit 2

Strategy

broad plan to guide decisions and behavior of employees of an organization  (Think long term)

Tactics

• short run actions performed by managers or employees to execute a marketing plan  

• GM's decision to cut prices to build market share  

• Ford's mission to produce the best quality medium sized car in the world  

(Think short term)

★Ansoff's growth matrix  , Market Development Strategy

existing product and a new market  

★Ansoff's growth matrix  , Product Development strategy

Product Development Strategy: Selling NEW products to CURRENT markets.

★Ansoff's growth matrix  , Market Penetration

marketing strategy to increase sales of current products in current markets  

★Ansoff's growth matrix , Diversification analysis

helps a firm search for growth opportunities from current and new markets as well as current and new products  

If the American beef council runs a campaign targeting beef lovers with new recipes

Market penetration  (Market penetration = SAME product + SAME people → get them to buy/use MORE.

Business portfolios:  Business Portfolio analysis 

A technique managers use to evaluate the performance and growth potential of a firm's different businesses/SBUs as if they were separate investments.

Business Portfolio

The collection of businesses and products owned by a company.

Strategic Business Unit (SBU)

A separate business or division owned by a parent company that has its own goals, budget, salesforce, and strategy.

Why do firms identify SBUs?

So each business/unit can be evaluated separately to determine how well it is performing and what strategy it should follow.

BCG Matrix

A tool used to evaluate a firm's SBUs based on market growth and relative market share to determine an appropriate strategy.

BCG Matrix — Y-Axis

Market Growth Rate → how fast the overall market/industry is growing.

BCG Matrix — X-Axis

Relative Market Share → your market share compared with the largest competitor/market leader.

Market Growth Rate

How quickly the overall market is growing; a high growth rate suggests more potential for future growth.

Relative Market Share Formula

Your market share ÷ market leader's market share.

Relative Market Share Example

If Coke has $60 million in sales and Pepsi has $30 million:
Pepsi's relative market share = $30M ÷ $60M = 0.50 (50%).

Market Share

Your company's sales as a percentage of the entire market.

Market Share Formula

Company sales ÷ Total market sales × 100.

Market Share Example

If Pepsi has $30 million in sales and the entire market is $100 million:
$30M ÷ $100M = 30% market share.

Market Share vs. Relative Market Share, Market share

your company vs. the whole market.

Market Share vs. Relative Market Share, Relative market share

your company vs. the market leader.

BCG Matrix

A tool used to evaluate a company's different SBUs and decide what strategy/investment each one should get.

★Y-axis

Market Growth: How fast the overall market/industry is growing.

★X-axis

Relative Market Share: Your SBU's market share compared to the market leader. (How strong are we compared to the leader.)

Strategic Business Unit (SBU)

A part/business owned by a larger company that is managed and evaluated separately.

Star

SBU with high market share + high market growth. May need extra cash to support rapid growth.

Cash Cow

SBU with high market share + low market growth. Generates lots of cash that can support other SBUs.

Question Mark

SBU with low market share + high market growth. Requires lots of cash/investment to increase or maintain market share.

Dog

SBU with low market share + low market growth. May be a candidate to sell/divest.

Parent company with several Stars

Bright future, but may have cash-flow problems now because all the Stars require lots of cash.

Parent company with several Cash Cows

Generates lots of cash now, but future growth may be limited because the SBUs are in slow-growing markets.