Download Office for Strategic Business Initiatives

Getting Started with OSBI Consulting
Team expectations
Mission of OSBI
“To establish OSBI as a premier consulting organization managed by students, to deliver high quality
solutions to client problems and to nurture future consultants for the business world.”
OSBI Value
Leadership
Consulting Experience
Team Building
Problem Solving
2
The context of your project

These are “live” projects with “real” clients

The organization is getting paid for almost all of the projects

There are no “right” answers, but some answers are better than
others

You represent not only OSBI Consulting but the College of
Business and the University of Illinois
3
Typical project timeline
Action Steps
Approximate Timing
• Confirm scope and team roles
• Develop project workplan
• Identify potential information
sources/ collection methods
• Conduct initial information
gathering
• Summarize findings and key
implications
• Determine additional information
needs
• Collect, analyze and synthesize
additional information
• Develop recommendations and
draft deliverables
• Create final deliverable(s)
Weeks
1
2
3
4
5
Client kickoff
meeting
7
Summary of key
findings and
implications
Status reports
Team reviews with Stig
6
• Engagement proposal
• Workplan
8
9
10
11
12
Deliverable
reviews
Final presentation
• Client feedback
• Engagement
reviews
4
Where you should be now

Setting up and having first team meetings
– all team members must attend all team meetings

All paperwork should be in
– Non-disclosure and non-compete forms must be in
to your Engagement Managers at your next team
meeting.

Engagement Proposal and Work Plan
should be in the works
5
Logistics of the project

Weekly video conferences with the client

Weekly team meetings

All deliverables “approved” by Stig

Realistic goals set on a weekly basis

COMMUNICATION!!!
 First Class folders
 Team and client meetings
6
When the Project is Over

Team and Manager Evaluations will be done

Promotion possibilities will be decided

Feedback to EM on the project to help
improve the program

Team members assigned to a new project in
their new roles
7
What should you expect- the challenges

Things will NOT go as originally planned

You will NOT be able to find the information that you are looking for
in the form you need it in

Your client, at times, may NOT be as responsive as you would like

Team members will NOT contribute at times
You need to be comfortable with being uncomfortable!!
8
What should you expect- the rewards

You WILL get out of the experience what you put into

You WILL better appreciate the concepts learned in class

You WILL understand that cases presented in class are contrived
and only partially prepare you for what you will do in the work place

You WILL have a good story to tell to future employers

You WILL have actual consulting experience to reference
You STILL need to be comfortable with being uncomfortable!!
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Issue decomposition (question pyramids)
Purpose: To define the key questions to answer to solve the company’s
business issue
Question
Presenting problem
Question
?
?
Question
?
?
?
?
?
?
?
Mutually
Exclusive
Collectively
Exhaustive
?
10
How to create a question pyramid



Start by defining the presenting problem in the form of a question
Brainstorm the categories of questions that stem from the
presenting problem
Within each issue category ask the following questions to create
additional layers:
–
–
–
–
–

Why?
How?
What?
When?
Where?
Regroup questions, as required, into the appropriate categories
11
Presenting problem
Should our company launch a new retail concept
aimed at enabling elderly and the disabled to stay in
their home?
12
Identify issue categories
Is retail concept viable?
Target
customers?
Market
penetration
required?
Characteristics
of target
markets?
Appropriate
delivery
channels?
Product/
service
mix?
Competition?
Sources of
supply?
Organizational
infrastructure?
Market
positioning?
13
Add additional layers

Who is the target customer(s)?
– What are the demographics/ key characteristics of the target
customers?
– What segments of the target customers exist? (e.g., buy for
themselves, buy for others, etc.)
– What are the buying behaviors of the target customers (e.g., where
do they buy, how much do they buy, how often, etc.)
– How do the buying behaviors differ by customer segment?
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Example issue decomposition
Primary Issues
Sub Issues
Alignment with P&L
Who is the target customer(s)?
*
What are the demographics/ key characteristics
of the target customers?
What segments of the target customers exist?
(e.g., buy for themselves, buy for others, etc.)?
What are the buying behaviors of the target
customers (e.g., where do they buy, how much
do they buy, how often, etc.)?
How do the buying behaviors differ by customer
segment?
Net Sales
How does the number of target customers differ
by market?
How does the market vary by region/ area of the
country?
What market-specific factors make some markets
more attractive than others?
How do these market differences affect potential
sales?
Net Sales
What options for market penetration will
support profitability goals? (e.g., deep
penetration in a few markets, shallow
penetration in multiple markets)
What are the key factors that will drive/ hinder
market penetration?
What are the anticipated sources of market share
(e.g., steal from competitors, create new demand,
etc.)?
Net Sales
*
*
*
What are the characteristics of the
target market(s)?
*
*
*
*
What level of market penetration and/
or market share is required to support
profitability goals?
*
*
*
15
Example issue decomposition
Primary Issues
Sub Issues
Alignment with P&L
What mix of products/ services will
best meet/exceed the needs of the
target customer(s) and market(s)?
*
What are the product/ service that will best
meet/ exceed the target customers’ needs?
How should the mix of products/ services vary
by customer segment?
How should the mix of products/ services vary
by market?
What level of quality of products/ services will
best align with target customers/ markets?
Net Sales
Cost of Sales
What are the pros/ cons of alternate delivery
formats/ channels (e.g., retail store, service
program, direct sales, catalog, Home Shopping
Network, etc.)
What are the pros/ cons of various
combination(s) of the above alternate delivery
channels?
Net Sales
Cost of Sales
Operating Expenses
What is the required investment for each
combination of the selected delivery channels?
What is the projected ROI for selected delivery
channels and/or combinations?
Operating Expenses
What are the key factors to evaluate suppliers?
How many suppliers exist for each product/
service?
How does this vary by market/ region?
How can supplier relationships that already exist
with other Centex businesses be leveraged?
Cost of Sales
*
*
*
What is the most appropriate delivery
channel(s) for products/ services to
best meet/exceed the needs of the
target customers?
*
What level of investment is required to
support selected delivery channel(s)?
*
Who are the most appropriate sources
of supply for these products/ services?
*
*
*
*
*
*
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Example issue decomposition
Primary Issues
Sub Issues
Alignment with P&L
Who is the competition?
*
How does the competition vary by market (e.g.,
number of competitors, market share, number of
delivery channels, etc.)?
How does the competition vary by delivery
channel?
What is the current market position of each
competitor?
What trends relating to competition exist (e.g.,
change in number of competitors, number/ types
of delivery channels, market positioning, etc.)?
Net Sales
What are the appropriate dimensions (e.g., price,
service, quality, etc.) of positioning to consider?
What are the potential benefits/ costs of alternate
market positions?
What is the desired image to attract target
customers?
How should this concept be positioned to the
different customer segments?
What are the unintended pros/cons of alternate
market positions?
How should the Centex Corporation’s image/
reputation be leveraged, if at all?
Net Sales
Operating Expenses
Other Expenses
*
*
*
How should the concept(s) be
positioned in the market?
*
*
*
*
*
*
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Example issue decomposition
Primary Issues
Sub Issues
Alignment with P&L
What organization infrastructure is
required to support the concept(s) and
their associated operations?
*
*
Operating Expenses
Other Expenses
*
*
*
What type of organization structure is required?
What are the marketing requirements for this
program/ concept?
What Human Resource issues need to be
addressed (e.g., training, etc.)
What management measures and reporting
implications need to be defined and/ or
addressed?
What existing organizational structures/
infrastructure from other Centex businesses can
be leveraged?
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Workplan example
19
Exercise
Presenting problem:

