Mm session4

Market-OrientedStrategic Planning

Marketing Management

How important is Planning??

How important are you in Strategic Planning?

- The marketing manager is the most significant functional contributor to the strategic planning. He/she has a leadership role in:- Defining the business mission- Environment Analysis- Competitive and business situations- Developing objectives, goals, and strategies- Defining the product, market, distribution,

and quality plans

Market-Oriented Strategic Planning

Stakeholders

Resources

Processes

Organization

Set strategies to satisfy key stakeholders

…by improving business processes…and aligningResources and organization


Stakeholders –define stakeholders and their needs.› Stockholders – increase in stock prices› Employees – job security› Suppliers – maintain/increase order volume› Distributors – marketing programs› Customers – high-quality products and

services


Processes – you satisfy the needs of your stakeholders by improving business processes

Resources and Organization – to carry out process improvements, you a company needs resources and a flexible organization


Stockholder Satisfaction

Customer Satisfaction

Higher-quality Products and services

Higher-quality Environment

(employee satisfaction)

Cont

inuo

us

impr

ovem

ent

Brea

kthr

oug

hIn

nova

tions

Grow

th

Profi

ts

Dynamic Relationships among Stakeholder Groups in a High Performance Business


- A managerial process of developing and maintaining a viable fit between the organization’s objectives, skills, and resources, and its changing market opportunities to yield target profit and growth.


Strategic Planning, Implementation, and Control Process

Corporate Planning

Division Planning

Business Planning

Product Planning

Organizing

Implementing

Measuring Results

Diagnosing Results

Taking Corrective

Action

Planning

Implementing

Control

Strategic Planning, Implementation, and Control Process

Corporate Planning- prepare mission statement,

policies, strategies, goals, and frameworkthat will be the basis of plans of all business units.

I. Corporate Planning Define Corporate Mission Establish Strategic Business Units Assign Resources to SBU’s Plan New Businesses

Define Corporate Mission- Fundamental Questions

1. What is our business?2. Who is our customer?3. What is the value to the customer?4. What will our business be?5. What should our business be?

Define Corporate MissionElements of Company Mission1. History – history of aims, policies, and

achievements2. Current Preferences – business direction3. Market Environment – external

influences to the business4. Resources – corporate capabilities5. Distinctive Competencies – Competitive

Advantages

Define Corporate MissionSignificance: Provides employees with a shared

sense of purpose Acts as the “invisible hand” that guides

employees to work independently towards a common goal

Embody what the company is all about

Define Corporate MissionConsider:1. Define major competitive scopes:

- Industry scope – what industry you want to belong to- Products and Applications scope – range of products

the company will participate in- Competencies Scope – range of competencies the

company will master and leverage- Market-Segment Scope – Type of market the company

will serve- Vertical Scope – number of channel levels the company

will engage- Geographical Scope – range of regions, countries or

country groups the company will operate in

Define Corporate MissionShould be:1. Motivating2. Guided by a Vision3. Stress major policies4. Provide direction for the company in

the next five to ten years

Business Definitions- Defining what you are as a business

Dimensions:› Customer groups› Customer needs› Technology

COMPANY PRODUCT DEFINITION

Revlon We Make Cosmetics We Sell HopeXerox We Make Copying Equipment We help improve Office

ProductivityColumbia Pictures We make movies We sell entertainmentCarrier We make air-conditioners We provide climate control in the

home

Assigning Resources to SBUs

Companies define Strategic Business Units for appropriate funding

HQ will then decide which SBU will › Build – increase market share› Maintain – preserve market share› Harvest – increase short term cash flow› Divest – sell or liquidate business


Boston Consulting Group’s Growth Share Matrix Cash cows - is where a company has high market share in a slow-

growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, yet corporations value owning them due to their cash generating qualities.

Stars - are units with a high market share in a fast-growing industry. They are graduated question marks with a market or niche leading trajectory. The hope is that stars become next cash cows.

Dogs - units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share.

Question marks - (also known as problem children) are business operating in a high market growth, but having a low market share. They are a starting point for most businesses. Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows.


