Amity School of Business
Amity School of Business
Marketing Management
Module – II
Geetika Jain
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Amity School of Business
Customer Value
• In order to survive in this competitive
environment wherein buyers have
abundant choices, an organization can
only survive by fine-tuning its value
delivery process.
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Value Delivery Process
Make the Product
Design
Product
Procure
Sell the product
Make
Price
Sell
Promote Distribute Service
Traditional Physical process
Choose the value
Strategic marketing
Provide the value
Communicate
Tactical marketing
Contemporary value creation & Delivery Process
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Value Chain
• Michael Porter has proposed the value
chain as a tool for identifying ways to
create more customer value.
– According to this model every organization is
a synthesis of activities performed to design,
produce, market, deliver and support it’s
product.
– The value chain identifies nine strategically
relevant activities (5 primary and 4 support)
that create value and cost in a specific
business.
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Value Chain
Support Activities
Firm Infrastructure
HRM
Technology Development
Procurement
Inbound
Logistics
Operations Outbound
Logistics
Mkting
Service
&
Sales
Primary Activities
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• Thus, successful marketing requires
companies to have capabilities such as
understanding customer value, creating
customer value, delivering customer value,
and sustaining customer value.
• In order to ensure that the marketers select
and execute right activities marketers have to
give priority to strategic planning specifically
in 3 different areas.
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Strategic Planning
• A game plan for long-run survival and growth
–
–
–
–
Situation
Opportunities,
Objectives
Resources
• The process of developing and maintaining a
strategic fit between the organization’s goals
and capabilities and its changing marketing
opportunities.
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• Strategic Planning calls for action in 3 key
areas:
– Managing company’s businesses as an
investment portfolio.
– Assessing each businesses’ strength by
considering market growth rate and
company’s position to fit into it.
– Establishing strategy.
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Strategic Planning
Planning
Implementing
Controlling
Measuring Results
Corporate/
Division Planning
Organizing
Diagnosing Results
Business Planning
Implementing
Product Planning
Taking Corrective
Action
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Corporate Strategic Planning
• All Corporate HQ’s undertake 4 planning
activities:
– Define Corporate Mission
– Establish SBU’s
– Assigning Resources to each SBU
– Assessing Growth Opportunities
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Vision & Mission- the
Relationship
Vision is a short, succinct, and inspiring statement of what
the organization intends to become and to achieve at some
point in the future, often stated in competitive terms.
Vision refers to the category of intentions that are broad,
all-intrusive and forward-thinking.

A mission statement is an organization's vision translated
into written form.
It is an statement of the organization’s purpose- what it
wants to accomplish in the larger environment.

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A Mission should…
• Focus on limited number of goals
• Stress the company’s major policies and values
• Define the major competitive spheres within
which the company will operate:
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–
–
–
–
–
Industry
Products and applications
Competence
Market segment
Vertical
Geographical
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Establishing SBUs
• A business portfolio is collection of businesses
and products that make up the company. A
business portfolio consists of several SBUs
(Strategic Business Units).
• An SBU is a single business or collection of related
businesses that can be planned and evaluated
separately from the rest of the company.
• An SBU can be a company division, a product line
within a division or sometimes a individual product
or brand.
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Resource Allocation
• Once SBUs are defined, management must
decide how to allocate corporate resources.
• 1970’s saw several portfolio planning models
introduced to provide an analytical means for
making investment decisions.
– BCG matrix
– GE 9 Cell
• These methods usually use two important
dimensions:
– The attractiveness of the SBUs Market or industry,
and
– The strength of the SBU’s position in that market or
industry.
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Assessing Growth Opportunities
• Includes:
– Planning new business
– Downsizing
– Terminating old business
• The company’s plans for it’s existing businesses
allow it to project sales and profits.
• But there tend to be a gap between the two.
• If there is a gap between future desired and
projected sales, corporate management will have
to develop or acquire new businesses to fill it.
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Strategic Planning Gap
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Options for filling the Strategic
Planning Gap
• Intensive growth- to achieve growth within
the company’s current businesses.
– Market penetration
– Market development
– Product development
• Integrative growth- to build or acquire
businesses that are related to the company’s
current businesses.
– Backward integration
– Forward integration
– Horizontal integration
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Options for filling the Strategic
Planning Gap
• Diversification growth- to add attractive
businesses that are unrelated to company’s
current businesses.
– Concentric Diversification
– Horizontal diversification
– Conglomerate diversification
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SBU Strategies
Protect
Position
Invest To Build
Build
Selectively
Build
Selectively
Selectivity /
Manage for
earnings
Limited
Expansion or
Harvest
Protect and
Refocus
Manage for
Earnings
Divest
INVEST / GROW
SELECTIVITY / EARNINGS
HARVEST / DIVEST
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Integrative Strategies
• Backward Integration
– Coca-cola has bought domestic and foreign bottling
companies in order to increase its production and
distribution efficiency
• Forward Integration
– Apple computer and Dell entered the retail industry to
sell by deciding to set up a chain of stores
• Horizontal Integration
– IDBI acquired United Western Bank; added 230
branches
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Diversification Strategies
• Concentric Diversification
– The entry of Reckitt Benckiser from industrial
chemicals into household products.
