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Prof. Mundy Gonzalez De La Salle University Professional Schools, Inc

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Presentation on theme: "Prof. Mundy Gonzalez De La Salle University Professional Schools, Inc"— Presentation transcript:

1 Winning Markets Through Market-Oriented Strategic Planning by Philip Kotler
Prof. Mundy Gonzalez De La Salle University Professional Schools, Inc RCBC Campus July 19, 2006

2 Philip Kotler S.C. Johnson & Son Distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management in Chicago Recipient of the Distinguished Marketing Educator of the Year Award of the American Marketing Association ”The world's foremost expert on the strategic practice of marketing” - Mgmt. Centre Europe

3 Kotler on Marketing It is more important to do what is strategically right than what is immediately profitable Professional wisdom is contemporary, relevant and practical

Managing a company’s businesses as an investment portfolio. Involves assessing each business’ strength by considering the market’s growth rate and the company’s position and fit in that market. Establishing a strategy.

5 STRATEGY as defined… The words ‘strategy’ and ‘tactics’ are derived from ancient Greek – taktikos meaning ‘fit for arranging or maneuvering’ and is referring to the art of moving forges in battle. Strategos was the word for ‘general’. Strategy was the ‘art of the general’ or the art of setting up forces before the battle.

6 Same principle applies in business …
“The objective of a good sales strategy is to get yourself in the right place with the right people at the right time so that you can make the right tactical presentation”

The Corporate Level – responsible in designing a corporate strategic plan to guide the whole enterprise The Division Level – establishes a division plan covering the allocation of funds to each business unit within the division The Business Unit Level – develops a strategic plan to carry the business unit into a profitable future The Product Level – (product line, brand) within a business unit develops a marketing plan for achieving its objectives in its product market

8 Strategic-Planning, Implementation & Control Processes
IMPLEMENTING CONTROLLING Corporate Planning Division Business Product planning Organizing Implementing Measuring Results Diagnosing Taking Corrective action

9 Planning new businesses, downsizing older businesses…
Sales Diversification Growth Desired Sales Strategic-Planning Gap Integrative growth Intensive growth Current Portfolio Time (years)

10 The Growth-Share Matrix
Stars Question Marks ? ? ? Cash Cow Dogs

11 Assigning resources to SBUs: Four strategies:
Build – market share must grow if they are to become stars. Hold – appropriate for strong cash cows if they are to continue yielding large positive cash flows. Harvest – to increase short-term cash flow regardless of long-term effect. Divest – is likely to produce fairly good bids if the business is in relatively good shape and of more value to another firm.

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

Mission Statements define which competitive scopes the company will operate in: Industry scope Products and applications scope Competence scope Market-segment scope Vertical Scope Geographical scope

14 Corporate and Division Strategic Planning
Competitive company: well defined mission Mission = goals, strategy, policy Decentralization: empowerment, freedom of business units

15 Organizational leader visibility
Well defined mission statement provides connection Mission = purpose, direction and opportunity One goal knits the people together (cohesion)

16 Establishing strategic business units: Product-Oriented vs Market-Oriented Definitions of a Business
Company Product Definition Market Definition Missouri-Pacific Railroad We run a railroad. We are a people-and-goods mover. Xerox We make copying equipment. We help improve office productivity. Standard Oil We sell gasoline. We supply energy. Columbia Pictures We make movies. We market entertainment. Encyclopedia Britannica We sell encyclopedias. We distribute information. Carrier We make air conditioners and furnaces. We provide climate control in the home.

17 Receive timely information about market, competition
Timely marketing strategy Receive timely information about market, competition Act decisively, time does not wait, so does the competitor Untimely decision = obsolete decision

18 Kotler says… “A company must study its competitors as well as its actual and potential customers. Companies need to identify competitors’ strategies, objectives, strengths, weaknesses, and reaction patterns. Managers should be able to receive timely information about competitors. “

19 Market Niche/Product differentiation strategy
Niche Marketing caters to narrowly defined group typically of small market where needs are not that well served; Target specific market and develop product and marketing programs best fit for the product; Instead of scattering their market or concentrating on fad items that eventually die down, focus on Niche Marketing

20 Sales people motivation
Pay and fulfillment When you’re “down”, go up, when you’re “up”, go down.

21 Aggressive Strategies

22 Market Leader “A market leader has the largest market share in the relevant product market. To remain dominant, the leader looks for ways to expand total market demand, attempts to protect its current market share, and perhaps tries to increase its market share.”

23 Market Challenger A Market challenger attacks the market leader and other competitors in an aggressive bid for more market share. It can attack the market leader, firms of its own size that are not doing the job and under financed, and  small local and regional firms”

24 Market challenger strategy
Benchmarking approach Raise the bar, innovate

25 Market challenger strategy
Which markets to defend, which to leave alone, which to drop? Defensive strategy: (i) reduce; (ii) divert; (iii) lessen intensity Defense is as much reaction as it is anticipation

26 “POSITION DEFENSE: The basic defense is to build an impregnable fortification around one’s territory. Although defense is important, leaders under attack would be foolish to put all their resources into only building fortifications around their current product.”

27 “Counteroffensive Defense:
Most market leaders, when attacked, will respond with a counterattack. The leader cannot remain passive in the face of a competitor’s price cut, promotion blitz, product improvement, or sales-territory invasion. In a counteroffensive, the leader can meet the attacker frontally or hit his flank or launch pincer movement.”

28 PREEMPTIVE DEFENSE- This is to attack before the enemy starts its offense. It can wage guerilla action across the market – hitting one competitor here, another there – and keep everyone off balance. Or it can try to achieve a grand market envelopment or it can send out market signals to dissuade competitors from attacking. Market leaders with strong resources may even choose to entice opponents into costly attacks.

29 Geographical Flank Attack
, the challenger spots areas where the opponent is under performing. It can also serve uncovered market needs. A flanking strategy is another name for identifying shifts in market segments that are causing gaps to develop, then rushing in to full the gaps and develop them into strong segments.”

30 “MOBILE DEFENSE : the leader stretches its domain over new territories that can serve as future centers for defense and offense. It spreads through market broadening and market diversification. Market broadening involves the company in shifting its focus from the current product to the underlying generic need. The company gets involved in R&D across the whole range of technology associated with that need.”

31 GUERILLA WARFARE – consists of waging small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds. It uses both conventional and unconventional means of attack. The smaller firm launches a barrage of short promotional and price attacks in random corners of the larger opponent’s market in a manner calculated to weaken the opponent’s market power gradually

32 **Good versus bad competition Support good Attack bad
Focus of company’s marketing attack **Good versus bad competition Support good Attack bad

33 Market Penetration Strategies
Promotion High Low Rapid- skimming strategy Slow- skimming strategy High Price Rapid- penetration strategy Slow- penetration strategy Low

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