WINNING MARKETS: MARKET-ORIENTED STRATEGIC PLANNING

• Characteristics of Corporate Planning:• Vision• Mission• SBU• Product Portfolio Models:

– BCG Model– GE Model

• Strategies for Planning A New Business• Business Strategic Planning• The Marketing Process• Contents of A Marketing Plan

CORPORATE AND DIVISION STRATEGIC PLANNING

• Defining the Mission: • History• Preferences• Environment• Resources• Distinctive Competencies.

• Characteristics of Mission Statements:• Goals• Company policies with suppliers, customers. etc.

CORPORATE AND DIVISION STRATEGIC PLANNING

• Characteristics of Mission Statement (cont.):• Competitive scope:

– Industry, product, competence, market-segment, vertical, geographical

• Establishing Strategic Business Units (SBU):• Single business:

– customer group• Satisfies its own set of competitors:

– customer needs• Single managers responsible for planning and technology

improvements

DIVISION STRATEGIC PLANNING (CONT.)

• Assigning Resources to Each SBU: • Boston Consulting Group Model(BCG):

– Market share and market growth• Strategies:

– Build-increase market share– Hold-maintain market share– Harvest-increasing short-term cash flow– Divest-liquidation.

• Mistakes:– expect all SBU will have same growth pattern,– very little cash retained for cash cows.

Analyzing Current SBU’s: Boston Consulting Group Model

Question Marks

• High growth, low share • Build into Stars/ phase out • Requires cash to hold market share

Stars

• High growth & share• Profit potential • May need heavy investment to grow

Cash Cows

• Low growth, high share• Established, successful SBU’s•Produces cash

Dogs• Low growth & share • Low profit potential

Relative Market ShareHigh Low

Mar

ket G

row

th R

ate

Low

Hig

h

DIVISION STRATEGIC PLANNING (CONT.)

• The General Electric Model(GE):• Market Attractiveness and Business Strengths.

• Critiques of Portfolio Models:• Positives:

– help to understand economies of business better– quality of plans may be improved– communication with top management may be improved.– pinpoint information gab– help to eliminate weaker businesses– open opportunities to invest to more profitable businesses.

• Negatives: – too mach emphasis to market share,– Can be manipulated to produce desired location– fail to delineate synergy between two or more business.

Analyzing Current SBU’s: GE Strategic Business-Planning Grid

Business Strength

High

Medium

Low

Strong Average Weak

A

B

C

D

Indu

stry

Attr

activ

enes

s

PLANNING NEW BUSINESSES

• Intensive Growth:• Product/market expansion grit

– Market Penetration– Market Development\Product Development

• Integrative Growth:• Backward Integration• Forward Integration • Horizontal Integration

Developing Growth Strategies

1. Market Penetration

2. Market Development

3. Product Development

4. Diversification

ExistingMarkets

NewMarkets

ExistingProducts

NewProducts

Product/ Market Expansion Grid

PLANNING NEW BUSINESSES

• Diversification Growth:• Related industries

– concentric diversification– horizontal diversification

• Unrelated Industries– Conglomerate diversification

• Downsizing Older Businesses:• Pruning.

BUSINESS STRATEGIC PLANNING• Business Vision/Mission• SWOT ANALYSIS:

– External Environmental Analysis: • Opportunity and Treat Analysis

– Marketing Opportunity-success probability:• Environmental Treat-probability of occurrence:

– Ideal business-opportunities are high and treat is low– Speculative business-high on both opportunities and treat– Mature business-low in opportunities and low in treat– Troubled business-low in opportunities and high in treats

• Internal Environmental Analysis:– Strength and Weaknesses:

BUSINESS STRATEGIC PLANNING (CONT.)

• Goal Formulation: • MBO• Profit (short-term profit or long-term growth) vs. nonprofit goals,

or high growth Vs low risk.– ROI– Realistic goals

• Strategy Formulation: • Cost Leadership:

– learning curve • Differentiation:

– service, quality, technology• Focus:

– target market

BUSINESS STRATEGIC PLANNING (CONT.)

• Strategic Alliances:• product/service alliances• promotional alliances• logistic alliances• pricing collaborations:

– airlines,hotels and car rental

• Program Formulation:• supporting programs-R&D

• Implementation • Feedback and Control

THE MARKETING PROCESS• Value Delivery Process:

– Production process:• Strategic Marketing:

– Marketing is at the top» segmentation» targeting» positioning

• Tactical Marketing– Provide and communicate the value-Japanese approach:

» zero Customer feedback» zero product-improvement time» zero purchasing time(JIT)» zero set-up time» zero defects.

THE MARKETING PROCESS (CONT.)• Analyzing Marketing Opportunities:

• Marketing research :– Macro/Micro environment– Consumer and business markets.

• Developing Marketing Strategies:• Differentiation and positioning

• Planning Marketing Programs:• Marketing mix:

– Product, Price, Promotion and Place

• Managing Marketing Effort:• Implementation of marketing programs

CONTENTS OF MARKETING PLAN

• Executive Summary• Current Marketing Situation:

• Market• Product• Competition• Distribution• Macro-environment

CONTENTS OF MARKETING PLAN (CONT.)

• Opportunity and Issue Analysis:• Opportunities/Treats Analysis.• Strengths/Weaknesses Analysis.• Issue Analysis.

• Objectives/Goals:• Financial.• Marketing.

CONTENTS OF MARKETING PLAN (CONT.)

• Marketing Strategy:• Targeting, positioning:

– product– price– promotion– distribution, service, R&D and marketing research.

• Action Programs• Projected Profit-and-Loss Statement• Controls

MARKETING PLANNING

• Customer and Competitor Oriented• More Realistic• Team Approach• Top Management Involvement• Continuing Process• Cover shorter term (one year and so)• Some Take Seriously, others use as a guideline