Marketing

• 1. Marketing Defined: • Marketing management is a dynamic process that involves

• Marketing is a business philosophy that centers on several key activities:
identifying and meeting human and social needs. It's a • Choosing Target Markets: This is the process of identifying
specific customer segments or markets that the company wants
process of creating value for both customers and to focus on.
organizations. One succinct definition of marketing is • Getting Customers: Attracting new customers through various
"meeting needs profitably." This means that marketing aims marketing strategies and tactics.
to address customer needs and preferences while also • Keeping Customers: Building and maintaining customer
generating profits for the company. loyalty and satisfaction to encourage repeat business.
• 2. American Marketing Association's Definition: • Growing Customers: Increasing the value and profitability of
customer relationships over time.
• The American Marketing Association (AMA) provides a • Creating Customer Value: The central goal of marketing is to
formal and comprehensive definition of marketing. It provide superior value to customers through products, services,
emphasizes that marketing encompasses several key or experiences.
components: • 4. Social vs. Managerial Definitions:
• Creating: This involves product development, design, and
innovation to meet customer needs. • Social Definition: This perspective highlights marketing's
• Communicating: Marketers use various channels like role in society. It views marketing as a societal process
advertising, public relations, and digital media to convey the where individuals and groups obtain what they need and
value of their offerings. want by creating, offering, and exchanging products and
• Delivering: This focuses on distribution and supply chain services. It emphasizes improving the standard of living and
management to ensure products and services reach customers well-being in society through marketing activities.
effectively.
• Exchanging: Marketing involves facilitating transactions and • Managerial Definition: From a managerial standpoint,
exchanges between buyers and sellers. marketing is about understanding customers so profoundly
• Value: The core of marketing is to provide offerings that have that the product or service aligns perfectly with their needs.
value for customers, clients, partners, and society as a whole. In this ideal scenario, the product essentially "sells itself"
This value can be in the form of benefits, solutions to problems, because it precisely meets customer requirements.
or satisfying needs and wants.
• 3. Marketing Management:
• 5. What Is Marketed: • Traditional Definition: Historically, a "market" referred
to a physical place where buyers and sellers met to
• Marketers promote and sell a wide range of entities: exchange goods and services.
• Goods: Physical products like clothing, electronics, food, • Economic Definition: Economists define a market as a
and vehicles. collection of buyers and sellers transacting over a specific
• Services: Intangible offerings such as healthcare, product or product category (e.g., the housing market or
education, consulting, and entertainment. the stock market).
• Events: Time-based activities like concerts, sports games, • Modern Marketing Perspective: In modern marketing,
trade shows, and festivals. sellers are viewed as the industry, and the term "market"
• Experiences: Customized combinations of goods and refers to customer groups. Markets can be categorized
services that create memorable and valuable customer based on various factors like needs, products,
experiences. demographics, geography, or behavior.
• Persons: Prominent individuals, including celebrities, • 8. Market Flows:
experts, and influencers.
• Places: Geographical locations like cities, tourist
• Markets are interconnected through flows of goods,
destinations, and regions, aiming to attract residents, services, money, and information:
tourists, and businesses. • Goods and Services Flow: Sellers provide products or
• Properties: Rights of ownership, including real estate and services to the market, and customers purchase them in
financial assets. exchange for money.
• Organizations: Entities like corporations, nonprofits, and • Money Flow: Customers pay for products or services,
government agencies that seek to enhance their public which generates revenue for sellers.
image and achieve their objectives. • Communication Flow: Marketers communicate with
• Information: Data, knowledge, insights, and content customers through advertising, promotions, and various
provided to individuals and organizations. channels.
• Ideas: Concepts, beliefs, and messages marketed to • Information Flow: Information about customer
influence behavior, opinions, or social change. preferences, market trends, and sales data is exchanged
between buyers and sellers.
• 6. Who Markets:
• Understanding these flows is crucial for effective
• Marketers are individuals or entities actively seeking a marketing as they drive the interactions between
response (e.g., attention, purchase, vote, donation) sellers and buyers in various markets.
from another party, known as the prospect or
customer. • In summary, marketing is a multifaceted discipline that
revolves around understanding, creating, delivering,
• Marketing involves understanding customer needs and and communicating value to meet customer needs and
preferences, as well as influencing the level, timing, societal objectives. It encompasses a wide array of
and composition of demand to meet organizational entities and concepts, and its practice involves both a
objectives. strategic and creative approach to achieving success in
• 7. Markets: the marketplace.
Key Customer Markets
• Certainly, let's delve into greater detail about the key customer markets mentioned: countries and navigating various cultural, legal, and political differences. Companies
consumer markets, business markets, global markets, and nonprofit markets. entering global markets face unique challenges and opportunities.
• 1. Consumer Markets: • Marketing Focus: Companies in the global marketplace need to adapt their
• Characteristics: Consumer markets comprise individuals and households strategies to the unique characteristics of each country they operate in. Key
purchasing goods and services for their personal consumption. These markets are strategies include:
incredibly diverse and can include everything from everyday products like snacks • Market Entry Strategy: Deciding how to enter each country (e.g., exporting,
licensing, joint ventures, contract manufacturing).
and toiletries to big-ticket items like cars and vacations.
• Cultural Adaptation: Adapting product features, marketing communications, and
• Marketing Focus: In consumer markets, companies aim to establish strong brand pricing to fit the local culture.
images and connect with individual consumers. Key strategies include: • Legal and Regulatory Compliance: Ensuring products meet local laws and
• Product Excellence: Developing high-quality and desirable products or services that regulations.
meet consumer needs and preferences. • Effective Communication: Tailoring marketing messages to resonate with diverse
• Availability: Ensuring that products are readily available in convenient locations, both cultural and language preferences.
offline and online. • Examples: Companies like McDonald's and Coca-Cola have successfully adapted
• Marketing Communications: Creating engaging advertising and marketing their products and marketing strategies to resonate with consumers in various
campaigns to attract and retain consumers.
global markets.
• Reliable Performance: Consistently delivering on product promises and providing
exceptional customer service. • 4. Nonprofit and Governmental Markets:
• Examples: Companies like Coca-Cola, Nike, and Apple excel in consumer markets • Characteristics: Nonprofit and governmental markets involve selling to
by offering well-recognized brands and products that resonate with individual organizations with limited purchasing power, such as churches, universities,
consumers. charitable organizations, and government agencies.
• 2. Business Markets: • Marketing Focus: Companies selling to these markets often need to consider
• Characteristics: Business markets involve organizations purchasing goods and pricing carefully, as many government purchases require competitive bids. Key
services to support their operations. These markets are typically characterized by strategies include:
more complex purchasing processes and often involve professional buyers. • Pricing Strategy: Offering competitive pricing while ensuring profitability.
• Practical Solutions: Focusing on providing practical and cost-effective solutions.
• Marketing Focus: Companies targeting business markets need to cater to the • Bid Processes: Navigating bidding processes and ensuring compliance with
needs of professional buyers who evaluate competitive offerings. Key strategies procurement regulations.
include:
• Sales Force: Employing skilled sales teams to build relationships with business clients
• Examples: Companies supplying products or services to government agencies,
and provide tailored solutions. educational institutions, or charitable organizations need to understand the unique
• Pricing and Reputation: Offering competitive pricing and maintaining a strong procurement and budget constraints of these entities.
reputation for reliability and quality. • In summary, each of these key customer markets presents its own set of challenges
• Customization: Providing customization options to meet the specific needs of business and opportunities for companies. Effective marketing strategies in these markets
clients. involve tailoring approaches to the specific characteristics and needs of consumers,
• Examples: Companies like IBM, Boeing, and Oracle cater to business markets by businesses, global audiences, and nonprofit/governmental organizations. Successful
offering complex products and services tailored to the needs of other organizations. companies adapt their products, pricing, communication, and distribution strategies
• 3. Global Markets: to thrive in these diverse market segments.
• Characteristics: Global markets involve selling products and services in multiple
• CORE MARKETING CONCEPTS others in the same market.
• Needs, Wants, and Demands: 3. Segmentation: Market segmentation is the process of
1. Needs: Needs are the fundamental human requirements dividing a broader market into smaller, more homogeneous
necessary for survival and well-being. These include basic customer segments. Each segment shares similar
necessities like air, food, water, clothing, and shelter. characteristics and needs, making it easier for marketers to
Additionally, humans have psychological and social needs, develop tailored marketing strategies. Segmentation can be
such as recreation, education, entertainment, and a sense of based on various criteria, as mentioned earlier, including
belonging. Needs are universal and exist independently of demographics, psychographics, behavior, and geography.
marketing. • Types of Needs:
2. Wants: Wants arise when individuals direct their needs toward 1. Stated Needs: These are the needs that customers explicitly
specific objects or solutions. For example, while the need is for express or communicate. For example, a customer may state
food, a person may want a specific type of food like pizza and that they want an affordable car.
a craft beer. Wants are influenced by cultural, social, and 2. Real Needs: Real needs go beyond what customers express
personal factors. They are shaped by society and can vary and get to the underlying, often unspoken, requirements. In
from one person to another. the previous example, the real need might be a car with low
3. Demands: Demands are wants for specific products or operating costs.
services that are accompanied by the ability and willingness to 3. Unstated Needs: Sometimes, customers have expectations
pay for them. For instance, many people may want a luxury that they don't explicitly communicate but expect a company
car like a Mercedes, but only those who can afford it and are to fulfill. For instance, a customer may assume good service
willing to pay for it create a demand. Demands are the focus of from a car dealer without explicitly mentioning it.
marketers because they represent potential customers who
are both interested in a product and capable of purchasing it. 4. Delight Needs: Delight needs are desires for additional
features or benefits that can pleasantly surprise customers. For
• Target Markets, Positioning, and Segmentation: instance, a customer might be delighted if a car comes with an
1. Target Markets: Target markets refer to specific customer onboard GPS system.
segments or groups that a company chooses to focus its 5. Secret Needs: Secret needs are latent desires or aspirations
marketing efforts on. These segments are selected based on that customers may not openly share but influence their
various factors, including demographics (age, gender, income), purchasing decisions. A customer might want their friends to
psychographics (lifestyles, values), behavior (buying habits, perceive them as savvy consumers, affecting their choice of
product usage), and geography. Identifying target markets products or brands.
allows companies to tailor their marketing strategies and
offerings to meet the unique needs and preferences of these • Companies that understand and address these different types
groups. of needs can develop more effective marketing strategies and
provide customers with offerings that truly satisfy their
2. Positioning: Positioning involves creating a distinct and requirements. It's essential for companies to listen to
favorable image of a product or brand in the minds of the customers, probe deeper, and help them discover what they
target market. It's about how a company wants its customers want, even when they might not fully articulate their needs.
to perceive its offerings compared to competitors. Effective This understanding can lead to product innovation and better
positioning clarifies why a product or brand is unique and customer experiences.
valuable. It helps differentiate a company's products from
• Certainly, let's explore the concepts of offerings, brands, and marketing which products or services reach customers. Key distribution channels
channels in greater detail: include:
• Offerings and Brands: 1. Direct Distribution: Companies sell products or services directly to
customers through their own physical stores, websites, or catalogs.
