Marketing Turnaround Consulting - Marketing Strategy Audit

The Harris Group uses an "expert system" software tool that assists in the critique and formulation of actionable marketing and business strategies.

The tool draws on an extensive database of prior users' experience plus concepts described in the following:

Competitive Advantage, Porter
Creating Strategic Leverage, Lele
Delivering Quality Service, Zeithaml, Parasuraman & Berry
Developing Business Strategies, Aaker
Power Pricing, Dolan & Simon
High-Tech Ventures, Bell
Principles of Marketing, Kotler & Armstrong
Service Breakthroughs, Heskett, Sasser & Hart
The Balanced Scorecard, Kaplan & Norton
The Fifth Discipline, Senge
The PIMS Principles, Buzzell & Gale
Top Management Strategy, Tregoe & Zimmerman
Value Migration, Slywotzky
and many others.

One form of analysis provided by the marketing strategy audit is charts that describe a business or marketing concept. Some examples are:

Generic Strategy Potential

This chart graphically displays an analysis of the potential for your enterprise to implement each of the generic strategies. The assertions behind the ratings can be traced to the clients answers on questionnaires, which keeps the analysis clean of consultant bias.

Strategic Factor Ratings

This is a graphical display of strategic factors, some of which you do not have the ability to directly control. This form of display is called a spider graph. It is most positive for your enterprise when all display points are at the outer limit of the chart. Each factor is rated between zero and one hundred. To have a reasonable chance for successful implementation of your marketing strategy each of the strategic factors should have a rating of 70 or higher.

Industry Attractiveness

This industry model, initially described by Michael Porter in his book, Competitive Strategy, addresses the key factors that influence industry profitability. Your objective should be to understand each of these factors to the extent that you can defend against them or influence them in your favor. The nearer the plot point is to the outer edge of the chart, the more favorable it is for your strategy.

Business Risk Analysis

The concepts of closeness to the core business and market attractiveness can be combined to analyze the risk of investing in new offerings. The proximity of the new offering to the core business is measured by its proximity to current offerings and current markets. For products, such factors as technology, familiarity with the materials, special finishes, and quality standards contribute to the proximity to current products. Market attractiveness considers such factors as: bargaining power of the suppliers, threat of substitutes, threat of new entrants, competitive rivalry, and bargaining power of the buyers.

Business Strategy Matrix

The General Electric Company, with the aid of the Boston Consulting Group and McKinsey and Company, pioneered the nine-cell strategic business screen illustrated here. The vertical axis represents the industry attractiveness. Factors such as the bargaining power of the buyers and the suppliers, the internal rivalry and the threat of new entrants and substitutes are weighed and considered. The horizontal axis represents the firm's strength or ability to compete in the industry. The competitive strength includes an analysis of the value and quality of the offering, its market share, staying power, experience, etc.

The circle on the matrix represents your enterprise. Both axes are divided into three segments, yielding nine cells. The nine cells are grouped into three zones:

The Green Zone consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this product/service.

The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this product/service. The suggested strategy is to seek to maintain share rather than growing or reducing share.

The Red Zone consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that management should begin to make plans to exit the industry.

Position Evaluation Graph

The Position Evaluation Graph compares the attributes of your offering with the best of your competition in each category. Ideally the display for your product will form a circle around the extremes of the graph. This evaluation will force you to consider the strength of each of the competitive offerings and how you must position your offering to face them.

Some strategy conclusions might be reached based on the results of this comparison.

For example, if your offering is low priced and offers acceptable performance then your business may thrive while competitive technology is widely available and inefficient market leaders are priced too high.

Or, if your offering is of high quality with good availability of support, good quality and high performance then it can be the best value for the affluent customer.

However, if your strength is only in availability then you can expect gradual erosion of market share until competitors establish a reputation and better distribution - then the bottom will fall out.

Or, if your offering is a me-too product with low to average ratings in each category then you can expect to muddle through while the market is rapidly growing, but likely fall by the wayside during industry shake-out.

Capability and Propensity to Attack

Competition can offer benefits as well as threats to your participation in the industry. Competition may actually increase your competitive advantage by providing such benefits as a cost umbrella. They can assist in market development activities, and thereby increase the overall demand for your offering. Their actions may also deter new market entrants by crowding distribution channels thereby allowing you higher margins. Competitors can also threaten your position by attacking your offerings and your moves in the market. This chart presents your competitors as being threats or benefits to your efforts.

Boston Consulting Group Matrix

This is the Boston Consulting Group Matrix. There are several points to note:

a) The horizontal axis represents the market share relative to the industry leader. The leader will always be displayed on the far left of the chart.
b) The vertical axis represents the market growth rate for the industry.
c) The cash flow situation is different in each quadrant, which leads to the following classifications:

Stars: High-growth, high-share businesses that are likely to generate enough cash to be self-sustaining.
Cash cows: Low-growth, high-share businesses that generate excess cash that can be used to support other business units (especially question marks) and R & D efforts.
Question marks: High-growth, low-share businesses that normally require a lot of cash to maintain or increase their share. Management must often either invest additional cash to convert these business units into stars or divest themselves of the product.
Dogs: Low-growth, low-share businesses that are often cash traps.


	Principal Contact: Mike Harris Direct Telephone: 858-481-8665 Fax: 858-605-6682 mike.harris@harconllc.com