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Transcript of Mc donald english_29th
The only sustainable future for marketing- professionalism and accountability
by Professor Malcolm McDonald
Plekhanov University of Economics 29th January 2013
This presentation is the copyright of Professor Malcolm McDonald
Agenda
• What goes wrong without excellent marketing
• The uselessness of Profit and Loss Accounts and Balance Sheets
• In order to become the drivers of corporate strategy, marketers must become more professional and more accountable financially
Page 2
Page 3
Inter Tech’s 5 year performance
Performance (£million) Base Year 1 2 3 4 5
Sales Revenue
- Cost of goods sold
£254
135
£293
152
£318
167
£387
201
£431
224
£454
236
Gross Contribution
- Manufacturing overhead
- Marketing & Sales
- Research & Development
£119
48
18
22
£141
58
23
23
£151
63
24
23
£186
82
26
25
£207
90
27
24
£218
95
28
24
Net Profit £16 £22 £26 £37 £50 £55
Return on Sales (%) 6.3% 7.5% 8.2% 9.6% 11.6% 12.1%
Assets
Assets (% of sales)
£141
56%
£162
55%
£167
53%
£194
50%
£205
48%
£206
45%
Return on Assets (%) 11.3% 13.5% 15.6% 19.1% 24.4% 26.7%
Page 4
Performance (£million) Base Year 1 2 3 4 5
Market Growth 18.3% 23.4% 17.6% 34.4% 24.0% 17.9%
InterTech’s 5 Year Market-Based Performance
Customer Retention (%)
New Customers (%)
% Dissatisfied Customers
88.2%
11.7%
13.6%
87.1%
12.9%
14.3%
85.0%
14.9%
16.1%
82.2%
24.1%
17.3%
80.9%
22.5%
18.9%
80.0%
29.2%
19.6%
InterTech Sales Growth (%)
Market Share(%)
12.8%
20.3%
17.4%
19.1%
11.2%
18.4%
27.1%
17.1%
16.5%
16.3%
10.9%
14.9%
Relative Product Quality
Relative Service Quality
Relative New Product Sales
+10%
+0%
+8%
+8%
+0%
+8%
+5%
-20%
+7%
+3%
-3%
+5%
+1%
-5%
+1%
0%
-8%
-4%
Why Market Growth Rates Are Important
Page 5
Percentage of market
represented by segment
Percentage of all profits in
total market produced by
segment
Ratio of profit produced by
segment to weight of
segment in total population
Defection rate
Total
Market
Segment
1
Segment
2
Segment
3
Segment
4
Segment
5
Segment
6
27.1
14.7
0.54
15%
18.8
21.8
1.16
28%
18.8
28.5
1.52
30%
11.0
23.0
2.09
35%
9.5
4.9
0.52
17%
14.8
7.1
0.48
20%
100.0
100.0
1.00
23%
Measurement of segment profitability
Page 6
Balance sheet
Assets Liabilities
- Land
- Buildings
- Plant
- Vehicles
etc.
- Shares
- Loans
- Overdrafts
etc.
£100 million £100 million
Page 7
Balance sheet
Assets Liabilities
£100 million £900 million
- Land
- Buildings
- Plant
- Vehicles
etc.
- Shares
- Loans
- Overdrafts
etc.
Page 8
Balance sheet
Assets Liabilities
£900 million £900 million
Goodwill £800m
- Land
- Buildings
- Plant
- Vehicles
- Shares
- Loans
- Overdrafts
etc.
