MKT 450 CH 15

Reasons for prioritizing & trimming the brand portfolio

1) provides impetus to prioritizing the business portfolio 2) corrects confusion of "over-branding" among customers and employees 3) addresses "strategic paralysis"

What to evaluate in order to compete

1) organization 2) growth 3) share by segment 4) customer loyalty 5) margins 6) distribution 7) technology skills 8) marketing 9) flexibility

Drivers of the exit decision

1) market demand 2) competitive intensity 3) change in strategic thrust (drain or distraction)

4 biases inhibiting the exit decision

1) emotional attachment 2) reluctance to admit defeat 3) confirmation bias 4) escalation of commitment

Conditions favoring a milking strategy

1) investments unlikely to improve negative environment 2) competitor aggressiveness 3) consumer tastes 4) new entrants

Milking strategy implementation problems

1) managers of cash-generating businesses want to hold on to cash for investment 2) businesses with low current sales but big potential get starved of cash 3) need a business portfolio analysis to determine who gets the investment 4) difficulty in placing and motivating managers 5) market risks 6) making it inconspicuous

Steps to measure brands on BCG Growth-share matrix

1) draw circles on a matrix 2) after calculating all the measures, you should be able to plot your brands on the matrix 3) Draw a circle for each brand 4) size of the circle should correspond to the proportion of business revenue generated by the brand

What to look at when evaluating market attractivness

1) size 2) growth 3) customer satisfaction levels 4) competition: quantity, types, effectiveness, and commitment 5) price levels 6) profitability 7) technology 8) governmental regulations 9) sensitivity to economic trends

5 steps of the strategic brand consolidation process

1) starts with identifying the relevant brand sets or subsets in the portfolio 2) brand assessment 3) prioritize the brands 4) develop the revised brand portfolio strategy 5) design & implement the migration strategy

4 groups to prioritizing & trimming the brand portfolio

1) strong strategic brands 2) brands playing a worthwhile role 3) brands that should receive no investments 4) brands that should be deleted

When an exit strategy should be considered

1) the business position is weak 2) demand within the category is declining 3) the firm's strategic fit has changed

How exit can be healthy and invigorating

1) visible costs 2) doesn't represent future 3) other potential growth platforms 4) generate cash 5) liberate management talent 6) reposition the firm

brand

A __________________ strategy is often the business strategy

loyalty; central; stable

A business uses the milk strategy when there is enough ________________________ to support a business, the business is not ________________________ to the current strategy, and demand & price structure/profits are ________________________

market; milking

Exit barriers can delay the exit process if the _______________________ may change. If so, the company should change to the ____________________________ strategy

sales

For milking to be feasible, ___________________ must decline in an orderly way

divestiture; external

Many firms avoid ______________________________ decisions until they are obvious by _____________________ forces, which has an impact on prices and profitability

brand portfolio

Prioritizing and trimming the _____________________________ provides another perspective on prioritizing businesses, even clarify brand offerings, and can remove the paralysis of not being able to brand new offerings

market share; money

The business position is weak when the business is losing ______________________________ and _______________________

strategic fit

The firm's ___________________________ has changed when firm's resources coulld be better employed elsewhere

disruptive; cash cow

The holding strategy also has issues with ______________________ technologies and can lead to a premature demise of a _________________________ business

reversed

The milking strategy can be ____________________________ if there is a resurgence of product classes

portfolio

View business units as a _____________________

transparent; spectrum

When going through the exit process, the business needs to be _________________________ and discourage gut reactions. Furthermore, the business needs to look at the entire ___________________________ before they make the decision

reinvest

With the holding strategy, the business can lose market share if they are too slow to __________________________

hold

enough investment to hold a market position; adequate level of investment is employed to maintain product quality, production facilities, and customer loyalty; picture is not as grim; interim strategy to determine the uncertainties

exit decision

even though this is psychologically and professionally painful, it can be healthy for both the firm because it releases resources to be used elsewhere and the divested business, which might thrive in a different context

milking/harvesting strategy

generating cash flow by reducing investment and operating expenses; works when the involved business is not crucial to the firm financially or synergistically; better use of funds; "cash cow" business; sales will decline in an orderly way; 3 types: fast, slow, and hold

brand equity

includes awareness, reputation, differentiation, relevance and loyalty to a brand

brand assessment

includes brand equity, business strength, strategic fit, and branding options; evaluation criteria & judgements

market risks

includes customers losing confidence in a brand, employee morale suffering, and attacks from competitors

strategic fit (def)

includes extendibility & business fit

business prospects

includes sales, share, profit, and growth

prioritize the brands

includes strategic brands, brands with specialized roles, cash cow role, eliminate, on-notice, and merge

exit barriers

includes termination costs, support for other businesses, use of excess capacity, long-term contracts with suppliers & unions, spare parts and service back-up, and impact on reputation

five-step priorization process

involves: 1) identifying the relevant brand set, 2) assessing the brands, 3) prioritizing brands, 4) creating a revised brand portfolio strategy, and 5) designing a transition strategy

BCG Growth-Share Matrix

makes visible the issue of allocation across business units; experience-based advantage of market share; includes 1) stars, 2) cash cows 3) problem children, and 4) dogs

fast milking

maxmize short-term cash flow

stars

part of BCG Growth-Share matrix; important; deserving of investment; has a high market growth rate and a high competitive position

dogs

part of BCG growth-share matrix; cash traps/candidates for liquidation; low market growth rate and low competitive position

problem children

part of BCG growth-share matrix; heavy cash/potential; high market growth rate but low competitive position

cash cows

part of BCG growth-share matrix; high share/low growth; low market growth rate but high competitive position

invest/grow

part of the market attractiveness-business position matrix; has a high business position and high market attractiveness; use growth tools here

selective investment

part of the market attractiveness-business position matrix; has ambiguous business positions and market attractiveness; more study is required

harvest/divest

part of the market attractiveness-business position matrix; low business position and low market attractiveness; consider harvest/divest options

competitive position

ratios of share-to-share of largest competitors

slow milking

reduce long-term investment

brand (def)

represents the face of the business, including assets & competencies, value proposition, and talent

The Market-business position matrix

richer, more robust analysis; in favorable areas, use growth tools; in unfavorable areas, consider harvest or divest options; in ambiguous areas, more study is required

confirmation bias

seek out optimistic information and discount disconfirming information

The strategic brand consolidation process

the process will help define what brands to keep; disciplined introduction of new offerings & brands; phase out or redeploy of marginal or redundant brands

"strategic paralysis"

what brands will be strategic going forward, so many options that branding new products is difficult

"last survivor"

when a company is in the holding strategy; encourages competitors to exit