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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Review ● Class Website http://ta.ba.ttu.edu/yongkim - late registration (come & see me), Quiz#1 & Exam Detail are up ● Review - - Class #3: Different Types of Organization, Mission (=Vision) Statement, Goals(=objective), Culture, Strategy (definition & why necessary): Why + What = How; Strategy made at three levels (corporate/?/functional level) IBM Video Homework Due VIDEO CASE 2 IBM: USING STRATEGY TO BUILD A “SMARTER PLANET” 2-3 ● Since 1911, Numerous Accolades, founded as CTR (Computing Tabulating Recording) company ● Famous Inventions – ATM, floppy disk, Hard disk drive, magnetic stripe card, Universal Product Code (UPC), … ● Figures – Thomas Watson (1914-56) known as “Think,” Samuel Palmisano (2000 – 2012) purchasing PwC, initiated “Smarter Planet Strategy” ● In 2005, Sold the PC group (SBU) to Lenovo ● Joint work with NASA ● 5 Nobel Prize ● Business Model Change Basic Questions – Smarter Planet Strategy ● What kind of organization? ● Motivation for business model change? ● Target Market? ● Smart Planet Strategy was what level of strategy? ● Homework Evaluation: 10/8/5/0 ● What were/are the needs in the market? ● They say it is a business strategy, not a marketing promotion. If so, why did IBM made such an investment on media? What was the impact of such strategies? ● What majors/disciplines would be helpful to get a job at IBM? ● What are the 3 Core Values? Have they changed? The core values help create what? ● Platform? What is it for? Basic Questions – Smarter Planet Strategy ● What factors will let IBM to prosper another century? Focus Corporate Characteristics Abilities to provide what the customers want High R&D investment IBM is all about progress!! VIDEO CASE 2 IBM 1. (a) What is IBM’s “Smarter Planet” business strategy? (b) How does this strategy relate to IBM’s mission and values? (a) This knowledge can help reduce costs, cut waste, improve efficiency, and increase productivity for companies, industries, and cities. (b) The “Smarter Planet” strategy clearly promotes leadership in the delivery of information technologies that provide valued customer solutions (mission) and a commitment to the customers’ success through meaningful innovation, and professional behavior. 2-7 VIDEO CASE 2 IBM 2. Conduct a SWOT analysis for IBM’s Smarter Planet initiative. What are the relevant trends to consider for the next three to five years? 2-8 VIDEO CASE 2 IBM 3. (a) How can IBM communicate its strategy to companies, cities, and governments? How is Watson a part of the communication strategy? (b) what was the base for the changes in its business model? (a) Publicity events, such as the appearance of the IBM computer named “Watson” on the TV game show Jeopardy! (b) IBM believes that the transformation will provide growth for the company and its employees, success for its customers, and improved value for its stockholders. 2-9 VIDEO CASE 2 IBM 4. What are the benefits of the Smarter Planet initiative to (a) society and (b) IBM? (a) The solutions also help reduce costs, cut waste, improve efficiency, and increase productivity for companies, industries, and cities. (b) Growth for the company 2-10 VIDEO CASE 2 IBM 5. How should IBM measure the results of the Smarter Planet strategy? In terms of SCM, Inventory, Sales 2-11 STRATEGY IN VISIONARY ORGANIZATIONS LO3 DASHBOARDS, METRICS, AND PLANS Marketing Dashboard The visual computer display of essential marketing information Marketing Metric A measure of the value or trend of a marketing activity or result data visualization Marketing Plan Business Plan 2-12 FIGURE 2-3 An effective marketing dashboard like Sonatica’s helps managers assess a business situation at a glance Source: Dundas Data Visualization 2-13 FIGURE 2-3A Marketing Dashboard: Website Traffic Sources 2-14 FIGURE 2-3B Marketing Dashboard: Sales Performance by SBU 2-15 FIGURE 2-3C Marketing Dashboard: Monthly Website Visits by State 2-16 LO3 USING MARKETING DASHBOARDS How Well is Ben & Jerry’s Doing? [Dollar Sales and Dollar Market Share] Dollar Market Share (%) = Ben & Jerry's Sales ($) Total Industry Sales ($) 2-17 Marketing Plan A marketing plan is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years. 2-18 LO3 STRATEGY IN VISIONARY ORGANIZATIONS TYPES OF MARKETING PLANS Long-Range Marketing Plans Annual Marketing Plans 2-19 Business Plan A business plan is a road map for the entire organization for a specified future time period, such as one year or five years. 