How can OSBI increase repeat participation of students?
20
How to create a question pyramid



Start by defining the presenting problem in the form of a question
Brainstorm the categories of questions that stem from the
presenting problem
Within each issue category ask the following questions to create
additional layers:
–
–
–
–
–

Why?
How?
What?
When?
Where?
Regroup questions, as required, into the appropriate categories
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Resources available to you

First Class project folder

I- Find (www.osbi.uiuc.edu)

Methodologies

Tools and templates

Past deliverables
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The Creation of a Marketing Plan
Phase 1
Phase 2
Phase 3
Phase 4
Situation
Report
Objectives
Statement
Execution & Implementation
Performance
Evaluation
Where is the
client now?
Where does the client
want to be?
How should the client get there?
Has the client reached
her/his goals?
Communication
Creative/
Analytical
Process
1.
Assess
Market
Environment
Product
Price
2.
Formulate
Strategies &
Set Objectives
3.
4.
Develop
Marketing
Tactics
Marketing
Mix
Place
Structure
Evaluative
Process
Promotion
Distribution
Written
Outputs to
Marketing
Plan
Executive
Summary
Corporate
Strategy
Situation
Report
Key
Assumptions
Consistent Client Interaction & Input
Marketing
Strategies &
Objectives
Marketing
Tactics
Short &
Long Term
Measures &
Goals
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1.0 Assess the Market Environment
Sub-Process
Objective
• Develop the foundation from
which marketing strategies,
objectives, and tactics are to
be developed
• Recognize for
implementation the
consumer orientation for
targeted marketing
communications
• Define necessary
assumptions, both internal &
external, upon which further
planning can be
meaningfully based
Tips & Key ?s
• Is the industry growing? Is it
stable? Does technology play a
dominant role?
• Are the client’s existing/ potential
resources & capabilities
coincidental with key industry
success factors?
• How has the client performed? Is
the client well-positioned relative
to competitors?
Conduc
t
Externa
l
Analysi
s
•Determine chief
economic traits
•Identify drivers
of change
•Identify key
success factors
•Determine the
impact of
external entities
upon the industry
(government
regulation, social
goodwill, etc.)
•Identify the
relative strengths
& weaknesses of
existing industry
players
•Identify existing/
potential voids
within the market
for possible
exploitation
Conduc
t
Internal
Analysi
s
•Understand
overarching
business strategy
•Determine the
client’s strengths
& weaknesses
•Earmark areas to
be improved for
later action
•Gather all
historical data
and secondary/
primary research
when appropriate
and possible
•Evaluate past
performance in
light of internal
goals/ objectives
& competitor’s
performance
where possible
•Evaluate past
and current
positioning for
coherence with
overarching
business strategy
Tools
EXTERNAL
• Porter’s Five Forces
• PESTLE Framework
• Structure-ConductPerformance Articulation
• Segmentation Scheme
• Competitive Positioning
Articulation
• Value Mapping
• Perceptual Mapping
•Define internal
& external
assumptions (ie
growth rates,
advent of
regulation, speed
of innovation,
etc.) using
historical data
and secondary/
primary research
Outputs to Written Marketing Plan
INTERNAL
• SWOT Analysis
• Activity Coherence
Mapping
ASSUMPTIONS
• Historical Trend
Analysis
• Pareto Affect
• A summary of all the external factors which will
likely affect the client’s marketing performance
in the present & future
• A statement of the client’s strengths &
weaknesses with relevance to its competition
• An exhaustive list of necessary assumptions
essential to current & future marketing
decisions
24
1.01 Porter’s Five Forces Model
Tool
Process
•Assess strength of each
of the five competitive
forces (Strong?
Moderate? Weak? )
•Explain how each force
acts to create
competitive pressure.
What are the factors
that cause each force to
be strong or weak?
•Decide whether overall
competition (the
combined effect of all
five competitive forces)
is fierce, strong,
normal/moderate, or
weak
Personal Computer
Industry
Supplier Power:
Very High
Intel and Microsoft
extract all industry
profits.
Substitutes: Low to Moderate
Increasing competition from hand
held/ portable computing devices
Rivalry: Very High
Intense price competition
Excess capacity and
saturation. Some brand
recognition, but PCs thought
of as commodities
Buyer Power:
High and Rising
Low switching
costs, Less brand
loyalty.
Resellers and
retailers
have grip on
end users
Threat of Entry: Moderate to High
Low capital costs of manufacturing
Relatively easy to assemble PCs
Some brand recognition and loyalty
Notes/ Implications
• Key questions to better understand the ferocity of competition within the industry:
Is price competition vigorous? Active efforts to improve quality? Are rivals
competing on customer service? Lots of advertising/sales promotions? Active
product innovation? Active use of other weapons (strategic, operational, marketingrelated)?
25
1.02 PESTLE Analysis
Tool
Scan of the External
Macro-Environment
Process
•Gather information
relevant to client’s
external environment
and analyze for
relevance to the client’s
strategies
•Implications for the
client, customers,
intermediaries, the
market/ industry,
competitors, and
stakeholders must be
considered
•Arrange this
information into the
categories at left for
use during both the
internal analysis phase
and the strategy &
objective development
phases
Political
Economic
Social
Technological
Legal
Environmental
Tax policy
Economic
growth
Population
demographics
Automation
Pollution
control
Exchange
rates
Income
distribution
Government
spending on
technology
Health
&
safety
laws
Trade
restrictions &
tariffs
Waste disposal
Interest
rates
Attitudes
towards work &
leisure
Information
technology
development
Employ
ment
regulati
ons
Political
stability
Inflation
rates
Social mobility
Deregulation
Business
cycles
Unemploy
ment
Speed of
technology
transfer
Environmental
regulations
Privatization
Health
consciousness
Population
growth rate
Emphasis on
safety
Monop
olies
legislati
on
Noise levels
Additional
requirements
on
manufacturing
processes
Research &
Development
Technology
incentives
Rate of change
Technological
maturity
Notes/ Implications
• What influences have been particularly important to the client in the past?
• Are any of these more or less significant in the future for the client and her/his competitors?
• Which of these are the most important at the present time? In the next few years?
26
1.03 Structure-Conduct-Performance Articulation
Tool
Process
• To identify the structure
of the industry, the
dominant conduct of
existing players, and the
resulting performance of
newer firms
• To define the relationships
illustrated at right, the
following industry conditions
must first be considered:
Consumer
Elasticity of demand
Substitutes
Seasonality
Rate of growth
Location
Lumpiness of orders
Method of purchase
Production
Technology
Raw materials
Unionization
Product durability
Location
Scale economies
Scope economies
Structure
•Numbers of buyers
•Numbers of sellers
•Barriers to entry facing new firms
•Product differentiation
•Vertical integration
Conduct
•Diversification
•Advertising and marketing
•Research and development
•Pricing behavior
•Plant investment
•Legal tactics
•Product choice
•Collusion
Performance
•Profits
•Product quality
•Production efficiency
•Technical progress/ progressiveness
•Allocative efficiency
•Equity
Notes/ Implications
• Threat of entry is stronger when…entry barriers are low, a sizable pool of entry
candidates exists, incumbents are unwilling or unable to contest a newcomer’s entry
