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A Project Report on Strategic

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market planning

MBA
Submitted by
RIAZ AHEMAD
SM20092001

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Strategic market planning
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INTRODUCTION
Marketing planning strategy is a method of focusing an organization's energies and resources on
a course of action which can lead to increased sales and dominance of a targeted market niche.
A marketing strategy combines product development, promotion, distribution, pricing,
relationship management and other elements; identifies the firm's marketing goals, and explains
how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the
choice of target market segments, positioning, marketing mix, and allocation of resources. It is
most effective when it is an integral component of overall firm strategy, defining how the
organization will successfully engage customers, prospects, and competitors in the market arena.
Corporate, corporate missions, and corporate goals. As the customer constitutes the source of a
company's revenue, marketing strategy is closely linked with sales. A key component of
marketing strategy is often to keep marketing in line with a company's overarching mission
statement
Basic theory:
Target Audience
Proposition/Key Element
Implementation
Tactics and actions
A marketing strategy can serve as the foundation of a marketing plan. A marketing plan contains
a set of specific actions required to successfully implement a marketing strategy. For example:
"Use a low cost product to attract consumers. Once our organization, via our low cost product,
has established a relationship with consumers, our organization will sell additional, higher-
margin products and services that enhance the consumer's interaction with the low-cost product
or service."
A strategy consists of a well thought out series of tactics to make a marketing plan more
effective. Marketing strategies serve as the fundamental underpinning by marketing plans

Strategic market planning

designed to fill market needs and reach marketing objectives. Plans and objectives are generally
tested for measurable results.
A marketing strategy often integrates an organization's marketing goals, policies, and action
sequences (tactics) into a cohesive whole. Similarly, the various strands of the strategy , which
might include advertising, channel marketing, internet marketing, promotion and public
relations can be orchestrated. Many companies cascade a strategy throughout an organization,
by creating strategy tactics that then become strategy goals for the next level or group. Each
group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This
is why it is important to make each strategy goal measurable.

There are two major components to your marketing strategy:

1. how your enterprise will address the competitive marketplace
2. how you will implement and support your day to day operations.
In today's very competitive marketplace a strategy that insures a consistent approach to offering
your product or service in a way that will outsell the competition is critical. However, in concert
with defining the marketing strategy you must also have a well defined methodology for the day
to day process of implementing it. It is of little value to have a strategy if you lack either the
resources or the expertise to implement it.

In the process of creating a marketing strategy you must consider many factors. Of those many
factors, some are more important than others. Because each strategy must address some unique
considerations, it is not reasonable to identify 'every' important factor at a generic level.
However, many are common to all marketing strategies. Some of the more critical are described
below
You begin the creation of your strategy by deciding what the overall objective of your enterprise
should be. In general this falls into one of four categories:
Marketing strategies may differ depending on the unique situation of the individual business.
However there are a number of ways of categorizing some generic strategies. A brief description
of the most common categorizing schemes is presented below:

Strategic market planning

Strategies based on market dominance - In this scheme, firms are classified based on their
market share or dominance of an industry. Typically there are four types of market dominance
strategies:
Leader
Challenger
Follower
Nicher

Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength.
Strategic scope refers to the market penetration while strategic strength refers to the firm’s
sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two
alternatives each with two alternative scopes. These are Differentiation and low-cost leadership
each with a dimension of Focus-broad or narrow.
1. Product differentiation (broad)
2. Cost leadership (broad)
3. Market segmentation (narrow)

Innovation strategies - This deals with the firm's rate of the new product development and
business model innovation. It asks whether the company is on the cutting edge of technology
and business innovation. There are three types:
1. Pioneers
2. Close followers
3. Late followers

Strategic market planning

Growth strategies - In this scheme we ask the question, “How should the firm grow?”. There are
a number of different ways of answering that question, but the most common gives four
answers:
1. Horizontal integration
2. Vertical integration
3. Diversification
4. Intensification
A more detailed scheme uses the categories:
1. Prospector
2. Analyzer
3. Defender
4. Reactor
Marketing warfare strategies - This scheme draws parallels between marketing strategies and
military strategies.

Strategic models

Marketing participants often employ strategic models and tools to analyze marketing decisions.
When beginning a strategic analysis, the 3Cs can be employed to get a broad understanding of
the strategic environment. An Ansoff Matrix is also often used to convey an organization's
strategic positioning of their marketing mix. The 4Ps can then be utilized to form a marketing
plan to pursue a defined strategy.
There are many companies especially those in the Consumer Package Goods (CPG) market that
adopt the theory of running their business centered around Consumer, Shopper & Retailer needs.
Their Marketing departments spend quality time looking for "Growth Opportunities" in their
categories by identifying relevant insights (both mindsets and behaviors) on their target
Consumers, Shoppers and retail partners. These Growth Opportunities emerge from changes in
market trends, segment dynamics changing and also internal brand or operational business
challenges.

Strategic market planning

The Marketing team can then prioritize these Growth Opportunities and begin to develop
strategies to exploit the opportunities that could include new or adapted products, services as
well as changes to the 7Ps.
Real-life marketing:-
Real-life marketing primarily revolves around the application of a great deal of common-sense;
dealing with a limited number of factors, in an environment of imperfect information and
limited resources complicated by uncertainty and tight timescales. Use of classical marketing
techniques, in these circumstances, is inevitably partial and uneven.
Thus, for example, many new products will emerge from irrational processes and the rational
development process may be used (if at all) to screen out the worst non-runners. The design of
the advertising, and the packaging, will be the output of the creative minds
employed; which management will then screen, often by 'gut-reaction', to ensure that it is
reasonable.
For most of their time, marketing managers use intuition and experience to analyze and handle
the complex, and unique, situations being faced; without easy reference to theory. This will
often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy, coupled
with the knowledge of the customer which has been absorbed almost by a process of osmosis,
will determine the quality of the marketing employed. This, almost instinctive management, is
what is sometimes called 'coarse marketing'; to distinguish it from the refined, aesthetically
pleasing, form favored by the theorists.

If the market is very attractive and your enterprise is one of the strongest in the industry you will
want to invest your best resources in support of your offering.
If the market is very attractive but your enterprise is one of the weaker ones in the industry you
must concentrate on strengthening the enterprise, using your offering as a stepping stone toward
this objective.
If the market is not especially attractive, but your enterprise is one of the strongest in the
industry then an effective marketing and sales effort for your offering will be good for
generating near term profits.

Strategic market planning

If the market is not especially attractive and your enterprise is one of the weaker ones in the
industry you should promote this offering only if it supports a more profitable part of your
business (for instance, if this segment completes a product line range) or if it absorbs some of
the overhead costs of a more profitable segment. Otherwise, you should determine the most cost
effective way to divest your enterprise of this offering.

