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3. Cash cows (lower left).
– Are SBUs that generate more cash than they can use.
4. Dogs (lower right).
– Are SBUs with a low share of slow-growth markets.
– Dropping dogs may be required if they consume more cash than they
generate unless these conditions exist:
* Relationships with other SBUs.
d. An organization’s SBUs often start as question marks and go
counterclockwise to become stars, then cash cows, and finally dogs.
e. Because an organization has limited influence on the market growth rate, its
main objective is to try to change its relative dollar or unit market share.
f. When changing an SBU’s relative market share, management must:
g. Apple:
• Has been consistently cited as one of the top global brands over the past
decade…
h. What has made Apple so iconic?
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i. [Figure 2-4] Using the BCG business portfolio analysis, Figure 2-4 shows
what Apple’s four principal SBUs might look like from 2018 – 2020.
1. Apple Watch (wearable technology).
– Launched in April 2015 – Apple’s version of a smart watch.
2. iPhone (smartphones).
– Launched in 2007. iPhone sales skyrocketed and now has U.S.
3. iPad/iPad mini (tablets).
– Launched in 2010, unit sales reached 40% market share by 2013 –
4. iPod (music players).
– Apple entered the market with iPod in 2001. The product became a
cultural icon, selling more than 50 million units annually until 2010.
– In 2010, iPhone integrated a music player.
• How did you – as Tim Cook – rank the growth opportunity for each of the
four SBUs?
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– iPhone SBU is likely to continue growing at almost 7%, but iPad SBU
is declining in sales.
• The primary strength of business portfolio analysis:
– Lies in forcing a firm to place each of its SBUs in the growth-share
• Weaknesses of this analysis arise from the difficulty in:
2. Diversification Analysis.
a. Diversification analysis is a technique that helps a firm search for growth
opportunities from among:
b. For any market, there is both:
c. For any product, there is both:
d. As organizations seek to increase sales revenues, they consider all four
market-product strategies.
e. [Figure 2-5] Using Ben & Jerry’s as an example, these four market-product
strategies are:
• Market penetration.
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– Is a marketing strategy to increase sales of current products in current
markets.
[Video 2-4: B&J’s Chocolate Chip Cookie Dough Video]
• Market development.
– Is a marketing strategy to sell current products to new markets.
– Example: Selling Ben & Jerry’s Bonnaroo Buzz Fair Trade-sourced
ice cream to Brazilian customers, an attractive market.
– Is risky if:
• Product development.
– Is a marketing strategy to sell a new product to current markets.
– Example: Selling Ben & Jerry’s branded children’s clothing to U.S.
• Diversification.
– Is a marketing strategy to sell new products in new markets.
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LEARNING REVIEW
2-5. What is the difference between a marketing dashboard and a marketing metric?
2-6. What is business portfolio analysis?
2-7. Explain the four market-product strategies in diversification analysis.
Answer: The four market-product marketing strategies in diversification analysis are:
• Market penetration. Increasing sales of current products in current markets. There is
IV. THE STRATEGIC MARKETING PROCESS [LO 2-5]
• After the organization assesses where it’s at and where it wants to go, it asks:
1. How do we allocate our resources to get to where we want to go?
2. How do we convert our plans into actions?
3. How do our results compare with our plans, and do deviations require new plans?
[ICA 2-2: Marketing Yourself]
• [Figure 2-6] This process has 3 phases: planning, implementation, and evaluation.
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A. The Planning Phase of the Strategic Marketing Process
• A truism: “If you don’t know where you’re going, any road will get you there.”
• The planning phase consists of three steps as outlined below.
1. Step 1: Situation (SWOT) Analysis.
a. A situation analysis involves taking stock of where the firm or product has
b. [Figure 2-7] A SWOT analysis is an acronym describing an organization’s
appraisal of its internal Strengths and Weaknesses and its external
Opportunities and Threats.
c. A SWOT analysis studies four areas to build a firm’s marketing program:
• Identifying trends in the organization’s industry.
d. The Ben & Jerry’s SWOT analysis table in Figure 2-7 shows:
• The combination of internal versus external factors (the rows).
e. The goal is to identify the critical strategy-related factors that impact the firm.
f. The task is to translate the SWOT analysis into specific marketing actions.
g. The Ben & Jerry’s SWOT analysis suggests the following:
• Build on a strength. Find distribution efficiencies with Unilever’s existing
2. Step 2: Market-Product Focus and Goal Setting.
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b. This decision often based on market segmentation, which involves
aggregating prospective buyers into groups, or segments, that (1) have
3. Step 3: Marketing Program.
a. This step is the “how” aspect of the planning phase: developing the marketing
LEARNING REVIEW
2-8. What are the three steps of the planning phase of the strategic marketing process?
