Product Strategies
Product strategies specify market needs that may be served by different product offerings. It is a company's product strategies, duly related to market strategies, that eventually come to dominate both overall strategy and the spirit of the company. Product strategies deal with such matters as number and diversity of products, product innovations, product scope, and product design. In this chapter, different dimensions of product strategies are examined for their essence, their significance,...
The Team Meeting
The managers and staff from all of Pat Skene's Consumer Credit departments were chatting about Bankware II around the boardroom table as Pat arrived. The agenda for the team meeting had been set for weeks. See Exhibit 3. In attendance were Warren Wood Rosemary Naltchadjian Michelle Thomas Denise Fawcitt Vice President, Consumer Credit General Manager, Retail Lending Senior Manager, Personal Loan Portfolio Product Manager Product Manager Secretary to Pat Skene Manager, Marketing Consumer Credit
Profit Impact Of Marketing Strategy Pims
In 1960, the vice president of marketing services at GE authorized a large-scale project called PROM, for profitability optimization model to examine the profit impact of marketing strategies. Several years of effort produced a computer-based model that identified the major factors responsible for a great deal of the variation in return on investment. Because the data used to support the model came from diverse markets and industries, the PROM model is often referred to as a cross-sectional...
Diversification Strategy
Diversification refers to seeking unfamiliar products or markets or both in the pursuit of growth. Every company is best at certain products diversification requires substantially different knowledge, thinking, skills, and processes. Thus, diversification is at best a risky strategy, and a company should choose this path only when current product market orientation does not seem to provide further opportunities for growth. A few examples will illustrate the point that diversification does not...
Seeking Competitive Advantage
To outperform competitors and to grow despite them, a company must understand why competition prevails, why firms attack, and how firms respond. Insights into competitors' perspectives can be gained by undertaking two types of analysis industry and comparative analysis. Industry analysis assesses the attractiveness of a market based on its economic structure. Comparative analysis indicates how every firm in a particular market is likely to perform, given the structure of the industry. Every...
Corporate Strategic Direction
Corporate strategic direction is defined in different ways. In some corporations, it takes the form of a corporate creed, or code of conduct, that defines perspectives from the viewpoint of different stakeholders. At other corporations, policy statements provide guidelines for implementing strategy. In still others, corporate direction is outlined in terms of objective statements. However expressed, corporate direction consists of broad statements that represent a company's position on various...
Portfolio Analysis
The previous chapters dealt with strategy development for individual SBUs. Different SBU strategies must ultimately be judged from the viewpoint of the total organization before being implemented. In today's environment, most companies operate with a variety of businesses. Even if a company is primarily involved in a single broad business area, it may actually be operating in multiple product market segments. From a strategy angle, different products markets may constitute different businesses...
Info Alh
2 Richard Gibson, Marketers' Mantra Reap More with Less, 3 USIC Chem. Ads Start to Support Effort to Double Sales in 5 Years, Industrial 4 Michael E. Porter, Interbrand Choice Media Mix and Market Performance, American Economic Review 6 May 1976 190-203. 5 Market Makers, The Economist 14 March 1998 67. 6 See Workbook for Estimating Your Advertising Budget Boston Cahners Publishing Co., 7 Naras V. Eechambadi, Does Advertising Work The McKinsey Quarterly 3 1994
Leasing Strategy
The major emphasis of a pricing strategy is on buying a product outright rather than leasing it. Except in housing, leasing is more common in the marketing of industrial goods than among consumer goods, though in recent years there has been a growing trend toward the leasing of consumer goods. For example, some people lease cars. Usually, by paying a specified sum of money every month, similar to a rental on an apartment, one can lease a new car. Again, as in the case of housing, a lease is...
Discussion Questions Kct
1. Explain the meaning of environmental scanning. Which constituents of the environment, from the viewpoint of a corporation, require scanning 2. Illustrate with examples the relevance of technological, political, economic, social, and regulatory environments in the context of marketing strategy. S. Who in the organization should be responsible for scanning the environment What role may consultants play in helping corporations in their environmental scanning activity 4. Explain the use of...
