Among the plethora of frameworks available to marketers, five models stand out for their enduring relevance and applicability across various industries..

1. SWOT Analysis: The Strategic Compass

Framework Overview: The SWOT Analysis is a strategic tool used for identifying and understanding the internal Strengths and Weaknesses of an organization, as well as the external Opportunities and Threats it faces. This model facilitates a holistic view of a business’s strategic position, guiding decision-making processes.

 “Strengths and weaknesses are internal factors. Opportunities and threats are external factors.” – SWOT Analysis, MindTools.com

This quote succinctly captures the essence of the SWOT Analysis, emphasizing the distinction between internal capabilities and external possibilities. It serves as a reminder that a comprehensive strategy must account for both the organization’s internal environment and its external context.

2. The 7Ps of the Marketing Mix: Expanding the Marketing Canon

 

Framework Overview: The 7Ps model extends the original 4Ps (Product, Price, Place, Promotion) by adding People, Process, and Physical Evidence. This expansion reflects the increasing importance of service elements in marketing strategies.

“Marketing is about putting the right product, in the right place, at the right price, at the right time. It’s that simple. You just need to create a product that a particular group of people want, put it on sale someplace that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy. Then you’ve got it made!” – 7Ps of Marketing, Chartered Institute of Marketing

This quote encapsulates the core principle of the 7Ps model, highlighting the crucial balance between product, placement, pricing, and timing, and further enriching it with considerations for people, processes, and physical evidence, which are especially vital in service marketing.

3. The BCG Matrix: Portfolio Analysis for Strategic Balance

Framework Overview: The Boston Consulting Group (BCG) Matrix classifies business units or products into four categories based on their market share and market growth: Stars, Question Marks, Cash Cows, and Dogs. This tool aids in resource allocation and strategic planning.

The BCG Growth-Share Matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors.– Boston Consulting Group

This quotation from the creators of the BCG Matrix itself underscores the model’s utility in visualizing a company’s portfolio, thereby facilitating strategic decisions based on market dynamics and competitive positioning.

  • The BCG matrix is a two-by-two matrix that classifies businesses, divisions or products according to the present market share and the future growth of that market.
  • Growth is seen as the best measure of market attractiveness.
  • Market share is seen to be a good indicator of competitive strength

Products are then shown in a diagram where the money value of sales is indicated by the relative size of the circle:

BCG matrix

Based on this there are four possible classifications.

Cash cow

cash cow has a high relative market share in a low-growth market and should be generating substantial cash inflows.

  • The period of high growth in the market has ended (the product life cycle is in the maturity or decline stage), and consequently the market is less attractive to new entrants and existing competitors.
  • Cash cow products thus tend to generate cash in excess of what is needed to sustain their market positions.
  • Profits support the growth of other company products.
  • The firm’s strategy is oriented towards maintaining the product’s strong position in the market.

Star

star has a high relative market share in a high-growth market. A star may be only cash-neutral despite its strong position, as large amounts of cash may need to be spent to defend an organisation’s position against competitors.

  • Competitors will be attracted to the market by the high growth rates.
  • Failure to support a star sufficiently strongly may lead to the product losing its leading market share position, slipping eastwards in the matrix and becoming a problem child.
  • star, however, represents the best future prospects for an organisation.
  • Market share can be maintained or increased through price reductions, product modifications, and/or greater distribution.
  • As industry growth slows, stars become cash cows.

Problem child

problem child (sometimes called ‘question mark’) is characterised by a low market share in a high-growth market. Substantial net cash input is required to maintain or increase market share.

  • The company must decide whether to do nothing (but cash continues to be absorbed) or market more intensively (requiring substantial investment) or get out of this market (“double or quit”).
  • The questions are whether this product can compete successfully with adequate support and what that support will cost.

Dog

The dog product has a low relative market share in a low-growth market. Such a product tends to have a negative cash flow, that is likely to continue.

  • It is unlikely that a dog can wrest market share from competitors without getting bigger but the market is not attractive enough to warrant such investment.
  • Competitors, who have the advantage of having larger market shares, are likely to fiercely resist any attempts to reduce their share of a low-growth or static market.
  • An organisation with such a product can attempt to appeal to a specialised market, delete the product or harvest profits by cutting back support services to a minimum.

