Post on 16-Jan-2016
description
Market-Oriented Strategic Planning
““The company without a strategy is willing to try The company without a strategy is willing to try anything.” anything.”
Michael PorterMichael Porter
““If you know the enemy and know yourself you need If you know the enemy and know yourself you need not fear the results of a hundred battles.not fear the results of a hundred battles.””
Sun TzuSun Tzu
Strategic Marketing Planning
Companies should look ahead and develop long-term strategies ğ to meet changing conditions in their industries and ensure long-term survival
The task of selecting an overall company strategy for long-run survival and growth ğ “strategic planning”
Marketing’s key role in strategic planning
Strategic Planning
Strategic Planning ğ Managerial process of developing and maintaining a match between the organization’s resources, goals and capabilities and the changing market opportunities.
The aim ğ to shape and reshape company’s businesses and products in order to reach to targeted profits and growth.
Top-management job Part of a broader process: strategic
management
Strategic Planning, Implementation, and Control Process
Measuringresults
Diagnosingresults
Takingcorrective
action
ImplementationImplementationPlanningPlanning
Corporateplanning
Divisionplanning
Businessplanning
Productplanning
Organizing
Implementing
ControlControl
Steps in Strategic Planning
Defining theCompanyMission
Defining theCompanyMission
Setting CompanyObjectivesand Goals
Setting CompanyObjectivesand Goals
Designingthe Business
Portfolio
Designingthe Business
Portfolio
Planning marketingand other functionalstrategies
Planning marketingand other functionalstrategies
C o r p o r a t e L e v e l Business unit, product, and market level
Corporate and Division Strategic Planning
All corporate headquarters undertake four planning activities:
1) Defining the corporate mission2) Establishing the strategic business units
(SBUs)3) Assigning resources to each SBU4) Planning new businesses, downsizing or
terminating older businesses.
Steps in Strategic Planning: Company Mission Statement
A mission statement ğ a statement of the organization’s purpose --- what it wants to accomplish in the larger environment
A clear mission statement ğ acts as “invisible hand” that guides employees to work toward realizing the organization’s goals.
Company Mission
Fundamental questions: What is our
business? Who is the
customer? What do
consumers value?
What should our business be?
A mission statement should be: Neither too narrow nor
too broad Fitting of market
environment Based on distinctive
competencies An “invisible hand” Motivating
Company Mission (cont.)
Limited number of goals
Stress major policies & values
Define competitive scopes
Company Mission (cont.)
“Market-oriented definitions” of a business ğ better than product or technological definitions
A market-oriented mission statement ğ defines the business in terms of satisfying basic customer needs (see examples)
Mission statement ğ to be guided by a “vision” - an almost “impossible dream” that provides a direction for the company for the next 10 to 20 years
Market OrientedMarket Oriented
RealisticRealistic
Fit Market EnvironmentFit Market Environment
Distinctive CompetenciesDistinctive Competencies
MotivatingMotivating
Specific
Company Mission
Characteristics of a Good Mission
Statement:
Characteristics of a Good Mission
Statement:
Company Product-Oriented Definition
Market-Oriented Definition
Amazon.com We sell books, videos, CDs, toys, consumer electronics and other products online
We make the Internet buying experience fast, easy, and enjoyable— we’re the place where you can find and discover anything you want to buy online
Disney We run theme parks We create fantasies—a place where dreams come true and America still works the way it’s supposed to
Nike We sell athletic shoes and apparel
We bring inspiration and innovation to every athlete* in the world (* if you have a body, you are an athlete)
Steps in Strategic Planning: Company Goals and Objectives
Company’s mission ğ needs to be turned into detailed, supporting objectives for each level of management
Mission ğ hierarchy of objectives As specific as possible Marketing strategies ğ must be developed
to support these marketing objectives
Hierarchy of Objectives
Mission Statement
Marketing Objective # 1
Marketing Objective # 2
Marketing Objective # 3
Marketing Strategy
Marketing Strategy
Steps in Strategic Planning: Business Portfolio
Business portfolio ğ collection of businesses and products that make up the company
1)Analyzing its current business portfolio and decide which business should receive more, less or no investment
2)Developing growth strategies to add new products/businesses to the current portfolio
Business Portfolio (cont.)
