1. WINNING MARKETS: MARKET-ORIENTED STRATEGIC PLANNING
CHAPTER 3
WINNING MARKETS: MARKET-ORIENTED STRATEGIC PLANNING

2. Important Topics of This Chapter
Characteristics of Corporate Planning:
Vision
Mission
SBU
Product Portfolio Models:
BCG Model
GE Model
Strategies for Planning A New Business
Business Strategic Planning
The Marketing Process
Contents of A Marketing Plan

3. CORPORATE AND DIVISION STRATEGIC PLANNING
Defining the Mission:
History
Preferences
Environment
Resources
Distinctive Competencies.
Characteristics of Mission Statements:
Goals
Company policies with suppliers, customers. etc.

4. CORPORATE AND DIVISION STRATEGIC PLANNING
Characteristics of Mission Statement (cont.):
Competitive scope:
Industry, product, competence, market-segment, vertical, geographical
Establishing Strategic Business Units (SBU):
Single business:
customer group
Satisfies its own set of competitors:
customer needs
Single managers responsible for planning and technology improvements

5. DIVISION STRATEGIC PLANNING (CONT.)
Assigning Resources to Each SBU:
Boston Consulting Group Model(BCG):
Market share and market growth
Strategies:
Build-increase market share
Hold-maintain market share
Harvest-increasing short-term cash flow
Divest-liquidation.
Mistakes:
expect all SBU will have same growth pattern,
very little cash retained for cash cows.

6. Analyzing Current SBU’s: Boston Consulting Group Model
Analyzing Current SBU’s: Boston Consulting Group Approach
This CTR corresponds to Figure on p. 39 and relates to the discussion on pp
Relative Market Share
High Low
Stars
High growth & share
Profit potential
May need heavy
investment to grow
Question Marks
High growth, low share
Build into Stars/ phase out
Requires cash to hold
market share
Designing the Business Portfolio
The business portfolio is the collection of businesses and products that make up the company. In portfolio analysis, management evaluates the businesses for their strategic fit in meeting company objectives. Strategic Business Units (SBUs) consist of separate units of the company that can be planned independently from other company businesses.
The BCG Matrix
Stars. High growth, high share businesses. Stars often require heavy investment to build/maintain share in rapidly expanding markets. You may wish to discuss the importance of market share to product profitability at this point.
Cash Cows. Low growth, high share businesses. Cows generate profits for investment in other businesses.
Question Marks. High growth, low share businesses. Strategy must decide between further investment to move question marks to star status or phasing the product out.
Dogs. Low growth, low share. Dogs are often targets for divestment, but may still be profitable and/or contribute to other organizational goals.
Market Growth Rate
Low High
Cash Cows
Low growth, high share
Established, successful
SBU’s
Produces cash
Dogs
Low growth & share
Low profit potential

7. DIVISION STRATEGIC PLANNING (CONT.)
The General Electric Model(GE):
Market Attractiveness and Business Strengths.
Critiques of Portfolio Models:
Positives:
help to understand economies of business better
quality of plans may be improved
communication with top management may be improved.
pinpoint information gab
help to eliminate weaker businesses
open opportunities to invest to more profitable businesses.
Negatives:
too mach emphasis to market share,
Can be manipulated to produce desired location
fail to delineate synergy between two or more business.

8. Analyzing Current SBU’s: GE Strategic Business-Planning Grid
The GE Planning Grid
This CTR corresponds to Figure 2-3 on p. 40 and relates to the material on pp
Business Strength
High
Medium
Low
Strong
Average
Weak A B C D
The General Electric Approach
This matrix uses two dimensions of three zones each:
Industry attractiveness is an index made up of such factors as market size, market growth, industry profit margin, amount of competition, seasonality & cyclicality of demand, and industry cost structure.
Business strength is an index of factors like relative market share, price, competitiveness, product quality, customer & market knowledge, sales effectiveness, and geographic advantages. Which elements within these categories are utilized may vary from product to product and market to market.
Strategies appropriate for each group of zones:
Invest/Grow. This zone consists of the three green cells in the upper left corner and indicate strong SBUs.
Selectivity/Earnings. This zone consists of the three yellow diagonal cells from the lower left to the upper right and represent SBUs of medium overall attractiveness.
Sell or Reposition. This zone consists of the three red cells in the lower right corner and indicated SBUs with low overall attractiveness.
Industry Attractiveness