Page 9
Intangibles
P and G have paid £31 billion for Gillette, but have bought only £4 billion of tangible assets
- Gillette brand £ 4.0 billion- Duracell brand £ 2.5 billion- Oral B £ 2.0 billion- Braun £ 1.5 billion- Retail and supplier network £10.0 billion- Gillette innovative capability £ 7.0 billion
TOTAL £27.0 billion
(David Haigh, Brand Finance, Marketing Magazine, 1st April 2005)
Page 10
Brand
Reputation
Brands affect business value by influencing the behaviour of a wide range of Shell’s
stakeholders, some of which directly impact Shell’s P&L (and hence value)
STAKEHOLDER
PERCEPTION
STAKEHOLDER
BEHAVIOURFINANCIAL
IMPACT
SHAREHOLDER
VALUE
Customers- individuals, businesses
Suppliers / Partners- businesses, energy asset
owners
Employees- current and potential
Shareholders / Bankers- individual and
institutional
Other Stakeholders
- government, media, opinion formers,
academics, public, environmentalists
• Pay price premium
• Buy more
• Lower prices
• Better terms
• Willingness to partner
•(more opportunities)
• Better retention
• Lower salary expectations
• Better qualified candidates
Revenues
Costs
Revenues
Costs
Productivity
Costs
Risk
• Higher PE ratio
• Lower volatility
• Lower borrowing costs
• Better repayment conditions
Influences business and brand value
Indirect influence on value
Tra
dem
ark
s
Brands Increasingly Drive Business Results
Asset Breakdown for the top 10 countries by Enterprise Value (US$ millions, 2011)
Page 11
Page 12
The historic rift between marketers and the finance department, caused by marketing’s reluctance to be accountable for what they do, is as marked as ever
“Marketing in 3D”
Deloitte
Tense relations between
CFOs and Marketers are
dividing boardrooms over
the value of marketing.
One in three CFOs said
they did not believe
marketing to be crucial
in determining strategy.
“Marketers have constantly hidden
behind a fog of measures that are
based purely on tactical marketing
activity, rather than solid financial
metrics that are relevant to the City”.
Page 13
Stories
and Myths
Symbols
Paradigm
Control
Systems
Organisational
Structures
Power
Structures
Rituals
• Cars
• Offices
• Terminology
• Statistics
• Lunch• Research withheld
• Take credit for
others work
• Jargon
• Lack of structure
• Internal focus
• Always in
meetings
• Unaccountable
• Untouchable
• Expensive
• Slippery• Planning
• Delegating
• Deadlines
• Off site
meetings
• 10.00-16.00 hrs• Lunch• Travel• Soft measurement• For self
• Mud doesn‟t stick• Golden child• Quick promotion• No loyalty• Churn• Costs• Experience
The Cultural Web (What senior non marketers believe about
marketers)
Source: „Defining a Marketing Paradigm‟ (Baker, S. 2000)
The purpose of strategic marketing
The overall purpose of strategic marketing, and its principal focus is the identification and creation of sustainable competitive advantage.
Page 14
Page 15
Definition of marketingMarketing is a process for:
• defining markets
• quantifying the needs of the customer groups (segments) within these markets
• putting together the value propositions to meet these needs, communicating these value propositions to all those people in the organisation responsible for delivering them and getting their buy-in to their role
• playing an appropriate part in delivering these value propositions (usually only communications)
• monitoring the value actually delivered.
For this process to be effective, organisations need to be consumer/
customer-driven
Asset
Base
Define markets
& understand
value
Determine
value
Proposition
Deliver
value
Monitor
value
Map of the marketing domain
Page 16
In capital markets, success is measured in terms of shareholder value added, having taken account
of the risks associated with future strategies, the time value of money and the cost of capital.
17
Page 18
Financial Risk and Return
High
Low
Return
HighLow
1
2
3
Risk
Adapted from Professor Keith Ward, Cranfield School of Management
Page 19
The route to Sustainable Competitive Advantage (SCA)
Differentiation High
Price
High
Volume
Sales Revenue
Low Business
Risk
Low Financial
Risk
Positive
NPVSCA
Economies
of Scale
Learning
Curve
High Cash
Flows
Gearing
Interest Cover
Working Capital Ratio
Operational LeverageFinancial
OperationsLower
Costs
Page 20
Define markets
& understand
value
Determine
value
Proposition
Deliver
value
Monitor
value
Map of the marketing domain
Measurement zone
where metrics
are applied
(Levels 2 & 3)
Strategic zone
where metrics
are defined
(Level 1)
Page 20
Asset
Base
Page 21
What is Marketing Due Diligence?
