238 CHAPTER 7: Measuring Strengths and Weaknesses Chapter Measuring Strengths and Weaknesses A Intoduction Meaning of Strengths and Weaknesses (TM 7-1) B Measuring Strengths and Weaknesses Measuring of Product Strengths and Weaknesses: Conceptual Scheme (TM 7-2) Meaning of Current Strategic Posture (TM 7-3) • Operational Scheme For Measuring Current Strategic Posture (TM7-4) • Current Strategy of a Product/Market (TM 7-5) a What Markets Do We Have? (TM 7-6) b How is Each Market Served? (TM 7-7) Past Performance • Product Performance Profile (TM 7-8) • Market Performance Profile (TM 7-9) • Financial Performance a Performance Measures (TM 7-10) b Performance Standards (TM 7-11) Marketing Environment (TM 7-12) C Opportunity Analysis Areas of Strength – Some Examples (TM 7-13) Relative Strenghts of Personal Computer Firms in 2008 (TM 7-14) Matching Strengths with Opportunities (TM 7-15) Typical Marketing Weaknesses (TM 7-16) 239 CHAPTER 7: Measuring Strengths and Weaknesses 7-1 MEANING OF STRENGTHS AND WEAKNESSES Strengths refer to the competitive advantages and other distinctive competencies that the company can exert in the marketplace The distinctive competence of an organization is more than what it can do; it is what it can particularly well Weaknesses are constraints that hinder movements in certain directions CHAPTER 7: Measuring Strengths and Weaknesses 240 7-2 MEASUREMENT OF PRODUCT STRENGTHS AND WEAKNESSES: CONCEPTUAL SCHEME 241 CHAPTER 7: Measuring Strengths and Weaknesses 7-3 MEANING OF CURRENT STRATEGIC POSTURE • What underlies our company’s success, given competitor’s patterns of doing business? • Are there any characteristics and traits that have been followed regularly? • To what strategic posture these characteristics and traits lead? • What are the critical factors that could make a difference in the success of the strategy? • To what extent are critical factors likely to undergo a change? What may be the direction of change? CHAPTER 7: Measuring Strengths and Weaknesses 242 7-4 OPERATIONAL SCHEME FOR MEASURING CURRENT STRATEGIC POSTURE • Identify actual current scope of the company’s activities • Identify pattern of actual past and existing resource deployments • Deduce the actual basis on which the company has been competing • Determine actual performance criteria, emphasis, and priorities 243 CHAPTER 7: Measuring Strengths and Weaknesses 7-5 CURRENT STRATEGY OF A PRODUCT/MARKET The current strategy of a product/market may be examined by seeking answers to the following two questions: What markets we have? How is each market served? CHAPTER 7: Measuring Strengths and Weaknesses 244 7-6 WHAT MARKETS DO WE HAVE? • Recognize different market segments • Build a demographic profile of each segment • Identify important customers in each segment • Identify those customers, while important, also business with competitors • Reasons that each important customer may have in buying the product from us • Strategic perspective of each important customer as it concerns the product’s purchase • Anticipated changes in each customer’s perspectives 245 CHAPTER 7: Measuring Strengths and Weaknesses 7-7 HOW IS EACH MARKET SERVED? It refers to the means that a company employs to serve different customers This can be examined by analyzing information contained in Exhibit 7-3 in the text (See the breakfast cereal example in the text.) CHAPTER 7: Measuring Strengths and Weaknesses 246 7-8 PRODUCT PERFORMANCE PROFILE CONTRIBUTION TO COMPANY PERFORMANCE Product Line Profitability Product Leadership Technological Growth Support of Total Product Line Utilization of Company Resource Provision of Customer Benefits 247 CHAPTER 7: Measuring Strengths and Weaknesses 7-9 MARKET PERFORMANCE PROFILE CONTRIBUTION TO COMPANY PERFORMANCE Market Segment Profitability Market Share Growth End-user Markets Size of Customer Base Distribution Strength Degree of Customer Loyalty CHAPTER 7: Measuring Strengths and Weaknesses 248 7-10 PERFORMANCE MEASURES • Growth rate • Profitability • Market share • Cash flow 249 CHAPTER 7: Measuring Strengths and Weaknesses 7-11 PERFORMANCE STANDARDS • Company’s performance • Competitors’ performance • Management expectations • Performance in terms of resource committed CHAPTER 7: Measuring Strengths and Weaknesses 250 7-12 MARKETING ENVIRONMENT Monitoring of the environment from the viewpoint of products/markets is a line function that should be carried out by those who are involved in making marketing decisions The constituents of the product/ market environment are: • Social and cultural effects • Political influences • Ethical considerations • Legal requirements • Competition • Economic climate • Technological changes • Institutional evolution • Consumerism • Population • Location of consumers • Income • Expenditure patterns • Education 251 CHAPTER 7: Measuring Strengths and Weaknesses 7-13 AREAS OF STRENGTH— SOME EXAMPLES • Excellence in product design • Leadership in product innovation • Efficiency in