1. Value Proposition: A value proposition is the unique set of benefits 2. Indirect Distribution: Companies use intermediaries like distributors,
and values that a company offers to meet customer needs and wholesalers, retailers, and agents to reach a wider customer base. These
preferences. It answers the question, "Why should customers choose intermediaries facilitate product distribution, inventory management, and
our product or service?" The value proposition encompasses both access to various markets.
tangible and intangible aspects, including product features, quality, 3. Service Channels: Service channels support transactions and
convenience, pricing, and customer experience. customer interactions, ensuring a smooth customer experience. They
2. Offering: An offering refers to the tangible product, service, or include:
combination of products and services that a company provides to 1. Warehouses: Facilities for storing and managing inventory before
customers. It includes everything a customer receives when they distribution.
engage with the company, such as the physical product, customer 2. Transportation Companies: Shipping and logistics providers that move
support, warranties, packaging, and any additional services associated products from manufacturers to retailers or directly to consumers.
with the product. 3. Banks: Handling financial transactions, including payments, online
banking, and e-commerce payment gateways.
3. Brand: A brand is more than just a name or logo; it represents the 4. Insurance Companies: Providing coverage and protection for goods
identity and reputation of a company or product in the minds of during transit.
consumers. It encompasses the emotions, perceptions, and associations • Designing Marketing Channels: Creating an effective mix of
that customers have with the brand. Successful branding creates a communication, distribution, and service channels is a strategic decision
strong, favorable, and memorable image, helping customers for marketers. Considerations include:
differentiate one brand from another. A brand is built over time through
consistent messaging, quality, and customer experiences. • Customer Preferences: Understanding where and how the target
audience prefers to receive information and make purchases.
• Marketing Channels:
• Product Characteristics: Evaluating the nature of the product (e.g.,
1. Communication Channels: These channels are used to deliver size, weight, perishability) and its suitability for various distribution
messages from the company to its target audience and receive methods.
feedback. Various communication channels include:
1. Print Media: Newspapers, magazines, posters, brochures, and flyers are • Market Coverage: Deciding on the extent of market coverage, such as
traditional print media channels. intensive (widely available), selective (limited availability), or exclusive
2. Broadcast Media: Radio and television are powerful mediums for (exclusive availability).
reaching a broad audience. • Cost and Efficiency: Assessing the cost-effectiveness of different
3. Direct Marketing: Channels like mail, telephone, email, text messages, channel options and ensuring efficient delivery, communication, and
and social media are used for personalized communication. support.
4. Digital Media: Websites, social media platforms, blogs, online advertising,
and video content provide interactive communication opportunities. • Competitive Advantage: Leveraging channel design to gain a
5. Out-of-Home Advertising: Billboards, posters, and transit competitive edge by offering better accessibility, customer service, or
advertisements offer exposure in public spaces. communication.
6. Mobile Media: Messaging apps, mobile websites, and apps on • Effective channel design ensures that a company's offerings reach the
smartphones and tablets provide mobile-specific communication. right customers, communicate the value proposition effectively, and
7. Physical Media: CDs, DVDs, and audiotapes are used for distributing meet customer needs efficiently. It plays a crucial role in a company's
content.
overall marketing strategy and customer satisfaction.
8. Interactive Media: Websites and apps with interactive features, such as
online shopping or customer support chats.
9. In-Store Displays: The physical layout, signage, and visual
merchandising within retail stores communicate brand messages.
2. Distribution Channels: Distribution channels are the routes through
• Certainly, let's explore in detail the concepts of paid media, owned an essential component of content marketing strategies.
media, and earned media in the context of marketing: • Earned Media:
• Paid Media: 1. Definition: Earned media refers to the exposure and attention a
1. Definition: Paid media refers to marketing communication channels brand or company receives through word-of-mouth, buzz, or viral
and strategies in which marketers pay a fee to display their marketing methods. It is the result of customers, the press, or other
advertisements or promotional content to a targeted audience. This external parties voluntarily sharing or discussing the brand or its
category includes various paid advertising formats and channels, both content.
traditional and digital. 2. Examples of Earned Media:
2. Examples of Paid Media: 1. Social Media Shares and Mentions: When individuals share a brand's
1. Television Ads: Commercials that air on television channels during social media posts or mention the brand in their own posts.
specific programs or time slots. 2. Product Reviews and Recommendations: Positive reviews and
2. Magazine and Display Ads: Advertisements placed in print publications recommendations by customers or influencers.
or on websites and social media platforms. 3. News Coverage: Media outlets reporting on a brand, product launch, or
3. Paid Search: Pay-per-click (PPC) advertising on search engines like event.
Google, where advertisers pay for their ads to appear when specific 4. User-Generated Content: Customers creating content related to a
keywords are searched. brand, such as photos, videos, or reviews, and sharing it online.
4. Sponsorships: Partnering with events, organizations, or influencers to 3. Role in Marketing: Earned media is a powerful indicator of a brand's
promote a brand or product, often in exchange for a sponsorship fee.
reputation and the level of engagement it has with its audience. It is
3. Role in Marketing: Paid media allows marketers to reach a broader often seen as more credible and trustworthy than paid or owned
and more targeted audience by leveraging established platforms and media because it reflects genuine customer opinions and experiences.
media outlets. It is an effective way to generate brand awareness, Companies strive to create compelling and shareable content to
drive traffic, and promote products or services to potential customers. encourage earned media, as it can significantly amplify their brand's
Paid media is particularly useful when launching new products or reach and impact.
targeting specific demographics. • Impact on Marketing Strategy:
• Owned Media:
• The emergence of earned media has shifted marketing strategies,
1. Definition: Owned media refers to communication channels that with companies increasingly focusing on creating content that
marketers or organizations have complete control over. These resonates with their audience and encourages sharing and
channels are owned and operated by the company and are used to engagement.
deliver content and engage with their audience directly. • Brands actively monitor and participate in conversations on social
2. Examples of Owned Media: media to leverage positive earned media opportunities and address
1. Company Website: A website created and managed by the company to negative publicity.
provide information, showcase products, and engage with customers.
2. Company Blog: A blog hosted on the company's website where they can
• Effective content marketing and influencer marketing strategies can
publish articles, news, and updates related to their industry or products. lead to significant earned media exposure.
3. Social Media Profiles: Social media accounts, such as Facebook pages, • In summary, paid media, owned media, and earned media are
Twitter accounts, and Instagram profiles, where the company can share essential components of a comprehensive marketing strategy. They
content and interact with followers. each serve distinct purposes, but when integrated effectively, they
4. Email Newsletters: Email campaigns and newsletters sent to a list of can help companies reach, engage, and influence their target
subscribers who have opted in to receive updates from the company.
audience to achieve marketing objectives. Earned media, in particular,
3. Role in Marketing: Owned media serves as a valuable platform for has gained prominence due to its ability to harness the power of word-
building brand identity, sharing valuable content, and nurturing of-mouth and customer advocacy in the digital age.
customer relationships. Companies have full control over the
messaging and branding on owned media channels, allowing them to
create a consistent and authentic brand image. Owned media is also
• Certainly, let's delve into more detail about impressions and 3. Interactive Content: Engagement can also be measured
engagement in marketing: through interactive content, such as quizzes, surveys, polls, and
interactive videos, where users actively participate.
• Impressions: 4. Time Spent: The amount of time a user spends on a website,
1. Definition: Impressions, in the context of marketing, refer mobile app, or watching a video can indicate a higher level of
to the number of times a particular piece of content or engagement.
advertisement is viewed by an audience. Impressions are a 5. Click-Through Rates (CTR): CTR measures the percentage of
people who click on a link in an email, ad, or website. It signifies
quantitative metric used to measure the reach or exposure active interest and engagement.
of a communication across various media channels,
including TV, Internet, and mobile. 3. Importance of Engagement:
1. Creating Value: Engagement reflects a more active and
2. Usefulness of Impressions: meaningful response from the audience. When users actively
1. Measuring Reach: Impressions help marketers understand the engage with content, they are more likely to find value in it.
scope or breadth of their communication efforts. It indicates 2. Building Relationships: Engagement can foster stronger
how many people have potentially seen the content or connections between brands and customers. It allows brands to
advertisement. interact with their audience, answer questions, and address
2. Cross-Channel Comparison: Impressions provide a concerns.
standardized metric that can be compared across different 3. Measuring Effectiveness: Engagement metrics provide
types of communication, such as TV ads, online banners, social insights into the effectiveness of marketing campaigns. Higher
media posts, and mobile app ads. engagement often correlates with better campaign
3. Limitations of Impressions: performance.
1. Lack of Depth: Impressions provide a basic count of views but 4. Personal Experiences and Transformative
do not offer insights into the quality of the viewership or Engagement: Engagement can extend beyond online
whether the audience engaged with the content. metrics to personal experiences. For example, engaging
2. No Insight into Results: Impressions alone do not reveal the customer service or personalized product recommendations
impact of the communication. It doesn't show whether viewers
took any action, such as making a purchase or sharing the can augment or transform a customer's perception of a
content with others. brand's products and services. These types of engagement
can lead to increased customer loyalty and advocacy.
• Engagement:
• In summary, impressions measure the reach and exposure
1. Definition: Engagement, in marketing, refers to the extent
of a communication, while engagement measures the depth
of a customer's active involvement, interaction, or and quality of audience interaction. Both metrics have their
participation with a communication or piece of content. It place in marketing analysis, with impressions providing a
goes beyond mere exposure and measures the level of broad view of reach and engagement offering insights into
attention and interaction from the audience. the level of audience involvement and interaction. For a
2. Examples of Engagement Metrics: comprehensive understanding of the effectiveness of
1. Social Media "Likes" and Comments: Metrics like the marketing efforts, marketers often consider both
number of "likes" on a Facebook post, comments on a Twitter impressions and engagement metrics together.
tweet, or shares of a video on social media platforms.
2. Blog and Website Comments: The number of comments left
by readers on a blog post or website article.
• Certainly, let's delve into more detail about the concepts of 2. Levels of Satisfaction:
value and satisfaction in marketing: 1. Disappointment: When the product or service falls short of
• Value: customer expectations, resulting in dissatisfaction.