Marketing Due
Diligence
Risk Assessment
Market Risk:
Is the market
there?
Strategy risk:
Will we get our
planned share?
Implementation risk:
Will we get our
planned profit?
Page 21
Page 22
Sensitivity to business risk
Marketing Due
Diligence
Risk Assessment
Market Risk:
Is the market
there?
Share risk:
Will we get our
planned share?
Profit risk:
Will we get our
planned profit?
Hig
h g
row
th in
ten
t
Low market share
Lo
w g
row
th in
ten
t
High market share
Moderately sensitive to
market risk
Low sensitivity to
market risk
Highly sensitive
to market risk
Moderately sensitive to
market risk
Hig
h g
row
th in
ten
t
Low competitive intensity
Lo
w g
row
th in
ten
t
High competitive intensity
Moderately sensitive to
share risk
Low sensitivity to
share risk
Highly sensitive to
share risk
Moderately sensitive to
share risk
Hig
h g
row
th in
ten
t
High margins
Lo
w g
row
th in
ten
t
Low margins
Moderately sensitive to
profit risk
Low sensitivity to
profit risk
Highly sensitive to
profit risk
Moderately sensitive to
profit risk
Sensitivity to each source
of risk is dependent
on the source of
growth, current share and
planned margins
Page 23
Market Risk Profile• Product Category Existence
• Segment Existence
• Sales Volumes
• Forecast Growth
• Pricing Assumptions
The marketing strategy has a higher probability of success if the product category is well established
If the target segment is well established
If the sales volumes are well supported by evidence
If the forecast growth is in line with historical trends
If the pricing levels are conservative relative to current pricing levels
Page 23
Page 24
Ansoff matrix
Market
Penetration
Product
Development
Market
ExtensionDiversification
Present Newincreasing technological
newness
increasing
market
newness
Present
New
PRODUCTS
MARKETS
Page 25
Profit improvement
Productivity improvement Sales growth
Existing assets Change
asset base
Market
penetration
Market
development
Product
development
Increase
usage
Take
competitors’
customers
New
segments
Convert
Non-users
Existing
markets
New
markets
Cost
reduction
Improve
Asset
Utilisation
(eg more/
better
sales calls)
Increase
Price/
Reduce
discounts
Improve
Product/
Customer
mix
Cash and margin focus Growth focus
Investment
•Acquisition
•Joint ventures
•etc
Divestment
Redevelopment
of capital resources
Capital Utilisation focus
Gap analysis summary
Page 26
Market Share Risk Profile• Target Market Definition
• Proposition Specification
• SWOT Alignment
• Strategy Uniqueness
• Anticipation of market change
The marketing strategy has a higher probability of success if the target is defined in terms of homogeneous segments and is characterised by utilisable data
If the proposition delivered to each segment is different from that delivered to other segments and addresses the needs which characterised the target segment
If the strengths and weaknesses of the organisation are independently assessed and the choice of target and proposition leverages strengths and minimises weaknesses
If choice of target and proposition is different from that of major competitors
If changes in the external microenvironment and macroenvironment are identified and their implications allowed for
Page 26
Page 27
Listen to how customers talk about category need
Customer View
Advice
• cutting costs
• future technology direction
Help
• design & configuration
• process engineering
• electron commerce
Run
• international network
• disaster recovery
Supplier View
• fast PAD family
• multimedia FRADs
• PIX firewall
• Solutions
• Gigabit Ethernet
• solutions
• high performance
• LAN support
Page 27
Page 28
Understand the different category buyers
Business
perfectionist
Radical thinkers
Profit engineer
Save my
budget
Business
general
Save my
career
Conservative
technocrat
Technical
idealist
Radical
architect
“Reward” “Relief”
Technical
Business
Page 29
This is a friend I know…
I know 12m people in the UK as well as I know
Miss Jones
… she is a busy young lady
… she looks after her health and loves fresh
produce
… she drives to the supermarket on a Saturday
morning
… she reads Hello Magazine
… she has a cat
… she doesn‟t pay attention to the price of products
… she does look out for promotions
Page 30
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
Page 31
Strategic marketing planning exercise – SWOT analysis
1
2
3
4
5
You Comp A Comp B Comp C Comp D
Total 100
1
2
3
4
5
1. SEGMENT DESCRIPTION
It should be a specific part of
the business and should be
very important to the
organisation
2. CRITICAL SUCCESS
FACTORS
In other words, how do
customers choose?