• Conglomerate Diversification
– Virgin Media moved from music producing to travels
and mobile phones.
– ITC presence from FMCG to hotels to agri-businesses
to paper boards and specialty paper etc.
• Horizontal Diversification
– Walt Disney moved from producing animated movies
to theme parks and vacation properties
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Business-unit Strategic
Planning Process
External
Analysis
Goal
Business
Mission
Strategy
Program
Implementation
SWOT
Analysis
Internal
Analysis
Feedback &
Control
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Porter’s Generic Strategies
• Overall Cost Leadership:
– The business works hard to achieve lowest production &
distribution cost so as to price lower than it’s competitors and win
a large market share.
– Firms pursuing this strategy should be good at engineering,
purchasing, manufacturing, distribution.
• Differentiation:
– Focus is on achieving superior performance in an important
customer benefit area.
• Focus:
– The business focuses on one or more narrow market segments.
The firm gets to know these segments intimately and pursues
either cost leadership or differentiation within the target segment.
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Strategy Formulation
• Strategic alliances
– Product or service alliances – HUL joined hands with
PepsiCo India) to bottle and market Lipton Iced Tea in
glass bottles.
– Promotional alliances – P&G India has used
endorsements of Bombay Dyeing for promoting Ariel
detergent powder in the past.
– Logistics alliances – Transystem, a joint venture
between TCI and Mitsui co. Ltd. Of Japan offers
complete logistics services to Toyota Kirloskar Motors
Pvt. Ltd.
– Pricing collaborations – Airlines, Hotels and car rental
companies joining hands to offer attractive rates.
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Marketing Process &
Product-level Planning
• It consists of
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–
–
–
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analyzing marketing opportunities,
researching and selecting target markets,
designing marketing strategies,
planning marketing programs, and
organizing, implementing & controlling marketing
effort.
• Each product level (product line, brand) must
develop a marketing plan for achieving it’s goals.
• A marketing plan is a written document that details
the actions necessary to achieve one or more
marketing objectives.
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Contents of a Marketing Plan
• Executive Summary & table of contents
– Brief summary of main goals and recommendations.
– Focus on plan’s major thrust.
• Current marketing situation
– Relevant background data on sales, cost, profit, the
market, competitors, channels and macro environmental
forces.
– This information is used to carry out a SWOT analysis.
• Opportunity & Issue analysis
– Review the main opportunities and issues in the SWOT
which are likely to affect organization’s goal attainment.
• Objectives
– Outlines plan’s major financial and marketing goals,
expressed in sales volume, market share, profit.
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Contents of a Marketing Plan
• Marketing strategies
– Define STP and other Mix Strategies
• Action program
– Derived from marketing strategies. Answers
questions like, what will be done, when will it be done,
who will do, how much will it cost.
• Financial projection
– Build supporting budget. Forecasted sales volume,
expected cost of production, projected profit.
• Implementation & control
– Outlines controls for monitoring and adjusting
implementation of the plan. Contingency plans.
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Ansoff’s Product-Market
Expansion Grid
CURRENT PRODUCTS
CURRENT
MARKETS
NEW
MARKETS
MARKET
PENETRATION
MARKET
DEVELOPMENT
NEW PRODUCTS
PRODUCT
DEVELOPMENT
DIVERSIFICATION
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BCG Growth Share Matrix
• According to the BCG technique, businesses or products are
classified as low or high performers depending upon their
market growth rate and relative market share.
• Relative Market share is the percentage of the total
market that is being serviced by your company,
measured either in revenue terms or unit volume terms.
RMS = Business unit sales this year
Leading rival sales this year
• Market growth is used as a measure of a market’s
attractiveness.
– Markets experiencing high growth are ones where the total
market share available is expanding, and there’s plenty of
opportunity for everyone to make money.
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BCG Growth-Share Matrix
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GE 9-Cell Matrix
• Each business is rated in terms of two major
dimensions, market attractiveness and business
strength.
• The company has to decide on its list of factors.
• Factors underlying Market Attractiveness can be
like;
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Overall market size
Annual market growth rate
Competitive intensity
Technological requirements
Historical profit margins
Energy requirement
Socio-political-legal factors
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GE 9-Cell Matrix
• Factors underlying Business Strength can be
like:
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–
–
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Market share
Share Growth
Product Quality
Brand Reputation
Distribution Network
Production Capacity
R&D Performance
Managerial Personnel
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Building GE Matrix
Weight
Factors
underlying
Market
attractiveness
Value
1= very
unattractive
5= attractive
Weight
Factors
underlying
Business
Strength
Rating
(1-5)
Rating
(1-5)
Value
1= very
unattractive
5= attractive
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THE GENERAL ELECTRIC MODEL
Classification of SBUs
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