Answer: The three steps of the planning phase of the strategic marketing process are:
• Situation analysis. Involves taking stock of where the firm or product has been
recently, where it is now, and where it is headed in terms of the organization’s
• Market-product focus and goal setting. Determines what products an organization
will offer to which customers. This is often based on market segmentation—
2-9. What are points of difference and why are they important?
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B. The Implementation Phase of the Strategic Marketing Process [LO 2-6]
• The second phase of the strategic marketing process—implementation—involves
1. Obtaining Resources.
a. The marketing manager must obtain the human and financial resources
2. Designing the Marketing Organization.
a. A marketing program needs a marketing organization to implement it by
converting marketing plans into reality.
b. [Figure 2-9] Shows the organization chart of a typical manufacturing firm,
giving some details of the marketing department’s structure.
• Four managers of marketing activities are shown to report to the vice
c. The entire marketing organization is responsible for converting these
marketing plans to reality as part of the corporate marketing team.
3. Defining Precise Tasks, Responsibilities, and Deadlines.
a. Successful implementation requires that people know the tasks for which they
are responsible and the deadlines for completing them.
b. The outcome of meetings should be an action item list, which is an aid to
implementing a marketing plan, consisting of four columns:
• The task.
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c. Within hours of completing a meeting, the action item list:
d. An action item list:
• Is forward looking.
e. You are part of a team that is required to do a term project on “How the
college can increase attendance at its performing arts concerts?”
• The instructor limits the project in the following ways:
• To begin the assignment, you need to:
• To complete it in 11 weeks, your team:
• Requires specialization and cooperation between Students A, B, and C:
f. [Figure 2-10] Scheduling activities can be done efficiently with a Gantt chart:
• Is a graphical representation of a program schedule, which:
• Software programs, such as Microsoft Project, simplify the task of
developing a schedule or Gantt chart.
• The key to all scheduling techniques is to distinguish:
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g. Tasks 1 and 2 that are shaded red in Figure 2-10 must be done sequentially.
h. Tasks 6 and 7 that are shaded blue can be done concurrently.
4. Executing the Marketing Program.
a. The effective execution of a marketing plan requires attention to detail for
both marketing strategies and marketing tactics.
b. Marketing strategy.
• The means by which a marketing goal is to be achieved, usually
c. Marketing tactics.
• Are the detailed day-to-day operational marketing actions for each
C. The Evaluation Phase of the Strategic Marketing Process [LO 2-7]
• The evaluation phase of the strategic marketing process:
• Accomplishing this requires the marketing manager to:
a. Compare:
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1. Comparing Results with Plans to Identify Deviations.
a. [Figure 2-11] Apple begins the evaluation phase of its strategic marketing
process at the end of its fiscal year, which is September 30.
b. Suppose you are on an Apple task force in late 2009 that is responsible for
making plans through 2016.
c. You observe that:
d. Looking at potential new products in the Apple pipeline:
e. This reveals a gray wedge-shaped gap DBC in the figure:
• Planners call this the planning gap:
• The purpose of a firm’s marketing program is to “fill in” the planning gap.
• In the case of Apple:
f. This is the essence of evaluation: Comparing actual results with goals set.
g. To reach aggressive growth targets in sales revenues, firms like Apple must
continuously look for a new SBU or product cash cow or star.
2. Acting on Deviations.
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b. Apple’s:
• Explosion in actual sales revenues from 2006 to 2017 (line BE)…
c. Let’s consider some of Apple’s marketing actions:
• Exploiting a positive deviation.
– Favorable customer reactions to Apple’s iPhone (2007) and its iPad
(2010) enable it to…
• Correcting a negative deviation.
– As Apple’s desktop PCs became dated, it moved aggressively to
d. In the BCG business portfolio analysis of the four Apple product lines:
• The firm has several stars and cash cows to fill in its planning gap.
LEARNING REVIEW
2-10. What is the implementation phase of the strategic marketing process?
2-11. How do the goals set for a marketing program in the planning phase relate to the
evaluation phase of the strategic marketing process?
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APPLYING MARKETING KNOWLEDGE
1. (a) Using Netflix as an example, explain how a mission statement gives a strategic
direction. (b) Create a mission statement for your own career.
Answers:
a. Explain how a mission statement gives a strategic direction. A mission statement is
an expression of the organization’s function in society, often identifying its customers,
2. What competencies best describe (a) your college or university and (b) your favorite
restaurant?
3. Compare the advantages and disadvantages of Ben & Jerry’s attempting to expand
sales revenues by using (a) a product development strategy or (b) a market
development strategy.