efforts, and/or newcomers can expect to earn attractive profits
27
1.04 Segmentation Scheme
Tool
Determine Which Segmentation Variables to Use
Process
•Define distinct customer
groups that have
problems/ needs which
can be solved/ serviced
in one or more ways
• Establish segment
variables that yield
mutually exclusive and
exhaustive segments
• Develop Segment
Profiles
• Evaluate Segments for
their viability and
“attractiveness”
Develop Market Segment Profiles
Evaluate Relevant Market Segments
Segmentation Variables
User-Related
•Demographics: Age, Gender,
Race, Ethnicity, Income, Education,
Occupation, Family Size, Family
Life Cycle, Religion
•Social Class
•Geographic: Region, Urban,
Rural, City Size, County Size, State
Size, Market Density, Climate,
Terrain
•Lifestyles & Psychographics
Behavioral
•Benefits
•Usage
•Price
•Brand
•Situational
Are acquired segments viable?
Measurable
• Size, purchasing power, profiles of segments can be
measured
Actionable
•Must be able to attract and serve the segments
Substantial
•Segments must be large or profitable enough to serve
Differential
•Segments must respond differently to different
marketing mix elements & actions
Accessible
•Segments must be effectively reached and served
Notes/ Implications
• Segmentation scheming defines potential markets and serves as an essential component of
the client’s ultimate marketing mix decisions
28
1.05 Positioning Articulation
Tool
Student-Staffed
Consulting
Process
Quality
Management
Consortium
MBA Consulting
Program
OSBI
•Determine current
competitive
positioning within
the marketplace
•Identify holes,
potentially
representative of
untapped markets,
for further
exploration
•Formulate
strategies to seize
advantage, whether
by challenging
competitors’
positioning or by
seeking “vacant”
space
Primarily
Fortune 500
Austin Power
Low Student
Participation
Carlson
Business Consulting
Network
Center for Experiential
Learning
High Student
Participation
Community
Consulting
The MBA
Consulting
Project
Darden Business
Projects
Freeman Consulting
Group
Primarily Start-up
Companies
Notes/ Implications
• With positioning articulated, unfulfilled customer groups or needs can be more readily identified and targeted
• Should current positioning prove incoherent with the client’s business strategy, this articulation becomes
essential to developing new marketing strategies
29
1.06 Value Mapping
Tool
Price Value Map of the Toothpaste Industry, 1992
Process
$3.00
•Determine the current
value-price orientation
prevalent in the industry
$2.80
•Define the customer
groups to which major
competitors cater (pricesensitive or qualityfocused)
$2.20
Oral-B
Regular
$2.60
$2.40
•Formulate strategies to
combat competitors or to
seize “vacant” space
Price
Aquafresh Flex
$2.00
Pepsodent
Professional
$1.80
Colgate
Plus
Reach
Advanced
Reach
Regular
$1.60
Price
•Identify areas of the
existing value
orientation scheme
within which client could
capture value
Oral-B
Indicator
$1.40
$1.20
Pepsodent
Regular
Colgate
Classic
$1.00
Perceived
Perceived Performance
Benefits
Notes/ Implications
• Use the acquired value map to identify holes in the market’s current pricing scheme;
where large gaps exist between products on the value line, there is opportunity for new
product introduction
30
1.07 Perceptual Mapping
Tool
Liquid Detergent Market
Process
•Evaluate the
current players
and their
respective
abilities in light
of all-important
consumer
perceptions
•Formulate
strategies to
exploit the
weaknesses and
nullify the
strengths of
competitors in
terms of
consumer
perception
Long-lasting
suds
Most pleasant fragrance
Mildness
50%
Best Value
for money
Overall
Cleaning
100%
Leaves dishes
shiny
Competitor
#1
#2
#3
Cutting Grease
Removing
baked-on foods
Notes/ Implications
• By mapping perceptions, the relative strengths & weaknesses of competitors become more clear and actionable
• What are the respective foci of competitors, and how do consumers perceive them in the marketplace?
31
1.08 SWOT Analysis
Tool
Process
• Gather relevant
information and
list all issues,
external &
internal, that have
or will likely have
impact upon the
client’s activities
• Use this
information in
conjunction with
the findings of the
external analysis
(specifically the
PESTLE) to
develop a
thorough
understanding of
the client’s reality
Strengths
Weaknesses
Opportunities
Threats
List internal strengths
List internal weaknesses
List external opportunities
List external threats
•Brand awareness
•Converse of
suggested strengths (ie
lack of brand
awareness, lack of
access to resources)
•An unfulfilled
customer need
•Emergence of
substitutes
•Arrival of new
technologies
•Tightening of
applicable
regulations
•Patents/ trademarks
•Cost advantages
•Proprietary
knowledge
•Exclusivity of
resources
•Preferential
distributive access
•May sometimes be
the “flip-side” of a
strength (ie large
manufacturing
capacity, while
generating low perunit costs, might also
inhibit flexibility/
adaptability)
•Relaxation of
regulations
•Dissolution of preexisting trade barriers
•Institution of
new trade
barriers
•Shifts in
consumer
preferences away
from client’s
offerings
Notes/ Implications
• Compiled strengths should be considered potential points of competitive advantage for the client
and her/his activities
• This information is useful in the immediate to better understand the current environment, and will
again prove essential during the strategy formulation & recommendation stages of the plan
32
1.09 Activities Map
Tool
Process
Southwest
Airlines
• Evaluate the existing
strategic coherence of
the client’s current
activities
No
meals
No
assigned
seats
Flexible
Union
contracts
High
employee
compensation
No connections
Point-to-Point
flights
Frequent
Departures
15 min.
turnaround
• Identify the higherlevel activities and then
list those actions
undertaken and
policies adopted to
support main actions/
initiatives
Limited
Passenger
Amenities
No
transfers
Lean
and
productive crew
Employee Stock
ownership
Limited use
of travel agents
Automatic
Ticketing
machines
Standard
fleets
Low prices
High aircraft
utilization
Notes/ Implications
• The more relationships/ linkages that exist among current activities, the more
coherent and integrated is the client’s strategy
• Planned activities for the future can herewith be evaluated prior to adoption/
implementation for coherence with existing activities
33
1.10 Historical Trend Analysis
Tool
Trends in US GDP
Growth
Process
Increasing Annually at $256B
Billions of '96 $s
• Acquire historical data
and establish relevant
time periods for
examination (ie similar
in duration, behavior,
conditions, etc)
Most Recent 10-Years:
10,000
9,000
8,000
7,000
6,000
5,000
• Examine data for
statistical relevance and
significance, being
careful to adjust for
seasonality where
appropriate
4,000
3,000
Long-term: Trending
2,000
increases of $118B
1,000
0
1929
• Extrapolate forward
into the future for
periods of appropriate
relevance to the client
positively with annual
1939
1949
1959
1969
1979
1989
1999
Notes/ Implications
• While long-term trends are often beneficial in establishing the broad perspective, it
is often more insightful to limit trend analysis to a more current term given that
influential factors/ conditions can change dramatically over time. Examining the
past for periods of similar observable behavior to that of the current period can
prove useful in predicting upcoming movements.
34
1.11 The Pareto Effect (80/20 Rule)
Tool
Process
• To quickly estimate
with demonstrated
accuracy the
importance of existing
customer segments
• This “effect” is
generally applicable
across industries and
basically states that
approximately 80% of a
firm’s sales are
attributable to only
20% of same firm’s
customers
