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Market-Oriented Strategic Planning

Market-Oriented Strategic Planning. “ The company without a strategy is willing to try anything .” Michael Porter “ If you know the enemy and know yourself you need not fear the results of a hundred battles. ” Sun Tzu. Strategic Marketing Planning.

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Market-Oriented Strategic Planning

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  1. Market-Oriented Strategic Planning “Thecompanywithout a strategy is willingtotryanything.” Michael Porter“If you know the enemy and know yourself you need not fear the results of a hundred battles.”Sun Tzu

  2. Strategic Marketing Planning • Companies should look ahead and develop long-term strategiesğ to meet changing conditions in their industries and ensure long-term survival • The task of selecting an overall company strategy for long-run survival and growth ğ “strategic planning” • Marketing’s key role in strategic planning

  3. Strategic Planning • Strategic PlanningğManagerialprocess of developing and maintaininga match between the organization’s resources, goals and capabilities and the changing market opportunities. • The aim ğto shape and reshape company’s businesses and products in order to reach to targeted profits and growth. • Top-management job • Partof a broader process: strategic management

  4. Implementation Control Corporate planning Division planning Business planning Product planning Organizing Implementing Measuring results Diagnosing results Taking corrective action StrategicPlanning, Implementation, and Control Process Planning

  5. Steps in Strategic Planning Corporate Level Business unit, product,and marketlevel Planning marketing and other functional strategies Setting Company Objectives and Goals Defining the Company Mission Designing the Business Portfolio

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

  7. Steps in Strategic Planning: Company Mission Statement • A mission statementğ a statement of the organization’s purpose --- what it wants to accomplish in the larger environment • A clear mission statement ğ acts as “invisible hand” that guides employees to work toward realizing the organization’s goals.

  8. Fundamental questions: What is our business? Who is the customer? What do consumers value? What should our business be? A mission statement should be: Neither too narrow nor too broad Fitting of market environment Based on distinctive competencies An “invisible hand” Motivating Company Mission

  9. Limited number of goals Stress major policies & values Define competitive scopes Company Mission (cont.)

  10. Company Mission (cont.) • “Market-oriented definitions” of a business ğ better than product or technological definitions • A market-oriented mission statementğ defines the business in terms of satisfying basic customer needs (see examples) • Mission statement ğ to be guided by a “vision” - an almost “impossible dream” that provides a direction for the company for the next 10 to 20 years

  11. Market Oriented Realistic Fit Market Environment Distinctive Competencies Specific Motivating Company Mission Characteristics of a Good Mission Statement:

  12. Steps in Strategic Planning: Company Goals and Objectives • Company’s mission ğ needs to be turned into detailed, supporting objectives for each level of management • Mission ğhierarchy of objectives • As specific as possible • Marketing strategies ğ must be developed to support these marketing objectives

  13. Hierarchy of Objectives

  14. Steps in Strategic Planning: Business Portfolio • Business portfolioğ collection of businesses and products that make up the company • Analyzing its current business portfolioand decide which business should receive more, less or no investment • Developing growth strategies to add new products/businesses to the current portfolio

  15. Business Portfolio (cont.) • Portfolio Analysisğ to identify and evaluate the various businesses that make up the company • To identify key businesses ğStrategic Business Units (SBUs) • SBU:unit of the company (separate mission and objectives / can be planned independently from other company businesses) • To assess the attractiveness of its various SBUs and decide how much support each deserves

  16. 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- 0 Stars Question marks 4 ? ? 1 3 ? ? 5 2 Market Growth Rate Dogs Cash cow 8 6 7 10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x Relative Market Share The Boston Consulting Group’s Growth-Share Matrix

  17. Boston Consulting Group (BCG) Approach • Stars • High growth & share • Profit potential • May need heavy • investment to grow • Question Marks • High growth, low share • Build into Stars or phase out • Require cash to hold • market share ? Market Growth Rate Low High • Cash Cows • Low growth, high share • Established, successful • SBU’s • Produce cash • Dogs • Low growth & share • Low profit potential Relative Market Share High Low

  18. The BCG Growth-Share Matrix and Strategies • After the classification of its SBUs ğ to determine what role each will play in the future • Harvestğ to increase the SBU’s short-term cash flow • Good for weak cash cows, question marks and dogs • Divestğ to sell or to liquidate the business • Good for dogs and question marks • Buildğto invest more in the SBU in order to build its share • Increase market share • Works well for question marks • Holdğ to invest enough just to hold at the current level • Preserve market share • Good for cash cow

  19. Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBU’s & Measure Market Share/ Growth Problems With Matrix Approaches Focus on Current Businesses; provide little advice for future planning Can Lead to Unwise Expansion or Diversification

  20. Existing products New products 1. Market penetration 3. Product development Existing markets 2. Market development New markets Growth Strategies -Ansoff’s Product/Market Expansion Grid 4. Diversification

  21. Product/ Market Expansion Grid • Market Penetration: making more sales to current customers without changing its products. • Add new stores in current market areas,improve advertising, prices, service or store design. • Market Development: develop new markets for its current products • Identify new demographic or geographic markets. • Product Development: offering modified or new products to current markets. • New styles, flavors, colors, or modified products. • Diversification: new products for new markets. • Start up or buy new businesses.