9. PLANNING NEW BUSINESSES
Intensive Growth:
Product/market expansion grit
Market Penetration
Market Development\Product Development
Integrative Growth:
Backward Integration
Forward Integration
Horizontal Integration

10. Developing Growth Strategies
Product/Market Expansion Grid
This CTR corresponds to Figure 2-4 on p. 41 and relates to the material on pp
Developing Growth Strategies
Product/ Market Expansion Grid
1. Market
Penetration
3. Product
Development
Existing
Products
New
Products
Developing Growth Strategies
Market Penetration. A penetration strategy involves increasing sales to present target customers. The product itself remains unchanged although there may be a substantial change in how the product is promoted. You may wish to link market penetration with other company-wide strategies such as market leader if appropriate to course progress at this time.
Market Development. A market development strategy involves identifying new segments for the current products offered by the company. Market development can be successful for old products like Arm & Hammer Baking Soda (used as a refrigerator deodorant). You may wish to link market development to emerging technologies such as geodemographics for identifying new market segments.
Product Development. A product development seeks growth by modifying existing products or introducing new products to serve an existing market. Line extensions in snack foods are often useful for illustrating this strategy to students. You may ask your class how many flavors of Doritos they can name as an example.
Diversification. This strategy involves taking profits from existing products or businesses to acquire or enter new markets, usually in different industries from previous company efforts. RJR buying Nabisco is an example.
Existing
Markets
2. Market
Development
4. Diversification
New
Markets

11. PLANNING NEW BUSINESSES
Diversification Growth:
Related industries
concentric diversification
horizontal diversification
Unrelated Industries
Conglomerate diversification
Downsizing Older Businesses:
Pruning.

12. BUSINESS STRATEGIC PLANNING
Business Vision/Mission
SWOT ANALYSIS:
External Environmental Analysis:
Opportunity and Treat Analysis
Marketing Opportunity-success probability:
Environmental Treat-probability of occurrence:
Ideal business-opportunities are high and treat is low
Speculative business-high on both opportunities and treat
Mature business-low in opportunities and low in treat
Troubled business-low in opportunities and high in treats
Internal Environmental Analysis:
Strength and Weaknesses:

13. BUSINESS STRATEGIC PLANNING (CONT.)
Goal Formulation:
MBO
Profit (short-term profit or long-term growth) vs. nonprofit goals, or high growth Vs low risk.
ROI
Realistic goals
Strategy Formulation:
Cost Leadership:
learning curve
Differentiation:
service, quality, technology
Focus:
target market

14. BUSINESS STRATEGIC PLANNING (CONT.)
Strategic Alliances:
product/service alliances
promotional alliances
logistic alliances
pricing collaborations:
airlines,hotels and car rental
Program Formulation:
supporting programs-R&D
Implementation
Feedback and Control

15. THE MARKETING PROCESS Value Delivery Process: Production process:
Strategic Marketing:
Marketing is at the top
segmentation
targeting
positioning
Tactical Marketing
Provide and communicate the value-Japanese approach:
zero Customer feedback
zero product-improvement time
zero purchasing time(JIT)
zero set-up time
zero defects.

16. THE MARKETING PROCESS (CONT.)
Analyzing Marketing Opportunities:
Marketing research :
Macro/Micro environment
Consumer and business markets.
Developing Marketing Strategies:
Differentiation and positioning
Planning Marketing Programs:
Marketing mix:
Product, Price, Promotion and Place
Managing Marketing Effort:
Implementation of marketing programs

17. CONTENTS OF MARKETING PLAN
Executive Summary
Current Marketing Situation:
Market
Product
Competition
Distribution
Macro-environment

18. CONTENTS OF MARKETING PLAN (CONT.)
Opportunity and Issue Analysis:
Opportunities/Treats Analysis.
Strengths/Weaknesses Analysis.
Issue Analysis.
Objectives/Goals:
Financial.
Marketing.

19. CONTENTS OF MARKETING PLAN (CONT.)
Marketing Strategy:
Targeting, positioning:
product
price
promotion
distribution, service, R&D and marketing research.
Action Programs
Projected Profit-and-Loss Statement
Controls

20. MARKETING PLANNING IN THE 2000s
Customer and Competitor Oriented
More Realistic
Team Approach
Top Management Involvement
Continuing Process
Cover shorter term (one year and so)
Some Take Seriously, others use as a guideline