• With this tool,
marketing efforts can
be better focused/
targeted to generate
maximum impact with
respect to stated goals
Observed
Pareto
Effect in the
Capital
Industrial
Goods
Market
% of client’s
current sales
Customer
Customer
Group A
accounts
for 75% of
sales and
represents
only 25%
of total
customer
base
Group C
accounts
for 5% of
sales and
represents
20% of
the total
customer
base
Customer Group B
accounts for 20% of
sales while
comprising 55% of
customer base
% of client’s existing customer base
Notes/ Implications
• While this tool is useful in a general sense, it is static and therefore must be used carefully.
Customers with the greatest potential may well be within the 80 percent, or within a
heretofore untapped segment of the market.
35
2.0 Formulate Strategies & Set Objectives
Sub-Process
Objective
• Develop marketing
strategies and
associated objectives
based upon the
environmental
assessment
• Translate into concrete
form the needs, hopes,
& desires of the client
with respect to her/his
business performance
Tips & Key ?s
• This process must be one of
continuous review, as the
strategies and associated
objectives need to be evaluated
forwards and backwards for
coherence.
•Develop cohesive
marketing strategies
to best approach the
client’s environment
now and into the
future
•Establish broad
objectives applicable
to these marketing
strategies and to the
client’s overarching
wants/ needs (ie
target ROI, improved
image, social
responsibility)
Tools
• Ansoff Matrix
• TWOS Matrix
•Translate the broad
objectives into key
result areas (ie
market penetration,
sales growth rate)
commensurate with
key industry success
factors
•Create subobjectives necessary
for the
accomplishment of
the broad objectives
(ie sales volume
goals, geographical
expansion, product
line extension)
Outputs to Written Marketing Plan
• A set of overarching marketing strategies
relevant to the client’s environment
• A definitive statement of the client’s objectives
replete with associated complementary subobjectives
36
2.1 Ansoff’s Matrix of Growth Strategies
Existing Products
New Products
Market Penetration
Product Development
Least
risky of the four as it leverages the
client’s existing resources and capabilities
Process
• Conceptualize the client’s
competitive situation
within two dimensions
only: products and
markets (ie what is
offered and to whom it is
offered)
• Develop marketing
strategies for which
specific objectives can be
defined and later
measured
Notes/ Implications
• This tool is useful as it allows
for the simplification of even
the most complicated
industry. By reducing
complexities along two
dimensions, the client has
only to consider four broad
growth strategies.
Existing
Markets
In
a growing market, maintaining the
status quo will result in growth; there may
also exist opportunities to increase market
share if competitors reach capacity limits
As
Mitigates risk
by basing operations within an established
customer base
May be
appropriate if the client’s strengths are related
to specific customers rather than products
the market approaches saturation/
maturity another strategy must be pursued
if further growth is desired
Market Development
Diversification
Most
Mitigates risk
by basing market expansion
on existing products
risky of the four growth strategies since it requires
both product and market development ─also know as the
“suicide cell” of this matrix
Horizontal:
New
Markets
Can
include entering new geographical
areas, promoting new uses for an existing
product and entering new market segments
May be
appropriate when the client’s
distinct competence rests with the product
rather than the market
development of activities which are
complementary to or competitive with the client's existing
activities
Vertical:
development of activities which involve the
preceding or succeeding stages in the client’s production
process (upstream/backward or downstream/forward)
Conglomerate:
refers to the situation where at face
value the new activity of the client seems to bear little or
no relation to it's existing products or markets
37
2.2 TWOS Matrix
Tool
Process
• Analyze most
relevant
information from
SWOT in an
attempt to
maximize strengths
and minimize
weaknesses
• Complete the
matrix as shown,
with careful focus
upon the actionable
recommendations
arising from the
analysis
Opportunities (O)
List external
opportunities
Threats (T)
List external threats
Strengths (S)
Weaknesses (W)
List internal strengths
List internal weaknesses
SO Strategies
Generate strategies here that use
strengths to take advantage of
opportunities
WO Strategies
Generate strategies here that take
advantage of opportunities to
overcome weaknesses
ST Strategies
Generate strategies here that use
strengths to avoid threats
WT Strategies
Generate strategies here that
minimize weaknesses and avoid
threats
Notes/ Implications
• This model, while seemingly academic in nature, is one of the essential elements of
strategy formulation and the written Marketing Plan.
38
3.0 Develop Marketing Tactics
Sub-Process: Use of Marketing Tactics to Attain Objectives
Objective
• Develop the overall
route to be followed
for the achievement of
stated objectives
• Determine the
appropriate
Marketing Mix, with
special emphasis upon
relevant & coherent
Communications
•Determine
where within
the Product
Life Cycle
the client’s
offering is
currently, as
the maturity
of the
offering will
determine
much of the
MM
Product
•Policies & decisions related to client’s
offerings: line extensions/ retractions, feature
modifications, branding, etc.
Promotion
(Communication)
•Impersonal:
advertising, POS
displays, public
relations
•Personal: faceto-face selling on& off-site
Adjust the
Marketing Mix
as appropriate
to pursue
objectives
Place (Distribution)
•Agent, retailer, wholesaler, direct, etc.
•Issues associated with the physical movement
of goods
Price
•Skimming &
penetration
policies
•Cost & value
approaches
•Revisit marketing
strategies to
ensure coherence
with defined
objectives and
associated tactics
•Refine objectives
as necessary and
adjust strategies
accordingly; this
process is one for
continuous review
& modification
Tips & Key ?s
• Any and all Marketing Mix decisions
(especially those to do with product &
pricing) must be made with due
consideration for competitive positioning
• Product Life Cycle Articulation
• Communication means & messages are
largely dependent upon the complexity of
client’s offering
• Elements of Environmental
Assessment
• Each aspect of the MM should
correspond to definite, measurable, and
attainable objectives
Tools
Outputs to Written Marketing Plan
• Definite marketing tactics formulated specifically
to attain established objectives
• Associated expenditure requirements and
estimated results of each strategy relevant to
stated objectives (to be coordinated with
Evaluation Phase)
39
3.1 Product Life Cycle Articulation
Tool
Process
• Determine where
within the life cycle the
client’s offering is
currently
Growth
Product: establishment
of branding & quality
level; acquisition of
trademarks/ patents
Product:
maintenance of
quality;
addition of
functionality/
support
Price: low penetration
pricing to build share or
high skim pricing to
recover development
costs
• Formulate marketing
mix strategies using the
accepted PLC as a
guide
Notes/
Implications
Place: selective
distribution until
demonstrated
acceptance
Product Sales
• The appropriate Marketing
Mix is heavily dependent
upon where within the life
cycle the product/ service
currently is. As the
product/ service matures
and demonstrates profit
potential, competitors are
likely to enter and influence
the client’s tactics,
objectives, & strategies.
Introduction
Promotion: targeting
innovators/ early