  22. Which strategy is this? • Market penetration • Market development • Product development • Diversification 2 - 23

  23. Steps in Strategic Planning: Functional Planning • The company’s overall strategic planğ establishes what kind of businesses the company will be in future & its objectives for each business. • More detailed planning must take place within each business unit • The major functional departments in each unit ğ must work together to accomplish strategic objectives • Marketing plays a key role

  24. Marketing’s Key Role in Strategic Planning Marketing’s Role in Strategic Planning Design effective strategies Inputs to Strategic Planners Provide a guiding philosophy Form superior value delivery networks Build strong value chains Identify attractive opportu- nities

  25. Marketing’s Key Role: Partner Relationship Management • Partner relationship management • working closely with partners in other departments (to form an effective “value chain” that serves the customer) & • partnering effectively with other companies in the marketing system for a superior “value delivery network” to jointly bring greater value to customers

  26. Marketing’s Key Role: Partner Relationship Management • Each department in the company ğ as a link in the company’s value chain; • Each dept.carries out value-creating activities • The company’s overall success ğ depends also on how well the activities of various dept. are coordinated • Departmental relations are full of conflicts • Marketers must find ways to get all dept. to “think consumer” and to develop a smoothly functioning value chain

  27. Marketing’s Key Role: Partner Relationship Management • The company needs to look beyond its own value chain in order to create customer value: • Value-delivery networkğ network made up of the company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire sytem • Competition today takes place between the entire value delivery networks!

  28. Business Unit Strategic Planning

  29. Business Unit Strategic Planning • Business Missionğ each SBU needs to define its specific mission within the broader company mission • External Environment Analysisğ to build a MISto monitor: • Key external macroenvironment forces • Significant microenvironment actors • Trends and important developments ğ to identify the associated opportunities and threats

  30. Business Unit Strategic Planning • Internal Environment AnalysisğEach business needs to evaluate its internal strengths and weaknesses periodically • “Checklist for Performing Strengths/Weaknesses Analysis” • Management or an outside consultant ğ reviews the business’s marketing, financial, manufacturing and organizational competencies and rates each factor as strength or weakness • SWOT ANALYSIS

  31. Business Unit Strategic Planning /Example of a Checklist

  32. Marketing Analysis – SWOT Analysis

  33. Business Unit Strategic Planning • Goal Formulation(Goals ğ objectives that are specific with respect to magnitude and time) • Turning objectives ğ into measurable goals ğ facilitates management planning, implementation and control

  34. Business Unit Strategic Planning: Strategy Formulation: Porter Overall Cost Leadership Differentiation Focus

  35. The Marketing Process • The task of any business is to deliver customer value at a profit. • There are at least 2 views of the value-delivery process

  36. Traditional Process Sequence Make product Sell product Value Creation and Delivery Sequence Choose the value Provide the value Communicate the value Two Views of the Value Delivery Process

  37. The Value-Delivery Process

  38. The Marketing Process • The Marketing Process: • Analyzing marketing opportunities • Researching and selecting target markets • Designing marketing strategies • Planning marketing programs • Organizing,implementing, controlling the marketing effort

  39. The Marketing Process (cont.)

  40. Customers grouped by: Geographic Demographic Psychographic Behavioral Market segment is a groups of consumers who respond in similar ways to marketing efforts. The Marketing Process(cont.) Strategy • Market Segmentation • Target marketing • Market Positioning

  41. Evaluation of each segment’s attractiveness Selection of segments with greatest long-term profitability A company can choose one or several segments to target Strategy • Market Segmentation • Target marketing • Market Positioning

  42. The place the product occupies in the consumer’s mind Products are positioned relative to competing products Marketers look for clear, distinctive and desirable place in positioning Strategy • Market Segmentation • Target marketing • Market Positioning

  43. The Marketing Process(cont.) Designing marketing strategies for competitive advantage • Market leader strategies • Market challenger strategies • Market follower strategies • Market nicher strategies

  44. The Marketing Process(cont.) Planning marketing programs • Decisions on: • Marketing expenditures • Marketing mix – 4Ps • Marketing budget allocation The marketing mix includes controllable and tactical marketing tools known as the 4P’s

  45. The Marketing Mix 2 - 47

  46. The Marketing Process(cont.) Managing the marketing effort • Marketing Analysis • Marketing Planning • Marketing Implementation • Marketing Control

  47. Begins with a complete analysis of the company’s situation Finding opportunities : the company must analyze its market & mktg environment company strengths & weaknesses current and possible mktg actions Avoiding threats Understanding strengths Analyzing weaknesses Managing the Marketing Effort Marketing Functions • Analysis • Planning • Implementation • Control

  48. Marketing plans include: Executive summary Analysis of current situation Objectives Targets and positioning Marketing mix Budget Controls Managing the Marketing Effort Marketing Functions • Analysis • Planning • Implementation • Control

  49. Marketing Planning • Through strategic planningğ the company decides what it wants to do with each business unit • Marketing planningğ involves deciding on marketing strategies that will help the company reach its strategic objectives • Marketing planğ 2 levels: • Strategic mktg planğ develops the broad mktg objectives and strategy based on an analysis of the current market situation and opportunities • Tactical mktg planğ outlines specific mktg tactics, including advertising, merchandising, pricing, channels, service, etc.

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