2-20 FIGURE 2-B Elements in typical marketing and business plans targeted at different audiences 2-21 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 2, YOU SHOULD BE ABLE TO: LO4 LO5 LO6 Discuss how an organization assesses where it is now (3 things) and where it seeks to be (2 Analysis). Explain the three steps of the planning phase of the strategic marketing process. Describe the elements of the implementation and evaluation phases of the strategic marketing process. 2-22 LO4 SETTING STRATEGIC DIRECTIONS WHERE ARE WE NOW? 1) Competencies – answers for what do we do best? • Special capabilities (ex: world-class tech, training, service) • Competitive Advantage – competencies should be distinctive enough to provide __________ • Core Competencies Core competencies are particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. 2) Customers • How much a satisfying experience they have? • Started as catalog retailer 2-23 LO4 SETTING STRATEGIC DIRECTIONS WHERE ARE WE NOW? 3) Competitors 2-24 LO4 SETTING STRATEGIC DIRECTIONS WHERE DO WE WANT TO GO? 1) Business Portfolio Analysis (BCG Matrix) A technique that mangers use to quantify performance measures and growth targets of their firms’ strategic business units High Stars Question Marks SBU or Offering? Market Growth Rate Cash Cows Dogs Low High Low Relative Market Share 2-25 LO4 Kodak Consumer-Related Products What SBU type in the BCG growth-share matrix? Kodak digital camera Kodak digital photo printer Kodak film Kodak Picture kiosk 2-26 FIGURE 2-4 BCG business portfolio analysis for Kodak’s consumer SBUs for 2003 (red circle) and 2012 (red arrow) ① ③ Kodak film Kodak digital photo printer ② ④ Kodak digital camera Any patterns? Kodak Picture kiosk 2-27 Founded in 1880 ● In 1976, 90% of film and 85% of camera ● In the early 1990’s, one of the most valuable companies ● Until 2000, depended on its traditional film ● 1. Film: $8bil cash cow in 2003 to 500mil in 2009 vanish in 2012 2. Digital camera: invented but no exploit, smart phone dog 3. Printer: despite online photo sharing, still Kodak believe ? will become Star 4. Self-service kiosk: potential ? Or dog ● In 2012, filed for bankruptcy protection: phasing out digital cameras, pocket video camera due to the growth of ? LO4 SETTING STRATEGIC DIRECTIONS WHERE DO WE WANT TO GO? Diversification Analysis • Market Penetration • Market Development • Product Development • Diversification 2-29 FIGURE 2-5 Four alternative market-product strategies for Ben & Jerry’s to expand sales revenues using diversification analysis Which one is Risky? Which is not? 2-30 LO5 THE STRATEGIC MARKETING PROCESS Strategic Marketing Process • How Do We Allocate Our Resources to Get to Where We Want to Go? • How Do We Convert Our Plans into Actions? • How Do Our Results Compare With Our Plans and Do Deviations Require New Plans? 2-31 FIGURE 2-6 The strategic marketing process has three phases: 1) planning, 2) implementation, and 3) evaluation 2-32 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Step 1: Situation (SWOT) Analysis • Situation Analysis • SWOT Analysis Strengths Weaknesses Opportunities Threats 2-33 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Step 1: Situation (SWOT) Analysis • SWOT Analysis Study Identify Industry Trends Analyze Competitors Assess the Organization Research Present and Prospective Customers 2-34 FIGURE 2-7 Ben & Jerry’s SWOT analysis that serves as the basis for management actions regarding growth 2-35 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Step 1: Situation (SWOT) Analysis • SWOT Analysis Actions Build on a Strength Correct a Weakness Exploit an Opportunity Avoid a DisasterLaden Threat 2-36 VIDEO CASE 2 IBM 2. Conduct a SWOT analysis for IBM’s Smarter Planet initiative. What are the relevant trends to consider for the next three to five years? 2-37 VIDEO CASE 2 IBM Favorable Internal External Unfavorable Strengths Weaknesses • Global brand name. • New technologies and patents. • A planning process that included online discussions among 50,000 employees. • A clear concise mission statement. • IBM’s size may make change difficult. • Products such as PCs and hard disk drives are becoming commodities and are not customizable. Opportunities Threats • Growth markets such as China, India, Brazil and Africa. • Business analytics and optimization. • Cloud and smarter computing. • Connectivity. • Shift to custom-made technological solutions. • Demand for Smarter Planet solutions will depend on interest in change rather than just reaction to problems. • Demonstrating success will require accurate and timely measurement of relevant outcomes. 