The Ten Steps of The Strategic Marketing Planning Process

The Strategic Plan
1. Mission:-Mission Statement
2.Corporate Objective
Goal Setting
Financial Summary
Market Overview
Marketing Audit
SWOT Analysis
Assumptions
3. SWOT Analysis Marketing Objectives and Strategies Forecast and Budgets
4. Assumptions Situation Review
5. Marketing Objectives and Strategies
6.Expected Estimated Results Phase Three
7. Identify Alternative Plans and Mixes Strategy Formulation
8. Budge Phase Four Measurement And Resource Allocation & Monitoring
9. 1st Year Detailed Implementation Programme Review

EFFECTIVE STRATEGIC MARKETING PLANNING

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An effective strategic marketing planning framework is a must-have element for any small
business that wants to become a big business "when it grows up". Unfortunately, many small
business owners have as much interest in strategic marketing planning as a turkey has for
thanksgiving. They avoid it.
In working with my consulting clients, I have developed a simple framework for helping the
every day business owner articulate a plan for strategic engagement with the marketplace. I call
it the 4P Business Thinking framework.
The 4P Business Thinking Framework is a robust system for matching your solution to the
needs of a marketplace, and then communicating that match in a way that results in sales and
profits. Here is a brief overview of the 4Ps of the 4P framework.
1. People (or Profile)
For you or your business to exploit a market opportunity or overcome an industry challenge, you
must have a very clear definition of the target customer. In the B2B (business-to-business) space
that customer may be an organization, but the approach must still be crafted with individual
decision makers in mind. In a B2C (business-to-consumer) context, you may have to define the
demographic, psychographic or geographic profiles of your target prospects.
2. Problem
You must clearly define the problem your marketplace is desperate to solve for which you have
an answer. In business, many ships have crashed on the rocks of market indifference because a
company manufactured a solution for which the market had no
problem. The time proven approach to value innovation in business is to deeply examine the
clearly identified challenges of the customer.
3. Process (or Product)
What is your particular way of solving the market's challenge that differentiates you from every
other competitor?

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This 3rd P in the framework is where you have a chance to stand out from the crowd of
competitors for solving the problem of your chosen target market. Your process or product must
be meaningfully different.
4. Passion (or Personality) and Proof
This last element is often flubbed badly by small businesses who blindly emulate the sanitized
and often colorless communications of much larger firms. One of the embedded advantages a
small business has is the ability to be "personal" and to communicate passion to the
marketplace.
One large company that successfully communicates passion and personality in marketing is
Southwest airlines. As a result of their commitment to personality in business, they continue to
be rewarded with some of the highest customer approval ratings in the domestic airline industry.
If you manage a manufacturer of colorless widgets, or a buttoned-down professional service
firm, you cannot afford to pass up the power of personality, passion and social proof in your
marketing.
Some simple things you can do include digging through early stories of your company for
narratives that may resonate, or capturing the experiences of your staff, clients and managers for
your marketing campaigns.
Having selected the direction most beneficial for the overall interests of the enterprise, the next
step is to choose a strategy for the offering that will be most effective in the market. This means
choosing one of the following 'generic' strategies (first described by Michael Porter in his work,
Competitive Advantage).

A COST LEADERSHIP STRATEGY is based on the concept that you can produce and market
a good quality product or service at a lower cost than your competitors. These low costs should
translate to profit margins that are higher than the industry average. Some of the conditions that
should exist to support a cost leadership strategy include an on-going availability of operating
capital, good process engineering skills, close management of labor, products designed for ease
of manufacturing and low cost distribution.

Strategic market planning

A DIFFERENTIATION STRATEGY is one of creating a product or service that is perceived as
being unique "throughout the industry". The emphasis can be on brand image, proprietary
technology, special features, superior service, a strong distributor network or other aspects that
might be specific to your industry. This uniqueness should also translate to profit margins that
are higher than the industry average. In addition, some of the conditions that should exist to
support a differentiation strategy include strong marketing abilities, effective product
engineering, creative personnel, the ability to perform basic research and a good reputation.

A FOCUS STRATEGY may be the most sophisticated of the generic strategies, in that it is a
more 'intense' form of either the cost leadership or differentiation strategy. It is designed to
address a "focused" segment of the marketplace, product form or cost management process and
is usually employed when it isn't appropriate to attempt an 'across the board' application of cost
leadership or differentiation. It is based on the concept of serving a particular target in such an
exceptional manner, that others cannot compete. Usually this means addressing a substantially
smaller market segment than others in the industry, but because of minimal competition, profit
margins can be very high.
Marketing process can be realized by the marketing mix . The last step in the process is the
marketing controlling. In most organizations, "strategic planning" is an annual process, typically
covering just the year ahead. Occasionally, a few organizations may look at a practical plan
which stretches three or more years ahead.
To be most effective, the plan has to be formalized, usually in written form, as a formal
"marketing plan." The essence of the process is that it moves from the general to the specific,
from the vision to the mission to the goals to the corporate objectives of the organization, then
down to the individual action plans for each part of the marketing program. It is also an
interactive process, so that the draft output of each stage is checked to see what impact it has on
the earlier stages, and is amended.

Marketing planning aims and objectives

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Behind the corporate objectives, which in themselves offer the main context for the marketing
plan, will lie the "corporate mission," which in turn provides the context for these corporate
objectives. In a sales-oriented organization, the marketing planning function designs incentive
pay plans to not only motivate and reward frontline staff fairly but also to align marketing
activities with corporate mission.
This "corporate mission" can be thought of as a definition of what the organization is, of what it
does: "Our business is …". This definition should not be too narrow, or it will constrict the
development of the organization; a too rigorous concentration on the view that "We are in the
business of making meat-scales," as IBM was during the early 1900s, might have limited its
subsequent development into other areas. On the other hand, it should not be too wide or it will
become meaningless; "We want to make a profit" is not too helpful in developing specific plans.
Abell suggested that the definition should cover three dimensions: "customer groups" to be
served, "customer needs" to be served, and "technologies" to be used. Thus, the definition of
IBM's "corporate mission" in the 1940s might well have been: "We are in the business of
handling accounting information [customer need] for the larger US organizations [customer
group] by means of punched cards [technology]."
Perhaps the most important factor in successful marketing is the "corporate vision."
Surprisingly, it is largely neglected by marketing textbooks, although not by the popular
exponents of corporate strategy - indeed, it was perhaps the main theme of the book by Peters
and Waterman, in the form of their "Super ordinate Goals." "In Search of Excellence" said:
[2]
"Nothing drives progress like the imagination. The idea precedes the deed." If the
organization in general, and its chief executive in particular, has a strong vision of where its
future lies, then there is a good chance that the organization will achieve a strong position in its
markets (and attain that future). This will be not least because its strategies will be consistent
and will be supported by its staff at all levels. In this context, all of IBM's marketing activities
were underpinned by its philosophy of "customer service," a vision originally promoted by the
charismatic Watson dynasty. The emphasis at this stage is on obtaining a complete and accurate
picture.

