Marketing Plan

Characteristics of a Good Marketing Plan

A good marketing plan should communicate to every

member what is desired of each member, so that they
have some level of goal clarity, understanding of
assumptions that lie behind the goals and the context of
each activity and decision.
 Approaches in Marketing Plan

Different organizations follow different kinds of planning

approaches.
Organizations where top management sets both the
goals and plans for the lower management, follows a top
down approach.
In democratic and participative organizations, there is a
bottom up approach in which each unit in the
organization creates its own goals and plans, which are
then approved by the top management.
The third approach is to have goals down-plans up
approach. In this approach the top management sets the
goal but various business units create their own plans to
meet these goals
 IMPORTANCE OF MARKETING
PLANNING
It helps in avoiding future uncertainties.
It helps in management by objectives.
It helps in achieving objectives.
It helps in coordination and communication among the
departments.
It helps in control.
It helps the customers in getting complete satisfaction.
STRATEGIC CORPORATE PLANNING BY TOP
MANAGEMENT
Establishing corporate mission, objectives and goals

Establishing Strategic Business Units

Assigning resources to each Strategic Business Unit

Planning for Business Growth.

Establishing Corporate Mission, Objectives
and Goals
It should not be an impossible statement.
It should be short and limited.
It should be motivating.
It should be enough to define the functions, the clientele
and the method of operation.
lt should be clear and should stress the company’s
policy.
It should be distinctive and should define company’s
major competitive scope.
It should indicate how objectives are to be accomplished.
 Objective Setting

A higher market share

High growth opportunities
Increased ability to compete in global markets
Product innovation
Recognition as a leader in technology
Better customer services
Good reputation with customers
Low cost compared with competitors
High quality goods and services
Brand image and loyalty
Wider profit margin
Establishing Strategic Business Units

A strategic business unit has the

following characteristics:
Separate responsibility for strategic planning and profit
performance, and profitinfluencing factors.
A separate set of competitors.
Single business or a collection of related businesses,
which offer scope for independent strategic planning
from remaining organization
Resources to SBU Units
BOSTON CONSULTING GROUP
MATRIX
 INTRODUCTION

 BOSTON CONSULTING GROUP (BCG)

MATRIX is developed by BRUCE
HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY
1970’s.

 According to this technique, businesses or

products are classified as low or high
performers depending upon their market
growth rate and relative market share.
 Relative Market
Share and Market
Growth
To understand the Boston Matrix
you need to understand how
market share and market growth
interrelate.
 MARKET SHARE
• Market share is the percentage of the total market that is being
serviced by your company, measured either in revenue terms or
unit volume terms.

• RELATIVE MARKET SHARE

• RMS = Business unit sales this year

Leading rival sales this year

• The higher your market share, the higher proportion of the

market you control.
 MARKET GROWTH
RATE
Market growth is used as a measure of a market’s
attractiveness.

MGR = Individual sales - individual sales

this year last year
Individual sales last year

Markets experiencing high growth are ones where

the total market share available is expanding, and
there’s plenty of opportunity for everyone to make
money.
THE BCG GROWTH-SHARE

MATRIX
It is a portfolio planning model which is based on
the observation that a company’s business units can
be classified in to four categories:
 Stars
 Question marks
 Cash cows
 Dogs

It is based on the combination of market growth and

market share relative to the next best competitor.
 STARS
High growth, High market share

Stars are leaders in business.

They also require heavy investment, to maintain its large
market share.
It leads to large amount of cash consumption and cash
generation.
Attempts should be made to hold the market share otherwise
the star will become a CASH COW.
 CASH COWS
Low growth , High market share

They are foundation of the company and often the stars

of yesterday.
They generate more cash than required.
They extract the profits by investing as little cash as
possible
They are located in an industry that is mature, not
growing or declining.
 DOGS
Low growth, Low market share

Dogs are the cash traps.

Dogs do not have potential to bring in
much cash.
Number of dogs in the company should be
minimized.
Business is situated at a declining stage.
 QUESTION MARKS
High growth , Low market share

Most businesses start of as question marks.

They will absorb great amounts of cash if the
market share remains unchanged, (low).
Why question marks?
Question marks have potential to become star
and eventually cash cow but can also become a
dog.
Investments should be high for question marks.
 WHY BCG MATRIX ?

To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of products
 Resource allocation and divestment decisions
MAIN STEPS OF BCG MATRIX
Identifying and dividing a company into SBU.
Assessing and comparing the prospects of each SBU
according to two criteria :
1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
Classifying the SBU’S on the basis of BCG matrix.
Developing strategic objectives for each SBU.
BCG MATRIX WITH CASH FLOW
 BENEFITS
BCG MATRIX is simple and easy to
understand.
It helps you to quickly and simply screen the
opportunities open to you, and helps you
think about how you can make the most of
them.
It is used to identify how corporate cash
resources can best be used to maximize a
company’s future growth and profitability.
 LIMITATIONS
BCG MATRIX uses only two dimensions, Relative market
share and market growth rate.
Problems of getting data on market share and market
growth.
High market share does not mean profits all the time.
Business with low market share can be profitable too.
 PRACTICAL USE
MAHINDRA & MAHINDRA
HLL
IES
 BCG MATRIX

scorpio

Jeep
balero
 CONCLUSION

Though BCG MATRIX has its limitations it is one

of the most FAMOUS AND SIMPLE portfolio
planning matrix ,used by large companies
having multi-products.
 Portfolio Planning:
Four Areas of Emphasis
Allocating resources
Formulating business-unit strategy
Setting performance targets
Analyzing portfolio balance
 Cash flow