2. Satisfaction: When the product or service meets customer
1. Definition: In marketing, value refers to the perceived benefit expectations, resulting in a neutral or satisfied state.
that customers receive from a product or service compared to 3. Delight: When the product or service exceeds customer
the cost or price they pay for it. It's the trade-off between expectations, leading to a highly positive and delighted state.
what customers gain (benefits) and what they give up (costs) 3. Factors Affecting Satisfaction: Customer satisfaction is
to acquire and use a product or service. influenced by various factors, including:
2. Components of Value (Customer Value Triad): 1. Expectations: Customers form expectations based on prior
1. Quality: Quality encompasses the characteristics, features, and experiences, marketing messages, and word-of-mouth
performance of a product or service. Higher quality typically leads recommendations.
to greater perceived value. 2. Actual Performance: How well the product or service performs
2. Service: Service includes the level of customer support, in reality compared to what was promised or expected.
convenience, and assistance provided by a company throughout 3. Perceived Value: The perceived value of the product or service
the customer journey. Excellent service can enhance perceived in relation to the price paid.
value. 4. Post-Purchase Experience: Factors like customer support, ease
3. Price: Price represents the monetary cost or investment required of returns, and overall post-purchase interactions can impact
to obtain a product or service. Customers evaluate whether the satisfaction.
benefits received justify the price paid. Lower prices often
increase perceived value, but it's important to balance price with 4. Importance of Satisfaction: High levels of customer
quality and service. satisfaction are linked to several benefits for businesses,
including customer loyalty, positive word-of-mouth, repeat
3. Value Perception: Customers assess value based on their business, and reduced customer churn. Satisfied customers
individual preferences, needs, and perceptions. What one are more likely to become brand advocates and recommend
customer considers a good value may differ from another's the company to others.
perspective. Value perceptions can vary depending on factors
like brand reputation, marketing messages, and competitive 5. Continuous Improvement: Monitoring customer satisfaction
alternatives. and gathering feedback are essential for businesses to identify
areas for improvement and enhance the overall customer
4. Marketing and Customer Value: Marketing efforts aim to experience.
identify, create, communicate, deliver, and monitor customer
value. This involves understanding customer needs, tailoring • In summary, value and satisfaction are integral to the
products and services to meet those needs, effectively marketing process. Value represents the balance between
communicating the value proposition, ensuring efficient benefits and costs that customers perceive, while satisfaction
delivery, and continuously assessing customer satisfaction. reflects how well a product or service meets or exceeds
customer expectations. Successful marketing involves
• Satisfaction:
delivering superior value and consistently satisfying customer
1. Definition: Satisfaction in marketing represents a customer's needs to build long-term customer relationships and loyalty.
judgment or assessment of a product's or service's perceived
performance in relation to their expectations. It reflects how
well the product or service met or exceeded customer
expectations.
• Certainly, let's explore in detail the concepts of the supply chain, competition, innovation.
and the marketing environment: • Marketing Environment:
• Supply Chain: 1. Definition: The marketing environment is the external context in which a
1. Definition: The supply chain is a network or channel that stretches from the business operates and makes marketing decisions. It consists of two main
acquisition of raw materials and components to the production and delivery of components:
finished products to final consumers. It encompasses all the activities, 1. Task Environment: Comprising actors involved in producing, distributing, and
processes, and entities involved in the creation and distribution of goods and promoting offerings, including the company itself, suppliers, distributors, dealers,
services. and target customers.
2. Broad Environment: Comprising broader factors and forces that influence
2. Components of the Supply Chain: A typical supply chain consists of marketing decisions, including demographics, economics, sociocultural factors, the
various components, including: natural environment, technology, and political-legal factors.
1.Raw Material Suppliers: Entities that provide the essential materials needed for
production.
2. Components of the Broad Environment: Each component of the broad
2. Manufacturers: Companies that transform raw materials and components into
environment can significantly impact marketing strategies:
finished products. 1. Demographic Environment: Trends in population size, age, gender, ethnicity, and
other demographic factors.
3. Distributors and Retailers: Entities responsible for warehousing, distribution, and
sales of the finished products. 2. Economic Environment: Factors such as inflation, unemployment, economic
growth, and consumer spending patterns.
4. Transportation and Logistics: The movement of products between different
stages of the supply chain. 3. Sociocultural Environment: Influences of culture, social norms, values, lifestyle
trends, and consumer behavior.
5. Alternative Trading Organizations (ATO): Organizations involved in fair trade
practices, particularly in global supply chains. 4. Natural Environment: Concerns related to sustainability, environmental
regulations, and eco-friendly products.
6. Value Capture: Each participant in the supply chain captures a certain percentage
of the total value generated during the product's journey to the consumer. 5. Technological Environment: Innovations, advancements, and the adoption of
new technologies that affect how businesses operate and interact with customers.
3. Importance of a Smooth Supply Chain: Efficient supply chain 6. Political-Legal Environment: Laws, regulations, government policies, and
management is critical for businesses as it ensures timely production, political stability that impact business operations.
minimizes costs, and meets customer demands. Disruptions or problems
3. Importance of Environmental Analysis: Businesses must continuously
within the supply chain can lead to product shortages, delays, and customer
analyze the marketing environment to identify opportunities and threats. By
dissatisfaction.
understanding these external factors, companies can adjust their strategies,
• Competition: innovate, and stay competitive in dynamic markets.
1. Definition: Competition in marketing refers to all actual and potential rival • Example of Pinterest:
offerings and substitutes that a buyer might consider when making a • Pinterest is a social media platform that allows users to discover and save
purchasing decision. It involves assessing the various alternatives available in
ideas, images, and content on virtual pinboards.
the market.
• It operates in a dynamic marketing environment influenced by sociocultural
2. Types of Competition: There are several dimensions of competition,
trends, technological advancements, and competition from other social media
including:
platforms.
1. Direct Competition: Companies that offer similar products or services and target
the same customer segments. For example, two smartphone manufacturers • Pinterest has adapted to changing user behaviors and preferences by
competing for the same customer base. introducing features like shopping capabilities, visual search, and content
2. Indirect Competition: Companies that offer products or services that serve as recommendations.
alternatives but may not be directly similar. For example, a car manufacturer
indirectly competes with bicycle manufacturers as a mode of transportation.
• The platform's success lies in its ability to provide value to users by facilitating
3. Substitute Products: Products or services that fulfill a similar need or purpose but inspiration and discovery, making it an attractive platform for marketers and
may not be in the same category. For example, a consumer choosing between advertisers.
buying a car or using ride-sharing services. • In summary, the supply chain represents the interconnected stages of product
4. Global Competition: Competition can also be global, where companies from creation and delivery, competition involves assessing alternatives in the
different countries compete in international markets. market, and the marketing environment encompasses external factors that
3. Adapting to Competition: Businesses must closely monitor and adapt to impact business decisions. Adapting to these factors is essential for
competition by assessing their strengths and weaknesses, differentiating their businesses to succeed and thrive in the ever-evolving marketplace.
offerings, and understanding customer preferences and trends. Effective
competitive analysis helps companies identify opportunities for growth and
New Marketing Realities
• more than 70 percent of global GDP growth, with consumption totaling $30
Certainly, let's delve into the details of the three transformative forces in trillion annually.
marketing: technology, globalization, and social responsibility. 3. Demographic Trends: Developing markets with younger populations, like
• Technology: India, Pakistan, and Egypt, are positioned for growth. The rise of the middle
1. Scale of Technological Achievement: The rapid pace of technological class in countries such as the Philippines, China, and Peru is driving economic
advancement has led to remarkable changes in the marketing landscape. development.
Statistics, such as the proliferation of mobile phones in India and Facebook's 4. Multiculturalism: Globalization has made countries more multicultural.
user base exceeding one billion, illustrate the global reach of technology. Minority populations in the United States, such as African Americans, Asians,
2. Digital Transformation: The rise of e-commerce, mobile Internet, and and Hispanics, wield substantial economic influence. Businesses are
increased web accessibility in emerging markets has transformed the way recognizing the importance of multicultural marketing and increasing their
brands and marketers operate. Businesses must now prioritize their "digital budgets for it.
balance sheets" to effectively navigate this digital landscape. 5. Innovation and Product Development: Companies are adopting a global
3. Data Availability: The digital era has made massive amounts of data approach to innovation by adapting ideas and lessons from one country to
accessible to both consumers and marketers. Gartner's prediction that CMOs another. For example, GE's success in developing a portable, low-cost
will spend more time on information technology (IT) than Chief Information ultrasound scanner for the Chinese market led to its adoption in developed
Officers (CIOs) underscores the growing importance of data-driven decision- countries as well.
making in marketing. • Social Responsibility:
4. Information Sharing: The traditional notion that "information is power" is 1. Global Challenges: Issues like poverty, pollution, water shortages, climate
evolving into "sharing information is power." Companies like SAP have built change, conflicts, and wealth inequality are significant global challenges that
online communities to engage with customers and gather ideas for product require attention and action.
development. 2. Corporate Social Responsibility (CSR): The private sector is taking on a
5. Impact on Traditional Marketing: Even traditional marketing activities are more prominent role in addressing social and environmental issues. Many firms
influenced by technology. For example, businesses like The Gent's Place worldwide have embraced CSR initiatives as part of their business strategies.
barbershop leverage social networks and digital channels to acquire new 3. Impact on Branding: CSR initiatives can positively influence a brand's image
customers, often at low marketing costs. and reputation. Consumers are increasingly favoring brands that demonstrate
6. Sales Force Empowerment: Technology aids in improving sales force social responsibility and contribute to improving living conditions.
effectiveness. Companies like Roche provide iPads to sales teams, enabling • In summary, technology has revolutionized marketing through digital
real-time data entry and enhancing data quality in customer relationship transformation, data-driven decision-making, and changes in consumer
management. behavior. Globalization has reshaped the business landscape by opening up
• Globalization: emerging markets, encouraging innovation, and promoting multiculturalism.
1. Shrinking World: Advancements in transportation, shipping, and Lastly, the growing emphasis on social responsibility highlights the role of
communication technologies have reduced the barriers to global trade and businesses in addressing global challenges and aligning with consumer values.
interaction, making the world a smaller place. These three transformative forces continue to shape the marketing realities of
the modern world.
2. Emerging Markets: Emerging markets are becoming increasingly influential
A dramatically changed marketplace
• Certainly, let's explore in detail how the marketplace has been dramatically changed by exact location.
various forces, including new consumer and company capabilities, shifts in distribution 4. Enhanced Communication: Intranets, databases, and specialized software have improved
channels, and heightened competition. internal and external communications within companies. This includes employee
• New Consumer Capabilities: recruitment, training, and cross-functional collaboration.
1. Rapid Internet Adoption: The growth of the Internet, even among older demographics, is 5. Cost Efficiency: The internet facilitates cost savings through efficient procurement,
evident. For instance, the percentage of German consumers over 65 accessing the Internet logistics, and operations. Businesses can compare prices, conduct reverse auctions, and
increased significantly. This widespread adoption allows consumers to engage with online streamline supply chains. Small businesses, in particular, can leverage the internet to
platforms and services, including social media. achieve significant cost savings.
2. Wireless Web Access: The number of Germans browsing the web wirelessly has surged, • Changing Channels:
providing consumers with more flexibility and convenience when accessing online 1. Retail Transformation: Traditional store-based retailers face competition from various
information and services. channels, including e-commerce, direct-to-customer ads, home shopping TV, and more. To
3. Social Media Empowerment: Social media platforms like Facebook, Twitter, and others attract customers, some retailers have shifted focus towards creating in-store experiences
have empowered consumers to share their opinions, connect with like-minded individuals, rather than solely offering products.
and even hold companies accountable for their actions. Businesses have also embraced 2. Disintermediation and Reintermediation: Early e-commerce companies disrupted
social media as a means of engaging with customers and gathering feedback. traditional supply chains through disintermediation. Traditional businesses responded by
4. Mobile Integration: Smartphones and tablets have become integral parts of consumers' incorporating online services into their operations, leading to reintermediation. This hybrid
daily lives. These devices are used not only for communication but also for researching approach helped traditional companies compete with pure online retailers.
products and making purchases, creating new opportunities for mobile marketing and sales. • Heightened Competition:
5. Transparency Expectation: Consumers now have access to vast amounts of information 1. Private Labels: Retailers have introduced private label products, which often closely
about companies and their products. This has heightened the importance of transparency in resemble established brands. This has intensified competition and challenged traditional
corporate actions, as consumers can quickly fact-check and scrutinize a company's claims brand manufacturers.
and practices.
