Corporate Strategy and ROI Analysis Quiz

Business-to-Consumer Marketing

• This presentation is about business-to-consumer marketing.
• The presenter is Prof. Dr. Valerie Wulfhorst.
• The institution is Fachhochschule Südwestfalen.
• The goal is to create momentum.

Agenda

• Marketing definition and goals.
• Marketing strategy.
• Analysis of the initial strategic situation.
• Formulation, evaluation and selection of marketing strategies.
• Marketing mix.
• Product.
• Price.
• Sales.
• Communication.
• Customer relationship management.

Key Aspects of Marketing Strategy

• An Initial Overview of the Marketing Strategy Concept.
• The 'Classics' of Strategic Success Factor Research.
• The Marketing Strategy Development Process.

Learning Objectives

• Different types of company strategies and marketing objectives.
• Various strategy levels in companies and how they relate to each other.
• PIMS (Profit Impact of Market Strategies) research and critical evaluation of the PIMS Project.
• Experience curve model and its impact on strategic marketing, along with critical evaluations.
• Life cycle model, critical evaluation, and strategic marketing implications.
• Individual steps in developing marketing strategies.

Overview of Marketing Strategy Concept

• Different types of company strategies and marketing objectives.
• Various strategy levels in companies and their interrelationships.

What is Strategy?

• Limits choices, simplifies decision-making.
• "Many roads lead to Rome" (multiple options).
• Focused on achieving goals with plans, policies, and principles.
• Involves consistency, integration, cohesiveness.
• Long-term perspective.

Corporate Strategy

• Defines company orientation, long-term.
• Aligning the company's overall strategy with objectives.
• Establishing financial and non-financial objectives.
• Defining relevant markets and SBUs(Strategic Business Units).
• Distributing resources across SBUs.
• Defining strategic measures scope for SBUs and functions.
• Developing and exploring strategically relevant resources and capabilities.

System of Company Objectives

• Hierarchical structure of objectives.
• Business mission → company objectives → functional objectives → instrumental objectives.
• Links long-term objectives to financial and non-financial goals.
• Breakdown of objectives to SBU and functional levels (including marketing).

Examples of Business Missions

• Steve Jobs (Apple): advance humankind by providing tools for the mind.
• Harley-Davidson: the journey, not the destination.
• IKEA: creating a better everyday life for people.
• Nike: just do it.

Example: Business Mission/Values of Tesla

• Goal: To accelerate the advent of sustainable transportation, starting with compelling electric cars.
• The company faced early challenges regarding economies of scale and affordability.
• Initial focus on a sports car model for market competitiveness.

Example: Business units at Mercedes-Benz

• Mercedes-Benz AG, Daimler Truck AG, Daimler Mobility AG.
• Examples of different business units.

Example: Mercedes-Benz "Cars" Strategy (SBU)

• Goal: To develop the world's most desirable cars.
• Focus on profitable growth, expanding customer base, leading in electric drive and digital experience.
• Emphasis on sustainability, integrity, and diversity.

Marketing Objectives of a Company

• Objectives related to potential market success prerequisites.
• Objectives focusing on market success based on actual customer behavior.
• Financial objectives aligning with conventional economic success factors.

Systematization of Marketing Objectives

• Categorization of objectives based on potential, market success, financial performance.
• Examples: familiarity with the company, company image, service quality, customer attitudes, customer satisfaction, sales, market share, customer loyalty, buying frequency, customer equity, pricing levels.

Goals of Marketing - the Value-Based View

• Marketing decision → non-financial performance → financial performance → circular approach relating marketing to corporate performance.

Marketing Performance Chain

• Marketing actions (Product, Price, Place, Promotion) → Marketing Assets (Customer Satisfaction, Customer Retention, Quality, Brand Value, Customer Value, Defection Rate, Image, etc.) → Value-Based Performance (EVA, CVA, ROCE, CFROI, etc.).

Differentiation of Strategies According to Level in the Organization

• Hierarchical structure of strategies, from corporate to business unit to functional strategies (including procurement, production, marketing).
• Clear demarcation among strategies at different hierarchical levels.

Business Unit Strategy

• Competitive measures specific to a defined market.
• Strategic alignment of functions within the company.
• Marketing strategy positioning within wider strategic framework.