Portfolio Analysis ğ to identify and evaluate the various businesses that make up the company
To identify key businesses ğ Strategic Business Units (SBUs)
SBU: unit of the company (separate mission and objectives / can be planned independently from other company businesses)
To assess the attractiveness of its various SBUs and decide how much support each deserves
The Boston Consulting Group’s Growth-Share Matrix
20%-20%-18%-18%-16%-16%-14%-14%-12%-12%-10%-10%- 8%-8%- 6%-6%- 4%-4%- 2%-2%- 00
Mar
ket
Gro
wth
Rat
e
3 ?Question marks
? ??2
1
Cash cow
6
Dogs
8
710x10x 4x 2x 1.5x 4x 2x 1.5x 1x1x
Relative Market Share.5x .4x .3x .2x .1x .5x .4x .3x .2x .1x
Stars
5
4
Question Marks
• High growth, low share • Build into Stars or phase out • Require cash to hold market share
Question Marks
• High growth, low share • Build into Stars or phase out • Require cash to hold market share
Stars
• High growth & share• Profit potential • May need heavy investment to grow
Cash Cows
• Low growth, high share• Established, successful SBU’s•Produce cash
Cash Cows
• Low growth, high share• Established, successful SBU’s•Produce cash
Dogs
• Low growth & share • Low profit potential
Dogs
• Low growth & share • Low profit potential
Mar
ket
Gro
wth
Rat
e L
ow
H
igh
Boston Consulting Group (BCG) Approach
?
Relative Market ShareHigh Low
The BCG Growth-Share Matrix and Strategies
Build ğ to invest more in the SBU in order to build its share Increase market
share Works well for
question marks
Hold ğ to invest enough just to hold at the current level Preserve market
share Good for cash cow
Harvest ğ to increase the SBU’s short-term cash flow Good for weak cash
cows, question marks and dogs
Divest ğ to sell or to liquidate the business Good for dogs and
question marks
After the classification of its SBUs ğ to determine what role each will play in the future
Can be Difficult, Time-Consuming, & Costly to ImplementCan be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU’s & Measure Market Share/ GrowthDifficult to Define SBU’s & Measure Market Share/ Growth
Focus on Current Businesses; provide little advice for future planningFocus on Current Businesses; provide little advice for future planning
Can Lead to Unwise Expansion or DiversificationCan Lead to Unwise Expansion or Diversification
Problems With Matrix Approaches
Growth Strategies - Ansoff’s Product / Market Expansion Grid
4. Diversification2. Marketdevelopment
Newmarkets
1. Marketpenetration
Existingmarkets
Existingproducts
3. Productdevelopment
Newproducts
Product / Market Expansion Grid Market Penetration: making more sales to
current customers without changing its products.
Add new stores in current market areas, improve advertising, prices, service or store design.
Market Development: develop new markets for its current products
Identify new demographic or geographic markets. Product Development: offering modified or
new products to current markets. New styles, flavors, colors, or modified products.
Diversification: new products for new markets. Start up or buy new businesses.
Which strategy is this?
Market penetration
Market development
Product development
Diversification2 - 23
Steps in Strategic Planning: Functional Planning
The company’s overall strategic plan ğ establishes what kind of businesses the company will be in future & its objectives for each business.
More detailed planning must take place within each business unit
The major functional departments in each unit ğ must work together to accomplish strategic objectives
Marketing plays a key role
Provide a guiding
philosophy
Inputs to StrategicPlanners
Marketing’s Role in Strategic Planning
Marketing’s Key Role in Strategic Planning
Identify attractive opportu-
nities
Designeffective
strategies
Designeffective
strategies
Build strongvalue chains
Form superior
value delivery networks
Marketing’s Key Role:
Partner Relationship Management
Partner relationship management working closely with partners in other
departments (to form an effective “value chain” that serves the customer) &
partnering effectively with other companies in the marketing system for a superior “value delivery network” to jointly bring greater value to customers
Marketing’s Key Role: Partner Relationship Management
Each department in the company ğ as a link in the company’s value chain;
Each dept.carries out value-creating activities The company’s overall success ğ depends also on how well
the activities of various dept. are coordinated Departmental relations are full of conflicts
Marketers must find ways to get all dept. to “think consumer” and to develop a smoothly functioning value chain
Marketing’s Key Role: Partner Relationship Management
The company needs to look beyond its own value chain in order to create customer value:
Value-delivery network ğ network made up of the company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire sytem
Competition today takes place between the entire value delivery networks!
