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Defensive Strategies

Defensive Strategies. Mktg 485 June 2, 2004. Defensive Strategies – Ch. 13. Protect Market Position Protect Market Share Build Customer Retention Reduced Focus Exit Market Position Harvest Price Strategy Harvest Resource Strategy Divest Market Position. Problems at Campbell Soup.

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Defensive Strategies

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  1. Defensive Strategies Mktg 485 June 2, 2004

  2. Defensive Strategies – Ch. 13 • Protect Market Position • Protect Market Share • Build Customer Retention • Reduced Focus • Exit Market Position • Harvest Price Strategy • Harvest Resource Strategy • Divest Market Position

  3. Problems at Campbell Soup • No so “Hmm, hmm Good” • Canned soup sales are down 8% • Losing share to General Mills Progresso – whose ad campaign equates Campbell’s soups to kids food • Gotten nowhere in the dry soup category competing against Lipton

  4. Hope for Campbell • Pepperidge Farms is #3 in cookie/cracker category • Nabisco (Kraft Foods) • Keebler (Kelloggs) • But sales are up 8% (counting Godiva chocolates)

  5. Focus for Growth & Profitability • Campbell’s Pepperidge Farms saw declining sales for its Goldfish crackers • Decided to refocus from adults to children • In 1997, revised the product & advertising • Stamped a smiling face on every cracker • “the healthy snack that smiles back” • Sales doubled to $250 milllion

  6. Portfolio Analysis VeryAttractive Market Attractiveness VeryUnattractive Very Weak Very Strong Competitive Advantage

  7. Portfolio Analysis VeryAttractive Market Attractiveness VeryUnattractive Very Weak Very Strong Competitive Advantage

  8. Protect Market Position

  9. Ford’s Drive for Profitability • Improved quality • Dropped slow sellers (e.g.,Mercury Cougar) • Reduced sales to rental companies • Results •  Market Share 22% to 20.2% • Margins 5.6% to 8.4% • $2 billion profit in 1st quarter

  10. Fast versus Slow Growth(text, p. 310) • Fast Growth Markets • .4% share loss for every 1% annual market increase every year. • Loss = 40% x Growth x Share • If Growth = 5% • Loss = 40% x 5% x Share • Loss = 2% x Share • If Share = 20%, share loss = .4%

  11. Market Share Erosion(for industry with 5% share)

  12. Market Share Erosion(for industry with 5% share)

  13. Market Share Erosion(for business with 20% share) Erosion = .4% of growth rate

  14. Effect of Market Growth on Share when Not Protected

  15. Protect Market Share

  16. Protect Market Share - Leader

  17. Protect Market Share - Challenger

  18. Protect Market Share - Flanker

  19. Build Customer Retention

  20. Reduced Market Focus

  21. Exit Market Strategies

  22. Yahoo’s Failure to Defend • Once, the leading internet site • First place that individuals went to for information. • AOL & MSN dominate as portals • Google dominates for searches • Amazon dominates for shopping • eBay dominates for auctions • News, Sports, Finance • eMail & Communities

  23. Web Traffic – February 2004

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