Marketing Strategy

1. April, 2018
THE FORMULATIONOF MARKETING
STRATEGY: ANALYSING THE PRODUCT
PORTFOLIO
(BCG and GE Models)

2. Introduction
The
development of
strategic
perspectives
 The revised approach to
management planning that
emerged was designed to provide
organizations with a far stronger
and more resilient framework
 that would enable managers both
to recognize opportunities more
readily and overcome threats more
easily.

3. Introduction
This new
planning
process was
based on
three central
premises:
1. The company’s business should be
viewed and managed in a similar way to
an investment portfolio,
2. Emphasis should be placed upon
identifying in detail the future profit
potential of each aspect of the business.
3. A strategic perspective to the
management of each major element of
the business should be adopted.

4. Strategic planning and issues of
responsibility
 This process, which involves statements of
vision, mission, policy and strategy, establishes
the broad frame- work within which plans at the
business unit level are then developed.
 organizations differ greatly both in how they go
about this and in the degree of freedom given
to the managers of individual business units

5. Cont. …
Planning
Approache
s
Bottom-up
planning
Top-down
planning
Goals
down/Plans up
allow the managers
of business units
considerable scope
in developing their
own objectives and
strategies, requiring
only that the
promised levels of
performance are
then obtained
Top Management
not only establish
the objectives, but
also subsequently
insist on being
involved in the
development and
implementation of
strategy
Top
Management
establish the
goals and then
leave the
business unit to
develop the
strategies for
their
achievement

6. Cont. …
corporate
management
has the ultimate
responsibility
for the four
major
dimensions of
planning:
 The definition of the vision and business
mission
 Establishing the company’s strategic
business units (SBUs)
 Evaluating the existing business portfolio
 Identifying new areas for the business to
enter.

7. The strategic planning, implementation and control
cycle

8. Planning with SBUs
 Businesses should be defined in terms of
three elements:
 The customer groups that will be served
 The customer needs that will be satisfied
 The technology that will be used to meet these
needs.

9. Cont. …
The three
most
important of
which are that
an SBU:
1. Is a single business or a collection of
related businesses that offer scope for
independent planning and might feasibly
stand alone from the rest of the
organization.
2. Has its own set of competitors
3. Has a manager who has responsibility
for strategic planning and profit
performance, and control of profit-
influencing factors.

10. Group’s )

11. BCG
 Stars are products or SBUs that are growing rapidly.
They also need heavy investment to maintain their
position and finance their rapid growth potential. They
represent best opportunities for expansion.
 Cash Cows are low-growth, high market share
businesses or products. They generate cash and have
low costs. They are established, successful, and need
less investment to maintain their market share. In long
run when the growth rate slows down, stars become
cash cows.

12. BCG
 Question Marks, sometimes called problem children or wildcats,
are low market share business in high-growth markets. They require
a lot of cash to hold their share. They need heavy investments with
low potential to generate cash. Question marks if left unattended
are capable of becoming cash traps. Since growth rate is high,
increasing it should be relatively easier. It is for business
organizations to turn them stars and then to cash cows when the
growth rate reduces.
 Dogs are low-growth, low-share businesses and products. They
may generate enough cash to maintain themselves, but do not have
much future. Sometimes they may need cash to survive. Dogs
should be minimized by means of divestment or liquidation

13. Cont. …
The four
strategies
that can be
pursued are:
 Build: Here the objective is to increase market
share, even by forgoing short-term earnings in
favor of building a strong future with large
market share.
 Hold: Here the objective is to preserve market
share.
 Harvest: Here the objective is to increase
short-term cash flow regardless of long-term
effect.
 Divest: Here the objective is to sell or liquidate
the business because resources can be better
used elsewhere.

14. BCG and Strategic Dimensions