Continuity
 Risk
 BCG Growth-Share Matrix
High Star Question Mark

Market
Growth
Cash Cow Dog

Low
Strong Weak
Relative Market Share
Four Main Strategies of the BCG
Model
Increase market share
Hold market share
Harvest
Divest
 BCG Growth-Share Matrix:
Quadrant Characteristics
30% Star
Earnings: high stable, growing
Cash flow: neutral
Strategy: hold or invest for
growth
Market
Growth
Cash Cow
Earnings: high stable
Cash flow: high stable
Strategy: hold or add market
-10% share
Question Mark
Earnings: low, unstable, growing
Cash flow: negative
Strategy: increase market share
or harvest/divest
Dog
Earnings: low, unstable
Cash flow: neutral or negative
Strategy: harvest/divest

10 1.0 .1
Relative Market Share
 Using the Model: Symbols

Product A Product A
Total Market Previous
Market Share Market Size
and Position

Product B Market
B Smaller but firm
has greater share
 Plotting Your SBU’s
30% Star Question Mark
C C
B
Market A
Growth
Cash Cow Dog

A B

-10%
10 1.0 .1
Relative Market Share
 Traditional SBU
or Product Path
30% Star Question Mark

2 1
Market
Growth
Cash Cow Dog

3 2

4
-10%
10 1.0 .1
Relative Market Share
• Strategic planning models
- BCG (Boston Consulting Group) model
- Ansoff’s model
- GE model
Business Portfolio Models
A. Boston Consultin Group (BCG) Model

Market Share – Growth Matrix

Hi

Marketing Growth Rate

Star ?

Cash cow Dog

Lo
Hi Lo
B. Ansoff’s Product-Market Development Model

Existing Product New Products

Existing
Market Market Penetration Product Development

New
Market Market Development Diversification
 C. G.E Strategic Planning Model
Business Strength
Strong Average Weak

Industry Attractiveness
High

Medium

Low
Business Strength Index Industry Attractiveness Index
* Market Share * Market size
* Price Competitiveness * Market Growth
* Product Quality * Industry Profit Margin
* Customer Knowledge * Amount of Competition
* Sales Force and Effectiveness * Seasonality
* Geographic Advantage * Cost Structure
* Others * Etc.
THE STRATEGIC PLANNING PROCESS

Assessment and adjustment of core strategy

(market / competitive analysis, internal analysis)

Formulation of global strategy

(choice of target countries, segments and competitive strategy)

Development of global marketing program

Implementation
(organization structure, control)
Michael Porter’s
Five Forces
Model
 Michael Porter …

“An industry’s profit potential is

largely determined by the intensity
of competitive rivalry within that
industry.”
Porter’s Five Forces
 Portfolio Analysis …

… Strategy at the time (1970s) was focused on two

dimensions of the portfolio grids …
… Industry Attractiveness
… Competitive Position
Business Strength Matrix
 Where was
Michael Porter
coming from?
School of Economics …
… at Harvard …
… Exposed Porter to the
Industrial Organization (I0)
sub-field of Economics.
 Structural reasons why
…
… some industries were profitable
* Firm concentration
* Established cost advantages
* Product differentiation
* Economies of scale
 Structural reasons …
… all represented barriers to entry in
certain industries, thus allowing those
industries to be more profitable than
others.
 Porters Five Forces …

* Threat of Entry
* Bargaining Power of Suppliers
* Bargaining Power of Buyers
* Development of Substitute
Products or Services
* Rivalry among Competitors
 Barriers to Entry …
… large capital requirements or the
need to gain economies of scale
quickly.
… strong customer loyalty or strong
brand preferences.
… lack of adequate distribution
channels or access to raw materials.
 Power of Suppliers …
… high when
* A small number of dominant, highly
concentrated suppliers exists.
* Few good substitute raw materials or
suppliers are available.
* The cost of switching raw materials or
suppliers is high.
 Power of Buyers …
… high when
* Customers are concentrated, large or
buy in volume .
* The products being purchased are
standard or undifferentiated making it
easy to switch to other suppliers.
* Customers’ purchases represent a
major portion of the sellers’ total
revenue.
 Substitute products …
… competitive strength high when
* The relative price of substitute
products declines .
* Consumers’ switching costs decline.
* Competitors plan to increase market
penetration or production capacity.
 Rivalry among competitors
… intensity increases as
* The number of competitors increases
or they become equal in size.
* Demand for the industry’s products
declines or industry growth slows.
* Fixed costs or barriers to leaving the
industry are high.
 Summary …
As rivalry among competing firms
intensifies, industry profits
decline, in some cases to the point
where an industry becomes
inherently unattractive.
 The Experience Curve
…
… as an entry barrier
Unit costs associated with economies of scale,
the learning curve for labor, and capital-labor
substitution decline with “experience,” and this
creates a barrier to entry, as new competitors
with no “experience” face higher costs than
established ones.
 However …
… If a new entrant has built the
newest, most efficient plant, it
will not have to “catch up.”
… Technical advances purchased
by new entrants – free from the
legacy of heavy past Investments –
may provide those companies a
cost advantage over the leaders.
 In addition …
The experience curve barrier can be
nullified by product or process
innovations that create an entirely
new experience curve – one to which
leaders may be poorly positioned to
jump, but to which new entrants can
alight as they enter the market .
 Strategic Groups …
Firms that face similar threats or
opportunities in an industry but
which differ from the threats and
opportunities faced by other sets of
firms in the same industry (e.g., in
the beverage industry: soft drinks
group versus alcoholic beverages).
 Strategic Groups …
Rivalry generally is more intense
within strategic groups than between
them because members of the same
group focus on the same market
segments with similar products,
strategies and resources.
Industry & Product
Life Cycles
Industry & Product
Life Cycles
Bright Horizons (12 months)