Strategic Marketing Planning: How Do We Get There From Here?

1. Strategic Marketing Planning: How Do We Get There From Here?

2. If You Can Plan a Trip, You Can Plan A Marketing Strategy Where are you now? Where do you want to go? How will you get there?

3. Where Are You Now? Where are you on the map? • Gainesville • Drive or fly • Alone or with others • What to pack • Etc., etc. Make a list of the things you need to do before leaving

4. Where do you want to go? • Why do you want to go there? Business? Personal? Beach? Shopping? • How will it look when you arrive? Big buildings? A river? Expressways? • What are your expectations ? Productive?Fun? Exciting? Relaxing?

5. What is thebest route? Fastest route? Shortest route? Most scenic route? Best route to the beaches?

6. Most EfficientRoute • Highest average speed • Fewest delays • Least traffic

7. Identify your waypoints before starting your trip

9. Anticipate Potential Hazards! Be Prepared For Detours, But Avoid Side Roads

12. STRATEGIC PLANNING • Managerial process that helps to develop a strategic and viable fit between the firm’s objectives, skills, resources with the market opportunities available. It helps the firm deliver its targeted profits and growth through its businesses and products.

13. MARKETING PLAN • Central instrument for directing and coordinating the marketing effort. • STRATEGIC MARKETING PLAN • Lays out the target markets and the value proposition that will be offered, based on analysis of the best market opportunities.

14. IMPORTANCE / BENEFITS OF STRATEGIC MARKETING PLAN Melville Branch lists the planning benefits as follows: Planning encourages systematic thinking ahead It leads to a better coordination of company efforts It leads to the development of performance standards for control It causes the company to sharpen its guiding objectives and policies Its result in better preparedness for sudden developments It bring about a more vivid sense in the participating executives of their interacting responsibilities

15. Steps in Strategic Planning

16. How to go about it? • Defining the corporate mission • Establishing SBUs • Allocating resources for SBUs • Planning for new business

17. Corporate Mission • This seeks to embody the entire goals of the organization and the objective of its existence. • It seeks to provide a sense of purpose, direction and opportunity. • Define the business domain in which the organizational will operate. • Business domain can be defined in terms of products, technologies, customer group, customer needs or some combinations.

18. 5 questions that the firm must ask itself • What is our business? • Who is our customer? • What does our customer need? • What will our business be? • What should our business be?

19. Good mission statements have three characteristics • They focus on a limited number of goals • It stresses the major values and policies the firm desires • It defines the major competitive scope of operation

20. Major Competitive • Industry • Products and application • Competence • Market-segment • Vertical • Geographic

21. Major Competitive • Industry • the range of industries in which a company will operate. • some companies will operate in only one industry; some only in a set of related industries; some only in industrial goods, consumer goods or services and some in any industry. • Example; Siam Cement prefers to operate in the industrial market, Jollibee concentrates on the consumer market and Matsushita operates in both industrial and consumer market. • Products and application • the range of products and applications a company will supply. • Sony, Panasonic and Samsung sell electronics from home entertainment devices like television and DVD players to cell phones; while Sharp concentrates only on household items like washing machine and entertainment products but not cell phones.

22. Major Competitive • Competence • the range of technological and other core competencies that a company will master and leverage. • Japan’s NEC has built its core competencies in computing, communications and components to support production of laptop computers, television receivers and handheld telephones. • Market-segment • the type of market or customers a company will serve. • example; Porsche markets only expensive cars.

23. Major Competitive • Vertical • the number of channel levels from raw material to find product and distribution in which a company will participate. • at one extreme are companies with a large vertical scope. • example; Japanese production keiretsus, for instance comprise large automakers such as Toyota and their suppliers. • Geographic • the range of regions, countries or country groups in which a company will operate. • at one extreme are companies that operate in a specific city or state. • at the other are multinationals such as P&G and Sony, which operate in many countries.

24. Setting Company Objectives and Goals The company’s mission needs to be turned into a detailed set of supporting objective for each level of management – management by objectives

25. Hierarchy of objectives for the International Minerals and Chemicals Corporation, Fertilizer Division

26. Defining The Business • Industry is a customer satisfying process not a goods producing process. • It is important therefore how you redefine your business. • Example: Levitt encouraged companies to redefine their business in terms of needs, not product. • Example: IBM redefined itself from a hardware and software manufacturer to a “builder of networks.”

27. Defining The Business • Target market definition: focus on selling a product/service. • Strategic market definition: everyone who might drink something to quench his/her thirst.

28. SBU • It is a company within a company • The business is differentiated from the rest of the company • It has its own set of competitors • It is a separate profit centre

29. Designing The Business Portfolio Guided by company’s mission statement and objectives, management must now decide what collection of business and products (business portfolio) will best fit the company’s strengths and weaknesses to opportunities in its environment. It must: Analyze the current business portfolio and decide which business should receive more or less emphasize and resources. Develop growth strategies for adding new products or businesses to the portfolio Business Portfolio Analysis The major tool in strategic planning to evaluates the business making up the company Identify the key businesses making up the company (the Strategic Business Units – SBUs) a) Boston Consultant Group (BCG) approach b) General Electric (GE) approach

30. The Boston Consultant Group (BCG) Growth-Share Matrix

31. The Boston Matrix • The Boston Matrix: • A means of analysing the product portfolio and informing decision making about possible marketing strategies • Developed by the Boston Consulting Group – a business strategy and marketing consultancy in 1968 • Links growth rate, market share and cash flow What do these terms mean?

