Strategic Planning & The Marketing Process STRATEGIC PLANNING Strategic Planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. It involves defining a clear company mission, setting supporting objectives, designing a sound business portfolio and coordinating functional strategies. Strategic Planning set the stage for the rest of the planning in the firm. It involves defining a clear company mission, setting supporting company objectives, designing a sound business portfolio and coordinating functional strategies.
At corporate level the company first defines its overall purpose and mission. Mission Statement: An organization exists to accomplish something. Mission statements of the organizations purpose what it wants to accomplish in the larger environment. When the management senses that the organization is drifting it must renew its search for purpose. Mission statements ask; ? What is our business? ? Who is the customer? ? What do consumers value? ? What should our business be? Mission statement should be; ? An invisible hand that guides people in organization ? Neither too narrow nor too broad Fitting of market environment ? Based on distinctive competencies (Why we are better from others? Some plus points, etc) ? Motivating Mission Statement of Some Companies CompanyProduct OrientedMarket Oriented RevlonWe make cosmeticsWe sell life style, expressions, success & status memories. DisneyWe run theme parksWe provide fantasies and entertainment a place where America still works the way it’s supposed to Wall-MartWe run discount storesWe offer product & services that deliver value to middle Americans
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DESIGNING THE BUSINESS PORTFOLIO Portfolio is the collection of items. A business portfolio is the collection of business & products that makeup the company. The best business portfolio is one of the best fits the company strength & weakness to opportunities in environment. Analyzing the cureent business portfolio: Portfolio Analysis: A tool by which management identifies and evaluates the various businesses that makes up the company. The company will want to put strong resources into its more profitable business and phase down or drop its weaker ones. Strategic Business Unit-SBU:
It is a unit of company that has a separate mission and objective and that can be planned independently from other company business. An SBU can be company division, a product line within a division, or sometimes a single person or brand. “The next step in the business portfolio analysis calls for management to assess the attractiveness of its various ‘sbu’ and decide how much support each deserves. The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment”
The Boston Consulting Group Approach: The Boston Consulting Group Approach a company classifies all its SBUs according to growth share matrix. Growth Share Matrix: A portfolio planning that evaluates a company’s strategic business unit in terms of their market growth rate and relative market share. SBUs are defines as; 1: Stars: These are high growth, high share business or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down they will become cash cows. 2: Cash Cows: These are low growth, high share business or products.
These established and successful SBUs need less investment to hold their market share. 3: Question Marks: These are low-share business unit in high growth markets. They require a lost of cash to keep their share, let alone increase it. Management should think whether to invest more on it or not. 4: Dogs: These are low growth, low share business and products. They can make enough cash to meet their expenses, but don’t promise to be large source of cash. [pic] Potential buyers: Who have buying power, but they are not our customers. Strategic Growth:
Strategic growth is done on four levels; ? Company Level ? Division Level ? Business Level ? Product Level Strategic Planning Gap: It is the difference between the desired level of sales & projected level of sales. Desired Level of Sales: Sales which is our target or the maximum we can sale is the desired level of sales. Projected Level of Sales: Sales which can be generated from current resources is know as projected level of sales. How can we fill strategic planning gap? Intensive Growth: ? To increase sale by increasing market share ? To increase sale by introducing new product To increase sale by introducing your existing product in new market Market Penetration Strategy: Increasing your customers by getting more market share through existing products Market Development Strategy: Offering your existing products in new markets Product Development Strategy: Offering a new improved product is same market Integrated Growth: Backward Integration: Increasing growth by producing raw material Forward Integration: Increasing growth by opening retail stores to sell your products, buying your customers Horizontal Integration: Increasing growth by buying your competitor
Diversification Growth: Concentric Diversification Strategy: Offering new products in new market which have some similarity with your existing products in terms of market, technology, supply, etc Horizontal Diversification Strategy: Offering new product in same market which have no similarity with your existing product in terms of market, technology, supply, etc Conglomerate Diversification Strategy: Offering new product in new market which have no similarity with your existing product in terms of market, technology, supply, etc Business Unit Strategic Planning: Business Mission:
Setting your goal and objective SWOT Analysis: Market Opportunity Analysis (MOA) ? Can the benefits involved in the opportunity be articulated convincingly to a defined target market? ? Can target markets can be located and reached with cost effective media and trade channels? ? Does the company posses or have access to critical capabilities and resources needed to deliver the customer benefits. ? Can company deliver benefits better than any actual or potential competitors? ? Will the financial rate of return meet or exceed the companies required threshold for investment?
