MKTG1001 · Marketing Principles
Strategic Marketing Planning & the Portfolio
Strategic Marketing Planning & the Portfolio moves up from a single offer to the whole company: corporate vs marketing planning, strategic business units (SBUs), a market-orientated mission, SMART objectives, and the two classic portfolio tools — the BCG growth-share matrix and the Ansoff product/market expansion grid — plus the four-step marketing plan and SWOT.
This is Week 2 mid-semester material, examined through MCQs on the matrix cells and the four growth strategies, and through short application questions (classify these SBUs; pick a growth strategy). The marks come from correctly reading the two axes of each tool and matching each cell to its strategy — build, hold, harvest or divest for BCG; penetration, market development, product development or diversification for Ansoff.
What this chapter covers
- 01Corporate plan vs marketing plan; the planning cascade (mission → objectives → portfolio → functional strategies)
- 02Strategic Business Unit (SBU) — a business in the portfolio with its own brand, value proposition and marketing plan
- 03Market-orientated mission (customer-need-defined, motivating) vs product-orientated mission
- 04SMART objectives: specific, measurable, achievable, realistic, time-bound — cascading corporate → SBU → brand
- 05BCG growth-share matrix: market growth (vertical) × relative market share (horizontal) → Stars / Cash Cows / Question Marks / Dogs
- 06The four BCG strategies: build, hold, harvest, divest
- 07Ansoff product/market expansion grid: market penetration / market development / product development / diversification
- 08The 4-step marketing plan and SWOT (internal strengths/weaknesses, external opportunities/threats)
Extended-answer (Part B style): classify SBUs on the BCG matrix
- 3 marksMove 1 — outline the theory. BCG plots market growth rate (vertical) against relative market share (own share ÷ largest rival, horizontal) into four cells: Stars (high/high), Cash Cows (low growth/high share), Question Marks (high growth/low share) and Dogs (low/low). The four strategies are build, hold, harvest and divest.
- 4 marksMove 2 — classify and recommend. Veggie Crisps = Star → invest to build/hold share while the market grows (tomorrow's cash cow). Classic Chips = Cash Cow → hold/harvest and milk the cash to fund the rest. Plant Jerky = Question Mark → selectively build if a strong value proposition exists, otherwise harvest. Pretzels = Dog → harvest or divest unless it plays a strategic role.
- 1 markMove 3 — explore the cash logic. Fund the Star and the chosen Question Mark from the Cash Cow; the matrix shows where cash is generated (Cash Cow) and where it is consumed (Star, Question Mark).
- 2 marksMove 4 — conclude with limitations. The matrix is a snapshot, ignores synergies between SBUs, and assumes relative share drives profit — so do not blindly divest a Dog that supports the wider range or shares costs.
Key terms
- Strategic Business Unit (SBU)
- A distinct business within the company's portfolio that can be planned separately — it holds its own brand(s), value proposition and marketing-mix deployment, and has its own marketing plan. Corporate strategy allocates resources across SBUs.
- Mission statement
- A statement of the organisation's purpose. A good mission is market-orientated (defined by customer needs, e.g. 'help create a better everyday life at home'), motivating and realistic — not stated as 'more sales/profit' and not narrowly product-orientated.
- SMART objectives
- Objectives that are Specific, Measurable, Achievable, Realistic and Time-bound. They cascade down the organisation: corporate objectives set SBU objectives, which set brand objectives, keeping the whole firm aligned.
- BCG growth-share matrix
- A portfolio tool plotting market growth rate (vertical) against relative market share (horizontal). Cells: Stars (high/high), Cash Cows (low growth/high share), Question Marks (high growth/low share) and Dogs (low/low). Strategies: build, hold, harvest, divest.
- Ansoff product/market expansion grid
- A growth tool crossing products (existing/new) with markets (existing/new): market penetration (existing/existing), market development (existing product, new market), product development (new product, existing market) and diversification (new/new, highest risk).
- SWOT analysis
- An audit of internal Strengths and Weaknesses plus external Opportunities and Threats. Strengths and weaknesses are defined relative to key competitors; opportunities and threats come from the marketing environment (Ch 3).
Strategic Marketing Planning & the Portfolio FAQ
What is the difference between the BCG matrix and the Ansoff grid?
BCG is a portfolio tool — it diagnoses where your existing SBUs sit (growth rate vs relative share) and tells you whether to build, hold, harvest or divest each. Ansoff is a growth tool — it generates options for getting bigger by crossing products (existing/new) with markets (existing/new): penetration, market development, product development and diversification. BCG looks at what you already have; Ansoff plots where to expand.
What are the two axes of the BCG matrix?
Market growth rate on the vertical axis (how fast the market is expanding) and relative market share on the horizontal axis (your share divided by your largest rival's share). High growth + high share = Star; low growth + high share = Cash Cow; high growth + low share = Question Mark; low growth + low share = Dog. Getting the axes the right way round is the most common MCQ trap.
Which Ansoff strategy is riskiest and why?
Diversification — a new product AND a new market — because the firm has no existing familiarity with either the product or the customer. Market penetration (existing product, existing market) is the lowest risk; market development and product development sit in between. The course advice is to sequence growth by risk and by your capability to execute.
What makes a mission statement market-orientated?
It defines the business by the customer need it serves, not the product it makes. A product-orientated mission says 'we make low-cost furniture'; a market-orientated one says 'we help create a better everyday life at home'. Market-orientated missions are more durable because they survive changes in technology and product form, and they are motivating without being a bald 'increase profit' goal.
Exam move
Drill the two portfolio tools until you can draw each from memory with its axes labelled: BCG (growth vertical, relative share horizontal → Star/Cash Cow/Question Mark/Dog → build/hold/harvest/divest) and Ansoff (products × markets → penetration/market development/product development/diversification, ordered by risk). For application questions, classify first, then recommend a strategy per cell, then add the cash-flow logic (Cash Cow funds the Star). Always close with a limitation — the matrix is a snapshot, ignores synergies, assumes share drives profit — because that evaluation move earns the conclusion marks. Keep SMART and SWOT as supporting vocabulary the MCQs test.
