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Marketing Strategy > Lecture 2: Resource allocation > Flashcards

Lecture 2: Resource allocation Flashcards

1
Q

what are the 2 dimensions of resource allocation

A

horizontal and vertical

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2
Q

what does horizontal RA consist of

A
  • strategic dimension
  • portfolio management
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3
Q

horizontal RA

A
  • different products or brands
  • most strategic level
  • complicated
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4
Q

vertical RA

A
  • secondary decisions (i know i want to invest in brand A but how)
  • 4Ps are important (should i invest in price reduction or promotional campaigns)
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5
Q

why is portfolio management necessary

A
  • avoid cannibalisation
  • avoid redundant brands
  • don’t forget about old brands
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6
Q

types of portfolio management:

A
  • branded house
  • house of brands
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7
Q

branded house

A

put the brand name on everything that you do
- eg Virgin

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8
Q

branded house disadvantages

A
  • halo effect: if you (dont) like virign you (wont) will buy the other brands
  • can only target those that like the Virgin brand
  • consist image
  • synergy effect
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9
Q

branded house advantages

A
  • pour all resources into one big brand and then roll out different categories -> efficient
  • consistent image
  • synergy effect
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10
Q

house of brands

A

one parent brand that rolls out different brands
- eg P&G, Unilever

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11
Q

disadvantage house of brands

A
  • build every brand up from scratch -> more expensive
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12
Q

advantage house of brands

A
  • risk management -> if one brand image gets damaged it doesnt affect the other brands
  • target different customer segments
  • can own both premium and value-driven brands in same category
  • can go for brand associations most valuable in every category
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13
Q

disadvantage of large brand portfolios eg Unilever or P&G

A
  • fragmentation of marketing resource, opportunity cost
  • destroying economies of scale
  • management attention dilution
  • brand blurring: brands start loosing meaning because they stop serving most important function
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14
Q

BCG matrix

A
  • helps managers decide what to invest in and what to deinvest
  • profits lag the development of the market
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15
Q

relative market share

A
  • horizontal axis
  • how do i define the market or segment
  • 1 is midpoint = duopoly, 0=monopoly
  • high zone = market leaders
  • calculated by your market share/ LARGEST competitor market share
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16
Q

market growth rate

A
  • vertical axis
  • more subjective -> mid point depends on market and industry
  • it is the same for all brands in that segment
  • is it NOT about how much the brand is growing but about the market
  • good to compare matrices over time
17
Q

cash cow

A
  • high RMS, low MG
  • in rapidly growing markets, costs are higher and competition is more intense hence CC make more money than stars
  • CC are in mature markets hence higher profits
  • resources should come from CC and be invested into ? which turn into star or dog.
18
Q

advantages BCG

A
  • easy to perform
  • quick overview of strategic positions of business portfolio
  • good starting point for more thorough analysis
  • everyone known it
  • clients expect it
19
Q

evolution BCG

A
  • Stars should become cash cows eventually, that is our goal
  • Dogs should be retired, they do not serve a very long-term function and it is usually too late to turn
    them into cash cows
  • Dogs can become question marks when the market picks up growth again (they usually grow fastest at
    the beginning)
20
Q

disadvantages BCG

A
  • what about brands on the boundary
  • huge impact of market definition
  • no dynamic information which is crucial for RA
  • MS and industry growth doesnt equal profitability
  • defends the cash cow and dotcom mentality
  • synergies between units
21
Q

brand renewal matrix

A
  1. identify brand portfolio
  2. assess brand contribution
  3. asses market position
  4. sort by strategic importance
  5. brand portfolio plan
22
Q
  1. identify brand portfolio
A
  • not as straightforward
  • too much focus on prominant brands and risk neglecting older brands, underexploited equities, struggling brands, quasi brands/nicknames, partner brands
  • attentional blindness
23
Q
  1. assess brand contribution
A
  • how much is it adding to the firm
  • Look at P&L table, take contribution after marketing, deduct hidden costs (e.g. overhead, bad PR, management time, complexity of value chain) and add hidden benefits (e.g. supermarkets have to stock Sprite because they want Coca Cola, line extension possibilities)
24
Q
  1. assess market position
A
  • sort into problems and opportunities
  • brand traction: how strong is a brand today
  • brand momentum: where is the brand heading
25
Q
  1. sort by strategic imperative
A

Marketing Strategy (2 decks)

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