Strategic Planning, Marketing Strategy, and Portfolio Management

Foundations of Company-Wide Strategic Planning

  • Definition of Strategic Planning:

    • Strategic planning is the process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marketing opportunities.

  • Hierarchy of Strategic Planning:

    • Corporate Level:

    • Defining the company mission.

    • Setting company objectives and goals.

    • Designing the business portfolio.

    • Business Unit, Product, and Market Level:

    • Planning marketing and other functional strategies.

  • Role of Sponsorship and Strategic Marketing:

    • Comprehensive marketing strategies integrate high-visibility promotional avenues, such as large-scale global sports sponsorships, to solidify brand presence and align corporate capabilities with target markets.

    • Emirates Airline utilizes global sponsorships across diverse athletic sectors—including football (FIFA, Arsenal's Emirates Stadium), sailing (Fly Emirates Team New Zealand), rugby (Emirates Airline Dubai Rugby Sevens), field hockey (East Grinstead Hockey Club), horse racing (Melbourne Cup), Formula 1 racing, and cricket—as an essential vehicle for global brand positioning and relationship building.

Emirates Airline sponsorship portfolio

Defining the Corporate Mission Statement

  • Definition of a Mission Statement:

    • A mission statement is a statement of the organization's purpose—what it wants to accomplish in the larger environment.

  • Fundamental Questions Answered by a Mission Statement:

    • What is our business?

    • Who is the customer?

    • What do consumers value?

    • What should our business be?

  • Market-Oriented Mission Philosophy:

    • A mission statement must be market-oriented rather than product-oriented.

    • It defines the business in terms of satisfying basic customer needs rather than emphasizing technological capabilities or physical goods produced.

  • Product-Oriented vs. Market-Oriented Definitions:

    • Starbucks:

    • Product-oriented: We sell coffee.

    • Market-oriented: To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.

    • Walmart:

    • Product-oriented: We run discount stores.

    • Market-oriented: We deliver low prices everyday and give ordinary folks the chance to buy the same things as rich people.

    • Nike:

    • Product-oriented: We sell footwear.

    • Market-oriented: To bring inspiration and innovation to every athlete in the world.

    • Chipotle:

    • Product-oriented: We sell burritos and other Mexican food.

    • Market-oriented: We give customers "Food With Integrity," served with a commitment toward the long-term welfare of customers and the environment.

    • Facebook:

    • Product-oriented: We are an online social network.

    • Market-oriented: We connect people around the world and help them share important moments in their lives.

    • Home Depot:

    • Product-oriented: We sell tools and home repair and improvement items.

    • Market-oriented: We empower consumers to achieve the homes of their dreams.

    • NASA:

    • Product-oriented: We explore outer space.

    • Market-oriented: We reach for new heights and reveal the unknown so that what we do and learn will benefit all humankind.

    • Revlon:

    • Product-oriented: We make cosmetics.

    • Market-oriented: We sell lifestyle and self-expression; success and status; memories, hopes, and dreams.

    • Ritz-Carlton Hotels & Resorts:

    • Product-oriented: We rent rooms.

    • Market-oriented: We create "The Ritz-Carlton experience"—a memorable stay that far exceeds guests' already-high expectations.

    • Amazon:

    • Market-oriented: To be the most customer-centric company in the world, where people can find and discover anything they want to buy online.

    • Google:

    • Market-oriented: To organize the world’s information and make it universally accessible and useful.

    • Disney:

    • Market-oriented: We create fantasies—a place where dreams come true and the world still works the way it’s supposed to.

    • eBay:

    • Market-oriented: We connect individual buyers and sellers in the world's online marketplace, a unique Web community in which they can shop around, have fun, and get to know each other.

Product- versus Market-Oriented Business Definitions

Setting Company Objectives and Goals

  • Operationalizing the Mission:

    • The broad corporate mission must be translated into detailed, actionable supporting objectives for each level of corporate management.

  • Core Categories of Business Objectives:

    • Building long-term customer and partner relationships.

    • Investing in research and development (R&D).

    • Improving profits and operational efficiency.

Designing and Analyzing the Business Portfolio

  • Foundational Concepts:

    • Business Portfolio: The collection of businesses and products that make up the company.

    • Portfolio Analysis: A central strategic planning activity whereby management evaluates the products and businesses that make up the company.

    • Strategic Business Unit (SBU): A unit of the company that possesses a separate mission and objectives that can be planned independently from other corporate operations. An SBU can be:

    • A company division.

    • A product line within a division.

