University of Washington EMBA ProgramRegional 20

Marketing Management

“Identifying Opportunities in the Marketplace”

Instructor: Elizabeth Stearns

Mission• Definition:

– A description of the business we are in, or should be in, codifying what a firm does well or wishes to do.

– Used to guide strategy development

• Needs to be supported by resources to accomplish the mission

• Marketers should avoid statements that are too narrow or too broad.

Mission• Examples:

– Otis Elevator

•To provide any consumer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.

Mission

–Courtyard by Marriott•To provide economy, and quality-minded frequent business travelers with a premier, moderate-priced lodging facility which is consistently perceived as clean, comfortable, well maintained and attractive, staffed by friendly, attentive and efficient people.

Mission Statements

Co. Key Market Contribution Distinction

Otis To provide any a means of moving with higher

consumer people and things reliability

up, down, and than any

sideways over similar

short distances enterprise in the world

Mission Statements

Co. Key Market Contribution Distinction

??? To offer the fast food prepared in the delivered in

food customer same high quality a consistent

manner world-wide, low-key

tasty and reasonably decor

priced and friendly

atmosphere

Mission

Alternative bases

Natural Resource

Market orMarket Segment

Product/Service

Technology

Needs to beSatisfied

Choosing Among Market Opportunities

• Financial Analysis

– Payback

– ROI (Return on Investment)

– ROE (Return on Equity)

– IRR (Internal Rate of Return)

– NPV (Net Present Value)

– Risk Analysis

Choosing Among Market Opportunities

• Strategic Analysis

– Growth Path

– Portfolio Approaches

• Growth Share Matrix (BCG)

• Multiple Criteria (GE/McKinsey Screen)

Strategic Analysis

• Considerations for analysis: multi-level– Business– Product/Market Segment

• Portfolio Analysis: key dimensions– Market Attractiveness– Business Strengths

Strategic Focus

In cre ase S a lesV o lu m e (u n its)

fro m cus to m e rs

C h an geS a le s M ix

Im p roveP rice

R e du ceC o s ts

R e du ceIn v es tm e nt

Im p roveE ffic ien cy

R O I

Growth Profits

Three Intensive Growth Strategies: Ansoff’s Product/Market Expansion Grid

4. Diversification2. Marketdevelopment

Newmarkets

1. Marketpenetration

Existingmarkets

Existingproducts

3. Productdevelopment

Newproducts

©2000 Prentice Hall

Growth Path Analysis

Products/Technologies

Existing

Customers

Related

New

Existing Related New

Risk

Growth Path Analysis

Products/Technologies

Existing

Customers

Related

New

Existing Related NewRisk

Market Penetration

Product Extension

ConglomerationDiversification

ProductExpansion

MarketExtension

BusinessExtension

BusinessExpansion

Market Expansion

BusinessExpansion

The Boston Consulting Group’s Growth-Share Matrix

20%-20%-18%-18%-16%-16%-14%-14%-12%-12%-10%-10%- 8%-8%- 6%-6%- 4%-4%- 2%-2%- 00L

on

g t

erm

Mar

ke

t G

row

th R

ate

3 ?Question marks

? ??21

Cash cow

6

Dogs

8

710x 4x 2x 1.5x 1x 10x 4x 2x 1.5x 1x

Relative Market Share.5x .4x .3x .2x .1x .5x .4x .3x .2x .1x

Stars

5

4

©2000 Prentice Hall

$ Cash cow Dogs

Problem Children

Stars

Barnyard!

ProfitableHigh Risk

(Customers, Competitors, Technology)

High Investment

Cash Outflows D C

A B

$

High Investment

Frequent Losses

Heavy Cash Outflows

High Risk (Customers, Competitors, Technology)

Low Cost Supplier

Price Premium

High Profits

Relatively Low Investment

High Potential Cash Generation

Low Risk

High Cost

Supplier

Focus of Top Management

Attention

High Managerial Turnover

Lower Profits and Cash

Generation

High Low

Relative Market Share

Long High

RunMarketGrowthRate

Low

The Growth/Share Matrix (BCG)

Developing the Multiple Criteria Matrix

1000High

700

Medium400

Low100

1000 700 400 100 High Medium Low

Business Strengths

Mar

ket

Att

ract

iven

ess

Developing the Multiple Criteria Matrix

GoGo

Go

?

?

Stop

?

Stop

Stop

1000High

700

Medium400

Low100

1000 700 400 100 High Medium Low

Business Strengths

Mar

ket

Att

ract

iven

ess

Market Attractiveness• Given our history, objectives, culture, management style,

successes and failures, we like to be in markets where:

• Examples:

– Profit margins are high

– Exchange rates are stable

– There are few competitors

– Barriers to exit are low

– Government Regulations are Extensive

– The workforce is non-unionized

- Market size is small

- Market growth is high

- Payback period is short

Market Attractiveness Analysis Factor Weight (to firm) Rating (to opportunity) Total Group (must = 100) (1-10) (WxR=T)

1.2.3.4.5.6.7.8.

---------- ---------- 100 Total

======

Business Strengths• To be successful in this market, any competitor must

possess:

• Examples:

– Low cost operations

– Consumer marketing skills

– Established distribution facilities

– Deep pockets

– Ability to innovate new products

– Effective information systems

– A strong sales force

– Commitment to R&D

Business Strengths (required to be successful) Factor Weight (any competitor) Rating (of firm) Total Group (must = 100) (1-10) (WxR=T)

1.2.3.4.5.6.7.8.

---------- ---------- 100 Total

======

Developing the Multiple Criteria Matrix

1000High

700

Medium400

Low100

1000 700 400 100 High Medium Low

Business Strengths

Mar

ket

Att

ract

iven

ess

Thank You!