PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process

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Principles of Marketing MGT301

Lesson 7

Lesson overview and learning objectives:

All companies must look ahead and develop long-term strategies to meet the

changing

conditions in their industries. Each company must find the game plan that makes the most sense

given its specific situation, opportunities, objectives, and resources. Keeping in view this fact the

last Lesson was dedicated for the discussion to explore several growth alternatives within the

context of strategic planning and portfolio analysis. The product/market expansion grid shows

four avenues for growth: market penetration, market development, product development, and

diversification.

PORTFOLIO ANALYSIS

A. MARKETING PROCESS

Analyzing the Current Business Portfolio

We have discussed in last Lesson that in order to analyze the current business portfolio, the

company must conduct portfolio analysis (a tool by which management identifies and evaluates

the various businesses that make up the company). Two steps are important in this analysis:

1). The first step is to identify the key businesses (SBUs). The strategic business unit

(SBU) is a unit of the company that has a separate mission and objectives and which can be

planned independently from other company businesses.

2). The SBU can be a company division, a product line within a division, or even a single

product or brand.

3). The second step is to assess the attractiveness of its various SBUs and decide how much

support each deserves.

d. The best-known portfolio planning method is the Boston Consulting Group (BCG) matrix:

1). Using the BCG approach, where a company classifies all its SBUs according to the

growth-share matrix.

a). The vertical axis, market growth rate, provides a measure of market attractiveness.

b). The horizontal axis, relative market share, serves as a measure of company strength

in the market.

2). Using the matrix, four types of SBUs can be identified (Discussed in detail in last

Lesson)

a). Stars

b). Cash Cows

c). Question Marks

d). Dogs

Once it has classified its SBUs, a company must determine what role each will play in the future.

The four strategies that can be pursued for each SBU are:

1). The company can invest more in the business unit in order to build its share.

2). The company can invest enough just to hold at the current level.

3). The company can harvest the SBU.

4). The company can divest the SBU.

As time passes, SBUs change their positions in the growth-share matrix. Each has its own life

cycle. The growth-share matrix has done much to help strategic planning study; however, there are

problems and limitations with the method.

1). They can be difficult, time-consuming, and costly to implement.

Principles of Marketing MGT301

2). Management may find it difficult to define SBUs and measure market share and growth.

3). They focus on classifying current businesses but provide little advice for future planning.

4). They can lead the company to place too much emphasis on market-share growth or

growth through entry into attractive new markets. This can cause unwise expansion into hot, new,

risky ventures or giving up on established units too quickly. In spite of the drawbacks, most firms

are still committed to strategic planning. Based upon this analysis company designs the growth

strategies:

Developing Growth Strategies

Companies should always be looking to the future. One useful device for identifying growth

opportunities for the future is the product/market expansion grid. The product/market

expansion grid is a portfolio-planning tool for identifying company growth opportunities

through:

1). Market Penetration--making more sales to present customers without changing

products in any way. Market penetration means trying to increase sales of a firm's present products

in its present markets probably through a more aggressive marketing mix. The firm may try to

strengthen its relationship with customers to increase their rate of use or repeat purchases, or try to

attract competitors' customers or current

nonusers. New promotion appeals alone

may not be effective. A firm may need to

Current

New

add a home page on the Internet to make it

products

easier and faster for customers to place an

order. Or, it may need to add more stores

M arket-

Product-

Current

penetration

developm ent

in present areas for greater convenience.

markets

strategy

2). Market Development--a strategy

M arket-

New

for company growth by identifying and

(Diversification

developm ent

m arkets

strategy)

developing new markets for current

strategy

company products (example, demographic

markets). Market development means trying

to increase sales by selling present products in new markets. Firms may try advertising in different

media to reach new target customers. Or they may add channels of distribution or new stores in

new areas, including overseas.

3). Product Development--a strategy for company growth by offering modified or new

products to current markets. Product development means offering new or improved products for

present markets. By knowing the present market's needs, a firm may see new ways to satisfy

customers. Computer software firms like Microsoft boost sales by introducing new versions of

popular programs.