2. Mega-Brands and Convergence: Strong brands have expanded into multiple product
6. Consumer Empowerment: Empowered consumers are more willing to switch brands if categories, creating mega-brands. This trend is particularly noticeable in industries like
they feel mistreated or dissatisfied with a company's actions. The story of Progressive computing, telecommunications, and consumer electronics, where companies like Apple and
Insurance illustrates how public opinion can impact a company's reputation and bottom line Samsung offer diverse products.
through social media.
3. Deregulation: Deregulation in various industries, including financial services,
• New Company Capabilities: telecommunications, and utilities, has aimed to foster competition and innovation. This has
1. Online Sales and Customization: Companies can leverage the internet to serve as both led to increased competition among companies within these sectors.
an information source and a sales channel. For instance, businesses can list products and 4. Privatization: Many countries have privatized formerly public companies to enhance
services, share their history and values, and even offer customized goods. This efficiency. This trend has been particularly prominent in industries like telecommunications,
customization extends to personalized branding, such as printing customer names on promoting competition and growth opportunities.
products like M&M candies or custom messages on ketchup bottles.
• In summary, the marketplace has undergone significant transformation due to technology,
2. Data Collection and Analysis: Advances in technology have enabled companies to gather globalization, social responsibility, changes in distribution channels, and heightened
comprehensive market data, including customer preferences, demographics, and competition. These changes have empowered consumers with new capabilities, provided
profitability. Loyalty programs and data analytics tools help companies gain insights into companies with tools to adapt and respond effectively, altered distribution methods, and
customer behavior, such as CVS's ExtraCare program. intensified competition, all of which collectively shape today's dynamic business
3. Targeted Marketing: With social media and mobile marketing, companies can send environment.
targeted advertisements, coupons, and information to consumers efficiently. Location-based
advertising allows for real-time communication and promotions based on a consumer's
Company Orientation toward the
Marketplace
• Certainly, let's delve into the evolution of marketing
philosophies and explore the concept of holistic marketing in
detail:
on the development, design, and implementation of marketing
programs and activities that acknowledge their breadth and
interconnectedness.
• 1. The Production Concept: The production concept is one • Four Major Components of Holistic Marketing:
of the oldest business philosophies. It centers around the idea • Relationship Marketing: This component emphasizes
that consumers prefer products that are readily available and building long-term and mutually beneficial relationships with
affordable. Companies following this concept focus on customers. It recognizes that customer retention and loyalty
achieving high production efficiency, reducing costs, and mass are crucial for a company's success.
distributing their products. This approach has been particularly
effective in countries with a large and inexpensive labor pool, • Integrated Marketing: Holistic marketing integrates various
like China. The production concept is also used when marketing channels and activities to provide a consistent and
companies want to expand their market. unified customer experience. It ensures that all aspects of
marketing work together seamlessly.
• 2. The Product Concept: The product concept suggests that
consumers favor products with superior quality, performance, • Internal Marketing: Internal marketing involves aligning the
or innovative features. Managers who adhere to this concept company's internal culture, values, and employee training with
may sometimes become overly enamored with their products, the overall marketing strategy. Satisfied and motivated
believing that a better product alone will attract customers. employees are more likely to deliver superior customer service.
However, they may overlook the importance of pricing, • Performance Marketing: This aspect of holistic marketing
distribution, advertising, and effective selling strategies in focuses on measuring and analyzing the performance of
ensuring a product's success. marketing efforts. It involves using metrics and key
• 3. The Selling Concept: The selling concept is based on the performance indicators (KPIs) to assess the effectiveness of
premise that consumers and businesses, if left to their own marketing campaigns and strategies.
devices, will not buy enough of a company's products. This • In summary, the holistic marketing concept recognizes the
concept is often employed for unsought goods, which need for a broad and integrated perspective in modern
consumers do not typically think of buying, such as insurance marketing. It encompasses relationship-building, integration of
or cemetery plots. It is most risky when companies with excess marketing activities, internal culture alignment, and
capacity attempt to sell whatever they produce, rather than performance measurement. By adopting this holistic approach,
responding to market demand. Hard selling practices assume companies aim to thrive in the ever-changing and
that coerced customers will not only make a purchase but may interconnected world of marketing.
even become repeat buyers.
• 4. The Marketing Concept: The marketing concept emerged
in the mid-1950s as a customer-centric philosophy. It
emphasizes understanding and responding to customer needs
and preferences. Rather than preparing a product for a specific
market, companies practicing the marketing concept aim to
provide products that customers desire. For example, Dell
allows customers to customize their computers, choosing the
features they want. The marketing concept focuses on
creating, delivering, and communicating superior customer
value compared to competitors. It's a shift from seller-centric
to buyer-centric thinking.
• 5. The Holistic Marketing Concept: The holistic marketing
concept is a response to the changing landscape of marketing
in the 21st century. It recognizes that modern marketing is
characterized by complexity and interdependencies, and it
takes a comprehensive approach. Holistic marketing is based
• Relationship Marketing: Relationship marketing is a marketing strategy that focuses on parts. Two key themes of integrated marketing are the recognition that multiple marketing
building and maintaining long-term, mutually beneficial relationships with key constituents activities can contribute to value creation and the importance of designing and implementing
who directly or indirectly impact a company's success. The primary goal of relationship each activity with consideration for how it interacts with others.
marketing is to earn and retain the business of these key constituents by providing value and • Key Components of Integrated Marketing:
satisfying their needs and desires consistently over time.
1. Integrated Channel Strategy: Companies must develop a cohesive channel strategy that
• Key Constituents in Relationship Marketing: considers both direct and indirect effects on product sales and brand equity. For example,
1. Customers: Building strong relationships with customers is at the core of relationship when a hospital purchases an MRI machine, it expects seamless installation, maintenance,
marketing. Companies aim to create customer loyalty and encourage repeat business by and training services from the supplier (e.g., General Electric's Medical Systems division).
understanding customer needs, preferences, and behavior. They offer personalized 2. Integrated Communication: All company communications, whether through advertising,
experiences, tailor-made solutions, and excellent customer service to enhance customer public relations, events, or digital channels, must be integrated to reinforce and complement
satisfaction. each other. This ensures a consistent brand message at every customer touchpoint. For
2. Employees: Satisfied and motivated employees are crucial to delivering exceptional instance, Iceland's award-winning campaign successfully integrated various communication
customer experiences. Relationship marketing includes internal marketing efforts to align channels to deliver a consistent brand message.
employees with the company's values, culture, and customer-centric approach. Happy 3. Internal Marketing: Internal marketing is an essential component of holistic marketing. It
employees are more likely to provide better service, which, in turn, benefits customers. involves hiring, training, and motivating employees who are committed to serving customers
3. Marketing Partners: Marketing partners include channels, suppliers, distributors, dealers, effectively. Marketers recognize that internal marketing is as important, if not more so, than
and agencies that play a role in delivering value to customers. Companies aim to foster external marketing efforts. All company departments must collaborate to meet customer
strong relationships with these partners to ensure efficient collaboration and mutual success. goals and ensure consistent customer experiences.
By working closely with marketing partners, companies can enhance their ability to meet 1. Challenges in Internal Marketing: Sometimes, challenges arise when various departments
customer needs and achieve marketing objectives. within a company do not align with the marketing strategy. For example, a marketing vice president
at an airline may aim to enhance customer satisfaction through better services, but other
4. Members of the Financial Community: This group includes shareholders, investors, and departments, such as catering, maintenance, human resources, and finance, may have different
financial analysts who have a significant impact on a company's financial performance. priorities and perspectives. Effective internal marketing requires vertical alignment with senior
Maintaining transparent and trustworthy relationships with these stakeholders is essential for management and horizontal alignment across departments.
building trust and attracting investment. 4. Performance Marketing: Performance marketing involves assessing both the financial and
• Creating Prosperity for Key Constituents: Relationship marketing is about creating non-financial returns of marketing activities and programs. While traditional financial metrics
prosperity for all key constituents and balancing the returns to stakeholders. It involves like sales revenue are important, top marketers are broadening their evaluation criteria. They
understanding the capabilities, needs, goals, and desires of each group and tailoring consider measures like market share, customer loss rate, customer satisfaction, product
marketing efforts accordingly. By ensuring that all constituents benefit from the relationship, quality, and other key performance indicators. Additionally, they are increasingly concerned
companies can build trust and loyalty. about the legal, ethical, social, and environmental impacts of marketing activities.
• Marketing Network: The ultimate outcome of successful relationship marketing is the 1. Environmental and Social Responsibility: Some companies, like Ben & Jerry's, adopt a "double
bottom line" approach, which measures both financial performance and the environmental impact
development of a unique company asset called a marketing network. This network consists of of products and processes. This concept has evolved into a "triple bottom line" that also
the company and its supporting stakeholders, including customers, employees, suppliers, incorporates the social impacts of a company's business activities.
distributors, retailers, and others. These stakeholders have built mutually profitable business 2. Ethical Considerations: In response to growing concerns about ethics, social responsibility, and
relationships with the company over time. The marketing network serves as a valuable asset sustainability, companies are facing increased scrutiny. Consumers around the world are
that contributes to the company's success. demanding stricter regulation, particularly in industries like banking, insurance, and packaged
foods, to ensure responsible behavior from companies.
• Customer-Centric Approach: Many companies in the era of relationship marketing focus
on individual customers. They collect and analyze data about customers' past transactions, • Integrated marketing, with its focus on coordination and synergy among various marketing
demographics, psychographics, and media preferences. This information helps companies elements, helps companies create a holistic marketing approach that addresses both
create customized offers, services, and messages for each customer. By concentrating on financial and non-financial aspects of their business activities, leading to more sustainable
their most profitable customers and building high customer loyalty, these companies aim to and responsible marketing practices.
capture a larger share of each customer's expenditures over their lifetime.
• Customer Relationship Management (CRM) and Partner Relationship Management
(PRM): Relationship marketing involves not only customer relationship management (CRM)
but also partner relationship management (PRM). Companies recognize the value of strong
bonds with key suppliers and distributors, viewing them as partners in delivering value to
final customers. By deepening these partnering arrangements, companies can ensure that all
parties benefit and contribute to the overall success of the business.
• In summary, relationship marketing is a customer-centric strategy that focuses on building
and maintaining strong, long-term relationships with customers, employees, marketing
partners, and members of the financial community. It aims to create prosperity for all key
constituents, leading to mutually beneficial business relationships and the development of a
valuable marketing network.
• Integrated Marketing: Integrated marketing refers to a marketing approach in which a
marketer strategically designs and coordinates various marketing activities and programs to
create, communicate, and deliver value to consumers. The goal of integrated marketing is to
ensure that the combined impact of these activities is greater than the sum of their individual
• The traditional marketing mix, often referred to as the
four Ps (Product, Price, Place, Promotion), has been a
range of activities, both online and offline, traditional and
nontraditional.