3. WEIGHTING
(How important
is each of these
CSFs? Score
out of 100)
1
2
3
4
5
THREATS
5. OPPORTUNITIES / THREATS
What are the few things outside your
direct control that have had, and will
have, an impact on this part of your
business?
6. KEY ISSUES THAT NEED
TO BE ADDRESSED
What are the really key issues
from the SWOT that need to
be addressed?
OP
PO
RT
UN
ITIE
S
4. STRENGTHS / WEAKNESSES
ANALYSIS
How would your customers score you and
each of your main competitors out of 10 on
each of the CSFs?
Multiply the score by the weight.
Page 32
Manufacturers
Type B
Dealer Chain
Type B
Independent
Type C
Dealer Chain
Type C
Independent
VARs
Buying
Consortia
Retail
Direct
Response
Other
Type A
Independent
Type A
Dealer Chain
Final Users
Direct
Field Sales5%
47%
7%
0%
1%
15%
7%
5%
7%
4%
0%
0%
Company’s Route to Market
Final Users Route to Market
3%24%
3%
1%
8%
9%
18%
4%
10%
10%
4%
6%
Market map – office equipment
Extracted from the complete map
Page 33
Shareholder Value Risk Profile
• Profit Pool
• Profit Sources
• Competitor Impact
• Internal Gross Margin Assumptions
• Assumptions of Other Costs
The marketing strategy has a higher probability of success if the targeted profit pool is high and growing
If the source of new business is growth in the existing profit pool
If the profit impact on competitors is small and distributed
If the internal gross margin assumptions are conservative relative to current products
If assumptions regarding other costs, including marketing support, are higher than existing costs
Page 33
Setting expectations of performanceP
GC
P
GC
P
GC
P
GCHigh Low
High
Low
Mkt/Segmentattractiveness
Supplier business strength with
customer
high high/medium
medium low
Streamline
Manage for cash
Streamline
Manage for cash
Strategic
Strategic investment
Strategic
Strategic investment
Status
Pro-active maintenance
Status
Pro-active maintenance
Star
Selective investment
Star
Selective investment
-
Page 34
Page 35
Market attractiveness evaluation
This form illustrates a quantitative approach to evaluating market attractiveness. Each factor is scored, then multiplied by the
percentage weighting and totalled for the overall score. In this example, an overall score of 8.5 out of 10 places this market in the
highly attractive category.
1.
2.
3.
4.
Market Size (£ millions) >
Volume Growth (Units) >
Industry Profitability >
Competitive Intensity
10-7
€250
10%
15%
Low
6-4
€51-250
5-9%
10-15%
Medium
3-0
< €50
< 5%
< 10%
High
Factor Scoring Criteria
Score
5
10
8
6
Weighting
15
40
35
10
Total
Ranking
0.75
4.0
2.8
0.6
8.15
Page 36
Profit Risk
• Profit Risk
– The probability that your marketing strategy will create the anticipated value even if you win the anticipated market share from the predicted market size
• Begins by explaining the sources of the growth in value generation
• There are five Profit Risk factors
– Taken from many years of research and incorporating the ideas of game theory based strategy development
– 5 characteristics that differentiate low risk strategies from high risk ones
Page 37
Profit Risk
Profitpool
risk
Profitsources
risk
Competitorimpact
risk
Internalgross
marginrisk
Othercost
assumptions risk
Page 38
The components of Profit Risk
• Profit pool risk
– The marketing strategy has a higher probability of achieving its aims if the targeted profit pool is large and growing and the marketing strategy’s objectives only require a small share of this pool.
