1. Market-Oriented Strategic Planning
“The company without a strategy is willing to try anything.” Michael Porter “If you know the enemy and know yourself you need not fear the results of a hundred battles.” Sun Tzu

2. 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

3. 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

4. Strategic Planning, Implementation, and Control Process
Corporate
planning
Division
Business
Product
Organizing
Implementing
Measuring
results
Diagnosing
Taking
corrective
action

5. Steps in Strategic Planning
C o r p o r a t e L e v e l
Business unit, product, and market level
Planning
marketing
and other
functional
strategies
Setting Company
Objectives
and Goals
Defining the
Company
Mission
Designing
the Business
Portfolio

6. Corporate and Division Strategic Planning
All corporate headquarters undertake four planning activities:
Defining the corporate mission
Establishing the strategic business units (SBUs)
Assigning resources to each SBU
Planning new businesses, downsizing or terminating older businesses.

7. 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.

8. Company Mission A mission statement should be: Fundamental questions:
Neither too narrow nor too broad
Fitting of market environment
Based on distinctive competencies
An “invisible hand”
Motivating
Fundamental questions:
What is our business?
Who is the customer?
What do consumers value?
What should our business be?

9. Company Mission (cont.)
Limited number of goals
Stress major policies & values
Good mission statements have 3 major characteristics:
First,....
The statetement “we want to produce the highest quality products, offer the most service, achieve the widest distribution, and sell at the lowest prices” claims too much.
Second, mission statetemnts emphasize the major policies and values of the company.
Third, they define the major competititve scopes within which the company will operate.
For ex: Industry scope (operate in one or several industries
Products scope (the range of products that a company will supply.)
Market-segment scope (the type of customers that a company will serve)
Geographical scope (the range of regions, countries in which a company will operate)
Define competitive scopes

10. 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
Product or technologies can become outdated, but basic market needs may last forever.
Only one decade ago; if you’d asked top managers of IBM what business they were in; they might answered: “we sell computer hardware and software.”
Working under mktg myopia, and being heavily product-focused, IBM lost sight of its customer needs. As customer needs changed, IBM did not and by the early 1990s, it faced with falling market share.
Then IBM has undergone a remarkable transformation: new CEO brought a renew ed customer focus to IBM. He realized that in this new, high tech, connected age, companies must master info.technologies to serve their customers (and suppliers, distributors and employees as well). And he saw that customers are buying much more from IBM than computer hardware and software; they are buying solutions to confusing IT problems. This realization led to a fundamental redefinition of business for IBM. Now, they define their mission as “We deliver solutions to customers’ info.technology problems!”
The new customer focus ğ has promoted the role of services relative to hardware and software in IBM’s mix. (The company now offers an expanded set of IT consulting, strategic outsourcing, and e-business services.....services become their main growth area!
Vision ğ Sony’s former president wanted everyone to have access to “personal portable sound”, so his company created Walkman and portable CD player.

11. Characteristics of a Good Mission Statement:
Company Mission
Characteristics of a Good Mission Statement:
Market Oriented
Realistic
Fit Market Environment
Distinctive Competencies
Motivating
Specific

12. 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)

13. 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

14. Hierarchy of Objectives

15. Steps in Strategic Planning: Business Portfolio
Business portfolio ğ collection of businesses and products that make up the company
Analyzing its current business portfolio and decide which business should receive more, less or no investment
Developing growth strategies to add new products/businesses to the current portfolio

16. 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

17. The Boston Consulting Group’s Growth-Share Matrix
20%-
18%-
16%-
14%-
12%-
10%-
8%-
6%-
4%-
2%-
Market Growth Rate
Stars 5 4 3 ?
Question marks 2 1
Cash cow 6
Dogs 8 7
2 best-known business portfolio evaluation models: Boston ConsAulting Group Model and General Electric Model
Using the BCG Model ğ a company classifies all its SBUs according to the growth-share matrix:
a)The vertical axis ğ mkt growth rate: provides a measure of mkt attractiveness (annual growth rate of the mkt in which business operates)
b)The horizontal axis ğ relative mkt share: serves as a measure of company stregth in the mkt
(This measure refers to the SBU’s mkt share relative to that of its largest competitor. For ex. A relative mkt share of 0.1 means that the company’s sales volume is only 10% of the leader’s sales volume / A relative share of 10 means that the SBUis the leader and has 10 times the sales of the next strongest competitor in the market.)
The growth-share matrix is divided into 4 cells, each indicating a different type of business.
10x x 2x 1.5x 1x
Relative Market Share
.5x .4x .3x .2x .1x

18. Boston Consulting Group (BCG) Approach
Stars
High growth & share
Profit potential
May need heavy
investment to grow
Question Marks
High growth, low share
Build into Stars or phase out
Require cash to hold
market share ?
Market Growth Rate
Low High
Cash Cows
Low growth, high share
Established, successful
SBU’s
Produce cash
Dogs
Low growth & share
Low profit potential
Question marks are low-share business units in high-growth markets (they require alot of cash to hold their share)
If the quest.mark business is successful, it becomes a star
Stars are high-growth, high-share businesses or products (they need heavy investment to finance their rapid growth potential)
Cash-cows are low-growth, high-share businesses (they are established, successful, and need less investment to hold their share)
Dogs are low-growth, low-share businesses (they may generate enough cash to maintain themselves, but do not have much future)
Relative Market Share
High Low