adopters; message is
education & awareness
Time
Price: static
pricing
Maturity
Product:
enhancement of
features to pursue
differentiation
Maintain: continue
operations with a desire
to retain competitive
position
Price: decreased
price due to
competition
Improve: rejuvenate
product with additional
features, new issues, or
alternative customers
Place: “incentivize”
Place: addition existing channels to
of channels to
gain preference over
serve growing
competitors
customer base
Promotion:
broad message
to widening
audience
Decline
Promotion: strong
emphasis on
differentiation
Harvest: reduce costs
and target loyal/ niche
customers
Exit: discontinue
offering and liquidate
inventory to end-users
or competitors
Enter: develop new
products/ services
(usually for a new
customer group or
market)
40
4.0 Structure Evaluative Process
Sub-Process
Objective
• Predict the outcomes
associated with each
defined tactic and the
marketing plan as a
whole to better align
stated objectives with
reality
• Evaluate in progress
and in retrospect the
successes/ failures of
the marketing plan
Complete
projections
associated with
each tactic and
evaluate
against
budgeted
expenditures
Employ test
markets when
appropriate and
where possible
to evaluate the
paper plan in
the “real
world” prior to
full-scale
implementation
Evaluate
observed
successes/
failures against
stated
objectives (ie
did advertising
expenditures
create desired
awareness
levels?)
Examine the
external
environment
for events that
may have
contributed
positively/
negatively to
observed
outcomes
Tips & Key ?s
• Where will the client be if she/he adopts
the recommended actions?
• In retrospect, has the client reached
her/his stated objectives within the
parameters established? If not, why not?
• Did the marketing efforts have the
desired effect or even cause the observed
effect?
• Evaluate all phases of the planning
process for validity and improvement
Tools
• Sales Trend Analysis (with &
without control markets)
• Growth Rate of Improvement
Analysis
Outputs to Written Marketing Plan
• Structured process for predicting success in the
“pre-period,” analyzing progress in the “test
period,” and measuring success in the “post
period”
• List of measures (ie sales growth, brand
awareness, penetration rate, market share, etc.)
and associated goals for each
41
The Written Marketing Plan
Marketing Plan Inclusive of Defined Analyses
Objective
• Develop for
articulation a
coordinated plan that
translates stated
marketing strategies
into actionable
objectives and
associated tactics,
replete with a process
for evaluation
Tips & Key ?s
• Answer with the Marketing Plan these
four questions: Where is the client now?;
Where does the client want to be?; How
should the client get there?; Did the client
reach stated goals?
• Be concise and keep in mind the endaudience for this marketing plan
• Obtain “buy-in” from all levels of
management, while maintaining
overarching strategies & objectives and
rejecting biased, individualistic goals
2.
1.
Corporate
Strategy
Executive
Summary
3.
Situation
Report
4.
Key
Assumptions
7.
5.
Marketing
Tactics
Marketing
Strategies &
Objectives
8.
Short & Long
Term Measures
& Goals
9.
Conclusion
42
Market Feasibility Study
1.
2.
Phase 1
Phase 2
Phase 3
Target Market Identification
Prospective Positioning
Implementation Planning
Define
Customer
Needs
Conduct
Competitive
Analysis
Evaluate
Industry
Environment
4.
3.
Define
Potential
Markets
6.
5.
Data Gathering
Conduct
Internal
Analysis
Determine
Target
Market
7.
Evaluate
Financial
Viability
8.
Plan Value
Optimization
Analysis & Evaluation
Consistent Client Interaction & Input
43
1. Define Customer Needs
Sub-Process
Objective
• Evaluate alignment
of provided benefit
with the needs of
customers
Define the benefit
to be provided or
the void to be
filled with the new
alternative
Translate
perceived benefit
into necessary
features &
attributes
Briefly examine
the level of
customer
satisfaction
provided by
existing
alternatives
Tips & Key ?s
• Approach this objectively—avoid a
“client bias”
• Is this a B2B or B2C situation?
• What do customers want? Does this new
product give it to them?
• Does this new alternative better serve
their needs?
Tools
Rank the
measurable
attributes by their
respective
importance to
customer
Consider the
relative customer
risks and costs of
switching from
existing benefitprovisionary
source, if any, to
new alternative
Evaluate client’s
product
performance in
terms of weighted
attributes
Make preliminary
judgments as to
the product’s
overall
attractiveness in
light of existing
alternatives
Outputs
• Interest/ Needs Survey
• Perceived benefit desired/ required by customer
• Laddering Interviews
• Product attributes associated with said benefit &
relative importance to customer
• Prototyping
• Early determination of client product’s
marketability (attractiveness to customer)
44
1.1 Interest/ Needs Survey
Tool
Process
• Develop for
distribution and
reclamation a survey
targeted for the
informational needs
of the team
• Assign appropriate
and meaningful
metrics for ready
compilation
• Accumulate and
interpret acquired
data without bias
Representative
questions from
a recent survey
pertaining to
Target vending
machines
The Objective: to
determine a target
market need for
vending machines of
this nature, as well
as consumer
receptiveness to
vending machines of
this nature
1. Please rate the importance of the following attributes in your selection of a
retail store by circling the appropriate number.
Not At
All Important
Price
1
Product selection
1
Operating hours
1
Payment methods
1
Merchandise quality 1
Product Refundability 1
Customer service
1
Location
1
Extremely
Important
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
7
7
7
7
7
7
7
7
16. The following is a list of items that can be purchased from a Target vending
machine. Please rate the likelihood that you would purchase these products from
the vending machine by circling the appropriate number.
Not at All
Likely to Purchase
Sun block
1
Aspirin
1
Lip balm
1
Hand Lotion
1
Mouthwash
1
Toothpaste
1
Toothbrush
1
Soap bar
1
Music CD
1
CD carrier
1
Notebook
1
Disposable Camera 1
Camera Film
1
Extremely
Likely to Purchase
2
2
2
2
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
6
6
6
6
6
6
7
7
7
7
7
7
7
7
7
7
7
7
7
Notes/ Implications
• Be careful during survey creation not to inadvertently formulate or include questions that may contain a bias
• Collecting data is important, but the analytical interpretation is essential to the engagement
45
1.2 Laddering Interviews
Tool
Process
•
•
•
•
1-on-1 interviewing
technique capable of
establishing key consumer
associations between
product attributes and
meaningful values
By repeatedly asking
probing questions of
consumers, a value map
specific to the relevant
provided benefit can be
developed that associates
attributes to
consequences, and
consequences to values
This probing allows greater
understanding of consumer
behaviors, wants, and
needs
The resulting ladder of
perceptual orientations is
useful for distinguishing
between products in a
given product class
Representative interview questions
(posed to Diet Coke champion)
•Interviewer elicits as many product
attributes from the respondent as
possible and then probes further…
•Interviewer: You indicated that you enjoy
Diet Coke because it doesn’t have calories.
Why is this important to you?
Hierarchical Value Map: Diet Coke (1 champion/ 2 attributes)
SELF ESTEEM
SOCIAL ACCEPTANCE
Self-evaluation
determined by
appearance
ACCOMPLISHMENT
Weight is key
determinate of
social
acceptance
for women
Reward /
Compensation
Immediate
fulfillment of
need
•Respondent: I like to stay fit.
•Staying fit is important to you?
•Sure, I like to look good.
