Now this is where you start ladies and gentlemen and if there are any students of marketing watching this particular module, you will instantly recognize it as the Ansoff Matrix. He was the greatest strategist that we have ever had as far as I know he still alive and still writing. This is a very simplified version of his matrix and the way it works without boring the pants of everybody is to say you’ve got your present products or services in your present markets and whether we like it or not. Everybody who is watching this that is where you live now, it is where you are now.
And therefore it’s strikes me that the one thing that you should be doing is exploring all of this first rather than leaping around in the other boxes. So the first thing you would do is you would look at productivity wouldn’t you. You can productivity improvements for the things you sell and the process by which you sell them and you can actually make a lot of extra money without doing anything fancy.
The other thing is, if you want to break this down into different products for different markets, different segments. Quite clearly and each of this you’ve got the possibility of either market growth or market share growth. And when you’ve said those three things productivity market growth or market share growth there is nothing else that you can do in that box at all to grow yourselves some profits. In that’s where you start. If that is the case and you cannot grow to the degree to which you need to grow, the next obvious thing to do is to develop new products for your existing markets isn't.
Because that must be less risking than doing this one and the history of commerce is repeat with cases of companies who took their products into new markets and fell flat on their face. I mean companies like Wal-Mart for example we went into Germany and we've went to Germany’s well supermarket for something like three years and lost hundreds of billions of dollars because they’ve put their American model straight into the German market. They’re trying to do something quite similar with that approaches of as grow in this country and Tesco is beating them on virtually any dimension that you could think off.
Go to it simply because all that Wal-Mart seems to have is a low cost supply chain. All I can tell you consumers do not buy on price you will have to believe what I’m saying. if you went to any supermarket and a stopped a hundred people and said “How much have you paid for your peas, how much have you paid for your beans” and I'm sure that they would not know. So what makes people think that they got to compete on prices beyond that and that’s different from being in a market where prices are generally coming down. That’s a different point I'm making, companies like Tesco do not have the lowest prices, they never have done and never will do and yet they are the market leader. They're growing even while were sitting here they're growing through clever marketing, through clever segmentation, through understanding their costumers and their consumers better.
You may not like them but it’s a British company that is doing well and I admire them. So what saying is that you’ve got the first box and you got the second box and the third box why anybody would ever do that is really beyond me and they should really have to. Because what's you’ve got in the Ansoff Matrix are victors of risk haven't you. And then in this right hand corner you’ve got extreme risk, it use to be the facts and fashions in something like the 1960’s but it's all gone now. I mean that really is risky going into a new market with new products is extremely dangerous.
Now if you look at how you do this, I've given you some templates here and all I'm saying here ladies and gentleman is this is a simple methodology for getting you started and you will be able if you freeze the frame to see what I've said here the first thing to do is to put your objective in three years out a must objective not a might occurred or should but a must objective. And if you’ve said you wanted to be market leader in this market it's whatever that, it's as if you say you want to double your turn I reached whatever that is. This are must objectives that generally speaking come from the board.
This is your trend or your forecast if you don’t do anything different from what you're doing now and there is always a gap. And so the first obvious things you do, is you look at productivity, I haven't given you a complete list here but look at productivity, to see how much you can grow over the next three years by improving your productivity. The next thing you do as I've already said is you take each of your main products from markets, there are too many boxes on that but take each of your product for market and look at market growth and market share growth and put that in here it’s called “Market Penetration” and then you do the same for this box here, same for that box there.
And if there is still a gap then the only thing that’s left for you to do is diversification or investment which either buy another company license products etcetera you know franchise products, license products buy companies do joint ventures that is why you will see so much of that happening in the world around us. And that’s because companies have tried everything and the only way they can growing is by actually doing not organic growth but that kind of growth.
Now there are no other leavers in the world you can pull ladies and gentleman I just want to point one other thing to you and that is that this is for revenue you then do exactly the same thing for profit don’t do them together otherwise you will end as a nervous wreck and I can tell you will now when you’ve done that you can present that to the board as a sort of very rough look—a bit lifting ahead of the power part and looking out and saying look “This is generally speaking where were going to have to put our resources”, it’s not a strategic plan is it? But it’s a quantitative use of Ansoff Matrix to explain where you are going to put your best effort and can I tell if you actually said to me that 85% of your future revenue and profits was going to come from that box I would sell the share straight away.
Now why can't you tell the accountants in the board in very simple language how much you are getting from that box, that box, that box and that box and I just warn you ladies and gentleman if you send me a plan this is exactly what I would do, I would break your plan down into first of all productivity, I would break it down into market penetration, market development, product development and if you couldn’t. If I couldn’t put revenue and profit on each of this boxes your plan is useless, am I right? I mean they gave you some rackets size ladies and gentleman.
Most marketing plans are sort of sophisticated full class and budgets, if Mickey Mouse and Donald Duck could do. This is something different isn't. I want you to tell me where your revenue and profit is coming from because I'm interested in the riskiness of those. Is it fair that I should be interested in the riskiness of your projected revenues and profits of course? Okay, now this is the part version ladies and gentleman of the simple Queens English question I opposed about six slides ago. And again I don’t intend to go through all of this but I do ask you those who were watching this to have a careful look at it. Basically what it works like this ladies and gentleman, down here you’ve got the process, the manager of process which looks like a goal setting situation of you strategy formulation and resource allocation.
The output of the process is the actual plan itself, that’s what the output is and then they’ll ask some diagnostic tools in marketing that you use to get the output. Now I have put some financial tools in as well, purely and simply because my experience of working with the best companies in the world and having been a fast moving consumer goods company marketing itself direct to myself is that the person you need to work most closely along side when your doing world class marketing plans as the finest director. Because the board is interested in not just the cost but in the consequences of you’re your spending money on.
Now I'm going to go through some of these things here but most of it I'm going to tell what goes into the marketing plan. And it will become clear as I go through the rest of this module but don’t worry ladies and gentleman I haven't got much longer to go.
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