MODERN
fundamental framework for marketers for many years. • These activities must be integrated and designed to work MARKETING
However, in the context of modern marketing, particularly
within the holistic marketing concept, it's recognized that
together cohesively to achieve multiple objectives for the
organization. MANAGEMENT
these four Ps alone do not encompass the full scope of
marketing. Therefore, there's a need to update this • This integration ensures that the whole is greater than the

PEOPLE
framework to reflect the broader and more complex sum of its parts, creating a more comprehensive and
realities of contemporary marketing. The updated effective marketing approach.
framework includes four new elements: People, Processes, • 4. Performance:
Programs, and Performance. • "Performance" expands on the idea of evaluating

PROCESSES
• 1. People: marketing effectiveness, going beyond just financial
• In the updated framework, "People" recognizes the critical measures.
role of both employees within the organization and • It includes financial metrics like profitability, but also
consumers as individuals. considers nonfinancial aspects such as brand equity and

PROGRAMS
• Internal marketing focuses on the importance of customer equity.
employees and their alignment with the organization's • Additionally, it encompasses broader implications beyond
marketing goals. Employees play a crucial role in the company itself, including social responsibility, legal
delivering the brand promise and ensuring a positive compliance, ethical considerations, and environmental

PERFORMANCE
customer experience. impacts.
• From a customer perspective, viewing consumers as • Evaluating performance in this holistic manner helps
people rather than mere shoppers emphasizes companies make more responsible and sustainable
understanding their broader lives, needs, preferences, marketing decisions.
and values. It's about recognizing that customers have • Alignment with All Disciplines:
diverse and evolving lifestyles, desires, and experiences.
• Importantly, these new four Ps apply not just to the
• 2. Processes: marketing department but to all disciplines within the
• "Processes" highlight the need for structured and company.
disciplined approaches to marketing management. • By adopting this holistic framework, managers align
• It emphasizes that marketing should not be based on ad themselves more closely with the entire organization,
hoc decisions but should follow well-defined processes recognizing that marketing is not isolated but interwoven
and strategies. with other functions like finance, operations, and HR.
• These processes should incorporate creativity and • In summary, the updated four Ps framework - People,
innovation to continually generate new insights, products, Processes, Programs, and Performance - provides a more
services, and marketing activities. comprehensive and contemporary view of marketing that
• The goal is to create mutually beneficial, long-term acknowledges the importance of employees, the
relationships with customers, which requires systematic complexity of marketing processes, the diversity of
and disciplined planning and execution. marketing activities, and the need for responsible and
sustainable performance evaluation. This framework is
• 3. Programs: better suited to address the evolving challenges and
• "Programs" encompass all consumer-directed activities of opportunities in the modern marketing landscape.
the firm, extending beyond the traditional four Ps.
• Certainly, the tasks outlined for marketing management in the • Understanding competitors and devising competitive strategies is key
context of the situation involving Zeus Inc.'s Atlas camera division (Chapter 12).
highlight the key responsibilities and actions that marketing leaders • Growth strategies should be considered, including potential surprise
and managers need to undertake to address specific challenges and moves that anticipate competitors' reactions (Chapter 12).
opportunities. Let's break down these tasks in detail:
• 5. Creating Value:
• 1. Developing Marketing Strategies and Plans:
• Product development and innovation are crucial (Chapter 15). Atlas
• In the given situation, the first task is to identify long-term must decide whether to improve existing camera features or expand
opportunities. This involves analyzing the market experience and core into new product categories.
competencies of Atlas to determine where the division can excel.
• Pricing decisions (Chapter 16) should align with perceived value,
• Options may include enhancing camera features, entering new ensuring that customers see the price as justified by the product's
product categories like digital video cameras, or leveraging optical features and benefits.
expertise for products like binoculars and telescopes.
• 6. Delivering Value:
• The outcome of this task is to develop concrete marketing plans that
outline the strategy and tactics Atlas will employ going forward. This • Effective channel management (Chapter 17) ensures that products
includes setting clear objectives, target markets, and action plans. are accessible and available to target customers.
• 2. Capturing Marketing Insights: • Recruitment and collaboration with marketing facilitators (e.g.,
retailers, wholesalers) are necessary to efficiently supply products
• Atlas needs a robust marketing information system to monitor its (Chapter 18).
marketing environment continuously. This system involves gathering
data on suppliers, intermediaries, customers, and competitors. • 7. Communicating Value:
• Additionally, Atlas must analyze macroenvironmental factors such as • An integrated marketing communication plan is essential (Chapter
demographic, economic, technological, and social-cultural forces that 19) to communicate the value of Atlas's products.
impact its business. • Mass communication programs (advertising, public relations, etc.)
• A dependable marketing research system is essential to gain deeper must be designed to reach target audiences effectively (Chapter 21).
insights into customer needs, market trends, and competitive • Leveraging online, social media, and mobile channels can expand
dynamics. Atlas's reach (Chapter 20).
• 3. Connecting with Customers: • Personalized communication strategies, such as direct marketing and
• Atlas must focus on creating value for its chosen target markets. sales force training, should also be considered (Chapter 22).
Understanding consumer markets and buyer behavior is crucial • 8. Conducting Marketing Responsibly for Long-Term Success:
(Chapter 6). • Building a marketing organization capable of implementing the
• Segmenting the market, evaluating each segment, and selecting marketing plan effectively is vital (Chapter 23).
those Atlas can best serve is a strategic step (Chapter 9). • Feedback and control mechanisms are necessary to assess the
• Developing a positioning strategy is essential to determine how the efficiency and effectiveness of marketing activities and make
brand will be perceived by consumers (Chapter 10). improvements (Chapter 23).
• In the given situation, Atlas must also evaluate how its existing brand •
image (e.g., its 35mm film heritage) may affect its position in the
MARKETING
By following these tasks and applying the principles and concepts
from the respective chapters, Atlas can develop a strong turnaround

•
digital camera market (Chapter 11).
4. Building Strong Brands:
MANAGEMENT TASKS
plan for its camera division and adapt to the changing market
dynamics in both the 35mm and digital camera segments. Each task
contributes to the overall marketing strategy and ensures that Atlas is
• Branding decisions are critical. Should Atlas position itself as a well-positioned to meet customer needs, outperform competitors,
premium brand, a value brand, or something in between (Chapter and achieve long-term success in the industry.
10)?
 Strategic Planning, Implementation, and Control
•
Processes
Strategic planning plays a central role in the success of • 5. Division Level:
businesses, particularly those aiming to excel in marketing. • Each division within the organization establishes its plan,
Here's a detailed explanation of the central role of strategic which includes the allocation of resources to individual
planning and how it is implemented at various business units within that division.
organizational levels:
• 6. Business Unit Level:
• 1. Customer-Centric Approach:
• Business units develop their strategic plans, outlining how
• Successful companies that excel in marketing prioritize the they intend to achieve profitability and future success.
customer. They recognize that customer needs and
preferences drive their business strategies. • 7. Product Level:
• These companies are organized in a way that allows them to • At the product level, which includes product lines and
respond effectively to changing customer needs and brands, marketing plans are created to achieve specific
expectations. objectives.
• 2. Key Areas of Strategic Planning: • 8. Strategic and Tactical Planning:
• Marketers must focus on strategic planning in three critical • The marketing plan is a central instrument for directing and
areas: a. Managing the Business Portfolio: This involves coordinating the marketing effort. It operates at two levels:
viewing various businesses within the company as a. Strategic Marketing Plan: This lays out the target
investments. Decisions about resource allocation and markets and the company's value proposition based on an
business growth or elimination are made based on the analysis of the best market opportunities. b. Tactical
performance and potential of each business. b. Assessing Marketing Plan: This specifies the detailed marketing
Market Growth and Company Position: Companies tactics, such as product features, promotion, pricing, and
need to evaluate market growth rates to identify distribution channels.
opportunities. They also assess their own position in these • 9. Planning, Implementation, and Control:
markets to understand their competitive advantages and • The process of strategic planning involves not only creating
disadvantages. c. Establishing a Strategy: Developing a plans but also implementing them and monitoring their
clear strategy is crucial for achieving long-term objectives. A progress.
well-defined strategy provides direction and ensures
resources are allocated effectively. • The cycle of planning, implementation, and control ensures
that strategies are executed effectively and adjusted as
• 3. Organizational Levels: needed.
• Most large companies consist of four organizational levels: • In summary, strategic planning is essential for businesses,
corporate, division, business unit, and product. Each level especially those aiming to excel in marketing. It involves
has its own responsibilities and planning processes. assessing the business portfolio, evaluating market
• 4. Corporate Level: dynamics, and establishing clear strategies. This process
• Corporate headquarters is responsible for creating a occurs at various organizational levels, from corporate to
corporate strategic plan that guides the entire organization. product, and is instrumental in achieving long-term
objectives and responding to customer needs effectively
• This plan includes decisions on resource allocation to each
division and determines which businesses to initiate or
eliminate.
• Corporate and Division Strategic Planning Whether they • 4. Assessing Growth Opportunities:
let their business units set their own goals and strategies • Strategic-Planning Gap: Organizations often face a gap
or collaborate in doing so, all corporate headquarters between desired sales and projected sales from their
undertake four planning activities: existing portfolio, prompting a need to identify growth
• 1. Defining the corporate mission opportunities.
• 2. Establishing strategic business units • Intensive Growth: This involves maximizing
• 3. Assigning resources to each strategic business unit opportunities within current businesses. It includes market
penetration (selling more to existing markets), market
• 4. Assessing growth opportunitiesCertainly, let's delve development (finding new markets), and product
into each aspect of corporate and division strategic development (creating new products for existing
planning in more detail: markets).
• 1. Defining the Corporate Mission: • Integrative Growth: Companies can seek growth
• Purpose and Vision: A company's mission statement through integration within their industry, such as
defines its purpose and long-term vision. It articulates backward (supplier integration), forward (distribution or
why the organization exists and what it aspires to achieve. customer integration), or horizontal (acquiring similar
• Customer Focus: The mission statement should answer businesses) integration.
questions like "Who is the customer?" and "What is of • Diversification Growth: This strategy entails expanding
value to the customer?" It emphasizes a customer-centric into entirely new industries or businesses that offer
approach. attractive opportunities. Diversification can be concentric
• Evolving Mission: Over time, a company's mission may (related to existing businesses) or conglomerate
change in response to market dynamics, emerging (unrelated).
opportunities, or shifts in customer needs. • 5. Downsizing and Divesting Older Businesses:
• Market-Centric Definition: Successful companies often • Resource Optimization: Downsizing, harvesting, or
transition from product-centric to market-centric divesting older businesses is crucial for optimizing
definitions of their business. They focus on satisfying resource allocation and reducing costs.
customer needs and may diversify to meet those needs • Strategic Focus: It allows organizations to concentrate
more comprehensively. on core businesses aligned with their strategic objectives.
• 2. Establishing Strategic Business Units (SBUs): • Methods: Companies may choose to spin off business
• Distinct Entities: SBUs are individual business entities units, sell them, or gradually phase them out.
within a larger organization that can be managed and • In summary, corporate and division strategic planning is a
planned for separately. comprehensive process that starts with defining a clear
• Competitive Independence: Each SBU has its own set corporate mission. It involves segmenting the
of competitors and a manager responsible for strategic organization into SBUs, allocating resources effectively,
planning and profitability. and assessing growth opportunities. Organizations must
• Strategic Flexibility: SBUs allow organizations to adapt continuously adapt their strategies to evolving market
to diverse market conditions and develop tailored conditions and make informed decisions about their
strategies. portfolio of businesses, ensuring alignment with their
long-term vision and objectives.