Product Life Cycle
Products tend to go through different stages, each stage being affected by different competitive conditions. These stages require different marketing strategies at different times if sales and profits are to be efficiently realized. The length of a product's life cycle is in no way a fixed period of time. It can last from weeks to years, depending on the type of product. In most texts, the discussion of the product life cycle portrays the sales history of a typical product as following an...
How Cibc Competed
The CIBC's Personal and Commercial Bank competed on quality, service, and personal relationships with its customers. The bank's corporate philosophy was best illustrated by Holger Kluge, president, Personal and Commercial Bank We're not in the business of selling financial products. We're in the business of helping our customers Over the past year, the CIBC had completely repositioned itself to respond to the needs of its customers. In the past, the bank had been very focused on products which...
Classifying Competitors
A business may face competition from various sources either within or outside its industry. Competition may come from essentially similar products or from substitutes. The competitor may be a small firm or a large multinational corporation. To gain an adequate perspective on the competition, a firm needs to identify all current and potential sources of competition. Competition is triggered when different industries try to serve the same customer needs and demands. For example, a customer's...
Process Of Setting Objectives
At the very beginning of the process of setting objectives, an SBU should attempt to take an inventory of objectives as they are currently understood. For example, the SBU head and senior executives may state the current objectives of the SBU and the type of SBU they want it to be in the future. Various executives perceive current objectives differently and, of course, they will have varying ambitions for the SBU's future. It will take several top-level meetings and a good deal of effort on the...
Info Nym
Not cited by a significant number of poll respondents. Note Survey conducted in early January of each year. Not cited by a significant number of poll respondents. Note Survey conducted in early January of each year. How concerned are you about the environment Extremely 32 , Quite 37 , Somewhat 24 , Not Very 5 , Don't Care 2 How likely is it that you would purchase environmentally friendly products Very 49 , Somewhat 43 , Not too 2 , Not at all 4 How likely is it that you would switch...
Personal Selling Strategies
There was a time when the problems of selling were simpler than they are today. Recent years have produced a variety of changes in the selling strategies of businesses. The complexities involved in selling as we approach the next century are different from those in the past. As an example, today a high-principled style of selling that favors a close, trusting, long-term relationship over a quick sell is recommended. The philosophy is to serve the customer as a consultant, not as a peddler....
Info Ioh
investors. Take, for example, information from government sources. Under the Freedom of Information Act, a great amount of information can be obtained at low cost. As far as information from its own sources is concerned, the company should develop a structured program to gather competitive information. First, a tear-down program like Ford's Exhibit 4-3 may be undertaken. Second, salespeople may be trained to carefully gather and provide information on the competition, using such sources as...
Exhibit 22
Key Elements of Marketing Strategy Formulation Thus, marketing strategy is the creation of a unique and valuable position, involving a different set of activities. Thus, development of marketing strategy requires choosing activities that are different from rivals. The concept of strategic marketing may be illustrated with reference to the introduction by Gillette Company of a new shaving product, Mach 3, in April 1998.1 For some time, Gillette had faced slow growth in its razor's division,...
The Company
Over the last 125 years, CIBC had grown to become North America's fifth largest bank and the second largest bank in Canada.1 Consumers were most familiar with CIBC's Personal and Commercial Bank, which provided a full range of financial services to 6 million Canadian customers. Personal banking involved basic transaction services, deposits and investments, consumer loans, residential mortgages, VISA issuing and merchant services, and other related financial services. The CIBC Personal and...
Exhibit 46
Porter's Model of Industry Competition Source Michael E. Porter, Industry Structure and Competitive Strategy Keys to Profitablility, Financial Analysis Journal July-August 1980 33. Source Michael E. Porter, Industry Structure and Competitive Strategy Keys to Profitablility, Financial Analysis Journal July-August 1980 33. scale require potential entrants either to establish high levels of production or to accept a cost disadvantage. Absolute cost advantage is enjoyed by firms with proprietary...