A "traditional" - albeit product-based - format for a "brand reference book" (or, indeed, a
"marketing facts book") was suggested by Godley more than three decades ago:

Strategic market planning

 1. Financial data—Facts for this section will come from management accounting, costing
and finance sections.
2. Product data—From production, research and development.
3. Sales and distribution data - Sales, packaging, distribution sections.
4. Advertising, sales promotion, merchandising data - Information from these departments.
5. Market data and miscellany - From market research, who would in most cases act as a
source for this information. His sources of data, however, assume the resources of a very
large organization. In most organizations they would be obtained from a much smaller
set of people (and not a few of them would be generated by the marketing manager
alone).

Project Plan for a Strategic Marketing Planning Process Implementation

1 Market Mapping & Segmentation Workshop
2 Guidance on Audit Preparation
3 Data Collection & Research
4 Segmentation Verification
5 Customer Profitability Audit
6 Software Training & Data Input
7 Market Audit Workshop
8 Data Validation
9 Objectives and Strategies Workshop
10 Review Objectives and Strategies
11 Plan Review& Metrics Workshop

It is apparent that a marketing audit can be a complex process, but the aim is simple: "it is only
to identify those existing (external and internal) factors which will have a significant impact on
Strategic market planning
the future plans of the company." It is clear that the basic material to be input to the marketing
audit should be comprehensive.
Accordingly, the best approach is to accumulate this material continuously, as and when it
becomes available; since this avoids the otherwise heavy workload involved in collecting it as
part of the regular, typically annual, planning process itself - when time is usually at a premium.
Even so, the first task of this annual process should be to check that the material held in the
current facts book or facts files actually is comprehensive and accurate, and can form a sound
basis for the marketing audit itself.
The structure of the facts book will be designed to match the specific needs of the organization,
but one simple format - suggested by Malcolm McDonald - may be applicable in many cases.
This splits the material into three groups:
Review of the marketing environment. A study of the organization's markets, customers,
competitors and the overall economic, political, cultural and technical environment; covering
developing trends, as well as the current situation.
Review of the detailed marketing activity. A study of the company's marketing mix; in terms of
the 7 Ps -
Review of the marketing system. A study of the marketing organization, marketing research
systems and the current marketing objectives and strategies. The last of these is too frequently
ignored. The marketing system itself needs to be regularly questioned, because the validity of
the whole marketing plan is reliant upon the accuracy of the input from this system, and
`garbage in, garbage out' applies with a vengeance.
Portfolio planning. In addition, the coordinated planning of the individual products and services
can contribute towards the balanced portfolio.
80:20 rule. To achieve the maximum impact, the marketing plan must be clear, concise and
simple. It needs to concentrate on the 20 percent of products or services, and on the 20 percent
of customers, that will account for 80 percent of the volume and 80 percent of the profit.

7 Ps: Product, Place, Price and Promotion, Physical Environment, People, Process. The 7 Ps can
sometimes divert attention from the customer, but the framework they offer can be very useful
in building the action plans.

Strategic market planning

It is only at this stage (of deciding the marketing objectives) that the active part of the marketing
planning process begins. This next stage in marketing planning is indeed the key to the whole
marketing process.
The "marketing objectives" state just where the company intends to be at some specific time in
the future.
James Quinn succinctly defined objectives in general as: Goals (or objectives) state what is to
be achieved and when results are to be accomplished, but they do not state "how" the results
are to be achieved. They typically relate to what products (or services) will be where in what
markets (and must be realistically based on customer behavior in those markets). They are
essentially about the match between those "products" and "markets." Objectives for pricing,
distribution, advertising and so on are at a lower level, and should not be confused with
marketing objectives. They are part of the marketing strategy needed to achieve marketing
objectives. To be most effective, objectives should be capable of measurement and therefore
"quantifiable." This measurement may be in terms of sales volume, money value, market share,
percentage penetration of distribution outlets and so on. An example of such a measurable
marketing objective might be "to enter the market with product Y and capture 10 percent of the
market by value within one year." As it is quantified it can, within limits, be unequivocally
monitored, and corrective action taken as necessary.
The marketing objectives must usually be based, above all, on the organization's financial
objectives; converting these financial measurements into the related marketing measurements.
He went on to explain his view of the role of "policies," with which strategy is most often
confused: "Policies are rules or guidelines that express the 'limits' within which action should
occur."Simplifying somewhat, marketing strategies can be seen as the means, or "game plan,"
by which marketing objectives will be achieved and, in the framework that we have chosen to
use, are generally concerned with the 8 P's.

Examples are:
1. Price - The amount of money needed to buy products
2. Product - The actual product
3. Promotion (advertising)- Getting the product known

Strategic market planning

 4. Placement - Where the product is located
5. People - Represent the business
6. Physical environment - The ambiance, mood, or tone of the environment
7. Process - How do people obtain your product
8. Packaging - How the product will be protected

In principle, these strategies describe how the objectives will be achieved. The 7 Ps are a useful
framework for deciding how the company's resources will be manipulated (strategically) to
achieve the objectives. However, they are not the only framework, and may divert attention
from the real issues. The focus of the strategies must be the objectives to be achieved - not the
process of planning itself. Only if it fits the needs of these objectives should you choose, as we
have done, to use the framework of the 7 Ps.
The strategy statement can take the form of a purely verbal description of the strategic options
which have been chosen. Alternatively, and perhaps more positively, it might include a
structured list of the major options chosen.

One aspect of strategy which is often overlooked is that of "timing." Exactly when it is the best
time for each element of the strategy to be implemented is often critical. Taking the right action
at the wrong time can sometimes be almost as bad as taking the wrong action at the right time.
Timing is, therefore, an essential part of any plan; and should normally appear as a schedule of
planned activities.