    • A single product or individual brand.

  • Two-Step Portfolio Planning Process:

    1. Analyze the current business portfolio and evaluate which businesses should receive more, less, or no investment.

    2. Shape the future portfolio by developing strategies for growth and downsizing.

  • Analyzing the Current Portfolio Process:

    • Identify Strategic Business Units (SBUs).

    • Assess the attractiveness of the various SBUs.

    • Decide how much support each SBU deserves.

Steps in Analyzing Current Business Portfolio

  • Amazon Business Portfolio Segmentation:

    • Online Stores: Net sales of $163 B\$163\text{ B} (50.6%50.6\% of total revenue); involves direct product sales via the eCommerce platform. (Competitors: Walmart, JD.COM).

    • Third-Party Selling Services: Net sales of $63 B\$63\text{ B} (19.7%19.7\% of total revenue); enables vendors to sell via Amazon marketplace with commissions and shipping fees collected. (Competitors: eBay, Etsy).

    • Amazon Web Services (AWS): Net sales of $40 B\$40\text{ B} (12.4%12.4\% of total revenue); offers cloud storage, analytics, computing, and AI services. (Competitors: Google Cloud, Microsoft Azure).

    • Subscription Services: Net sales of $22 B\$22\text{ B} (6.8%6.8\% of total revenue); comprises services centered around Amazon Prime, including Prime Video, Prime Music, and Prime Reading. (Competitors: Netflix, Disney+).

    • Physical Stores: Net sales of $17 B\$17\text{ B} (5.3%5.3\% of total revenue); encompasses Whole Foods Market, Amazon Books, Amazon 4-star, Amazon Go, and Amazon Pop Up. (Competitors: Walmart, Costco, Barnes & Noble).

    • Other Business Segments: Net sales of $17 B\$17\text{ B} (5.3%5.3\% of total revenue); covers digital ad revenue and co-branded credit cards. (Competitors: Google).

Amazon Revenue Breakdown by Strategic Business Unit

The Boston Consulting Group (BCG) Growth-Share Matrix

  • Matrix Mechanics and Metrics:

    • Evaluates a company's SBUs based on two quantitative dimensions:

    • Market Growth Rate (Vertical Axis): A measure of market attractiveness and growth potential.

    • Relative Market Share (Horizontal Axis): A measure of SBU strength in the market relative to its largest competitors.

BCG Growth-Share Matrix

  • The Four Quadrants:

    • Stars (High Growth, High Share):

    • High-growth businesses or products commanding high market share.

    • Require heavy investment to finance rapid market growth.

    • Over time, growth slows down and they eventually transition into Cash Cows.

    • Cash Cows (Low Growth, High Share):

    • Mature, highly successful businesses or products commanding dominant share in low-growth markets.

    • Require less capital investment to maintain their position.

    • Generate large amounts of cash that must be "milked" to support and reinvest into other high-potential SBUs (Stars and Question Marks).

    • Question Marks (High Growth, Low Share):

    • Business units operating in rapidly expanding markets but possessing low relative market share.

    • Require significant cash injections simply to hold or expand share.

    • Management must critically assess whether to commit heavy investment to build them into Stars or phase them out.

    • Dogs (Low Growth, Low Share):

    • Products or units with weak market shares in mature or declining markets.

    • May generate enough cash to maintain themselves, but do not promise to be significant sources of cash.

    • Candidates for divestment or liquidation.

  • BCG Application Example — Unilever Brand Portfolio:

    • Stars: Lux, Dove, Axe, Lifebuoy, Knorr, Becel, Sunsilk, Flora.

    • Cash Cows: Pond's, Sunlight, Lipton, Signal, Blue Band, Vaseline, Comfort.

    • Question Marks: Wish-Bone, Rama.

    • Dogs (Eliminated or Sold Brands): Omo, Hellmann's, Doriana, Persil, Cif, SlimFast.

Unilever BCG Growth-Share Matrix Evaluation

  • BCG Classification of The Coca-Cola Company Portfolio:

    • Evaluated portfolio units include:

    • Evian (mineral water distribution)

    • Fanta (fruit-flavored carbonated soft drink)

    • Coca-Cola (core carbonated cola brand)

    • Diet Cola (sugar-free carbonated cola)

    • Vanilla Coke (flavored line extension)

    • Dr Pepper (specialty carbonated soda)

    • Fresca (citrus soft drink)

    • POWERADE (isotonic sports drink)

  • Four Strategic Matrix Postures:

    • Build: Increase investment into an SBU to expand its market share (ideal for promising Question Marks aiming for Star status).

