Principles of Marketing Lecture-6

Summary of Lecture-5

Marketing Challenges in the 21st century

Threat of Substitute Products Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Threat of New Entrants Rivalry Among Competing Firms in Industry * 23

The Information Technology Boom Rapid Globalization The Changing World Economy The Call for more ethical and social Responsibility The New Marketing Landscape

Today’s Topics

Strategic Planning and Marketing Process

Strategic planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

Planning--what are we going do and how are we going to do it?

Why Plan? Address changing environment and consumers Develop shared goals within organization Address competitive threat

Planning is no fun! Who likes to think about the future? It is just an unnatural act!

If you fail to plan, you plan to fail.

Planning requires that you: What do you see? Anticipate the future Determine actions that are needed to achieve objectives

The Planning Process

Environmental Analysis Mission & Objective Setting Marketing Strategy Development Action Plans

Characteristics of a Strategic Plan

Broad in Scope Long Range: 3 - 5 + Years Focus on Organizational Objectives Initiated and Managed by Top Management Becomes Basis for Tactical Planning & Operations

Strategic Planning Conducted by Board, CEO, Division VPs Sets Objectives Fundamental Strategies

Tactical Planning Middle Management - Sales Mgr., Mkt. Research Director, Advertising Director Quarterly & Semi-Annual Plans Departmental Policies and Procedures Budget Allocations

Operational Planning District Sales Managers, Staff Marketing Supervisors Daily and Weekly Plans Departmental Rules & Procedures

It is more important to do what is strategically right than what is immediately profitable. --Phillip Kotler

SWOT Analysis Strengths Weaknesses Opportunities Threats

Steps in Strategic Planning

Corporate Level Business unit, product, and market level Planning, marketing, and other functional Strategies Defining the Company Mission Setting Company Objectives and Goals Designing the Business Portfolio

Strategic Planning involves developing an overall company strategy for long-run survival and growth.

This process involves: Defining a Mission: Statement of an organization’s purpose; should be market oriented. Setting Company Objectives: Supporting goals and objectives to guide the entire company. Designing a Business Portfolio: Collection of businesses and products that make up the company. Planning Functional Strategies: Detailed planning for each department designed to accomplish strategic objectives.

Defining the Company’s Business and Mission

A Mission Statement is a Statement of the Organization’s Purpose. Characteristics of a Good Mission Statement: Market Oriented Realistic Fit Market Environment Distinctive Competencies Motivating Specific

Setting Company Objectives and Goals

Designing the Business Portfolio

Business Portfolio: The collection of business and products that make up the company Portfolio Analysis: A tool by which management evaluates the various business making up the company Strategic Business Unit (SBU): A unit of the company that has a separate mission and objectives and that can be planned independently from other company business

The best portfolio is the one that best fits the company’s strengths and weaknesses to the opportunities in the environment. The company must: analyze its current business portfolio or Strategic Business Units (SBU’s) decide which SBU’s should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio

The Boston Consulting Group’s Growth-Share Matrix

? ? ? ? 4 1 3 5 2 8 6 7 Market growth rate Relative market share Stars 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- Stars Question marks 4 ? ? 1 3 ? ? 5 2 Market growth rate Dogs Cash cow 8 6 7 10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x Relative market share 2

Enough for today. . .

Summary

Strategic Planning and Marketing Process

Corporate Level Business unit, product, and market level Planning, marketing, and other functional Strategies Defining the Company Mission Setting Company Objectives and Goals Designing the Business Portfolio

? ? ? ? 4 1 3 5 2 8 6 7 Market growth rate Relative market share Stars 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- Stars Question marks 4 ? ? 1 3 ? ? 5 2 Market growth rate Dogs Cash cow 8 6 7 10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x Relative market share 2

Next….

BCG Marketing Process Analyzing marketing opportunities Selecting target markets

Principles of Marketing Lecture-6