Past Performance Of Business Units
The past performance of business units serves as an important input in formulating corporate-wide strategy. It helps in the assessment of the current situation and possible developments in the future. For example, if the profitability of an SBU has been declining over the past five years, an appraisal of current performance as satisfactory cannot be justified, assuming the trend continues. In addition, any projected rise in profitability must be thoroughly justified in the light of this trend....
STRATEGIC BUSINESS UNITS SBUs
Frequent reference has been made in this chapter to the business unit, a unit comprising one or more products having a common market base whose manager has complete responsibility for integrating all functions into a strategy against an identifiable competitor. Usually referred to as a strategic business unit SBU , business units have also been called strategy centers, strategic planning units, or independent business units. The philosophy behind the SBU concept has been described this way The...
Discussion Questions Lop
1. Outline promotion objectives for a packaged food product in an assumed market segment. 2. Develop a promotion-expenditure strategy for a household computer to be marketed through a large retail chain. 3. Will promotion-expenditure strategy for a product in the growth stage of the product life cycle be different from that for a product in the maturity stage Discuss. 4. How may a promotion budget be allocated among advertising, personal selling, and sales promotion Can a simulation model be...
Valuemarketing Strategy
In the 1990s, value has become the marketer's watchword. Today, customers are demanding something different than they did in the past. They want the right combination of product quality, good service, and timely delivery. These are the keys to performing well in the next century. It is for this reason that we examine this new strategic focus. Value marketing strategy stresses real product performance and delivering on promises. Value marketing doesn't mean high quality if it is only available...
Factors In Appraisal Value Orientation Of Top Management
The ideologies and philosophies of top management as a team and of the CEO as the leader of the team have a profound effect on managerial policy and the strategic development process. According to Steiner The CEO's aspirations about his personal life, the life of his company as an institution, and the lives of those involved in his business are major determinants of choice of strategy. His mores, habits, and ways of doing things determine how he behaves and decides. His sense of obligation to...
Notes Nho
1 Polaroid Sharper Focus, The Economist 24 April 1993 72. 2 Thomas S. Robertson and Yoram Wind, Marketing Strategy, in Handbook of Business Strategy New York McGraw-Hill Book Co., 1982 . See also Yoram Wind and Thomas S. Robertson, Marketing Strategy New Directions for Theory and Research, Journal of Marketing Spring 1983 12-25. 3 Kenichi Ohmae, Getting Back to Strategy, Harvard Business Review 4 George S. Day and Allan D. Shocker, Identifying Competitive Product-Market Boundaries Strategic and...
Priceleadership Strategy
The price-leadership strategy prevails in oligopolistic situations. One member of an industry, because of its size or command over the market, emerges as the leader of an entire industry. The leading firm then makes pricing moves that are duly acknowledged by other members of the industry. Thus, this strategy places the burden of making critical pricing decisions on the leading firm others simply follow the leader. The leader is expected to be careful in making pricing decisions. A faulty...
Info Vof
Source Bruce D. Henderson, The Product Portfolio Boston The Boston Consulting Group, Inc., 1970 . Perspectives No. 66. Reprinted by permission. Portfolio Matrix and Product Life Cycle Top management needs to answer two strategic questions a How promising is the current set of businesses with respect to long-term return and growth b Which businesses should be developed maintained as is liquidated Following the portfolio matrix approach, a company needs a cash-balanced portfolio of businesses...
Marketscope Strategy
Market-scope strategy deals with the coverage of the market. A business unit may serve an entire market or concentrate on one or more of its parts. Three major alternatives in market-scope strategy are single-market strategy, multimarket strategy, and total-market strategy. A variety of reasons may lead a company to concentrate its efforts on a single segment of a market. For example, in order to avoid confrontation with large competitors, a small company may find a unique niche in a market and...
Product Linepricing Strategy
A modern business enterprise manufactures and markets a number of product items in a line with differences in quality, design, size, and style. Products in a line may be complementary to or competitive with each other. The relationships among products in a given product line influence the cross-elasticities of demand between competing products and the package-deal buying of products complementary to each other. For example, instant coffee prices must bear some relationship to the prices of a...
