A strategy determines how a company is going to compete. Some strategic models also provide objective tools to evaluate the quality of marketing plans. In other words, whether the right mix of resources is dedicated to each element in the marketing mix: line extensions (new products), advertising, pricing, service, direct sales, or consumer and trade promotions (campaigns). This for each product in your portfolio.
Last year I had the pleasure of applying some models which I had long "forgotten" to a client's portfolio.
- Product Life Cycle. Uses the life cycle stage each product is in (development, introduction, growth, maturity or decline) to help you determine for each product in your portfolio the right mix of resources and the level of profitability you should aspire to achieve. The PLC model has been around long and is quite readily applicable.
- Boston Consulting Group Matrix. Uses your market share and overall market potential to determine marketing objectives and resources to dedicate to each element of the marketing mix.
- Trout's Strategic Square. Uses your market share relative to that of competitors to determine marketing objectives: defend market share, attack the market leader, avoid the him or be a guerrilla.
For all some data, market intelligence and forecasting ability is needed. How to get the data?
Porter's Competitive Strategy. Uses SWOT analyses of yourself and your competitors to determine how to compete. It's a great model, which I studied at length when in school and which continues to be used extensively today. Unfortunately, there are few objective measures to determine your or your competitors' strengths or weaknesses, or which of these are relevant. Even the opportunities and threats facing the organization are not obvious. Hence, SWOT analyses often turn out to be an exercise in bias and subjectivity. A consultant should be able to be more objective. But, the first time I did so honestly (in 1995), I was fired on the spot.
These old tools still provide great value when used properly and I am gradually turning my strategic planning course into postings on my Business Coaching Blog.
ReplyDeleteI have seen the rush to keep on finding the next new big thing or fad and keep on wanting to say to people, use what we already have.
The product life cycle (by coincidence the next strategy subject I will be writing about) and the BCG matrix may have been around for over 40 years but they still have much to contribute.