Boston Consulting Group’s Growth Share Matrix

Planning New Business- Existing SBUs will project sales- HQ will have target sales for the year- Divested businesses will result to a

sales gap which will need replacement- New businesses will fill the gap of

divested businesses

Planning New Businesses

0 5 10 150123456789

10

Desired Sales

Strat Plan Gap

Projected Sales

Planning New Businesses Companies can fill the gap in 3 ways:

1. INTENSIVE GROWTH: Identify opportunities to achieve growth within the company’s current businesses

2. INTEGRATIVE GROWTH: Identify opportunities to build or acquire businesses that are related to the company’s current businesses

3. DIVERSIFICATION GROWTH: Identify opportunities to add attractive businesses that are unrelated to current businesses.

New Business Strategies INTENSIVE GROWTH OPPORTUNITIES

› Market Penetration Strategy – increase the market share of its current portfolio in their current markets

› Market Development Strategy – look for new markets whose need might be met by its current products

› Product Development Strategy – new product posibilities

New Business Strategies INTEGRATIVE GROWTH Backward

Integration – acquiring suppliers or service providers› Forward Integration – acquiring distributors› Horizontal Integration – acquiring

competitors

New Business Strategies DIVERSIFICATION GROWTH

› Concentric Diversification – new products that have technological marketing synergies with existing product line

› Horizontal Diversification – new products that might appeal to existing customers

› Conglomerate Diversification – no relationship with products or customers

II. Business Strategic Planning

Business Mission

External Environment Analysis

Internal Environment Analysis

Goal Formulation

Strategy Formulation

Tactics/Program Formulation

Implementation

Feedback and Control

Business Mission Define Specific Mission of the Business

within the broader company mission› More specific scopes

Product applications Competencies Market segments Vertical positioning geography

Internal Analysis Strength and Weakness Analysis

› Asses which business activities your business unit is very good at and very bad at on the department level

› Examine resource utilization› Define needed process improvements› Must be done periodically by management

External Analysis Opportunities and Threats Analysis

› Made up of the actors and forces that affect the company’s ability to develop and maintain successful transactions and relationships with its target customers

Macro and Micro Environment Forces

External Analysis Purpose:

› Look for Market Opportunities – an area of need which a company can perform profitably

› Look for developments in the environment that may pose as a threat to your operations Market Threat – is a challenge posed by an unfavourable trend that would lead to a decrease in sales in the absence of marketing action

Goal FormulationGoals are specific objectives set by management for the planning periodS - M -A - R - T -

Goal FormulationGoals are specific objectives set by management as to what they want to happen to the company for the period

S - pecificM - easurableA - ttainableR - eallisticT - imebound

Goal FormulationPurpose is to set objectives for:

› Profitability› Sales growth› Market share improvement› reputation

Strategy Formulation- Goals indicate where they want the

business to go, Strategies are ways how to get there- Types of Strategies

- Overall Cost Leadership – focus is to lower costs in critical business processes

- Differentiation – achieve superior performance in a benefit valued by customers

- Focus – focuses on narrow market segments rather than going for the larger markets

Program FormulationPrograms or Tactics are detailed specific activities based on set Strategies for the Goals.

› Purpose: Set activities that support the strategies Set programs that ensure the goals that

were formulated by the management will be met

Goal, Strategy, and Program Formulation

Be one of the Major Players in the Industry

Increase Market Presence Expenditure

by 5%

Increase Market Share by 10%

Invest in Advertising

Launch New

Product

Increase Sales

Image Model

Prime Time Ads

Improve portfolio

Corporate Mission

Marketing Objectives Marketing

Strategy

Marketing Program

Implementation Implementation of set plans according

to a Business Calendar – set schedules of activities according to priority and feasibility› Calendar must be followed strictly not to

hamper attainment of set goals

Feedback Control During implementation, management

should monitor activities and new developments in the environment.› Purpose:

Track if Business Calendar is being followed Check for process improvements when

developments in the environment arise.

Questions?

Mm session4

Business

Transcript of Mm session4