Measurement issues

Assessing the rate of market growth as high or low is difficult because it depends on the market. New markets may grow explosively while mature markets grow hardly at all. The midpoint of the growth dimension is usually set at a 10% annual growth rate; markets growing more than 10% are considered to be high-growth markets and those growing at less are low-growth markets.

Relative market share is defined by the ratio of market share to the market of the largest competitor. The log scale is used so that the midpoint of the axis is 1.0, the point at which an organisation’s market share is exactly equal to that of its largest competitor. Anything to the left of the midpoint indicates that the organisation has the leading market share position.

 

4. Porter’s Five Forces: Deciphering Industry Dynamics

Framework Overview: Porter’s Five Forces framework analyzes an industry’s competitive forces to assess its attractiveness and profitability. The five forces are the threat of new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the intensity of competitive rivalry.

The essence of strategy formulation is coping with competition. Yet it is easy to view competition too narrowly and too pessimistically.” – Michael E. Porter, “Competitive Strategy”

Porter’s observation highlights the critical nature of understanding competitive forces not just as threats, but as elements that shape strategic opportunities. This perspective is at the heart of the Five Forces model.

Porter set out five forces at play in a given industry: internal competition, the potential for new entrants, the negotiating power of suppliers, the negotiating power of customers, and the ability of customers to find substitutes. Below, we take you through each of Porter’s five forces, detail the significant critiques of his approach, and show how to apply the model to specific markets.

 

  • The five forces are competition, the threat of new entrants to the industry, supplier bargaining power, customer bargaining power, and the ability of customers to find substitutes for the sector’s products.
  • The model guides businesses in determining the intensity of competition and potential profitability within their market, helping them better understand where power lies in their sector.
  • Porter’s model was meant to critique “perfectly competitive” business models, unlike real-world markets where competitors aren’t just rivals and firms in specific industries tend to rise and fall together.
  • Criticisms mounted against the model include that it’s too static, doesn’t speak to the advantages or problems of specific companies, doesn’t account enough for collaborative business models, and doesn’t apply as well to quick-changing markets.

5. The Ansoff Matrix: Navigating Growth Pathways

 

Framework Overview: The Ansoff Matrix, or Product/Market Expansion Grid, outlines four strategic options for growth: Market Penetration, Market Development, Product Development, and Diversification, based on combinations of existing or new markets and products.

Strategies for growth are not merely a collection of potential options, but paths to new opportunities and niches.” – Igor Ansoff, “Corporate Strategy”

How to use the Ansoff Matrix

Strategic questions that can be answered using the matrix include:

  • Market Penetration: How to sell more of your existing products or services to your existing customer base?
  • Market Development: How to enter new markets?
  • Product and Development: How to develop existing products or services.
  • Diversification: How to move into new markets with new products or services, increase your sales with your existing customer base as well as acquisition.

 

To evaluate the suitability of these strategies, issues to consider for each of these:

  1. Market Penetration: change your opening hours of your store, reduce order processing times, showcase entire product portfolio etc.
  2. Market Development: Does your research on your market share in your existing sectors back up potential demand for you to considering entering new markets? Considering search intent for services in different markets, for example, using Google Keyword Planner or Ubersuggest can also inform this. Can your company support this with existing resources?
  3. Product and Development: Can you you develop new products, perhaps using cheaper manufacturers, improved quality, updated packaging. Again market research to ask potential customers and influencers for feedback can help here.
  4. Diversification:  Assess expertise, technical know-how. Can you move into a new market with a new product offer using the skills in your business? Do you have a strong management team to support it.

 

Ansoff’s quote underlines the strategic intention behind the matrix that bears his name, portraying it as a guide towards uncovering new horizons and opportunities for expansion and innovation.

 

These top five marketing models offer a strategic lens through which businesses can view their challenges and opportunities. From the introspective insights of the SWOT Analysis to the expansive strategic paths outlined by the Ansoff Matrix, each model provides a unique perspective on how to navigate the complexities of the market. As we venture forward in the digital age, these models remain not just relevant, but essential tools for strategic marketing planning, echoing the timeless wisdom that has shaped the discipline of marketing itself.