2-38 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Step 2: Market-Product Focus and Goal Setting • Market Segmentation • Points of Difference =Unique Selling Proposition 2-39 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Example: Medtronic’s Pacemaker • Set Marketing & Product Goals • Select Target Markets • Find Points of Difference • Position the Product 2-40 LO5 THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE Step 3: Marketing Program • Product Strategy • Price Strategy • Promotion Strategy • Place (Distribution) Strategy 2-41 FIGURE 2-8 The four Ps elements of the marketing mix must be blended to produce a cohesive marketing program 2-42 FIGURE 2-E Results of good and bad marketing planning and implementation 2-43 LO6 THE STRATEGIC MARKETING PROCESS THE IMPLEMENTATION PHASE 1) Obtaining Resources - ?, from where 2) Designing the Marketing Organization – a typical structure 3) Defining Precise Tasks, Responsibilities, and Deadlines 4) Executing the Marketing Program • Marketing Strategy The means by which a marketing goal is to be achieved: target market + MKT program • Marketing Tactics Detailed day-to-day operational decisions essential 2-44 FIGURE 2-9 Organization of a typical manufacturing firm, showing a breakdown of the marketing department 2-45 LO6 THE STRATEGIC MARKETING PROCESS THE IMPLEMENTATION PHASE Defining Precise Tasks, Responsibilities, and Deadlines • Action Item List – the outcome of each of the meeting • Program Schedules • Gantt Chart 2-46 FIGURE 2-G Tasks and time needed to complete a term project 2-47 FIGURE 2-10 Gantt chart for scheduling a term project that distinguishes sequential and concurrent tasks 2-48 LO6 THE STRATEGIC MARKETING PROCESS THE IMPLEMENTATION PHASE Improving Implementation of Marketing Programs • Communicate Goals and The Means of Achieving Them • Have a Responsible Program Champion Willing to Act • Reward Successful Program Implementation 2-49 LO6 THE STRATEGIC MARKETING PROCESS THE EVALUATION PHASE Comparing Results with Plans to Identify Deviations • Planning Gap = growth target – trend extrapolation (V shape) Acting on Deviations • Exploiting a Positive Deviation • Correcting a Negative Deviation 2-50 FIGURE 2-H The evaluation phase of the strategic marketing process ties results and actions to goals, often using marketing metrics and dashboards 2-51 FIGURE 2-11 The evaluation phase requires that Kodak compare actual results with goals to identify and act on deviations to fill in the “planning gap” by 2012 2-52 LO6 THE STRATEGIC MARKETING PROCESS THE EVALUATION PHASE In response to the negative and positive deviations from targets, Kodak task force might have considered the following in Exploiting a positive deviation – new line of digital camera #1 in US quickly launch in international market Correcting a negative deviation – if international sales were not good, Kodak might have reconsidered it pricing or distribution strategies 2-53 Business Plan A business plan is a road map for the entire organization for a specified future time period, such as one year or five years. 2-54 Business Portfolio Analysis Business portfolio analysis is a technique that managers use to quantify performance measures and growth targets to analyze its clients’ strategic business units (SBUs) as though they were a collection of separate investments. 2-55 Diversification Analysis Diversification analysis is a technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. 2-56 Strategic Marketing Process The strategic marketing process is the approach whereby an organization allocates its marketing mix resources to reach its target markets. 2-57 Situation Analysis A 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 marketing plans and the external factors and trends affecting it. 2-58 SWOT Analysis A SWOT analysis is an acronym describing an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats. 2-59 Market Segmentation Market segmentation involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. 2-60 Points of Difference Points of difference are those characteristics of a product that make it superior to competitive substitutes. 2-61 Marketing Strategy Marketing strategy is the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it. 2-62 Marketing Tactics Marketing tactics are the detailed day-to-day operational decisions essential to the overall success of marketing strategies. 2-63