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BM04MM MARKETING STRATEGY ARTICLES SUMMARY
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MARKETING STRATRATEGY ARTICLESWEEK 1
Kotler, 2011
- Emphasis on the necessity for companies to balance growth objectives with
sustainability
- Marketing currently also means adding social value
- Changing consumer mindset → Preference for environmental responsible companies
→ Willingness to pay increases
American Marketing Association (2008) definition of marketing :“Marketing is the activity,
set of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for consumers, clients, partners, and society at large”
Social Marketing – the theory and practice of marketing an idea, cause of behavior (e.g. say
no to drugs, stop smoking)
Environmental agenda will have a huge influence on marketing theory and practice
companies must address sustainability sustainability raises the question whether this
generation can leave future generations with the same or a larger basket of resources than
we have now
Companies need to make drastic changes in their research-and-development, production,
financial, and marketing practices reinvent marketing practices once we acknowledge
resource limitations and externality costs in contrast to the assumption of having unlimited
supply recognize difference in the mindset of firms and consumers
Challenge because the mindset of the consumer has to be changed sustainability-driven
companies need to explain how they would revise their goals and operations to pursue
sustainability consumer can pressure companies to change LOHAS (Lifestyles of Health
and Sustainability)
Change in product (new products), price (environmental friendliness and price), place
(location of production and distribution facilities), promotion (print or online)
From functional marketing 1.0 to emotional marketing 2.0 criteria to marketing 3.0 (social
responsibilities must be met)
Porter & Kramer, 2011
Purpose of a company should not only revolve around profit, but should be redefined as
creating shared value (CSV)
Creating shared value (CSV) – creating economic value in a way that also creates value for
society by addressing its needs and challenges businesses must reconnect company
success with social progress not social responsibility, philanthropy or sustainability but a
new way of achieving economic success
The development of new skills and knowledge is necessary such as:
, - Far deeper appreciation of societal needs
- Greater understanding of the true bases of company productivity
- Ability to collaborate across profit/nonprofit boundaries
- Government must learn how to regulate in ways that enable shared value rather than
work against it
corporation must be redefined as creating shared value, not just profit per se
Every firm should look at decisions and opportunities through the lens of shared value
new approaches that generate greater innovation and growth for companies and also greater
benefits for society
Shared value – policies and operating practices that enhance the competitiveness of a
company while simultaneously advancing the economic and social conditions in the
communities in which it operates focus on identifying and expanding connections
between societal and economic progress using value principles e.g. creating shared value
by improving growing techniques and strengthening the local cluster of supporting suppliers
to increase farmer’s efficiency
Externalities – arise when firms create social costs that they do noy have to bear, such as
pollution thus, society must impose taxes, regulations and penalties so that firms
internalize these externalities
Shared value recognizes that societal needs, not just economic needs define markets it
also recognizes that social harms or weaknesses frequently create internal costs for firms
such as wasted energy or raw materials and the need for remedial training to compensate for
inadequacies in education
it is about expanding the total pool of economic and social value
Strategy theory – to be successful, a company must create a distinctive value proposition
that meets the needs of a chosen set of customers
Creating shared value consists of 3 key ways in which companies can create these
opportunities:
1. Reconceiving products and markets
2. Redefining productivity in the value chain
3. Enabling local cluster development
improving value in one area gives rise to opportunities in the others
Shared value is seen as a new way to achieve economic value creation
Shared value thinking is transforming the value chain including:
- Energy use and logistics
- Resource use
- Procurement
- Distribution
- Employee productivity
, - Location establish deeper roots in important communities (e.g. factory near
production location instead of off-short)
Local cluster development: The success of every company is affected by the supporting
companies and infrastructure around it and productivity and innovation is greatly influenced
by clusters around a company
Boston Consulting Group Growth-Share Matrix (BCG MATRIX)
Founder: Alan Zakon
Purpose: help corporations to analyze their business units (product lines) helps the
company to allocate resources and is used as an analytical tool in brand marketing, product
management, strategic management, and portfolio analysis
Cash Cows – high share in slow growing markets
- Used to be “milked” with limited investment, which can subsequently be used to fund
stars and question marks, who are expected to become future cash cows
- Generate cash to maintain the business for all the products
Stars – high share in fast growing markets e.g. monopoly/USP
- Hope is that stars become cash cows require high funding to fight competitors and
maintain growth rate when industry growth slows and stars remain niche leader or
amongst the market leaders, they can become cash cows, otherwise they become
dogs due to the low market share
- Require high funding
, Question marks – low share in fast growing markets
- Starting point for most of the businesses
- Potential to gain market share and become stars, and even cash cows but if they
don’t succeed, they turn into dogs
- Must be analyzed carefully in order to determine whether they are worth the
investment required to grow market share
Dog – low share in slow growing markets
- Break-even generating barely enough cash to maintain the business’s market share
can provide jobs and possible synergies that can assist other business units, but from
an accounting perspective useless, negative for company’s return on assets portfolio,
used to judge how well a company is managed not profitable
- Should be sold-off when harvesting has been maximized
As a particular industry matures and its growth slows, all business units become either cash
cows or dogs
Natural cycle: question marks stars cash cow dog
Only a diversified company with a balanced portfolio can use its strengths to truly capitalize
on its growth opportunities and has:
- Stars whose high share and high growth assure the future
- Cash cows that supply funds for the future growth
- Question marks to be converted into stars with the added funds
When comparing the position, use the relative market share rather than just profits to show
where the brand is positioned against its main competitors, where it is likely to go in the
future, and determine which type of marketing activities will be effective
Problems
- Minority applicability the cashflow techniques are only applicable to a very
limited number of markets what about business unites/brands on the boundaries,
huge impact of market definition, no dynamic information, market share and industry
growth does not mean profitability
- Milking cash cows the finding that cash cows should be milked to fund new brands
is the worst implication as it has been researched that e.g. in fmcg the brand leader’s
position has to be defended they should not be milked to such an extent that the
position will be jeopardized the chance of new brand achieving similar brand
leadership may be slim
Hill et al., 2005
The Brand Renewal Matrix consists of a 5-steps approach that aims to streamline brands into
a more effective portfolio and show which brands should be supported, retired or
repositioned
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