• 3. Assigning Resources to Each SBU:
• Historical Methods: Traditional methods like the
GE/McKinsey Matrix and BCG's Growth-Share Matrix
categorized SBUs based on factors like competitive
advantage and industry attractiveness.
• Resource Allocation: Decisions involve whether to
invest in, harvest (extract cash from), or divest particular
SBUs based on their strategic fit and potential for growth.
• Modern Approaches: Contemporary approaches
consider shareholder value analysis, global expansion
opportunities, repositioning, and strategic outsourcing
when allocating resources.
Assessing growth opportunity
1. Intensive Growth: 2. Unrelated Diversification: Think of a company that makes
1. Market Penetration: This strategy focuses on selling more of your electronics but decides to enter the restaurant business. This is
existing products or services to your current customers. For example, if unrelated diversification because it's a completely different industry. It
you run a coffee shop and you want to increase sales, you might offer can be riskier because the company might not have expertise in the
loyalty cards or discounts to your regular customers to encourage them new field, but it can also provide opportunities for new revenue
to visit more often. streams.
2. Product Development: With this approach, you create new versions 4. Downsizing:
or variations of your existing products to cater to the evolving needs 1. Downsizing involves reducing the size, scope, or complexity of a
and preferences of your current customer base. For instance, a company's operations. This could mean closing unprofitable stores,
smartphone company might release a new model with upgraded eliminating product lines that aren't performing well, or reducing the
features to entice its existing customers to upgrade. workforce. The goal is to cut costs, improve efficiency, and focus on
3. Market Development: Here, you explore new geographic areas or what's working best.
untapped customer segments while still offering your existing products
or services. For instance, if you have a successful line of organic
5. Divesting Older Businesses:
snacks, you might consider selling them in a new city or targeting a 1. This strategy involves selling off older or underperforming parts of a
different age group. business. It's like decluttering your business portfolio. Companies might
do this to free up capital for more promising ventures or to streamline
2. Integrated Growth: their operations. For example, a tech company might sell an outdated
1. Horizontal Integration: Imagine you own a chain of movie theaters, software product to focus on newer, more innovative solutions.
and you decide to buy another chain that's a competitor. This horizontal
integration allows you to eliminate competition, reduce costs through
• In summary, accessing growth opportunities in marketing involves
economies of scale, and expand your presence in the movie exhibition a range of strategic approaches. Companies can try to sell more of
industry. their current products to existing customers, expand within their
2. Vertical Integration: Let's say you run a car manufacturing company, industry, diversify into related or unrelated areas, streamline their
and you decide to acquire a tire manufacturer. This is an example of operations through downsizing, or shed older businesses to refocus
forward vertical integration, as it involves moving closer to the end their resources. The choice of strategy depends on a company's
customers. It allows you to have more control over your supply chain, goals, market conditions, and competitive landscape, and it often
improve efficiency, and potentially reduce costs.
involves careful analysis and planning.
3. Diversification Growth:
1. Related Diversification: Consider a company that makes bicycles
and decides to start producing bike accessories, like helmets and locks.
This is related diversification because it's still connected to their core
business of bicycles. It can reduce risk by offering a broader range of
products to customers who already trust the brand.
• Management must decide how to allocate corporate resources to each SBU • Opportunity Identification: Opportunities may arise from
offering products in short supply, improving existing products or
• Portfolio-planning models ( BCG & GE Matrix) services, or creating entirely new solutions.
• Opportunity Evaluation: Companies use market opportunity
• Shareholder/market value analysis analysis (MOA) to evaluate opportunities by assessing their
• Certainly, let's explore the business unit strategic planning process benefits, target market identification, resource availability,
in more detail, focusing on key components like the business competitive advantage, and financial viability.
mission, SWOT analysis, and the assessment of the external and • Internal Environment (Strengths and Weaknesses) Analysis:
internal environments:
• Strengths Assessment: Evaluate internal strengths, such as core
• 1. Business Mission: competencies, unique resources, and advantageous capabilities.
• Defining a Specific Mission: Each business unit within an For example, a direct sales model could be a strength.
organization should have a well-defined mission that aligns with the • Weaknesses Assessment: Identify internal weaknesses, like
broader corporate mission. This mission statement outlines the limited brand recognition or a lack of distribution channels. These
specific purpose and objectives of the business unit. areas may require improvement.
• Clear Focus: The mission should have a clear focus and not be • Matching Strengths to Opportunities: The goal is to leverage
overly broad. It should provide guidance on what the business aims strengths to exploit identified opportunities effectively.
to achieve and who its primary customers are.
• Example: Dell's strength was its efficient direct-to-consumer sales
• Example: For instance, a television studio lighting equipment model, while its weakness was a weaker brand and lack of strong
company might define its mission as becoming the preferred dealer relationships. These insights led to a strategy leveraging
vendor for advanced and reliable lighting technologies in major direct sales and internet marketing.
television studios. This mission statement emphasizes a specific
• 3. Strategy Development:
target market and product focus.
• • Alignment with Opportunities: The SWOT analysis guides the
2. SWOT Analysis:
development of a business unit's strategy, ensuring that it aligns
• SWOT Overview: SWOT analysis evaluates a business unit's with identified opportunities, leverages strengths, and addresses
internal Strengths and Weaknesses as well as external weaknesses and threats.
Opportunities and Threats. It's a comprehensive assessment of the
• Strategic Planning: Based on the SWOT analysis, the business
business environment.
unit formulates a strategic plan that outlines specific actions,
• External Environment (Opportunity and Threat) Analysis: objectives, and timelines to achieve its mission and capitalize on
• Macroenvironment Factors: Business units must monitor opportunities.
macroenvironmental forces such as economic trends, technological • Flexibility: The strategy should be flexible enough to adapt to
advancements, regulatory changes, and sociocultural shifts that changing market conditions and address emerging challenges.
may create opportunities or pose threats.
• In summary, business unit strategic planning involves defining a
• Microenvironment Factors: Microenvironment factors include clear mission for the business unit, conducting a SWOT analysis to
competitors, customers, suppliers, and other entities directly evaluate the internal and external environment, identifying
affecting the business unit. Monitoring these factors helps identify opportunities and threats, and aligning strengths and weaknesses
opportunities and threats. with strategic objectives. This process helps business units make
• Marketing Intelligence: Establishing a marketing intelligence informed decisions and develop effective strategies to achieve their
system allows the business to track trends and developments, missions and objectives within the larger corporate framework.
identify market opportunities, and respond effectively.
 Opportunity matrix
• An Opportunity Matrix, also known as a Growth-Share Matrix or opportunities:
Opportunity Assessment Matrix, is a strategic tool used by businesses to 1. High Attractiveness, High Probability of Occurrence, High
evaluate and prioritize potential opportunities or initiatives. It helps Seriousness (Upper-Left Quadrant):
organizations assess the attractiveness of opportunities, the probability of 1. Opportunities in this quadrant are considered very attractive, likely to
their occurrence, and the seriousness of the potential outcomes. This succeed, and have significant potential consequences.
matrix is typically used to make informed decisions about resource 2. These opportunities are often top priorities and should be pursued vigorously.
allocation, investment, and strategic planning. It usually consists of three
key factors: 2. High Attractiveness, Low Probability of Occurrence, High
Seriousness (Upper-Right Quadrant):
1. Attractiveness (Attractiveness of the Opportunity): 1. Opportunities here are highly attractive and have significant potential
1. Attractiveness refers to how appealing or beneficial a particular opportunity consequences, but they face obstacles that make successful execution less
appears to be. It evaluates the potential benefits, market demand, growth likely.
potential, and overall desirability of the opportunity. 2. These opportunities may require careful planning and risk mitigation
2. Opportunities that are highly attractive are those that promise significant strategies.
potential benefits, strong market demand, and substantial growth prospects.
3. Low Attractiveness, High Probability of Occurrence, High
3. Opportunities with low attractiveness may have limited market potential,
uncertain benefits, or little appeal to the organization. Seriousness (Lower-Left Quadrant):
1. Opportunities in this quadrant may not be very attractive in terms of benefits
2. Probability of Occurrence (Likelihood of Success): or market potential, but they are likely to succeed and could have significant
1.The probability of occurrence assesses the likelihood that the opportunity will consequences.
be successful or realized. It considers the feasibility, market conditions, and 2. Consideration should be given to whether these opportunities align with the
the organization's ability to execute the initiative successfully. organization's strategic goals.
2. Opportunities with a high probability of occurrence are those that are well-
aligned with the organization's capabilities and have favorable market 4. Low Attractiveness, Low Probability of Occurrence, Low
conditions. Seriousness (Lower-Right Quadrant):
3. Opportunities with a low probability of occurrence may be riskier, with 1. Opportunities in this quadrant are less attractive, have a low likelihood of
uncertain outcomes or challenges that make successful execution less likely. success, and limited consequences.
2. These opportunities may be deprioritized or reconsidered unless there are
3. Seriousness (Impact or Consequence): specific reasons to pursue them.
1. Seriousness measures the potential impact or consequences of pursuing the
opportunity. It evaluates the positive or negative effects that could result from • By using the Opportunity Matrix, organizations can systematically assess
the success or failure of the initiative. and prioritize opportunities, allocate resources effectively, and make
2. Opportunities with high seriousness have the potential to significantly impact strategic decisions based on a balanced evaluation of attractiveness,
the organization's success, profitability, or strategic position. probability of occurrence, and seriousness of potential outcomes. It
3. Opportunities with low seriousness may have limited consequences, and their provides a structured framework for evaluating and selecting the most
success or failure may not greatly affect the organization. promising initiatives to pursue.
• To create an Opportunity Matrix, these three factors are typically plotted
on a grid or matrix, resulting in four quadrants that help prioritize
• Strategic formulation is a crucial step in the strategic • Objective: In a focus strategy, a business concentrates on
planning process, as it involves defining how a business unit serving one or more narrow market segments exceptionally
intends to achieve its goals. This typically involves creating well.
a game plan that includes marketing strategies, technology • Competitive Advantage: By deeply understanding and
strategies, and sourcing strategies. Michael Porter's generic catering to the specific needs of the target segment(s), a
strategies offer a framework for thinking about different company can build strong customer relationships and
approaches to strategy. These strategies include: potentially achieve either cost leadership or differentiation
• 1. Overall Cost Leadership: within that segment.
• Objective: The objective of this strategy is to become the • Key Focus: In-depth knowledge of the target market and
lowest-cost producer in the industry. customization of products or services to meet their unique
• Competitive Advantage: By achieving the lowest requirements.
production and distribution costs, a company can offer • Challenge: The challenge is to remain highly focused on
products or services at lower prices than competitors. This the chosen segment(s) and avoid being distracted by
can help it gain market share. opportunities outside the target market.
• Key Focus: Minimizing costs through efficiency and • It's worth noting that some companies may adopt a hybrid
economies of scale. approach, combining elements of more than one generic
• Challenge: The challenge with this strategy is that other strategy to create a unique position in the market.
firms may also pursue cost leadership, leading to intense • Porter also emphasizes the importance of distinguishing
price competition. Maintaining cost leadership over the long between operational effectiveness and strategy. Operational
term can be difficult. effectiveness refers to performing similar activities as rivals
• 2. Differentiation: but more efficiently, often through benchmarking and
process improvement. However, this advantage can be
• Objective: In a differentiation strategy, the goal is to short-lived because competitors can quickly copy such
achieve superior performance in an area valued by a improvements.
significant portion of the market.
