Information to use marketing tools and complete the analysis and decision-making
Strategy in business is a fundamental and technical aspect of any organization. The success in achievement of a company’s objectives and goals heavily relies on the company’s ability to formulate maintain and sustain a viable business strategy. It therefore falls upon every company to make prompt strategic plans that involve developing and maintaining a strategic fit between the organizations objectives and goals and the available market opportunities.
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Analysis of a company’s portfolio requires certain pertinent information that can be derived from the six major marketing tools. This information provides a basis for decision making as well as planning and analysis (Steenkamp et al p 53-64). The following marketing tools provide the relevant information for decision-making.
Customer Data base
This is a set of information that allows the decision maker to understand who the customer is and what they want. It allows the decision maker to make planning decisions for the allocation of resources. Customer databases provide demographic information of the numbers ages and frequencies of the customers. It also allows the decision maker to make royalty analysis to determine the proportion of customers who are willing and able at any one time to purchase and remain with a single brand.
Primary research data (Consumer perceptions for each brand)
The consumer perception of a brand heavily determines the portfolio that a company adopted in its market plan and strategy. The Procter & Gamble (P&G) and Unilever companies have a wide variety of brands that have varying market command and share. The consumer’s perception of the brand therefore goes a long way in influencing the portfolio approach. The combined market share of both companies in the global market suggests that some of their brands are perceived a global while others are perceived as local. This is an important aspect of market planning as it allows the planner to make appropriate portfolio decisions to suit the consumer’s perception.
Secondary research data (sales figure for each brand, showing growth and market share)
Secondary information allows the decision maker to justify and support their decisions in the various portfolio decisions, for instance the decision to drop a certain brand could be based on the value of the market share that it commands. This manager therefore needs to collect enough secondary information on the sales figures of each brand and make a trend analysis of the growth and market share of each of the brands.
Year-to-date financial data (with at least 3-historical year profitability analysis)
Annual profitability data of a brand provides important information to the decision maker in making opportunity cost analysis and decisions. The data allows the decision maker to decide which brands have made progress or otherwise in achieving the company’s objective. An annual analysis of profitability also provides the relevant cost benefit and marginal returns analysis data that evaluates the long run benefits of the product or brand
Comprehensive competitor analysis
Competitor analysis allows the decision market to make an informed structural and strategic decision as to the competitor’s price products promotion and place. These are the basic parameters that a decision maker may adopt in evaluating the competitiveness of the organizations departmental strategies. The elements in the product such as variety design quality size and features differentiate a brand from its substitutes and competitors.
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Brands that do not adequately stand against the competition in these elemental parameters can therefore be considered for termination. The promotional aspect of competitor analysis goes to evaluate the companies advertising sales and public relations strategies as against the competition. They allow the decision maker to make marketing strategy decisions. The price aspect goes to determine the lists discounts as well as allowances and credit options available to the company’s customers and the terms on which these options are offered. Competitor analysis also allows the decision maker to determine the most suitable channels and logistical mechanisms that would be appropriate for the company.
Future sales and Financial projections (3 years onwards)
A decision maker also requires a sales forecast of the individual brands in making secession as to which brand to drop and which one to retain. The annual future proceeds expected from various brands in order to make resource allocation decisions. This information also allows the decision maker to evaluate brands for remodeling and re- evaluation. The future forecast must be for at least three future years based on the current of recent past rend analysis.
Strategic marketing choices
The strategic marketing choices that the analyzed companies have made
The Procter & Gamble Company has been widely known for its brand management and brand leadership strategies that have been motivated by their investment in research and innovation. Therefore, a scaling down approach to the number of brands gives more room for the innovative and fresh brands to enter the market. The value of sales is therefore balanced by the new entrants and in most cases increases the gross sales. New product brands tend to sell better and faster than the older and established brands.
Profitability and Cost management
The company’s strategy to eliminate non-productive brands reduces the cost of producing goods and increases the volume of sales. This translates to a subsequent increase in the gross profit and gross profit margin. Similarly the cutting down of non productive lines as well as reducing the number of brands means that the company makes a resultant increase in the level of spending in advertising and marketing relates expenses leading to an increase in the operating expenses that reduce the increase in the gross profit. This reduction however still leaves a reasonable net profit margin for the company.