– In such cases, these objectives will not have dramatically negative impacts on existing or potential competitors. Hence the probability of aggressive competitor reaction is much lower.
Page 39
The components of Profit Risk
• Sources of profit growth risk
– Marketing strategies have a higher probability of achieving their aims if the source of profit growth is primarily from growth in the total profit pool.
– Where profit growth comes totally from such overall growth in the profit pool, this means that no competitor actually loses existing profits as a direct result of this marketing strategy. Once again therefore the probability of competitor reaction is reduced.
Page 40
The components of Profit Risk
• Competitor impact risk
– The marketing strategy has a higher probability of success if any adverse profit impact on competitors is small and evenly distributed.
– The worst case is where the potential impact of the marketing strategy actually threatens the continued existence of a specific competitor. This competitor may well cease to behave in an economically rational way as it fights for survival. This can seriously damage the total profit pool of the market segment or complete industry.
Page 41
The components of Profit Risk
• Internal gross margin assumptions risk
– Probabilities of success are increased if gross margin assumptions in the marketing strategy are conservatively based on existing, or otherwise provable, levels.
– This risk tends to be critical when the marketing strategy is based on either ‘new’ products or on selling existing products into a new market segment where pricing and comparative cost information is not readily available.
Page 42
The components of Profit Risk
• Other cost assumptions risk
– Probabilities of success are increased if other cost assumptions are conservatively based on existing levels.
– The most common source of error in this area is the assessment of ongoing marketing support that will be needed to maintain the sales revenues that are predicted in the marketing strategy. Often high levels of launch marketing are included but these decline rapidly even where high levels of competitor response should be expected.
Page 43
What do most marketing strategies look like in this
area?
1. They do not quantify the total profit pool
2. They do not specifically identify sources of profit growth
3. They do not quantify the impact on key competitors
4. They often assume higher levels of gross margin in the future
5. They frequently include significant improvements in other cost levels, even though the plans may require new product developments and launches
Page 44
Market segment objectives: Directional Policy Matrix
High Low
High
Low
Segmentattractiveness
Relative company competitiveness
Selectively
invest
Manage for
cash
Strategic
invest/
build
Pro-actively
maintain
Analysis process
•Attractiveness of each segment (ranked)
•Projected net free cash flow (3/5yrs) -
for each segment
•Key risk factors influencing cash flows
•Risk assessment for each segment
•Risk adjusted future cash flows per segment
•Deduct risk-adjusted cash flows from the capital x cost of capital
for each segment
•Aggregated positive net present value
Strategies to
increase present value
•Increase future cash flows
•Cash flow happens earlier
•Reducing the risk in the cash flows
Critical success factors
No
change
Present position Forecast position in 3 yrs
Define markets
& understand
value
Determine
value
Proposition
Deliver
value
Monitor
value
Map of the marketing domain
Measurement zone
where metrics
are applied
(Levels 2 & 3)
Strategic zone
where metrics
are defined
(Level 1)
Page 45
Asset
Base
Overall Marketing Metrics Model
product market segment
ms%
sales£
profit£
corporate rev£
profit£
actions, esp. marketing
metrics on achievement of factor to required level
costs, activity milestones & outputs
Strategy/ achievement
Objectives/results
Plan/action
performance
by product market segment
application of spend
budget funds & time
Resource allocation/ spend
Forecast/profit
corporate performance
turnover,
profit &
shareholder value
budget
£
£
£
£
Intention/
actuality
Business element
Measure-ment
Lead indicators Lag indicators
Required by customers.Relative to competitors
Market growthCustomer acquisition/ retention/ uptrading/ X-selling/ regained
Product/customer mixChannel performance
Cost to achieveResponsibilities
who
who
who
who
what
what
what
what
Positioning of issues in the model
PFs
HFs
CSFs
Page 47
Marketing Metrics Model
Business element
Future/ actuality
Corporate
performance
Forecast/results
Corporate
Revenue
Profit
Budget resource
Resource allocation/spend
Budget
Funds
Time
Impact
factors
Strategy/response
Qualifying factors
Productivity factors
Competitive advantage
factors
Marketing &
other actions
Plan/
action
Marketing actions
Other actions
Objectives/outcomes
Market segments
Segment outcomes: sales, GM,
MS
Segmentneeds
Segment attributes
Define markets
& understand
value
Determine
value
Proposition
Deliver
value
Monitor
value
Map of the marketing domain
Measurement zone
where metrics
are applied
(Levels 2 & 3)
Strategic zone
where metrics
are defined
(Level 1)
Page 48
Asset
Base
Page 49
Expenditures to develop marketing assets make sense if the sum of the discounted cash flows they
generate is positive.