Opportunity Matrix: HIGH Success LOW ? How much attractive is your product? ? Success Probability? HIGH12 Attractiveness In case; 1-Invest in product, high returns are expected LOW34 2-Your product is attractive but success chances are low so avoid to invest if can’t take risk 3-Your product is not attractive but success probability is very high so you can take risk of staring a product 4-Don’t invest, high losses will occur Threat: HIGH Occurrence LOW ? Probability Occurrence? ? Seriousness? HIGH12 Seriousness In case; -Take very serious steps to solve your problems as soon as possible LOW34 2-You can ignore it but be prepare for it 3-Take some steps to solve the problem 4-You can ignore the problem Managing the marketing effort Analysis: ? Finding opportunity ? Avoiding threats ? Understanding strength ? Analyzing weakness The company must analyze its markets and marketing environment to find attractive opportunities and to avoid envoi mental threats. It must analyze company strengths and weakness, as well as current a possible marketing actions to determine which opportunity best can pursue.
Planning: A marketing plan includes; ? Executive summary: A brief summary of the main goals and recommendations of the plan for management review, helping top management to find the plans major points quickly ? Analysis of current situations It describes target market and company’s position in it, including information about the market, product, competition and distribution ? Objectives States the marketing objective that the company would like to attain during the plans tem and discusses key issues that will affect their attainment ? Targets & positioning
Targeting the right place to launch a product ? Marketing mix ? Budget It shown the expected revenues and cost & the difference b/w both is profit. Once the budget is approved it becomes the base of operations. ? Control It will use to monitor progress and allow higher management to review implementation result and spot products that are not meeting their goals. Through strategic planning the company decides what it wants to do with each business unit. Marketing planning involves deciding on marketing strategies that will help the company attain its overall strategic objectives.
A detailed marketing action is needed for each business focuses on product or brands plans. Implementation: ? Plans are turned into action with day to day activities ? Good implementation is a challenge The process that turns marketing strategies and plans into marketing actions in order to accomplish marketing objectives. Control: ? Evaluation of result of marketing strategies ? Check for differences b/w goals & performance It involves the evaluation or results of marketing strategies and plans and taking corrective action to ensure that objectives are attained. the marketing process
Targeting Consumers: Companies know that they cannot satisfy all consumers in a given market at least not all consumers in the same way. There are too many kinds of customers with too many kinds of needs, thus each market must divide up the total market, choose the beast segments and design strategies. Market Segmentation: ? Geographic ? Demographic ? Physiological behavior Dividing a market into distinct groups of buyers on the basis of needs, characteristics or behavior who might require separate products or marketing mixes Target Marketing: ? Evaluation of each segment attraction Selection of segments with greatest long term profitability ? A company can choose one several segment to target The process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market Positioning: ? The place the product occupies to consumers mind ? Products are positioned relative to competing products ? Marketers look for clear, distinctive and desirable place in positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of targets consumers.