Productpositioning Strategy
The term positioning refers to placing a brand in that part of the market where it will receive a favorable reception compared to competing products. Because the market is heterogeneous, one brand cannot make an impact on the entire market. As a matter of strategy, therefore, a product should be matched with that segment of the market in which it is most likely to succeed. The product should be positioned so that it stands apart from competing brands. Positioning tells what the product stands...
Dimensions Of Market Strategies
Market strategies deal with the perspectives of markets to be served. These perspectives can be determined in different ways. For example, a company may serve an entire market or dissect it into key segments on which to concentrate its major effort. Thus, market scope is one aspect of market strategy. The geographic dimensions of a market constitute another aspect a company may focus on a local, regional, national, or international market. Another strategic variable is the time of entry into a...
Sustaining Competitive Advantage
A good strategist seeks not only to win the hill, but hold on to it. In other words, a business should not only seek competitive advantage but also sustain it over the long haul. Sustaining competitive advantage requires erecting barriers against the competition. A barrier may be erected based on size in the targeted market, superior access to resources or customers, and restrictions on competitors' options. Scale economies, for example, may equip a firm with an unbeatable cost advantage that...
Info Szn
Be sensitive to information on specific issues Less specific information collection Specific information collection Scanning to Enhance gt Understanding of a Specific Event Scanning to Make an Appropriate Response to Markets and Competition Strategic Scanning to Be on the Lookout for Competitive Advantage significance of the environment and dabbles in scanning but in an unplanned, unstructured fashion. Everything in the environment appears to be important, and the company is swamped with...
Portfolio Analysis Conclusion
Portfolio approaches provide a useful tool for strategists. Granted, these approaches have limitations, but all these limitations can be overcome with a little imagination and foresight. The real concern about the portfolio approach is that its elegant simplicity often tempts managers to believe that it can solve all problems of corporate choices and resource allocation. The truth is that it addresses only half of the problem the back half. The portfolio approach is a powerful tool for helping...
Notes Bcd
1 Perspectives on Corporate Strategy Boston Boston Consulting Group, 1970 44. 2 The discussion on Dow Chemical Company draws heavily on information provided by 3 The Right Move Early, Forbes 8 January 1990 130-131. 4 Lee Smith, Dow vs. Du Pont Rival Formulas for Leadership, Fortune 10 September 5 Dow Chemical's Drive to Change Its Market and Its Image, Business Week 9 June 6 Roger E. Levien, Technological Transformation at Xerox, in Strategic Management Bridging Strategy and Performance New...
Multiplechannel Strategy
The multiple-channel strategy refers to a situation in which two or more different channels are employed to distribute goods and services. The market must be segmented so that each segment gets the services it needs and pays only for them, not for services it does not need. This type of segmentation usually cannot be done effectively by direct selling alone or by exclusive reliance upon distributors. The Robinson-Patman Act makes the use of price for segmentation almost impossible when selling...
Exhibit 81
Hewlett-Packard's Corporate Direction Profit To achieve sufficient profit to finance our company growth and to provide the resources we need to achieve our other corporate objectives To provide products and services of the greatest possible value to our customers, thereby gaining and holding their respect and loyalty To enter new fields only when the ideas we have, together with our technical, manufacturing and marketing skills, assure that we can make a needed and profitable contribution in...
Info Kfc
a growth industry, the corporation would need to rethink its investment policy. All quantitative information pertaining to an SBU may be summarized on one form, as shown in Exhibit 9-7. Different product market plans are reviewed at the SBU level. The purpose of this review is twofold a to consider product market strategies in finalizing SBU strategies and b to approve product market strategies. The underlying criterion for evaluation is a balanced achievement of SBU goals, which may be...
Exhibit 154
Competitive Information Needed for Pricing Strategy 1. Published competitive price lists and advertising 2. Competitive reaction to price moves in the past 3. Timing of competitors' price changes and initiating factors 4. Information on competitors' special campaigns 5. Competitive product line comparison 6. Assumptions about competitors' pricing marketing objectives 7. Competitors' reported financial performance 8. Estimates of competitors' costs fixed and variable 9. Expected pricing...