customer service • Effectiveness in sales promotion • Merchandising efficiency • Customer loyalty • Dominant market share position • Effectiveness of advertising Dell Hewlett-Packard Apple Lenovo ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Service and Support Retail Distribution National Sales Force Low-Cost Production Financial Muscle Depth of Management Brand Name Applications Software Current Strengths CHAPTER 7: Measuring Strengths and Weaknesses 252 7-14 RELATIVE STRENGTHS OF PERSONAL COMPUTER FIRMS IN 2008 ● 253 CHAPTER 7: Measuring Strengths and Weaknesses 7-15 MATCHING STRENGTHS WITH OPPORTUNITIES STRENGTH Customer loyalty LIKELY IMPACT • • • Cordial relationships with channels • • • • • OPPORUNTIY (FURNISHED BY THE ENVIRONMENT) Incremental product volume increases Price increases for premium quality/service New product introductions • New product introductions Point-of-purchase advertising Reduction of delivered costs through distribution innovations Tied-in products Merchandising differentiation • • • • • • • A trend of changing taste An identified geographic shift of part of the market A market segment neglected by the industry A product-related subconscious need not solicited by competition A product weakness of competition A distribution weakness of competition Technical feasibility for improving existing package design A discovered new use for the product or container OBJECTIVES AND GOALS • • • Develop a premium product Introduce the existing product in the segment hitherto not served Develop a new channel outlet for the product, etc CHAPTER 7: Measuring Strengths and Weaknesses 254 7-16 TYPICAL MARKETING WEAKNESSES • Inadequate definition of customer for product/market development • Ambiguous service policies • Too many levels of reporting in the organizational setup • Overlapping channels • Lack of top-management involvement in new product development • Lack of quantitative goals [...]...CHAPTER 7: Measuring Strengths and Weaknesses 248 7- 10 PERFORMANCE MEASURES • Growth rate • Profitability • Market share • Cash flow 249 CHAPTER 7: Measuring Strengths and Weaknesses 7- 11 PERFORMANCE STANDARDS • Company’s performance • Competitors’ performance • Management expectations • Performance in terms of resource committed CHAPTER 7: Measuring Strengths and Weaknesses 250 7- 12 MARKETING... Merchandising efficiency • Customer loyalty • Dominant market share position • Effectiveness of advertising Dell Hewlett-Packard Apple Lenovo ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Service and Support Retail Distribution National Sales Force Low-Cost Production Financial Muscle Depth of Management Brand Name Applications Software Current Strengths CHAPTER 7: Measuring Strengths and Weaknesses 252 7- 14... Financial Muscle Depth of Management Brand Name Applications Software Current Strengths CHAPTER 7: Measuring Strengths and Weaknesses 252 7- 14 RELATIVE STRENGTHS OF PERSONAL COMPUTER FIRMS IN 2008 ● 253 CHAPTER 7: Measuring Strengths and Weaknesses 7- 15 MATCHING STRENGTHS WITH OPPORTUNITIES STRENGTH Customer loyalty LIKELY IMPACT • • • Cordial relationships with channels • • • • • OPPORUNTIY (FURNISHED BY... existing package design A discovered new use for the product or container OBJECTIVES AND GOALS • • • Develop a premium product Introduce the existing product in the segment hitherto not served Develop a new channel outlet for the product, etc CHAPTER 7: Measuring Strengths and Weaknesses 254 7- 16 TYPICAL MARKETING WEAKNESSES • Inadequate definition of customer for product/market development • Ambiguous... product/ market environment are: • Social and cultural effects • Political influences • Ethical considerations • Legal requirements • Competition • Economic climate • Technological changes • Institutional evolution • Consumerism • Population • Location of consumers • Income • Expenditure patterns • Education 251 CHAPTER 7: Measuring Strengths and Weaknesses 7- 13 AREAS OF STRENGTH— SOME EXAMPLES • Excellence... increases for premium quality/service New product introductions • New product introductions Point-of-purchase advertising Reduction of delivered costs through distribution innovations Tied-in products Merchandising differentiation • • • • • • • A trend of changing taste An identified geographic shift of part of the market A market segment neglected by the industry A product-related subconscious need not ... Loyalty CHAPTER 7: Measuring Strengths and Weaknesses 248 7- 10 PERFORMANCE MEASURES • Growth rate • Profitability • Market share • Cash flow 249 CHAPTER 7: Measuring Strengths and Weaknesses 7- 11... Management Brand Name Applications Software Current Strengths CHAPTER 7: Measuring Strengths and Weaknesses 252 7- 14 RELATIVE STRENGTHS OF PERSONAL COMPUTER FIRMS IN 2008 ● 253 CHAPTER 7: Measuring Strengths. ..239 CHAPTER 7: Measuring Strengths and Weaknesses 7- 1 MEANING OF STRENGTHS AND WEAKNESSES Strengths refer to the competitive advantages and other distinctive competencies