Formulating competitive positioning for a product and a detailed marketing mix. Marketing Strategies: ? Market Leaders ? Market Challenges ? Market Followers ? Market Nicher To be successful the company must do better jo than its competitors of satisfying target consumers. Thus marketing strategies must be geared to the need s of consumers and also to the strategies of competitors. Marketing Mix: (4P’s of Marketing) The set of controllable tactical marketing tools-product, price, place and promotion-that the firm blends to produce the response it wants in the target market. ? Product
It is combination of goods and services the company offers to its target market ? Price The amount of money the consumer has to pay to obtain the product ? Place It includes company activities that make the product available to target consumers ? Promotion Activities that communicate the merits of the products and persuade target customer to but it MARKETING NOTES CHAPTER # 2 “STRATEGIC MARKET” WHAT IS STRATEGIC PLANNING: The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. E. g. – Fast in 85 is different then now in 2005. MISSION STATEMENT: A statement of the organization’s purpose. What it want to accomplish in large environment. MARKET-ORIENTED MISSION: ??? A mission statement asks: (For Target Customer) ? What is our business? ? Who is the customer? ? What do Customer’s value? E. g. : – Clothes in Saddar are 250 every one buy, while in Defense they not. ? What should our business be? ??? A mission statement should be: ? An “invisible hand”. (Good message to motivated the customer to buy). ? Neither too narrow nor too broad. ? Fitting of market environment. ? Based on distinctive competencies. Motivating. MISSION STATEMENT |COMPANY |PRODUCT ORIENTED |MARKET ORIENTED | |Revlon |We make cosmetics. |We sell lifestyle and sely expression; success and status, | | | |memories, hopes & dreams. | |Disney |We run theme parks. |We provide fantasies and entertainment a place where | | | |America still works the way it’s supposed to. |Wat mart |We run discount stores. |We offer products and services that derive value to middle | | | |Americans. | |Xeror |We make copying fax and other office machine. |We make business more productive by | | | |Helping them scan, store, retrieve, revise, distribute, | | | |print & publish documents. | |Philips |We make electric appliances. We sell electric appliances all over Pakistan. We make | | | |thing better & glow life. | PORTFOLIO: It is the collection of item. BUSINESS PORTFOLIO: The collection of business and products that make up the company. E. g. Artist =; Painting. INVESTMENT PORTFOLIO: The collection of financial asset statement. STRATEGIC BUSINESS UNITS (SBU): The Boston Consulting Group Approach. POTENTIAL BUYERS: They have power to purchase the certain product. STRATEGIES MARKET: ? Company Level. ? Division Level. ? Business Level. Product Level. STRATEGIC PLANNING GAP: ? Desired level of sales (required and desired level of state). ? Projected level of sales (achieved with their current sales) ‘ Current Asset. INTENSIVE GROWTH: It has three processes: ? Increase the level of sales by increasing market sales. ? Introduce the new product for current customer. ? Introduce the current product in new market. ANSOFF’S PRODUCT MARKET EXPANSION GRID | |CURRENT PRODUCT |NEW PRODUCT | |Current Markets |1. Market Penetration strategy. 3. Product Development Strategy. | | |E. g: Coca Cola. |E. g: Diet Pepsi. | |New Markets |2. Market Development Strategy. |[Diversification Strategy] | | |E. g: Mobiles Company. | | INTEGRATIVE GROWTH: ? Raw material produces by your own. ? E. g: KSN Frozen Chicken sells for backward. They start producing chickens in farm. ? E. g: If some body farm a Chicken and produces. Then they start for forwarding that is they start selling Chicken in Market. Buying your competitors. ? E. g: Walls buy Polka their competitors. DIVERSIFICATION GROWTH: ? Offering total different product. ? You Offering new product that has some sort of marketing and technological synergy available for their existing product. ? E. g: Dawn Start selling Newspaper for Punjab in Punjabi. ? You are producing new product to no market and technological synergy. ? E. g: ? There are offering new product without marketing plus technology synergy. ? E. g: Angro -; Fertilizers start making -; Milk for different and new market. ??? Marketing & Technological Synergy + New Markets. No Marketing & Technological Synergy + Current Markets. ??? No Marketing & Technological Synergy + New Markets. BUSINESS UNIT STRATEGIC PLANNING: ? Business Mission. ? Set your mission. ? Set your objective (Increase our Market Share). ? Set your goals (10% Share Increase in next year). ? Active planning to achieve your goals. MARKET OPPORTUNITY ANALYSIS (MOA): 1. Can the benefits involved in the opportunity be articulated convincingly to a defined target market? 2. Can the target market(s) be located and reached with cost effective media and trade channels? If you open a hotel in Dadu, there will be not much response because Infrastructure is not developed. 3. Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits? 4. Can the company deliver the benefits better than any actual or potential competitors? 5. Will the financial rate of return meet or exceed the company’s required threshold for investment? (If your rate of return then investment => then we don’t do it and vice versa. PRODUCT DEVELOPMENT STRATEGY: ? New product offered in current markets. Business Mission ‘ Overall image of the company. OPPORTUNITY MATRIX: | | |SUCCESS |PROBABILITY | |Attractiveness | |HIGH |LOW | | |HIGH |1 |2 (avoid it) | | |LOW |3 |4 | THREAT MATRIX: | |PROBABILITY OF OCCURENCE | |Seriousness | |HIGH |LOW | | |HIGH |1 (Important Threat) |3 | | |LOW |2 |4 | ? Precautionary Majors. ———————– Mission Statement SWOT Goals or Objective Strategies Implementation Control