4). Diversification--a strategy for company growth by starting up or acquiring businesses

outside the company's current products and markets. Diversification means moving into totally

different lines of business perhaps entirely unfamiliar products, markets, or even levels in the

production-marketing system.

Planning Cross-Functional Strategies

The final step in the strategic planning process is planning functional strategies.

1). Once the strategic plan is in place, more detailed planning must take place within each

business unit.

2). Each department (such as marketing, finance, et cetera) provides information for strategic

planning.

Marketing plays a key role in the company's strategic planning process by:

Principles of Marketing MGT301

1). Providing a guiding philosophy.

2). Providing inputs to strategic planners by helping to identify attractive market

opportunities and by assessing the firm's potential to take advantage of them.

3). Within individual business units, marketing designs strategies for reaching the unit's

objectives.

4). Marketers are challenged to find ways to get all departments to "think customer."

Strategic Planning, Implementation, and Control Process

The process of developing and

maintaining a strategic fit between

the organization's goals and

capabilities and its changing

P la n n in g

Im p le m e n ta tio n

C o n tro l

marketing opportunities. It relies on

developing a clear company

C o rp o rate

M e a su rin g

p la n n in g

O rg a n izin g

re su lts

mission, supporting objectives, a

D ivisio n

sound business portfolio and

p la n n in g

D ia g n o s in g

coordinated functional strategies.

re su lts

B u sin e ss

Im p le m e n tin g

Business plans are more customers

p la n n in g

T a kin g

and competitor-oriented and better

co rrec tive

P ro d u ct

ac tio n

reasoned and more realistic than

p la n n in g

they were in the past. The plan is

variously called a "business plan," a

"marketing plan," and sometimes an

"operating plan." Most marketing plans cover one year, but some cover a few years. The plans

vary in their length from under ten pages to over 50 pages. Some companies take their plans very

seriously, while others see them as only a rough guide to action. The most frequently cited

shortcomings of current marketing plans, according to marketing executives, are lack of realism,

insufficient competitive analysis, and a short-run focus.

IMPLEMENTING THE MARKETING PLAN: Planning good strategy is only the start - it

counts very little if the organization fails to implement it correctly. Main reasons for the poor

implementation are isolated planning, Some organizations employ `professional planners' while

others leave the task of developing strategic plans to top management and leaving the details of

implementation to lower-level managers can spell poor or no implementation at all.

Marketing strategy and marketing performance are linked by an implementation system consisting

of five related elements. Finally

marketing

control

involves

Narrowing down to focused strategy with quantitative

evaluating

the

results

and qualitative screening criteria

marketing strategies and plans

and taking corrective action to

Customers

ensure that objectives are

Needs and other

Segmenting

attained. It then measures its

Dimensions

Targeting &

Segmentation

performance in the marketplace

Company

and evaluates the causes of any

Mission, Objectives,

differences between expected

& Resources

Positioning &

and actual performance. Finally,

Differentiation

management takes corrective

Competitors

Current &

action to close the gaps between

Prospective

its goals and its performance.

External Market Environment

Principles of Marketing MGT301

Marketing Strategy Planning Process

Whenever performing the marketing function company needs courses of the action known as the

strategies. Marketing strategies and the planning process are based on the It is based on the SWOT

analysis. SWOT analysis means to analyze the threats and opportunities that are part of external

environment and strengths and weaknesses of the organization, which are part of the internal the

environment. Based on this environmental analysis company formulates the strategies to find out

the target customers designs objectives and mission statements to fulfill the needs of the target

customers and strategies to respond to the competitive environment. After conducting SWOT

analysis companies decides strategies about the marketing mix i.e. 4Ps (Product, Price, Place and

Promotion) .

Marketing Process

The marketing process is the process of analyzing market opportunities, selecting target markets,

developing the marketing mix, and managing the marketing effort.

This process has following main steps:

1. Analyzing marketing opportunities

2. Selecting target markets

3. Developing the marketing Mix

4. Managing the marketing effort

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