Brand management analysis
Majority of business brand managers have vouched for the Boston consulting approach to brand management. The approach suggests that there can be four main categorizations of brand performance. Star brands are the aggressive and key brands that generate a considerable amount of income for the company. These brands are therefore a promising investment that is yet to acquire a strong market presence and voice.
These brands have a high industrial to market growth rate and therefore have a better future performance rating in the relative market share index. It is therefore prudent that a decision maker invests more funds in the future Cash cows have a great capacity and chance at being cash cows or stars. These are therefore left in themed way due to their low present relative market share. The company therefore has the option of investing or disinvesting in these products.
The cash cows on the other hand are a great source of revenue but have a low industrial growth rate. These brands have reached their maximum potential and are better milked for financial resources for investment in stars and question marks. Dogs on the other hand generate little profits. The Procter & Gamble and unbeliever companies should therefore consider withdrawing these brands from the market (Procter and Gamble Annual Report p 14-20).
Overall management of customers
The customer management approach that is embodied in the brand reduction strategy in as far as the 7 types of customers make an overall gain in the customer loyalty and confidence. Potential users are taken care of by the increased advertising budget while lost and jumper users are addressed through innovation of ne brands and an aggressive marketing strategy. New customers are directed towards a different brand to which they are given discounts and price lifts while current customers are convinced to shift to the alternative products that are similar or equal substitutes heavy users are guaranteed equal service and substance from an innovative product that for instance is a merger between two eliminated brands while friends move on to the next available alternative product.
Consolidation of resources and assets allows the companies a greater chance at increasing their revenues sales and profits. The consolidation of resources goes to increase the company’s ability to effectively manage and increase the production of fewer brands.
Agreement or disagreement to their decision to reduce brands
I however disagree with the option to reduce the number of brands since the nature of the competition in the market needs a highly diversified strategy. Reducing the number of brands fails to diversify the investment options in the company.
Oher strategic marketing choices that the companies could have made
Keep all brands (no need to limit, just increase capitalization)
This strategy reduces the company’s potential loss of market share to the eliminated or limitation of brands. The Procter & Gamble Company has acquired a great market command by increasing its market brands through research and envelopment as well as innovation.
Establish a sister company that will take care of newer potential brands while the existing company takes care of COWS and STARS brands
This is an appropriate method that is not cost effective since the sister company may not effectively deliver the innovative but potentially strong products. The parent company has better resources and market command to successfully launch and deliver new products and innovations into the market.
Sell the unproductive brands to other companies that can take care of DOGS and QUESTION MARKS products. (sell brand license)
This is a feasible strategy that allows the companies to make opportunity cost and benefit analysis. The collection of a salvage value for the unproductive brands allows the company to invest the additional resources in cows and stars. The numerous numbers of brands of both companies could be easily reduced to a smaller number through sale and disposal of the unproductive ones.
Re-made/re-plan all marketing activities and strategies if DOGS and QUESTION MARKS will be kept
This strategy allows the companies to make the best of the available opportunities in dogs and question marks. If the company is able to make an increase in the gains that are generated from the two categories of brands and more brands move from question marks to cows and stars then the strategy is appropriate and a viable alternative to the brand reduction strategy.
Outsource the brands while P&G and Unilever still are the brand owners of the DOGS and QUESTION MARKS
Outsourcing high-income generators of the company created a dangerous economic appendance by the company on external assistance in its finances and capital base. This is however, a viable long run strategy due to the promising nature of the question marks. The company therefore uses the finances and resources generated from the cows and stars to increase the level of investment in question marks.
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Move other brands to other department within the company
A transfer of costs from one department to another does nothing more than to shift operating expenses to costs of production. This does not solve the problem unless the economies of scale in the new department allow for better management of the brands. The delegation of production processes has its own benefits and shortcomings.
Procter and Gamble Annual Report. (2005). Web.
Steenkamp, Jan-Benedict et al.How Perceived Brand Globalness Creates Brand Value. Journal of International Business Studies Vol. 34, No. 1 (2003), pp. 53-65.