Having completed this crucial stage of the planning process, you will need to re-check the
feasibility of your objectives and strategies in terms of the market share, sales, costs, profits and
so on which these demand in practice. As in the rest of the marketing discipline, you will need
to employ judgment, experience, market research or anything else which helps you to look at
your conclusions from all possible angles.
Strategic marketing management: a working model

Strategic market planning

STRAGY= a cycle of decisions where each set of decisions has a ‘knock
on’ effect on subsequent decisions.
The cycle incorporates a
review element which enables decisions to be questioned and changed if need be.
A Basic Strategic Management Cycle
Define overall purpose of
Organization
Review results and make
Set (adapt) fundamental appropriate changes toaims/goals for organization
subsequent aims/goals
Implement decisions
Internal Establish (adapt) through management mechanisms to facilitate
Structure environment decision-making (including)
means for assessing internal
resources and external environment)
External Environment
Agree and promulgate major
product - market and other
key objects

Detailed plans and programs

At this stage, you will need to develop your overall marketing strategies into detailed plans and
program. Although these detailed plans may cover each of the 7 Ps (marketing mix), the focus
will vary, depending upon your organization's specific strategies. A product-oriented company
will focus its plans for the 7 Ps around each of its products. A market or geographically oriented
company will concentrate on each market or geographical area.

Each will base its plans upon the detailed needs of its customers, and on the strategies chosen to
satisfy these needs. Brochures and Websites are used effectively.

Again, the most important element is, indeed, that of the detailed plans, which spell out exactly
what programs and individual activities will take place over the period of the plan (usually over
the next year). Without these specified - and preferably quantified - activities the plan cannot be
Strategic market planning
monitored, even in terms of success in meeting its objectives. It is these programs and activities
which will then constitute the "marketing" of the organization over the period. As a result, these
detailed marketing programs are the most important, practical outcome of the whole planning
process.

These plans must therefore be:

1. Clear - They should be an unambiguous statement of 'exactly' what is to be done.
2. Quantified - The predicted outcome of each activity should be, as far as possible,
quantified, so that its performance can be monitored.
3. Focused - The temptation to proliferate activities beyond the numbers which can be
realistically controlled should be avoided. The 80:20 Rule applies in this context too.
4. Realistic - They should be achievable.
5. Agreed - Those who are to implement them should be committed to them, and agree that
they are achievable. The resulting plans should become a working document which will
guide the campaigns taking place throughout the organization over the period of the
plan. If the marketing
6. plan is to work, every exception to it (throughout the year) must be questioned; and the
lessons learnt, to be incorporated in the next year's

Content of the marketing plan

A marketing plan for a small business typically includes Small Business Administration
Description of competitors, including the level of demand for the product or service and the
strengths and weaknesses of competitors.

Strategic market planning

 1. Description of the product or service, including special features
2. Marketing budget, including the advertising and promotional plan
3. Description of the business location, including advantages and disadvantages for
marketing
4. Pricing strategy
5. Market Segmentation

Medium-sized and large organizations

The main contents of a marketing plan are:

1. Executive Summary
2. Situational Analysis
3. Opportunities / Issue Analysis - SWOT Analysis
4. Objectives
5. Strategy
6. Action Program (the operational marketing plan itself for the period under review)
7. Financial Forecast
8. Controls

To achieve this marketing plan, the organization will have to go through a number of stages
which take the form of questions, as follows:

Where are we now? - the analysis of the current marketing situation.

Strategic market planning
Where do we want to be in the future? - setting the objectives.
How are we going to get there? - creating the strategy
How will we know when we get there? - monitoring and evaluation.
Measurement of progress
The final stage of any marketing planning process is to establish targets (or standards) so that
progress can be monitored. Accordingly, it is important to put both quantities and timescales
into the marketing objectives and into the corresponding strategies.
Changes in the environment mean that the forecasts often have to be changed. Along with these,
the related plans may well also need to be changed. Continuous monitoring of performance,
against predetermined targets, represents a most important aspect of this. However, perhaps
even more important is the enforced discipline of a regular formal review. Again, as with
forecasts, in many cases the best (most realistic) planning cycle will revolve around a quarterly
review. Best of all, at least in terms of the quantifiable aspects of the plans, if not the wealth of
backing detail, is probably a quarterly rolling review - planning one full year ahead each new
quarter. Of course, this does absorb more planning resource; but it also ensures that the plans
embody the latest information, and - with attention focused on them so regularly - forces both
the plans and their implementation to be realistic.
Plans only have validity if they are actually used to control the progress of a company: their
success lies in their implementation, not in the writing'

PRICING
Having defined the overall offering objective and selecting the generic strategy you must then
decide on a variety of closely related operational strategies. One of these is how you will price
the offering. A pricing strategy is mostly influenced by your requirement for net income and
your objectives for long term market control. There are three basic strategies you can consider.
A SKIMMING STRATEGY

Strategic market planning

If your offering has enough differentiation to justify a high price and you desire quick cash and
have minimal desires for significant market penetration and control, then you set your prices
very high.
A MARKET PENETRATION STRATEGY
If near term income is not so critical and rapid market penetration for eventual market control is
desired, then you set your prices very low.
A COMPARABLE PRICING STRATEGY
If you are not the market leader in your industry then the leaders will most likely have created a
'price expectation' in the minds of the marketplace. In this case you can price your offering
comparably to those of your competitors.
PROMOTION
To sell an offering you must effectively promote and advertise it. There are two basic promotion
strategies, PUSH and PULL.
The PUSH STRATEGY maximizes the use of all available channels of distribution to "push"
the offering into the marketplace. This usually requires generous discounts to achieve the
objective of giving the channels incentive to promote the offering, thus minimizing your need
for advertising.
The PULL STRATEGY requires direct interface with the end user of the offering. Use of
channels of distribution is minimized during the first stages of promotion and a major
commitment to advertising is required. The objective is to "pull" the prospects into the various
channel outlets creating a demand the channels cannot ignore.

There are many strategies for advertising an offering. Some of these include:
PRODUCT COMPARISON ADVERTISING
In a market where your offering is one of several providing similar capabilities, if your offering
stacks up well when comparing features then a product comparison ad can be beneficial.
PRODUCT BENEFITS ADVERTISING
When you want to promote your offering without comparison to competitors, the product
benefits ad is the correct approach. This is especially beneficial when you have introduced a
new approach to solving a user need and comparison to the old approaches is inappropriate.
PRODUCT FAMILY ADVERTISING

Strategic market planning

If your offering is part of a group or family of offerings that can be of benefit to the customer as
a set, then the product family ad can be of benefit.
CORPORATE ADVERTISING
When you have a variety of offerings and your audience is fairly broad, it is often beneficial to
promote your enterprise identity rather than a specific offering.
DISTRIBUTION
You must also select the distribution method(s) you will use to get the offering into the hands of
the customer. These include:
On-premise Sales involves the sale of your offering using a field sales organization that visits
the prospect's facilities to make the sale.
Direct Sales involves the sale of your offering using a direct, in-house sales organization that
does all selling through the Internet, telephone or mail order contact.
Wholesale Sales involves the sale of your offering using intermediaries or "middle-men" to
distribute your product or service to the retailers.
Self-service Retail Sales involves the sale of your offering using self service retail methods of
distribution.
Full-service Retail Sales involves the sale of your offering through a full service retail
distribution channel.