32. The Boston Matrix - STARS • Products in markets experiencing high growth rates with a high or increasing share of the market. • They are typically cash using SBUs cause cash is necessary to finance their rapid growth. • Eventually their growth will slow down, and they will turn into cash cows and become major cash generators supporting other SBUs. • Potential for high revenue growth

33. The Boston Matrix – Cash Cows • Cash Cows: • High market share • Low growth markets – maturity stage of PLC • Low cost support • High cash revenue – positive cash flows • Uses to pay its bills and support other SBUs that are cash using

34. The Boston Matrix - Dogs • Dogs: • Products in a low growth market • Have low or declining market share (decline stage of PLC) • Associated with negative cash flow • May require large sums of money to support Is your product starting to embarrass your company?

35. The Boston Matrix - ? Problem child • Question mark ??? • Or Problem Child: • Products having a low market share in a high growth market • Need money spent to develop them • May produce negative cash flow • Potential for the future? Problem children – worth spending good money on?

36. Stars – high growth, high share SBUs. They are typically cash using SBUs cause cash is necessary to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows and become major cash generators supporting other SBUs Cash cows – low growth, high share SBUs. They produce a lot of cash that the company uses to pay its bills and support other SBUs that are cash using Question marks – low share SBUs in high growth market. They require a lot of cash to maintain their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased down or out Dogs – low growth, low share SBUs. They may generate enough cash to maintain themselves but not promise to be large source of cash

37. What stage of the Boston Matrix are these at? Put these onto a grid

38. Boston Matrix Grid Market Growth High Low High Market Share

39. Video Boston Matrix Grid Market Growth High Low High Market Share

40. FOUR ALTERNATIVES OBJECTIVES Build – the objectives is to increase the SBUs market share, even forgoing short-term earnings to achieve this objectives. Building is appropriate for question marks whose share has to grow if they are to become stars Hold – the objective is to preserve the SBUs market share. This objective is appropriate for strong cash cows if they are to continue to yield a large positive cash flow Harvest – the objective is to increase the SBUs short-term cash flow regardless of the long-term effect. This strategy is appropriate for weak cash cows whose future is dim and from whom more cash flow is needed. It can also be used with question marks and dogs Divest – the objective is to sell or liquidate the business because resources can be better used elsewhere. This is appropriate for dogs and for question marks that the company cannot finance

41. GE’s Strategic business-Planning Grid The best businesses are those businesses located in a very attractive industry in which the company has a high business strength.

42. The diagram below illustrates some of the elements that determine industry attractiveness and business strength / competitive on the UK market.

43. Industry Attractiveness Index Factors Market size – large market are more attractive than small market Market growth rate – high growth market are more attractive than low growth market Profit margin – high profit margin industries are more attractive than low profit margin industries Competitive intensity – industries with many strong competitor are less attractive than industries with few weak competitors Cyclicality – industries are less effected by the business cycle are more attractive than highly cyclical industries Seasonality – industries with less seasonal movement are more attractive than highly seasonal industries Scale economies – industries where unit costs fall with large plan size and distribution are more attractive than constants cost industries Learning curve - industries where unit costs fall as management accumulates experience in production and distribution are more attractive than industries where management has reached the limits of its learning

44. The business strengths index factors Relative market share – the higher the company’s market share, the greater its business strengths Price competitiveness – the higher the company’s price competitiveness, the greater its business strengths Product quality - the higher the company’s product quality’s competitiveness, the greater its business strengths Knowledge of customer/ market - the deeper the company’s knowledge of customer, the greater its business strengths Sales effectiveness - the greater the company’s sales effectiveness, the greater its business strengths Geography - the greater the company’s geographic advantages, the greater its business strengths

45. Assessing Growth Opportunities planning new businesses, downsizing, or terminating older businesses.

46. Assessing Growth Opportunities

47. Assessing Growth Opportunities INTENSIVE GROWTH Integrative Growth Diversification Growth Downsizing and Divesting Older Business

48. Assessing Growth Opportunities • market-penetration strategy The company first considers whether it could gain more market share with its current products in their current markets . • market-development strategy the company considers whether it can find or develop new markets for its current products. • product-development strategy the company considers whether it can develop new products of potential interest to its current markets • diversification strategy the company will also review opportunities to develop new products for new markets.

49. Four market-product strategies: alternative ways to expand sales revenues for Ben & Jerry’s

50. Success Probability for each of the 4 basic strategies: Diversification strategy 1 in 20 Market-development Strategy is 1 in 4 Product-development strategy 50-50 Market-penetration is the highest