•Why is looking good important to you?
Gain respect of
others through
physical
appearance
Society values
youthful
appearances
•I want to look good; people are judged by
their appearance. I care what others think o f
me.
•Do you feel that you are being judged?
•Of course! People are constantly judging
me; and as a woman it is all about
appearance.
•What specifically about appearance do you
think is important?
Desire to be
athletic and
attractive
Available
almost
anywhere
Bright, energetic,
youthful
appearance
No Caloric
Content
Ready-totransport
containers
Bottle
•For women? Weight is the biggest issue.
Notes/ Implications
• Key Questions: “Why do people not buy my product?” & “Why do people buy my product?”
• It is most beneficial to conduct multiple interviews, with both non-users and product champions to acquire
the most valuable insights into consumer motivations and behaviors
46
1.3 Customer Prototypes
Tool
Not-For-Profit Adult English-Language Education--segment-specific customer
Process
• Imagine and define people
within specific target
segments in an attempt 1) to
gain a multi-dimensional view
of the customer for whom the
client will provide benefit and
2) to gain insight into the
unarticulated needs of said
customer
• Base profile on certain key
?s: Why does she/he use
require this benefit? How
does this person see
her/himself? What is
important to her/him? What
are her/his ambitions? Who
does she/he want to
impress? What is her/his
idea of the perfect vacation?
• Repeat this process until
customer profiles begin to
overlap, and then compile
common characteristics/
goals/ values for client’s
marketing mix
Horacio Castro has just entered the United States illegally at the age of seventeen. Crossing
the border with the aid of an established smuggling organization, Mr. Castro is eager to recover
his US$3,500 cost of entry into America. Mr. Castro has settled in Chicago to reap the benefits
of the city’s large labor market, and to utilize his existing familial ties within the city. Mr. Castro
is here primarily to earn money, the vast majority of which will be sent to his rural home in the
Durango Province of Mexico. In Mexico, his mother and five younger siblings will use the
money to improve the drainage of their small field and purchase those necessities which they
cannot provide for themselves. Horacio’s motivations are clear: earn as much money as
possible to facilitate a quick return to his Mexican homeland. He has chosen this path as
opportunities in Mexico are limited for a man lacking formal education and familial influence.
Learning the meat-packing trade from his uncle, Horacio has secured a position in the same
plant in which his uncle has labored for twelve years. While his expenses are low (he lives with
his uncle’s family free of charge), Horacio recognizes the economic advantages associated with
English abilities. His supervisor is a bilingual immigrant from Mexico City, valued for his ability
to understand and communicate the motivations of both laborers and management. Horacio
wants to emulate this successful supervisor and not his uncle, who having never learned
English is still a laborer. In his mind, Horacio struggles with the barriers: he has little
educational training, no English-speaking acquaintances, little disposable income with which to
procure an education, no knowledge of the available educational opportunities, and little
available time with which to take any classes. Horacio is discouraged by the barriers, but he
feels there must be a way to learn English.
Notes/ Implications
• The results of this profile-layering have significant importance to the client’s ultimate
marketing strategy
47
2. Evaluate Industry Environment
Sub-Process
Objective
• Determine the client’s
ability to enter and
compete within the
industry
• Identify potential
opportunities for
further exploration
Tips & Key ?s
• Do existing industry players actively
discourage new entrants?
• Is the industry growing? Has the
industry been stable? Is growth likely to
continue?
• Is technology an issue? If so, where
along the curve are current alternatives?
Determine chief
economic traits of
the industry
(growth rates,
trends)
Identify the
drivers of change
within the industry
Identify the
relative strengths
& weaknesses of
existing industry
players
Tools
Determine the
impact of external
entities upon the
industry
(government
regulation, social
goodwill, etc.)
Identify key
success factors
within industry
Identify barriers to
entry, if any, &
evaluate them with
respect to client’s
strengths/
weaknesses
Make a judgment
as to overall
industry
attractiveness
Outputs
• Structure-ConductPerformance Articulation
• List of industry players ranked according to
strength/ position
• Porter’s Five Forces Model
• Clear understanding of resources & capabilities
required for industry success
• Externalities Mapping
48
2.1 Structure-Conduct-Performance Articulation
Tool
Process
• To identify the structure
of the industry, the
dominant conduct of
incumbents, and the
resulting performance of
firms
• To define the relationships
illustrated at right, the
following industry conditions
must first be considered:
Consumer
Elasticity of demand
Substitutes
Seasonality
Rate of growth
Location
Lumpiness of orders
Method of purchase
Production
Technology
Raw materials
Unionization
Product durability
Location
Scale economies
Scope economies
Structure
•Numbers of buyers
•Numbers of sellers
•Barriers to entry facing new firms
•Product differentiation
•Vertical integration
Conduct
•Diversification
•Advertising and marketing
•Research and development
•Pricing behavior
•Plant investment
•Legal tactics
•Product choice
•Collusion
Performance
•Profits
•Product quality
•Production efficiency
•Technical progress/ progressiveness
•Allocative efficiency
•Equity
Notes/ Implications
• Threat of entry is stronger when…entry barriers are low, a sizable pool of entry
candidates exists, incumbents are unwilling or unable to contest a newcomer’s entry
efforts, and/or newcomers can expect to earn attractive profits
49
2.2 Porter’s Five Forces Model
Tool
Process
•Assess strength of each
of the five competitive
forces (Strong?
Moderate? Weak? )
•Explain how each force
acts to create
competitive pressure.
What are the factors
that cause each force to
be strong or weak?
•Decide whether overall
competition (the
combined effect of all
five competitive forces)
is brutal, fierce, strong,
normal/moderate, or
weak
Personal Computer
Industry
Supplier Power:
Very High
Intel and Microsoft
extract all industry
profits.
Substitutes: Low to Moderate
Increasing competition from hand
held/ portable computing devices
Rivalry: Very High
Intense price competition
Excess capacity and
saturation. Some brand
recognition, but PCs thought
of as commodities
Buyer Power:
High and Rising
Low switching
costs, Less brand
loyalty.
Resellers and
retailers
have grip on
end users
Threat of Entry: Moderate to High
Low capital costs of manufacturing
Relatively easy to assemble PCs
Some brand recognition and loyalty
Notes/ Implications
• Key questions to better understand the ferocity of competition within the industry:
Is price competition vigorous? Active efforts to improve quality? Are rivals racing
to offer better customer service? Lots of advertising/sales promotions? Active
product innovation? Active use of other weapons of rivalry?
50
2.3 Externalities Mapping
Tool
The Economy at
Large
Process
• Define and evaluate the
impact of existing and
potential forces outside
of the industry that
may impact the
industry and/ or the
industry
• With externalities
more clearly defined,
threats and
opportunities can be
more easily identified
and anticipated
Suppliers
Rival
Firms
Substitutes
CLIENT
Buyers
Potential
Entrants