Of course, making a decision about pricing, promotion and distribution is heavily influenced by
some key factors in the industry and marketplace. These factors should be analyzed initially to
create the strategy and then regularly monitored for changes. If any of them change substantially
the strategy should be reevaluated.

THE ENVIRONMENT
Environmental factors positively or negatively impact the industry and the market growth
potential of your product/service. Factors to consider include:

Strategic market planning

GOVERNMENT ACTIONS - Government actions (current or under consideration) can support
or detract from your strategy. Consider subsidies, safety, efficacy and operational regulations,
licensing requirements, materials access restrictions and price controls.
DEMOGRAPHIC CHANGES - Anticipated demographic changes may support or negatively
impact the growth potential of your industry and market. This includes factors such as
education, age, income and geographic location.
EMERGING TECHNOLOGY - Technological changes that are occurring may or may not favor
the actions of your enterprise.
CULTURAL TRENDS - Cultural changes such as fashion trends and life style trends may or
may not support your offering's penetration of the market
THE PROSPECT
It is essential to understand the market segment(s) as defined by the prospect characteristics you
have selected as the target for your offering. Factors to consider include:
The potential for market penetration involves whether you are selling to past customers or a new
prospect, how aware the prospects are of what you are offering, competition, growth rate of the
industry and demographics.
The prospect's willingness to pay higher price because your offering provides a better solution to
their problem.
The amount of time it will take the prospect to make a purchase decision is affected by the
prospects confidence in your offering, the number and quality of competitive offerings, the
number of people involved in the decision, the urgency of the need for your offering and the risk
involved in making the purchase decision.

The prospect's willingness to pay for product value is determined by their knowledge of
competitive pricing, their ability to pay and their need for characteristics such as quality,
durability, reliability, ease of use, uniformity and dependability.
Likelihood of adoption by the prospect is based on the criticality of the prospect's need, their
attitude about change, the significance of the benefits, barriers that exist to incorporating the
offering into daily usage and the credibility of the offering.
THE PRODUCT/SERVICE
You should be thoroughly familiar with the factors that establish products/services as strong
contenders in the marketplace. Factors to consider include:

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Whether some or all of the technology for the offering is proprietary to the enterprise.
The benefits the prospect will derive from use of the offering.
The extent to which the offering is differentiated from the competition.
The extent to which common introduction problems can be avoided such as lack of adherence to
industry standards, unavailability of materials, poor quality control, regulatory problems and the
inability to explain the benefits of the offering to the prospect.
The potential for product obsolescence as affected by the enterprise's commitment to product
development, the product's proximity to physical limits, the ongoing potential for product
improvements, the ability of the enterprise to react to technological change and the likelihood of
substitute solutions to the prospect's needs.
Impact on customer's business as measured by costs of trying out your offering, how quickly the
customer can realize a return from their investment in your offering, how disruptive the
introduction of your offering is to the customer's operations and the costs to switch to your
offering.
The complexity of your offering as measured by the existence of standard interfaces, difficulty
of installation, number of options, requirement for support devices, training and technical
support and the requirement for complementary product interface.
THE COMPETITION
It is essential to know who the competition is and to understand their strengths and weaknesses.
Factors to consider include:
Each of your competitor's experience, staying power, market position, strength, predictability
and freedom to abandon the market must be evaluated.

YOUR ENTERPRISE
An honest appraisal of the strength of your enterprise is a critical factor in the development of
your strategy. Factors to consider include:
Enterprise capacity to be leader in low-cost production considering cost control infrastructure,
cost of materials, economies of scale, management skills, availability of personnel and
compatibility of manufacturing resources with offering requirements.
The enterprise's ability to construct entry barriers to competition such as the creation of high
switching costs, gaining substantial benefit from economies of scale, exclusive access to or

Strategic market planning

clogging of distribution channels and the ability to clearly differentiate your offering from the
competition.
The enterprise's ability to sustain its market position is determined by the potential for
competitive imitation, resistance to inflation, ability to maintain high prices, the potential for
product obsolescence and the 'learning curve' faced by the prospect.
The prominence of the enterprise.
The competence of the management team.
The adequacy of the enterprise's infrastructure in terms of organization, recruiting capabilities,
employee benefit programs, customer support facilities and logistical capabilities.
The freedom of the enterprise to make critical business decisions without undue influence from
distributors, suppliers, unions, creditors, investors and other outside influences.
Freedom from having to deal with legal problems.
DEVELOPMENT
A review of the strength and viability of the product/service development program will heavily
influence the direction of your strategy. Factors to consider include:
The strength of the development manager including experience with personnel management,
current and new technologies, complex projects and the equipment and tools used by the
development personnel.

Personnel who understand the relevant technologies and are able to perform the tasks necessary
to meet the development objectives.
Adequacy and appropriateness of the development tools and equipment.
The necessary funding to achieve the development objectives.
Design specifications that are manageable.
PRODUCTION
You should review your enterprise's production organization with respect to their ability to cost
effectively produce products/services. The following factors are considered:
The strength of production manager including experience with personnel management, current
and new technologies, complex projects and the equipment and tools used by the manufacturing
personnel.

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Economies of scale allowing the sharing of operations, sharing of production and the potential
for vertical integration.
Technology and production experience
The necessary production personnel skill level and/or the enterprise's ability to hire or train
qualified personnel.
The ability of the enterprise to limit suppliers bargaining power.
The ability of the enterprise to control the quality of raw materials and production.
Adequate access to raw materials and sub-assembly production.
MARKETING/SALES
The marketing and sales organization is analyzed for its strengths and current activities. Factors
to consider include:
Experience of Marketing/Sales manager including contacts in the industry (prospects,
distribution channels, media), familiarity with advertising and promotion, personal selling
capabilities, general management skills and a history of profit and loss responsibilities.
The ability to generate good publicity as measured by past successes, contacts in the press,
quality of promotional literature and market education capabilities.
Sales promotion techniques such as trade allowances, special pricing and contests.