Different Approaches to Classifying Marketing Strategy

• Different perspectives on marketing strategy in relation to other functional strategies (personnel, production, R&D, procurement).
• Marketing strategy as one of several functional strategies versus a dominant strategy.

The "Classics" of Strategic Success Factor Research

• PIMS Project.
• Experience Curve Model.
• Life Cycle Model.

PIMS – Project Structure

• Data collection (Member companies, database, research).
• Analysis (analytical models, simulation, outputs).
• Strategic choices leading to ROI.

What is PIMS?

• Comprehensive long-term study of strategic business unit (SBU) performance across various industries.
• Aims to understand factors influencing SBU success, starting with General Electric in the 1950s.
• Data collection to characterize strategic competitive position.
• Data management by the Strategic Planning Institute (SPI).

The PIMS Database

• Data from five areas: competitive position, business environment, production characteristics, SBU strategy, budget allocation.
• ROI influenced by investment intensity, relative market share, and relative product quality.

PIMS - The ROI is Affected by the Following Three Key Influencing Variables

• Relative product quality (positive impact on ROI).
• Relative market share (positive impact on ROI).
• Investment intensity (negative impact on ROI).

Summary of Criticism of the PIMS Project

• Subjectivity in data, inadequate representation of certain SBUs.
• Limitations in analysis methods, neglecting interdependencies and time lags.
• Overemphasis on ROI, neglecting other success factors.
• Narrow scope of the model, not suitable for all types of businesses.
• Methodology limitations.

Experience Curve Model: Explanation

• Unit cost reductions over time related to the increase in production volume (repeated task).
• Cost reduction due to fixed cost degression, learning effects, and economies of scale.
• Potential cost reduction between 20%-30% by doubling production.

Empirically Determined Cost Reductions

• Table showing cost reduction percentages for various product types when production volume doubles.

Experience Curve

• Graphic representation of the experience curve showing cost reduction related to accumulated volume.

Experience Curve Model: Critical Evaluation

• Assessment needs consistent identity over a period, difficult for many products.
• Limited aspects for marketing strategizing.
• Relevance depends on market conditions and customer factors.
• Focus on standardized/high-volume products.
• Gaining cost advantage through high market share.

The "Classics" of Strategic Success Factor Research

• Summarizing points of discussion.

Sales and Profit Curves According to the Life Cycle Model

• Graphic representation of sales and profit based on product life cycle (Introduction, Growth, Maturity, Saturation).
• Characteristics of each stage in terms of date of introduction, sales maximum, profit threshold, profit maximum, and re-entry into loss zone.

Life Cycle Model: Explanation

• Introduction (extensive marketing).
• Growth (demand increase).
• Maturity (full production, focusing on cost efficiencies).
• Saturation (re-launching, new products).

Characteristics of Market Life Cycle Phases

• Summary table listing characteristics (market growth, potential, market share, stability of market share, number of competitors) during different phases.

Characteristics of Market Life Cycle Phases

• Detailed explanation of different market life cycle phases encompassing customer loyalty, entry barriers, and technology as key factors.

Life Cycle Model: Critical Evaluation

• Simplifies reality by considering time as the primary variable.
• Limitations of empirical observations aligning with the S-shaped curve.
• Possibility for active management by companies through actions.

Product Life Cycle Types

• Diagrams showcasing different product life cycle patterns (ascending/descending curves).

Typical Strategic Behavior in the Various Life Cycle Phases

• How companies adapt marketing/pricing strategy, target markets, and product range across the phases of a product's life cycle.

Typical Strategic Behavior in the Various Life Cycle Phases

• Emphasizes communication, sales/distribution decisions, and actions undertaken across the different phases of a product's life cycle (introduction, growth, maturity, saturation).

The Marketing Strategy Development Process

• Steps involved in developing marketing strategies.
• Process of defining, evaluating, selecting, and implementing strategies.

Process of Strategy Development in Marketing

• Process of strategy development.
• Detailed steps/processes (analysis, formulation of alternatives, evaluating, selecting, implementation, and monitoring).

Kahoot!-Time

• Instructions for using the interactive learning tool Kahoot.