Distributionscope Strategy
For an efficient channel network, the manufacturer should clearly define the target customers it intends to reach. Implicit in the definition of target customers is a decision about the scope of distribution the manufacturer wants to pursue. The strategic alternatives here are exclusive distribution, selective distribution, and intensive distribution. Exclusive distribution means that one particular retailer serving a given area is granted sole rights to carry a product. For example, Coach...
Productoverlap Strategy
The product-overlap strategy refers to a situation where a company decides to compete against its own brand. Many factors lead companies to adopt such a strategic posture. For example, A amp P stores alone cannot keep the company's 42 manufacturing operations working at full capacity. Therefore, A amp P decided to distribute many of its products through independent food retailers. A amp P's Eight O'Clock coffee, for example, is sold through 7-Eleven stores. Procter amp Gamble has different...
Defining Market Boundaries
The crux of any strategy formulation effort is market definition The problem of identifying competitive product-market boundaries pervades all levels of marketing decisions. Such strategic issues as the basic definition of a business, the assessment of opportunities presented by gaps in the market, the reaction to threats posed by competitive actions, and the decisions on major resource allocations are strongly influenced by the breadth or narrowness of the definition of competitive boundaries....
Customer Groups
An adequate business definition requires proper consideration of the strategic three Cs customer e.g., buying behavior , competition e.g., competitive definitions of the business , and company e.g., cost behavior, such as efficiencies via economies of scale resources skills, such as financial strength, managerial talent, engineering manufacturing capability, physical distribution system, etc. and differences in marketing, manufacturing, and research and development requirements and so on,...
Productscope Strategy
The product-scope strategy deals with the perspective of the product mix of a company i.e., the number of product lines and items in each line that the company may offer . The product-scope strategy is determined by making reference to the business unit mission. Presumably, the mission defines what sort of business it is going to be, which helps in selecting the products and services that are to become a part of the product mix. The product-scope strategy must be finalized after a careful...
Sbu Objectives And Goals
The objectives and goals of the SBU may be stated in terms of activities manufacturing a specific product, selling in a particular market financial indicators achieving targeted return on investment desired positions market share, quality leadership and combinations of these factors. Generally, an SBU has a series of objectives to cater to the interests of different stakeholders. One way of organizing objectives is to split them into the following classes measurement objectives, growth survival...
Discussion Questions Leh
1. What purpose may a product portfolio serve in the context of marketing strategy 2. How can the position of a product in its life cycle be located 3. What is the strategic significance of products in the maturity stage of the product life cycle 4. What is the meaning of relative market share 5. What sequence should products follow for success What may management do to ensure this sequence 6. What factors may a company consider when measuring industry attractiveness and business strengths...
Discussion Questions Rfj
1. Discuss how a business unit may avoid problems of cannibalism among competing brands. 2. Conceptualize how a lagging brand assume a grocery product may be repo-sitioned for new uses. 3. What criteria may be employed to determine the viable position for a brand in the market 4. What conditions justify a company's dealing in multiple products 5. Are there reasons other than profitability for eliminating a product Discuss. 6. What factors must be weighed to determine the viability of divesting...
C LaggardEntry Strategy
Definition Entering the market toward the tail end of growth phase or during maturity phase. Two modes of entry are feasible a Imitator Entering market with me-too product b Initiator Entering market with unconventional marketing strategies. Objectives Imitator To capture that part of the market that is not brand loyal. Initiator To serve the needs of the market better than present firms. Requirements Imitator a Market research ability. b Production capability. Initiator a Market research...
Sbu Objectives
An SBU was defined in Chapter 1 as a unit comprising one or more products having a common market base whose manager has complete responsibility for integrating all functions into a strategy against an identifiable external competitor. We will examine the development and meaning of SBUs again in this chapter to make it clear why objectives must be defined at this level. Abell's explanation is as follows The development of marketing planning has paralleled the growing complexity of business...