The effectiveness of your distribution channels as measured by history of relations, the extent of
channel utilization, financial stability, reputation, access to prospects and familiarity with your
offering.
Advertising capabilities including media relationships, advertising budget, past experience, how
easily the offering can be advertised and commitment to advertising.
Sales capabilities including availability of personnel, quality of personnel, location of sales
outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the
benefits of the offering and necessary sales support capabilities.
The appropriateness of the pricing of your offering as it relates to competition, price sensitivity
of the prospect, prospect's familiarity with the offering and the current market life cycle stage.
CUSTOMER SERVICES

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The strength of the customer service function has a strong influence on long term market
success. Factors to consider include:
Experience of the Customer Service manager in the areas of similar offerings and customers,
quality control, technical support, product documentation, sales and marketing.
The availability of technical support to service your offering after it is purchased.
One or more factors that causes your customer support to stand out as unique in the eyes of the
customer.
Accessibility of service outlets for the customer.
The reputation of the enterprise for customer service.
The most important elements of marketing performance, which are normally tracked, are:
SALES ANALYSIS
Most organizations track their sales results; or, in non-profit organizations for example, the
number of clients. The more sophisticated track them in terms of 'sales variance' - the deviation
from the target figures - which allows a more immediate picture of deviations to become
evident.
`Micro-analysis', which is simply the normal management process of investigating detailed
problems, then investigates the individual elements (individual products, sales territories,
customers and so on) which are failing to meet targets.

MARKET SHARE ANALYSIS

Few organizations track market share though it is often an important metric. Though absolute
sales might grow in an expanding market, a firm's share of the market can decrease which bodes
ill for future sales when the market starts to drop. Where such market share is tracked, there may
be a number of aspects which will be followed:
overall market share
segment share - that in the specific, targeted segment
relative share -in relation to the market leaders
annual fluctuation rate of market share
also the specific market sharing of customers.
EXPENSE ANALYSIS

Strategic market planning

The key ratio to watch in this area is usually the `marketing expense to sales ratio'; although this
may be broken down into other elements (advertising to sales, sales administration to sales, and
so on).
FINANCIAL ANALYSIS
The "bottom line" of marketing activities should at least in theory, be the net profit (for all
except non-profit organizations, where the comparable emphasis may be on remaining within
budgeted costs). There are a number of separate performance figures and key ratios which need
to be tracked:
The above performance analyses concentrate on the quantitative measures which are directly
related to short-term performance. But there are a number of indirect measures, essentially
tracking customer attitudes, which can also indicate the organization's performance in terms of
its longer-term marketing strengths and may accordingly be even more important indicators.
Some useful measures are:

market research - including customer panels (which are used to track changes over time)
lost business - the orders which were lost because, for example, the stock was not available or
the product did not meet the customer's exact requirements
customer complaints - how many customers complain about the products or services, or the
organization itself, and about what

USE OF MARKETING PLANS

A formal, written marketing plan is essential; in that it provides an unambiguous reference point
for activities throughout the planning period. However, perhaps the most important benefit of
these plans is the planning process itself. This typically offers a unique opportunity, a forum, for
information-rich and productively focused discussions between the various managers involved.

The plan, together with the associated discussions, then provides an agreed context for their
subsequent management activities, even for those not described in the plan itself. Additionally,
marketing plans are included in business plans, offering data showing investors how the
company will grow and most importantly, how they will get a return on investment.

BUDGETS AS MANAGERIAL TOOLS

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The classic quantification of a marketing plan appears in the form of budgets. Because these are
so rigorously quantified, they are particularly important. They should, thus, represent an
unequivocal projection of actions and expected results. What is more, they should be capable of
being monitored accurately; and, indeed, performance against budget is the main (regular)
management review process.
The purpose of a marketing budget is, thus, to pull together all the revenues and costs involved
in marketing into one comprehensive document. It is a managerial tool that balances what is
needed to be spent against what can be afforded, and helps make choices about priorities. It is
then used in monitoring performance in practice.
The marketing budget is usually the most powerful tool by which you think through the
relationship between desired results and available means. Its starting point should be the
marketing strategies and plans, which have already been formulated in the marketing plan itself;
although, in practice, the two will run in parallel and will interact. At the very least, the rigorous,
highly quantified, budgets may cause a rethink of some of the more optimistic elements of the
plans.
The key to successfully marketing your practice begins with developing a strategic marketing
plan in which each activity is based on solid research and specific goals, and is implemented and
carefully evaluated in a timely manner. The plan serves as a road map to help you achieve your
marketing goals.

Why should you market your practice?

Some physicians still feel that marketing is at best unprofessional and at worst unethical. In fact,
good marketing is no more than educating your patients and your community about your
expertise and services, and there are a wide range of reasons for doing it, not all of which have a
purely financial basis.
However, if you do want to determine the value of each new patient to your practice, calculate
the average of the revenue that 10 new patients generated during their first 12 months with you.
You might consider marketing your practice for any or all of the following reasons: to increase
your income, expand your patient base, discourage competition, improve your practice image,
promote current and new services, introduce new providers, enter a new marketplace or gain or
retain market share. Whatever your motivation, make sure to get your staff involved right from
the start. Share your reasons for marketing with them, and ask them for their ideas. If your staff

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is not involved early, it will be difficult to convince them to support the marketing plan and take
on any additional work that comes with it.
THE ELEMENTS OF A PLAN
There are nine major steps required to develop a well-crafted, strategic marketing plan: set your
marketing goals, conduct a marketing audit, conduct market research, analyze the research,
identify your target audience, determine a budget, develop specific marketing strategies, develop
an implementation schedule for the strategies and create an evaluation process.
1. Set your marketing goals. Once you’ve decided to market your practice, you need to set
realistic and measurable goals to achieve over the next 18 to 24 months. This time span allows
you to plan activities around community events that are in line with your marketing goals. For
example, you might help sponsor an annual walkathon for breast cancer or speak at your
community’s annual health fair. Because of the rapid changes occurring in the health care
environment, we don’t recommend planning specific activities more than two years in advance.
One way to define your goals is to separate them into the following three categories: immediate,
one to six months; short-term, six to 12 months; and long-term, 12 to 24 months. Here are some
examples of measurable goals:

Increase the number of new patients seen in the practice by 5 percent within the first six months
and 10 percent by the end of the first year.
Shift your patient mix by expanding the pediatric and adolescent patient base from 15 percent to
25 percent of total patient visits within 18 months.
Increase your gross revenue by 30 percent within 24 months.
Improve your practice’s image, which may be measured by “before” and “after” scores on a
community survey or by reviews from focus group participants.

It’s important to share these goals with your staff members. They can tell you from their
perspectives whether they believe the goals are reasonable. If you want your marketing plan to
be successful, your staff needs to support your efforts to achieve the marketing goals.
Marketing can increase your income, introduce new providers or improve your practice image,
among other things.