Business Unit Strategic Planning
External Analysis
(Opport.&Threat)
Mission SWOT Setting Selecting Developing Implemen- Feedback &
Statement ANALYSIS Objectives Strategy Program. tation Control
Internal Analysis
(Streng.&Weakness)
Business Unit Strategic Planning
Business Mission ğ each SBU needs to define its specific mission within the broader company mission
External Environment Analysis ğ to build a MIS to monitor:
Key external macroenvironment forces Significant microenvironment actors Trends and important developments ğ to
identify the associated opportunities and threats
Business Unit Strategic Planning
Internal Environment Analysis ğ Each business needs to evaluate its internal strengths and weaknesses periodically
“Checklist for Performing Strengths/Weaknesses Analysis”
Management or an outside consultant ğ reviews the business’s marketing, financial, manufacturing and organizational competencies and rates each factor as strength or weakness
SWOT ANALYSIS
Business Unit Strategic Planning /Example of a Checklist
ı PERFORMANCE IMPORTANCEMain 2nd Moderate 2nd Main High Medium Low
Strength Strength Weakness WeaknessMARKETING
Firm's reputationMarket shareProduct/service qualityPricingDistributionPromotionSales forceR&D / InnovationGeographical location
FINANCEHigh profitabilityLow cost of capitalCash flowFinancial stability
PRODUCTIONScale economiesCapacity of meeting demandTalented productive powerTimely productionTechnical competence
ORGANIZATIONSkillful managersLoyal employeesEntrepreneurship orientationFlexibility degreeRapid adaptation
Marketing Analysis – SWOT Analysis
Business Unit Strategic Planning
Goal Formulation (Goals ğ objectives that are specific with respect to magnitude and time)
Turning objectives ğ into measurable goals ğ facilitates management planning, implementation and control
Business Unit Strategic Planning: Strategy Formulation: Porter
Overall Cost Leadership
Differentiation
Focus
The Marketing Process
The task of any business is to deliver customer value at a profit.
There are at least 2 views of the value-delivery process
Two Views of the Value Delivery Process
Traditional Process Sequence
Make product Sell product
Value Creation and Delivery Sequence
Choose the value
Provide the value
Communicate the value
The Value-Delivery Process
The Marketing Process
The Marketing Process: Analyzing marketing opportunities Researching and selecting target markets Designing marketing strategies Planning marketing programs Organizing, implementing, controlling the
marketing effort
The Marketing Process (cont.)
Customers grouped by:
Geographic Demographic Psychographic Behavioral
Market segment is a groups of consumers who respond in similar ways to marketing efforts.
1. Market Segmentation
2. Target marketing
3. Market Positioning
StrategyStrategy
The Marketing Process (cont.)
Evaluation of each segment’s attractiveness
Selection of segments with greatest long-term profitability
A company can choose one or several segments to target
StrategyStrategy
1. Market Segmentation
2. Target marketing
3. Market Positioning
The place the product occupies in the consumer’s mind
Products are positioned relative to competing products
Marketers look for clear, distinctive and desirable place in positioning
StrategyStrategy
1. Market Segmentation
2. Target marketing
3. Market Positioning
The Marketing Process (cont.)
Designing marketing strategies for competitive advantage
Market leader strategies Market challenger strategies Market follower strategies Market nicher strategies
The Marketing Process (cont.)
Planning marketing programs Decisions on:
Marketing expenditures Marketing mix – 4Ps Marketing budget allocation
The marketing mix includes controllable and tactical marketing tools known as the 4P’s
The Marketing Mix
2 - 47
The Marketing Process (cont.)
Managing the marketing effort
Marketing Analysis Marketing Planning Marketing Implementation Marketing Control
Begins with a complete analysis of the company’s situation
Finding opportunities : the company must analyze
its market & mktg environment
company strengths & weaknesses
current and possible mktg actions
Avoiding threats Understanding
strengths Analyzing weaknesses
Analysis
Planning
Implementation
Control
Managing the Marketing Effort
Marketing FunctionsMarketing Functions
Marketing plans include:
Executive summary Analysis of current
situation Objectives Targets and positioning Marketing mix Budget Controls
Managing the Marketing Effort
Marketing FunctionsMarketing Functions
Analysis
Planning
Implementation
Control
Marketing Planning
Through strategic planning ğ the company decides what it wants to do with each business unit
Marketing planning ğ involves deciding on marketing strategies that will help the company reach its strategic objectives
Marketing plan ğ 2 levels: Strategic mktg plan ğ develops the broad mktg
objectives and strategy based on an analysis of the current market situation and opportunities
Tactical mktg plan ğ outlines specific mktg tactics, including advertising, merchandising, pricing, channels, service, etc.
Contents of a Marketing PlanExecutive Summary & Table of Contents
Current Marketing Situation
Threats and Opportunity Analysis
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
Controls
The process that turns mktg plans into mktg actions in order to achieve strategic mktg objectives
Deals with “who”, “where”, “when”, “how” (while mktg planning dealing with “what” and “why”)
Good implementation is a challenge
Managing the Marketing Effort
MarketingMarketing Functions Functions
Analysis
Planning
Implementation
Control
Evaluation of the results of marketing strategies
Checks for differences between goals and performance
Managing the Marketing Effort
Marketing FunctionsMarketing Functions
Analysis
Planning
Implementation
Control
Measuring Effectiveness
Return on marketing (marketing ROI) The net return from a marketing
investment divided by the costs of the investments
The Relationship Between Analysis, Planning, Implementation, and Control
2 - 56