Strategy

Chapter 2

Case Study
NIKE Strategy: Then & Now
Early Days
Characterized by seat of the pants management. Innovative sneaker tread drove early success. Technological product superiority, big-name endorsements and Just Do It ads revolutionized sport marketing. 1980s 1990s: Nike leverages brand strength into new product areas.

Late 1990s - Present

Changes in consumer shoe preference, declining product innovation, and negative PR plague Nike. Anti-establishment image no longer works: brand backlash occurs. Strategic planning is embraced and Nike focuses on innovation and exploring new market opportunities. Nike has global success.

Strategic Planning
The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities

Strategic Planning: Steps

Defining the company mission

Setting company objectives and goals

Designing the business portfolio

Planning, marketing, and other functional strategies

Strategic Planning: Mission Statement

Mission Statement
Purpose Guides peoples efforts Understand values Ethical behaviour

The Marketing Mix

Product

Price

Target consumers

Promotion

Place

Managing the Marketing Effort

Analysis

PLANNING Strategic Plans

IMPLEMENTATION

CONTROL Measure Results Evaluate Results Corrective Action

Carry Out Plans Marketing Plans

Managing the Marketing Effort

Four marketing management functions:
Marketing analysis Marketing planning Implementation Control
Figure 2.6 p.64

Marketing strategy:
The marketing logic by which the business unit hopes to achieves its marketing objectives

Contents of a Marketing Plan (Table 2.2 p.65)

Executive summary:
Table of contents

Current marketing situation:

Market description, product review, competition, and distribution

Threat and opportunity analysis: Marketing objectives and issues:

Marketing strategy:
Target markets, positioning, expenditure levels, and marketing mix

Action program: Budget: Controls:

The Control Process

Marketing audit:
Comprehensive, systematic, independent, periodic Examination of a companys environment, objectives, strategies, and activities To identify problems, opportunities, and plans of action
Figure 2.7

Set goals

Measure performance What is happening?

Evaluate performance Why is it happening?

Take corrective action What should we do about it?

What do we want to achieve?

Strategic Business Unit (SBU)

A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. Can be a company division, a product line within a division, or sometimes a single product or brand.

Designing the Business Portfolio: The BCG Growth-Share Matrix

Market growth rate

High

Star

???
Dog Low

Question mark

Cash cow Low High

Relative market share p.49

BCG Growth-Share Matrix

Stars
Business strength, growth rate, cash use Defend position

???
Use cash to make into a star

Cows
Nurture to generate cash

Dogs
Fix or abandon

Industry attractiveness, market share, cash generation

EQ
Star: Office XP, Red Bull, IPhone; Nano; IE 7.0, Dell Cash Cow: Cigarettes, Tide, McDonalds ?: OS/2, Apple Computer, Linux, Reebok Dog: Record albums, VCR, Typewriter.
Once a firm has classified all of its S.B.U., it has 4 options:

1. Build 2. Hold

3. Harvest 4. Divest

Problems with Matrix approaches

May be difficult, time consuming, and costly to implement. May be difficult to define and measure a S.B.U. They focus on the present not the future. May lead a firm to place too much emphasis on growth via new acquisitions, and therefore, possibly into areas of managerial weaknesses. Broadening the focus may not always be the right answer.

Winning Strategies
Michael Porters 3 winning strategies:
Overall cost leadership (Wal-Mart) Differentiation (IBM) Focus (Amazon.com)

Treacy & Wiersemans 3 value disciplines:

Operational excellence (Dell, Ikea) Product leadership (3M) Customer intimacy (Harry Rosen, FedEx)

Strategies
(p. 51)

Growth strategies:
Essential to grow, to keep up with inflation. If economy isnt growing, then you must take away from your competitor to maintain your growth.

1) Intensive Growth 2) Integrative Growth 3) Diversification

Designing the Business Portfolio: Developing Growth Strategies

p.51

Existing products Existing markets 1. Market penetration

New products 3. Product development

New markets

2. Market development

4. Diversification

Strategies for Growth: Tim Hortons

Marketing penetration:
Opening more locations in existing markets, advertising Continuous improvement of facilities and operations

Market development:
New demographic age groups, or geographical locations (U.S.A)

Product development:
Expanding the product line to attract lunch crowd

Figure 2.3

Diversification:
Entering new markets with new products Growth by acquisition or development

2. Integrative growth
Backwards: Buy up your suppliers.
GM and Delco; Microsoft + Soft Image

Forwards: Buy up your retailers or someone lower in the channel.

PetroCan or McDonalds buying out franchisee; Disney + ABC

Horizontal: Buy up your competitors

Adidas & Reebok; Molson & Coors; Loblaws & Maxi; Sears & Eatons; HP & Compaq; P&G and Gillette; Daimler & Chrysler

Diversification (Conglomerate) buying up unrelated businesses

Seagrams buying MCA for movies; Tropicana juices for a new TM; Tenneco owns oil+ gas, air conditioning, plastics, newspapers; Westinghouse & CBS

3. Diversification
Concentric: New products for new TM using current technology Bombardier SeaDoo Seagrams & Tropicana Penthouse & Omni magazine Horizontal: New products for current TM using new technology Labatt selling snack food Coke Cola bathing suits Nautilus line of clothing Conglomerate: New products for new TM using new technology John Deere selling a new line of frozen diet foods