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A strategic marketing plan requires you to define your practice in terms of what it does for
patients.
Every goal, strategy and action in your marketing plan is subject to change as you evaluate your
progress.
2. Conduct a marketing audit. A marketing audit is a review of all marketing activities that have
occurred in your practice over the past three years. Be as thorough as possible, making sure to
review every announcement, advertisement, phonebook ad, open house, brochure and seminar
and evaluate whether it was successful.
3. Conduct market research. The purpose of market research is to draw a realistic picture of your
practice, the community you practice in and your current position in that community. With this
research, you can make fairly accurate projections about future growth in the community,
identify competitive factors and explore nontraditional opportunities (such as offering patients
nutritional counseling, smoking-cessation programs or massage therapy). Your research may
even bring to light some problem areas in your practice as well as solutions you can implement
right away
Conducting market research is often the most time-consuming step in this process. However, it’s
also one of the most important steps. It’s from this research that you’re able to find out what
your practice does best and what you need to work on, what the needs of your community are,
who your practice should be targeting and how you should go about it.

4. Analyze the research. Next, you need to analyze the raw data you collect and summarize it
into meaningful findings that will be the foundation for determining which marketing strategies
make the most sense and will get the best results for your practice The research will identify the
wants and needs of your current and potential patients and will help you to define your target
audience (for more on target audiences, see step 5, below). This is also a good time to look back
at the goals you’ve chosen. Based on your research findings, you may need to modify some of
your goals.
A strategic marketing plan requires that your practice be defined in terms of what it does for
patients. The research analysis will reveal your practice’s strategic advantages. After looking
closely at your own practice as well as your competitors’, you can ask yourself some key
questions: What are the similarities and differences between your practice and your
competitors’? What sets your practice apart from your competition? Is your location more
desirable than your competitors’?

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Do you offer a broader scope of services than the competition? Is there a service you provide
that no one else in the community currently offers? Your competitive edge may lie in your style
of practice, the range of services you offer, the ease of making an appointment or the way you
and your staff communicate with patients.
A GUIDE TO MARKET RESEARCH
To gather the kind of information you need to develop a strategic marketing plan for your
practice, you need to conduct market research on your practice, your competition and your
community. You can’t rely on intuition, judgment and experience; your practice needs hard
data. Although it will take some time to gather this information, a number of resources are
available that can make the process easier for you.
Much of the information you need about your own practice can be found through discussions
with staff members and other physicians, or by reviewing your patient records. You can also
find out about your practice and whether it’s meeting the needs of your current patients by
asking them to fill out a patient survey about the practice. Here are some of the questions you
need answered about your practice:
What is the background and history of your practice? Has it been in the current community for a
long time?

What are your practice’s strengths and weaknesses? Are there problems with scheduling,
cancellations, staff turnover or reimbursement management?
Who are your current patients in terms of their age, sex, ethnic origin, type of insurance
coverage, chief complaints and where they live?
What are the services provided by your practice? Who needs these services? Are these needs
changing?
How is your practice perceived by your patients?
You need to find out who your competitors are and what they have to offer. Check with your
county or state medical society and your local hospital to find out how many other family
physicians, nurse practitioners and general internists are in your service area, how long they’ve
practiced in that location and how many have moved into your area over the past five years.
Once you’ve determined who your competitors are, you need to assess them. This information
may be a little harder to come by, but you can try to gather as much information as you can by
simply asking other physicians, listening to your patients, friends and neighbors when they talk

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about their physicians and keeping your eye out for competitors’ advertisements. To assess your
competition, you need to ask the following questions:
What are your competitors’ target audiences and niche markets?
Why do certain patients or groups of patients particularly like or dislike your competitors?
How are your competitors viewed within the community?
What marketing activities have your competitors tried?
How many people live in your service area? Is the population expected to grow or shrink? What
are the demographic characteristics of the population in your area?
How is your practice perceived in the community? Are you known in the community?
Who are your potential patients? Are their wants and needs being met elsewhere in the
community? If not, how can your practice meet those needs.
Identify a target audience. With the help of your market research analysis, you should be able to
identify your practice’s “target audience,” which is the specific group of patients to which you’d
like to direct your marketing efforts. Your target audience might include patients of a certain
age, gender, location, payer type or language/ethnicity and patients with certain clinical needs.

Keep in mind that your target audience should not only be the patients you want to attract but
also the people who can influence and provide exposure to that segment of the population.

For example, if you wish to treat patients with arthritis, you might want to get involved in the
local and regional Arthritis Foundation and explore senior organizations in the community. If
you want to treat young athletes, you might consider giving talks on sports safety and first-aid
tips to coaches and athletes at the local high schools, colleges and YMCAs. The key to
marketing lies in targeting the audience that your practice can serve better than your competition
– and communicating this to that group.
Determine a budget. Before you can decide what specific marketing strategies you want to
implement to achieve your goals, you need to examine your financial information and come up
with a marketing budget. Marketing budgets vary by the type of market a practice is in, the age
of a practice and whether the practice has marketed before.
There’s no standard for how much a practice should spend. However, in our experience,
practicesin open markets have spent 3 percent to 5 percent of their annual gross incomes on

Strategic market planning

marketing. If your practice is new, in a highly competitive market or has never been marketed
before, or if you intend to roll out an ambitious new program or service, you can expect to spend
10 percent or more of your annual gross income the first year you implement the plan.
Some of the initial marketing activities can be expensive. For example, it can cost more than
$5,000 to have a corporate image package (i.e., logo, stationery and collateral pieces) developed
by a professional and as much as $10,000 if you add a brochure. On the other hand, some of the
best marketing activities cost practically nothing. For example, to build your referral network,
you might try meeting with new physicians in your community and sending follow-up/notes to
referring physicians. Big or small, these are all worthwhile investments that will give the
community a positive image of your practice.

Develop marketing strategies. With your budget in place, you can begin to define specific
marketing strategies that will address your goals, reach your target audience and build your
patient base. Remember to focus your strategies on the elements of your practice that can be
used to create a special value in the minds of patients and referral sources.

Each strategy should be related to a specific goal and should be made up of numerous actions.
For example, one
strategy related to the goal of increasing patient satisfaction might be to make the office more
patient friendly. The actions required for that strategy might include the following:
Provide patient satisfaction training sessions to staff;

Develop a patient self-scheduling system within the practice Web site to eliminate the need to
telephone the office for an appointment;
Improve the reception-room decor;
Provide name tags for staff;
Require staff to introduce themselves to each new patient;
Conduct post-encounter telephone interviews with new patients within three days of their
appointments
Develop an implementation schedule.
An implementation schedule is a time-line that shows which marketing actions will be done
when and by whom. The schedule should also include the cost of each marketing action and

Strategic market planning

how it fits into the budget estimates for the 24-month period. When creating the schedule,
carefully consider how the activities will affect the current practice operations and whether there
are sufficient resources (such as staff, time and money) to accomplish the necessary tasks. In
some cases, it may be necessary to whittle down the list or postpone some activities. In other
cases, it might be best to go ahead with full implementation of your plan. If you want to fully
implement the plan but don’t quite have the staffing resources, you might consider bringing in a
consultant to coordinate the marketing activities and/or adding a part-time staff member to
handle the majority of the marketing tasks. The implementation schedule will also give you a
basis on which to monitor the progress of your marketing plan.