IMMEDIATE
INDUSTRY AND
COMPETITIVE
ENVIRONMENT
Notes/ Implications
• It is important to evaluate external forces in both the near and far terms, as the client’s
survivability and sustainability are key foci for analysis
51
3. Define Potential Markets
Sub-Process
Objective
• Define markets within
which the client’s product
is appropriate and
potentially well-received
• Divide the large market
into smaller ‘pieces’, or
customer groups with
similar needs and/or
desires
Tips & Key ?s
• Where can we play, and who is playing
already? Against whom will we compete
most successfully?
• Is this a B2B or B2C situation?
• Quick calculations with realistic
assumptions often prove useful:
To estimate market size for new garage
storage devices we have the following…
•65M garages, 68% of which are ≥2
car; given 1.5% of available population
invests $1K; potential for $1B sales
Define the
markets available
to client in terms
of size, age,
maturity,
technology, etc.
Specify the
characteristics of
each market and
their overall
alignment with the
client’s product
and goals
Tools
Identify the key
players in each
potential market
and their
respective
positions within
said market
Rank the available
markets by
attractiveness/
receptiveness to
client’s product
Outputs
• Segmentation Scheme
• List of markets by potential receptiveness
• Product Sector Articulation
• Ranked list of existing competitors within identified
markets
52
3.1 Segmentation Scheme
Tool
Determine Which Segmentation Variables to Use
Process
•Define distinct customer
groups with that have
one or more problems/
needs which could be
solved/ serviced in one or
more ways
1.Establish segment
variables that yield mutually
exclusive and exhaustive
segments
2.Develop Segment Profiles
3.Evaluate Segments for
their viability and
preliminary “attractiveness”
Develop Market Segment Profiles
Evaluate Relevant Market Segments
Segmentation Variables
User-Related
•Demographics: Age, Gender,
Race, Ethnicity, Income, Education,
Occupation, Family Size, Family
Life Cycle, Religion
•Social Class
•Geographic: Region, Urban,
Rural, City Size, County Size, State
Size, Market Density, Climate,
Terrain
•Lifestyles & Psychographics
Behavioral
•Benefits
•Usage
•Price
•Brand
•Situational
Are acquired segments viable?
Measurable
• Size, purchasing power, profiles of segments can be
measured
Actionable
•Must be able to attract and serve the segments
Substantial
•Segments must be large or profitable enough to serve
Differential
•Segments must respond differently to different
marketing mix elements & actions
Accessible
•Segments must be effectively reached and served
Notes/ Implications
• Segmentation scheming not only defines potential markets, but also serves as an essential
component of the client’s ultimate marketing mix decision
53
3.2 Market Sectoring Analysis
Tool
Process
•Establish current
market make-up in
hopes of identifying
sectors within which
client could best position
for success
5%
Toy Market Sectors
Dolls/Figures
13%
Activity/ Construction
Games
19%
Indoor Games
9%
Infant/Pre-School Toys
Model-Wheeled Vehicles
Soft/Plush Toys
7%
Outdoor Games
Other Toys and Games
9%
6%
Intelligent Toys
Consoles
9%
2%
9%
4%
8%
Console Games
Computer Games
Notes/ Implications
• Sectoring provides a nice snapshot of customer groups as defined by the existing market;
it can also be used to identify “holes” in structure representative of unfulfilled customer
groups
54
4. Conduct Competitive Analysis
Sub-Process
Objective
• Determine the
conditions upon
client’s industry
entrance
• With conditions
established, threats
and opportunities can
be better evaluated
and anticipated
Determine the
strengths/
weaknesses of
each competitor
within each
available market
Understand the
characteristics of
each competitor
that grants
survivability in
short and long
terms
Identify voids
within the market
for possible
exploitation by
client
Determine the
ability of
competition to
counter client's
introduction
• Identify opportunities
for client introduction
Tips & Key ?s
• Will competitors have the ability to
react? How quickly?
• Will customers make the switch? What
are their costs of switching?
Tools
• Positioning Articulation
• Perceptual Mapping
• Value Mapping
Outputs
• List of those factors which dictate and indicate success within
the industry
• Clear understanding of which existing players will move/ be
able to counter client’s actions
• Do not underestimate the speed and
ferocity of competitive reaction
55
4.1 Positioning Articulation
Tool
Student-Staffed
Consulting
Process
•Determine the
competitive
positioning
within the
marketplace
•Identify holes,
potentially
representative
of untapped
markets, for
further
exploration
Primarily
Fortune 500
Quality
Management
Consortium
MBA Consulting
Program
OSBI
Austin Power
Low Student
Participation
Carlson
Business Consulting
Network
Center for Experiential
Learning
High Student
Participation
Community
Consulting
The MBA
Consulting
Project
Darden Business
Projects
Freeman Consulting
Group
Primarily Start-up
Companies
Notes/ Implications
• With positioning articulated, unfulfilled customer groups or needs can more readily be identified
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4.2 Perceptual Mapping
Tool
Liquid Detergent Market
Process
•Evaluate the
current players
and their
respective
abilities in light
of all-important
consumer
perceptions
Long-lasting
suds
Most pleasant fragrance
Mildness
Overall
Cleaning
50%
Best Value
for money
100%
Leaves dishes
shiny
Competitor
#1
#2
#3
Cutting Grease
Removing
baked-on foods
Notes/ Implications
• By mapping perceptions, the relative strengths & weaknesses of competitors becomes clear
• What are the respective foci of competitors, and how do consumers perceive them in the marketplace?
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4.3 Value Mapping
Tool
Price Value Map of the Toothpaste Industry, 1992
Process
$2.80
Oral-B
Regular
$2.60
Oral-B
Indicator
$2.40
Aquafresh Flex
Price
$2.20
$2.00
Pepsodent
Professional
$1.80
Colgate
Plus
Reach
Advanced
Reach
Regular
$1.60
Price
•Determine the current
value-price orientation
prevalent in the industry
•Define the customer
groups to which major
competitors cater (pricesensitive or qualityfocused)
•Identify areas of the
existing value
orientation scheme
within which client could
capture value
$3.00
$1.40
$1.20
Pepsodent
Regular
Colgate
Classic
$1.00
Perceived
Perceived Performance
Benefits
Notes/ Implications
• Use the acquired value map to identify holes in the market’s current pricing scheme;
where large gaps exist between products on the value line, there exists opportunity for
new product introduction
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5. Conduct Internal Analysis
Sub-Process
Objective
• Determine the client’s
ability to successfully
launch her/his
provided benefit
Tips & Key ?s
• Take care to avoid the “client-bias;” all
analysis should be realistic and not
overly-optimistic
• Is now the time? Does the client have in
place what is necessary to be successful?
Determine
internal strengths
& weaknesses of
client
Tools
• Activity Map
• SWOT Matrix
Identify areas to
be improved in
both the short and
long terms and
prescribe methods
to effect stated
improvements
Evaluate the
client’s existing
and likely
resources and
capabilities with
respect to key
success factors of
industry and
available markets
Make judgments
as to the viability
of client’s success
(begin formulating
likely scenarios
representative of
varying degrees of
success)
Outputs
• Understanding of client’s ability to effect a successful product
launch
• Realistic view of existing resources & capabilities, and the
relative strength or weakness of each
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5.1 Activity Map
Tool
Process
Southwest
Airlines
• Evaluate the existing
strategic coherence of
the client’s current and
planned activities
• Identify the higherlevel activities and then
list those actions
undertaken and
policies adopted to
support main actions/
initiatives
No
meals
No
