Page 64 - Foundations of Marketing

Planning, Implementing, and Evaluating Marketing Strategies | Chapter 2 31

a need for a biofuel not developed from corn or sugar-
cane. These two fuel sources can cause food shortages
and deforestation, respectively. KiOR developed a biofuel
using waste, not food— addressing a waste disposal prob-
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lem while producing fuel the nation needs. Corporate
strategy planners are also concerned with defining the
scope and role of the company’s business units so the units
are coordinated to reach the ends desired. The proactive
nature of a company’s corporate strategy can affect its
capacity to innovate.

Business-Unit Strategies

After analyzing corporate operations and performance,
the next step in strategic planning is to determine the
direction of the business and develop strategies for indi-
vidual business units. A strategic business unit (SBU)
is a division, product line, or other profit center within
the parent company. Nestlé, for example, has SBUs for
Confectionaries and Beverages. Each SBU sells a distinct
set of products to an identifiable group of customers and
each competes with a well-defined set of competitors.
The revenues, costs, investments, and strategic plans of an
SBU can be separated from those of the parent company AP Images/Lee Jin-man
and evaluated. SBUs face different market growth rates,
opportunities, competition, and profit-making potential.
Business strategy should seek to create value for the com-
pany’s target markets and attain greater performance, Corporate Strategy
Samsung’s corporate strategy includes frequent introductions of
which marketing research suggests requires implement-
newly designed, technologically advanced products.
ing appropriate strategic actions and targeting appropriate
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market segments.
Strategic planners should recognize the performance capabilities of each SBU and care-
fully allocate resources among them. Several tools allow a company’s portfolio of SBUs, or
even individual products, to be classified and visually displayed according to the attractive-
strategic business unit
ness of markets and the business’s relative market share. A market is a group of individuals (SBU) A division, product line,
and/or organizations that have needs for products in a product class and have the ability, or other profit center within the
willingness, and authority to purchase those products. The percentage of a market that actu- parent company
ally buys a specific product from a particular company is referred to as that product’s (or market A group of individuals
business unit’s) market share . Google, for example, controls 67 percent of the U.S. search and/or organizations that have
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engine market share. Product quality, order of entry into the market, and market share have needs for products in a product
8
all been associated with SBU success. class and have the ability,
One of the most helpful tools for a marketer is the market growth/market share matrix , willingness, and authority to
purchase those products
developed by the Boston Consulting Group (BCG). This approach is based on the philoso-
phy that a product’s market growth rate and its market share are important considerations in market share The percentage
determining marketing strategy. To develop such a tool, all of the company’s SBUs and prod- of a market that actually buys a
specific product from a particu-
ucts are integrated into a single matrix and compared and evaluated to determine appropriate
lar company
strategies for individual products and overall portfolio strategies. Managers use this model
market growth/market share
to determine and classify each product’s expected future cash contributions and future cash
matrix A helpful business
requirements. However, the BCG analytical approach is more of a diagnostic tool than a guide
tool, based on the philosophy
for making strategy prescriptions.
that a product’s market growth
Figure 2.3 , which is based on work by the BCG, enables a strategic planner to classify a rate and its market share are
company’s products into four basic types: stars, cash cows, dogs, and question marks. Stars important considerations in
are products with a dominant share of the market and good prospects for growth. However, determining its marketing
they use more cash than they generate in order to finance growth, add capacity, and increase strategy

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