    • Hold: Preserve the SBU's existing market share by investing steady, sufficient resources (standard posture for strong Stars and Cash Cows).

    • Harvest: Maximize short-term cash flow from the SBU regardless of the long-term impact on its market presence (applied to Cash Cows or aging Question Marks/Dogs).

    • Divest: Liquidate, phase out, or sell the SBU to reallocate financial resources to high-potential ventures elsewhere (applied to Dogs and unviable Question Marks).

  • Inherent Limitations of Matrix Approaches:

    • Difficulty in precisely defining SBUs and measuring market share and industry growth rates.

    • Highly time-consuming to execute comprehensively.

    • Resource-intensive and financially expensive.

    • Inherent bias toward analyzing current business positions with inadequate consideration for prospective future planning.

Developing Strategies for Growth: Ansoff's Product/Market Expansion Grid

  • Definition of the Ansoff Matrix:

    • Ansoff's Product/Market Expansion Grid is a portfolio planning tool for identifying company growth opportunities by examining combinations of existing versus new products and existing versus new markets.

Ansoff's Product/Market Expansion Grid

  • Strategic Quadrants:

    • Market Penetration (Existing Markets, Existing Products):

    • Achieving company growth by increasing sales of current products to current market segments without altering the underlying product.

    • Application (The Coca-Cola Company): Holiday-themed seasonal packaging, such as the classic Santa Claus promotional graphics on original Coca-Cola cans, designed to increase purchase frequency among existing soda consumers.

    • Product Development (Existing Markets, New Products):

    • Offering modified or entirely new products to current market segments.

    • Application (The Coca-Cola Company): Developing flavor and formulation extensions like Diet Coke, Coca-Cola Zero, Coca-Cola Cherry, and Coca-Cola Vanilla to satisfy current soda consumers seeking alternatives.

    • Application (Starbucks): Introducing packaged single-serve "Veranda Blend" capsules engineered specifically for Nespresso Vertuo machines to serve existing coffee drinkers at home.

    • Market Development (New Markets, Existing Products):

    • Identifying and developing new market segments—demographic or geographic—for current corporate products.

    • Application (The Coca-Cola Company & Starbucks): Geographic globalization into diverse international territories, including the United States, China, United Kingdom, India, Indonesia, European Union, Russia, Mexico, South Korea, Argentina, France, Brazil, South Africa, Canada, Australia, Turkey, Italy, Saudi Arabia, Germany, and Japan.

    • Application (Starbucks): Distributing ready-to-drink chilled packaged cups (e.g., Caffè Latte) into grocery store aisles to reach new consumer purchasing contexts.

    • Diversification (New Markets, New Products):

    • Starting up or acquiring businesses entirely outside the company’s current products and markets.

    • Application (The Coca-Cola Company): Expanding into sports beverages with Powerade, or licensing non-beverage consumer lifestyle goods such as Coca-Cola branded apparel (sequin fashion shirts).

    • Application (Starbucks): Entering the bottled mineral water market via Ethos Water, or launching music distribution platforms through Hear Music ("The Sound of Starbucks").

Downsizing the Business Portfolio

  • Definition of Downsizing:

    • Downsizing is the intentional reduction of the business portfolio by eliminating products or business units that are not profitable or that no longer align with the company's overall strategic vision.

  • Case Study — Procter & Gamble (P&G) Portfolio Streamlining:

    • P&G executed an aggressive divestment strategy to reduce its portfolio to approximately 7070 to 8080 core brands, identifying that this selective group generated 90%90\% of total corporate sales.

    • Strategic justification by CEO A.G. Lafley: "We're going to create a faster growing, more profitable company that is far simpler to manage and operate. This will enable P&G people to be more agile and responsive. More flexible and faster. Less will be much more."

    • Portfolio adjustments included the divestment, spin-off, or reduction of non-core brands such as Duracell (batteries), Wella Koleston (hair color), Camay (beauty soap), Pert Plus (2-in-1 shampoo), Joy (dishwashing liquid), Ivory soap, Era (laundry detergent), and Scope/Crest Scope Outlast (mouthwash).

  • Case Study — Unilever Tea Business Divestment:

    • Unilever streamlined its food and beverage portfolio by selling its global tea division—including the flagship brand Lipton—to a private-equity firm for $5 B\$5\text{ B}.

Partnering to Build Customer Relationships: Value Chains and Networks

  • Internal Value Chain:

    • A value chain is a series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products.