A
B
C
Projected cash
flows from
investing in a
promotion
DCF and NPV
methods
implicitly make
this comparison
Assumed cash
flow resulting
from doing
nothing
Companies
should be
making this
comparisonMore likely
cash flow
resulting from
doing nothing
Note: Most executives compare the cash flow from
promotion against the default scenario of doing nothing
assuming, incorrectly, that the present health of the
company will persist indefinitely if the investment is not
made. For a better assessment of the promotion’s value,
the comparison should be between the projected
discounted cash flow and the more likely scenario of a
decline in performance in the absence of promotional
investment.Figure 10
Adapted from Christensen CM et al, ( 2008 )
£ - 7 million + 2 + 2 + 2 + 2 = £-0.6 million
(1+r) (1+r)² (1+r)³ (1+r)4
£ - 1 million + 2 + 2 + 2 + 2 = £5.4 million
(1+r) (1+r)² (1+r)³ (1+r)4
Page 50
Page 51
Over 40 years of research into the link between long run financial success and excellent marketing strategies reveal the following:
Excellent Strategies
• Define markets in terms of needs
• Target needs based segments
• Make a specific offer to each segment
• Leverage their strengths and minimise their weaknesses
• Anticipate the future
• Spell out the financial effectiveness of marketing expenditure
Weak Strategies
• Define markets in terms of products
• Target product categories
• Make similar offers to all segments
• Have little understanding of their strengths and weaknesses
• Plan using historical data
• Make unjustified forecasts of revenue and profits
Page 52
Key Elements of World Class Marketing
1. A deep understanding of the market place2. Correct needs-based segmentation and prioritisation3. Segment-specific propositions4. Powerful differentiation, positioning and branding5. Effective strategic marketing planning processes6. Long-term integrated marketing strategies7. A deep understanding of the needs of major customers8. Market/customer-driven organisation structures9. Professionally-qualified marketing people10. Institutionalised creativity and innovation
Page 53
APPENDIX 1
Valuing Key Market SegmentsBackground/Facts
Risk and return are positively correlated, ie. as risk increases, investors require a
higher return.
Risk is measured by the volatility in returns, ie. high risk is the likelihood of either
making a very good return or losing all your money. This can be described as the
quality of returns.
All assets are defined as having future value to the organisation. Hence assets
to be valued include not only tangible assets like plant and machinery, but intangible
assets, such as Key Market Segments.
The present value of future cash flows is the most acceptable method to
value assets including key market segments.
The present value is increased by:
- increasing the future cash flows
- making the future cash flows „happen‟ earlier
- reducing the risk in these cash flows, ie. improving the certainty of these cash flows,
and, hence, reducing the required rate of return.
Page 54
Suggested ApproachIdentify your key market segments. It is helpful if they can be classified on a vertical axis (a kind of
thermometer) according to their attractiveness to your company. „Attractiveness‟ usually means the
potential of each for growth in your profits over a period of between 3 and 5 years. (See the attached
matrix)
Based on your current experience and planning horizon that you are confident with, make a projection of
future net free cash in-flows from your segments. It is normal to select a period such as 3 or 5 years.
These calculations will consist of three parts:
revenue forecasts for each year;
cost forecasts for each year;
net free cash flow for each segment for each year.
Identify the key factors that are likely to either increase or decrease these future cash flows.
