Definitely, it’s not every business that retains its stand in the market after a long while, some brands are born to perish within a short while. The threat of competitors and the rejections which they face from customers may not allow them to have the taste of time. For example; do you remember “2Go” and “ORKUT”? These are social community websites which almost got lost from the market due to weak strategies and strong competitors like facebook and twitter. But there still brands which live long lasting life without ending like pepsi and coke.
This is why I’ll take my time to discuss some invaluable marketing models in details so that you apply them to sustain your stand in the market. For the sake of space and time in today’s post, I’ll simply highlight them a bit:
1. Product Life Cycle:
Product life cycle consist of different stages that a product or brand must occupies in its life. There is a chance of missing one or more stage in product life cycle i.e. one product can be directly shift from introduction stage to decline. Market rejects these products and compels to die.
There are five stages in Product Life Cycle:
- Product Development or Research and Development Stage
- Introduction Stage
- Growth Stage
- Maturity Stage
- Decline Stage
All the stages will be explained later in a separate post.
2. Ansoff Growth Matrix
The Ansoff Growth matrix is another marketing planning tool that helps a business determine its product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.
The output from the Ansoff product/market matrix is a series of suggested growth strategies which set the direction for the business strategy.
These will be described in a different post, but they include:
- Market penetration
- Market development
- Product development
3. BCG Matrix
The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product’s market grows, the better it is for the company. This model categorises products in a portfolio as Stars, Cash Cows, Dogs and Question Marks, by looking at market growth and market share.
Placing products in the BCG matrix results in 4 categories in a portfolio of a company:
- CASH COW – a business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units.
- STAR – a business unit that has a large market share in a fast growing industry. Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
- QUESTION MARK (OR PROBLEM CHILD) – a business unit that has a small market share in a high growth market. These business units require resources to grow market share, but whether they will succeed and become stars is unknown.
- DOG – a business unit that has a small market share in a mature industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
This model will be elaborated and broken down for in another post.
4. McKinsey / GE Matrix
The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company’s strengths and helps exploit the most attractive opportunities.
The company must:
(1) Analyse its current business portfolio and decide which businesses should receive more or less investment, and
(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.
The two best-known portfolio planning methods are the Boston Consulting Group Portfolio Matrix and the McKinsey / General Electric Matrix (discussed below). In both methods, the first step is to identify the various Strategic Business Units (“SBU’s”) in a company portfolio. An SBU is a unit of the company that has a separate mission and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or even individual brands – it all depends on how the company is organised.
The McKinsey / General Electric Matrix
The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box. Firstly, market attractiveness replaces market growth as the dimension of industry attractiveness, and includes a broader range of factors other than just the market growth rate. Secondly, competitive strength replaces market share as the dimension by which the competitive position of each SBU is assessed.
5. 7 Ps – marketing mix
Product, Price, Place, Promotion, People, Process and Physical evidence – these elements of the marketing mix form core tactical components of a marketing plan.
Unique Selling Proposition is the concept that brands should make it clear to potential buyers why they are different and better than the competition.
7. Brand positioning map
This model allows marketers to visualise a brand’s relative position in the market place by plotting consumer perceptions of the brand and competitor brands against the attributes that drive purchase.
8. Customer Lifetime Value
Customer Lifetime Value is the concept used to assess what a customer is worth, based on the present value of future revenue attributed to a customer’s relationship with a product.
9. Loyalty ladder
This model shows the steps a person takes before becoming loyal to a brand as they move through the stages of prospect, customer, client, supporter and advocate.
As an extension of the traditional PEST model, this analysis framework is used to assess the impact of macro-environmental factors on a product or brand – political, economical, social, technological, legal and economic.
11. Porter’s Five Forces
The five forces are Rivalry, Supplier power, Threat of substitutes, Buyer power and Barriers to entry and are used to analyse the industry context in which the organisation operates.
12. Segmentation, Targeting and Positioning (STP Model)
This three stage process involves analysing which distinct customer groups exist and which segment the product best suits before implementing the communications strategy tailored for the chosen target group. Most products are sold to a specific group of people, referred to as a market segment, not to all consumers. Whilst this is easy to say it is harder to define the exact make-up of your market segment. This is the concept behind the STP Model, which stands for: Segmentation, Targeting, and Positioning. When you are able to target the right customers with the right message and positioning of your products or service success is closer. These three concepts play a significant role in marketing communications but need to be integrated into your overall plan.
This acronym stands for Situation, Objectives, Strategy, Tactics, Actions, Control and is a framework used when creating marketing plans.
14. McKinsey Growth Pyramid – Growth Strategy
This model is similar in some respects to the well-established Ansoff Model. However, it looks at growth strategy from a slightly different perspective.
The McKinsey model argues that businesses should develop their growth strategies based on:
- Operational skills
• Privileged assets
• Growth skills
• Special relationships
15. Value Chain Analysis
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business.
Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings:
(1) PRIMARY ACTIVITIES- those that are directly concerned with creating and delivering a product (e.g. component assembly); and
(2) SUPPORT ACTIVITIES, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities.
Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others (“out sourced”).
16. The 4 P’s Marketing Model
The 4 P’s of Marketing model enables you to better understanding your whole marketing process. It helps to match which products and services should be promoted to specific market segments. The 4 P’s are: Product, Place, Price, and Promotion.
17. The 4 C’s Marketing Model
In today’s market the customer is critical to your success and the 4 C’s Marketing Model helps you to view your marketing activities from your customers perspective. The 4 C’s stand for: Customer, Cost, Convenience and Communication. Each of these four topics plays a significant role in your organization’s overall marketing strategy.
18. Keller’s Brand Equity Model
Success of organizations often depends on the strength of their brand. Building your reputation is an essential part of any marketing communications plan. Keller’s Brand Equity model creates a four-tier a pyramid – with lowest tier being ‘Identity’ working up through ‘Meaning, then “response’ to the top tier ‘Relationships.’ Long-term success is based on building your organization’s pyramid solidly from the ground up.
19. Pricing Models
Organizations use pricing models to help identify the ‘best’ price at which to sell their product or service. Understanding how much a customer is prepared to pay is essential to success. The four pricing models described are: Cost-based Pricing, Market Pricing, Portfolio Pricing, and Freemium Pricing.
20. AIDA + S Theory
AIDA – an acronym for Attention, Interest, Desire & Action – is a mantra that’s been widely adopted by the marketing & advertising industry. Over time, AIDA evolved into AIDAS, with the ‘S’ denoting ‘Satisfaction’. AIDAS outlines the steps a customer goes through when purchasing a product or service – right from initial interaction with a brand to his or her post-purchase state of mind. AIDAS is an important concept to keep in mind when defining marketing, advertising and sales practices. It helps fine tune different stages of interaction with prospective buyers, and highlights the importance of a win-win situation at the end of these interactions.
NOTE THAT: Each of These Models Will Be Discussed in Details Separately in Different Posts.
(Referencing: Dr Dennis Mark Laxton)