    • Alignment across all operational facets is necessary; for instance, Carrefour establishes a corporate goal to create customer value and satisfaction by providing shoppers with the products they want at the lowest possible price, requiring purchasing, logistics, and merchandising departments to coordinate flawlessly.

  • External Value Delivery Network:

    • A value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.

    • Example (Toyota Supplier Partnership): Toyota partners with suppliers through platforms like ToyotaSupplier.com, managed via Toyota Motor Engineering & Manufacturing North America (TEMA). By establishing mutually beneficial, long-term relationships with hundreds of North American parts manufacturers, Toyota secures lower costs and higher part quality, translating directly into superior vehicle reliability and elevated customer satisfaction.

Customer-Driven Marketing Strategy: STP Framework

  • Definition of Marketing Strategy:

    • Marketing strategy is the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships.

Managing Marketing Strategies and the Marketing Mix

  • The Two Core Questions of Marketing Strategy:

    1. Which customers will we serve? (Addressed via Market Segmentation and Targeting).

    2. How will we create value for them? (Addressed via Differentiation and Positioning).

  • Core Components:

    • Market Segmentation: Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.

    • Market Targeting: Evaluating each market segment’s attractiveness and selecting one or more segments to enter.

    • Market Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

    • Differentiation: Actually differentiating the company's market offering to create superior customer value.

Developing the Marketing Mix: 4Ps, 4Cs, and 7Ps

  • Definition of the Marketing Mix:

    • The marketing mix is the set of controllable, tactical marketing tools—Product, Price, Place, and Promotion—that the firm blends to produce the response it wants in the target market.

The Four Ps of the Marketing Mix

  • The Four Ps (Seller's Perspective):

    • Product: Variety, quality, design, features, brand name, packaging, services.

    • Price: List price, discounts, allowances, payment period, credit terms.

    • Place: Channels, coverage, assortments, locations, inventory, transportation, logistics.

    • Promotion: Advertising, personal selling, sales promotion, public relations.

  • The Four Cs (Buyer's Perspective):

    • The traditional 4Ps reflect the seller’s viewpoint; in modern customer-centric marketing, they translate directly to the buyer's perspective (the 4Cs):

    • Product corresponds to Customer Solutions

    • Price corresponds to Cost

    • Place corresponds to Convenience

    • Promotion corresponds to Communication

  • The Extended Services Marketing Mix (7Ps):

    • Because services are intangible, inseparable, variable, and perishable, service marketers expand the traditional 4Ps model to 7Ps by adding:

    • People: All human actors who play a part in service delivery and influence the buyer's perceptions (e.g., front-line staff, customer service representatives).

    • Process: The actual procedures, mechanisms, and flow of activities by which the service is created and delivered.

    • Physical Evidence: The environment in which the service is delivered, where the firm and customer interact, and any tangible commodities that facilitate performance or communication.

The 7Ps of the Services Marketing Mix

Managing Marketing Strategy through SWOT Analysis

  • Definition and Scope:

    • SWOT analysis is an overall evaluation of a company's internal Strengths (S), internal Weaknesses (W), external Opportunities (O), and external Threats (T).

SWOT Analysis Matrix

  • Structural Dimensions:

    • Internal vs. External:

    • Internal Factors: Strengths and Weaknesses (factors originating within the organization's boundary).

    • External Factors: Opportunities and Threats (factors originating from the macro- and micro-environment outside the organization).

    • Positive vs. Negative:

    • Positive Factors: Strengths and Opportunities.

    • Negative Factors: Weaknesses and Threats.

  • Constituent Definitions and Enterprise Examples:

    • Strengths:

    • Definition: Internal capabilities that may help a company reach its objectives.

    • Examples: Highly educated and skilled staff, very good Research & Development (R&D) department, high market share, high profits.

    • Weaknesses:

    • Definition: Internal limitations that may interfere with a company’s ability to achieve its objectives.

    • Examples: Not keeping up with technological advancements, limited resources to expand, slow production rate, failure to adapt to changing consumer needs.

    • Opportunities:

    • Definition: External factors that the company may be able to exploit to its advantage.

    • Examples: Identifying an unserved market segment not targeted by another company, availability of prime new physical locations for expansion, rapid increase in online buying behavior.

    • Threats:

    • Definition: Current and emerging external factors that may challenge the company’s performance.

    • Examples: Regional political instability, introduction of restrictive new rules and regulations, macroeconomic downturns/economic problems, arrival of aggressive new competitors.