Answers:
a. Product development strategy. According to the text and Figure 2-5, this marketing
Chapter 02 – Developing Successful Organizational and Marketing Strategies
b. Market development strategy. According to the text and Figure 2-5, this marketing
strategy involves selling current products to new markets. For Ben & Jerry’s, this could
4. Select one strength, one weakness, one opportunity, and one threat from the SWOT
analysis for Ben & Jerry’s shown in Figure 2-7. Suggest an action that a marketing
manager might take to address each factor.
Answers:
a. Strength. Leverage its brand name by continuing to offer crazy new flavors, products
(ice cream, yogurt, sorbet, low-fat/carb, etc.). Promote its social mission in college
5. What is the main result of each of the three phases of the strategic marketing process?
(a) planning, (b) implementation, and (c) evaluation.
Answers:
a. Planning phase. Results are formal marketing plans that identify specific objectives to
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6. Parts of tasks 5 and 6 in Figure 2-10 are done both concurrently and sequentially.
(a) How can this be? (b) How does it help the students meet the term paper deadline?
(c) What is the main advantage of scheduling tasks concurrently rather than
sequentially?
Answers:
Figure 2-10 shows a Gantt chart that is used to schedule the various tasks and deadlines
that are required to complete a project. Its goal is to demonstrate how the concurrent work
on several tasks enables the project team to finish the project on time. The key to all
7. The goal-setting step in the planning phase of the strategic marketing process sets
quantified objectives for use in the evaluation phase. What does a manager do if
measured results fail to meet objectives? Exceed objectives?
Answers:
If the marketing manager discovers a planning gap, which is a difference between the
projection of the path to reach a new goal and the projection of the path of the results of a
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BUILDING YOUR MARKETING PLAN
1. Read Appendix A, “Building an Effective Marketing Plan.” Then write a 600-word
executive summary for the Paradise Kitchens marketing plan using the numbered
headings shown in the plan. When you have completed the draft of your own
marketing plan, write a 600-word executive summary to go in the front of your own
marketing plan.
2. Using Chapter 2 and Appendix A as guides, give focus to your marketing plan by
(a) writing your mission statement in 25 words of less, (b) listing three nonfinancial
goals and three financial goals, (c) writing your competitive advantage in 35 words or
less, and (d) doing a SWOT analysis table.
Suggestions: Question #2 asks students to get a jump start on writing their marketing plan
by putting on paper their mission statement, non-financial and financial goals, competitive
3. Draw a simple organization chart for your organization.
Helping with Common Student Problems
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TEACHING NOTE FOR VIDEO CASE VC-2
IBM: Putting Smart Strategy to Work
This case describes how IBM’s ‘Let’s Put Smart To Work’ initiative is (1) based on
Synopsis
IBM began as the Tabulating Machine Company more than 100 years ago. Since then the
company has shifted from tabulation machines, to typewriters, to computers, to business services
and consulting, to artificial intelligence in response to changes in technology, the global
IBM’s strategy is built on three core values: (1) a dedication to every client’s success, (2)
innovation that matters for IBM and for the world, and (3) trust and personal responsibility in all
relationships. The values influence IBM’s use of strategic tools such as portfolio analysis and
SWOT analysis, which have led the company to focus on a few core brands including IBM
which is based on improvisation, testing and data, and collaboration, and which results in speed,
adaptability, and creativity. The details of the approach are articulated in a marketing plan which
includes many traditional and emerging marketing tools, including TV, radio, out-of-home and
digital advertising, social media, events, and sponsorships. The combination of innovative
technologies and changing businesses has created an exciting combination for IBM as it moves
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2. Ask your students to describe their perceptions of changes in the environment that would
be important to IBM. Are they aware of the increasing importance of intelligent digital
platforms, the growth of developing economies, the impact of artificial intelligence, and
generally a shift to an era of “man+machine”?
Answers to Questions
1. What is IBM’s ‘Let’s Put Smart To Work’ strategy?
Answer:
A strategy is an organization’s long-term course of action designed to deliver a unique
customer experience while achieving its goals. IBM’s “Let’s Put Smart To Work” strategy
is based on the idea that IBM and its clients and partners collaborate to use innovative
2. How does this strategy relate to IBM’s values?
3. Conduct a SWOT analysis for IBM’s “Let’s Put Smart To Work” initiative. What are
the relevant trends to consider?
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a. A SWOT analysis for IBM’s ‘Let’s Put Smart To Work’ initiative. Listed below is
a brief, non-exhaustive SWOT analysis for IBM and its ‘Let’s Put Smart To Work’
initiative or strategy:
• Strengths
– Well-known global brand name.
• Threats
– Shift to custom-made technological solutions.
b. The relevant trends IBM should consider.
• Environmental Trends.
– Growth of artificial intelligence, machine learning, and blockchain technology.
• Customer Trends.
– Desire for genuine, engaging, comfortable customer experiences.