Create an evaluation process. The value of a marketing plan is its effectiveness, which requires
deliberate and timely implementation and monitoring and evaluation of results. It’s important to
measure your results against the standards you set in establishing your goals. Review your plan
periodically (we recommend quarterly) by comparing your progress with the implementation
schedule.

There are several ways you can measure the results of your progress: patient survey scores,
referral sources, increased income, increased new patients and decreased complaints.
If at any time you find your progress does not measure up to your expectations, you need to
determine why. Perhaps the advertisement about a new service you are marketing has not
attracted new patients. If the ad campaign has been carried out as directed without results, dump
the campaign and try other actions.

Perhaps you’ll want to try giving a series of seminars specifically targeted to the group you want
to attract or developing a new segment on your Web site for patients that describes the benefits
of the new service. You may even find that if each physician in the practice talks about the new
service with his or her patients as merely informational conversation, favorable results will
follow. In other words, the actions – and even the strategies and goals – in the marketing plan
are not written in stone. By regularly monitoring and evaluating each action, you can always
change and try new approaches.

This can be further broken down into defined actions:

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 STAGE 1: Mission Statement and
organizational objectives
ANALYSIS

Marketing audit and SWOT

Analysis

STAGE 2: Marketing
objectives and

PLANNING Strategies
Marketing tactics and
Budgets
STAGE 3:
Preparation of marketing plan
COMMUNICATION
Implementation

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 STAGE 4:

ACTION

Monitoring and review

COST TO ENTER MARKET

This is an analysis of the factors that will influence your costs to achieve significant market
penetration. Factors to consider include:
Your marketing strength.
Access to low cost materials and effective production.
The experience of your enterprise.
The complexity of introduction problems such as lack of adherence to industry standards,
unavailability of materials, poor quality control, regulatory problems and the inability to explain
the benefits of the offering to the prospect.
The effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities,
employee benefit programs, customer support facilities and logistical capabilities.
Distribution effectiveness as measured by history of relations, the extent of channel utilization,
financial stability, reputation, access to prospects and familiarity with your offering.
Technological efforts likely to be successful as measured by the strength of the development
organization.
The availability of adequate operating capital.

PROFIT POTENTIAL

Strategic market planning

This is an analysis of the factors that could influence the potential for generating and
maintaining profits over an extended period. Factors to consider include:
Potential for competitive retaliation is based on the competitors resources, commitment to the
industry, cash position and predictability as well as the status of the market.
The enterprise's ability to construct entry barriers to competition such as the creation of high
switching costs, gaining substantial benefit from economies of scale, exclusive access to or
clogging of distribution channels and the ability to clearly differentiate your offering from the
competition.
The intensity of competitive rivalry as measured by the size and number of competitors,
limitations on exiting the market, differentiation between offerings and the rapidity of market
growth.
The ability of the enterprise to limit suppliers bargaining power.

The enterprise's ability to sustain its market position is determined by the potential for
competitive imitation, resistance to inflation, ability to maintain high prices, the potential for
product obsolescence and the 'learning curve' faced by the prospect.
The availability of substitute solutions to the prospect's need.
The prospect's bargaining power as measured by the ease of switching to an alternative, the cost
to look at alternatives, the cost of the offering, the differentiation between your offering and the
competition and the degree of the prospect's need.
Market potential for new products considering market growth, prospect's need for your offering,
the benefits of the offering, the number of barriers to immediate use, the credibility of the
offering and the impact on the customer's daily operations.
The freedom of the enterprise to make critical business decisions without undue influence from
distributors, suppliers, unions, investors and other outside influences.
Market Map ,Ansoff Analysis
The market segmentation and product groupings investigated for this plan are shown below. The
‘Y’s indicate those product -markets which have been included in the analysed portfolio. Each
product-market in the analysed portfolio has had high-level business information tabulated for it.
Bearing HighPe Assemblie
s rf s Systems

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 Auto Y

Chemica
l Y Y

Food Y Y

Electrica
l Y Y

All of these markets are currently being addressed during 2000 and it is our intention

to withdraw from HighPerformance-Chemical during the next three year

Gap Analysis
Revenue Objective
Revenue Gap Analysis
800
600 Target
£m
Diversification
In

400 Market
Revenue Extension
Product
Development
Market
200 Penetration
0
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02 Dec
03

Strategic market planning

 Margin Objective

Margin Gap Analysis

400
300 Target

£m Diversification

In 200 Market
Margin

Extension
Product
Development
Market

100 Penetration
0
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02
Dec03

Although the shortfall from the target still exists there is expected to be a significant

Strategic market planning

improvement in margin during the next three years.

Market Attractiveness
If the Market Size Overview Table in the previous section is compared to the MAF Comparison
it can be seen that the size of the market does not necessarily make it the most attractive.
Portfolio Summary
Boston Matrix
The Boston Matrix is a plot of market share, as a ratio of company share to the share of the
largest competitor, against the rate of market growth. The Boston Matrix classifies a firm’s
products according to their cash usage and their cash generation along the two dimensions of the
matrix, namely relative market share and market growth rate. Market share is used because it is
an indicator of the product’s ability to generate cash; market growth is used because it is an
indicator of the product’s cash requirements. The measure of market share used is the product’s
share relative to the firm’s largest competitor.
This is important because it reflects the degree of dominance enjoyed by the product in the
market. The company with the largest market share is usually in the most favorable position.

Strategic market planning

Strategic market planning
BOSTON MATRIX

As expected the Bearings -Food market is in the classical Cash Cow position. The High
Performance-Chemical market is clearly a ‘Dog’ and will have very little future and will be a
cash drain on the company. For these reasons the High Performance-Chemical market will be
divested.
Directional Policy Matrix
The Directional Policy Matrix (DPM) is a plot of market attractiveness against business strength,
or strength in market, for the various product-markets in which the company operates. The
positions of product-markets in the DPM, denoted by discs on the diagram, determine whether
they are candidates for investment or divestment and how they should be managed. The area of
the discs is an indication of the revenue obtained from the individual product-markets. A key
feature of the DPM is that it directly compares the opportunities offered by different markets.

Conclusion
After defining your strategy you must use the information you have gathered to determine
whether this strategy will achieve the objective of making your enterprise competitive in the
marketplace.

Strategic market planning