• In contrast, strategy involves creating a unique and valuable
• Competitive Advantage: By delivering products or position by either performing different activities from rivals
services with unique features, quality, or benefits that or performing similar activities in different ways. A
customers value, a company can command premium prices successful strategy sets a business apart and cannot be
and build strong brand loyalty. easily replicated by competitors. Thus, a true strategy
• Key Focus: Concentrating on areas that set the business creates a sustainable competitive advantage.
apart from competitors, such as innovation, product quality, • In summary, strategic formulation involves selecting a clear
or customer service. and distinct approach to achieving a competitive advantage,
• Challenge: Maintaining differentiation can be challenging whether through cost leadership, differentiation, or focus.
as competitors may attempt to replicate or improve upon It's essential for a business to align its chosen strategy with
the differentiated features. its capabilities and market opportunities to achieve long-
• 3. Focus: term success.
 1.Cost Leadership Strategy:
1. Objective: The primary goal of the cost leadership strategy is to become the lowest-cost
producer in the industry.
2. Key Characteristics:
1. Economies of Scale: Companies employing this strategy aim to produce goods or
services in large quantities to take advantage of economies of scale, which can lower
production costs per unit.
2. Operational Efficiency: They focus on operational excellence, cost control, and
process optimization to minimize expenses.
3. Competitive Pricing: The aim is to offer products or services at competitive prices or
even lower than competitors while maintaining an acceptable level of quality.
3. Competitive Advantage: Cost leaders can attract a wide customer base, including price-
sensitive customers. They can also weather industry price wars better than competitors and
potentially achieve higher profit margins due to their cost efficiency.
2.Differentiation Strategy:
1. Objective: The differentiation strategy centers on offering unique and high-quality products
or services that stand out in the market.
2. Key Characteristics:
1. Product Innovation: Companies employing this strategy invest in research and
development to create innovative products or services.
2. Branding and Marketing: They heavily promote and market their distinctive
features, which could include design, performance, or other unique attributes.
3. Quality Focus: Maintaining consistent high quality is essential to meet customer
expectations.
3. Competitive Advantage: Differentiators can charge premium prices for their products or
services because customers are willing to pay more for the perceived added value. They can
also build strong brand loyalty and customer relationships.
3.Focus (or Niche) Strategy:
1. Objective: The focus strategy involves concentrating efforts on serving a specific, often
Porter generic smaller, segment of the market.
strategies 2. Key Characteristics:
1. Market Segmentation: Companies using this strategy identify a particular market
segment with distinct needs and preferences.
2. Tailored Offerings: They tailor their products or services to meet the specific
demands of the chosen niche.
3. Customer Intimacy: Building strong relationships and understanding the niche's
unique requirements are crucial.
 BCG Matrix
• Certainly, let's dive into more detail about the BCG Growth-Share Matrix: • Characteristics: Dogs are business units or products with a low market
• 1. Stars: share in a slow or stagnant market. They do not generate much profit and
often require minimal investment.
• Characteristics: Stars are business units or products that hold a high
market share in a rapidly growing market or industry. They are often leaders • Strategy: Companies may consider divestiture, liquidation, or cost
in innovation and enjoy strong customer demand. reduction strategies for dogs. Dogs can be a drain on resources if they are
not providing strategic value.
• Strategy: Companies typically invest heavily in stars to maintain their
market leadership and further accelerate growth. This investment may • Goal: The goal is to either revitalize dogs or phase them out to free up
include product development, marketing, and expanding market presence. resources for more promising business units.
• Goal: The goal with stars is to eventually turn them into cash cows as the • Limitations and Considerations:
market matures. If successful, stars can become the future sources of • Simplification: The matrix simplifies complex business realities by only
significant revenue and profit. considering market growth rate and relative market share. Other factors like
• 2. Cash Cows: competitive forces, technological disruptions, and external market dynamics
are often overlooked.
• Characteristics: Cash cows are business units or products with a high
market share in a mature or slow-growing market. They have already • Market Definitions: Defining markets accurately can be challenging.
reached a dominant position in the market. Market boundaries are not always clear-cut, and some business units may
span multiple markets.
• Strategy: Companies aim to extract as much profit as possible from cash
cows while minimizing additional investments. They are considered stable • Dynamic Environment: The matrix assumes a static environment, while in
and reliable sources of income. reality, markets can change rapidly due to technological advancements or
shifts in consumer preferences.
• Goal: The goal is to continue generating a steady cash flow, which can be
reinvested in other business units, including question marks, to fuel growth. • Synergies: The matrix doesn't account for potential synergies between
business units. Some units may perform better together than they would
• 3. Question Marks (or Problem Children): individually.
• Characteristics: Question marks are business units or products with a low • Long-Term vs. Short-Term: The focus is on long-term growth and
market share in a high-growth market. They often require significant profitability, so short-term considerations may be neglected.
investments to capture a larger market share.
• In practice, the BCG Growth-Share Matrix is a starting point for strategic
• Strategy: Companies must decide whether to invest in question marks to analysis. Companies often use additional tools and models to make more
turn them into stars or phase them out if they are unlikely to achieve nuanced decisions about resource allocation and portfolio management.
significant market share. While it has its limitations, the matrix remains a valuable framework for
• Goal: The goal is to convert question marks into stars, but this is not always assessing and prioritizing business units based on their current market
achievable. Some may remain question marks, while others might become positions and growth prospects.
dogs if investments do not pay off.
• 1. Growth Rate of the Market: • The model is a starting point for strategic analysis and should be used in conjunction with other
• The growth rate of the market is one of the key parameters considered in the BCG Matrix. It tools and models to make informed decisions about resource allocation and portfolio
serves as a measure of the market's attractiveness. High-growth markets are seen as more management.
attractive because they offer greater potential for expansion and profit. Markets that are •
rapidly expanding are often characterized by increased customer demand and emerging The BCG Matrix, also known as the Boston Consulting Group Matrix, uses two key parameters:
opportunities. relative market share and market growth rate. These parameters are used to classify business
• 2. Relative Market Share: units or products into four categories: Stars, Cash Cows, Question Marks (Problem Children),
and Dogs. Let's dive deeper into the calculation and interpretation of these axes:
• Relative market share (RMS) is another critical parameter in the BCG Matrix. It is used as an
indicator of competitive strength within a specific market. The larger a firm's market share • Relative Market Share (X-Axis):
relative to its largest competitor, the stronger its position in the marketplace is considered. • Relative Market Share is calculated by taking your brand's market share and dividing it by the
RMS is calculated by dividing the firm's market share by the market share of its largest market share of your largest competitor.
competitor. • Formula: Relative Market Share (%) = Brand’s Market Share ÷ Largest Competitor’s Market Share
• Relative Market Share = Firm's Market Share / Largest Competitor's Market Share • Interpretation of Relative Market Share:
• For example, if Company A has a market share of 20% in a specific industry, and its largest • The X-axis represents your brand's competitive strength in the market compared to your
competitor, Company B, has a market share of 30%, then the RMS for Company A would be largest competitor.
20% / 30% = 0.66. • The value typically ranges from 0.1 to 4, with a division happening around 1.
• Market leaders typically have an RMS greater than 1, indicating their competitive strength • A value of 1 or close to 1 indicates that your brand's market share is roughly equal to your largest
compared to the largest competitor. competitor's.
• 3. Market Growth Rate Calculation: • Values less than 1 suggest that your brand has a smaller market share than the largest
competitor.
• To determine the market growth rate for the BCG Matrix, a simple year-on-year growth rate is • Values greater than 1 indicate that your brand's market share is larger than the largest competitor.
often used. This calculation is typically done as follows: • Beyond a value of approximately 4, it suggests that your brand is dominating the existing
• Market Growth Rate = (Total Market Unit Sales in Current Year - Total Market Unit Sales in Previous Year) / Total Market market and significantly outperforms competitors.
Unit Sales in Previous Year • Market Growth Rate (Y-Axis):
• 4. Defining the Market: • Market Growth Rate is a measure of how fast the market in which a product or business unit
• It's crucial to define the specific market for which you are applying the BCG Matrix. The operates is growing or declining. It's calculated by comparing total market unit sales in the
boundaries of the market should be clearly defined to accurately assess market share and current year to the previous year.
growth rate. • Formula: Market Growth Rate (%) = (Total Market Unit Sales in Current Year - Total Market Unit
• BCG Matrix Quadrants: Sales in Previous Year) / Total Market Unit Sales in Previous Year
• - Dogs (Low Market Share / Low Market Growth): • Interpretation of Market Growth Rate:
• Dogs represent business units or products with both a low market share and low market growth • The Y-axis represents the attractiveness of the market in terms of growth potential.
rate. These are considered weak areas where your presence in the market is limited. Dogs • The value for market growth rate typically ranges from 0% to 30%, with divisions occurring
often require significant effort to gain attention and may struggle to achieve profitability. around 10-15%.
• - Stars (High Market Share / High Market Growth): • A low growth rate (0%-10%) suggests that the market is relatively stagnant or growing slowly.
• Stars are business units or products with a high market share in a rapidly growing market. • A moderate growth rate (10%-15%) indicates a market with some growth potential.
These units require substantial investment due to their potential for growth. They are leaders in • A high growth rate (15%-30%) suggests a rapidly growing market with significant opportunities
their respective markets and have the potential to generate significant profits. for expansion.
• - Question Marks (Low Market Share / High Market Growth): • Interpreting the BCG Matrix Quadrants:
• Question marks, also known as problem children, are business units or products with low • Stars: High Relative Market Share and High Market Growth Rate.
market share but are situated in high-growth markets. These units may not be generating • Interpretation: These are opportunities with a strong competitive position in rapidly growing
substantial revenue currently due to their limited market share. However, they have the markets. Invest to maintain or increase market share.
potential to become stars or may require further evaluation to determine if increased
investment is warranted.
• Cash Cows: High Relative Market Share and Low Market Growth Rate.
• Interpretation: These are mature markets where your brand has a strong competitive position.
• - Cash Cows (High Market Share / Low Market Growth): They generate significant cash flows and should be milked for profits.
• Cash cows are business units or products with a high market share in a market with low growth. • Question Marks (Problem Children): Low Relative Market Share and High Market Growth
They typically generate more cash than is needed to maintain the business. Cash cows are Rate.
considered stable and reliable sources of income and are often "milked" with minimal • Interpretation: These opportunities have potential but low market share. They require
additional investment. consideration and investment to determine if they can become stars.
• Limitations and Considerations: • Dogs: Low Relative Market Share and Low Market Growth Rate.
• The BCG Matrix is a simplified model that does not take into account all factors that influence • Interpretation: These are weak areas with limited market share in slow or stagnant markets.
Consider divesting or repositioning.
business success.
• It assumes a static market environment, whereas markets can change rapidly due to various
• In summary, the BCG Matrix helps businesses make strategic decisions based on their
factors. competitive strength and market growth. It classifies products or business units into four
categories, guiding resource allocation and portfolio management. The logarithmic nature of
• Other factors such as competitive dynamics, technological disruptions, and external market the axes reflects the non-linear relationship between competitive strength and market growth.
forces are often not considered.