19. The BCG Growth-Share Matrix and Strategies
After the classification of its SBUs ğ to determine what role each will play in the future
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
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
Build ğ to invest more in the SBU in order to build its share
Hold ğ to invest enough just to hold at the current level
Harvest ğ milking the SBU’s short-term cash flow regardless of the long-term effect
Divest ğ by selling SBU or phasing it out and using the resources elsewhere

20. Problems With Matrix Approaches
Can be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU’s & Measure Market Share/ Growth
Problems With Matrix Approaches
Focus on Current Businesses; provide little advice for future planning
Can Lead to Unwise Expansion or Diversification

21. Growth Strategies - Ansoff’s Product / Market Expansion Grid
penetration
Existing
markets
products
3. Product
development
New
products
2. Market
development
New
markets
4. Diversification
Beyond evaluating current businesses, designing the business portfolio involves finding businesses and products that the company should consider in the future.
Companies need to grow if they want to comete more effectively and satisfy their stakeholders.
One useful device for identifying growth opportunities for the future ğ product/market expansion grid
1)Making more sales to present customers without changing products in any way
2)identifying and developing new market segments for current company products
3)offering modified or new products to current market segments
4)starting up or acquiring businesses outside the company’s current products and markets

22. 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.

23. Which strategy is this? Market penetration Market development
Product development
Diversification
There are several potential answers to this categorization:
Starbucks is appealing to the at-home coffee drinking market. This is market development.
The answer could also be product development where Starbucks is offering coffee in areas where there are no Starbucks retail outlets.
Some students might argue this is market penetration if it is selling ADDITIONAL coffee to current drinkers.
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24. Downsizing
Many reasons that a company might want to abandon products or markets:
The market environment might change (making some of the company’s product or markets less profitable – economic recession)
The company may have grown too fast or entered areas where it lacks experience
Some of the company’s products or business units age and die.

25. 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

26. Marketing’s Key Role in Strategic Planning
Marketing’s Role in Strategic Planning
Design
effective
strategies
Inputs to
Strategic
Planners
Provide a
guiding
philosophy
Form
superior
value
delivery
networks
Build
strong
value
chains
Identify
attractive
opportu-
nities

27. Marketing’s Key Role: 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

28. 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

29. 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!

30. Business Unit Strategic 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

31. 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

32. 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

33. Business Unit Strategic Planning / Example of a Checklist

34. Marketing Analysis – SWOT Analysis34

35. 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
Most businesses pursue a mix of objectives
Objectives must be arranged hieararchically; from the most to the least important
should be stated quantitatively whenever possible (e.g .“increase the ROI to 15% within two years”)
should be realistic
should be consistent

36. Business Unit Strategic Planning: Strategy Formulation: Porter
Overall Cost Leadership
Differentiation
Strategy ğ A game plan for how to reach goals (while goals indicating what a business unit wants to achieve)
3 general type of strategy:
Cost Leadership ğ to achieve the lowest production and distribution costs / to price lower than its competitors and win a large market share
Differentiation ğ to concentrate on achieving performance in an important customer benefit area valued by a large part of the market
Focus ğ on one or more narrow market segments rather than going after a large market
Focus

37. 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

38. 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

39. The Value-Delivery Process

40. 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

41. The Marketing Process (cont.)

42. The Marketing Process (cont.)
Strategy
Customers grouped by:
Geographic
Demographic
Psychographic
Behavioral
Market segment is a groups of consumers who respond in similar ways to marketing efforts.
Market Segmentation
Target marketing
Market Positioning

43. Strategy Market Segmentation Target marketing Market Positioning
Evaluation of each segment’s attractiveness
Selection of segments with greatest long-term profitability
A company can choose one or several segments to target
Market Segmentation
Target marketing
Market Positioning

44. Strategy Market Segmentation Target marketing 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
Market Segmentation
Target marketing
Market Positioning

45. The Marketing Process (cont.)
Designing marketing strategies for competitive advantage
Market leader strategies
Market challenger strategies
Market follower strategies
Market nicher strategies

46. 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

47. The Marketing Mix
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48. The Marketing Process (cont.)
Managing the marketing effort
Marketing Analysis
Marketing Planning
Marketing Implementation
Marketing Control

49. Managing the Marketing Effort
Marketing Functions
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 function ğ begins with a complete analysis of the company’s situation

50. Managing the Marketing Effort
Marketing Functions
Marketing plans include:
Executive summary
Analysis of current situation
Objectives
Targets and positioning
Marketing mix
Budget
Controls
Analysis
Planning
Implementation
Control

51. 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.

52. Contents of a Marketing Plan
Executive Summary & Table of Contents
Current Marketing Situation
Threats and Opportunity Analysis
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
Controls

53. Managing the Marketing Effort
Marketing Functions
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
Analysis
Planning
Implementation
Control

54. Managing the Marketing Effort
Marketing Functions
Evaluation of the results of marketing strategies
Checks for differences between goals and performance
Analysis
Planning
Implementation
Control

55. Measuring Effectiveness
Return on marketing (marketing ROI)
The net return from a marketing investment divided by the costs of the investments

56. The Relationship Between Analysis, Planning, Implementation, and Control
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