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    DPM

    Uploaded by

    Shubham Bhatewara
    The document discusses the Directional Policy Matrix (DPM), a tool used to determine the most attractive market segments for an organization to pursue and invest in. The DPM measures the attractiveness of each segment and the organization's capability to support that segment. It involves weighting factors for attractiveness and capability, scoring each segment, and plotting the results on a chart to identify segments the organization should focus on ("Leader"), grow in ("Growth Leader"), or withdraw from ("Custodial"). Interpreting the DPM suggests strategic tactics for each segment based on its position on the chart.

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    DPM

    Uploaded by

    Shubham Bhatewara
    129 views5 pages
    The document discusses the Directional Policy Matrix (DPM), a tool used to determine the most attractive market segments for an organization to pursue and invest in. The DPM measures the attractiveness of each segment and the organization's capability to support that segment. It involves weighting factors for attractiveness and capability, scoring each segment, and plotting the results on a chart to identify segments the organization should focus on ("Leader"), grow in ("Growth Leader"), or withdraw from ("Custodial"). Interpreting the DPM suggests strategic tactics for each segment based on its position on the chart.

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    Directional policy matrix

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    Dpm

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    The document discusses the Directional Policy Matrix (DPM), a tool used to determine the most attractive market segments for an organization to pursue and invest in. The DPM measures the attractiveness of each segment and the organization's capability to support that segment. It involves weighting factors for attractiveness and capability, scoring each segment, and plotting the results on a chart to identify segments the organization should focus on ("Leader"), grow in ("Growth Leader"), or withdraw from ("Custodial"). Interpreting the DPM suggests strategic tactics for each segment based on its position on the chart.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    129 views5 pages

    DPM

    Uploaded by

    Shubham Bhatewara
    The document discusses the Directional Policy Matrix (DPM), a tool used to determine the most attractive market segments for an organization to pursue and invest in. The DPM measures the attractiveness of each segment and the organization's capability to support that segment. It involves weighting factors for attractiveness and capability, scoring each segment, and plotting the results on a chart to identify segments the organization should focus on ("Leader"), grow in ("Growth Leader"), or withdraw from ("Custodial"). Interpreting the DPM suggests strategic tactics for each segment based on its position on the chart.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 5

    Making good strategic choices Directional Policy

    Matrix

    The essence of strategy is that it is a choice between two or more good options.
    In developing a marketing strategy the choice to be made is of which segments of the market you
    should develop tactics to pursue.
    The Directional Policy Matrix (DPM) is a tool for helping you determine what your preferred
    segments are. In completing a DPM you understand what you should invest in and the direction
    your organisation should take. The directional policy matrix helps you determine whether
    decisions made in the day-to-day running of the organisation are in its best interest.
    The Directional Policy Matrix measures the attractiveness of a segment and the capability of the
    organisation to support that segment.

    Attractiveness of a Market Segment


    Evaluating the attractiveness of a segment should include but not be limited to, these variables:

    Size of the segment (number of customers, units or $ sales)


    Growth rate of the segment (a very important variable)

    Profit margins of the segment to the sales organisation

    Ongoing purchasing power of the segment

    Attainable market share given promotional budget, fragmentation of the market and
    competitors promotional expenditures

    Required market share to break even.

    Capability of the organisation


    Evaluating the capability of the organisation to meet the needs of the segments should include,
    but not be limited to, these variables analysed against the competition:
    Competitive capability of the organisation against the marketing mix (product/service,
    place, price and promotion)
    Access to distribution channels

    Capital and human resource investment required to serve the segment

    Brand association of the organisation in the eyes of the segment

    Current market share/likely future market share.

    Scoring the Directional Policy Matrix


    To score the DPM you need to know the goal of your marketing strategy. This may be, but not
    limited to:
    1.
    2.

    Profit lift
    Market share lift

    3.

    Value of the organisation if it were for sale.

    Complete scoring the directional policy matrix in four steps:


    1.

    Weight the relative importance of each factor of attractiveness and capability in terms of
    its contribution to the goal of the marketing strategy out of 1.
    2.
    Allocate the respective weight of a total score of 48 points to each factor. e.g. if the
    weighting for a factor was 0.2 then the total points available for that factor is 0.2X48=10
    (rounded up)
    3.

    Score each segment relative to the other segments in how much each segment meets the
    criteria of the factor. e.g. For the attractiveness factor Size of segment, in the example Table
    1, score the largest segment 10 and the smallest segment 1.

    4.

    Plot the resultant score in excel and create a bubble chart graph where the size of the
    bubble represents the size of the segment for greater visual clarity when it comes to
    interpreting the analysis.

    Below is an example chart for an organisation selling services.

    Interpreting the Directional Policy Matrix


    The directional policy matrix suggests tactics for each of nine sectors, as shown in the figure
    below.

    The tactics for each sector descriptor are:


    1.
    2.

    Leader Focus your resources on segments in this sector.


    Growth leader Grow by focusing just enough resources here.

    3.

    Cash Generator Milk segments in this sector for expansion elsewhere.

    4.

    Phased withdrawal Move cash to segments with greater potential.

    5.

    Custodial Do not commit any more resources to segments in this sector.

    6.

    Try harder Determine if there are ways in which you can build your capability for
    segments in this sector for low levels of cash.

    7.

    Double or quit Invest in your capability or get out of segments in this sector.

    8.

    Divest Liquidate or move assets used in segments in this sector as fast as you can.

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