MKTG 3000 Lecture Notes - Lecture 7: Honest Tea, Cost Leadership, Target Market
I. SBU and resource allocation
a. In general, everyone comes to budget meeting asking for more money
b. How to make priorities:
i. Question marks: high market growth but low market share= invest heavily to
increase market share of liquidate.
1. Market is growing, but e do’t hae uh arket share
2. Need to figure out what to do.
3. Google play
ii. Star: high market growth and high market share= ensure cashflow exceeds
required investment for growth. Sometimes as the market stops growing, they
will become a cash cows.
1. Market is’t groig ayore, ut still doig ell
2. Apple iphones (depending on where you are)
iii. Cash cows: foundation of a company; high profits, low investment.
1. Invest to maintain market share
2. Example: google serach engine ads
iv. Dogs: not much market growth, and not much market share
1. If the market becomes unimportant, you may decide to liquidate
2. Ensure cashflow
3. Apple: desktops
c. CocaCola example
i. Even though their key business (softdrinks) is going down, they have done with
product development to continue doing well
ii. A lot of differentiation
iii. Beverage industry:
1. Healthy and convenient
2. Over our love affair with processed sugar and corn sweeteners
iv. What type of growth strategy was Coca-Cola using when they brought Honest
Tea?
1. Diversification, because it is going after a new market and a different
product
II. Competitive Advantage
a. Types of competitive advantage=the set of unique features of a company and its
products that are perceived by the target market as significant and superior to the
competition (to be sustainable, hard to copy near term)
i. Cost leadership
1. Become a low cost provider and have cost advantage
2. Have an advantage that you have a good raw material supplier
3. No frill services
4. Example: walmart
ii. Product/service differentiation
1. Try to find a way to differentiate yourself from others
2. Try to do something better or different
3. As a product or as a service
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