• The GE (General Electric) Nine-Cell Matrix, also known as the GE-McKinsey Matrix, is a These business units are in attractive markets but may need additional resources and
strategic planning tool used to assess a company's portfolio of business units or strategic initiatives to strengthen their competitive positions further.
products. It was developed by the consulting firm McKinsey & Company in 3. High Attractiveness, Weak Competitive Strength (Upper-Right Cell): Business
collaboration with General Electric and is designed to help organizations prioritize and units in this cell are in attractive markets but have weak competitive positions. They
allocate resources effectively among their various business units. The matrix may require significant investments and strategic efforts to improve their positions or
evaluates business units based on two key dimensions: market attractiveness and consider exiting these markets.
competitive strength. These dimensions are represented as a 3x3 matrix, resulting in
nine cells, each with its own strategic implications. Here's a breakdown of how the GE 4. Moderate Attractiveness, Strong Competitive Strength (Middle-Left Cell):
Nine-Cell Matrix works: These business units have strong competitive positions but operate in markets with
moderate attractiveness. They should focus on maintaining profitability and possibly
• 1. Market Attractiveness (Y-Axis): This dimension assesses the attractiveness of explore adjacent markets.
the market or industry in which the business unit operates. Factors considered in
evaluating market attractiveness may include market size, growth rate, profitability, 5. Moderate Attractiveness, Moderate Competitive Strength (Middle-Center
competitive dynamics, and potential regulatory changes. Cell): Business units in this cell need careful consideration. They may generate stable
but unspectacular returns. Companies must decide whether to invest, divest, or
• High Market Attractiveness: Business units operating in highly attractive markets maintain the status quo.
typically have significant growth potential and opportunities for profitability.
6. Moderate Attractiveness, Weak Competitive Strength (Middle-Right Cell):
• Medium Market Attractiveness: Markets with moderate attractiveness may offer stable These business units face a challenging situation. They operate in markets with
growth but may not be as lucrative or dynamic. moderate attractiveness and have weak competitive positions. Strategic decisions
• Low Market Attractiveness: Business units in less attractive markets may face should be made to improve or exit these markets.
challenges such as slow growth, intense competition, or unfavorable market 7. Low Attractiveness, Strong Competitive Strength (Lower-Left Cell): Business
conditions. units in this cell are in less attractive markets but have strong competitive positions.
• 2. Competitive Strength (X-Axis): This dimension evaluates the competitive Companies may consider cost-cutting and resource optimization to maintain
strength or position of the business unit within its industry. It considers factors such as profitability.
market share, brand strength, technological capabilities, cost structure, and overall 8. Low Attractiveness, Moderate Competitive Strength (Lower-Center Cell):
competitive advantage. These units are in unattractive markets with moderate competitive strength.
• Strong Competitive Strength: Business units with a strong competitive position are Companies may need to carefully evaluate their long-term viability and consider exit
well-positioned to outperform competitors and capture market share. strategies.
• Moderate Competitive Strength: Units with moderate strength may hold a reasonable 9. Low Attractiveness, Weak Competitive Strength (Lower-Right Cell): Business
position but may not dominate the market. units in this cell face significant challenges. They operate in unattractive markets and
• Weak Competitive Strength: Business units with weak competitive positions may have weak competitive positions. Exiting or divesting from these markets is often the
struggle to compete effectively and face challenges in their markets. best option.
• The Nine Cells: Based on the combination of market attractiveness and competitive • The GE Nine-Cell Matrix provides a structured framework for portfolio analysis and
strength, the GE Nine-Cell Matrix divides the business units into nine cells, each with helps organizations make informed decisions regarding resource allocation, growth
its own strategic implications: strategies, divestitures, and overall portfolio management. It encourages a
comprehensive assessment of each business unit's strategic position and market
1. High Attractiveness, Strong Competitive Strength (Upper-Left Cell): These are dynamics, allowing for a more balanced and informed approach to managing a
the most attractive business units. They should be invested in heavily to capitalize on diversified portfolio.
their strong positions in attractive markets.
2. High Attractiveness, Moderate Competitive Strength (Upper-Center Cell):
Ansoff Matrix
• 1. Market Penetration (Existing Market, Existing Product): brand Vitamin water, is an example of related diversification. It allowed Coca-Cola to
• Objective: Market penetration is about increasing your market share within your enter the health drink sector, which was related to their existing beverage portfolio.
current market using your existing products. • Unrelated Diversification (New Market, New Product - Unrelated to Existing
• Strategies: Portfolio):
• Competitive Pricing: You can maintain or increase your market share by offering • Objective: Unrelated diversification entails entering entirely new industries or markets that
competitive prices, special discounts, or promotions to attract more customers. lack similarities with your current operations.
• Advertising and Promotion: Aggressive advertising and promotional campaigns can help • Strategies:
you retain your current customer base and attract new customers. • Brand Strength: Utilize your brand strength and reputation to explore new markets where your
brand equity can be an advantage.
• Customer Loyalty Programs: Introducing loyalty schemes or rewards for existing • Diversifying Revenue Streams: Expand into unrelated industries to reduce risk by diversifying
customers can encourage them to buy more frequently or in larger quantities. your sources of revenue.
• Product Improvements: Continuous product improvements or enhancements can also • Example: While Coca-Cola primarily operates in the beverage industry, they also offer
help in market penetration by keeping existing customers satisfied and attracting new
ones. official merchandise, such as pens and glasses, as a form of unrelated diversification.
This leverages their strong brand advocacy and allows them to generate revenue from
• Example: Coca-Cola is a prime example of a company using market penetration merchandise sales.
strategies. They invest heavily in advertising, promotional campaigns, and seasonal
marketing to maintain and increase their market share in the carbonated soft drink • In essence, the Ansoff Matrix offers a structured approach for businesses to choose the
industry. For instance, the annual Coca-Cola Christmas advert reinforces the association most suitable growth strategy based on their objectives, risk tolerance, and market
between Coca-Cola and Christmas, boosting sales during the holiday season. conditions. These strategies enable companies to expand their operations, capture new
market opportunities, and stay competitive in a rapidly changing business landscape.
• 2. Product Development (Existing Market, New Product):
• Objective: Product development involves introducing new products or product variants
into your existing market to meet evolving customer needs or outperform competitors.
• Strategies:
• New Product Creation: Develop new products that align with your existing market's
demands or preferences.
• Product Variants: Create variations or flavors of existing products to cater to different
customer segments or preferences.
• Enhanced Features: Enhance the features, quality, or capabilities of your existing
products to make them more attractive to customers.
• Example: McDonald's frequently uses product development to offer new burger
variants within the fast-food industry. They introduce new burgers or limited-time menu
items to attract new customers and keep their existing customer base engaged and
excited.
• 3. Market Development (New Market, Existing Product):
• Objective: Market development focuses on finding new customer groups or untapped
markets for your existing products.
• Strategies:
• Geographical Expansion: Expand into new geographic regions or countries where your
product is not yet available.
• Distribution Channels: Explore different distribution channels to reach new customer
segments or markets.
• Pricing Adjustments: Consider modifying pricing strategies to attract different customer
groups within existing markets.
• Targeted Marketing: Customize your marketing and advertising efforts to resonate with
the preferences and needs of new market segments.
• Example: When Coca-Cola launched Coke Zero in 2005, they targeted young men who
perceived Diet Coke as a "woman's drink." By changing their marketing approach and
packaging, they successfully entered a new market segment while selling the same
product.
• 4. Diversification:
• Related Diversification (New Market, New Product - Related to Existing
Portfolio):
• Objective: Related diversification involves introducing new products that complement your
existing portfolio to enter new, but related, markets.
• Strategies:
• Acquisitions: Acquire companies or brands that offer products related to your existing expertise or
brand identity.
• Product Line Extensions: Develop new product categories that align with your core competencies
and can benefit from your existing customer base.
• Brand Leverage: Leverage your brand reputation and customer trust to enter new markets.
• Example: Coca-Cola's acquisition of Glaceau in 2007, which included the health drink
• 1. Market Penetration: existing ones.
• Enhanced Features: Improving existing products by adding new features,
• Objective: Market penetration is a strategy focused on increasing a functions, or design elements.
company's market share in its existing market with its existing products. • Leveraging Brand Identity: Capitalizing on the strong brand image and
The goal is to boost sales and revenue within the current market. customer loyalty to introduce new products.
• Strategies: • Considerations: Product development carries some risk, as there's no
• Competitive Pricing: Offering competitive prices or discounts to attract guarantee that customers will seamlessly transition from existing
more customers and gain a larger share of the market. products to new ones. It requires understanding customer preferences
• Promotion: Implementing aggressive marketing and promotional and market dynamics.
campaigns to maintain and grow the customer base.
• Product Improvements: Enhancing product features, quality, or services • Example: Companies like Unilever and Procter & Gamble often launch
to keep existing customers satisfied. new products within existing markets, leveraging their brand reputation
• Customer Loyalty Programs: Introducing loyalty schemes or rewards to to capture market share.
encourage repeat purchases. • 4. Diversification:
• Considerations: Market penetration is relatively low-risk since it • Objective: Diversification is the riskiest strategy and involves entering
involves leveraging existing products and market knowledge. However, entirely new markets with new products. It's a high-reward, high-risk
it may face limitations when the market becomes saturated, and further approach.
growth becomes challenging.
• Strategies:
• Example: Television channels and media houses often use market • New Product Development: Creating entirely new products to enter new
penetration strategies to maintain and expand their viewership within markets.
their existing markets by offering engaging content and competitive • New Market Exploration: Venturing into markets unrelated to the
pricing. company's existing business operations.
• 2. Market Development: • Deep Pockets and Resources: Requiring significant resources and a
financial cushion to support the venture until it becomes profitable.
• Objective: Market development involves expanding a company's reach
by entering new markets or customer segments while still selling its • Considerations: Diversification is challenging and best suited for
existing products. companies with strong financial resources and an existing customer
base. It involves navigating uncharted territories and may take time to
• Strategies: generate returns.
• Geographic Expansion: Entering new geographical markets or regions
where the company's products are not currently available. • Example: The Tata Group diversified into various sectors, such as
• Distribution Channel Diversification: Exploring different distribution telecommunications and retail, where they had to launch new products
channels to reach untapped customer segments. and enter new markets, leveraging their reputation for value and
• Customized Marketing: Tailoring marketing efforts to meet the specific quality.
needs and preferences of the new market. • Conclusion: The Ansoff Matrix provides firms with a strategic
• Considerations: Market development can be riskier than market framework to determine their growth path based on whether they aim
penetration because it requires understanding new markets and may to launch new products or enter new markets. It offers a structured
involve regulatory and cultural challenges. approach to help companies expand and increase their market share,
• Example: Mobile telephony companies like Vodafone and Nokia aligning with their current capabilities and growth potential.
expanded into African markets, leveraging their expertise to tap into • In today's competitive business landscape, growth is essential for
new regions where mobile services were emerging. generating returns and delivering value to stakeholders. The Ansoff
• 3. Product Development: Matrix serves as a valuable tool to guide companies through different
growth strategies, helping them adapt to changing market conditions
• Objective: Product development focuses on introducing new products and seize opportunities. It is particularly relevant in times of economic
or product variants into the existing market to meet changing customer uncertainty, allowing firms to explore new avenues for expansion and
demands or gain a competitive edge. leverage their existing strengths.
• Strategies: