Winning Markets: Market-Oriented Strategic Planning

It is more important to do what is strategically right than what is immediately profitable

Learning objectives
How is strategic planning carried out at the corporate and division levels? How is planning carried out at the business unit level? What are the major steps in the marketing process? How is planning carried out at the product level? What does a marketing plan include?

Market-oriented strategic planning

Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit between the organisations objectives, skills and resources and its changing market opportunities. The aim of strategic planning is to shape the companys businesses and products so that they yield target profits and growth.

Strategic planning-calls for action in three key areas

Managing the business as an investment portfolio Assessing each businesss strength Strategy For each of its businesses, the company must develop a game plan Marketing plays a critical role in the strategic planning process

Organisational levels and strategic planning

The corporate level Division level Business unit level Product level

Marketing plan operates at two levels:

The strategic marketing plan The tactical marketing plan

The strategic-planning, implementation and control process

The strategic-planning, implementation and control process

Planning
Corporate planning Organising Division planning Implementing Business planning Product planning Take corrective action Diagnosing results

Implementing

Controlling
Measuring results

Corporate and division strategic planning

All corporate headquarters undertake four planning activities
Defining the corporate mission Establishing strategic business units Assigning resources to each SBU Planning new businesses, downsizing older businesses

Corporate and division strategic planning

Defining the corporate mission

What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our business be?

Good mission statements have limited number of goals, stress the major policies and values of the company and define the competitive scope

Corporate and division strategic planning

Establishing Strategic Business Units

Products are transient, but basic needs and customer groups endure for ever.. A business can be defined in terms of three dimensions: Customer groups, Customer needs, and technology. An SBU has three characteristics:
It is a single business or collection of related businesses that can be planned separately from the rest of the company It has its own set of competitors It has a manager who is responsible for strategic planning, profit performance and control

Corporate and division strategic planning

Assigning resources to each SBU

Business Portfolio evaluation models
The Boston Consulting Group (BCG) Model The General Electric (GE) Model

Corporate and division strategic planning

Assigning resources to each SBU

The BCG Approach
M 20% A 18% R 16% K 14% E 12% T 10% G 8% R 6% O 4% T 2% H 1% 10x 4x 2x 1.5x 1x 0.5x 0.4x 0.3x 0.2x 0.1x

Stars

Question marks

8 8
Cash cow

Dogs

Relative market share

Corporate and division strategic planning

Assigning resources to each SBU

The BCG Approach - Strategies to each SBU Question Marks Hold Harvest Divest - Build - Strong Cash Cows - Weak cash cows, QM and Dogs - Dogs and hopeless QM

Corporate and division strategic planning

Planning new businesses, downsizing older businesses

Strategic-planning Gap - Gap between future
desired sales and projected sales, corporate management have to develop or acquire new businesses to fill it.
Diversification

S A L E S

Desired sales

Strategic planning gap

Diversification Integrative Intensive

Current portfolio

Time (years)

Corporate and division strategic planning

Planning new businesses, downsizing older businesses

Options available to fill-in the strategic-planning gaps Intensive growth opportunities - identify opportunities within
the companys current businesses

Integrative growth opportunities - identify opportunities to build or

acquire businesses that are related to the companys current businesses

Diversification growth opportunities - identify opportunities to add

attractive businesses that are unrelated to the companys current businesses Downsizing older businesses: Companies must also carefully prune, harvest, or divest tired old businesses in order to release needed resources and reduce costs.

Business Strategic planning

Business Mission

External Environment (opportunity & threat) analysis SWOT Analysis Internal Environment (strengths & weaknesses) analysis

Goal formulation

Strategy formulation

Program formulation

Implementation

Feedback and control

Business Strategic Planning

Business Mission

Each business unit needs to define its specific mission within the broader company mission.

Business Strategic Planning

SWOT Analysis
External environment analysis (opportunity and threat analysis) A business unit has to monitor key macroenvironment forces and significant microenvironment actors.

A marketing opportunity is an area of buyer need in which a company can perform profitability. An environmental threat is a challenge posed by an unfavourable trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit.

Business Strategic Planning

SWOT Analysis
External environment analysis (opportunity and threat analysis) Opportunity matrix
Success probability High
A t t r a c t I v e n e s s

Threat matrix
Probability of occurrence High Low

Low
s e r i o u s n e s s

High

2 4

High

1 3

2 4

Low

Low

Business Strategic Planning

SWOT Analysis
Internal environment analysis (strengths and wealnesses analysis)

Each business needs to evaluate its internal strengths and weaknesses periodically.
Checklist for performing strengths/weaknesses analysis Performance
Major strength Low Minor strength Neutral Minor weakness Major weakness Hi

Importance
Med

Marketing 1. Market share 2. Customer satisfaction Finance 1. Cash flow 2. Financial stability Manufacturing 1. Facilities 2. Economies of Scale Organisation 1. Vision 2. Dedicated employees ______ ______ ______ ______ _____ _____ ______ ______ ______ ______ _____ _____ ______ ______ ____ ____ ______ ______ ______ ______ _____ _____ ______ ______ ______ ______ _____ _____ ______ ______ ____ ____ ______ ______ ______ ______ _____ _____ ______ ______ ______ ______ _____ _____ ______ ______ ____ ____ ______ ______ ______ ______ _____ _____ ______ ______ ______ ______ _____ _____ ______ ______ ____ ____

Business Strategic Planning

Goal formulation
Turning objectives into measurable goals facilitates management planning, implementation, and control. An effective MBO system must meet four criteria:

Objectives must be arranged hierarchically Objectives should be stated quantitaively Goals should be realistic objectives must be consistent

Business Strategic Planning

Strategic formulation
Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there. Michael Porters generic strategies Overall Cost Leadership Differentiation Focus Those firms pursuing the same strategy directed to the same target market constitute a strategic group

Business Strategic Planning

Strategic formulation
Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there. Strategic Alliances Product or service alliances Promotional alliances Logistics alliances Pricing collaborations Companies need to give creative thought to finding partners who might complement their strengths and offset their weaknesses.

Business Strategic Planning

Program formulation
Once the business unit has developed its principal strategies, it must work out detailed supporting programs.

Activity based cost (ABC) accounting should be applied to each marketing program to determine whether it is likely to produce sufficient results to justify the cost.

Business Strategic Planning

Implementation
A clear strategy and well-thought-out supporting programs may be useless if the firm fails to implement them carefully.

McKinsey 7-S framework - soft elements help strategic implementation

Structure Systems Shared values Skills Staff Style

Strategy

Business Strategic Planning

Feedback and Control

As it implements its strategy, the firm needs to track the results and monitor new developments in the internal and external environment. The market place will change. And when it does, the company will need to review and revise its implementation, programs strategies, or even objectives.

The Marketing Process

Planning at the corporate, division, and business levels is an integral part of the marketing process. Traditional physical process sequence
Make the Product
Design Product Procure Make Price Sell

Sell the Product

Advertise Distribute Service

Value creation and delivery sequence

Choose the value
Customer Segmentation Market Selection Focus Value positioning

Provide the value

Product service

Communicate the value

Sales Promotion Advertising

Pricing Sourcing Distributing Sales force Making Servicing

development development

Strategic Marketing

Tactical Marketing

The Marketing Process

The Value-Delivery Sequence

Zero customer feedback time Zero product improvement time Zero purchasing time Zero setup time Zero defects

The Marketing Process

Steps in the planning process

Product managers come up with a marketing plan for individual products, lines, or brands. The marketing process consists of analysing marketing opportunities, researching and selecting target markets, designing marketing strategies, planning marketing programs, and organising, implementing, and controlling the marketing effort.

The Marketing Process

Steps in the planning process

Analysing market opportunities
Marketing research Marketing information system

Developing marketing strategies

Positioning New product development, testing, and launching Decision tools at different stages of NPD Strategy modification in the stages of PLC Strategy choice on the firms position Strategy formulation according to changes

The Marketing Process

Steps in the planning process

Planning marketing programs
Decisions on marketing expenditures Decisions on marketing mix Decisions on allocation

Managing the marketing effort

Building marketing organisation for implementation Marketing control: Annual-plan control Profitability control Strategic control through marketing audit

Product planning
Each product level (product line, brand) must develop a marketing plan for achieving its goals.

Contents of the marketing plan

I. Executive summary and and table of contents II. Current marketing situation III. Opportunity and issue analysis IV. Objectives V. Marketing strategy VI. Action programs VII. Projected profit and loss statement VIII. Controls

MARKETING PLAN

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