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Marketing Strategy Summaries
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Lecture notes for thee course Marketing Strategy at the MSc Marketing Management
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Marketing Strategy - BM04Introduction to Marketing Strategy - Session 1
Freud’s iceberg metaphor: we are not aware of the actual reasons why we buy what we buy
What is marketing to people in business?
- synonym for advertising
- marketing = spending money not knowing if they will come back
1. marketing as tactics
a. sales promotions and coupons
b. advertisings, logos, brochures
2. marketing as costs (vs. investment)
a. accountability problem -
b. accounting problem - accounting systems have own frameworks that we have to
adapt to
Marketing as philosophy
Marketing encompasses the entire business scene.
a. Marketing: is the process of identifying and profitably satisfy customer’s wants and needs
b. Strategy: business strategy is a clear set of plans, actions and goals that outline how a
business will compete in a particular market with a product or number of product or services
c. when companies are bundeles of processes designed to deliver customer value: Marketing =
Strategy
Goal of Marketing Strategy: profitable growth -> growing sales -> you get there by being better than
your competition
!importance of Grow Market Share in a profitable way > primary goal of CMO
Market forces > Change Management > Profitable Growth
on two sides of market forces
a. 5 Cs: Customer, Competition, Company, Collaborators, Context
b. 5 Forces: Competition in the industry; Potential of new entrants into the industry; Power of
Suppliers; Power of Customers; Threat of Substitute products
Marketing is changing
a. 1960s “marketing is the execution of business activities aimed at navigating a stream of
products and services from the manufacturers to the customer” - it’s the opposite of a
consumer-centric perspective. Rather, it is a product-centric perspective
b. 1990 shift to customer orientation “marketing is the process of identifying and profitably
satisfy customer wants and needs”
i. drill example: most petrol drill 0 holes per year. Still, most people own a drill. Why?
To be independent. You could easily borrow the drill from someone else, but in
order to be independent you need your own drill. Black & Decker drills, famous drill,
but could not get the segment of handymen to buy it. why? because having common
people have back becker’s drills makes the handyman look less professional if they
use the same ones. - to solve the problem, they changed name
1
, c. What direction are we going? - talk about sustainability and carbon footprints
implicit assumption that at the heart of traditional marketing thought:
as long as consumption creates value for both consumers and companies, we should encourage
unlimited consumption” -
switch to system orientation - SUSTAINABLE PROFITABLE GROWTH and Shared Value should be the
new goals
Market forces > Change Management > Shared Value
Dananone e.g.:
- Market forces > Innovation > Shared Value: mission statement should give purpose to the
company identity to the brand and act as a catalyst … > importance of being a purpose
driven company (“enterprise à-mission”)
- first company to introduce a carbon-adjusted earnings-per-share (EPS)
- Evian new water bottle design with recyclable plastic
- Consistency if fundamental in order to transmit message - “purity” expressed with DUa LIpa
singing acapella (no music or raw audio) - inconsistency in story is what makes brand fall
apart e.g. Gillette best man campaign
Gillette “best men” campaign: you make women pay while bashing sexism in controversial ad -
inconsistency with message made Gillete get lots of backlash
Strong Purpose case vs Weak Purpose case
Financial performance benefits of shared value:
1. enhance firm reputation
2. stakeholder endorsement > both internal and external
3. RIsk mitigation
4. Improved innovative capacity - via access to knowledge and internal capabilities
After all, purpose WILL be costly in the end - Danone in the past 5 years lost 10% of value while
Nestle gained 15% value although they didn’t build shared value > Danone CEO that came up with
more shared value ideas got fired after losing revenue because of Sustainability Goal.
e.g. Movement: Patagonia case: all revenues donated to solve climate change
Readings Session 1
Market Driven Strategies trough Optimal Resource Allocation
resource allocation =what to change?
market forces > change management > shared value (/profitable growth = is what we want to
achieve as a company) > not matter what you put as end goal (shared value or profitable growth, the
path to get there is always the same, but priorities will be different)
- How do I allocate resources?
market forces > resource allocation (RA) > shared value
2
,2 dimensions of RA
- Vertical > 4 Ps (price, promotion, place, product)
- Horizontal > Strategic: you have portfolio of things that you are gonna allocate your
resources between → the more portfolios grow the more they reach into each other
Need to manage Brand Portfolio - why?
- Larger portfolios → cannibalization: brands can be overshadowed by sister brands
- P&G total firms: (Duracell, Pampers, Pringles) → 1000 - but complicated to know
how many brands you own > you might even forget about some > Wallmark took
brand P&G because they forgot to renew the brand name
Branded house = brand name put on all products (Virgin)
1. Advantages: halo effects: I like Virgin icecream so I also like Virgin casino - can be more
efficient (=sharing brand equity)
2. Disadvantage:
a. associations negative halo effects - halo effects can be good and bad. If one is good
“all are good”; if onesies bad “all are bad”
b. can be limited as it appeal to people that like the Virgin brands in everything they do
House of brands = P&G: different names: Pringles, Duracell → want products to be as independent
as possible (much more expensive)
1. Have to build up every brand from scratch: more expensive
2. Advantage:
a. risk management: allbrands independent from each other - everything more
transparent now: power of activists (know which brands are owned by which
companies) - environmentally destructive policies from one brand, activists can still
call for boycotts for other brands - still not completely risk free!;
b. further advantage, you can target different segments;
c. can have multiple brands per category - bigger range of pyramids of customers - also
satisfy people at the bottom vs premium prices
d. Big advantage: need to capture the most important association of that specific brand
- e.g. Duracell (P&G = pink and fast bunny)
3
, Disadvantages of large brand portfolios
1. Everything more fragmented - need to build more brands - destroys your economies of scales
2. Management attention dilution
3. Fragmentation of marketing resources, opportunity costs
4. Brand blurring: brands start losing meaning because they stop serving their most important
functions - brands meant to be unique (to reduce search costs) - brands can lose
discriminating power if there are too many brands
a. Cars: share platforms to cut costs: develop one car together but put their own badge
on the car - badge engineering - products not really distinct anymore - undermine
the power of the brands - brands will lose their discriminatory power and the
function/ value they have to consumers
BCG/Growth Share Matrix
The Boston Consulting Group (BCG) => Growth-Share-Matrix
- Relative market share/ segment share (debate about that: weakness)
- Growth - market growth (segment)
GSM consists of 2 dimensions:
1. Vertical = the market (/Segment) growth rate
2. Horizontal = Relative Market (/Segment) Share
Horizontal dimension
Your market share/ largest competitor share
Market vs segment: toothpaste market vs toothpaste market for people with gum
disease - share depends on definition
the 1 point (in middle of the tool, horizontal dimension) = indicates your market share divided by
your largest competitor - Your market share/ largest competitor
Monopoly of market is left bottom (X) > if you have monopoly, there is no competitor (= infinity)
4
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