assigned
seats
15 min.
turnaround
High
employee
compensation
No connections
Point-to-Point
flights
Frequent
Departures
Flexible
Union
contracts
Limited
Passenger
Amenities
No
transfers
Lean
and
productive crew
Employee Stock
ownership
Limited use
of travel agents
Automatic
Ticketing
machines
Standard
fleets
Low prices
High aircraft
utilization
Notes/ Implications
• The more relationships/ linkages that exist among current activities, the more
coherent and integrated is the firm’s strategy
• Planned activities can and should be evaluated for cohesion with existing activities
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5.2 SWOT Analysis
Tool
Process
• Complete the matrix as
shown, with careful
focus upon
recommendations
arising from the
analysis
Opportunities (O)
List external
opportunities
Threats (T)
List external threats
Strengths (S)
List internal strengths
Weaknesses (W)
List internal weaknesses
SO Strategies
Generate strategies here that
use strengths to take
advantage of opportunities
WO Strategies
Generate strategies here that
take advantage of opportunities
to overcome weaknesses
ST Strategies
Generate strategies here that
use strengths to avoid
threats
WT Strategies
Generate strategies here that
minimize weaknesses and avoid
threats
Notes/ Implications
• This model can at times seem academic in nature, but the recommendations that can
be created as a result of completing are often of use; however, avoid specific
references to SWOT analysis in client communications and deliverables
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6. Determine Target Market
Sub-Process
Objective
• Select the appropriate
target customer group
by evaluating
alignment of the
client’s provided
benefit and resources/
capabilities with the
needs of customers
Tips & Key ?s
• What benefit is the client providing, and
to whom can she/he best provide it?
• Who is the client selling to? Who is the
end-consumer?
Match the
clients
resources &
capabilities
with those of
the available
markets
Best align the
benefit to be
provided with
the needs of
customer
comprising
each available
market
Tools
• Use sound judgment and offer
recommendation based in
previous analytical outcomes
Identify key
aspects of
target market
above, on, and
below the
surface (size,
income levels,
complementary
preferences,
etc.)
Select given
analysis the
necessary and
appropriate
target to
maximize
impact for
client
Outputs
• Final determination of target market replete with
major/ minor characteristics
• Refine judgments as to the market’s
receptiveness
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7. Evaluate Financial Viability
Sub-Process
Objective
• Define likely scenarios
and determine
immediate and longterm survivability
given each
• This is the “go” or “no
go” stage, in which the
team must make final
judgments as to
overall feasibility
Define all
investments
necessary to
launch and beyond
Establish likely
scenarios for
analysis by
defining key
variables
(customer
reception, pricing
issues, distributor
acceptance
market
penetration)
Assess the
financial viability
of launch with
respect to each
scenario and with
due consideration
to client’s stated
objectives
Assign
probabilities
where possible
and calculate a
range for client’s
return on
investment
Make final judgment: Should the client go ahead with this project?
Tips & Key ?s
Tools
• Be careful to include for analysis all
costs, immediate and future, actual and
opportunity
• What do customers want? Does this new
product give it to them?
• Does this new alternative better serve
their needs?
• Make informed assumptions as necessary
• Pro Forma Financials w/ Scenario
Analysis
• Sensitivity Analysis
• Monte Carlo Simulation
Outputs
• Perceived benefit desired/ required by customer
• Product attributes associated with said benefit &
relative importance to customer
• Early determination of client product’s
marketability (attractiveness to customer)
63
7.1 Pro Forma Financials
Tool
New Restaurant…Yes or No?
Process
• Establish the available
facts and allow for the
necessary variables
• Devise a form which
accounts for these
considerations at different
variable values
• Employ facts/ fixed
numbers wherever
possible, constraints
whenever applicable, and
various revenue states
dependent upon
penetration scenarios
• Assign probabilities where
possible to allow for final
determinations
• Make assumptions when
necessary to further the
analysis (oftentimes the
number of assumptions far
outweigh hard facts)
Pro Forma Statement (Monthly)
Constraint: Average Dinner
Price*
Revenue
$138,660.12
Variable Costs
$42,012.38
Fixed Salaries
$38,000.00
Materials and Supplies
$4,500.00
Depreciation (Equipment)
$4,000.00
Advertising
$15,000.00
General Overhead
$30,000.00
Fixed Costs
$46.07
$60,046.88
Total Direct Costs
$102,059.25
Contribution/ Profit
$36,600.87
Notes/ Implications
• Fixed costs and per-unit variable costs can usually be treated as facts, while revenues are entirely
dependent upon the degree of market penetration
• Projects that do not meet established objectives (profit %, break-even, positive NPV, risk mitigation,
etc.) should not be pursued further
64
7.2 Sensitivity Analysis
Tool
Process
• Identify the variables to be
used and establish ranges
for their likely values
NPV Analysis using 2 variables to evaluate the introduction of a new brand
P&G Liquid Detergent Market
• Use these ranges to
calculate the multiple
outcomes dependent upon
variable levels
• Eliminate those variable
combinations, if any, that
are unlikely are immaterial
• Use the remaining
outcomes to calculate a
representative final figure
Notes/ Implications
• Dependent upon the values assigned to each variable, NPV results are positive or negative; in the above
example the outcomes are most often positive
• Eliminating unlikely scenarios often helps to clarify the resultant outcomes (ie those values close to zero
for each variable are unlikely given P&G’s dominance, and can therefore be eliminated from actual
consideration)
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8. Plan Value Optimization
Sub-Process
Objective
• Develop key
recommendations to
capture value
• Dependent upon
project scope, this may
be only preliminary in
nature while still
reflecting the wealth of
accumulated analysis
Tips & Key ?s
• What benefit is the client providing and
to whom, and how will he/she extract
value (ie make money)?
• Is now the time for an “all-in”
commitment? Or is the client betterpositioned by waiting for market forces
and/or additional capabilities?
Business Strategy:
How will the
client extract
value by providing
benefit?
(Differentiation or
Cost Strategy?)
Marketing
Strategy:
How can the client
best position the
benefit to be
provided?
Exit Strategy:
Provide for the
client options for
abandonment if/
when exit
becomes
appropriate
Tools
• Strategic planning cumulative of
all acquired information and
completed analysis
Operating
Strategy:
How should the
client deliver the
benefit to be
provided?
Determine the
efficacy of staged
involvement to
minimize overall
risk exposure
during pre-launch
Risk Strategy:
Identify the
elements of risk
and account/
prescribe for their
mitigation as
possible
Develop for
application a
means of
monitoring
success on
relevant measures
to facilitate
continuous
improvement
Outputs
• Perceived benefit desired/ required by customer
• Product attributes associated with said benefit &
relative importance to customer
• Early determination of client product’s
marketability (attractiveness to customer)
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Final thoughts

Have fun and learn!!

Take this seriously- your client and all OSBI Consulting
Leadership and the College of Business Administration

This is a relationship business

There are many resources available to you

You can contribute to the success of OSBI Consulting

Continually look for ways to leverage your experience with OSBI
Consulting

Remember that we are a “real” consulting firm
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