These factors are likely to be assessed according to the following factors:
the riskiness of the product/market segment relative to its position on the ANSOFF matrix;
the riskiness of the marketing strategies to achieve the revenue and market share;
the riskiness of the forecast profitability (e.g. the cost forecast accuracy ).
Now recalculate the revenues, costs and net free cash flows for each year, having adjusted the figures
using the risks (probabilities) from the above.
Ask your accountant to provide you with the overall SBU cost of capital and capital used in the SBU. This
will not consist only of tangible assets. Thus, £1,000,000 capital at a required shareholder rate of return of
10% would give £100,000 as the minimum return necessary.
Deduct the proportional cost of capital from the free cash flow for each segment for each year.
An aggregate positive net present value indicates that you are creating shareholder value – ie.
achieving overall returns greater than the weighted average cost of capital, having taken
into account the risk associated with future cash flows.
Page 55
Invest/
build
?
Maintain
Manage for
cash
Relative company competitiveness
Portfolio analysis - directional policy matrix (DPM)
High
Low
High Low
Segment
attractiveness
No
change
Present position Forecast position in 3 years
NB. Suggested
time period -
3 years
Page 56
Page 57
APPENDIX 2
The Contents of a Strategic Marketing Plan (<20 pages)
• Mission or Purpose Statement
• Financial Summary
Revenue
Profit
t.0 T+1 T+2 T+3
Products
Ma
rke
ts
Existing New
New
Exis
tin
g
1 2
3 4
Page 58
Key (revenue and profit growth)
• from productivity
• by product for market for existing products from existing markets
• from new products in existing markets
• from existing products in new markets
• from new products in new markets
Plus a few words of commentary
Market Overview/Summary
Market definition
Market map showing vol/rev flows from supplier through to
end user, with major decision points highlighted
Where appropriate, provide a future market map
Include commentary/conclusions/implications for the company
At major decision points, include key segments
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SWOT Analyses on Key Segments
• include pictorial representations of the SWOTs, such as bar charts
• highlight major conclusions/issues to be addressed
Portfolio Summaries of the SWOTs
• include Directional Policy Matrix (DPM) summaries of:-
- the attractiveness of the segments over the next 3-5 years
- the current relative competitive position of your company in
each segment
- the planned competitive position of each segment over the
next 3-5 years
Marketing Objectives and Strategies for the next 3-5 years
• include objectives (volume, value, market share, profit, as appropriate)
for the next 3-5 years for each segment as represented by the planned
position of each circle on the DPM
• include strategies (the 4XPs) with costs for each objective
Consolidated Budget for the next 3-5 years
• this will be a consolidation of all the revenues, costs and profits for
the next 3-5 years and should accord with the financial summary
provided earlier
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APPENDIX 3
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Are you getting these essential deliverables from your strategic marketing plan?
Score out of 10
Market structure and segmentation
• Is there a clear and unambiguous definition of the market we are interested in serving?
• Is it clearly mapped, showing product/service flows, volumes/values in total, our shares and critical conclusions for our organisation?
• Are the segments clearly described and quantified? These must be groups of customers with the same or similar needs, not sectors.
• Are the real needs of these segments properly quantified with the relative importance of these needs clearly identified?
Differentiation
• Is there a clear and quantified analysis of how well our company satisfies these needs compared to competitors?
• Are the opportunities and threats clearly identified by segment?
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Score out of 10
Scope· Are all the segments classified according to their relative potential for growth
in profits over the next three years and according to our company’s relative competitive position in each?
· Are the objectives consistent with their position in the portfolio? (volume, value, market share, profit)
· Are the strategies (including products, services and solutions) consistent with the objectives?
· Are the measurement metrics proposed relevant to the objectives and strategies?
· Are the key issues for action for all departments clearly spelled out as key issues to be addressed?
Value capture· Do the objectives and strategies add up to the profit goals required by our
company?
· Does the budget follow on logically and clearly from all the above, or is it merely an add on?
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Prof. Malcolm McDonald free videos and downloads
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