Chapter One:

Chapter One:

Market-Oriented Perspectives

Underlie Successful Corporate, Business,

and Marketing Strategies

Market-Oriented Perspectives

Underlie Successful Corporate, Business,

and Marketing Strategies

Dwight D. Eisenhower said it best: "Plans are nothing, planning is everything." While your strategic planning activities will result in a document, the document itself matters less than the process of collecting and analyzing input, and thoughtful discussion and debate.

Chapter One: Introduction to Strategy

Learning Objectives• Understand the meaning and value of strategic planning• Gain a historical perspective regarding strategic planning• Learn the structural component framework of strategy• Discern the hierarchy of strategy development• Gain an appreciation of the role of analytical thinking• Understand the contents of a marketing plan

The Evolution of Strategic PlanningFor the past two or three decades, popular strategic formulations have focused on competitors rather than customers, i.e., succeed by gaining a competitive advantage with strong brand names (brand awareness), distribution strongholds (# of salespeople, distribution channels), promotional muscle, cost efficiencies, etc. This perspective became especially popular with Michael Porter’s 1980 Competitive Strategy, which primarily deals with how to deal with competition. Competitive strategy often implies a sense of warfare, and many modern formulations, such as by Ries and Trout, incorporate such concepts.

STRATEGYCompetitionCustomers

Special Capabilities External Environment

1950s Budget, corporate planning (rather than functional planning)

1960s Long Range Planning (objectives, forecasting)

1970s Portfolio Planning

1980s Generic Strategies (lower costs, differentiation)

1990s Quality (more creativity; learning and adapting)

2000s “Value Disciplines” (e.g., Treacy and Wiersema)1) Operational Excellence 2) Customer Intimacy 3) Product Leadership

Strategic Planning Failure

Companies often talk about their strategies.

What does strategy mean?

A fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.

Planning,

Implementation, Control

Exhibit 1.3

Components of Strategy

• Scope

• Goals and objectives

• Resource deployments

• Identification of sustainable competitive advantage

• Synergy

-A strategy is a plan-

What are you planning? (Area)

What do you want to accomplish? (Goals)

What resources are available? (Constraints)

How can you get an edge? (Leverage a differential advantage)

How can the plan come together? (Parts fit)

Examples:

Blackjack Strategies Interview Strategies

Scope

The Hierarchy of Strategies

Markstrat Goals? Resource Allocation

1 Leadership (120 pts.) 1.1 Organizational Leadership (70 pts.)

1.2 Social Responsibility (50 pts.)2 Strategic Planning (85 pts.)

2.1 Strategy Development (40 pts.) 2.2 Strategy Deployment (45 pts.)3 Customer and Market Focus (85 pts.) 3.1 Customer and Market Knowledge (40 pts.) 3.2 Customer Relationships and Satisfaction (45 pts.)4 Measurement, Analysis, Knowledge Management (90 pts.) 4.1 Measurement and Analysis of Organizational Performance (45 pts.) 4.2 Information and Knowledge Management (45 pts.)5 Human Resource Focus (85 pts.)

5.1 Work Systems (35 pts.)5.2 Employee Learning and Motivation (25 pts.)

5.3 Employee Well-Being and Satisfaction (25 pts.)6 Process Management (85 pts.) 6.1 Value Creation Procsses (50 pts.) 6.2 Support Processes (35 pts.)7 Business Results (450 pts.)

7.1 Customer-Focused Results (75 pts.) 7.2 Product and Service Results (75 pts.) 7.3 Financial and Market Results (75 pts.) 7.4 Human Resource Results (75 pts.) 7.5 Organizational Effectiveness Results (75 pts.) 7.6 Governance and

Baldridge Awards

SCAs of 248 Businesses

1 Reputation for Quality

2 Customer service/product support

3 Name recognition/high profile

4 Good management/staff

5 Low cost production

6 Financial resources

7 Customer orientation/research

8 Product-line breadth

9 Technical superiority

10 Base of satisfied customers

11 Segmentation/focus

12 Brand characteristic/differentiation

13 Continuing product innovation

14 Market share

15 Size/location of distribution

16 Lowprice/high value offering

17 Knowledge of business

18 Pioneer/early entrant in industry

19 Efficient, adaptable to customers

20 Effective sales force

21 Overall marketing skills

22 Shared vision/culture

23 Strategic goals

What is effective marketing strategy?

There are many success “metrics,” but what are the sources of competitive advantage?

Exhibit 1.10

Contents of a Marketing Plan• Executive summary

• Current situation and trends

• Performance review (for an existing good/service only)

• Key issues

• Objectives

• Marketing strategy

• Action plans

• Projected profit-and-loss statement

• Controls

• Contingency plans

From Wikipedia

A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s). It can be for a product or service, a brand, or a product line. A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.